Grimes v. Dayton-Walther Corp.

• Decision Date: 07 August 1987
• Docket Number: No. C-3-85-026.,C-3-85-026.
• Citation: 680 F. Supp. 1110
• Parties: James GRIMES, et al., Plaintiffs, v. DAYTON-WALTHER CORP., Defendants.
• Court: U.S. District Court — Southern District of Ohio

680 F. Supp. 1110

James GRIMES, et al., Plaintiffs, v. DAYTON-WALTHER CORP., Defendants.

No. C-3-85-026.

United States District Court, S.D. Ohio, W.D.

August 7, 1987.

James B. Robinson, David M. Cook, Cincinnati, Ohio, for plaintiffs.

Frank H. Stewart, Martin McHenry, Cincinnati, Ohio, for defendants.

OPINION; FINDINGS OF FACTS AND CONCLUSIONS OF LAW; FURTHER PROCEDURES SET FOR PAYMENT OF BENEFITS DUE PLAINTIFFS, TO WIT: DEFENDANT GRANTED TWENTY DAYS FROM RECEIPT OF OPINION TO FILE PLAN TO GUARANTEE FUTURE BENEFITS AND PLAINTIFFS AND DEFENDANT GRANTED TWENTY DAYS TO FILE STIPULATIONS AS TO BENEFITS PAST DUE OR TO NOTIFY COURT THAT SUCH STIPULATIONS CANNOT BE REACHED

RICE, District Judge.

This case was heard by the Court, sitting as trier of fact, on September 16-23, 1986. On November 11, 1986, the Court filed an Opinion (Doc. # 64) indicating its intent to enter judgment for the Plaintiffs and against the Defendant on Plaintiffs' breach of the collective bargaining (pension) agreement claim and for Defendant and against Plaintiffs on their Employee Retirement Income Security Act (29 U.S.C. §§ 1104 & 1109) claim. Additionally, the Court indicated its present intent not to require Defendant to make a "lump sum" payment to Plaintiffs to cover future benefits. Based upon the exhibits and testimony admitted at trial, the Court hereby sets forth the following, non-exclusive Findings of Facts and Conclusions of Law:

I. FINDINGS OF FACT

1. The Defendant, Dayton-Walther Corporation, is an employer engaged in interstate commerce.

2. The Plaintiffs are: (a) a class of 191 Dayton-Walther retirees and 29 surviving spouses of deceased retirees who have been adversely affected by a discontinuance in supplemental early retirement benefits who retired prior to this reduction in benefits and (b) two individuals (Quire and Profitt) who retired subsequent to this reduction in benefits, and who would have been eligible for supplemental early retirement benefit payments had such payments not been discontinued.

3. Locals 4760 and 5028 of the United Steelworkers of America represent, and have represented, for purposes of collective bargaining certain active employees of Dayton-Walther.

4. Dayton-Walther established a pension plan for its employees represented by the Locals ("Pension Plan" or "Plan") in the 1950's.

5. The Plan's formal name is Pension Plan Dayton Division and United Steelworkers of America Locals 4760 and 5028.

6. The Plan was designated as Plan No. 002 for federal reporting purposes.

7. Dayton-Walther administered the Plan and was the Plan sponsor.

8. Dayton-Walther's federal employer identification number is XX-XXXXXXX.

9. Since the establishment of the Pension Plan, Dayton-Walther and Locals 4760 and 5028 have entered into various pension agreements.

10. The last pension agreement between Dayton-Walther and the Locals expired by its terms on August 1, 1983. (Jt. Exh. IX).

11. Dayton-Walther and the Locals agreed to extend the last pension agreement to July 31, 1984. (Defendant's Exh. AAAAE).

12. Dayton-Walther and the Locals did not agree to extend the pension agreement beyond July 31, 1984.

13. On May 25, 1984, representatives of Dayton-Walther gave timely written notice to the Locals of Dayton-Walther's intent to negotiate pensions. (Defendant's Exh. AAR).

14. Representatives of the Locals and Dayton-Walther negotiated on pensions throughout the summer of 1984, and thereafter.

15. In June of 1984, representatives of Dayton-Walther met with officials of the Pension Benefit Guaranty Corporation ("PBGC") to discuss the possible termination of the Plan.

16. On or about July 10, 1984, in a collective bargaining meeting, Dayton-Walther proposed termination of the Plan.

17. The representatives of the Locals rejected this proposal.

18. The Locals and Dayton-Walther reached impasse on the proposed termination of the Plan.

19. On October 6, 1984, Dayton-Walther's Board of Directors passed a resolution terminating the Plan effective October 31, 1984.

20. On October 8, 1984, Dayton-Walther gave notice of the proposed Plan termination to participants and beneficiaries of the Plan.

21. On October 18, 1984, Internal Revenue Service ("IRS") and PBGC Form 5310 (Application for Determination Upon Termination and Notice of Intent to Terminate) was filed on behalf of Dayton-Walther with the IRS and the PBGC. (Defendant's Exh. AAI).

22. The obligation of benefits of approximately two hundred and fifty (250) retirees who had been receiving benefits under the Plan were transferred to Dayton-Walther's pension plan for salaried employees. (Defendant's Exh. AAF). The benefits of retirees transferred to the salaried plan have not been reduced since Plan termination. These two hundred and fifty retirees are not members of the class of Plaintiffs in this case.

23. On March 18, 1985, the IRS issued a determination approving this transfer. (Defendant's Exh. AAS).

24. Before October 31, 1984, substantially all of the assets of the Plan were used to purchase annuities to pay benefits to two hundred and five (205) retirees under the Plan. These two hundred and five retirees are not members of the class of Plaintiffs in this case.

25. The PBGC assumed administration of the Plan in accordance with an agreement with Dayton-Walther dated July 1, 1985. (Defendant's Exh. AA).

26. The IRS approved the termination of the Plan in a determination dated April 24, 1985. (Defendant's Exh. AAT).

27. The Defendant transferred to the PBGC approximately one and a half million dollars ($1,500,000) to satisfy the Defendant's estimated liability for PBGC guaranteed benefits.

28. Since Plan termination, benefits have been provided at PBGC guaranteed levels, which are lower than total benefit levels were under the Plan.

29. The greatest reduction in benefits has occurred in benefits received by retirees who took early retirement and were receiving a pre-Social Security supplemental payment (i.e., an additional payment made until a retiree became eligible for Social Security benefits). Benefits under the Plan prior to its termination included a regular retirement pension payable in monthly installments computed on the basis of the employee's pre-retirement earnings or based on a fixed multiplier times the employee's years of service. Retirees under the age of 62 were entitled to a supplemental benefit, set at $400 per month by the 1980 pension agreement. (Jt. Exh. IX at 30).

30. W.C. Mattingly was employed by Dayton-Walther and was represented for purposes of collective bargaining by Local 4760 from June, 1950 until his retirement effective August 3, 1980. James Grimes was employed by Dayton-Walther and was represented for purposes of collective bargaining by Local 5028 from March, 1955 until his retirement effective August 1, 1984. Mattingly and Grimes and the class of Plaintiffs they represent have received since December 1, 1984, and thereafter, monthly pension checks less than those that they received before October 31, 1984. (The Court assumes that benefits received for October, 1984, were actually paid on November 1, 1984, and that the benefits paid on December 1, 1984, were those due for the month of November, 1984).

31. Robert C. Quire and Eugene E. Profitt were employed by Dayton-Walther from 1956 through October, 1984. Quire and Profitt retired as of October 31, 1984, and have not received all benefits to which they would have been entitled had the Plan not been terminated. (The Court assumes that the fact that Quire and Profitt retired on October 31, 1981 means that date was their last day at work and thus that their entitlement to pension benefits actually began on November 1, 1984; thus, their retirement would have been subsequent to the reduction in benefits).

32. In 1980 and subsequent years, the Company presented all retiring members of the two Locals with forms indicating that supplemental benefits in amounts set forth on the application were payable until the participant was "eligible for reduced Soc. Sec.", and that basic benefits in stated amounts were payable for the participant's lifetime (and his spouse's if the survivor option was chosen) (Testimony of Mattingly and Grimes; Plaintiffs' Exhibit No. 10(13), pp. A, C). These forms, and the statements made by the Company when it presented the forms, reflect an understanding and agreement on the part of the Company that the benefits were guaranteed. The prospective retirees signed these forms as retirement applications.

33. Section VI(1)(B) of the Pension Agreement that went into effect August 1, 1980, provides:

Any individual who shall claim the right to any payment under the Plan shall be limited to payments from the Pension Fund only.

(Jt. Exh. IX at 45).

34. Section VIII of the Pension Agreement that went into effect August 1, 1980, provides:

LIABILITY LIMITED

To the extent permitted by law, in administering the Plan and the payment of benefits neither the Pension Board or any member thereof, not sic the Board of Directors of the Company or any member thereof, not sic any Employing Company or any officers or employees thereof, shall be liable for any acts of omission or commission except for individual willful and intentional malfeasance or misfeasance. The Employing Company, its officers and directors, and the Pension Board shall be entitled to rely conclusively on all tables, valuations, certificates, opinions, and reports which shall be furnished by an actuary, accountant, trustee, counsel or other expert who shall be employed or engaged by the Pension Board.

(Jt. Exh. IX at 46).

35. Section X of the Pension Agreement that went into effect August 1, 1980, provides:

DISTRIBUTION OF ASSETS OF PENSION FUND ON DISCONTINUANCE

In the event that the Plan shall be discontinued, the assets then remaining in the Pension Fund shall be applied in the following order, all persons in each class being entitled to their respective proportionate shares:

1.

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