Page v. Pension Benefit Guaranty Corp.
213 F. Supp. 3d 200
| D.D.C. | 2016Background
- Two consolidated class actions against the PBGC (Page and Collins) settled in 1996; PBGC funded a Settlement Fund and a Settlement Director/CASB implemented benefit payments.
- Settlement implementation (extended beyond 36 months) paid over $922 million; court-ordered 8% attorney fee awarded to Class Counsel (~$75M initially) for payments made during implementation.
- A 2001 Wrap-Up Agreement (approved by the court) transferred post-2002 payment processing to PBGC’s Pension Search program and provided that PBGC would continue to deduct 8% attorney fees from payments for a ten-year period beginning August 31, 2002, after which PBGC would have no further liability for fees.
- Post-2002, PBGC paid roughly $111 million to ~7,500 additional class members and deducted the 8% fee through August 2012; PBGC stopped withholding fees in September 2012.
- Protracted disputes followed about CASB wind-down, audits of Pension Search, and responsibility for locating remaining class members; Class Counsel claim PBGC’s conduct prevented full performance and so the ten-year fee window should be tolled or extended.
- Class Counsel moved to enforce the Wrap-Up Agreement/charging lien seeking additional fees; the court denied the motion, holding the fee provision unambiguous and expired.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Wrap-Up Agreement’s 10-year limit on recovery of attorney fees should be extended or tolled | Toll or extend the 10-year fee period because PBGC failed to participate in CASB, avoided audits, and thereby prevented payments during part of the ten years (so Counsel did not get the bargain) | The fee clause is plain: the 10-year period starts Aug 31, 2002 and then PBGC has no further liability; PBGC paid substantial benefits and withheld fees during that period, so no extension warranted | Court held the fee clause unambiguous, refused to toll/extend; fees expired after the ten-year calendar period and denied Counsel’s motion |
| Whether the fee provision is ambiguous such that extrinsic purposes/contract context could alter its plain meaning | Clause ambiguous (lack of explicit date in second sentence, use of "a" ten-year period) and should be read in light of contract purpose to incentivize locating class members | Clause plainly sets start date Aug 31, 2002 and a ten-year run; grammar and context do not create reasonable alternative meanings | Court held the clause not reasonably susceptible to different constructions and enforced the plain text |
| Whether equitable doctrines (prevention/estoppel) excuse strict application of the 10-year limit | PBGC’s conduct prevented occurrence of conditions needed for Counsel to receive fees, so doctrine of prevention or similar equitable relief should toll the period | Prevention doctrine typically addresses failure of a condition precedent; here PBGC continued to pay benefits and the Agreement provided APA and other remedies for processing errors, so prevention does not apply | Court rejected prevention argument: record shows PBGC made substantial payments during the ten years and counsel identified no concrete payments lost due to PBGC misconduct; Agreement anticipated processing issues and provided remedies |
| Whether court should modify the consent decree/Wrap-Up Agreement to provide additional fees | Counsel asks for interpretation favoring their bargain (not an express modification) to reach fees beyond 10 years | PBGC argues any change would be a modification of the consent decree that the court should not impose absent proper basis | Court refused to reinterpret provision in a manner that would effectively modify the agreement, emphasizing that it must enforce unambiguous terms |
Key Cases Cited
- Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (1994) (court may retain jurisdiction to enforce and interpret consent decrees)
- United States v. Alshabkhoun, 277 F.3d 930 (7th Cir.) (consent decree treated as court order embodying party agreement)
- United States v. W. Elec. Co., 894 F.2d 430 (D.C. Cir.) (consent decree interpreted under ordinary contract principles; meaning discerned within four corners)
- Omega Eng’g, Inc. v. Omega, S.A., 432 F.3d 437 (2d Cir.) (settlement agreements construed as contracts)
- Travelers Indem. Co. v. Bailey, 557 U.S. 137 (2009) (unambiguous private contract terms must be enforced according to their terms)
- Hughes v. United States, 342 U.S. 353 (1952) (court may not rewrite an agreement to accomplish unexpressed purposes)
- Shear v. Nat’l Rifle Ass’n of Am., 606 F.2d 1251 (D.C. Cir.) (doctrine that a promisor who prevents condition from occurring cannot benefit from nonoccurrence)
- Gulf Oil Corp. v. Am. La. Pipe Line Co., 282 F.2d 401 (6th Cir.) (promisor cannot avoid liability by preventing condition precedent)
- ITT Cont’l Baking Co. v. United States, 420 U.S. 223 (1975) (distinguishing interpretation from modification of a consent decree)