Lewis v. Pension Benefit Guaranty Corp.

In 2005, Delta Airlines filed for bankruptcy and stopped contributing to its pilots' pension plan. Delta and the Pension Benefit Guaranty Corporation (PBGC) terminated that Plan, which had insufficient assets to support promised benefit payments, Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1301-1461. Under such circumstances, a trustee collects the remaining assets and makes promised payments according to statutory priorities. PBGC provides additional money from its own funds to make up the difference between those payments and guaranteed benefits. PBGC, the Plan's trustee, determined the Plan had a deficit of over $2.5 billion, almost $800 million of which PBGC guaranteed, and paid estimated benefits. It took six years to finalize benefit determinations. After administrative appeals by the pilots, nearly 1,700 beneficiaries sued to further challenge those determinations, citing the Administrative Procedure Act, 5 U.S.C. 706, and seeking disgorgement, arguing that the Corporation breached its fiduciary duty and controlled Plan assets for a longer period to collect “massive investment returns” rather than timely paying the pilots. The D.C. Circuit reversed the denial of the Corporation’s motion to dismiss the breach of fiduciary duty claim. Recovering the post-termination increase in the value of plan assets is not an available remedy; 29 U.S.C. 1344(c) prevents disgorgement, providing that “[a]ny increase or decrease in the value of the assets of a single-employer plan occurring after the date on which the plan is terminated shall be credited to, or suffered by, the [C]orporation.” View "Lewis v. Pension Benefit Guaranty Corp." on Justia Law