Deppenbrook v. Pension Benefit Guaranty Corporation

• Court: District Court, District of Columbia
• Decided: March 17, 2011
• Docket: Civil Action No. 2011-0600
• Status: Published

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA

PAUL DEPPENBROOK, ) ED ANTHONSEN, JOHN E. ) ATKINSON, LEE BLANKENBICKER, ) MICHAEL E. BURCKURE, ) RALPH CANANZI, HARRY P. ) CARCASE, PAUL BRUCE CERATTI, ) FRANK CHRICO, E.J. CORBIN, ) DAVID CORY, ROGER COTTERMAN, ) ARTHUR BRUCE CRIBBS, WILLIAM ) EATON, FRANK R. FERRERI, ) TERRY FLUENT, JOHN W. ) FRITZ, JR., WILLIAM GIPSON, ) OLSAN W. GLOVER, RON GOSSARD, ) CLIFFORD J. HALLSTEAD, ROBERT ) HEATON, ROBERT C. HARRINGTON, ) WAYNE HOSCAR, JAMES MICHAEL ) HOWE, ROBERT H. HUSTON, ) CHARLES W. HUNTINGTON, ) RAYMOND A. KANE, KEITH A. ) KNOX, JACK E. LIBERT, JAMES M. ) MANNON, JOHN R. MCDANEL, ) WILLIAM L. MCDOWELL, ALBERT ) MOORE (a/k/a DENNY MOORE), ) DAVID W. NAMOLA, JAMES P. ) NESTASIE, FRANK RAY PARRISH, ) THOMAS R. PARRISH, JERRY W. ) POWERS, THOMAS M. PROCOVICH, ) RICHARD M. RIHELY, CARL ROSE, ) PAUL KANE, LEX HERBANIK, ) TONY BRIANCESCO, CHARLES ) MAHOSKY, STANLEY TURAK, ) ART EVENS, HOWARD D. SHULER, ) JR., ROBERT TAYLOR, JACK ) THOMAS, DENNIS THUMM, ) JOSEPH TRZCINSKI, WILLIAM J. ) VENEZIE, SR., EDWARD M. WALSH, ) and LOUIS A. YOUNG, ) ) Plaintiffs, ) ) vs. ) 2:10cv134 ) Electronic Filing PENSION BENEFIT GUARANTY ) CORPORATION, ) ) Defendant. ) MEMORANDUM OPINION

March 17, 2011

I. INTRODUCTION

Plaintiffs, fifty-six (56) members of the United Steelworkers of America (the “USWA” or

the “Union”) and former employees of Republic Technologies International, LLC (“RTI”)

initiated this action against Defendant, Pension Benefit Guaranty Corporation1 (“PBGC”),

regarding the recalculation of benefits under RTI’s USWA Defined Pension Benefit Plan (the

“Pension Plan”). PBGC has filed a motion to dismiss the action on several grounds under Rule

12(b) of the Federal Rules of Civil Procedure. Plaintiffs have responded and the motion is now

before the Court.

II. STATEMENT OF THE CASE

On April 2, 2001, RTI filed a petition for voluntary bankruptcy under Chapter 11 of the

United States Bankruptcy Code. On June 12, 2002, PBGC which assumed the responsibility to

pay the retirement benefits of RTI employees as a result of RTI’s bankruptcy2, issued notices

pursuant to 29 U.S.C. § 1342(c), indicating its intent to terminate the plans, to seek appointment

as statutory trustee, and to have June 14, 2002, established as the date of plan termination.

Pension Benefit Guar. Corp. v. Republic Techs. Int’l, LLC, 386 F.3d 659, 660 (6th Cir. Ohio

1 PBGC is a federal corporation that was established by the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1301-1461 (“ERISA”) for the purpose of administering the single-employer pension plan termination insurance program. Under this insurance program, PBGC guarantees the payment of certain minimum pension benefits to pension plan participants in the event that a covered plan terminates with insufficient assets to pay the benefits in full. 29 U.S.C. §§ 1302(a)(2), 1322, and 1361. 2 If a plan terminates with insufficient assets to pay guaranteed benefits, PBGC typically becomes trustee of the plan, takes over the assets and liabilities of the plan, and pays benefits to plan participants. 29 U.S.C. §§ 1322, 1342(d)(1), and 1361. 2 2004). On that same day, PBGC also filed a complaint against RTI in the United States District

Court for the Northern District of Ohio seeking termination of the plans, appointment as

statutory trustee, and the establishment of June 14, 2002, as the date of plan termination. Id.

The District Court, however, ruled that August 17, 2002 was the date of the termination

of the plan, which resulted in significantly increased pension benefits that PBGC was required to

pay from its insurance funds. In Pension Benefit Guar. Corp. v. Republic Techs. Int’l, LLC, the

Court of Appeals for the Sixth Circuit reversed the District Court’s order regarding the date of

plan termination holding that June 14, 2002, was the correct date of plan termination. See

generally Pension Benefit Guar. Corp. v. Republic Techs. Int’l, LLC, supra. PBGC then

recalculated the participants’ benefit entitlements resulting in reductions to the monthly benefits

of the participants.

III. DISCUSSION

PBGC seeks dismissal of Plaintiffs’ Amended Complaint contending that: (1) venue is

improper in this district; (2) the Complaint was improperly served; and (3) the complaint fails to

state a claim upon which relief can be granted.

A. Venue

PBGC argues that the ERISA claim should be dismissed because Plaintiffs brought this

claim against PBGC in an improper venue. ERISA contains a specific venue provision applicable

to actions against PBGC. Under 29 U.S.C. § 1303(f), a participant “may bring an action against

[PBGC] for appropriate equitable relief in the appropriate court.” 29 U.S.C. § 1303(f)(1). The

“appropriate court” is defined as:

(A) the United States district court before which proceedings under section 1341 or 1342 of this title are being conducted,

(B) if no such proceedings are being conducted, the United States district court for the judicial district in which the plan has its principal office, or 3 (C) the United States District Court for the District of Columbia.

29 U.S.C.A. § 1303(f)(2). PBGC contends that because there are no current proceedings under

§§ 1341 or 1342, and because the plan’s principal office has closed, the statute compels venue in

the District of Columbia. The Court agrees.

Presently, there are no proceeding being conducted under §§ 1341 or 1342 in this district.

Moreover, PBGC’s action under § 1342 was initiated in the United States District Court for the

Northern District of Ohio, and culminated with the Sixth Circuit’s decision in Pension Benefit

Guar. Corp. v. Republic Techs. Int’l, LLC, supra., in 2004. Because there are no such

proceedings presently pending, subsection A of § 1303(f)(2) is inapplicable in this instance.

Absent proceedings being conducted under §§ 1341 or 1342, the Court must determine if

the Pension Plan has a principal place of business in the Western District of Pennsylvania. The

Pension Plan was terminated by the District Court of Northern Ohio in 2003, and PBGC was

appointed statutory trustee of the Plan. When Plaintiffs initiated this action, the Pension Plan

had no principal office in the Western District of Pennsylvania. Accordingly, the appropriate

statutory venue for the instant litigation is the United States District Court for the District of

Columbia. In the interests of justice, the Court will not dismiss the action, but will transfer the

action to the United States District Court for District of Columbia.

B. Improper Service

PBGC seeks dismissal of the complaint for failure of Plaintiffs to conform to the service

requirements of Rule 4 of the Federal Rules of Civil Procedure. Because PBGC is an agency of

the United States, it must be served in accordance with Rule 4(i). Rule 4(i)(2) states in relevant

part that “To serve a United States agency . . . a party must serve the United States and also

send a copy of the summons and of the complaint by registered or certified mail to the agency . .

.” Fed. R. Civ. P 4(i)(2). In order to serve the United States, Plaintiffs must deliver a copy of the

4 summons and of the complaint to the United States attorney for the district where the action is

brought and to the Attorney General of the United States in Washington, D.C. See Fed. R. Civ. P

4(i)(1)(A) & (B). PBGC acknowledges that it was mailed a copy of the complaint in this

instance, but there is no indication in the record that Plaintiffs served the United States Attorney

in Pittsburgh, or the Attorney General as required by Rule 4(i).

The United States Court of Appeals for the Third Circuit has held that “dismissal of a

complaint is inappropriate when there exists a reasonable prospect that service may yet be

obtained.” Umbenhauer v. Woog, 969 F.2d 25, 30 (3d Cir. 1992). “Where service is insufficient,

the Court must extend the deadline where good cause is present, and may, at its discretion,

extend the deadline regardless, even if good cause is not present.” Salaam v. Merlin, No.

CIV.A.08-1248, 2009 U.S. Dist. LEXIS 64463 at *3 (D.N.J. Jul. 22, 2009) (citing Petrucelli v.

Bohringer & Ratzinger, 46 F.3d 1298, 1312 (3d Cir.1995)). Good cause exists where there is a

“demonstration of good faith on the part of the party seeking an enlargement and some

reasonable basis for noncompliance within the time specified in the rules.” MCI Telecomm.

Corp. v. Teleconcepts, Inc., 71 F.3d 1086, 1097 (3d Cir. 1995). Some of the factors courts

examine in determining whether good cause exists include: (1) the reasonableness of the

plaintiffs’ efforts to serve, (2) the prejudice that may befall a defendant as a consequence of

untimely service, and (3) whether plaintiffs moved for an enlargement of time to serve. Id.

(citing the three factors but noting that the “absence of prejudice alone can never constitute good

cause to excuse late service”).

The Court will allow the pro se Plaintiffs in this matter the opportunity to correct any

service defects related to the service of the United States. Rule 4(i)(4) permits the Court to allow

a party reasonable time to cure its failure to a certain party or parties under the Rule’s

requirement of multiple service. The Court finds the Plaintiffs made reasonable efforts to serve

PBGC and its failure to serve the United States is excusable in this instance and causes no 5 prejudice to the United States or PBGC. Allowing the Plaintiffs to perfect service upon the

United States comports with the 1993 Advisory Committee Notes to Rule 4(i) Amendments

which recognize that the Rule, as amended, “. . . saves the plaintiff from the hazard of losing a

substantive right because of failure to comply with the complex requirements of multiple service.

. .” Accordingly, Plaintiffs may serve the United States Attorney for the District of Columbia

and the Attorney General of the United States in compliance with the Federal Rules of Civil

Procedure as specifically set forth in the Order following the filing of the Court’s Opinion.

C. Failure to Exhaust Administrative Remedies

PBGC maintains that sixteen (16) of the Plaintiffs have not exhausted their administrative

remedies and must do so before seeking judicial review. Although ERISA does not expressly

require exhaustion of administrative remedies, “where Congress has not clearly required

exhaustion, sound judicial discretion governs.” Boivin v. U.S. Airways, Inc., 446 F.3d 148, 153

(D.C. Cir. 2006)(quoting McCarthy v. Madigan, 503 U.S. 140, 144 (1992)). The Supreme Court

has long “acknowledged the general rule that parties exhaust prescribed administrative remedies

before seeking relief from the federal courts.” McCarthy v. Madigan, 503 U.S. at 144-145; see

also Myers v. Bethlehem Shipbldg. Corp., 303 U.S. 41, 50-51 (1938) (stating “the long-settled

rule of judicial administration that no one is entitled to judicial relief for a supposed or threatened

injury until the prescribed administrative remedy has been exhausted”). The Court further noted,

with respect to agency authority, that “the exhaustion doctrine recognizes . . . that agencies, not

the courts, ought to have primary responsibility for the programs that Congress has charged them

to administer.” McCarthy v. Madigan, 503 U.S. at 145.

PBGC regulations provide administrative remedies for persons dissatisfied with its

benefit determinations. The regulations require that PBGC issue an “initial determination” of a

participant’s benefits stating “the reason for the determination, and . . . shall contain notice of the

right to request review of the determination.” 29 C.F.R. § 4003.21. The regulations allow any 6 person “aggrieved” by the initial determination to file an appeal to the PBGC Appeals Board. 29

C.F.R. § 4003.51. The decision of the Appeals Board “constitutes the final agency action by the

PBGC with respect to the determination which was the subject of the appeal.” 29 C.F.R. §

4003.59(b). Further, the regulations state that “a person aggrieved by an initial determination . . .

has not exhausted his or her administrative remedies until he or she has filed” a request for

review. 29 C.F.R. § 4003.7.

Plaintiffs argue that they should be excused from exhausting administrative remedies

because those Plaintiffs that did appeal were afforded no meaningful right to be heard on the

issues so any appeal would be futile. The futility exception, however, is “quite restricted” and

“has been applied only when resort to administrative remedies is clearly useless.” Boivin v. U.S.

Airways, Inc., 446 F.3d at 157 (citations omitted). In order to fall within the exception, Plaintiffs

“must show that it is certain that their claim will be denied on appeal, not merely that they doubt

an appeal will result in a different decision.” Id. They are unable to do so.

The Court, therefore, must dismiss, without prejudice, the claims of any Plaintiff herein

who has failed to exhaust their administrative remedies. There is no evidence before the Court

however with respect to which of the Plaintiffs PBGC contends failed to exhaust their

administrative remedies. Nor does the Amended Complaint allege that the Plaintiffs have

exhausted their administrative remedies with respect to their specific claims. The Court finds

dismissal of the entire action is premature. This Court will allow Plaintiffs the opportunity to file

a Second Amended Complaint in which they may allege whether they have exhausted the

administrated remedies provided in the PBGC regulations.

Because Plaintiffs shall be given the opportunity to file an amended complaint, the Court

will not address its final argument with regard to the failure to state a claim based upon

Plaintiffs’ alleged request for relief that is legal rather than equitable. Clearly, Plaintiffs have

asked for injunctive and declaratory relief, however, their complaint can be construed as 7 requesting compensatory relief as well. PBGC can raise the issue subsequent to Plaintiffs filing

of their Second Amended Complaint.

IV. CONCLUSION

Based on the foregoing, PBGC’s motion to dismiss shall be granted in part and denied in

part without prejudice. The Court finds that the appropriate statutory venue for this litigation is

the United States District Court for the District of Columbia, and, in the interests of justice, the

Court will not dismiss the action, but will transfer the action to the District of Columbia.

Plaintiffs shall file a Second Amended Complaint as specifically set forth in the Order that

follows. Plaintiffs shall also be given the opportunity to properly serve such amended complaint

upon the United States Attorney for the District of Columbia and the Attorney General of the

United States in compliance with the Federal Rules of Civil Procedure. An appropriate Order

follows.

s/ David Stewart Cercone David Stewart Cercone United States District Judge

cc: Pro Se Plaintiffs (see attached list) (Via First Class Mail)

Nathaniel Rayle, Esquire Cynthia Reed Eddy, Esquire (Via CM/ECF Electronic Mail)