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Burmeister v. Pension Benefit Guaranty Corp.

United States District Court, District of Columbia

May 6, 2013

FRANKLIN J. BURMEISTER, et al., Plaintiffs,
v.
PENSION BENEFIT GUARANTY CORPORATION, Defendant

For FRANKLIN J. BURMEISTER, INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA, Plaintiffs: Joan Torzewski, PRO HAC VICE, HARRIS RENY TORZEWSKI, LPA, Toledo, OH; Wendy Lee Kahn, ZWERDING, PAUL, KAHN & WOLLY, PC, Washington, DC.

For PENSION BENEFIT GUARANTY CORPORATION, Defendant: Kimberly J. Duplechain, Nicole Hagan, PENSION BENEFIT GUARANTY CORPORATION, Washington, DC.

OPINION

Page 84

ROSEMARY M. COLLYER, United States District Judge.

What happens when a union and employer agree to change the employee pension plan but the plan never gets changed, the agreed change is dropped from the next contract, the employer goes bankrupt,

Page 85

and the Pension Benefit Guaranty Corporation takes over pension payments? In determining pension benefits, can PBGC rely on the formal plan documents and most recent collective bargaining agreement or must it sift through the parties' prior contract negotiations and apply agreed-upon changes that are not reflected in the plan or the last contract?

Once the facts are sorted and the questions clarified, the answers are plain. Plaintiffs are (1) a former employee of Sandusky, Limited and (2) his representative union. They complain that PBGC has underpaid Mr. Burmeister's pension benefit because PBGC ignored negotiated changes to benefit terms embodied in a 1999-2002 collective bargaining agreement, before PBGC assumed responsibility in 2006. Two things are clear: whatever the meaning of the parties' negotiations in 1999, their agreement to change benefits was never reflected in an amendment to the pension plan and was not included in the 2002-2007 collective bargaining agreement (during which Sandusky filed for bankruptcy protection). The Court finds that PBGC's Appeals Board did not violate the Administrative Procedure Act (" APA" ), 5 U.S.C. § 701 et seq., when it concluded that PBGC correctly determined Plaintiff Franklin Burmeister's monthly pension benefit in 2011 according to the terms of the pension plan without the temporary 1999-2002 contract change. Accordingly, PBGC's motion for summary judgment will be granted and Plaintiffs' cross-motion for summary judgment will be denied.

I. FACTS

Plaintiff Franklin Burmeister was formerly employed by Sandusky, Limited and was represented by the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, Local 1957 (" UAW" ) during his employment there. The UAW is also a Plaintiff. The UAW represented a bargaining unit of Sandusky employees for many years and negotiated repeated collective bargaining agreements on their behalf. Defendant Pension Benefit Guaranty Corporation (" PBGC" ) is a wholly-owned government corporation created under federal law to administer the pension termination insurance program established under Title IV of the Employee Retirement Income Security Act of 1974 (" ERISA" ), 29 U.S.C. § § 1301-1461. See id. § 1302. When an underfunded pension plan covered under Title IV terminates, PBGC typically becomes the statutory trustee and pays benefits to participants and beneficiaries under the plan, subject to statutory limits. See id. § § 1341, 1342.

Sandusky established the Sandusky, Limited Pension Plan for Hourly Employees (the " Plan" ) effective January 1, 1972. Sandusky maintained the Plan separate from its Collective Bargaining Agreement (" CBA" ), but the CBA identified and incorporated the Plan. The UAW negotiated a collective bargaining agreement covering 1999 to 2002 (" 1999-2002 CBA" ) on behalf of Sandusky's employees. Plaintiffs allege that during the negotiations leading up to the 1999-2002 CBA, " the parties agreed to eliminate all reduction factors in the pension plan" for those employees retiring early. Compl. ¶ 7. The relevant paragraph of the 1999-2002 CBA provided:

PENSIONS
(92) Pension Plan
A non-contributory pension plan is set forth in a Summary Plan Description, Plan Description and other documents are a part of this Agreement. [sic]
This includes an increase in defined benefits of $1.50 in each of the last two (2) years of the Agreement and an elimi ...

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