Lewis v. Pension Benefit Guaranty Corporation
197 F. Supp. 3d 16
D.D.C.2016Background
- Plaintiffs are ~1,700 former Delta airline pilots (participants/beneficiaries of the Delta Pilots Retirement Plan) who sued the Pension Benefit Guaranty Corporation (PBGC) after PBGC took over the terminated Plan following Delta’s bankruptcy and a settlement.
- Plaintiffs allege PBGC misallocated and delayed distributions, favored active pilots over retirees, withheld information, improperly involved agency counsel in appeals, and outsourced trustee duties, resulting in PBGC earning investment returns on assets that should have gone to retirees.
- PBGC issued final benefit determinations in 2010–2012; a consolidated appeal by ~1,784 participants was largely denied by PBGC’s Appeals Board in 2013, prompting this suit.
- Plaintiffs pleaded (inter alia) a breach of fiduciary duty claim against PBGC under 29 U.S.C. § 1303(f) seeking disgorgement (equitable relief), and separate statutory allocation/benefit challenges under Title IV ERISA provisions.
- PBGC moved to dismiss the fiduciary claim as duplicative or not equitable, and to strike demands for attorney’s fees and a jury trial.
- Court denied dismissal of the fiduciary claim, holding plaintiffs may seek disgorgement under § 1303(f), but granted PBGC’s motion to strike attorney’s fees (fees unavailable under Stephens) and the plaintiffs abandoned the jury demand.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether fiduciary breach claim is duplicative of statutory allocation/benefits claims | Plaintiffs proceed under §1303(f) (Title IV) so claim is distinct and not duplicative of §1132 cases | PBGC: fiduciary claim duplicates remedies available under benefit/allocation claims (citing §1132(a) jurisprudence) | Court: Not duplicative because plaintiffs sue under §1303(f) (Title IV) and Title IV enforcement differs from §1132 (Title I) remedies |
| Whether disgorgement is “appropriate equitable relief” under §1303(f) | Disgorgement/restoration of investment returns is equitable/traditional trustee remedy | PBGC: disgorgement would improperly seek post-termination asset increases or is barred by ERISA/precedent | Court: Disgorgement qualifies as appropriate equitable relief under §1303(f) (analogous to Amara/Harris Trust principles) |
| Whether any recovery must inure only to the plan (not individual plaintiffs) | Plaintiffs: §1303(f) authorizes suits by participants/beneficiaries and does not limit equitable relief to plan-wide recovery; individuals may receive relief | PBGC: Remedies should mirror §1109/Title I limitations (Russell)—relief inures to plan | Court: §1303(f)’s text and absence of contrary authority permit individual relief; Russell/§1109 do not control §1303(f) |
| Availability of attorney’s fees | Plaintiffs initially sought fees but conceded fees are unavailable under controlling D.C. Circuit law | PBGC: fees unavailable under ERISA for actions against PBGC; strike fee demand | Court: Granted motion to strike attorney’s fees (Stephens controls); plaintiffs conceded; EAJA argument not pursued |
Key Cases Cited
- Mertens v. Hewitt Associates, 508 U.S. 248 (1993) (distinguishes legal vs. equitable relief; limits compensatory damages under ERISA’s equitable catchall)
- CIGNA Corp. v. Amara, 563 U.S. 421 (2011) (recognizes monetary ‘surcharge’/disgorgement can be traditional equitable relief against fiduciaries)
- Harris Trust & Savings Bank v. Salomon Smith Barney, Inc., 530 U.S. 238 (2000) (restitution/disgorgement are remedies historically available in equity for trustee breaches)
- Varity Corp. v. Howe, 516 U.S. 489 (1996) (equitable relief under ERISA §1132(a)(3) appropriate where other §1132 remedies unavailable)
- Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134 (1985) (interpreting §1109 remedies as inuring to plan; informs limits of Title I fiduciary relief)
- Stephens v. U.S. Airways Group, Inc., 644 F.3d 437 (D.C. Cir. 2011) (ERISA actions against PBGC under §1303(f) do not permit recovery of attorney’s fees)
- Bechtel v. Pension Benefit Guar. Corp., 781 F.2d 906 (D.C. Cir. 1986) (addresses PBGC’s authority regarding distribution adjustments; not dispositive on fiduciary-disgorgement claim)