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Lewis v. Pension Benefit Guaranty Corp.

United States Court of Appeals, District of Columbia Circuit

December 21, 2018

K. Wendell Lewis, et al., Appellees
v.
Pension Benefit Guaranty Corporation, Appellant

          Argued November 16, 2017

          Reissued December 21, 2018

          Appeal from the United States District Court for the District of Columbia (No. 1:15-cv-01328)

          Charles L. Finke, Deputy Chief Counsel, pro hac vice, argued the cause for appellant. With him on the briefs were Judith R. Starr, General Counsel, Kenneth J. Cooper, Assistant General Counsel, Paula J. Connelly, Assistant Chief Counsel, and Mark R. Snyder, Attorney.

          Anthony F. Shelley argued the cause for appellees. With him on the brief were Timothy P. O'Toole and Michael N. Khalil.

          Before: Griffith and Pillard, Circuit Judges, and Williams, Senior Circuit Judge.

          OPINION

          Griffith, Circuit Judge.

         In this interlocutory appeal, we reverse the district court's decision allowing participants in a pension plan to seek recovery of an increase in the value of plan assets that took place after the plan had been terminated.

         I

         A

         In 2005, Delta Airlines, Inc. ("Delta") filed for bankruptcy and stopped contributing to the pension plan it sponsored for its pilots. That plan was called the Delta Pilots Retirement Plan (the "Delta Plan"). The following year, Delta and the Pension Benefit Guaranty Corporation (the "Corporation") agreed to terminate the Delta Plan because it had insufficient assets to support the benefit payments it promised to the pilots.

         Title IV of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1301-1461, created the Corporation "to ensure that employees and their beneficiaries would not be completely deprived of anticipated retirement benefits by the termination of pension plans before sufficient funds have been accumulated in the plans." PBGC v. LTV Corp., 496 U.S. 633, 637 (1990) (internal quotation marks omitted). To that end, the Corporation collects premiums from plan sponsors like Delta and guarantees certain benefits to plan participants even if a plan terminates without enough money to pay its ongoing obligations. See 29 U.S.C. §§ 1306-1307, 1322, 1361; LTV Corp., 496 U.S. at 636-38; Davis v. PBGC ("Davis II"), 734 F.3d 1161, 1164-65 (D.C. Cir. 2013). Importantly, guaranteed benefits are subject to limitations outlined in Title IV. See 29 U.S.C. §§ 1322(b), 1361; LTV Corp., 496 U.S. at 638.

         When a plan terminates without enough funding to provide even the guaranteed benefits established by Title IV, a statutory trustee collects the plan's remaining assets and begins making promised payments according to a list of statutory priorities. See 29 U.S.C. §§ 1341(c)(iii)(B)(3), 1342(b)-(d), 1344; 29 C.F.R. pt. 4044. The Corporation then provides additional money from its own funds to make up the difference between those payments and the guaranteed benefits. See 29 U.S.C. § 1322; 29 C.F.R. pt. 4022; LTV Corp., 496 U.S. at 637-38; Davis II, 734 F.3d at 1164-65. Although not required, the Corporation is almost always appointed as the statutory trustee who administers terminated plans, assuming this responsibility in addition to its role as guarantor. See Boivin v. U.S. Airways, Inc., 446 F.3d 148, 150 (D.C. Cir. 2006). When Delta and the Corporation agreed to terminate the Delta Plan, they agreed the Corporation would become the statutory trustee.

         The Corporation determined the Delta Plan had a deficit of over $2.5 billion in unfunded benefits when it terminated, almost $800 million of which were guaranteed under Title IV. Actuarial Case Memo for Delta Pilots Retirement Plan (Mar. 24, 2010), J.A. 201-03. Based on this information, the Corporation began paying estimated post-termination benefits to the pilots. It took six years, however, to finish making final benefit determinations. Administrative appeals filed by the pilots to challenge their benefit determinations concluded the following year, in 2013. See 29 C.F.R. pt. 4003 (explaining the process for determining post-termination benefits); Davis v. PBGC ("Davis I"), 571 F.3d 1288, 1291 (D.C. Cir. 2009) (same); Boivin, 446 F.3d at 151 (same). If the Corporation found that participants were entitled to larger benefit payments than they were ...


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