Stephens v. Pension Benefit Guaranty Corp.
410 U.S. App. D.C. 317
| D.C. Cir. | 2014Background
- U.S. Airways pilots receive lump sum or annuity retirement benefits; lump sum is actuarially equivalent to the annuity as of the annuity start date but paid ~45 days later with no interest for the delay.
- Stephens and Mahoney retired in 1996 and 1999 and elected lump sums; their payments were delayed ~45 days, with potential interest loss of several thousand dollars.
- Stephens claimed ERISA § 1054(c)(3) requires not only actuarial equivalence but also payment of lost time value due to delay; PBGC denied.
- Stephens filed administrative claims; Retirement Board denied; the case later moved to federal court after U.S. Airways’ bankruptcy and plan termination; PBGC substituted as defendant.
- District Court (D.D.C.) granted summary judgment for PBGC; prior appellate panels split on the governing standard and class certification issues; Stephens sought class certification for all lump-sum retirees with delayed payments.
- On remand, district court denied class certification; Stephens settled his individual claim and Mahoney dismissed without prejudice; the appeal challenges class certification and the exhaustion issue.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ERISA claims alleging statutory rights require exhaustion | Stephens | PBGC | Yes, exhaustion not required for statutory claims (reversed) |
| Whether claimants asserting statutory rights must exhaust internal remedies for delayed lump-sum payments | Appellants | PBGC | Exhaustion not required; court treats as statutory claim requiring no internal review |
| Whether Stephens’s claim is typical of a putative class’s ERISA claims | Stephens’s claim typical | Define typicality with plan-based claims | Reversed; district court to reconsider class certification for statutory claims |
| Whether district court should certify a class of lump-sum retirees for statutory claims | Yes, common statutory violation | No, no exhaustion or plan-based claims | Remand for reconsideration of class certification |
| What is the proper scope of relief and define liability on remand | Remand to determine unreasonableness and damages | Limit to plan-based interpretations | Remand to determine extent of reasonableness/damages for statutory claim |
Key Cases Cited
- Zipf v. AT&T, 799 F.2d 889 (3d Cir. 1986) (statutory rights may be enforced in court, not via internal remedies)
- Amaro v. Cont’l Can Co., 724 F.2d 747 (9th Cir. 1984) (no internal remedy mandated for ERISA statutory claims)
- Kross v. Western Electric Co., 701 F.2d 1238 (7th Cir. 1983) (exhaustion doctrine for ERISA claims varies by type of right asserted)
- Lindemann v. Mobil Oil Corp., 79 F.3d 647 (7th Cir. 1996) (exhaustion applies to statutory claims for many but not all ERISA contexts)
- Mason v. Cont’l Grp., 763 F.2d 1219 (11th Cir. 1985) (exhaustion issues in ERISA context; forum for statutory rights)