United States District Court, District of Columbia
E. BOASBERG United States District Judge
may be two things in life that are certain, but in
class-action settlements, there is but one: attorney fees.
The question now before the Court is whether those fees have
properly come to an end after more than $85 million in
payouts. The Pension Benefit Guaranty Corporation contends
that they have because a settlement Wrap-Up Agreement
unambiguously precludes fees after a ten-year period, which
has now expired. Class Counsel, not surprisingly, disagree.
The gist of their argument is that the PBGC failed to
adequately process benefit payments during the fees period;
as a result, Counsel assert that they have not yet received
the benefit of their bargain. Because the Court agrees with
the PBGC and finds no reason to amend this restriction, it
will deny Class Counsel's Motion seeking further fees.
class-action lawsuits underlying this Motion are older than
the majority of today's law-school students. In the late
1980s, the cases were initially assigned to then-Chief Judge
Aubrey Robinson and were then transferred to Judge Richard
Roberts in March 2001, where they remained until his
retirement in April 2016, at which point they was assigned to
this Court. In 1996, Class Counsel and the PBGC settled the
consolidated cases, and in 2002 negotiated a Wrap-Up
Agreement that should have put a final bow on that
settlement's work. There has instead been more litigious
infighting than administrative wrapping-up between the
parties ever since. Court delays, unfortunately, deserve
blame as well. Now, more than a decade later, the two sides
remain at loggerheads over how to interpret their Agreement.
The instant Motion to enforce the Agreement's
attorney-fees provision is just one manifestation of this
Court must do a bit of heavy lifting to sort through the
factual and procedural baggage behind this Motion. The first
section below thus briefly outlines the original Settlement
Agreement and describes its implementation phase. Next, the
Court provides the basic terms of the Wrap-Up Agreement and
sketches the parties' protracted dispute over the
PBGC's alleged non-compliance with it. A third section
details the settlement benefits that have continued to be
paid to the class members - with corresponding attorney fees
to Counsel - in the midst of this entrenched dispute.
Finally, the Court outlines the key events that have occurred
since the PBGC stopped subtracting attorney fees from the
benefit payments in September 2012.
Settlement Agreement and Implementation
and 1988, two class-action lawsuits were filed against the
PBGC over the termination of federally insured pension plans.
See Page v. Pension Benefit Guar. Corp., 498
F.Supp.2d 223, 224 (D.D.C. 2007). After extended
negotiations, Class Counsel and the PBGC entered into a
Settlement Agreement in these suits in 1996. Id.
Under its terms, the PBGC was to put money into a Settlement
Fund, and a Settlement Director was tasked with locating,
processing, and paying as many eligible class members as
possible during a 36-month settlement-implementation period
out of that Fund. Id. A Class Action Settlement
Board (CASB), composed of two representatives from each side
and a neutral lawyer, oversaw the Director's efforts.
Id. At the time of the settlement, the PBGC
represented to the Court that they anticipated
settlement-benefit payments would reach $65-70 million.
See ECF No. 134-1 (Final Report), ¶ 10. (All
ECF citations are to Page, 89-2997, rather than
estimate was more than a tad low. After two extensions, the
settlement-implementation phase finally came to an end in
2002 with the Settlement Fund having paid out over $922
million in benefits to class members. See Final
Report, ¶ 30. The reason that amount substantially
outpaced the original estimate of likely benefit payments was
the “extremely diligent” efforts made by the CASB
to locate missing class members, which “far exceed[ed]
the requirements of the Settlement Agreement and . . . the
efforts of many previous class actions.” Id.,
¶ 33. When these benefit payments were made, Class
Counsel, in turn, received 8% of them as attorney fees under
an order from this Court. See ECF No. 133-8 (Order
Approving Attorney Fees) at 3. In other words, Class Counsel
pocketed around $75 million in fees.
April 2001, the parties worked out a Wrap-Up Agreement to
close out the settlement, which this Court later approved.
Page, 498 F.Supp.2d at 224; see also ECF
No. 133-5 (Wrap-Up Agreement). The Agreement provided for the
“shut down of the substantive work of the Settlement
Director by August 31, 2002, and for the CASB to disband by
December 31, 2002.” Page, 498 F.Supp.2d at
224. Much of the Agreement laid out the mundane
administrative tasks that the parties would need to complete
to responsibly shutter the settlement's organizational
apparatus - e.g., the storage of the CASB's
records. See Wrap-Up Agreement. The Agreement,
moreover, anticipated that the Court would then discharge the
CASB, the parties, and the Settlement Director “from
any and all obligations under the Settlement Agreement or
otherwise arising from this litigation” by the end of
2002. Id. at 11.
Agreement also provided for the payment of class benefits to
continue past this formal shutdown. Because the Settlement
Director had calculated benefits for some class members who
had not yet been located, the PBGC committed to pay benefits
to these members through its own Pension Search Program if
they were later found. See Wrap-Up Agreement at 1-2.
The Pension Search Program is a general-pension portal that
the PBGC maintains to allow “individuals who are
entitled to benefits from [any] pension plans that PBGC has
taken over” to enter their name and retrieve results
for benefits that are owed to them under those plans.
See Final Report at 9 n.1. The beneficiary may then
fill out forms to confirm her identity and claim her money.
Agreement further offered incentives to Class Counsel and
private address-search firms to continue to look for these
remaining class members for periods of time after the
transition to the Pension Search Program. For three years,
the PBGC agreed to pay 10% of benefit payments to
address-search firms when a class member claiming the
settlement benefit on Pension Search had been located by such
a firm. Id. at 15; Wrap-Up Agreement at 9. The
Agreement also provided that corresponding attorney fees
would continue to be deducted from benefit payments under
this new system as follows:
The modification of PBGC's liability to pay settlement
benefits to permit settlement benefit payments through
PBGC's Pension Search program after August 31, 2002,
instead of through the Settlement Benefits Fund, shall not
modify the U.S. District Court's June 7, 1996 Order
awarding attorneys' fees as a percentage of class
counsel's recovery on behalf of the class. Attorneys'
fees shall continue to be deducted when settlement benefit
payments are made to class members at the 8% rate provided in
the U.S. District Court's June 7, 1996 Order for a
ten-year period. Thereafter, PBGC shall have no further
liability to class counsel in this case.
Wrap-Up Agreement at 8.
to say, the wind-down did not go smoothly. By the end of
2002, the PBGC had begun paying settlement benefits through
Pension Search, and the Settlement Director had ceased its
work. Several of the administrative tasks necessary to shut
down the CASB, however, had not yet been completed. See
Page, 498 F.Supp.2d at 226. As a result, in their
December 2002 Final Report, the parties asked that the Court
“issue an order of discharge . . . following completion
of [several administrative] tasks . . . and conditioned on
the filing of the CASB's 2001 and 2002 Financial
Statements.” ECF No. 134-1 (Joint Notice of Filing of
Final Report and Request for Order of Discharge) at 1-2.
tasks were not subsequently completed, and no final discharge
issued. See Page, 498 F.Supp.2d at 225. The parties
hotly contest who is to blame for this, but only one thing is
clear from the record: in May 2003, the CASB's wind-up
efforts collapsed completely. See ECF No. 132-1
(Declaration of Stephen R. Bruce), ¶ 4; ECF No. 133-18
(Declaration of Patricia Scott-Clayton), ¶ 11. The PBGC
then filed a motion to compel closeout of the settlement in
June 2003, alleging that Class Counsel had stymied its
efforts to resolve the remaining tasks. See Page,
498 F.Supp.2d at 226. Because the Wrap-Up Agreement required
the CASB to disband no later than December 31, 2002, the PBGC
argued that the Court ...