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Maher v. Pension Benefit Guaranty Corporation

United States District Court, District of Columbia

September 26, 2017

JEROME A. MAHER, Plaintiff,



         On March 25, 2015, the Pension Benefit Guaranty Corporation (“PBGC”) denied Plaintiff Jerome Maher's claim for benefits under the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1001-1461, in connection with a pension plan that was terminated in 1984. Maher filed this lawsuit to challenge the PBGC's denial (see Compl., ECF No. 1), and the parties have now filed cross-motions for summary judgment (see Mem. in Supp. of Def.'s Mot. for Summ. J. (“Def.'s Mem.”), ECF No. 29-1; Mot. to Deny Def.'s Mot. for Summ. J. & Cross-Mot. for Summ. J. (“Pl.'s Mem.”), ECF No. 31). As explained fully below, this Court concludes that the PBGC's decision was not arbitrary or capricious because substantial evidence supported the PBGC's finding that Maher received the benefits to which he was entitled in 1984 when the pension plan was terminated. Accordingly, this Court will GRANT the PBGC's motion for summary judgment and DENY Maher's cross-motion for summary judgment. A separate Order consistent with this Memorandum Opinion will follow.

         I. BACKGROUND

         A. The PBGC's Role In Terminating Pension Plans Under ERISA

         “The PBGC is a federal corporation charged with administering and enforcing the plan termination insurance provisions of ERISA.” Deppenbrook v. PBGC, 778 F.3d 166, 168 (D.C. Cir. 2015) (internal quotation marks and citation omitted); see 29 U.S.C. § 1302 (describing the PBGC's powers and functions). Subject to various statutory limitations, the PBGC guarantees the payment of benefits under pension plans covered by ERISA. See 29 U.S.C. §§ 1321-22b. The PBGC also supervises the termination process for covered pension plans, including plans whose assets are sufficient to cover all benefit liabilities and whose termination therefore does not trigger the PBGC's insurance obligations. See PBGC v. LTV Corp., 496 U.S. 633, 638-39 (1990); see also 29 U.S.C. § 1341(b). ERISA refers to these as “standard” terminations. 29 U.S.C. § 1341(b).[1]

         A standard termination is initiated by a pension plan's administrator, who must give all plan beneficiaries notice of intent to terminate the plan at least 60 days before the proposed termination date. See Id. § 1341(a)(2); see also 29 C.F.R. § 4041.23(a)(1).[2] The plan administrator must also notify each plan participant of the benefits to which he is entitled and the basis for calculating that amount. See 29 U.S.C. § 1341(b)(2)(B); 29 C.F.R. § 4041.24. In addition to giving notice to all beneficiaries of a pension plan, the plan administrator must also file a standard termination notice with the PBGC, alerting the PBGC to the plan's assets and benefit liabilities. See 29 U.S.C. § 1341(b)(2)(A); 29 C.F.R. § 4041.25(a). Upon receiving this notice, the PBGC must review it and notify the plan administrator within 60 days if the PBGC believes that the plan's assets are not sufficient to cover all benefit liabilities. See 29 U.S.C. § 1341(b)(2)(C)(i); 29 C.F.R. § 4041.31(a)(1)(iv).

         Absent receiving such a notice from the PBGC, the plan administrator commences distributing the plan's assets to its beneficiaries in accordance with a priority order set forth in ERISA. See 29 U.S.C. §§ 1341(b)(2)(D), 1344; 29 C.F.R. § 4041.28(a)(1), pt. 4044. And once this distribution is complete, the plan administrator must certify in writing to the PBGC that the plan's assets “have been distributed . . . so as to pay all benefit liabilities under the plan.” 29 U.S.C. § 1341(b)(3)(B); see also 29 C.F.R. § 4041.29. In 1984, the year in which the pension plan at issue in this case was terminated, PBGC regulations also required that the plan administrator's post-distribution certification to the PBGC contain “[t]he amount of the benefit provided” to “each participant or beneficiary to whom distribution was made[.]” 29 C.F.R. § 2617.23(a)(1) (1984).

         B. Factual Background

         Plaintiff Jerome Maher began working for First Federal Savings and Loan Association of Wilmette (“First Federal”) in 1963. (See Letter from Jerome A. Maher to Charles Korb, PBGC (Mar. 14, 2012), Admin. R. (“AR”), ECF Nos. 28-1 to 28-2, 106.)[3] See also Maher v. United States (Maher IV), 92 Fed.Cl. 413, 414 (2010). By 1982, Maher was First Federal's director and executive vice president. See Maher IV, 92 Fed.Cl. at 414. Maher was also a participant in the company's employee pension plan. See id. In 1982, at the behest of federal regulators, First Federal merged with several other savings and loan associations to form Horizon Federal Savings Bank (“Horizon”), and Maher stayed on as Horizon's executive vice president. See Id. As part of the merger, Maher agreed to forfeit his existing First Federal pension plan with the understanding that Horizon would eventually create a comparable plan for him. See id.[4]

         On May 15, 1984, Horizon notified the PBGC that it intended to terminate First Federal's pension plan over the course of the coming months. (See Form 5310, AR 10- 14.) Maher personally signed the notice form as Horizon's executive vice president (see id., AR 10), and an attachment to the form listed benefit amounts to be distributed to 25 individual beneficiaries, including $57, 834 to Maher (see Form 6088, AR 15). Shortly before providing the requisite notice to the PBGC, Horizon had sent Maher a letter notifying him of his entitlements upon the termination of the plan and prompting him to elect whether to receive his benefits in monthly annuity payments of $1, 784 beginning on his retirement date in 1999, or in a single lump-sum payment of $57, 834 upon the plan's termination, in which case the distribution could be rolled over “tax-free” into an individual retirement account. (Letter from Linda S. Sepp, Dir. of Human Res., Horizon, to Jerome Maher (Apr. 4, 1984), AR 57.)

         On September 28, 1984, Horizon's plan administrator Dominic Cannon wrote to the PBGC certifying that “[e]ach participant elected in writing the alternative form of distribution”-i.e., a lump-sum payment. (Plan Admin.'s Certification for an Alternative Form of Distribution, AR 59). See 29 C.F.R. § 4044.73(a)(1) (characterizing a “lump sum” payment as an “alternative form of distribution”).[5] Then, on January 16, 1985, Cannon again wrote to the PBGC, this time “certify[ing] that the Plan's assets were allocated in accordance with” ERISA, and attaching a list of benefit distributions to individual beneficiaries, including a lump-sum benefit of $57, 834 to Maher. (Letter from Dominic Cannon, Vice Chairman and Trustee of the Plan, Horizon, to Andrew Murphy, Case Officer, PBGC (Jan. 16, 1985) (“Certificate of Distribution”), AR 17; see also Id. 19.) The benefit distribution list clarified that Maher received a “benefit” of $57, 834 at a “cost” to Horizon of $58, 754.59. (See Certificate of Distribution, AR 19.)[6]

         C. Procedural History

         Beginning on March 14, 2012-more than 27 years after the termination of the First Federal pension plan and the purported distribution of its funds to the plan's beneficiaries-and continuing until May 24, 2013, Maher wrote a series of letters to the PBGC, claiming that he was never paid the $57, 834 to which he was entitled under the First Federal pension plan and requesting that the PBGC pay him the guaranteed portion of that amount. (See, e.g., Letter from Jerome A. Maher to Mark Fifer, PBGC (Jan. 16, 2013), AR 53 (“I never received a lump sum benefit or any other benefit from the First Federal Savings and Loan Association of Wilmette Retirement Plan.”).) The PBGC sent a letter to Maher on October 25, 2013, informing him of its “determin[ation] that there is no basis to support [his] allegations that [he is] owed an unpaid benefit from the Plan.” (Letter from Charles Korb, Manager, Processing and Technical Assistance Branch, PBGC, to Jerome A. Maher (Oct. 25, 2013), AR 63.) In reaching this decision, the PBGC relied on Horizon's letter to the PBGC (dated January 16, 1985), which certified that all beneficiaries of the First Federal plan, including Maher, had received the benefits to which they were entitled. (See Id. (observing that “one of the Plan's trustees, Dominic P. Cannon, certified that a lump sum benefit of $57, 834 was distributed to you”).) The PBGC decision further noted that Maher's own assertion that he was never paid “provides no credible basis to determine that [he] did not receive a benefit from the Plan[, ]” because “it is based on [his] recollection alone of events of almost 30 years ago[, ]” and because it is unreasonable to infer that Maher was not paid given “the extensive role [he] played in the Plan's termination and distribution of benefits, as an Executive Vice President” of Horizon. (Id.)

         Maher appealed the PBGC's denial of his request for benefits to the PBGC Appeals Board in two separate letters dated three days apart in November of 2013. (See Letter from Jerome A. Maher to PBGC Appeals Board (Nov. 11, 2013) (“Nov. 11 Appeal Letter”), AR 88-89; Letter from Jerome A. Maher to PBGC Appeals Board (Nov. 14, 2013) (“Nov. 14 Appeal Letter”), AR 55-56.) Maher's appeal re-emphasized that he never received a lump-sum benefit in connection with the termination of the First Federal plan in 1984. (See Nov. 14 Appeal Letter, AR 56.) Maher also contended that the PBGC's initial denial decision was wrong both to doubt his recollection (see Nov. 11 Appeal Letter, AR 88 (“I think I would remember if I received an additional $57, 834 in 1984”)), and to infer that he must have been paid from the fact that he personally played a significant role in the plan's termination (see id., AR 89 (stating that “my only role in the termination of the Pension Plan” was to “sign[] a power of attorney” to Horizon's accountants “to provide the actuarial report to satisfy the [PBGC] that the Plan had sufficient assets to fund the pension obligations”)). Finally, Maher argued that the September 28, 1984, and January 16, 1985, certification letters from Cannon to the PBGC are dubious on their face because they state that, with two exceptions, all participants in the First Federal plan (including Maher) elected to receive immediate lump-sum ...

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