follow Donovan, and award simple interest at the 6% rate.
The interest award in Donovan is particularly pertinent because it adopts the general rule that trustees, and presumably employee benefit plans, should be charged with simple interest at the applicable legal rate. The only exceptions to the general rule involve claims asserted against errant fiduciaries. See, e.g., Katsaros v. Cody, 744 F.2d 270, 281 (2d Cir.), cert. denied, 469 U. S. 1072, 105 S. Ct. 565, 83 L. Ed. 2d 506 (1984). But here, the Plan is not so characterized; nor should it be forced to disgorge its assets at the expense of innocent participants.
The decision to withhold from distribution an amount equal to prejudgment interest at the statutory rate rests on a careful assessment of the equities in an attempt to reach a result which is fair to both the plaintiffs and current participants. The Plan shall make the relevant computations, using as its base figure the $ 29 million sum, and shall assume that the benefits due for each class year may be derived from the tables attached to the Plaintiffs' Post-Remand Memorandum. Tables IIIB and IVB. The minor discrepancies between the sum total of these figures and the $ 29 million figure are insignificant, given the vast sums involved in this litigation. These calculations should be extended through December 31, 1985, and an amount equal to this sum shall be retained by the Plan.
In sum, and on the basis of the above discussion, the Court concludes that the class plaintiffs are entitled to a preliminary injunction prohibiting the distribution of Plan assets in an amount equal to the unpaid benefits which they may realistically expect to recover from the Plan, namely $ 29 million, in addition to prejudgment interest at a 6% rate. This is the Court's realistic assessment of the plaintiffs' claim for unpaid benefits in the event the Plan is found liable.
An appropriate Order accompanies this Memorandum Opinion.
Upon consideration of the supplemental briefs of the parties, submitted following the remand of this matter from the Court of Appeals, and the record presented, and based upon the Memorandum Opinion entered on this date, the Court finds
That plaintiffs' cause of action under section 502(a)(1)(B) of the Employee Retirement Income Security Act ("ERISA") against the Profit-Sharing Plan of U.S. News ("the Plan") will be lost if the Plan pays out all, or virtually all, of its assets, because the cause of action is a claim for benefits due plaintiffs and the class;
That the loss of a congressionally provided cause of action for the broad remedial purpose of protecting ERISA-covered participants and beneficiaries will work irreparable injury upon plaintiffs and the class whether or not the Plan remains inexistence after distribution;
That plaintiffs and the class have a likelihood of success on the merits of their ERISA claim for unpaid benefits against the Plan based on undervalued appraisals of stock issued by U.S. News and World Report, Inc. ("U.S. News") and held by the Plan;
That plaintiffs have raised serious legal questions regarding the propriety of the challenged appraisal practices utilized by U.S. News;
That in balancing the hardships to all parties, and including the public interest, the weight tips in favor of plaintiffs and the class because they will be without a remedy for the recovery of unpaid benefits after distribution, whereas current participants of the Plan will not lose their fund balances, which they will receive together with the interest, when the ownership rights have been finally determined;
That the Plan is potentially liable for the total amount of benefits withheld from former employees, including an award of prejudgment interest on any amounts wrongfully withheld;
That the Court determines that plaintiffs' claim for unpaid benefits is potentially $ 29 million and support for such claim is found in the record, and there exist genuine legal questions concerning the ownership of such funds;
That a distribution of the Plan's assets which leaves insufficient assets with which to pay the benefits due plaintiffs constitutes irreparable harm because the funds could not likely be recaptured from current Plan beneficiaries;
That injunctive relief is appropriate to enjoin this type of potential violation under ERISA, 29 U.S.C. § 1132(a)(3); and
That plaintiffs have satisfied the requirements in this District for the issuance of a preliminary injunction preserving the status quo of the disputed funds. Washington Metropolitan Area Transit Commission v. Holiday Tours, Inc., 182 U.S. App. D.C. 220, 559 F.2d 841, 844 (D.C. Cir. 1977).
Based on the above, it is is herby
That the Plan withhold from distribution the sum of $ 29 million, which represents the reasonable amount of plaintiffs; and the class members' unpaid benefits which they may likely recover from the Plan, in addition to a sum sufficient to pay an award of prejudgment interest, calculated at the 6 percent statutory rate.
That these funds be held in trust until such time as the precise rights to unpaid benefits are determined and the Court permits distribution.