mr shelley good morning morning for you before you began let me welcome on behalf of judge ginsburg and myself our newest colleague judge walker this is his nd day  argument i was hoping it would be his st but this is his nd and we're awfully glad to have him on board so if you will proceed with your argument thank you judge andersen morning in may it please the court of sampson shelley  in this appeal the court is faced with a unique situation it's the rare instance in which a federal agency is required by statute to act as if they do share with that the sherry status comes the judicial review standards associated with do sherry determinations which means no deference to the fiduciary statutory constructions and limited deference to contractual in fact will determination on top of that the fiduciary is to be guided by the goal of protecting beneficiaries sharing information with them paying the greatest possible benefits to all and fairly considering even raising for the beneficiaries all necessary arguments to get benefit judy cations right in the people she sees decision here the p b c on the substance got things very wrong just straying from its obligation to ensure the payment of benefits to the maximum extent possible in the district court then compound at the errors by giving the pvc the maximum deference it could as if we were in the heyday of chevron for a federal agency as opposed to reviewing a fiduciary decisions i'd like to address the review standard st and then turn to the merits of the particular counts the st standard of review issue is whether chevron different should be afforded to c statutory instructions davis won the decision in davis one plays large in the in the briefing as well as in the district court's decision but it best davis one has to be accepted for the arguments it reached no more no less and it reached only one argument and that was whether deference should be afforded should be denied the p t c because a private trustee in the same situation acting under the p b g c statute wouldn't and the court said no that wasn't sufficient to disallow moreover and it just it it did it it sad it didn't draw back from davis one it said under any standard it made its ruling so i don't see that it's cut back on davis one and i don't see that when davis one said that p b g c is not like a private to do sheree that's says to be we give it deference well in davis when the court said for the reason for the reason it considered we give deference to the p t c and it's authoritative it's authoritative constructions of the statute and even assuming davis one is is is remains a binding on on its terms davis won on its terms it says that only the authoritative the authoritative determinations of the p t c are entitled to chevron deference and the page case from years earlier says that decisions only of the board of directors of the p p g c are authoritative on policy issues and no one no one thought about this in davis one and the issue sort of lurked in the case much like the courts stated in the old westfall case from the supreme court of justice course it's recently stated in the jantar decision if an issue is just mr shelley was was just wrong case it was not it was not a chevron case it was a case about whether the typical standards of privilege law would apply from a lot would apply to the government in a fiduciary status and the courts said because they weren't given fiduciary status by statute you couldn't apply you could not apply the typical standards if we were to not apply chevron here  would we be saying that davis one should not have applied chevron yes yes you would be you would be saying that davis one was not incorrect on the basis it reached but davis one can't govern the case a case where for instance the supreme court subsequently has determined an issue contrary to davis one but also that davis one only went as far as it did had it gone further and considered whether the p b c appeals courts decisions were authoritative it couldn't have reached the decision that did it but but honestly a precedent is a precedent in the sense that it may get updated by later supreme court precedent or further thought about what it said in considering the issues may further amplify on what the president meant so davis won and davis one says what it says but given that it used the word authoritative as to what the p c did and there's an ar view no question that what the appeals court did is not authoritative because it's not with the board of directors it's not a board of directors decision it's not a interpretations and the issue may not actually be a be needed to be decided in a sense by the court because as we noted in i believe it's footnote four of our opening brief under the p a an deference to an agency is tempered when some in many case some cases say when it's interpreting a contract because the courts interpret contracts generally and in addition there is some suggestion in the case law that if the agency if there's a structural conflict of interest the agency might have in a case it's the deference to it is less that's what arista would say and if the court were to follow those cases under the a p a it makes no difference whether the court says that the the standard tempered by the fact that there's a structural conflict of interest with the people you see because it enjoys the fruits of the funds it holds in interest here and the longer it holds them the more the more money the p c is able to use for its own operations how do you distinguish us steel opinion that judge randolph authored u s steel wasn't a situation where the p b g c was acting as a on the substance of the claim the claims so on the merits i'd like to turn to i like to turn to count two for a nd this is this is the this focuses on the p c five category and are searching in the claim is that the p b g c erred when it refused to take into account and subtract from its allocation awards the follow on plan benefits that the active pilots obtained had the had the had the court we had the district  award windfalls to the actives and in addition the plan terms specifically said that benefits related benefits that the actives received should have been subtracted the district court really focused on the on the terms of the terms of the plan and the terms of the plan actually required the subtraction and so we would say on this very large issue that's worth a significant amount of money the people you see got it wrong i see that i'm in my rebuttal time so i'd like to reserve my time for rebuttal all right money p b g c does or doesn't have a given moment but my impression is that p b g c is it's nothing like that and that there is really no individual person that makes these antonymous determinations has no financial stake in the outcome simply apply the law and the plan provisions as they are we pay no more no less we don't have a factual stake in the outcome we simply c why this is something that could be used the insurance system so we do definitely take that seriously in this case though the bankruptcy court did not find arguments their to their case about p c three and what benefits are included in prior to category three it is the question of what i gave the plans increased to its compensation limit that used to calculate the benefits what data was adopted whether it meets the five year look back under the private category three but priority category three statute there's two different look backs and prior to category three this is a sexually higher status t down so that mr shelley can respond to this there are you afraid you've raised waiver with respect to claim for and claim do with but the pilot working agreement specifying in some in some places that there was it applied to act upon it to retired pilots as well i quote a majority of the airline pilots employed by the company does and their designated airline pilots and the association represents them it is that your understanding that with the pilot working agreement there was a company and there was a union and the union represented the pilots the airline pilots employed by the company yes your honor that that's an understanding that was a pils board conclusion looking at it tells arguments that the pilot were going to green its provisions as a whole and also looking at case law which says th that a collective bargaining agreement is not presume to be representing are currently actively employed employees and we also know that if it was read otherwise that would basically call the question the plans to with respect increasing for when a seventeen compensation limits or four hundred and fifteen dollars be annual benefit limits that plans do not have to adopt them those are simply the caps and so the plan was allowed to provide treatment for the two different groups and that's what the plan did and on the th amendment by my understand the pilot working agreement was arm's length negotiation you and i want to side company on the other side i'm not as clear on the th amendment did the company just do that you know laterally or were they bargaining with somebody no that was the plan and i doubt doing essentially that on many amendment to the plan document henderson asked about claim four in the waiver issue the pilots didn't wave this issue that the that the working agreement covers retirees or addresses retire interests as well a interests and effect at j a seven hundred and thirty seven we specifically set this language nothing in the actual language of section twenty six g can reasonably be read be read to support the p b t season for instance the plan amendment applied only to certain plan participants the district court was very harsh in saying that wasn't good enough you had to scope out the argument and every single detail even though the p b c had hardly even told the participants what the argument what they were doing before the appeal was raised but in any event there's no issue exhaustion required under at least a risk of cases like wallace and fought so we did appropriately raise it but wouldn't have had to because a fiduciary is supposed to raise appropriate issues on the substance of the working agreement the fact that it was negotiated between a union and the employer is one thing but the reality is is that the document actually addresses retiree's appoint the court to point  seven so these are people who are already retired at the time the agree the working agreement is signed in two thousand and one so it's it's it may be that is being negotiated the retirees are at the table but then pardon me what is the dream i believe it is june two thousand  as of the effective date permit delta pilot retirees to continue to receive full pension benefits so the effective date of the agreement they're talking about people who are already retired and then on the next page there's a reference in case thirteen to  for purpose again to the to the retirement plan and those who terminate employment after may st two thousand which is also before that before that the date of the agreement any because i think that they didn't want to cover retirees before before well i think that the wording is intended to limit this particular aspect of the of the agreement to those who retired after a certain date as opposed to to reflect the following number nine as of the effective date permit delta pilot retirees to continue to receive full pension benefits during the periods of time they are employed by delta airlines global staffing services or its successor year and then the next page for purposes of determining retirement benefits under the retirement plan the bridge plan for pilots who retire or terminate employment after may st two thousand so that's again these are people who would have already been retired at the time of the agreement our point is that the it is a very parsimonious reading of this agreement to say that it it that it only covers active and in fact it covers many retirement issues for people who are already retired and it was intended to do so and when it wanted to address just active pilots it it said so and i think those provisions assist in that construction looks right yes and i don't i don't disagree that that this is not an agreement in which some retiree organization was signing on the bottom line but delta as the delta as the it's said that whenever benefits could be paid they whenever for instance congressional increases occurred they should be immediately effective for a plan c yes and there it describes the ratio the recovery ratio and it's got a roman numeral wanted a roman numeral two i think roman numeral two is and there it talks about the amount i'm on the nd line of it dot dot dot as the terminations date and then in the next line it talks about interest got dot dot calculated from the terminations date so it looks to me like not only is there some kind of logic to mr critic's argument that when it comes to the membrane at the dom denominator we should be comparing apples to apples but it seems like the text of the statute probably requires that we make the numerator apples the denominators going to be apples we can all agree from the termination date so i don't pretend that i'm sure i'm sure of this and i suspect you disagree so please tell me if i'm wrong tell me tell me  and importantly what this is reading like this will lead to the result that if the if the recoveries if the value of the discoveries would decline when going back to to the terminations date so let's say there's a stock market crash like there wasn't march of this year and the recovery comes immediately after that if you have to go backwards and not just just in that case not discount but upgrade the value of the recoveries they could be worth fifty maybe sixty percent more than what they were the actual amount and the way this formula works it would result in more money having to be accorded for the allocation process than the trustee actually collected and so that's why i think congress didn't include this germination date in the in the numerator because it's simply took what was collected and then put it in into a formula there there would be as much reason not to want to  not to want to upgrade the value as to discount the value so i don't i think it was purposeful that there that the provision in c one of one thousand three hundred and twenty two does not does not reference determination date because otherwise you could have these value and the amounts in one answer respect what do you make of that well it's an argument that hadn't been raised yet so it's a new argument it is a different word i'm quickly looking up of the word what the word than amount conceivably but yours urging must you focus on difference between two adjacent sanctions where there's presumably some you're telling  significant other yes well if the word value can be it can be expanded to include a current versus current versus prior value i think you'd have to have a different word in front of it in order to allow the discounting that the p p c did its earlier value or it's supposed to or past value as opposed to present value so i don't think the word value alone can answer the question of why the terminations date wasn't in there and again i go back to the i go back to the point that congress would have a purpose in wanting the exact value of the recoveries at the time of their actual recovery to be to be the to be the threshold because if you do this discounting going to have to do upgrading and take into account greater amounts that might have been lost because of a loss in the ass since we have to use some part of it it seems like the most logical place to work is when it's describing how you figure out the amount of something even though three thousand and sixty two dollars and don't context talking about the amounts of liability there's no mention of dating and so i think this number can be very large this this outstanding amount of benefit liabilities and is unrelated to the actual recovery amount and that's what causes the prospect of the trustee having to pay more than he or she actually collects back to the plan and so i think the th sixty two language closely tracks what's in one thousand three hundred and twenty two c two big a as opposed to the b part which then is explained slightly later if i could make one more point though and i'm well into my time and that's back on the conflict of interest point that judge walker raised and that we don't say that any individual within the p b c had a monetary interest in order to  recoveries of the retired pilots but met life st as glen which is the risk the case the talks about conflicts of interest talks about not scienter in the mind of the decision maker but structural conflicts of interest that implicitly can cause  decision maker to rule one way or the other and here is this we have a situation where the p b g c regularly notes that it doesn't have sufficient funds to do its its it to meet its obligations and goes to congress for additional appropriations to the extent it can raise it raises insurance premiums and the the it's a structural conflict of interest there's no question that by delaying the payments and giving them to active benot beneficiaries as opposed to retired beneficiaries the p b c earned money for its own operations probably millions and millions of dollars and that that that that shouldn't be disregarded i think you're right it says no more questions gentlemen the case is submitted thank you thank you r