Lewis v. Pension Benefit Guaranty Corporation

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
WALTER A. LEWIS, )
)
Plaintiff, )
)
v. ) Civil Action No. 13-0973 (RC)
)
)
PENSION BENEFIT GUARANTY )
CORPORATION, )
)
Defendant. )
MEMORANDUM OPINION
Plaintiff, proceeding pro se, challenges the decision of the Pension Benefit Guaranty
Corporation (“PBGC”) to deny his application for retirement benefits allegedly owed him from his
employment with Shearson Hamill and Co., Inc., which merged with Lehman Brothers Holdings,
Inc., in 1974. Contending that plaintiff was previously paid his benefits, PBGC moves to dismiss
under Fed. R. Civ. P. 12(b)(6) [Dkt. # 7]. Plaintiff has filed two responses to the motion [Dkt. ##
9, 11] and PBGC has filed a reply [Dkt. # 10]. For the following reasons, the Court will grant
defendant’s motion and dismiss the case.
I. BACKGROUND
Plaintiff alleges that he was employed full-time as a Teletype Operator for 27 years, from
May 1969 to 1996, when he retired at age 65. Compl. at 1. “Because of two separate accidents”
in February 1979 and January 1980, plaintiff “sustained 2 different fractures . . . after which [he]
developed arthritis in [his] elbow and wrist joints.” Id. at 2. “[A]fter being in pain so much,”
plaintiff took short-term disability leave from November 1984 to May 1985 and thereafter took
1
long-term disability leave, which “accounts for a period of 7 months short term and about 11 years
long term disability.” Id.
In a decision dated August 24, 2011, PBGC’s Appeals Board determined that plaintiff was
not entitled to the requested retirement benefits because the records “PBGC’s auditors obtained
from the former Plan administrator” established that he had previously “received a lump-sum
payment of $2,879.85 as a final distribution of your pension from the Lehman Brothers Plan.”
Compl. Attach. (hereafter “AB Dec.”), ECF pp. 9-12. In support of that decision, PBGC provided
plaintiff a Lehman Brothers memorandum dated November 9, 1993, from the Pension Department
to Group Insurance, which stated that the lump-sum payment “effective November 1993”
constituted “a final distribution for [plaintiff’s] retirement plan.” Compl. Ex. A. The
memorandum further stated that “Mr. Lewis is presently on Long Term Disability. Please adjust
his payments to reflect his retiree status.” Id. In addition, PBGC provided plaintiff a letter dated
December 13, 1993, to Lehman Brothers’s insurance carrier, CIGNA Life Insurance Company of
New York, stating the same. Compl. Ex. B; see AB Dec. at 1, 2.
In the instant complaint filed in June 2013, plaintiff states that he “cannot recall receiving
[the] payment” -- purportedly distributed 20 years earlier -- and that he “ha[s] not signed anything
to indicate that I did, even if I did not remember. I found it hard to believe that I would receive
money from a corporation and not have to sign off on it.” Compl. at 2-3. Plaintiff further states
that “if a lump sum payment was received[,] can Lehman Brothers at least provide proof that the
Mandatory tax deducted portions was [sic] at least disbursed to the IRS for that period the alleged
‘final pension payment’ was made?” Id. at 3. Plaintiff also questions how the lump-sum amount
was calculated and faults PBGC for failing to maintain “my record in the plan.” Id. at 4. He
2
concludes that “[e]ven though I do not have all my paperwork from all these years, under Title IV
of the [ERISA], I believe I was denied the benefit of which I am entitled.” Id. at 4-5.
II. LEGAL STANDARD
The Federal Rules of Civil Procedure require that a complaint contain “a short and plain
statement of the claim” in order to give the defendant fair notice of the claim and the grounds upon
which it rests. Fed. R. Civ. P. 8(a)(2); accord Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per
curiam). A motion to dismiss under Rule 12(b)(6) does not test a plaintiff's ultimate likelihood of
success on the merits; rather, it tests whether a plaintiff has properly stated a claim. See Scheuer
v. Rhodes, 416 U.S. 232, 236 (1974), abrogated on other grounds by Harlow v. Fitzgerald, 457
U.S. 800 (1982). A court considering such a motion presumes that the complaint's factual
allegations are true and construes them liberally in the plaintiff's favor. See, e.g., United States v.
Philip Morris, Inc., 116 F. Supp. 2d 131, 135 (D.D.C. 2000).
“To survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). This means
that a plaintiff's factual allegations “must be enough to raise a right to relief above the speculative
level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).”
Twombly, 550 U.S. at 555–56 (citations omitted). “Threadbare recitals of the elements of a cause
of action, supported by mere conclusory statements,” are therefore insufficient to withstand a
motion to dismiss. Iqbal, 556 U.S. at 678.
In deciding a motion to dismiss under Rule 12(b)(6), a court may not rely upon matters
outside the pleadings without converting the motion to one for summary judgment, Fed. R. Civ. P.
12(d), but it can consider documents (as here) attached to the complaint as exhibits or incorporated
3
by reference and matters about which the court may take judicial notice without triggering the
conversion requirement. Abhe & Svoboda, Inc. v. Chao, 508 F.3d 1052, 1059 (D.C. Cir. 2007).
In addition, the Court may consider “documents upon which the plaintiff's complaint necessarily
relies even if the document is produced not by the plaintiff in the complaint but by the defendant in
a motion to dismiss.” Ward v. D.C. Dep’t of Youth Rehab.Servs., 68 F. Supp. 2d 117, 119-20
(D.D.C. 2011) (citations and internal quotation marks omitted).
III. ANALYSIS
A. The Statutory Framework
The Employee Retirement Income Security Act of 1974 (“ERISA”) “is a comprehensive
statute designed to promote the interests of employees and their beneficiaries in employee benefit
plans.” Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90 (1983); see also 29 U.S.C. § 1001(b)
(noting that ERISA was enacted “to protect . . . the interests of participants in employee benefit
plans and their beneficiaries”). PBGC is a wholly owned United States corporation “established
within the Department of Labor.” 29 U.S.C. § 1302(a). Under Title IV of ERISA, PBGC is
often appointed the statutory trustee to administer benefits when a private pension plan is
terminated or lacks sufficient funds “to pay in full promised pension benefits.” Air Line Pilots
Assoc. Int’l. v. PBGC, 193 F. Supp. 2d 209, 211 (D.D.C. 2002); see id. at 211-12 (discussing
ERISA’s statutory framework). In this capacity, PBGC makes determinations about plan
participants’ benefits in accordance with the terms of the respective pension plan. See 29 U.S.C.
§ 1342(d)(1)(B); Vanderkam v. PBGC, 943 F. Supp. 2d 130, 137 (D.D.C. 2013).
PBGC guarantees “the payment of all nonforfeitable benefits” in which the participant was
vested at the time of the plan’s termination. 29 U.S.C. § 1322; see West v. Greyhound Corp., 813
F.2d 951, 954 (9th Cir. 1987). This guarantee “is applicable only to pension, stock bonus or
4
profit-sharing plans.” West, 813 F.2d at 954 (citing 29 U.S.C. § 1321(a) (other citation omitted).
ERISA “expressly exempts” from its coverage as to vesting and accrual “employee welfare benefit
plans,” id. (citing 29 U.S.C. § 1051), which encompass long-term disability plans. See 29 U.S.C.
§ 1002(1) (defining welfare plan); Lopez v. Commonwealth Oil Refining Co., Inc., 833 F. Supp.
86, 88-89 (D. Puerto Rico 1993) (citing cases that “have found [] long term disability plans to be
employee welfare benefit plans”). In other words, “[t]here is no language in ERISA which
provides for the accrual of welfare benefits or guarantee that such benefits are vested or
nonforfeitable.” West, 813 F. 2d at 954; see accord Finley v. Hoescht Celanese Corp., 941 F.2d
1206 (4th Cir. 1991) (per curiam) (unpublished table decision) (“While both types of plans are
subject to ERISA's reporting and disclosure requirements . . . and its fiduciary standards for
management of plan assets . . ., welfare benefit plans are not subject to ERISA's strict standards
regarding vesting, participation and funding which are imposed on pension plans.”).
Plan participants may challenge PBGC’s determinations before the Appeals Board. See
29 C.F.R. §§ 4003.21, 4003.51. The Appeals Board decision “constitutes the final agency action
by the PBGC with respect to the determination which was the subject of the appeal,” id. §
4003.59(b), and it is subject to judicial review under the Administrative Procedure Act (“APA”).
See PBGC v. LTV Corp., 496 U.S. 633, 636 (1990); Vanderkam, 943 F. Supp. 2d at 137 (citing
Davis v. PBGC, 864 F. Supp. 2d 148, 155 (D.D.C. 2012); United Steel v. PBGC, 839 F. Supp. 2d
232, 241 (D.D.C. 2012); Air Line Pilots Assoc, 193 F. Supp. 2d at 220-21)).
B. APA’s Standard of Review
Under the APA, a court must set aside agency action as unlawful if it is “arbitrary,
capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. §
706(2)(A). The “arbitrary and capricious” standard of review is a narrow one, and “a court is not
5
to substitute its judgment for that of the agency.” Motor Vehicle Mfrs. Ass'n v. State Farm Mut.
Auto. Ins. Co., 463 U.S. 29, 43 (1983); see accord Zevallos v. Obama, No. 13-0390, --- F. Supp. 2d
---, 2014 WL 197864, at *5 (D.D.C. Jan. 17, 2014).
While a reviewing court must conduct a “searching and careful” review, the agency's
action remains “entitled to a presumption of regularity,” Citizens to Preserve Overton Park, Inc. v.
Volpe, 401 U.S. 402, 415 (1971), and the agency’s decision should be upheld “so long as the
agency ‘engaged in reasoned decision making and its decision is adequately explained and
supported by the record.’ ” Clark County v. FAA, 522 F.3d 437, 441 (D.C. Cir. 2008) (quoting
N.Y. Cross Harbor R.R. v. STB, 374 F.3d 1177, 1181 (D.C. Cir. 2004)). “Indeed, nothing more
than a ‘brief statement’ is necessary, as long as the agency explains ‘why it chose to do what it
did,’ ” and “the court can ‘reasonably discern[]’ the agency’s path.” Coe v. McHugh, 968 F.
Supp. 2d 237, 240 (D.D.C. 2013) (quoting Tourus Records, Inc. v. Drug, 259 F.3d 731, 737 (D.C.
Cir. 2001); Pub. Citizen, Inc. v. F.A.A., 988 F.2d 186, 197 (D.C. Cir. 1993)) (alteration in original).
As a general rule applicable to this case, a court’s review of a benefits determination is limited to
the record that was “available to the administrator or fiduciary at the time the decision was made.”
Lee v. Hartford Life & Acc. Ins. Co., 928 F. Supp. 2d 51, 57 (D.D.C. 2013) (citations and internal
quotation marks omitted).
C. PBGC’s Decision
The Lehman Brothers Plan terminated on December 12, 2008, without sufficient assets.
AB Dec. at 2. PBGC looked to “the terms of the Plan, the provisions of ERISA, and PBGC
regulations and policies . . . .” to make its decision about plaintiff’s entitlement to benefits. Id. at
2. It relied upon the records that its auditors had obtained from the former Plan administrator and
information provided by plaintiff’s then-attorney, who supplied, inter alia, plaintiff’s earnings
6
statements “from Shearson from 1969 to 1974 and from Lehman Brothers from 1974 through
1984.” Id.
PBGC did not locate a “Lehman Brothers Plan document” applicable to participants who
“terminated [their] employment prior to May 1, 1994,” but the Board explained:
[T]he Plan document amended and restated as of May 1, 1994 provides that,
when the present value of a participant’s retirement benefit does not exceed
$3,500.00, it will be paid to him or her in a single lump-sum payment as soon
as practicable following the participant’s vested termination date. We
concluded that the Lehman Brothers Plan provisions in effect when you
terminated employment likely also provided a lump sum distribution [under
the same circumstances]. Thus, a lump sum payment of $2,879.85 as a final
distribution of your benefit appears to be consistent with the terms of the
Lehman Brothers Plan.
Id. at 2-3. 1 In response to plaintiff’s claim that he did not recall receiving the lump-sum payment,
the Appeals Board reasonably found -- from the documents memorializing the lump-sum
distribution and the language of the amended Plan -- that the “weight of the evidence” established
that plaintiff had received the payment and that his contrary “statement [was] insufficient to rebut
the clear statements” contained in the 1993 internal memorandum and letter to CIGNA. Id. at 3.
Plaintiff also claimed in his administrative appeal that his pension should not have
terminated in November 1993 because he was required to reimburse Lehman Brothers for
long-term disability payments that overlapped with disability payments the Social Security
Administration had awarded him retroactively. AB Dec. at 3. The Board explained that PBGC
was “responsible for the Lehman Brothers [Pension] Plan” only and that any claims arising from
1
Presumably because plaintiff was not “actively employed” after November 1984, and the
November 1993 documents referred to plaintiff’s “retiree status,” PBGC reasonably implies that
plaintiff’s employment ended before May 1, 1994. AB Dec. at 2. But plaintiff states in the
complaint that he retired from Lehman Brothers in 1996. Compl. at 1. The administrative
materials provide no clarity on this point. On a motion to dismiss, the Court is required to accept
plaintiff’s factual allegations as true. If indeed plaintiff retired in 1996, the 1994 amended Plan
would apply directly to him.
7
plaintiff’s long-term disability payments were beyond its reach since the pension plan and the
long-term disability plan “were separate benefit programs that were independently administered.”
Id. This explanation comports with ERISA’s coverage.
CONCLUSION
For the foregoing reasons, the Court finds PBGC’s decision to be reasonable and
adequately supported. As such, PBGC’s decision is neither arbitrary nor capricious, an abuse of
discretion, nor otherwise not in accordance with law. Therefore, the Court grants defendant’s
motion and dismisses this case. A separate order accompanies this Memorandum Opinion.
________/s/____________
RUDOLPH CONTRERAS
Date: May 8, 2014 United States District Judge
8