United Steel, Paper & Forestry, Rubber, Manufacturing, Energy, Allied Industrial & Service Workers International Union v. Pension Benefit Guaranty Corp.
839 F. Supp. 2d 232
D.D.C.2012Background
- Thunderbird Mining Company filed for bankruptcy in May 2003; PBGC moved to terminate Thunderbird’s pension plan and appoint a statutory trustee.
- Plaintiffs, former Thunderbird employees represented by USW, challenged PBGC’s denial of shutdown benefits under the plan.
- Plan provided shutdown benefits if there was a permanent shutdown of the facility, but did not define permanent shutdown.
- EVTAC (Thunderbird’s parent) filed for Chapter 11 in May 2003; later assets were sold to Cleveland-Cliffs and Laiwu, forming United Taconite LLC.
- PBGC concluded EVTAC’s shutdown was not permanent as of July 24, 2003 and sought termination date; USW intervened but settled to PBGC’s proposed date.
- PBGC Appeals Board denied shutdown benefits in November 2007; district court granted PBGC summary judgment in 2010s, denying liability to plaintiffs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standard of review for PBGC determinations under § 1303(f) | Dycus-style de novo review should apply. | APA deferential review applies; Firestone not controlling here. | APA deferential review applies; Firestone limited to § 1132(a)(1)(B). |
| Whether PBGC’s shutdown determination was arbitrary or not | EVTAC’s representations show permanent shutdown prior to July 24, 2003. | Record shows EVTAC sought buyers and continued operations; shutdown was not permanent. | PBGC’s determination not arbitrary or capricious; supported by record. |
| Impact of EVTAC’s sale to Cleveland-Cliffs/Laiwu on shutdown status | Sale negates shutdown, aligning with Thorpe to grant shutdown benefits. | Thorpe addresses pre-sale shutdown; here termination predates sale andsale does not control. | Sale did not compel shutdown benefits; prior record supported non-permanent shutdown. |
| Is July 24, 2003 termination date proper given ongoing revival efforts? | PBGC sought too early termination to avoid liabilities and preserve shutdown benefits. | Timing based on evidence EVTAC not permanently shut; objective reasons support termination date. | Termination date proper; PBGC acted within rational boundaries. |
Key Cases Cited
- Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (Supreme Court 1989) (de novo review for benefits unless plan grants discretion)
- Dycus v. Pension Benefit Guar. Corp., 133 F.3d 1367 (10th Cir. 1998) (PBGC actions reviewed for arbitrary, capricious conduct; deference when applicable)
- Republic Techs. Int'l, LLC v. PBGC, 386 F.3d 659 (6th Cir. 2004) (PBGC termination framework and fiduciary concerns)
- Davis v. PBGC, 815 F.Supp.2d 283 (D.D.C.2011) (confirms APA deference to PBGC in § 1303(f) actions)
- Sara Lee Corp. v. American Bakers Ass'n Retirement Plan, 512 F.Supp.2d 32 (D.D.C.2007) (APA deferential review of PBGC actions under § 1303(f))
- Montgomery v. PBGC, 601 F.Supp.2d 139 (D.D.C.2009) (deference under APA in PBGC determinations)
- Piech v. Pension Ben. Guar. Corp., 744 F.2d 156 (D.C.Cir.1984) (conflict of interest in PBGC dual role as trustee and guarantor)
- Coleman v. PBGC, 2005 WL 5534139 (D.D.C. 2005) (court recognized PBGC considerations in shutdown determinations)