Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Stephens v. U.S. Airways Group, Inc.

United States District Court, District of Columbia

December 7, 2012

James C. STEPHENS, et al., Plaintiffs,
US AIRWAYS GROUP, INC., et al., Defendants.

Page 11

Robert P. Trout, Trout Cacheris, PLLC, Washington, DC, Jacks C. Nickens, Nickens Keeton Lawless Farrell & Flack LLP, Houston, TX, for Plaintiffs.

Karen M. Wahle, O'Melveny & Myers, LLP, New York, N.Y. Israel Goldowitz, Mark R. Snyder, Pension Benefit Guaranty Corporation, Washington, DC, for Defendants.


ROSEMARY M. COLLYER, District Judge.

Plaintiffs James C. Stephens and Richard Mahoney, former pilots for U.S. Airways, ask the Court to certify a class of former pilots who received delayed distributions of their lump-sum retirement benefits. As part of a bankruptcy proceeding, U.S. Airways terminated the pension plan in 2003, and it was assumed by the Pension Benefit Guaranty Corporation under the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. The PBGC contends that no pilot can claim a payment for interest on a delayed distribution unless he or she first exhausted administrative remedies. Concededly, only Mr. Stephens did so. This Court agrees and will deny class certification.


This case came to this Court by way of the District Court for the Northern District of Ohio and the Sixth Circuit. This Court dismissed the pilots' claims in part, 555 F.Supp.2d 112 (D.D.C.2008), then granted summary judgment to the PBGC on the remaining claims, 696 F.Supp.2d 84 (D.D.C.2010). The case also has been to the D.C. Circuit and back. Stephens v. U.S. Airways Group, Inc., 644 F.3d 437 (D.C.Cir.2011). Before the D.C. Circuit, the question was the propriety of U.S. Airways's practice of taking forty-five days to calculate and issue the lump-sum retirement payments due to pilots under their Retirement Plan. See Stephens, 644 F.3d at 439-40. The controlling opinion of the D.C. Circuit rejected the pilots' argument that the forty-five day delay violated the ERISA requirement that lump-sum payments be the " actuarial equivalent" of an

Page 12

annuity payment, as set forth in 29 U.S.C. § 1054(c)(3).[1] Stephens, 644 F.3d at 440.

Notwithstanding the absence of an ERISA violation, the D.C. Circuit held that the necessary inquiry is whether Plaintiffs are entitled to interest from the delay, which is determined by " whether [US Airways's] 45-day delay was reasonable." Id. To resolve that question, the controlling opinion relied on an Internal Revenue Service regulation, 26 C.F.R. § 1.401(a)-20 (Question & Answer 10(b)(3)). Id. That provision clarifies the term " annuity starting date" as used in 26 U.S.C. § 401(a)(11)(A) and provides that " [an annuity] payment shall not be considered to occur after the annuity starting date merely because actual payment is reasonably delayed for calculation of the benefit amount if all payments are actually made." 26 C.F.R. § 1.401(a)-20 (Question & Answer 10(b)(3)). Applying the IRS regulation, the D.C. Circuit held that U.S. Airways's forty-five day delay was " not ‘ reasonable’ " because it was " unrelated to the administrative calculation of Plaintiffs' lump sum benefits" and did not " correspond to administrative necessity." Id. at 441. Because the payment was unreasonably delayed, Mr. Stephens and Mr. Mahoney are entitled to interest, and the D.C. Circuit remanded the case to this Court " to calculate the appropriate amounts." Id. at 441-42. The circuit court did not expressly state how much of U.S. Airways's delay should be considered reasonable on remand. Judge Brown observed, however, that " calculation of a lump sum payment took at most 21 business days" or " approximately one calendar month," which supports the conclusion that such delay would " correspond to administrative necessity" and be reasonable, even if the extra fifteen or so days would not be. Id. at 440-41.

On remand, Mr. Stephens and Mr. Mahoney press their rights to a plaintiff class pursuant to Federal Rule of Civil Procedure 23(b)(3). Plaintiffs' first motion for class certification, which derived from the Third Amended Complaint, was denied without prejudice on July 18, 2012. See Order [Dkt. 54]. The Court made three conclusions of law in denying the first class certification motion. First, because Plaintiffs conceded that Mr. Stephens was the only member of the putative class who exhausted administrative remedies, the Court held that " exhaustion of [Mr. Stephen's] administrative remedies [as a named plaintiff] does not, as a matter of law, excuse the entire putative class from exhausting their administrative remedies." Id. at 3-6. Second, even assuming arguendo that exhaustion would be excused where the putative class's allegations were based on statutory violations as opposed to the Plan's administration, exhaustion would not be excused because the Plaintiffs challenged " the administration of the [US Airways Retirement] Plan and not just the legality of the Plan" in the Third Amended Complaint. Id. at 6-7 (citing

Page 13

Kifafi v. Hilton Hotel Ret. Plan, Civ. No. 98-1517, 2004 WL 3619156, at *5 (D.D.C. Sept. 27, 2004)). Finally, as to Plaintiffs' argument that exhaustion of administrative remedies should be excused because it would have been futile, the Court held that " [a]t most, Plaintiffs' claim of futility would apply only to those pilots who failed to pursue administrative remedies after Mr. Stephens' administrative denial on March 8, 1999." Id. at 7-8.

Plaintiffs filed their Fourth Amended Class Action Complaint on August 30, 2012. See [Dkt. 60]. The class they ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.