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Montgomery v. Pension Benefit Guaranty Corp.

March 2, 2009


The opinion of the court was delivered by: Emmet G. Sullivan United States District Judge


Plaintiff Leroy Montgomery seeks judicial review of a February 4, 2005 determination by the Pension Benefit Guaranty Corporation ("PBGC" or "agency") that he is not entitled to benefits under the LTV Steel Hourly Pension Plan ("Plan"), the successor to the Pension Plan for Hourly Employees of Youngstown Sheet and Tube Company and Affiliates ("YS&T Plan"). Although plaintiff acknowledges that he did not work sufficient calendar years to qualify for benefits under the YS&T Plan, he claims that he is entitled to benefits based on the number of hours he actually worked during that time. Pending before the Court is the PBGC's Motion for Summary Judgment. Upon consideration of the motion, response and reply thereto, the applicable law, the entire administrative record, and for the reasons stated herein, the Court GRANTS the PBGC's motion.

I. Legal Framework

A. Statutory Background

The Employee Retirement Income Security Act of 1974 ("ERISA" or "Act"), 29 U.S.C. § 1001 et seq., is a "comprehensive and reticulated statute" imposing a wide range of requirements on private pension plans. Nachman Corp. v. Pension Benefit Guar. Corp., 446 U.S. 359, 361 (1980). One such requirement contained in ERISA is minimum vesting standards, which include a ceiling on the amount of time an employee may be required to work before his benefits vest. See 29 U.S.C. § 1053(a)(2). These requirements were enacted to protect employees who were otherwise being denied access to benefits despite long periods of employment. See Holt v. Winpisinger, 811 F.2d 1532, 1536-37 (D.C. Cir. 1987) ("One of ERISA's principal aims in reforming the Nation's employee pension plans was to establish vesting ceilings so that employees with lengthy service would no longer lose accrued benefits simply because their employment terminated before they became eligible to retire."). The vesting provisions contained in ERISA, however, apply only prospectively to "persons actually employed when [ERISA] became effective" on January 1, 1976. Cohen v. Martin's, 694 F.2d 296, 298 (2d Cir. 1982) (reasoning that because the vesting requirements in 29 U.S.C. § 1053(a) refer to "employees" and are subject to the applicability provision in § 1061(b)(2), which limits application to "plan years beginning after December 31, 1975," § 1053(a)'s requirements apply only to individuals employed as of that date); Fremont v. McGraw-Edison Co., 606 F.2d 752, 755 (7th Cir. 1979) (applying similar reasoning and concluding that § 1053(a) "only protects against forfeiture the benefits of those who are in an employee status on January 1, 1976, or thereafter"); see also Stewart v. Nat'l Shopmen Pension Fund, 563 F. Supp. 773, 777 (D.D.C. 1983) (relying on above interpretations of the vesting requirements in distinguishing another ERISA provision on the basis that the latter provision referred to "participants" rather than "employees"), rev'd on other grounds, 730 F.2d 1552 (D.C. Cir. 1984).

ERISA, through Title IV of the Act, also established a mandatory federal insurance program to protect certain private-sector employees and their beneficiaries from being "deprived of anticipated retirement benefits by the termination of pension plans before sufficient funds have been accumulated in the plans." Pension Ben. Guaranty Corp. v. LTV Corp., 496 U.S. 633, 637 (1990) (quoting Pension Benefit Guar. Corp. v. R.A. Gray & Co., 467 U.S. 717, 720 (1984)); see also Nachman Corp., 446 U.S. at 374 ("One of Congress' central purposes in enacting this complex legislation was to prevent the 'great personal tragedy' suffered by employees whose vested benefits are not paid when pension plans are terminated." (footnote omitted)). In addition, Title IV created the PBGC, a wholly owned U.S. corporation that administers the insurance program. See 29 U.S.C. § 1301 et seq. Thus, "[w]hen a plan covered under Title IV terminates with insufficient assets to satisfy its pension obligations to the employees, the PBGC becomes trustee of the plan, taking over the plan's assets and liabilities. The PBGC then uses the plan's assets to cover what it can of the benefit obligations." LTV Corp., 496 U.S. at 637 (citing 29 U.S.C. § 1344).

The PBGC guarantees "all nonforfeitable benefits," 29 U.S.C. § 1322, which are defined as benefits "for which a participant has satisfied the conditions of entitlement under the plan." Id. § 1301(a)(8). When the PBGC becomes the trustee of a terminated plan, the agency obtains both plan and participant records and determines how much each participant is or will be due. Def.'s Mot. Summ. J. at 4. The agency then sends a determination letter to the participant, who may challenge the benefit determination by appealing to the PBGC Appeals Board. See 29 C.F.R. §§ 4003.21, 4003.51. "In reaching its decision, the Appeals Board shall consider those portions of the file relating to the initial determination, all material submitted by the appellant and any third parties in connection with the appeal, and any additional information submitted by PBGC staff." Id. § 4003.59(a). Such a decision constitutes the PBGC's final agency action. Id. § 4003.59(b). After exhausting these administrative remedies, a plan participant may then seek judicial review of the PGBC's determination. 29 U.S.C. § 1303(f).

B. Standard of Review

Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment is appropriate if the pleadings on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). Material facts are those that "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The party seeking summary judgment bears the initial burden of demonstrating an absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Tao v. Freeh, 27 F.3d 635, 638 (D.C. Cir. 1994). In considering whether there is a triable issue of fact, the court must draw all reasonable inferences in favor of the non-moving party. Tao, 27 F.3d at 638. The non-moving party's opposition, however, must consist of more than mere unsupported allegations or denials and must be supported by affidavits or other competent evidence setting forth specific facts showing that there is a genuine issue for trial. Fed. R. Civ. P. 56(e); see Celotex Corp., 477 U.S. at 324.

As a government agency, the PBGC is subject to the provisions of the Administrative Procedure Act ("APA"). 5 U.S.C. § 551 et seq.; see LTV Corp., 496 U.S. at 636. When reviewing agency action pursuant to the APA, the Court must determine whether the challenged decision is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A). In applying the "arbitrary and capricious" standard, a court "may not supply a reasoned basis for the agency's action that the agency itself has not given," but a court should "uphold a decision of less than ideal clarity if the agency's path may reasonably be discerned." Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). Upon review of an agency's action, the Court must engage in a "thorough, probing, in-depth review" to determine "whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment." Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 415-16 (1971). The Court's review, however, is limited to the administrative record that was before the agency at the time that its decision was made. 5 U.S.C. § 706; Florida Power & Light Co. v. Lorian, 470 U.S. 729, 743-44 (1985).

II. Factual and Procedural Background

Plaintiff was employed by Youngstown Sheet and Tube Company ("YS&T") from May 19, 1959 until March 17, 1973 -- a period totaling approximately thirteen years and nine months. Administrative Record ("A.R.") 7. As a YS&T employee, he was a participant in the YS&T Plan. See generally id. at 122-81. Plaintiff claims that he left YS&T because he believed that the work environment was unhealthy, and attributes his subsequently diagnosed lung cancer to his employment at YS&T. Id. at 114-15. In June 1991, plaintiff applied to LTV Steel Company, the successor to YS&T, for pension benefits. Id. at 7. The administrative record does not reveal the precise disposition of the application, but given plaintiff's subsequent application to the PBGC for benefits, it appears that plaintiff's LTV application was denied.

In September 2004, after the PBGC became the statutory trustee of the Plan, plaintiff applied to the agency for benefits.*fn1 Id. at 4-5. The PBGC issued a determination letter in October 2004, finding that plaintiff was not entitled to a pension benefit because he did not meet the fifteen-year service requirement contained in the YS&T Plan. Id. at 14.

Plaintiff then filed an appeal with the PBGC Appeals Board, raising five issues for review. See id. at 18-19. Specifically, plaintiff claimed that he qualified for pension benefits because (1) the fifteen-year service requirement did not apply because of the vesting requirements contained in 29 U.S.C. ยง 1053(a); (2) he had worked "enough overtime hours (500) to qualify for the 15 years"; (3) he had served in the military for a number of years before his employment at YS&T began; (4) he retired on ...

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