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Royal Oak Enters., LLC v. Pension Benefit Guar. Corp.

United States District Court, D. Columbia.

January 28, 2015

ROYAL OAK ENTERPRISES, LLC, Plaintiff,
v.
PENSION BENEFIT GUARANTY CORPORATION, Defendant

Page 432

For ROYAL OAK ENTERPRISES, LLC, Plaintiff, Counter Defendant: Edward Joseph Meehan, LEAD ATTORNEY, GROOM LAW GROUP, Washington, DC; Natasha S. Fedder, PRO HAC VICE, Michael Joseph Prame, GROOM LAW GROUP, CHARTERED, Washington, DC.

For PENSION BENEFIT GUARANTY CORPORATION, Defendant, Counter Claimant: Louisa A. Fennell, LEAD ATTORNEY, PENSION BENEFIT GUARANTY CORPORATION, Washington, DC.

Page 433

MEMORANDUM OPINION

Gladys Kessler, United States District Judge.

Royal Oak, LLC (" Royal Oak," " Plaintiff" or " the Company" ) brings this action to challenge an Order by the Pension Benefit Guaranty Corporation (" PBGC," " Defendant," or " the Agency" ).[1] On October 31, 2008, Royal Oak terminated the pension plan (" the Plan" ) it had previously operated for the benefit of its employees under the Employee Retirement Income Security Act of 1974 (" ERISA" ), 29 U.S.C. § 1001, et seq. After the Plan's termination date, Royal Oak changed the method it used to calculate certain payments to Plan participants. As a result of the change, the participants received approximately $2.1 million less than they would

Page 434

have been paid under the terms of the Plan as written on October 31, 2008.

The PBGC, which administers Title IV of ERISA, 29 U.S.C. § § 1301-1461, performed an audit of Royal Oak's pension plan termination. The Agency determined that Royal Oak had improperly decreased the value of plan benefits after the Plan's termination and Ordered Royal Oak to make additional payments to Plan participants.

On July 9, 2013, Royal Oak filed its Complaint seeking judicial review of the PBGC's Order. [Dkt. No. 1]. On September 16, 2013, the PBGC filed its Answer and a Counterclaim seeking enforcement of its Order. [Dkt. No. 11]. On January 22, 2014, both parties submitted their respective Motions for Summary Judgment, [Dkt. Nos. 19, 20], and thereafter, their Oppositions, [Dkt. Nos. 21, 22], and Replies, [Dkt Nos. 23, 24]. On April 8, 2014. With the Court's permission, the PBGC filed a Surreply. [Dkt. No. 30]. For the reasons set forth below, Royal Oak's Motion for Summary Judgment shall be denied, and the PBGC's Motion for Summary Judgment shall be granted.

I. BACKGROUND

A. Statutory Framework

1. Overview of ERISA

Congress enacted ERISA to provide minimum standards that would assure the equitable character and financial soundness of employee pension plans. See 29 U.S.C. § 1001(c); Pension Ben. Guar. Corp. v. R.A. Gray & Co., 467 U.S. 717, 720, 104 S.Ct. 2709, 81 L.Ed.2d 601 (1984). ERISA aims " to increase the likelihood that participants and beneficiaries under single-employer defined benefit pension plans will receive their full benefits." 29 U.S.C. § 1001b(c)(3).

ERISA's four Titles serve distinct functions within the statutory regime. Title I establishes the reporting and disclosure, participation and vesting, funding, and fiduciary obligations provisions pertaining to ongoing pension plans. See 29 U.S.C. § § 1001-1191c.

Title II, codified within the Internal Revenue Code (" I.R.C." ), relates to the qualification of pension plans for favorable tax treatment. See I.R.C. § § 401-424.

Title III provides for coordination of jurisdictional, administrative, and enforcement issues among the PBGC, the Internal Revenue Service (" IRS" ), and the Department of Labor. ...


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