The lawsuit, Thomas G. Davis, et al. v. Pension Benefit Guaranty Corporation, was filed in the U.S. Court of Appeals for the District of Columbia Circuit on behalf of approximately 1,700 retired airline pilots from U.S. Airways and their beneficiaries, who were appealing the grant of summary judgment to the PBGC on their claims regarding pension benefits payable under the terminated Retirement Income Plan for U.S. Airways Pilots.
In 2002, U.S. Airways filed for bankruptcy and requested that its retirement plan be terminated, and it was in March 2003. The PBGC became trustee and began making estimated payments to the retired pilots pending its initial determinations on proper asset allocation.
According to the court, the administrator of a terminated plan distributes assets in accordance with a six-tier priority scheme set forth in 29 U.S. Code Section 1344. The suit by the pilots related to the third of these tiers, which included allocations.
The court cited that while the pilots appealed nine of the claims stated in their amended complaint, they only provided arguments in support of five of those claims. The court stated, “In this circuit, it is not enough merely to mention a possible argument in the most skeletal way, leaving the court to do counsel’s work, create the [framework] for the argument and put flesh on its bones.” The court further stated that by failing to include relevant arguments in their appellate briefs, the appellants failed to show that the district court’s determination was erroneous.
The appellate court also found that it “need not decide the level of deference due to the PBGC’s interpretation of the plan provisions because the pilots have not demonstrated Article III standing for part one of their claim and their other claims fail regardless of the standard.” The court cited Chevron, U.S.A., Inc. v. NRDC, which supported that the PBGC is entitled to deference when it acts as trustee in an involuntary retirement plan termination.
In terms of the suit’s claim that benefits should not have been fixed as of the date that the pilots could have taken retirement, but instead be increased to compensate for value lost by not having benefits commence earlier, the court said, “The pilots fail to show that the PBGC has not adopted the better interpretation of [the relevant] ERISA Section 1344(a)(3)(B).”
As for the suit’s claim about the identification of which pilots were eligible for the basic retirement income guarantee provided by the plan, the court said “the pilots provided no record citation to show that the PBGC’s reading was inconsistent with other provisions of the plan…and failed to show that the PBGC erred in relying on the plan’s plain text.”
The full text for the court’s opinion can be found here.