That was the position taken in a friend of the court brief filed with the high court by Solicitor General Gregory G. Garre as well as U.S. Department of Labor lawyers after justices requested the government’s opinion on whether the court should accept the case for full consideration.
The AK Steel Corporation Retirement Accumulation Pension Plan and its administrative committee asked the justices to take a look at an April 2007 ruling by the 6 th U.S. Circuit Court of Appeals, which, in turn, had upheld a lower court decision awarding the participants over $37 million in damages and more than $9 million in interest for the miscalculation of their distributions.
In an opinion authored by Circuit Judge Ronald Lee Gilman, the 6 th Circuit appellate panel rebuffed AK’s Steel’s attempt to use the Pension Protection Act (PPA) provision lifting the whipsaw calculation requirement from cash balance plan distributions to get the monetary award overturned (see AK Steel Cash Balance Distributions Not Covered by PPA ). Chief District Judge Sandra S. Beckwith of the United States District Court for the Southern District of Ohio at Cincinnati awarded the funds in 2005 (see AK Steel Charged $46M for Miscalculated Pension Benefits ).
Gilman asserted that the impact of the August 2006 law was too late to affect AK Steel’s potential liability for miscalculating retiring participants’ benefits since named plaintiff John D. West represented participants who retired or were terminated from employment on or after January 1, 1995 and who received a lump sum on or before April 1, 2005.
Plaintiffs claimed the AK Steel Plan’s failure to use the whipsaw calculation when determining the value of the lump-sum distributions effectively foreclosed them from collecting benefits due under the Employment Retirement Income Security Act (ERISA).
“What is at stake here is a damages claim for AK Steel’s past miscalculation of benefits,” Gilman wrote. “The monetary relief awarded by the district court is not a new ‘distribution’ under a retirement plan as contemplated by the PPA, but retrospective relief for a past violation of the law as it stood at the time of the distribution.”
The government's friend of the court brief asserted that federal appellate courts have not disagreed on the legal issues underlying the AK Steel caseÂ—often used as a reason for the high court to get involved in resolving a dispute.
"The court of appeals correctly held that a claim for ERISA plan benefits that requires the court to interpret the provisions of ERISA may be brought under Section 502(a)(1)(B)," the government brief said. "(AK Steel)'s contrary contention represents an unduly narrow view of Section 502(a)(1)(B) that is contrary to its text as well as its fundamental purposes. There is no split in the lower courts on this issue, and further review is therefore unwarranted...A claim that a plan administrator failed to provide benefits in compliance with the terms of the plan and the provisions of ERISA is a claim for benefits due under the terms of the plan cognizable under Section 502(a)(1)(B)."
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