Davis v. Pension Benefit Guaranty Corp.
407 U.S. App. D.C. 119
| D.C. Cir. | 2013Background
- About 1,700 retired U.S. Airways pilots and beneficiaries sued PBGC over benefit allocations after the Retirement Income Plan terminated in 2003 and PBGC became trustee/guarantor.
- PBGC issued initial determinations and Appeals Board decisions allocating assets under ERISA § 1344 and PBGC regulations (29 C.F.R. § 4044.13); Pilots exhausted agency remedies and challenged final PBGC decisions in district court.
- The district court granted summary judgment to PBGC on nearly all claims; Pilots appealed five claims (Claims One, Two, Seven, Eight, Eleven) they briefed on appeal.
- Central statutory framework: ERISA Title IV priority categories for allocation after plan termination (priority category three) and PBGC regulations interpreting what plan provisions were “in effect” and which automatic increases count.
- Disputes focused on (a) whether an Early Retirement Incentive Program (ERIP) benefit and certain COLA/§415(b) increases count in priority category three, (b) whether benefits should be actuarially adjusted when pilots could have retired earlier, and (c) interpretation/application of the Prior Plan minimum-benefit rules and disability-eligibility mechanics.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ERIP increases fall into priority category 3 | ERIP effective date (Jan 1, 1998) predates five-year window so ERIP belongs in category 3 | PBGC: "in effect" means "payable" for priority purposes; ERIP payments were not payable throughout the five-year period, so excluded | Court affirmed PBGC: PBGC regulation §4044.13(b)(3)(i) properly interprets "in effect" as payable |
| Whether §415(b) caps and §415(d) COLAs incorporated into Plan are included for full 5-year period | Pilots: incorporation of §415 and COLAs before 5-year window makes all resulting increases part of plan provisions in effect during the five years, so included | PBGC: incorporated §415 limits create benefit increases; COLAs were not payable throughout 5-year window so only scheduled increases in years 4–5 are included under the automatic-increase exception | Court affirmed PBGC: Board’s interpretation of statute and §4044.13(b)(5) is better; COLAs treated as benefit increases and limited to 4th–5th year increases |
| Whether benefits for pilots who could have retired 3 years pre-termination should be actuarially increased | Pilots: benefits should be adjusted to actuarial equivalence to compensate delayed commencement | PBGC: §1344(a)(3)(B) and regs fix the benefit as of the start of the 3‑year period; no actuarial uplift authorized | Court affirmed PBGC: statutory text and regulations do not allow actuarial equivalence adjustments |
| Scope of Prior Plan minimum-benefit (§4.1(E)) and related components (dividends, twice-yearly adjustments, 1% termination credit, 50% disability supplement) | Pilots: minimum-benefit language preserves all Prior Plan components, including dividends, adjustments, termination credit, and the 50% disability supplement for qualifying pilots | PBGC: Plan text modifies or fixes certain components; many contested items are not in the new Plan or were superseded; Pilots also failed to timely supplement the administrative record; four purportedly qualifying pilots insufficiently identified for Article III standing on 50% supplement | Court affirmed PBGC: confined review to administrative record, rejected untimely/new evidence, upheld Board’s textual interpretations; plaintiffs lacked standing on 50% supplement claim |
| Whether PBGC must recreate pre-termination disability-determination procedures or accept alternative evidentiary routes | Pilots: PBGC should continue pre-termination alternative disability determination mechanisms (medical examiner or retirement board) rather than require SSA determinations | PBGC: Disability determinations were governed by the separate Disability Plan (administered by U.S. Airways); PBGC, administering the Retirement Plan, may defer to Disability Plan administrator and need not recreate prior procedures | Court affirmed PBGC: PBGC permissibly deferred to Disability Plan procedures; Pilots failed to show PBGC had duty to adopt alternative mechanisms |
Key Cases Cited
- Boivin v. U.S. Airways, 446 F.3d 148 (D.C. Cir.) (background on PBGC trustee role and exhaustion)
- PBGC v. LTV Corp., 496 U.S. 633 (1990) (PBGC guarantor/termination framework)
- Stephens v. U.S. Airways Group, Inc., 644 F.3d 437 (D.C. Cir.) (standard of review / related plan disputes)
- Davis v. PBGC, 571 F.3d 1288 (D.C. Cir.) (prior interlocutory rulings involving these plaintiffs)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (standing requirements)
- Russello v. United States, 464 U.S. 16 (1983) (canon: differing statutory language implies differing meaning)