The opinion of the court was delivered by: HOGAN
Plaintiffs are trustees, participants, and an employee organization representing participants in Eastern Airlines' ("Eastern") employee pension benefit plan (the "Plan"), established under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq. They contend that defendants the Secretary of Treasury and Commissioner of the Internal Revenue Service (hereafter referred to collectively as "IRS") have violated ERISA in the manner in which they have processed Eastern's minimum funding waiver application, and that defendant Pension Benefit Guaranty Corporation ("PBGC") has aided and abetted the violation. Plaintiffs seek preliminary injunctive relief against the IRS pursuant to ERISA's civil suit provision, 29 U.S.C. § 1132, and against PBGC pursuant to 29 U.S.C. § 1303(f). In addition, they seek to enjoin the allegedly unlawful agency action under the Administrative Procedure Act ("APA"), 5 U.S.C. § 706. Defendants have moved to dismiss the action under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6).
The IRS discharges the Secretary of Treasury's obligations under ERISA, and ERISA's provisions are codified in parallel sections in the Internal Revenue Code. In general, under ERISA employers must meet the minimum funding standards set forth by statute, 29 U.S.C. § 1082, a requirement the IRS enforces through imposition of an excise tax that ultimately equals 100% of delinquent contributions. 26 U.S.C. § 4971. ERISA also provides for waiver of the minimum funding requirement, if the employer can demonstrate business hardship. 29 U.S.C. § 1083. Factors considered in determining "business hardship" include: operating loss of employer, whether there is unemployment or underemployment in the trade concerned, whether the relevant industry's sales and profits are depressed or declining, and whether "it is reasonable to expect that the plan will be continued only if the waiver is granted." 29 U.S.C. § 1083(b). The determination depends on the facts and circumstances of each case, and the IRS has outlined detailed information that an employer must submit in support of its claim of business hardship. Rev. Proc. 83-41, 1983-23 I.R.B. 22. This information includes a factual history of the employer's corporate development, the classes of employees and benefits covered by the Plan, and a discussion of reasons that have led to the employer's situation, such as labor disputes, declining sales, etc. Id.
In 1986, Congress amended the funding waiver provisions, motivated by concern that employers frequently used the waiver to obtain a low interest loan from a "captive 'lender'," and by the fact that the claim for unpaid contributions was often subordinated to other creditors' claims, leaving the Plan's assets depleted. See H. Rep. No. 99-300, 99th Cong. 1st Sess., at (1985); Single Employer Pension Plan Amendments Act of 1986, Pub. L. No. 99-272, 100 Stat. 264-67. The new provisions require (1) notice of funding waiver application and consideration of any information received in response, 29 U.S.C. § 1083(a), (e) and (2) a determination in conjunction with PBGC of whether the employer should provide security if the waiver is granted. 29 U.S.C. § 1085a(a).
Notice and Comment Required
Initially, the employer seeking the waiver must provide satisfactory evidence that it has given notice of its application to affected employee organizations and participants. 29 U.S.C. § 1083(a), (e). Plaintiffs do not dispute the adequacy of notice. In response, employee organizations may submit "relevant information" in connection with the application. 29 U.S.C. §§ 1083(e), 1085a(b)(2)(B). Beyond requiring the information to be "relevant," the statute does not establish any specific substantive parameters, and does not provide for the organizations to review the application and supporting materials. If an organization chooses to submit this information in writing, the IRS must consider it in its waiver decision. No time limit is set for the submission or review of employee organization information.
The IRS has the obligation to give PBGC notice of the completed waiver application, as well as an "opportunity to comment on such application." 29 U.S.C. § 1085a(b)(1). The IRS must consider these comments, along with any written "views" of the employee organizations. 29 U.S.C. § 1085a(b)(2). The statute contemplates that the waiver application and supporting materials will be forwarded to PBGC in some form, as it specifically states that information provided to PBGC for the purpose of security consultation is to be protected as tax return information. 29 U.S.C. § 1085a(b).
Plaintiffs' Response to Eastern's Application
Instead of submitting written information when they got notice of Eastern's funding waiver application, plaintiffs requested a copy of the waiver application, and informed the IRS that they would submit written comments upon receipt of the application. Plaintiffs received no response from the IRS to this proposal, and never submitted any comments or other information to the IRS concerning the waiver application. Another employee organization, the Airline Pilots Association ("ALPA"), submitted comments in response to Eastern's application.
On January 27, 1987, the IRS conditionally granted the funding waiver application, and PBGC is reviewing it for a security determination.
Plaintiffs filed suit against Eastern in the Southern District of Florida under ERISA seeking damages related to Eastern's failure to fund the Plan. This action was brought on March 2, 1987, seeking to preliminarily enjoin PBGC and the IRS from completing the waiver and security process.
Plaintiffs contend that defendants have precluded them from exercising their right to "comment" on the waiver application, in violation of § 1083, and that any waiver decision will necessarily violate § 1085a's requirement that plaintiffs' comments be considered in the waiver process. Specifically, they ask the Court to:
(1) withhold issuance of any waiver until their comments have ...