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Page v. Pension Benefit Guaranty Corp.

United States District Court, District of Columbia

October 3, 2016

ESTELLA PAGE, et al., Plaintiffs,


          JAMES E. BOASBERG United States District Judge

         There 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.

         I. Background

         The two 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 long-running feud.

         The 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.

         A. Settlement Agreement and Implementation

         In 1986 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 Collins, 88-3406.)

         This 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.

         B. Wrap-Up Agreement

         In 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.

         The 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.

         The 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.

         Needless 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.

         These 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 ...

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