Pension Benefit v. Aircraft Mechanics ( 2007 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 05-2375
PENSION BENEFIT GUARANTY CORPORATION,
Plaintiff - Appellee,
and
THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS,
Party in Interest,
versus
UNITED AIRLINES, INCORPORATED, a Delaware
Corporation, as Plan Administrator for the
United Airlines Ground Employees’ Retirement
Plan,
Defendant,
and
AIRCRAFT MECHANICS FRATERNAL ASSOCIATION,
Intervenor/Defendant - Appellant.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Claude M. Hilton, Senior
District Judge. (CA-05-269-CMH-BRP)
Argued: September 18, 2006 Decided: January 9, 2007
Before WILKINSON and DUNCAN, Circuit Judges, and Henry F. FLOYD,
United States District Judge for the District of South Carolina,
sitting by designation.
Affirmed by unpublished per curiam opinion.
ARGUED: Stanley J. Silverstone, SEHAM, SEHAM, MELTZ & PETERSEN,
L.L.P., White Plains, New York, for Appellant. Stephanie L.
Thomas, PENSION BENEFIT GUARANTY CORPORATION, Office of the General
Counsel, Washington, D.C., for Appellee. ON BRIEF: Lee Seham,
SEHAM, SEHAM, MELTZ & PETERSEN, L.L.P., White Plains, New York, for
Appellant. Jeffrey B. Cohen, Chief Counsel, Nancy S. Heermans,
Associate Chief Counsel, Paula Connelly, Assistant Chief Counsel,
PENSION BENEFIT GUARANTY CORPORATION, Office of the General
Counsel, Washington, D.C., for Appellee.
Unpublished opinions are not binding precedent in this circuit.
2
PER CURIAM:
The Aircraft Mechanics Fraternal Association (AMFA) brings
this appeal asserting that the district court erred by concluding
that the Pension Benefit Guaranty Corporation’s (PBGC) publication
of notice of the termination of the United Air Lines (UAL) ground
crews’ pension plan (Ground Plan) on the termination date
constituted “reasonable notice” to the plan participants. We
disagree and, thus, for the reasons stated below, affirm the
judgment of the district court.
I.
As recited by the district court, the relevant and undisputed
facts are as follows:
PBGC is a government corporation responsible for paying
a certain amount to a pension’s beneficiaries if the
pension has insufficient funds and the plan is covered by
PBGC. PBGC may choose to unilaterally terminate a
pension plan if it determines that the plan has not met
certain minimum funding requirements or “the possible
long-run loss of the corporation with respect to the plan
may reasonably be expected to increase unreasonably if
the plan is not terminated.” 29 U.S.C. § 1342. Once
PBGC has terminated a plan pursuant to § 1342, it can
establish a termination date by agreement with the plan
administrator. 29 U.S.C. § 1348. If there is no
agreement between PBGC and the plan administrator, a
court establishes a termination date. Id.UAL is an airline that employs many thousands of
employees. Some of those employees received pension
benefits as part of their compensation from UAL. UAL
administered [the Ground Plan], a large portion of which
was made up of aircraft mechanics. AMFA represents many
of UAL’s employees covered by the Ground Plan, including
many of the aircraft mechanics. AMFA signed a collective
3
bargaining agreement (CBA) with UAL on March 14, 2002, on
behalf of many of the Ground Plan participants. If the
Ground Plan was still effective on March 14, 2005, then
UAL would owe an additional $88 million of guaranteed
benefits to Ground Plan participants.
UAL filed for bankruptcy on December 9, 2002. UAL failed
to pay its minimum funding to PBGC for the Ground Plan on
September 15, 2004. On March 10, 2005, PBGC determined
that the Ground Plan should be terminated involuntarily
pursuant to § 1342 because UAL did not pay its minimum
funding and PBGC could suffer unreasonable long term harm
by allowing the plan to continue. PBGC sent notices of
termination which were received on March 11, 2005, to
AMFA’s national director, the president of AMFA Local 9
in San Francisco, and UAL. On March 11, 2005, PBGC also
published notices of termination in the newspapers of
UAL’s major hubs: USA Today, San Francisco Chronicle, Los
Angeles Times, Rocky Mountain News, Denver Post, Chicago
Tribune, and Washington Post. Finally, PBGC issued a
press release about the termination and posted that
information on its website on March 11, 2005. AMFA
actually issued a press release about the termination and
posted it on its website that same day, March 11, 2005.
UAL initially opposed the establishment of March 11,
2005, as the termination date, leading PBGC to commence
this action. On April 22, 2005, PBGC and UAL settled
their dispute and agreed to the termination date proposed
by PBGC. The bankruptcy court approved the settlement
agreement, and it became official on May 23, 2005. AMFA
intervened on behalf of the Ground Plan participants and
filed a counterclaim challenging the March 11, 2005,
termination date pursuant to 29 U.S.C. § 1303(f)
[(allowing certain third parties to contest the
termination and termination date of a plan)].
Pension Benefit Guar. Co. v. United Air Lines, Inc., No. 05-0269,
2005 WL 3088455, at *1-2 (E.D. Va. Nov. 10, 2005).
The sole question for the district court on cross motions for
summary judgment was whether March 11, 2005, was the appropriate
termination date. Stated differently, the court was called upon to
consider whether the publication of notice of the termination of
4
the Ground Plan on the termination date constituted “reasonable
notice” to the plan participants. The district court answered that
question in the affirmative. This appeal by AMFA followed.
II.
We review the district court’s granting of summary judgment de
novo. In re Maco Homes, Inc., 180 F.3d 163, 165 (4th Cir. 1999).
Summary judgment is properly granted when there are no genuine
issues of material fact and when the record taken as a whole could
not lead a rational trier of fact to find for the non-moving party.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986). In
determining whether summary judgment is appropriate, the facts are
viewed in the light most favorable to the non-moving party. Id. at
255.
III.
A.
As observed by the district court, when disagreements
regarding a termination date occur, they are generally between the
plan administrator and PBGC. In the instant matter, however, it is
AMFA, an outside party, which is marshaling the arguments against
the March 11, 2005, termination date.
The district court noted that it was construing “PBGC’s date
of termination as an agency determination” and then went on to
5
explain that it would review the decision “to see if it was
arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with law.” United Air Lines, 2005 WL 3088455, at *2
(citation omitted). The Seventh Circuit Court of Appeals, however,
recently rejected the application of this standard in a matter
somewhat similar to the one before us today.
Deference is appropriate when agencies wield delegated
interpretive or adjudicatory power-the former usually
demonstrated by rulemaking and the latter by
administrative adjudication (which also may yield rules
in common-law fashion). The PBGC did not use either
rulemaking or adjudication to decide that United's plan
should be wrapped up [by a certain date]. Its decision
was made unilaterally and was not self-executing. The
only authority that the PBGC has under § 1342 is to ask
a court for relief. That implies an independent judicial
role. When making its decision a court must respect any
regulations issued after notice-and-comment rulemaking,
but the PBGC has not promulgated any rules pertinent to
this subject. Nor has it issued the sort of interpretive
guidelines that deserve the court's respectful
consideration even though they lack the power to control.
All the PBGC had done is commence litigation, and its
position is no more entitled to control than is the view
of the Antitrust Division when the Department of Justice
files suit under the Sherman Act. As the plaintiff, a
federal agency bears the same burden of persuasion as any
other litigant.
In re UAL Corp., (Nos. 06-1867, 06-2843, 06-2662, 06-2714), 2006 WL
3019451, at *3 (7th Cir. October 25, 2006) (citations omitted).
Moreover, in Pension Benefit Guar. Co. v. Heppenstall Company,
633 F.2d 293, 301 (3d Cir. 1980), the court was unpersuaded by
PBGC's contention that the court should defer to PBGC's
administrative expertise in deciding a plan's termination date on
the basis that the statutory scheme makes clear that it is the
6
province of the court to resolve disputes over the termination
date.1 See 29 U.S.C. § 1348(b)(3) (stating that “if no agreement
is reached, the [termination] date [is] established by the court”).
Nevertheless, AMFA failed to argue that the district court
applied the incorrect standard of review. Thus, the issue is
deemed waived for purposes of deciding this appeal.2 Carter v.
Lee, 283 F.3d 240, 252 n.11 (4th Cir. 2002) (stating that
contentions not raised in the opening brief are generally
considered waived); In re Apex Express Corp., 190 F.3d 624, 630 n.5
(4th Cir. 1999) (noting that issue not argued in appellant's brief
is deemed waived on appeal); Baltimore Boulevard, Inc. v. Prince
George's County, 58 F.3d 988, 993 n.7 (4th Cir. 1995) (holding that
arguments not discussed in appellate briefs are deemed abandoned).
B.
Our determination of whether the March 11, 2005, termination
date is valid is governed by the tripartite test set forth in
Pension Benefit Guar. Co. v. Mize Co., Inc., 987 F.2d 1059, 1063
(4th Cir. 1993). According to the Mize court, we must 1) first
determine the earliest date on which participants had notice of
1
While it is true that AMFA is proceeding under 29 U.S.C. §
1303(f), it would appear that these cases discussing §§ 1342 and
1348 are equally applicable here.
2
Assuming, without deciding, that we reviewed the decision of
PBGC de novo, our final disposition of this matter would be the
same.
7
termination, (2) then determine the later date that serves the
interests of PBGC, 3) while always assuring that there has been
strict compliance with the statutory requirements for termination.
Id.
There is no dispute that factors two and three are satisfied
here. Thus, the only remaining issue is to determine the earliest
date on which participants had reasonable notice of termination of
the plan so that the plan participants “no longer had a justifiable
expectation in the accrual of vested pension rights.” Heppenstall,
Inc., 633 F.2d at 302. Either actual or constructive notice is
allowed. Pension Benefit Guar. Co. v. Republic Techs. Int’l, LLC,
386 F.3d 659, 664, 668 (6th Cir. 2004) (stating that the
publication of a notice in the local newspapers and the issuing of
a notice of termination the day before the termination date to the
plan administrator and the union representative were sufficient);
Heppenstall, 633 F.2d at 302 (expressing in dicta that, “Possibly
notice to [the] collective bargaining representative as a class
representative is sufficient); In re Pan Am, 777 F. Supp. 1179,
1185 (S.D.N.Y. 1991) (finding that the receipt of actual notice by
plan participants satisfied PBGC’s notice requirement); Pension
Ben. Guar. Corp. v. United Air Lines, Inc., 436 F. Supp. 2d 909,
920 (N.D.Ill. 2006) (holding that the union representative’s
receipt of the notice of PBGC’s intent to seek termination of the
pension plan, publication in numerous newspapers and on the
8
websites of PBGC, the employer and the union–-all on the
termination date--provided constructive notice to the plan
participants that the plan would be terminated). PBGC relies on
constructive notice in arguing that its notice to the plan
participants was sufficient.
According to the record before us today, and as already noted,
PBGC 1) sent notices of termination of the plan, which were
received on March 11, 2005, to AMFA’s national director, the
president of AMFA Local 9 in San Francisco, and UAL3 2) published,
on March 11, 2005, notices of termination in the newspapers of
UAL’s major hubs: USA Today, San Francisco Chronicle, Los Angeles
Times, Rocky Mountain News, Denver Post, Chicago Tribune, and
Washington Post; and 3) issued a press release about the
termination and posted that information on its website on March 11,
2005. AMFA also issued a press release about the termination and
posted it on its website that same day, March 11, 2005.
We agree with the district court that, under the arbitrary and
capricious standard, these efforts by PBGC were sufficient to
provide to the plan participants reasonable notice of the
termination of the plan on March 11, 2005, such that they “no
longer had a justifiable expectation in the accrual of vested
pension rights.” Heppenstall, 633 F.2d at 302. Thus, any
3
Thus, these individuals and/or entities received actual
notice of the termination of the plan.
9
expectations that the plan participants had that the plan would
continue were extinguished on March 11, 2005, when they received
constructive notice of the termination. Republic Technologies, 386
F.3d at 667 (“Every court to consider the issue has concluded that
expectation interests in the accrual of benefits are extinguished
on the date the participants receive reasonable notice from PBGC
that the plan is going to be terminated.”).
Moreover, we note that there is no competent evidence in the
record before us that the plan participants did not receive
sufficient notice of the plan’s termination. Conclusory
allegations that they were unaware of the termination, without
more, are insufficient to survive PBGC’s motion for summary
judgment.
C.
We will briefly address the remaining arguments here. First,
AMFA’s arguments concerning In re Pan Am., 777 F. Supp. 1179, are
unavailing. Nevertheless, even if the district court
misapprehended that decision, and we do not think that it did, a
decision by a New York district court presents us with persuasive,
not controlling authority.
Second, to the extent that AMFA contends that the propriety of
the termination date is affected by UAL’s failure to provide the
plan participants with adequate notice of the plan’s termination
10
date, we reject that argument. Simply stated, PBGC is charged with
protecting the interests of the pension insurance system, 29 U.S.C.
1302(a), and cannot be required to rely on the actions of third
parties, some of whose interests may be adverse to those of PBGC,
in fulfilling its duty.
IV.
For the foregoing reasons, we hold that, under the applicable
standard, PBGC’s publication of notice of termination of the Ground
Plan on the termination date constituted “reasonable notice” to the
plan participants. Accordingly, we affirm the judgment of the
district court.
AFFIRMED
11