Thomas G. DAVIS, et al., Plaintiffs, v. PENSION BENEFIT GUARANTY CORPORATION, Defendant.
No. 1:08-CV-1064 (FJS).
United States District Court, District of Columbia.
May 30, 2012.
SCULLIN, Senior District Judge.
IV. CONCLUSION
For the foregoing reasons, the Court denies Plaintiff‘s motions for a TRO and PI and dismisses this case for lack of subject-matter jurisdiction.
Defendant is not an “investigative or law enforcement officer” for purposes of the proviso. Harrison Aff. ¶ 12; see
Joseph N. Krettek, Esq., Pension Benefit Guaranty Corporation, Office of the Chief Counsel, Washington, DC, for Defendant.
MEMORANDUM-DECISION AND ORDER
SCULLIN, Senior District Judge.
I. INTRODUCTION
Plaintiffs are more than 1,700 mostly retired U.S. Airways pilots who are the beneficiaries of the now-terminated Retirement Income Plan for Pilots of U.S. Airways, Inc. (“Plan“). In their second amended complaint, Plaintiffs allege that Defendant Pension Benefit Guaranty Corporation (“PBGC“), the statutory trustee of the Plan,1 erred in making final benefit determinations by providing lesser benefits than the Plan and
In March 2007, Plaintiffs filed a consolidated administrative appeal with the PBGC Appeals Board; and, in February 2008, the Appeals Board issued a final decision on Plaintiffs’ claims largely in PBGC‘s favor. Plaintiffs then filed suit in federal court challenging the Appeals Board‘s determination as contrary to the Plan‘s language and
There are four motions currently before the Court: (1) Plaintiffs’ motion for summary judgment on claims one, two, three, six, seven, nine, ten, eleven, and twelve of their second amended complaint; (2) PBGC‘s cross-motion for summary judgment on those claims as well as on claim four; (3) Plaintiffs’ motion to compel an immediate ruling from the PBGC‘s Appeals Board in the pending administrative appeal of Captain Peterman‘s benefit de-
II. BACKGROUND
Plaintiffs filed their initial complaint in this action against PBGC on June 20, 2008. See Dkt. No. 1. Plaintiffs also filed a notice of a related case, Oakey v. U.S. Airways Pilots Disability Income Plan, No. 1:03-CV-2373. See Dkt. No. 2. Plaintiffs filed their first amended complaint on August 15, 2008. See Dkt. No. 9. PBGC filed a motion to dismiss claims five and ten of Plaintiffs’ amended complaint and to strike Plaintiffs’ request for attorney‘s fees and for a jury trial. See Dkt. No. 10. On March 17, 2009, the Court (Robertson, J.) denied PBGC‘s motion to dismiss claims five and ten and granted its motion to strike. See Dkt. No. 33. Plaintiffs then filed a motion for a preliminary injunction on August 29, 2008, which the Court denied on December 2, 2008. See Dkt. Nos. 11 & 596 F.Supp.2d 1 (D.D.C.2008).
On June 23, 2009, Plaintiffs filed a second amended complaint. See Dkt. No. 36. On March 12, 2010, Plaintiffs filed a motion for partial summary judgment on one of the twelve claims in their second amended complaint—claim eight. See Dkt. No. 45. PBGC moved to strike Plaintiffs’ motion, and the Court denied that motion. See Dkt. No. 47. PBGC then filed a cross-motion for partial summary judgment on claim eight of Plaintiffs’ second amended complaint. See Dkt. No. 54. In a Memorandum Opinion and Order dated September 30, 2011, the Court (Kennedy, J.) de-
nied the parties’ cross-motions for partial summary judgment on claim eight without prejudice to renew on procedural grounds because Plaintiffs improperly relied on non-record materials. See 815 F.Supp.2d 283 (D.D.C.2011).
On November 15, 2010, Plaintiffs filed a motion for summary judgment on claims one, two, three, six, seven, nine, ten, eleven, and twelve; and, on February 8, 2011, PBGC filed a cross-motion for summary judgment thereto. See Dkt. Nos. 71 & 74.
On October 19, 2011, Plaintiffs filed a motion to compel the PBGC‘s Appeals Board to issue an immediate ruling on the pending administrative appeal of Captain Jerome Peterman, a named plaintiff in this case, whose appeal of his final benefit determination had been before the PBGC for approximately eight months. See 815 F.Supp.2d 283. PBGC opposed that motion. See Dkt. No. 84.
Then, on December 2, 2011, PBGC resubmitted its cross-motion for partial summary judgment on claim eight of Plaintiffs’ second amended complaint. See Dkt. No. 90. In response, Plaintiffs filed a motion to hold PBGC‘s resubmitted motion for partial summary judgment on claim eight in abeyance pending this Court‘s resolution of Plaintiffs’ motion to compel the Appeals Board to rule on Captain Peterman‘s pending administrative appeal.2 See Dkt. No. 92. In an Order dated December 12, 2011, the Court (Scullin, S.J.) granted Plaintiffs’ unopposed motion for an expedited briefing schedule on their motion to hold in abeyance PBGC‘s resubmitted motion for partial summary judgment on claim eight; granted Plaintiffs’ unopposed motion to schedule a status conference in this matter; granted Plaintiffs’ unopposed motion for an extension of time within
On January 9, 2012, Plaintiffs filed a “provisional” memorandum in opposition to PBGC‘s resubmitted motion for partial summary judgment on claim eight, noting that they currently had pending two motions related to “the urgency of resolving” Captain Peterman‘s administrative appeal and that they were “strongly of the view that the PBGC‘s motion [was] premature at this time.”4 See Dkt. No. 99 at 1. PBGC then filed a reply memorandum in support of its resubmitted motion for partial summary judgment on claim eight. See Dkt. No. 102. On February 7, 2012, Plaintiffs filed an unopposed motion for leave to file a surreply in further opposition thereto. See Dkt. No. 103.5
In their second amended complaint, Plaintiffs asserted twelve claims against PBGC: (1) failure to comply with
provisions incorporating a federal statutory tax provision; (3) failure to comply with
A. Plaintiffs’ motion for summary judgment on claims one, two, three, six, seven, nine, ten, eleven, and twelve and PBGC‘s cross-motion for summary judgment on those claims as well as on claim four
1. Standard of review
In its capacity as statutory trustee, PBGC is responsible for administering benefits under terminated pension plans. See
Since PBGC is a federal agency subject to the provisions of the APA, see
extent that Plaintiffs’ claims challenge PBGC‘s interpretations of ambiguous provisions of
First, PBGC—no matter what its role—has “practical agency expertise” that makes it “better equipped” to interpret and apply
ERISA than the courts.... Second, courts have consistently deferred to PBGC when it is acting solely as a guarantor even though PBGC often has a financial interest in a particular interpretation ofERISA in that role.
See 596 F.Supp.2d at 3 (quotation omitted).
The D.C. Circuit similarly “defer[red] to the PBGC‘s authoritative and reasonable interpretations of ambiguous provisions of
2. Claim one
In claim one of their second amended complaint, Plaintiffs allege that, in prioritizing benefits, PBGC erroneously interpreted an
the provisions of the plan (as in effect during the 5-year period ending on [the plan‘s termination] date) under which such benefit would be the least[.]”
Plaintiffs contend that, although the Plan had sufficient assets to cover the benefits in PC-3 for distribution purposes, PBGC improperly excluded the benefit to those Plan participants who retired early. PC-3 covers benefits based on provisions that were “in effect” within five years before the Plan‘s termination date. The relevant dates are the following: US Airways adopted the ERIP on December 4, 1997; the ERIP included a self-defined effective date of January 1, 1998; the ERIP provided that no pilots could retire or collect payments under the program until May 1, 1998; and the Plan was terminated on March 31, 2003. PBGC determined that the ERIP was not “in effect” five years before the Plan‘s termination on March 31, 2003, because, even though the ERIP‘s self-defined effective date was January 1, 1998, the first date on which pilots could actually retire and become eligible for the benefit, i.e., the first date on which the benefit actually went “in[to] effect,” was not until May 1, 1998—one month too late to be included in PC-3.
Plaintiffs challenge PBGC‘s “ad hoc” interpretation of the ERIP‘s effective date. They contend that the provision was expressly made effective on January 1, 1998,
PBGC maintains that this interpretation of
As stated, Plaintiffs contend that the ERIP was “in effect” more than five years before the Plan‘s March 31, 2003 termination date. In support of their assertion, Plaintiffs point to PBGC‘s regulation, which provides that a plan amendment “is ‘in effect’ on the later of the date on which it is adopted or the date it becomes effective[,]” see
years before termination on March 31, 2003. Such an interpretation is not unreasonable. However, since the meaning of the phrase “in effect” is ambiguous, PBGC‘s statutory interpretation need only be “permissible.” The Court defers to the PBGC‘s interpretation as a permissible construction of the statute. See, e.g., Bean Dredging, LLC v. United States, 773 F.Supp.2d 63, 87 (D.D.C.2011) (stating that “the mere fact that two inconsistent conclusions can be drawn from the record does not render the agency‘s decision arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law” (citation omitted)).
Accordingly, the Court denies Plaintiffs’ motion for summary judgment on claim one and grants PBGC‘s cross-motion for summary judgment on claim one.
3. Claim two
Claim two, like claim one, challenges PBGC‘s decision to exclude a benefit from PC-3. For the five-year lookback period prior to the Plan‘s termination, the Plan capped maximum benefits at the level established by Internal Revenue Code (“IRC“) § 415(b). See
For automatic benefit increases, PBGC‘s regulation provides that “the lowest annuity benefit payable during the 5-year period ending on the termination date ... includes the automatic increases scheduled during the fourth and fifth years preceding termination....”
Accordingly, “[t]hough the pilots prefer the higher cap, the statutory text is plainly against them: Priority Category 3 is ‘based on the provisions of the plan (as in effect during the 5-year period ending on [the plan‘s termination] date) under which such benefit would be the least.‘” Id. (quoting
4. Claim three
In the third claim of their second amended complaint, Plaintiffs challenge PBGC‘s calculation of their expected retirement age for asset distribution purposes and the PBGC Appeals Board‘s alleged refusal to even consider potential flaws in that calculation. Plaintiffs essentially challenge PBGC‘s use of generic tables to calculate their average expected retirement age.8
In valuing and allocating participants’ entitlement to early-retirement benefits, PBGC must determine Plaintiffs’ average expected retirement age. PBGC has promulgated regulations that establish general assumptions used to make this calculation by way of a formula that includes annually-updated tables. See
Plaintiffs contend that PBGC must make a particularized, Plan-specific expected retirement age estimation for them. Plaintiffs assert that, although PBGC‘s generic tables “may well prove adequate in the great bulk of cases that come before the PBGC,” it is “incapable of accurately estimating the average expected retirement age of commercial airline pilots, who have a number of unique incentives to continue working until the mandatory retirement age that has long been established by federal law.” See Dkt. No. 71 at 48. It is Plaintiffs’ position that “PBGC‘s, and specifically the Appeals Board‘s, refusal to do anything but rigidly apply the regulation [29 C.F.R. §§ 4044.55-4044.57] constitutes arbitrary and capricious agency action.” See id. at 49 (footnote omitted).
Plaintiffs assert that PBGC blindly rejected their proposed alternative without taking a hard look at their concerns and, in doing so, arbitrarily adhered to the generic calculation of their expected retirement age, which falls short of reasoned decision-making. However, affording PBGC the deference that it is unquestionably due on this claim with respect to its decision to adopt a rule of general applicability and its application of that regulation, see Lopez v. Davis, 531 U.S. 230, 243-44 (2001) (quotation and oth-
er citation omitted), the Court denies Plaintiffs’ motion for summary judgment on claim three and grants PBGC‘s cross-motion for summary judgment on claim three because PBGC‘s statutory interpretation is reasonable.
5. Claim six
In their sixth claim, Plaintiffs challenge PBGC‘s application of a Plan provision specific to those pilots formerly employed by Piedmont Aviation Inc. (“Piedmont Pilots“) before its merger with U.S. Airways. Plaintiffs contend that, in allocating PC-3 benefits, PBGC improperly left out COLAs payable to the Piedmont Pilots. Claim six, like claim two, deals with PBGC‘s “automatic benefit increase” regulation under § 4044.13(b)(5). Section 17.5(C) of the Plan provides that retired Piedmont Pilots would receive a COLA that increases their benefits by a certain percentage on the first of January every year after their retirement. As it did with Plaintiffs’ second claim, PBGC applied its automatic-benefit-increase regulation,
Plaintiffs first contend that PBGC erred in excluding the Piedmont Pilots’ COLAs in the three years prior to Plan termination, i.e., in paying COLAs in 1999 and 2000 but excluding COLAs from its PC-3 calculations in 2001, 2002, and 2003. For the reasons stated above with respect to claim two, the Court finds that PBGC reasonably determined that benefit increases subsequent to the January 1, 2000 COLA
The Court finds that PBGC permissibly interpreted its regulation to provide that each COLA is itself an automatic benefit increase that becomes effective when the benefit increase actually goes into effect, i.e., the first date on which the pilots became eligible for the benefit; and, insofar as the COLAs are an automatic increase within the three years before the Plan‘s termination, they are excluded from PC-3 because, again, “the lowest annuity benefit payable during the 5-year period ending on the termination date ... includes the automatic increases scheduled during the fourth and fifth years preceding termination....”
Furthermore, Plaintiffs contend that PBGC improperly applied its overly-broad “phase-in” regulation,
by the number of years (but not more than five) the plan or amendment, as the case may be, has been in effect[,]” see
Plaintiffs assert that PBGC‘s phase-in regulation is impermissibly overbroad as it is significantly more restrictive than
However, in applying its own corresponding regulation, PBGC determined that
became effective, whichever is later,” within five years of the plan‘s termination date.
Although PBGC‘s longstanding phase-in regulation is perhaps broader in certain circumstances than
6. Claim seven
Plaintiffs’ seventh claim concerns the proper way in which to calculate the PC-3 benefits of participants who were eligible to retire three years before the Plan‘s termination, i.e., as of April 1, 2000, but instead chose to defer retirement and to continue working past that date. Plaintiffs contend that PBGC must calculate those participants’ benefits by applying principles of “actuarial equivalence“—that is, for pilots who were not retired three years before termination but were eligible to retire at that time, the statutory benefit amount must at least match what it would have been had they retired at that time. PBGC contends that neither
mined that PC-3 was properly calculated by fixing the benefit amount as of three years before termination and that
As previously discussed, PC-3 includes benefits payable to participants who were retired or eligible to retire as of three years before the Plan‘s termination date. See
which would have been in pay status as of the beginning of such 3-year period if the participant had retired prior to the beginning of the 3-year period and if his benefits had commenced (in the normal form of annuity under the plan) as of the beginning of such period, to each such benefit based on the provisions of the plan (as in effect during the 5-year period ending on such date) under which such benefit would be the least.
The next question is whether or not the statute mandates an actuarial adjustment to the benefit amount of participants who were eligible to retire three years before termination but chose not to do so. Plain-
tiffs point to PBGC‘s own regulations to support their argument for actuarial increases; PBGC‘s regulations use “actuarial assumptions” (such as interest rates, mortality rates, and expected retirement ages) to determine the present value of benefits in a certain priority category. See
The Court finds that Plaintiffs have offered no legitimate reason to upset PBGC‘s interpretation of its own regulations and
Plaintiffs contend that they are entitled to summary judgment on their ninth claim because
Section 1345 of Title 29 of the United States Code provides that “the trustee is authorized to recover for the benefit of a plan from a participant the recoverable amount ... of all payments from the plan to him which commenced within the 3-year period immediately preceding the time the plan is terminated.”
As with all of Plaintiffs’ supposed challenges to measures PBGC adopted by regulation, courts owe substantial deference to its interpretations of its own regulations as long as the regulation represents a reasonable policy choice. See Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994); see also Broward v. United States, No. 05-01774, 2006 WL 1827733, *3 (D.D.C. July 3, 2006) (citation omitted). Accordingly, and for the reasons stated above, the Court finds PBGC‘s recoupment regulation and its application thereof to be a reasonable interpretation of
8. Claim ten
In claim ten, Plaintiffs allege that PBGC failed to provide sufficient funds to the Plan to make up for its obligation to guarantee the payment of all guaranteed benefits.
Plaintiffs contend that, because the Plan was underfunded at the time of termination and its assets did not cover all of their nonforfeitable benefits, PBGC was required to “guarantee the payment” of the remaining nonforfeitable benefits not covered by the Plan‘s assets, up to
Plaintiffs contend that PBGC must first allocate a plan‘s assets and only then calculate the guaranteed benefits, whereas PBGC contends that it must calculate guaranteed benefits before allocating a plan‘s assets. PBGC asserts that, “[i]n paying benefits for the past 35 years, [it] has followed the ordinary meaning of ‘guarantee‘: that PBGC ensures a floor, so that each participant will receive at least the minimum benefit prescribed in the statute.” See Dkt. No. 74 at 64 (footnote omitted). To be certain, Plan participants can sometimes receive more than their guaranteed benefits. In this case, the Plan terminated with enough assets to provide participants their guaranteed benefit amount. Since the Plan‘s assets could provide the guaranteed amount, the Court finds that PBGC reasonably construed the statute to mean that it did not need to reach into its insurance funds to supplement those benefits. Therefore, the Court denies Plaintiffs’ motion for summary judgment on claim ten and grants PBGC‘s motion for summary judgment on claim ten.
9. Claim eleven
In claim eleven, Plaintiffs challenge PBGC‘s interpretation of the disability retirement benefit provision14 in section 4.1(E) of the Plan guaranteeing supplemental retirement income to a participant who “begins receiving disability benefits under the Additional Benefit Programs on or after December 1, 1974, and who is determined to be totally and permanently disabled....” See AR at 387. Plaintiffs challenge the PBGC Appeals Board‘s denial of disability retirement benefits to certain Plan participants, arguing that PBGC (1) unreasonably discarded important procedures and practices utilized by the
a. Total and permanent disability determinations
First, Plaintiffs contend that PBGC erred in eliminating important procedures that the pre-termination Plan administrator used to determine a participant‘s entitlement to total and permanent disability benefits. By way of background, before the Plan‘s termination, the administrator offered pilots several ways in which to qualify as “totally and permanently disabled” in order to get the additional benefit. Relevant here is the U.S. Airways Pilots’ Disability Plan (“Disability Plan“) under which disability determinations are made, an ongoing plan separate and distinct from the (pension) Plan at issue in this litigation. The Disability Plan, unlike the Plan, provides disability benefits more broadly, the amount of which increases if a participant is deemed “Permanently and Totally Disabled.” Plaintiffs now contend that PBGC improperly denied their request to make disability determinations in a similar manner. Contrary to Plaintiffs’ apparent frustration with PBGC‘s method for making these determinations, however,
the PBGC Appeals Board actually held that it would continue the practice of deferring to formal disability determinations made under the Disability Plan. See Dkt. No. 72 at DAR 12. Further, “to expedite processing of the [participants‘] cases in a manner that is fully consistent with the Disability Plan‘s practice,” the PBGC Appeals Board held that it “would accept the SSA awards as establishing that the medical requirements for T & P disability were met.” See id. at DAR 11. The Court finds that PBGC acted reasonably in interpreting and applying the available procedures for determining total and permanent disability status.
b. Whether a pilot must begin receiving total and permanent disability benefits before retiring to qualify for the Plan‘s disability retirement benefit
Plaintiffs contend that PBGC improperly hindered a participant‘s ability to secure disability retirement benefits by construing the additional benefit as being limited to those totally and permanently disabled participants who retired while receiving disability benefits. As stated, the eligibility provision of the Plan provides a disability retirement benefit to a participant who “begins receiving disability benefits under the Additional Benefit Programs15 on or after December 1, 1974, and who is determined to be totally and permanently disabled....” See AR at 387 (emphasis added). Consistent with the supposed plain meaning of that Plan provision, PBGC has been paying disability retirement benefits to only those participants who satisfy both prongs of the Plan‘s apparent two-part test.
This Plan provision is ambiguous. Under PBGC‘s construction, Plaintiffs state that “a pilot who became ‘totally and permanently’ disabled in a plane, automobile or other crash, or in some other sudden fashion, [would be deemed] ineligible for the T & P retirement benefit because he would not have received disability payments prior to the onset of T & P disability.” See Dkt. No. 76 at 62. This is not an entirely fair characterization, as PBGC construed the Plan provision to require only that a totally and permanently disabled participant begin receiving total and permanent disability benefits before his or her retirement. In any event, even if this Court might construe the provision otherwise, the Court defers to PBGC‘s interpretation because it at least constitutes a permissible plain meaning construction of section 4.1(E) of the Plan.
c. Breach of fiduciary duty
Plaintiffs contend that PBGC unlawfully refused to take reasonable efforts to ensure that those participants entitled to a disability retirement benefit actually received that benefit. Even if the Plan requires a totally and permanently disabled participant to begin receiving disability benefits before retiring, Plaintiffs assert that “US Airways at the very least had a duty to inform them of this policy at a time when participants could have chosen to invoke their rights under the long-term disability plan rather than retire immediately.” See Dkt. No. 76 at 63. By not disclosing such material information, Plaintiffs argue, PBGC breached its fiduciary duty.
PBGC denies that it violated any fiduciary duty with respect to notifying totally and permanently disabled participants that they needed to go on disability before retiring to be eligible for the disability retirement benefit. The Court finds that Plaintiffs have failed to meet their burden to demonstrate that U.S. Airways’ previous Plan administrator breached a fiduciary duty to notify the pilots of the way in which the administrator construed Plan § 4.1(E) or that PBGC breached any fiduciary obligations after taking over as Plan trustee.
d. Whether PBGC improperly construed ERISA and its regulations in allocating remaining Plan assets by not including the disability benefit in PC-3
Finally, Plaintiffs contend that PBGC unreasonably classified disability retirement benefits when dividing up the remaining assets of the Plan. They first assert that PBGC improperly excluded from PC-3 the benefit for individuals who became totally and permanently disabled within three years before the Plan‘s termination, i.e., on or after March 31, 2000. As discussed, PC-3 includes benefits payable to participants who were retired or eligible to retire as of three years before the Plan‘s termination. See
Plaintiffs further contend that PBGC unreasonably refused to afford PC-3 status to the 3% annual increase for disabled pilots guaranteed after March 31, 2000. Construing this as a benefit increase, PBGC applied its automatic-benefit-increase regulation,
For all of these reasons, therefore, the Court denies Plaintiffs’ motion for summary judgment on claim eleven and grants PBGC‘s cross-motion for summary judgment on claim eleven.
10. Claim twelve
In claim twelve, Plaintiffs allege violations under the APA. In their reply memorandum, however, Plaintiffs concede that they
agree with PBGC that this case was brought under
ERISA , not the Administratives Procedure Act. Claim Twelve was brought solely as a protective claim, in case the PBGC sought to argue that this case was not cognizable underERISA . Since the parties are in agreement on this point, there is no need for
the Court to reach Claim Twelve if it grants summary judgment under
See Dkt. No. 76 at 1 n. 1.
Since
11. Claim four
Plaintiffs did not move for summary judgment on claim four but, instead, sought to reserve their right to move for summary judgment at a later time depending upon the Court‘s resolution of the other pending claims. PBGC, however, contends that claim four is ripe for adjudication and that it is entitled to summary judgment on this claim.
In claim four, like claim eleven, Plaintiffs challenge PBGC‘s interpretation of a provision in section 4.1 of the Plan. Specifically, Plaintiffs challenge PBGC‘s decision to use benefits received by participants under the Target Benefit Plan—a separate plan that U.S. Airways established in 1983 to ameliorate the effect of certain benefit limitations—to offset the benefits to which participants were entitled. Plaintiffs contend that, because the PBGC Appeals Board “reserved the right to use benefits received under the Target Plan to offset participant benefits under the Plan in all circumstances, even where such an offset would contradict the intent and plain language of the Collective Bargaining Agreement (the ‘CBA‘) pursuant to which the Target Plan was created,” any such potential reductions to a Plan benefit would be improper; and, “[i]f and when that happens, Claim Four will be ripe for decision, and Plaintiffs will immediately move for summary judgment, just as the Federal Rules permit.” See Dkt. No. 76 at 67-68 (citations omitted).
B. Cross-motions for partial summary judgment on claim eight for failure to comply with ERISA by miscalculating minimum benefits guaranteed under the Plan
On September 30, 2011, the Court denied without prejudice the parties’ cross-motions for summary judgment on claim eight, finding that Plaintiffs’ improper reliance on extra-record materials prevented the Court from fairly and effectively adjudicating the merits of the motions. See 815 F.Supp.2d at 292. The Court stated that the parties could resubmit their motions and briefs, citing “only to the administrative record lodged by PBGC.” See id. at 293. On December 2, 2011, PBGC resubmitted its motion for partial summary judgment on claim eight.
In claim eight, Plaintiffs allege that PBGC erroneously interpreted the Plan‘s “minimum benefit provision,” which, in short, guaranteed participants who were beneficiaries of the Prior Plan (the Plan‘s predecessor), the greater of (1) the normal
fixed benefit provided by the current Plan or (2) “that to which he would have been entitled ... had the Prior Plan continued in effect without change,” with certain adjustments. See 815 F.Supp.2d at 286-87.
PBGC first asserts that
[Plaintiffs] abruptly began summary judgment proceedings on the “minimum benefit” issue of Claim 8 in March 2010. Nearly two years later, after Judge Kennedy barred [Plaintiffs] from relying on documents outside the administrative record, [Plaintiffs] have reversed field. They now demand that judicial review await additional administrative proceedings by which they seek to inject into the record the same materials they failed to submit in their original agency appeal.
See Dkt. No. 102 at 1. Furthermore, “[c]onsistent with well-established principles of judicial review and Judge Kennedy‘s order, PBGC seeks only to have the Court review the agency‘s determination based on the documents that were before the agency at the time of its ruling.” See id.
Accordingly, PBGC asserts that the Court should deny Plaintiffs’ attempt to put before the Court documents that they could have submitted years earlier, as Judge Kennedy “firmly rejected the notion that ‘parties may remedy their own procedural errors by offering evidence to the Court that they neglected to produce below.‘” See id. at 1-2 (quoting 815 F.Supp.2d at 291). As such, PBGC contends that its motion for summary judgment on claim eight is ripe for decision because PBGC “followed Judge Kennedy‘s instruction to resubmit the motion citing only to the administrative record.” See id. at 4. Finally, PBGC contends that the Court should grant its motion for partial summary judgment on claim eight because its interpretation of the administrative rec-
Plaintiffs contend that their opposition to PBGC‘s motion for partial summary judgment on claim eight is entirely “provisional” in that they currently have pending two motions related to the alleged urgency of resolving Captain Peterman‘s administrative appeal; and, thus, the Court should find that PBGC‘s motion is premature.16 See generally Dkt. Nos. 99 & 103.
In its Memorandum Opinion and Order dated September 30, 2011, the Court held that its review was limited to determining whether PBGC‘s decision was arbitrary, capricious, or an abuse of discretion within the meaning of the APA; that it would not reverse PBGC‘s determination unless, in making that determination, it had “relied on factors which Congress ha[d] not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that [ran] counter to the evidence before the agency, or [was] so implausible that it could not [have been] ascribed to a difference in view or the product of agency expertise,” see 815 F.Supp.2d at 287 (quoting Motor Vehicle Mfrs. Ass‘n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)); and that it would not consider circumstances external to PBGC‘s decision-making process in order to determine whether bias had tainted an otherwise-reasonable conclusion. See id. (other citations omitted).
Furthermore, the Court held that its review was restricted to the administrative record that PBGC had filed. See id. at 287. In summation, the Court held that,
for whatever reason, plaintiffs did not provide all of the evidence supporting their position with their appeal. The Board, for whatever reason, chose to act on the evidence before it and not to hold a hearing. The Board did not contravene any regulations by doing so. Plaintiffs may have been legitimately surprised by the Board‘s course of action, but plaintiffs’ own choice to withhold evidence at the agency level—whether tactical, labor-saving, or otherwise—does not provide a basis to allow the introduction of extra-record evidence during judicial review.
See id. at 292.17
The instant case involves this Court‘s review of the PBGC Appeals Board‘s determinations rendered based on the administrative record before it. The Court finds that Plaintiffs cannot inject into the record materials that were not before the PBGC at the time it rendered its determination.
The next issue for the Court to decide is whether PBGC acted reasonably based on the record before it. In claim eight, Plaintiffs challenge PBGC‘s interpretation of the “minimum benefit provision” in section 4.1(E) of the Plan. That provision generally guarantees former Allegheny Airlines pilots the greater of either the normal fixed benefit under the Plan or the amount to which they would have been entitled had the Prior Plan continued in effect without change. Plaintiffs challenge the PBGC Appeals Board‘s determinations with regard to claim eight on several grounds.
1. Reinvestment dividends
Section 4.1(E) of the Plan provides that PBGC must calculate the minimum benefit using “the investment performance of the Standard and Poor‘s 500 stock index (unadjusted for dividends).” See AR at 386 (emphasis added). The PBGC Appeals Board interpreted this phrase to refer to “the value of the S & P 500 without taking into account the added return an investor would receive based on the reinvestment dividends paid by the S & P 500 companies.” See AR at 33-34. Plaintiffs assert that reinvestment dividends must be included and that the unadjusted-for-dividends modifier “simply reaffirms that
‘dividends’ should not be ‘adjusted’ out of the ‘investment performance,’ as they are when the S & P 500 Price Index is calculated.” See Dkt. No. 99 at 39.
Since the meaning of “the investment performance of the Standard and Poor‘s 500 stock index (unadjusted for dividends)” is ambiguous, the Court finds that PBGC reasonably construed this Plan provision to mean simply that, in paying benefits, PBGC need not include any adjustment for reinvestment dividends.
2. Post-retirement benefit adjustments
Plaintiffs challenge PBGC‘s determination to exclude “post-retirement tracking,” i.e. post-retirement benefit increases, in making minimum benefit calculations. Unlike the Prior Plan, which expressly provided for bi-yearly post-retirement benefit adjustments, § 4.1(E) of the current Plan makes no mention of post-retirement adjustments; and, primarily for that reason, the PBGC Appeals Board determined that it need not make any post-retirement adjustments. Plaintiffs, on the other hand, assert that
there was no need for Section 4.1(E) to mention post-retirement adjustments, or any other provision of the Prior Plan. By stating that the benefits of Prior Plan Pilots “shall not be less” than under the Prior Plan if kept in effect “without change,” Section 4.1(E) compels the administrator simply to refer back to the unchanged Prior Plan—with all of its provisions—to perform the minimum benefit calculation.
See Dkt. No. 99 at 29.
Section 4.1(E) of the Plan guarantees that any former Allegheny Airlines pilot shall not receive minimum benefits in an amount less than “the amount to which he would have been entitled at his Benefit Commencement Date or Termination of
Although Plaintiffs would have preferred a different interpretation and application of this Plan provision, the Court finds that PBGC‘s more restrictive interpretation that the minimum benefit amount is calculated and fixed as of one of those two dates, thereby precluding any post-retirement adjustments, was permissible.
3. The 50% supplement for total and permanent disability
Next, Plaintiffs challenge the PBGC Appeals Board‘s interpretation of the 50% supplemental benefit for totally and permanently disabled pilots. Under the Prior Plan, participants deemed “totally and permanently” disabled within two years of becoming disabled were entitled to a 50% increase in their retirement income. PBGC found that the Plan‘s minimum benefit “applie[d] to a T & P Disabled participant who started receiving benefits under the Disability Plan on or after December 1, 1974,” whereas “the Prior Plan‘s disability formula (which includes the 50% supplement) applie[d] to a participant who started receiving benefits under the Disability Plan before December 1, 1974.” See AR at 36. Plaintiffs assert that, because the Plan‘s minimum benefit provision guarantees to all Prior Plan pilots minimum benefits not less than the amount they would have received had the
Prior Plan continued without change, the Appeals Board arbitrarily and capriciously excluded this portion of the benefit from the scope of the minimum benefit guarantee.
In reaching its determination, the PBGC Appeals Board found persuasive the following paragraph in § 4.1(E) of the Plan: “The yearly amount of basic retirement income payable under the Plan to a participant who begins receiving disability benefits under the Additional Benefit Programs prior to December 1, 1974 will be equal to the amount he was entitled to receive thereunder.” See AR at 387. PBGC interpreted this provision to assure the 50% supplement only to those totally and permanently disabled participants who began receiving the disability benefit prior to December 1, 1974. The PBGC Appeals Board concluded that “the Plan‘s T & P disability retirement formula replaced the disability formula under the Prior Plan.” See AR at 36.
The Court finds that Plaintiffs have not met their burden to demonstrate that PBGC acted unreasonably in determining that totally and permanently disabled former Allegheny Airlines pilots who did not begin receiving disability benefits until on or after December 1, 1974, were not entitled to the 50% supplement under the Plan.
4. The 1% termination credit
Finally, Plaintiffs challenge PBGC‘s determination that it need not apply the so-called “1% termination credit” in making minimum benefit calculations. PBGC held that, although the Prior Plan included a 1% termination credit for forfeitures of non-vested participants, the current Plan eliminated the 1% credit. The PBGC Appeals Board reasoned that (1) the November 21, 1972 Letter Agreement and the 1973 Plan document did not mention the
Plaintiffs contend that the 1% termination credit was unquestionably part of the Prior Plan benefit, “which is the only question relevant to ensuring that the benefits of Prior Plan Pilots ‘shall not be less’ than those that the Prior Plan would have provided.” See Dkt. No. 99 at 36. However, the Court finds that it should not upset PBGC‘s reasoned determination that the current Plan does not provide for a 1% termination credit.
In sum, therefore, the Court finds that Plaintiffs have failed to establish any arbitrary, capricious, or unlawful agency action based on the administrative record that was properly before PBGC at the time it rendered its decision in 2008. Accordingly, the Court grants PBGC‘s motion for partial summary judgment on claim eight.
C. Plaintiffs’ motion to compel an immediate ruling from the PBGC Appeals Board with regard to Captain Peterman‘s appeal
In their motion to compel, Plaintiffs ask the Court to compel an immediate ruling from the PBGC Appeals Board in Captain Peterman‘s appeal and to direct the Appeals Board to supplement the administrative record with materials filed therein. See generally 815 F.Supp.2d 283. That appeal, however, has since been re-
solved as the PBGC Appeals Board issued a decision to Captain Peterman on May 9, 2012. See Dkt. No. 106. In addition, for the reasons stated above, Plaintiffs cannot inject into the record materials that were not before the PBGC at the time it rendered its determination and the Appeals Board‘s resolution of Captain Peterman‘s appeal cannot augment the scope of the administrative record that was before the Appeals Board at the time it rendered its decision in 2008. As such, the Court denies Plaintiffs’ motion to compel as moot.
IV. CONCLUSION
After carefully reviewing the entire record in this matter, the parties’ submissions, and the applicable law, and for the above-stated reasons, the Court hereby
ORDERS that Plaintiffs’ motion for summary judgment on claims one, two, three, six, seven, nine, ten, eleven, and twelve is DENIED; and the Court further
ORDERS that Defendant PBGC‘s cross-motion for summary judgment on claims one, two, three, six, seven, nine, ten, eleven, and twelve is GRANTED; and the Court further
ORDERS that Defendant PBGC‘s motion for summary judgment on claim four is GRANTED; and the Court further
ORDERS that Defendant PBGC‘s resubmitted motion for partial summary judgment on claim eight is GRANTED; and the Court further
ORDERS that Plaintiffs’ motion to hold Defendant PBGC‘s resubmitted motion for partial summary judgment in abeyance is DENIED as moot; and the Court further
ORDERS that Plaintiffs’ motion to com-
IT IS SO ORDERED.