Priscilla Belland v. Pension Benefit Guaranty Corporation, a Federal Body

726 F.2d 839, 234 U.S. App. D.C. 8, 5 Employee Benefits Cas. (BNA) 1109, 1984 U.S. App. LEXIS 25808
CourtCourt of Appeals for the D.C. Circuit
DecidedFebruary 3, 1984
Docket83-1079
StatusPublished
Cited by32 cases

This text of 726 F.2d 839 (Priscilla Belland v. Pension Benefit Guaranty Corporation, a Federal Body) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Priscilla Belland v. Pension Benefit Guaranty Corporation, a Federal Body, 726 F.2d 839, 234 U.S. App. D.C. 8, 5 Employee Benefits Cas. (BNA) 1109, 1984 U.S. App. LEXIS 25808 (D.C. Cir. 1984).

Opinions

TAMM, Circuit Judge:

On May 7, 1979, appellants brought this action in district court seeking to recover certain pension benefits. Appellants alleged that the federal agency, Pension Benefit Guaranty Corporation (PBGC), was arbitrary and capricious in deciding that their pension plan was not eligible for federal insurance coverage under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1461(b)(2) (Supp. Y 1981). They also alleged that their former employers, Brown Company (Brown) and Georgia-Pacific Corporation (Georgia-Pacific), breached contractual promises by reducing appellants’ pension benefits.

United States District Judge Norma Holloway Johnson entered judgments in favor of PBGC, Brown, and Georgia-Pacific. Bel-land v. PBGC, No. 79-1248 (D.D.C. June 30, 1981 & Dec. 30,1982). Appellants challenge those judgments on appeal. For reasons expressed herein, we affirm.

I. Background

A. The Reduction of Pension Benefits

Appellants comprise about 253 individuals who, until the summer of 1971, were employees of Brown at a paper products man[841]*841ufacturing plant in Portage, Michigan. Joint Appendix (J.A.) at 911. In June 1971, Brown sold the Portage plant to Georgia-Pacific. Appellants remained at the Portage plant and became Georgia-Pacific employees.

While working for Brown, appellants had participated in the Brown Company Pension Plan No. 1 (Brown Pension Plan). Because appellants, upon becoming Georgia-Pacific employees, would no longer accrue benefits under the Brown Pension Plan, the two companies provided for appellants’ pensions in the purchase and sale agreement for the Portage plant. In article 7(b)(i) of the agreement, Georgia-Pacific agreed to enter into collective bargaining with appellants’ representatives to substitute for the Brown Pension Plan either a new or an existing Georgia-Pacific plan.1 In article 7(b)(ii), Georgia-Pacific promised to strive during collective. bargaining to obtain retirement benefits for appellants comparable to benefits provided by the Brown Pension Plan. In article 7(b)(iii), Brown agreed to transfer to Georgia-Pacific appellants’ pro rata share of money in the Brown Pension Plan, and Georgia-Pacific agreed to apply this transferred money to appellants’ new pension plan.

Georgia-Pacific entered into a collective bargaining agreement with appellants in June 1971. J.A. at 1088-89. The agreement provided that appellants would participate in the Georgia-Pacific Midwestern Joint Pension Trust (Georgia-Pacific Pension Plan), which provided benefits comparable to the Brown Pension Plan.2 Id. at 926 n. *. In February 1972, the parties amended the Georgia-Pacific Pension Plan to make benefit reductions mandatory when fund assets became insufficient.3

In March 1974, Georgia-Pacific announced that the Portage plant would be closed by June 30, 1974. J.A. at 593. By June 30, 1974, all production at the plant had ceased, and only two employees remained. Id. These two employees were terminated after completing plant closure between July 1 and July 3, 1974. Id. at 33, 593..

With plant closure came the cessation of contributions to the Georgia-Pacific Pension [842]*842Plan. The pension plan trustees determined that existing pension plan assets would not be sufficient to pay appellants the amount provided by the plan. Accordingly, in compliance with the plan, supra note 3, the trustees in March 1975 reduced appellants’ pension benefits from six dollars per month per year of service to one dollar and fifty cents per month per year of service. J.A. at 912. Appellants received immediate written notification of the pension benefit reduction. Id. at 917.

B. Appellants Apply to PBGC for Pension Plan Insurance Coverage Under ERISA

Congress established PBGC on September 2,1974 to administer the pension plan insurance provisions of ERISA. 29 U.S.C. § 1302 (1976). ERISA provides a comprehensive insurance program for certain pension plans that terminated on or after September 2,1974. Id. § 1461(a). ERISA also provides retroactive insurance coverage for certain pension plans that terminated between July 1 and September 1, 1974. Id. § 1461(b). This retroactive coverage period commonly is called the “window period.” Congress expressly tasked PBGC with determining whether a plan seeking window period coverage terminated during the window period. Id. Congress established two tests for making this determination: PBGC “shall make the determination on the basis of the date on which benefits ceased to accrue [the “ceased to accrue” test] or on any other reasonable basis consistent with the purposes of this subsection [the “other reasonable basis” test].” Id.

On September 13, 1974, appellants applied to PBGC for pension plan insurance coverage under the window period provision of ERISA. J.A. at 593. PBGC applied the “other reasonable basis” test and, based upon the de minimis participation by appellants in the plan after June 30, 1974, concluded that the plan terminated before July 1, 1974. Accordingly, in June 1975, PBGC notified appellants that the Georgia-Pacific Pension Plan was not eligible for window period coverage. Id.

In December 1975 and June 1976, PBGC reviewed its decision that appellants’ pension plan terminated before July 1, 1974. J.A. at 593. Appellants, assisted by their union and by Georgia-Pacific, submitted additional factual materials to PBGC. Id. at 55, 65, 68. PBGC nevertheless affirmed its earlier decision. Id. at 593. In October 1977, PBGC determined the case should not be reopened. Id. at 131.

C. The District Court Decision

On May 7, 1979, appellants filed the instant action against PBGC, Brown, and Georgia-Pacific. Appellants alleged that PBGC improperly denied window period pension coverage under ERISA. Appellants argued that PBGC was arbitrary and capricious in its interpretation and application of section 1461(b). J.A. at 593-94. Alternatively, appellants argued that-PBGC violated the Administrative Procedure Act, 5 U.S.C. §§ 551-559 (1982), because it failed to promulgate rules governing the eligibility of pension plans seeking window period coverage. J.A. at 594. On June 30, 1981, the district court entered summary judgment for PBGC. Belland v. PBGC, Civ. No. 79-1248 (D.D.C. June 30, 1981).

In their complaint against Brown and Georgia-Pacific, appellants alleged that both companies breached oral promises that appellants would receive pension benefits of six dollars per month per year of service. J.A. at 914. Appellants also argued that Brown and Georgia-Pacific breached the purchase and sale agreement for the Portage plant by allowing the substantial reduction of pension benefits. Id. On December 30, 1982, the district court entered summary judgment for Brown and Georgia-Pacific. Belland v. PBGC, Civ. No. 79-1248 (D.D.C. Dec. 30, 1982).

This appeal followed.

II. Analysis

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726 F.2d 839, 234 U.S. App. D.C. 8, 5 Employee Benefits Cas. (BNA) 1109, 1984 U.S. App. LEXIS 25808, Counsel Stack Legal Research, https://law.counselstack.com/opinion/priscilla-belland-v-pension-benefit-guaranty-corporation-a-federal-body-cadc-1984.