# Pension Benefit Guaranty Corporation v. Ltv Corporation/Concurrence White

* Court Documents
* Case Syllabus
* Opinion of the Court
* Concurring Opinion White
* Dissenting Opinion Stevens
Justice WHITE, with whom Justice O'CONNOR joins, concurring in part and dissenting in part.
I join the Court's opinion except for the statement of the judgment and footnote 11. In particular, I agree that the anti-follow-on policy at issue here is not contrary to the statute and that the PBGC would not have been prohibited from applying that policy as a basis for restoration in this case. Unlike the Court, however, I cannot read the notice of restoration as relying on the anti-follow-on policy and respondents' alleged improved financial position as alternative, independent grounds for restoration. The notice, as I read it, clearly rested on both grounds in conjunction. Furthermore, it would make good sense to rely on improved financial position, for without it there would be a risk of an early retermination of the plan. At the very least, there is serious doubt about the matter, and if the Court of Appeals was correct that the PBGC's assessment of respondents' financial position was inadequate-and I think it was-the case should be remanded to the agency to consider whether the anti-follow-on plan by itself provides sufficient grounds for a restoration order.
I realize that the PBGC represented at oral argument that it had relied on its anti-follow-on policy and on respondents' improved financial condition as separate and independent grounds for the restoration, Tr. of Oral Arg. 25-26, but counsel's post hoc rationalizations are no substitute for adequate action by the agency itself. See Motor Vehicle Mfrs. Assn. of United States, Inc. v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29, 50, 103 S.Ct. 2856, 2870, 77 L.Ed.2d 443 (1983). Nor may the PBGC's restoration order be upheld even though the agency might reach the same result on remand, relying only on the anti-follow-on policy. "[The agency's] action must be measured by what [it] did, not by what it might have done. . . . The [agency's] action cannot be upheld merely because findings might have been made and considerations disclosed which would justify its order as an appropriate safeguard for the interests protected by the Act." SEC v. Chenery Corp., 318 U.S. 80, 93-94, 63 S.Ct. 454, 461-62, 87 L.Ed. 626 (1943).
I would therefore reverse the Court of Appeals in part, affirm in part, and remand with directions to return the case to the PBGC.
Justice STEVENS, dissenting.
In my opinion, at least with respect to ERISA plans that the PBGC has terminated involuntarily, the use of its restoration power under § 4047 to prohibit "follow-on" plans is contrary to the agency's statutory mandate. Unless there was a sufficient improvement in LTV's financial condition to justify the restoration order, I believe it should be set aside. I, therefore, would remand the case for a determination of whether that ground for the agency decision is adequately supported by the record.
A company that is undergoing reorganization under Chapter 11 of the Bankruptcy Code continues to operate an ongoing business and must have a satisfactory relationship with its work force in order to complete the reorganization process successfully. If its previous pension plans have been involuntarily terminated with the consequence that the PBGC has assumed the responsibility for discharging a significant share of the company's pension obligations, that responsibility by the PBGC is an important resource on which the company has a right to rely during the reorganization process. It may use the financial cushion to fund capital investments, to pay current salary, or to satisfy contractual obligations, including the obligation to pay pension benefits. As long as the company uses its best efforts to complete the reorganization (and, incidentally, to reimburse the PBGC for payments made to its former employees to the extent required by ERISA), the PBGC does not have any reason to interfere with managerial decisions that the company makes and the bankruptcy court approves. Whether the company's resources are dedicated to current expenditures or capital investments and whether the package of employee benefits that is provided to the work force is composed entirely of wages, vacation pay, and health insurance, on the one hand, or includes additional pension benefits, on the other, should be matters of indifference to the PBGC. Indeed, if it was faithful to the statement of congressional purposes in ERISA, see ante, at 648, it should favor an alternative that increases the company's use and maintenance of pension plans and that provides for continued payment to existing plan beneficiaries. The follow-on plans, in my opinion, are wholly consistent with the purposes of ERISA.
According to the Court, the PBGC policy is premised on the belief that if the company cannot adopt a follow-on plan, the employees will object more strenuously (1) in the case of a voluntary termination, to the "company's original decision to terminate a plan"; and (2) in the case of an involuntary termination, to the company's decision "to take financial steps that make termination likely." Ante, at 651. That belief might be justified in the case of a voluntary termination of an ERISA plan. Since the follow-on plan would be adopted immediately after plan termination, those who could object to the insurable event are also reasonably assured of receiving benefits when the insurance is paid. That view is wholly unwarranted, however, in the case of an involuntary termination. The insurable event, plan termination, is within the control of the PBGC, which presumably has determined that the company does not have the financial resources to meet its current pension obligations. Even if the company could adopt a follow-on plan, the employees will be no less likely to object to the financial steps that will lead to plan termination because they would have no basis for belief that a union will insist on that course when, perhaps years later, the PBGC involuntarily terminates the plan. The safety that comes from a healthy pension plan will not be overcome by the hope that a future union will remember the interests of its retirees and former employees. Plan restoration in these circumstances is not a legitimate curative to the problem of moral hazard, but rather constitutes punishment of both labor and management for the imprudence of their predecessors.
In the case of an involuntary termination, if a mistake in the financial analysis is made, or if there is a sufficient change in the financial condition of the company to justify a reinstatement of the company's obligation, the PBGC should use its restoration powers. Without such a financial justification, however, there is nothing in the statute to authorize the PBGC's use of that power to prevent a company from creating or maintaining the kind of employee benefit program that the statute was enacted to encourage.
Accordingly, I respectfully dissent.

## Notes

* ↑ At the time of the termination of the LTV plans, the PBGC was entitled to recover only 75 percent of the amounts expended to discharge LTV's pension obligations. The statute has since been amended to authorize a 100 percent recovery. LTV represents that if the restoration order is upheld, and if-as seems highly probable-it is promptly followed by another termination, the PBGC bankruptcy claim will increase from about $2 billion to more than $3 billion. Brief for Respondents LTV Corp. and LTV Steel 33, n. 21. The PBGC, of course, does not assert this change as a justification for the restoration order.
* ↑ The three opinion letters identifying the PBGC policy concerning follow-on plans all involved voluntary terminations. See App. to Pet. for Cert. 159a, 165a, 172a. The restoration order entered in this case was unprecedented.
This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).
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