Davis v. Pension Benefit Guar. Corp.

• Decision Date: 30 May 2012
• Docket Number: No. 1:08–CV–1064 (FJS).,1:08–CV–1064 (FJS).
• Citation: 864 F.Supp.2d 148
• Parties: Thomas G. DAVIS, et al., Plaintiffs, v. PENSION BENEFIT GUARANTY CORPORATION, Defendant.
• Court: U.S. District Court — District of Columbia

864 F.Supp.2d 148

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.

Anthony F. Shelley, Esq., Timothy P. O'Toole, Esq., Brian A. Hill, Esq., Miller & Chevalier, Washington, DC, for Plaintiffs.

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 ERISA entitled Plaintiffs to recover. See generally Dkt. No. 36.

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 ERISA.

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 determinationand for an order directing the Appeals Board to supplement the administrative record with any documents that Captain Peterman referenced in his appeal; and (4) PBGC's resubmitted cross-motion for partial summary judgment on claim eight of Plaintiffs' second amended complaint. See Dkt. Nos. 71, 74, 83, & 90.

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. SeeDkt. 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.) denied 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. See815 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. See815 F.Supp.2d 283. PBGC opposed that motion. SeeDkt. 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.²See 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 which to file their opposition to PBGC's resubmitted motion for partial summary judgment on claim eight; and reserved decision on Plaintiffs' motion for an order holding in abeyance PBGC's resubmitted motion for partial summary judgment on claim eight until after the status conference.³See Dkt. No. 95.

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.” ⁴See 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 ERISA for improper priority categorization of plan provisions regarding early retirement benefits; (2) failure to comply with ERISA for improper priority categorization of plan provisions incorporating a federal statutory tax provision; (3) failure to comply with ERISA for improper calculation of plan liabilities by using unlawful formula; (4) failure to comply with ERISA for improper calculation of pension benefits due to the use of offsets prohibited by the plan; (5) failure to comply with ERISA for breach of fiduciary duty; (6) failure to comply with ERISA for failure to honor the plan provision guaranteeing the Piedmont Aviation Inc. Pilot Retirement Plan's pilots a cost of living adjustment; (7) failure to comply with ERISA for refusing to allocate benefits by calculating the present value of any benefit as of the date of the plan's termination; (8) failure to comply with ERISA for miscalculation of the minimum benefits guaranteed to former Allegheny Airlines (the predecessor to U.S. Airways) pilots; (9) failure to comply with ERISA for unlawful recoupment; (10) failure to provide insurance benefits to make up for shortfalls that existed after the distribution of remaining plan assets; (11) failure to comply with ERISA for arbitrary diminishment and/or failure to honor longstanding, vested plan provisions guaranteeing disability retirement benefits; and (12) violations of the Administrative Procedure Act (“APA”) for failure to provide Plaintiffs with benefits guaranteed by ERISA and the Plan. See Dkt. No. 36.

III. DISCUSSION

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. See29 U.S.C. § 1342(d)(1)(B). PBGC makes determinations for plan participants who apply to the PBGC for benefits, and participants may challenge those decisions before the PBGC Appeals Board. See29 C.F.R. §§ 4003.21, 4003.51. A decision that the PBGC Appeals Board renders constitutes PBGC's final agency action. See29 C.F.R. § 4003.59(b). As Plaintiffs have done in the instant case, plan participants upset with PBGC's final determination concerning their benefits under the plan may challenge that determination in federal court. See29 U.S.C. § 1303(f). Pursuant to the APA, courts may only set aside final agency actions that the court finds to be “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law[.]” 5 U.S.C. § 706(2)(A).

Since PBGC is a federal agency subject to the provisions of the APA, see5 U.S.C. §§ 551 et seq., courts generally must defer to PBGC's actions unless the plaintiff demonstrates that the decision was arbitrary or capricious. See5 U.S.C. §§ 555, 706(2)(A). Furthermore, to the extent that Plaintiffs' claims challenge PBGC's interpretations of ambiguous provisions of ERISA, those interpretations are entitled to Chevron deference. See Pension Benefit Guar. Corp. v. LTV Corp., 496 U.S. 633, 648, 110 S.Ct. 2668, 110 L.Ed.2d 579 (1990). This Court (Robertson, J.) previously ⁶ applied Chevron deference to such claims challenging PBGC's statutory interpretations for two reasons:

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 of ERISA in that role.

See596 F.Supp.2d at 3 (...