Deppenbrook v. Pension Benefit Guar. Corp.

• Decision Date: 17 June 2013
• Docket Number: Civil Action No. 11–600 (RBW).
• Citation: 950 F.Supp.2d 68
• Parties: Paul DEPPENBROOK, et al., Plaintiffs, v. PENSION BENEFIT GUARANTY CORP., Defendant.
• Court: U.S. District Court — District of Columbia

950 F.Supp.2d 68

Paul DEPPENBROOK, et al., Plaintiffs,

v.PENSION BENEFIT GUARANTY CORP., Defendant.

Civil Action No. 11–600 (RBW).

United States District Court,

District of Columbia.

June 17, 2013.

Paul Deppenbrook, Beaver Falls, PA, pro se.

Nathaniel Rayle, Pension Benefit Guaranty Corporation, Washington, DC, for Defendant.

MEMORANDUM OPINION

REGGIE B. WALTON, District Judge.

The pro se plaintiffs, a group of former employees of a now defunct steel product producer, Republic Technologies International, LLC (“Republic”), seek review under the Administrative Procedure Act (“APA”), 5 U.S.C. § 706 (2012), of agency determinations made by the defendant, the Pension Benefit Guaranty Corporation (“PBGC”), pursuant to the Employment Retirement Income Security Act of 1974 (“ERISA”), as amended, 29 U.S.C. §§ 1002–1461 (2012). See generally Second Amended Complaint (“Compl.”). Currently before the Court are the parties' cross-motions for summary judgment. Upon careful consideration of the parties' submissions,¹ the Court concludes for the following reasons that the PBGC's motion must be granted, and the plaintiffs' motion must be denied.

I. BACKGROUND

A. The Employment Income Security Act of 1974

The ERISA was enacted in 1974 to, among other things, “ensure that employees and their beneficiaries would not be deprived of anticipated retirement benefits by termination of pension plans before sufficient funds [had] been accumulated in the plans.” Pension Benefit Guar. Corp. v. R.A. Gray & Co., 467 U.S. 717, 720, 104 S.Ct. 2709, 81 L.Ed.2d 601 (1984). Congress's goal in enacting the ERISA was “to guarantee that ‘if a worker has been promised a defined pension benefit upon retirement—and if he has fulfilled whatever conditions are required to obtain a vested benefit—he actually will receive it.’ ” Id. (quoting Nachman Corp. v. Pension Benefit Guar. Corp., 446 U.S. 359, 375, 100 S.Ct. 1723, 64 L.Ed.2d 354 (1980)). The ERISA is divided into three major parts. The first details reporting and disclosure requirements, participation and vesting, funding of pension plans, fiduciary responsibilities, and administration and enforcement. 29 U.S.C. §§ 1002–1191c. The second identifies the agencies charged with administering the ERISA, as well as the outlines procedures for doing so, and also establishes a task force. Id. §§ 1120–1242. The third part, which is most pertinent to this case and thus discussed in further detail below, addresses insurance for certain types of pension plans through the PBGC. Id. §§ 1301–1461.

B. The Pension Benefit Guaranty Corporation

“There is established within the Department of Labor a body corporate ... known as the Pension Benefit Guaranty Corporation.” Id. § 1302(a). The PBGC's board of directors is comprised of the Secretaries of the United States Departments of Treasury, Labor, and Commerce, with the Secretary of Labor serving as the chair of the board. Id. § 1302(d). The PBGC is charged with carrying out the following duties:

(1) to encourage the continuation and maintenance of voluntary private pension plans for the benefit of their participants,

(2) to provide for the timely and uninterrupted payment of pension benefits to participants and beneficiaries under plans to which this title applies, and

(3) to maintain premiums established by the corporation under [29 U.S.C. § 1306] at the lowest level consistent with carrying out its obligations under this subchapter.

29 U.S.C. § 1302(a)(1)-(3).

C. Factual and Procedural Background

The following facts are undisputed.²

1. The Republic Technologies Shutdown and the Plan Termination Date Litigation

The plaintiffs are all former employees of Republic's now defunct Beaver Falls, Pennsylvania, facility. Compl. ¶ 23. Republic was the product of “a pair of mergers in 1998 and 1999.” ³ Def.'s Mem. at 3. A combination of market conditions, high debt obligations, and deteriorating liquidity at Republic led the company to “ha[ve] difficulty meeting its financial obligations.” Id. Thus, the “PBGC attempted to secure better funding for the [company's] [p]ension [p]lans by entering into agreements with [Republic] that would increase the level of funding.” Id. at 3–4. As part of those efforts, “[Republic] contributed a total of $64.5 million to its [p]ension [p]lans in addition to its legally required funding contributions.” Id. at 4.

Republic was ultimately “[u]nable to meet is financial obligations,” and filed for bankruptcy in 2001.⁴Id. at 4. After determining that the company “could not reorganize as a standalone entity and would instead have to sell its assets[,] ... ce[ase] ... [its] operations[,] and ... resum[e] ... operations [under] a new owner after the assets were sold, [Republic] issued” notices to its employees pursuant to the Worker Adjustment Retraining and Notification Act (“WARN Act”), 29 U.S.C. §§ 2101–09 (2012). Id. at 4. The notices stated:

As you know, the Company filed a petition with the Bankruptcy Court last year seeking to reorganize the business. Last week, we signed a letter of intent to sell substantially all the assets of Republic to a new company, RTI Acquisition Company. We have filed a motion with the Bankruptcy Court to approve this transaction, subject to higher and better offers. Some of Republic's assets are not included in the proposed transaction, including the Beaver Falls Cold Finished facility. Accordingly, subject to the approval of the Bankruptcy Court, the Company plans to permanently and entire [sic] close its plant located at 220 Seventh Avenue, Beaver Falls, PA 15010. The expected date of first separation will be between July 17, 2002 and August 1, 2002. A list of the job titles of positions to be affected by the plant closure and the names of workers currently holding the affected jobs is also attached hereto. This is a formal notice pursuant to the Worker Adjustment and Retraining Notification (“WARN”) Act. The Company expressly reserves its right to invoke any exception available to it under the WARN Act should circumstances change.

Administrative Record (“AR”) at 28. “Around the same time, [Republic] negotiated an agreement with [the United Steelworkers of America Union (“United Steelworkers”) ] under which (i) July 9, 2002, was specified as the ‘shutdown’ date of [Republic] for purposes of the shutdown benefits ... under [its] [p]ension [p]lans and (ii) [Republic] employees who otherwise met the age and service requirements would be deemed eligible for shutdown benefits.” Def.'s Mem. at 4–5. As explained by the Sixth Circuit,

[s]hutdown benefits are enhanced early retirement benefits for certain workers who are affected by a facility shutdown or business cessation. They permit participants who meet certain age and service requirements to begin receiving a retirement benefit after a plant shutdown, rather than having to wait while out of work to reach a specific retirement age. Unlike other early and normal retirement benefits, shutdown benefits usually are not advance-funded. Because this enhanced benefit may be paid for many years before a recipient is eligible for normal retirement benefits, the cost of shutdown benefits can be very high.

Pension Benefit Guar. Corp. v. Republic Techs., Int'l, LLC, 386 F.3d 659, 662–63 (6th Cir.2004) (footnotes omitted).

Republic filed for bankruptcy and was eventually “liquidated in ... 2004.” Def.'s Mem. at 3. “During that bankruptcy, [the] PBGC terminated [Republic's] four defined benefit pension plans.” Def.'s Mem. at 3. The PBGC “had to decide whether to involuntarily terminate the [p]ension [p]lans prior to the accrual of shutdown benefits, which would add an additional $96 million to [the] PBGC's liability,” which was already “then estimated at more than $300 million.” Id. at 5–6. The “PBGC determined to terminate the plans and, on or about June 14, 2002, notified [the plans'] participants, through [United Steelworkers] and by newspaper publication, of its intent to terminate the [p]ension [p]lans and establish June 14, 2002, as the [p]ension [p]lans' termination date.” Id. at 6. Because disagreements arose as to “the appropriate termination date for [Republic's] pension plans,” the PBGC filed suit in the United States District Court for the Northern District of Ohio, which set the plans' termination date as August 17, 2002. Pension Benefit Guar. Corp. v. Republic Techs. Int'l, LLC, 287 F.Supp.2d 815 (N.D.Ohio 2003). The case was appealed to the Sixth Circuit Court of Appeals, which ultimately set the plan termination date back to June 14, 2002, as requested by the PBGC. Republic Techs., Int'l, 386 F.3d at 668. Among the affected Republic pension plans was “the pension plan for hourly workers in which [the] [p]laintiffs are participants” (Republic's “Hourly Pension Plan”). Def.'s Mem. at 5.

2. The PBGC's Determination of the Plaintiffs' Benefits

Under the original August 17, 2002 plan termination date, many of the Republic pension plans' “participants became eligible to take early retirement under the shutdown benefit provisions ... and did in fact retire.” Def.'s Mem. at 7. As a result, when the Sixth Circuit set the date two months earlier, to June 14, 2002, “many participants suddenly became ineligible for certain benefits that they had in fact received during the prior two years under the district court's chosen termination date.” Id. The “PBGC gave [affected] participants the option of continuing to receive pension benefits ..., or rescinding their retirement and deferring their pensions until they reached their normal retirement age. [The] [p]laintiffs chose the latter option.” Id. at 7–8 (footnotes omitted).

3. The Plaintiffs' Administrative Appeals and the Current Lawsuit

Upon receiving the PBGC's benefit determinations, each plaintiff filed a timely appeal alleging, among other things, that the PBGC should treat the May 1, 2002 WARN Act notice as the date of constructive shutdown, and that it had “mishandled” the plaintiffs' defined contribution plan...