Fisher v. Pension Benefit Guaranty CorporationFisher v. Pension Benefit Guaranty Corporation
AMENDED MEMORANDUM OPINION
The Employee Retirement Income Security Act of 1974 (“ERISA“),
“Because plan termination can cause significant hardships for participants and substantial liabilities for [the] PBGC, ERISA outlines permissible plan termination procedures in considerable detail.” In re Pension Plan for Emps. of Broadway Maint. Corp., 707 F.2d 647, 648 (2d Cir. 1983). As relevant here, if a pension plan is unable to meet its obligations, it may be terminated under what is called “distress termination,” and the “PBGC becomes trustee of the plan, taking over the plan‘s assets and liabilities.” PBGC v. LTV Corp., 496 U.S. 633, 637, 639 (1990). ERISA imposes several requirements that a plan administrator must satisfy in order to enter distress termination, and also dictates that, after submitting a notice of intent to terminate (“NOIT“), an administrator must generally pay plan benefits only in the form of an annuity.
Plaintiff Joseph Fisher is a former executive of a company that sponsored a pension plan governed by ERISA. Id. at 163. After the company declared bankruptcy, but before the plan submitted a NOIT, Fisher requested that his pension benefits be paid in a lump sum form. Id. The plan administrator denied his request on the ground that “applicable law prohibits the payment of lump sum distributions in anticipation of the termination of the Plan.” Id. at 163–64. When Fisher‘s case eventually made it to the PBGC‘s Board of Appeals (“the Board” or “Appeals Board“), the Board concluded that Fisher was not entitled to a lump sum payment. See id. at 166. In Fisher I, the Court set aside that decision and remanded the case for further proceedings because the Board‘s decision failed to address three potentially dispositive issues: (1) the Board did not grapple with the fact that Fisher‘s request was denied (not merely submitted) before the NOIT and thus did “not fall within the plain terms” of the policy the Board had relied on; (2) “neither the policy nor the decision spoke to whether an administrator may deny [a lump sum] request before submitting a [NOIT];” and (3) the decision “wholly ignore[d] whether and how
On remand, the Board concluded, inter alia, that the administrator correctly denied Fisher‘s request for a lump sum because
I. BACKGROUND
The Court has recounted much of the relevant factual background and procedural
A. Statutory and Regulatory Background
In 1974, animated by concerns over the growth in size and the unregulated state of the employee benefit plan sector, Congress passed the Employee Retirement Income Security Act of 1974,
“Because plan termination can cause significant hardships for participants and substantial liabilities for [the] PBGC, ERISA outlines permissible plan termination procedures in considerable detail.” In re Pension Plan for Emps. of Broadway Maint. Corp., 707 F.2d at 648. As relevant here, in 1986, Congress created a termination procedure for distressed plans as part of the Single-Employer Pension Plan Amendments Act of 1986 (“SEPPAA“),
SEPPAA established several requirements a plan administrator must satisfy in order to enter distress termination.1 Among other things, a plan administrator must provide sixty days’ notice to all affected parties, including participants and the PBGC—an event known as a notice of intent to terminate or a “NOIT.”
In addition to setting out detailed termination procedures, ERISA also “requires that plan assets be distributed to participants in accordance with the six-tier allocation scheme set forth in § 4044(a).” Mead Corp. v. Tilley, 490 U.S. 714, 717 (1989) (citing
Victor v. Home Sav. of Am., 645 F. Supp. 1486, 1491 (E.D. Mo. 1986). This priority scheme is intended to ensure an equitable distribution of the plan‘s assets upon termination. See H.R. Rep. 93-533, as reprinted in 1974 U.S.C.C.A.N. 4639, 4660 (“An equitable priority distribution of assets would be provided upon plan termination.“). “If there are insufficient assets to meet the obligations in a given category, the assets available for this priority level are allocated pro rata in proportion to the present value of the benefits at this priority level.” Victor, 645 F. Supp. at 1491. Moreover, the first four categories are guaranteed by the PBGC; “[i]f the plan assets are not sufficient to cover the benefits in categories 1–4, the PBGC will make up the difference,” and the “employer must then reimburse the PBGC for the unfunded benefit liabilities.” Mead Corp, 490 U.S. at 718.
ERISA authorizes the PBGC to promulgate “rules[] and regulations . . . as may be necessary to carry out the purposes of [Title IV of ERISA].”
Third, and central to this case, the PBGC promulgated a regulation in 1981 that effectuates the allocation priorities established by ERISA § 4044,
B. Facts and Proceedings
Fisher is a former executive of the Penn Traffic Company, a corporation that operated a chain of supermarkets throughout the Mid-Atlantic and New England. See Dkt. 49-1 at 5, 8.3 “Until it declared bankruptcy in 2003, Penn Traffic operated a retirement plan known as the Penn Traffic Plan” (the “Plan“). Fisher I, 151 F. Supp. 3d at 163 (citing AR 2 at 2). That Plan “permitted employees, including Fisher, to withdraw benefits in the form of a lump sum payment upon retirement.” Id. (citing AR 55 at 27). In May 2003, Penn Traffic filed for Chapter 11 bankruptcy, and, three months later, in August 2003, Fisher resigned. Dkt. 49-1 at 5, 8. Upon his resignation, Fisher “requested that the plan administrator pay his accrued benefits as a lump sum.” Fisher I, 151 F. Supp. 3d at 163 (citing AR 3, Ex. 1, at 1). The next month, on September 29, 2003, Penn Traffic‘s Board of Directors voted to terminate the Penn Traffic Plan, and, in light of the impending termination, the Board of Directors directed the committee that administered the Plan to deny Fisher‘s pending request for benefits in the form of a lump sum payment. Dkt. 49-1 at 11–12. The committee informed Fisher by letter on October 17, 2003 that his request for a lump sum benefits payment had been denied, explaining that “the applicable law prohibits the payment of lump sum distributions in anticipation of the termination of the Plan.” Id. at 12. Fisher then appealed the committee‘s denial of his request, but that appeal was never adjudicated by the committee. Id. “On November 19, 2003, over a month after Fisher was notified that his request for a lump sum distribution was denied, Penn Traffic submitted its notice of intent to terminate to the PBGC.” Id.
The PBGC Appeals Board issued its original decision on September 19, 2011, concluding, as relevant here, that Fisher was not entitled to a lump sum payment of benefits.4 Id. On July 25, 2014, Fisher filed this action, seeking judicial review of the Board‘s decision and an order requiring the PBGC to pay his benefits in the form of a lump sum rather than as an annuity, Dkt. 1, and the parties later cross-moved for summary judgment, Dkt. 16; Dkt. 17. In Fisher I, the Court held that the Board had not adequately explained three key aspects of its decision. First, the Board had failed to grapple with the fact that Fisher‘s request had been not merely submitted but also denied before the NOIT was submitted and thus did “not fall within the plain terms” of the internal PBGC policy upon which the Board had relied. Fisher I, 151 F. Supp. at 168. Second, neither the internal policy nor the Board‘s 2011 decision “spoke to whether an
administrator may deny [a lump sum] request before submitting a notice of distress termination.” Id. Third, the Board‘s 2011 decision “wholly ignore[d] whether and how
After the Court remanded the case, the Appeals Board issued a new decision respecting Fisher‘s request for a lump sum payment. See Dkt. 49-1 at 2–32. In that decision, the Board concluded, as follows:
- PBGC regulation § 4044.4, which prohibits the distribution of assets “in anticipation of plan termination,” applies to Mr. Fisher‘s lump sum payment request. The former Plan Administrator correctly denied Mr. Fisher a lump sum distribution of his Plan benefit in accordance with PBGC regulation § 4044.4.
- PBGC‘s prohibition in PBGC regulation § 4044.4 of lump-sum distributions in anticipation of termination is a valid exercise of PBGC‘s rulemaking authority, rather than an ultra vires rule (as Mr. Fisher claims).
-
Because the Plan‘s former administrator correctly denied Mr. Fisher‘s lump sum application based on PBGC regulation § 4044.4, a lump-sum benefit was not “due and payable” to him as of the Plan‘s termination date (“DOPT“). Consequently, PBGC is not required to treat Mr. Fisher‘s lump sum payment request as a pre-termination liability of the Plan (see PBGC regulation § 4044.3) for purposes of PBGC‘s allocation of the Plan‘s assets as of the Plan‘s DOPT pursuant to ERISA § 4044. - As provided under PBGC‘s regulation § 4022.7 and PBGC policy, PBGC cannot pay a lump-sum benefit to Mr. Fisher. Instead, PBGC correctly is paying Mr. Fisher the annuity benefit he elected in accordance with the Plan‘s provisions and PBGC regulations, with his annuity benefit reduced by the guarantee limitations under ERISA § 4022 and PBGC regulation § 4022.
Id. at 4–5. After the Appeals Board issued its decision, Plaintiff filed an amended complaint in the still-pending case before this Court. Dkt. 25. The parties now cross-move for summary judgment. Dkt. 40; Dkt. 41.
II. LEGAL STANDARDS
In the normal course, summary judgment may be granted “if the pleadings, the discovery and disclosure materials on file, and any affidavits [or declarations] show that there is no genuine issue as to any material fact and that the movant is entitled to a judgment as matter of law.” Air Transp. Ass‘n of Am., Inc. v. Nat‘l Mediation Bd., 719 F. Supp. 2d 26, 31–32 (D.D.C. 2010), aff‘d, 663 F.3d 476 (D.C. Cir. 2011) (quoting
Section 706(2)(A) of the APA allows a reviewing court to “hold unlawful and set aside agency action” that is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”
agency‘s interpretation ‘is based on a permissible construction of the statute.‘” (quoting Chevron U.S.A. Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 842–44 (1984)). Second, under “arbitrary and capricious review,” the function of the district court is to determine whether “the agency ‘examine[d] the relevant data and articulate[d] a satisfactory explanation for its action including a rational connection between the facts found and the choice made.‘” Id. at 89 (quoting Motor Vehicle Mfrs. Ass‘n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)).
III. ANALYSIS
A. Scope of Remand
As a threshold matter, Fisher presses an argument that the Court has already rejected. See Dkt. 31 at 2–3. On remand, the PBGC rested its decision entirely on the validity and applicability of
First, although counsel cannot rely on post hoc rationalizations offered for the first time in litigation to justify an agency‘s decision, SEC v. Chenery Corp., 318 U.S. 80, 94–95 (1943), here, the Board issued a new decision, and, as a result, the explanations the PBGC now offers are contemporaneous, not post hoc, see NAACP v. Trump, 315 F. Supp. 3d 457, 467 n.7 (D.D.C. 2018) (noting that if an agency opts to issue a new decision on remand, the new explanations are
“contemporaneous and, consequently, not post hoc“). That the Board issued a new decision is apparent both by the nature of the Court‘s remand order and from the administrative record. In remanding the case for further proceedings, the Court expressly contemplated that the PBGC would reconsider its “prior decision.” Fisher I, 151 F. Supp. 3d at 170 (noting that on remand, if the Board concluded that “Fisher was not entitled to a lump-sum payment for reasons not provided —or not fully explicated—in its prior opinion, Fisher may seek review of that decision” (emphasis added)); see also id. at 168 (citing Fox, 684 F.3d at 80, and Tripoli Rocketry Ass‘n, Inc. v. ATF, 437 F.3d 75, 77 (D.C. Cir. 2006), cases where the remand order was for “reconsideration“). On remand, the Board did exactly that; after reconsidering the matter, it issued a new decision.5 See Dkt. 49-1 at 31.
Second, it is beyond dispute that “an agency‘s review on remand must be responsive to the court‘s mandate.” Bean Dredging, 773 F. Supp. 2d at 78. In Fisher I, the Court set aside the Board‘s 2011 decision because, among other things, that decision did not address “Fisher‘s challenge to
rationales offered by anyone other than the proper decisionmakers‘” Dkt. 31 at 2–3 (quoting Alpharma, Inc., 460 F.3d at 6).
Finally, it was Fisher who put § 4044.4(b) at issue; he challenged the administrator‘s decision on the ground that § 4044.4(b) was ultra vires and inapplicable. See Dkt. 24-1 at 16. Having raised the issue in his appeal before the agency, Fisher cannot now protest that the Board considered and decided the question that he raised and that the Court ordered the PBGC to consider on remand. Fisher I, 151 F. Supp. 3d at 169–70 (remanding to the agency for further proceedings consistent with the Court‘s opinion); Dkt. 31 at 3 (explaining that, given the history of this case, Fisher cannot “complain that the agency has sandbagged him” by addressing § 4044.4(b) on remand); see also Bean Dredging, 773 F. Supp. 2d at 78 (“[A]n agency is not restricted from reopening administrative proceedings after the grounds upon which it once relied are drawn into question by the reviewing court.” (citing PPG Indus., Inc. v. United States, 52 F.3d 363, 366 (D.C. Cir. 1995))).
Fisher also advances two additional, less ambitious, procedural arguments, but neither fares any better. He first contends that the Board‘s arguments based on
permissible one. Fisher also protests that “the Appeal Board devoted multiple pages to factual information that is not relevant to the questions of statutory interpretation at issue.” Dkt. 40 at 23. To the extent Fisher complains that these facts are irrelevant, that is a question of substance for the Court to decide. To the extent he instead contends that the Board impermissibly considered additional facts, that contention fails on the law. “It is beyond dispute that a reviewing court may allow an agency to supplement the record with additional evidence following remand.” Butte Cnty. v. Chaudhuri, 197 F. Supp. 3d 82, 88 (D.D.C. 2016) (quotation omitted). If, as in this case, the court “does not require fact gathering on remand . . . the agency is typically authorized to determine, in its discretion, whether such fact gathering is needed.” Id. (quotation omitted).
The Court, accordingly, concludes that the Board did not rely on any impermissible post hoc rationalizations nor otherwise exceed the scope of the remand.
B. Section 4044.4(b)
Fisher raises both facial and as-applied challenges to
1. Facial Challenge
Fisher first argues that § 4044.4(b) “is ultra vires and cannot be reconciled with ERISA.” Dkt. 40 at 15–18. To resolve this challenge, the Court must resort to the familiar Chevron two-step framework. At Chevron step-one, the Court must “‘employ[] traditional tools of statutory
construction,’ to determine whether Congress has ‘unambiguously foreclosed the agency‘s statutory interpretation.‘” Vill. of Barrington v. Surface Transp. Bd., 636 F.3d 650, 659 (D.C. Cir. 2011) (first quote quoting Chevron, 467 U.S. at 843 n.9), (second quote quoting Catawba Cty. v. EPA, 571 F.3d 20, 35 (D.C. Cir. 2009)) (alteration in original). “Because at Chevron step one [the Court] alone [is] tasked with determining Congress‘s unambiguous intent,” it must conduct its analysis “without showing the agency any special deference.” Id. at 659–60. If, after exhausting the traditional tools of statutory interpretation, the Court “determine[s] that statutory ambiguity has left the agency with a range of possibilities and that the agency‘s interpretation falls within that range, then the agency will have survived Chevron step one,” and the Court must proceed to step two. Id. at 660. At Chevron step two, the Court‘s review is “highly deferential,” id. at 665 (quoting Nat‘l Rifle Ass‘n of Am. v. Reno, 216 F.3d 122, 137 (D.C. Cir. 2000)), and its task is limited to determining whether the “agency‘s interpretation of the statute is ‘reasonable,‘” Ne. Hosp. Corp. v. Sebelius, 657 F.3d 1, 13 (D.C. Cir. 2011) (quoting Abington Crest Nursing & Rehab. Ctr. v. Sebelius, 575 F.3d 717, 719 (D.C. Cir. 2009)).
At Chevron step one, the Court begins with “the language of the statute.” United States v. Wilson, 290 F.3d 347, 352 (D.C. Cir. 2002). The disputed provision,
Fisher contends that this provision,
Fisher‘s most substantial argument in favor of his reading of the statute is based on the expressio unius canon of statutory interpretation—that is, the principle that courts should generally “construe statutes to give meaning to the disparate inclusion of particular language.” Catawba Cty., 571 F.3d at 36. In his view, because § 1341(c) explicitly prohibits lump sum payments only after a NOIT has issued, the PBGC may not, in implementing other portions of ERISA, restrict lump sum payments that occur before a NOIT is issued. See Dkt. 44 at 9–10 (”Expressio unius est exclusio alterius“). But the expressio unius principle “hardly compels” the result that Fisher suggests. Catawba Cty., 571 F.3d at 36. As the D.C. Circuit has recognized, whatever the general force of the expressio unius canon, it is “an especially feeble helper in an administrative setting, where Congress is presumed to have left to reasonable agency discretion
questions that it has not directly resolved.” Cheney R.R. Co. v. Interstate Commerce Comm‘n, 902 F.2d 66, 69 (D.C. Cir. 1990); Catawba Cty., 571 F.3d at 36 (“[A] congressional mandate in one section and silence in another often ‘suggests not a prohibition but simply a decision not to mandate any solution in the second context, i.e., to leave the question to agency discretion.‘” (quoting Cheney, 902 F.2d at 69)). “For that reason, that Congress spoke in one place but remained silent in another, as it did here, ‘rarely if ever’ suffices for the ‘direct answer’ that Chevron step one requires.” Catawba Cty., 571 F.3d at 36 (quoting Cheney, 902 F.2d at 69).
Fisher disagrees, arguing that § 1345 is merely “an additional tool” the PBGC may use “if necessary” but that it does not move the line set by § 1341(c).7 Dkt. 44 at 10. He also
contends that PBGC‘s reading would mean that “no plan administrators could make any payments beyond the PBGC‘s guaranteed level in the three years prior to a plan‘s termination, and that is simply not how benefits plans operate.” Id. This latter contention is a bit of a straw man. The PBGC is not arguing that § 1345 means that it will recover all excessive payments made in the three-year period preceding termination; rather, it argues only that, if Congress gave the PBGC the discretion to do so, it is unlikely that Congress intended to deprive the PBGC of the more efficient and less disruptive tool of preventing certain excessive payments from being made in the first place. See Dkt. 48 at 9. To be sure, one might argue that § 1345 supports Fisher‘s view. By allowing the PBGC to recapture lump sum payments after the fact, ERISA contemplates that such lump sum payments might be made. But the fact that Congress anticipated that payments might be made in circumvention of the ERISA allocation rules does not mean that Congress intended to preclude the PBGC from preventing or limiting such payments before they are
of the statute. See, e.g., Philip Morris USA, Inc. v. Vilsack, 736 F.3d 284, 290 (4th Cir. 2013) (observing that the mere existence of a plausible alternative reading of a statute is not dispositive at Chevron step one).
Moving beyond ERISA‘s text and structure, Fisher points to what he sees as the purpose of § 1341(c)—or, more precisely, the purpose of SEPPAA, which is the statute that introduced the relevant text. See Dkt. 40 at 16. According to Fisher, in enacting SEPPAA, Congress intended to “str[ike] a balance” between honoring the “benefit options” of plan participants and “protecting the PBGC from rising deficits.” Id. This argument, however, is belied by ERISA and SEPPAA‘s statutory and regulatory history.
Since the time that ERISA was enacted in 1974,
termination. See 46 Fed. Reg. 9480, 9481 (Jan. 28, 1981) (explaining that the rule is intended to “minimize the possibility of abuse“); see also In re Braniff Airways, Inc., 27 B.R. 222, 227 (Bankr. N.D. Tex. 1982) (“The purpose of [§ 4044.4] is to maintain the respective positions of the participants in a plan‘s assets and prevent a run on the bank.“)9; id. (holding that the rule “prohibit[s] claims for distribution which are made at a time the participants know or should know that plan termination is a likely prospect“).
Section 4044.4 is consistent with Congress‘s efforts, in several parts of ERISA, to thwart practices that unduly deplete plan assets (e.g., excessive payments), see, e.g.,
Congress gave the PBGC to “protect the financial viability of its fund.” See, e.g., Deppenbrook v. PBGC, 778 F.3d 166, 168 (D.C. Cir. 2015) (noting that, in certain circumstances, the PBGC may terminate a plan if it will cause an unreasonable “long-run loss” to the Corporation).
In the decade after ERISA‘s termination insurance program was created, Congress grew increasingly concerned about the program‘s long-term financial viability. See, e.g., H.R. Rep. No. 99-266, at 28 (1985) (“Steps must be taken to assure that the single-employer insurance program is put back on a fiscally sound basis so that it will continue to be able to fulfill its statutory purpose.“). Most notably, Congress found that ERISA‘s “[then-]current termination insurance system in some instances encourage[d] employers to terminate pension plans, evade their obligations to pay benefits, and shift unfunded pension liabilities onto [ERISA‘s] termination insurance system and the other premium-payers.” SEPPAA,
In light of this history and contrary to Fisher‘s contention, there is little, if any evidence, that SEPPAA addressed participants’ interest in pre-termination payments. To the contrary, Congress sought to address practices that could “jeopardize the PBGC‘s long-term financial stability,” and, in particular was concerned about practices that could undermine the PBGC‘s ability to guarantee that participants receive benefits after a plan has terminated. See H.R. Rep. 99-266, at 35 (explaining that the purpose of SEPPAA was to “close obvious loopholes in
[ERISA] which, if left unattended, could jeopardize the PBGC‘s long-range financial stability“). Thus, if anything, the history and purpose of SEPPAA cuts against Fisher‘s reading. As the PBGC notes, it would be “illogical” to read SEPPAA, which sought to shore up the financial stability of the termination insurance program, to require that plan administrators make lump sum payments that might deplete plan assets (or undermine the statutory allocation scheme) shortly before termination. See Dkt. 41 at 25; cf. H.R. Rep 99-266, at 50 (expressing concern that “lump sum distributions of plan assets in a terminated plan . . . during the course of a termination would dilute plan assets and may adversely affect participants benefits under Title IV and the PBGC‘s recovery“).
Recognizing that § 4044.4(b) predates SEPPAA, see Dkt. 40 at 17, Fisher advances a theory of implied repeal: He does not argue that § 4044.4(b) was unlawful when the PBGC adopted the rule in 1981,
The case that Fisher relies upon to advance this argument undermines rather than supports his point. In United States v. Wilson, the D.C. Circuit recognized that “Congress is presumed to preserve, not abrogate, the background understandings against which it legislates.” 290 F.3d at 356. Applying that principle here, there is no reason to infer that Congress abrogated
rather than preserved § 4044.4(b) when it amended ERISA through SEPPAA. The Court need not conclude that Congress affirmatively ratified § 4044.4(b) when it enacted SEPPAA, moreover, in order to reject Fisher‘s argument. Cf. Ohio v. U.S. Dep‘t of the Interior, 880 F.2d 432, 458 (D.C. Cir. 1989) (discussing “acquiescence-by-reenactment“). It is sufficient to conclude that Congress did not abrogate the rule.
Fisher does not dispute that, at the time the PBGC adopted § 4044.4, ERISA authorized that regulatory action. Under his theory, it was not until SEPPAA was enacted that Congress rescinded that grant of regulatory discretion. Framed in this manner, Fisher‘s argument “encounter[s] head-on the ‘cardinal rule . . . that repeals by implication are not favored.‘” Morton v. Mancari, 417 U.S. 535, 550 (1974) (quoting Posadas v. Nat‘l City Bank, 296 U.S. 497, 503 (1936)); see also Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1624 (2018) (courts recognize “the ‘stron[g] presume[ption]’ that repeals by implication are ‘disfavored’ and that ‘Congress will specifically address’ preexisting law when it wishes to suspend its normal operation in a later statute” (alterations in original)). “In the absence of some affirmative showing of an intention to repeal, the only permissible justification for a repeal by implication is when the earlier and later statutes are irreconcilable.” Morton, 417 U.S. at 550. Here, even if that rule applies with less vigor where Congress has merely left an agency with discretion to fill a regulatory gap, Fisher has failed to offer any evidence that Congress intended to withdraw its delegation or that the relevant provisions of ERISA and SEPPAA conflict.
In summary, nothing in ERISA or in SEPPA‘s text, structure, history, or purpose “provide sufficient clarity to foreclose the [PBGC‘s] interpretation at Chevron step one.” Shands Jacksonville Med. Ctr. v. Burwell, 139 F. Supp. 3d 240, 253 (D.D.C. 2015). Accordingly, the Court proceeds to Chevron step two.
Fisher offers no argument at Chevron step two, see Dkt. 44 at 5, and for good reason. Section 4044.4(b) clearly promotes ERISA‘s purpose by “‘minimiz[ing] the possibility of abuse’ . . . that could occur . . . during the time period when plan termination was anticipated but had not yet occurred.” Dkt. 49-1 at 17 (quoting 46 Fed. Reg. 9480, 9481 (Jan. 28, 1981)). The statutorily mandated allocation rules would be subject to circumvention if plan administrators were free to make distributions without regard to the allocation
The Court, accordingly, concludes that the PBGC‘s interpretation passes muster under Chevron step two.
2. As-Applied Challenge
Fisher argues, in the alternative, that § 4044.4(b) is inapplicable to his case. Dkt. 40 at 18–20. This challenge is subject to arbitrary and capricious review, which is “fundamentally deferential,” see Fox, 684 F.3d at 75, and precludes the Court from “substitut[ing] its judgment for that of the agency,” Am. Inst. of Certified Pub. Accountants v. IRS, 746 Fed. App‘x 1, 12 (D.C. Cir. 2018) (quoting State Farm, 463 U.S. at 43). To pass muster under this standard,
“[t]he agency must have ‘examine[d] the relevant data and articulate[d] a satisfactory explanation for its action including a rational connection between the facts found and the choice made.‘” Id. (quoting State Farm, 463 U.S. at 43) (second and third alterations in original). Here, the PBGC‘s 2016 decision also clears this modest hurdle.
“In determining whether a distribution . . . of assets has been made in anticipation of plan termination” for purposes of § 4044.4(b), the PBGC “will consider all facts and circumstances including“: (1) “Any change in funding or operation procedures;” (2) “Past practice with regard to employee requests for forms of distribution;” and (3) “Whether the distribution is consistent with plan provisions.”11
Most tellingly, at the same meeting that Penn Traffic resolved to deny Fisher‘s request, it also “resolved to terminate all of the [c]ompany‘s pension plans” due to the “financial difficulties that [it] was experiencing before and after its bankruptcy filing.” Id. at 20. This constitutes clear
evidence
Fisher offers three responses, none of which is persuasive. First, he argues that the Board misapplied the first factor listed in § 4044.4(b). Dkt. 40 at 19. As he reads that factor, the “question is not whether a lump sum payment would affect a plan‘s funding level . . . , but rather whether a lump sum payment would require a change in funding procedures.” Id. But, as the PBGC persuasively explains, that interpretation is illogical: “It would mean that a plan‘s deteriorating funding status would not signal the strong possibility of termination so long as there was no change in ‘funding procedures‘” and, conversely, “that a change in ‘funding procedures’ by a well-funded plan would indicate that the plan may soon terminate.” Dkt. 48 at 6. Fisher also contends that the second factor—the plan‘s past practices—cuts in his favor. Dkt 40 at 19. As he puts it, “the Plan‘s past practice with regard to employee requests for lump sums was to pay them promptly and routinely.” Id. (citing AR 3 at 2). Even assuming this factor tilts in his favor, it does little to advance his cause. As the Appeals Board explained, § 4044.4(b) does not require that all four to the factors be “satisfied in order for a violation . . . to occur.” Dkt. 49-1 at 23. In addition, as the Board further explained, although other employees received lump sum distributions before and after Fisher‘s request was denied, he was not similarly situated to other employees—Fisher, who was Penn Traffic‘s President and Chief Executive Officer, Dkt. 49-1 at
21, was one of only three employees whose benefits fell within “ERISA‘s phase-in limitation,” which applied “to the substantial benefit increase he received under the Plan‘s Second Amendment,” id. at 23 & n.72. “The phase-in limitation [did] not similarly affect the PBGC-guaranteed benefits that [were] payable to other Plan participants upon Plan termination because the Second Amendment applied only to Mr. Fisher.” Id. at 23.
The Court therefore concludes that the Board‘s decision was not “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”
CONCLUSION
For these reasons, Fisher‘s motion for summary judgment, Dkt. 40, and his Rule 56(d) motion, Dkt. 45, are hereby DENIED, and the PBGC‘s motion for summary judgment, Dkt. 41, is hereby GRANTED.
A separate order will issue.
/s/ Randolph D. Moss
RANDOLPH D. MOSS
United States District Judge
Date: June 19, 2020
Notes
- Benefits attributable to voluntary employee contributions;
- Benefits attributable to mandatory employee contributions;
- Benefits that have been in pay status for the three-year period before plan termination or that would have been in pay status if the eligible participant had retired;
- Benefits generally that are guaranteed by the PBGC;
- Benefits that are vested (other than by reason of plan termination); and
- All other benefits under the plan.