United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 14, 2006 Decided May 2, 2006

No. 05-5165

CHARLES BOIVIN, ET AL.,

APPELLANTS

v.

U.S. AIRWAYS, INC., ET AL.,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 03cv02373jr)

Sara R. Pikofsky argued the cause for appellants. With her

on the briefs was Sherwin Kaplan.

Garth D. Wilson, Attorney, Pension Benefit Guaranty

Corporation (PBGC), argued the cause for appellee PBGC.

With him on the brief were Jeffrey B. Cohen, Chief Counsel,

Nancy S. Heermans, Associate Chief Counsel, Paula J.

Connelly, Assistant Chief Counsel, and Beth A. Bangert, Jean

Marie Breen, and Sandra A. Garrick, Attorneys. 
2

Before: HENDERSON and GARLAND, Circuit Judges, and

EDWARDS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge GARLAND.

GARLAND, Circuit Judge: Retired U.S. Airways pilots

brought suit against the Pension Benefit Guaranty Corporation

(“PBGC” or “Corporation”), seeking to compel the PBGC to

correct alleged errors in its calculation of estimated benefits due

the pilots under the Employee Retirement Income Security Act

of 1974 (“ERISA”) and the U.S. Airways’ Pilots’ Retirement

Income Plan. The pilots contend that, in failing to correct those

errors, the PBGC breached its obligations both as fiduciary and

as agency-guarantor. Without reaching the merits, we conclude

that the claims against the PBGC must be dismissed because the

pilots have not yet exhausted their administrative remedies.

I

On August 11, 2002, U.S. Airways Group, Inc. and seven

subsidiaries (collectively, “U.S. Airways”) filed voluntary

petitions in the Bankruptcy Court for the Eastern District of

Virginia, seeking reorganization relief under Chapter 11 of the

Bankruptcy Code, 11 U.S.C. § 1101, et seq. On January 30,

2003, U.S. Airways filed with the PBGC a notice of its intent to

terminate its Pilots’ Retirement Income Plan, a defined-benefit

pension plan, citing “a serious funding shortfall.” In re U.S.

Airways Group, Inc., 296 B.R. 734, 738 (Bankr. E.D. Va. 2003).

U.S. Airways simultaneously filed a motion in the bankruptcy

court for the judicial findings required by ERISA to permit a

distress termination of the Plan. See 29 U.S.C. §

1341(c)(2)(B)(ii)(IV).

The bankruptcy court subsequently granted the motion,

finding that “unless the Plan is terminated, the debtors will be
3

unable to pay all of their debts pursuant to a plan of

reorganization and will be unable to continue in business outside

the chapter 11 reorganization process.” In re U.S. Airways

Group, Inc., No. 02-83984, Order at 1 (Bankr. E.D. Va. Mar. 2,

2003) (citing 29 U.S.C. § 1341(c)(2)(B)(ii)(IV)). After U.S.

Airways gained the consent of the pilots’ union to terminate the

Plan, see 29 U.S.C. § 1341(a)(3), the company entered into an

agreement with the PBGC setting March 31, 2003 as the Plan’s

termination date.

Prior to the termination date, U.S. Airways, as the pretermination plan administrator, was responsible for revising

benefit payments under the Plan from then-current levels to

what it estimated would be the amount of benefits that would be

covered by Plan assets or guaranteed by the PBGC following

termination. See 29 U.S.C. § 1341(c)(3)(D)(ii)(IV); 29 C.F.R.

§ 4041.42(c). Revised benefit calculations are governed by

ERISA and PBGC regulations. See 29 U.S.C. §§ 1322, 1344(a);

29 C.F.R. § 4022.61-.63. U.S. Airways completed these

determinations and informed Plan participants of their estimated

post-termination benefits by letters dated March 28, 2003. See

Boivin v. U.S. Airways, Inc., 297 F. Supp. 2d 110, 113 (D.D.C.

2003).

The PBGC -- created pursuant to Title IV of ERISA -- is a

U.S. government corporation within the Department of Labor

that insures private-sector defined-benefit pension plans. See 29

U.S.C. § 1302. Sponsors of such plans pay premiums to the

PBGC, and the Corporation acts as a statutory guarantor, paying

benefits to participants of underfunded terminated plans subject

to statutory limits. See id. §§ 1307, 1322. When an

underfunded plan is terminated, a successor trustee is appointed

to administer the plan and to assume responsibility for its assets.

ERISA permits, but does not require, the PBGC to be appointed

as the successor trustee. See id. § 1342(b). In practice, the
4

PBGC has always applied to serve as successor trustee for

distress-terminated defined-benefit plans, and the courts have

invariably granted its applications. See Pineiro v. PBGC, 318 F.

Supp. 2d 67, 72 (S.D.N.Y. 2003). Following this well-worn

path, the PBGC applied to serve as successor trustee of the U.S.

Airways Plan, and its application was granted. 

When the U.S. Airways Plan terminated on March 31, 2003,

the PBGC began paying estimated benefits. At that point, the

PBGC had not yet made its formal determination of each

participant’s post-termination benefits, and it still has not done

so. The parties do not dispute that the PBGC normally requires

two to three years from the date it takes over a plan to issue a

formal benefit determination to each plan participant. See

Boivin, 297 F. Supp. 2d at 114; Decl. of Candace Campbell ¶ 15

(Nov. 24, 2003). Once final benefit determinations are made,

the PBGC either repays any shortfall in the amount of the

participants’ interim benefits, with interest, or seeks to recoup

any surplus. See 29 C.F.R. § 4022.81-.83.

On November 17, 2003, without waiting for the PBGC to

complete its final determinations, the plaintiffs filed suit against

the PBGC and U.S. Airways. The gravamen of their complaint

was that “the estimated benefit calculations [were] incorrectly

low as to them, and that waiting two to three years for a formal

benefit determination would cause them great hardship.”

Boivin, 297 F. Supp. 2d at 115. They alleged four primary

errors in the calculation of estimated benefits: (1) incorrect

determination of the effective date of an amendment to the U.S.

Airways Plan concerning early retirees; (2) improper

consideration of previously paid partial lump-sum benefits in

calculating prospective monthly annuities; (3) underpayment of

benefits to retirees over the age of 65, based upon the PBGC’s

statutory guaranty levels; and (4) underpayment of benefits to

other retirees, based on the “PBGC’s application of an
5

artificially low funding percentage in calculating benefits,”

Appellants’ Br. 2. The plaintiffs contended that the PBGC

breached its duties, both as a fiduciary and as a federal agencyguarantor, by failing to correct the asserted errors in its

calculation of estimated benefits. See Am. Compl. ¶¶ 81-89.

The plaintiffs’ claims against U.S. Airways were stayed as

a consequence of the airline’s bankruptcy filing. See 11 U.S.C.

§ 362(a); Boivin v. U.S. Airways, Inc., No. 03-2373, Order at 1

(D.D.C. March 17, 2005). On December 19, 2003, the district

court denied a motion for a preliminary injunction against the

PBGC. In the months that followed, the PBGC took action to

remedy two of the four errors alleged by the pilots. First, it

corrected the benefit payments for retirees over the age of 65 by

increasing their benefits from 85 to 100 percent of their pretermination levels. Second, it corrected payments for other

retirees by raising their benefits from 85 to 98 percent of their

pre-termination levels. The PBGC took no action as to the other

two alleged errors.

On March 17, 2005, after hearing motions filed by both

sides, the district court issued an order granting summary

judgment for the PBGC on the plaintiffs’ fiduciary duty claims,

holding that there was no evidence that the Corporation had

breached any fiduciary obligation in calculating estimated

benefits. See Boivin v. U.S. Airways, Inc., No. 03-2373, Mem.

Op. at 3-4 (D.D.C. Mar. 17, 2005). It dismissed for failure to

state a claim the plaintiffs’ allegations against the PBGC as

agency-guarantor, on the ground that the plaintiffs had failed to

exhaust their administrative remedies. Id. at 4-5. At the

plaintiffs’ request, the court then entered final judgment

pursuant to Federal Rule of Civil Procedure 54(b).
6

1

ERISA § 4022(b)(1) states:

Except to the extent provided in paragraph 7,

. . . .

(B) any increase in the amount of benefits under a plan

resulting from a plan amendment which was made, or

became effective, whichever is later, within the 60

months before the date on which the plan terminates

shall be disregarded.

29 U.S.C. § 1322(b)(1). The referenced exception, ERISA §

4022(b)(7), provides:

Benefits described in paragraph (1) are guaranteed only to

II

As noted above, the pilots’ complaint alleged that the PBGC

had committed four errors in calculating their estimated benefits.

The pilots agree that the PBGC has since corrected two of those

errors -- relating to the percentage of payments made to retirees

-- and that only two alleged errors remain for our consideration

on this appeal: (1) incorrect determination of the effective date

of an amendment to the U.S. Airways Plan concerning early

retirees; and (2) improper consideration of previously paid

partial lump-sum benefits in calculating prospective monthly

annuities. See Appellants’ Br. 2, 5-7; Reply Br. 19.

The first remaining allegation concerns benefit reductions

made by the PBGC based on its view that an amendment to the

Plan, which enhanced benefits for certain early retirees, had

become effective less than 60 months before the Plan

terminated. ERISA provides that amendments “resulting from

a plan amendment which was made, or became effective,

whichever is later,” less than 60 months before termination may

not be fully credited. 29 U.S.C. § 1322(b)(1)(B).1

 The parties
7

the extent of the greater of -- 

(A) 20 percent of the amount which, but for the fact

that the plan or amendment has not been in effect for

60 months or more, would be guaranteed under this

section, or 

(B) $20 per month,

multiplied by the number of years (but not more than 5) the

amendment . . . has been in effect.

Id. § 1322(b)(7).

appear to agree that the amendment at issue here was “made” on

December 4, 1997, the date it was adopted. See Appellants’ Br.

30; PBGC’s Opp’n to Pl.’s Supplemental Mem. in Supp. of its

Mot. for Partial Summ. J. at 5. The dispute, therefore, is over

when the amendment “became effective.” 

The plaintiffs contend that, because correspondence setting

forth the amendment stated that U.S. Airways would offer the

enhancement “effective as of the effective date of the new

Collective Bargaining Agreement” with the pilots’ union, Early

Retirement Incentive Program, J.A. at 107, and because the

Agreement became effective on January 1, 1998, that date is the

operative date. They further contend that, because January 1,

1998 was more than 60 months before the Plan was terminated,

no reduction in benefits is appropriate. The PBGC, by contrast,

has preliminarily concluded that the amendment did not become

effective until May 1, 1998 -- less than 60 months before

termination -- because that was the date specified in the

correspondence as the first date upon which a participant could

retire and receive the enhanced benefit. See id. at 107-08. The

plaintiffs argue that the PBGC’s position misconstrues the

statutory phrase “became effective,” 29 U.S.C. § 1322(b)(1), as
8

2

See 29 C.F.R. § 4022.25(b) (providing that the percentage of a

“benefit increase” guaranteed by the PBGC is determined, inter alia,

by multiplying twenty percent by the number of years (not to exceed

five) that “the benefit increase has been in effect”).

3

If the participant’s total payments were greater than the

applicable guarantee limit, the PBGC reduced the remainder annuity

to zero because, in its view, the retiree had already received more than

he was due by virtue of the partial lump sum “annuity.” See Mem. in

Supp. of the PBGC’s Cross-Mot. for Summ. J. at 29.

well as the related regulatory phrase “has been in effect,” 29

C.F.R. § 4022.25(b).2

The second alleged error concerns pilots who, prior to the

Plan’s termination, had taken a portion of their pension benefits

as a lump sum, with the remainder to be paid out in monthly

installments. The PBGC treated the partial lump sum as if it

amounted to the purchase of a partial annuity, also to be paid out

prospectively. The PBGC then applied the statutory guarantee

limit against the total payments to the participant, including the

portion taken as a lump sum.3 In so doing, the plaintiffs allege,

the PBGC misinterpreted its own regulations by making

calculations on the basis of benefits “paid” rather than benefits

“payable” as of the termination date. See 29 C.F.R. § 4022.22

(referring to “benefits payable”); id. § 4022.62 (same). 

As this discussion indicates, both errors alleged by the

pilots depend, at bottom, upon interpretations of ERISA sections

and PBGC regulations. The pilots assert that the PBGC

misinterpreted the relevant statutory and regulatory provisions,

and in so doing breached both its fiduciary duty as trustee and

its responsibility as agency-guarantor. See Appellants’ Br. 8

(citing 29 U.S.C. §§ 1132, 1303(f)). The PBGC responds in
9

4

Nor does it expressly condition judicial review upon “final”

agency action. The two ERISA provisions that the plaintiffs assert

authorize their suit are 29 U.S.C. §§ 1132(a) and 1303(f); the plaintiffs

do not rely on the Administrative Procedure Act, 5 U.S.C. § 704.

three ways. First, it argues that, in calculating estimated

benefits, it owes no fiduciary duty to the pilots because it makes

such calculations in its role as agency-guarantor and not as a

fiduciary. Second, the PBGC asserts that -- even if it did act as

a fiduciary in making the challenged calculations (and even if

the calculations were wrong) -- it did not breach a duty to the

pilots because it made the calculations in good faith. Third, the

PBGC maintains that, regardless of the capacity in which it

acted and regardless of whether its calculations violated a

fiduciary duty or agency responsibility, the pilots have not

exhausted their administrative remedies and must do so before

seeking judicial review. That administrative process requires

the plaintiffs to wait until the PBGC completes its work and

issues formal benefit determinations, at which point the

plaintiffs must complete internal PBGC appeals before filing an

action in federal court.

For the reasons set forth below, we agree with the PBGC’s

exhaustion argument. The pilots must await formal

determinations, and then challenge those determinations through

the procedures that the PBGC has provided, before they may

seek redress in court. Since our holding regarding exhaustion

resolves the case, we need not reach any questions concerning

the existence or scope of the PBGC’s fiduciary duty.

III

Although ERISA does not expressly require exhaustion of

administrative remedies,4

 “where Congress has not clearly

required exhaustion, sound judicial discretion governs.”
10

5

See McCarthy, 503 U.S. at 144-45 (“This Court long has

acknowledged the general rule that parties exhaust prescribed

administrative remedies before seeking relief from the federal

courts.”); Myers v. Bethlehem Shipbldg. Corp., 303 U.S. 41, 50-51

(1938) (noting “the long-settled rule of judicial administration that no

one is entitled to judicial relief for a supposed or threatened injury

until the prescribed administrative remedy has been exhausted”).

McCarthy v. Madigan, 503 U.S. 140, 144 (1992); see

Communications Workers of Am. v. AT&T, 40 F.3d 426, 432

(D.C. Cir. 1994). And as the plaintiffs correctly concede,

“[c]ourts generally hesitate to interfere in matters prior to final

agency action in order to allow the expert agency to complete its

work and to allow senior officials to authoritatively rule on

issues.” Appellants’ Br. 34.5

 Indeed, this court has held that, in

the case of ongoing pension plans, “barring exceptional

circumstances, parties aggrieved by decisions of pension plan

administrators must exhaust the administrative remedies

available to them under their pension plans before challenging

those decisions in court” under ERISA. Communications

Workers, 40 F.3d at 428.

1. The PBGC has promulgated regulations providing

administrative remedies for persons dissatisfied with its benefit

determinations. As discussed in Part I, when an underfunded

plan terminates, the PBGC begins paying estimated benefits to

plan participants. After completing a review of plan documents,

data, and assets, the Corporation issues benefit determination

letters to participants setting forth its formal calculation of their

benefits. The regulations refer to such a formal determination

as an “initial determination,” and they require that it “shall be in

writing, shall state the reason for the determination, and . . . shall

contain notice of the right to request review of the

determination.” 29 C.F.R. § 4003.21. “Any person aggrieved

by” such “an initial determination” may file an appeal to the
11

6

An aggrieved person may alternatively request reconsideration

by “the Director of the department within the PBGC that issued the

initial determination.” 29 C.F.R. § 4003.33. The filing of either an

appeal or a request for reconsideration “shall automatically stay the

effectiveness of a determination” until the PBGC issues a decision. Id.

§ 4003.22(a).

PBGC Appeals Board. See id. § 4003.51.6 The decision of the

Appeals Board “constitutes the final agency action by the PBGC

with respect to the determination which was the subject of the

appeal.” Id. § 4003.59(b). The regulations further state that “a

person aggrieved by an initial determination . . . has not

exhausted his or her administrative remedies until he or she has

filed” such a request for review. Id. § 4003.7. 

The pilots contend that these administrative remedies were

not intended to apply to their situation. As both sides agree, to

date the pilots have received only estimated determinations and

have not yet received the formal “initial determination” to which

the regulations refer. Because the “regulations remain silent on

exhaustion of claims against PBGC for actions other than final

determination of benefits,” the pilots contend that the

regulations “do not preclude” their claims. Reply Br. 15.

The PBGC, to whose interpretation of its own regulations

we owe substantial deference, see Thomas Jefferson Univ. v.

Shalala, 512 U.S. 504, 512 (1994), persuasively argues to the

contrary. The Corporation insists that, although the exhaustion

regulations do not mention estimated benefit determinations,

they are part of a process that begins with such determinations,

leads to formal determinations, and culminates in intra-agency

appeals generating “final agency actions.” It would make little

sense, the PBGC observes, to establish an elaborate process for

appealing determinations (and requiring the exhaustion of such

appeals) once the Corporation reaches a formal conclusion, but
12

to allow plan participants to pretermit that process by going to

court before that stage is even reached.

In any event, regardless of whether the regulations’ authors

consciously accounted for the possibility that a participant might

want to challenge an estimated determination, there is no

question that the regulations provide an administrative avenue

for doing so: An estimated determination inevitably leads to a

formal benefit determination, and, if the latter does not satisfy

the participant, the regulations provide for an administrative

appeal. If the participant wins that appeal, he or she is entitled

to recoup any underpayments along the way, with interest. See

29 C.F.R. § 4022.81-.83; Appellee’s Br. 14.

2. The Supreme Court has explained that courts generally

require administrative exhaustion “because it serves the twin

purposes of protecting administrative agency authority and

promoting judicial efficiency.” McCarthy, 503 U.S. at 145.

With respect to agency authority, “the exhaustion doctrine

recognizes . . . that agencies, not the courts, ought to have

primary responsibility for the programs that Congress has

charged them to administer.” Id. The doctrine “acknowledges

the commonsense notion[s] of dispute resolution that an agency

ought to have an opportunity to correct its own mistakes

[regarding] the programs it administers before it is haled into

federal court,” id., and that “‘frequent and deliberate flouting of

administrative processes’ could weaken an agency’s

effectiveness by encouraging disregard of its procedures,” id.

(quoting McKart v. United States, 395 U.S. 185, 195 (1969)).

With respect to judicial efficiency, by giving an agency the

opportunity “to correct its own errors, a judicial controversy

may well be mooted, or at least piecemeal appeals may be

avoided.” Id. “And even where a controversy survives

administrative review, exhaustion of the administrative

procedure may produce a useful record for subsequent judicial
13

7

Cf. Communications Workers, 40 F.3d at 432 (noting that “the

exhaustion requirement enables plan administrators to apply their

expertise and exercise their discretion to manage the plan’s funds,

correct errors, make considered interpretations of plan provisions, and

assemble a factual record that will assist the court reviewing the

administrators’ actions”).

consideration, especially in a complex or technical factual

context.” Id.

The purposes identified by the Court are well served by

enforcing an exhaustion requirement in this case.7

 Exhaustion

would protect the PBGC’s authority to administer the complex

program that Congress has entrusted to its care, give it the

chance to correct its own mistakes, and obviate what would

otherwise be an incentive to disregard -- and to disrupt -- the

PBGC’s administrative procedures. Indeed, allowing the pilots

to proceed in court at this time would permit them to jump ahead

of others who have patiently waited for the PBGC to reach final

determinations -- which would no doubt encourage those others

to file suit as well, disrupting the entire process and ultimately

delaying determinations for everyone. Requiring exhaustion

would also promote judicial efficiency by giving the PBGC the

opportunity to moot this appeal by correcting the errors alleged

by the pilots; it would at least require the pilots to consolidate in

one appeal any objections they may have to the Corporation’s

final as well as estimated calculations. See McKart, 395 U.S. at

194 (noting that “it is generally more efficient for the

administrative process to go forward without interruption than

it is to permit the parties to seek aid from the courts at various

intermediate stages”).
14

8

See McCarthy, 503 U.S. at 145 (recognizing that “exhaustion of

the administrative procedure may produce a useful record for

subsequent judicial consideration”).

The pilots contend that the usual considerations counseling

in favor of exhaustion are less applicable here because their

claims -- that the PBGC has misconstrued the applicable statutes

and regulations -- present pure questions of law. Since those

claims do not involve factual determinations, the pilots argue,

requiring exhaustion will not produce an administrative record

that will be of any assistance to the court. 

We disagree. The pilots concede that the PBGC’s

interpretations of the relevant statutory and regulatory

provisions are entitled to judicial deference, and that we must

uphold them if they are reasonable. See Reply Br. 17

(“Appellants simply request that PBGC adopt a reasonable

interpretation of the statute, regulations and plan documents.”);

Oral Arg. Tape at 1:02:13; see generally Chevron U.S.A. Inc. v.

Natural Res. Def. Council, Inc., 467 U.S. 837 (1984). But in

order to evaluate the reasonableness of the PBGC’s

constructions, we need a record explaining the reasons for those

constructions. At present, we have only estimated benefit

calculations, with no formal explanation of their rationale.

Requiring exhaustion will generate the necessary record. See 29

C.F.R. § 4003.59(c) (providing that the “decision of the Appeals

Board shall be in writing, specify the relief granted, if any, [and]

state the bases for the decision, including a brief statement of the

facts or legal conclusions supporting the decision”).8

 Equally

important, it will provide an authoritative statement of the

agency’s position by its senior officials. 

An analogous situation was at issue in Communications

Workers. See 40 F.3d at 433. There, former AT&T employees

sued the administrators of the (ongoing) AT&T pension plan
15

9

We explained that “‘a denial of benefits challenged under

[section 502 of ERISA] is to be reviewed under a de novo standard

unless the benefit plan gives the administrator . . . discretionary

authority to determine eligibility for benefits or to construe the terms

of the plan,’ in which case courts apply an abuse-of-discretion

standard,” Communications Workers, 40 F.3d at 433 (quoting

Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989))

(emphasis added in Communications Workers), and that the AT&T

“pension administrator ha[d] discretionary authority to construe the

terms of the plan and determine eligibility,” id.

10We note that, in McKart v. United States, the Supreme Court

held that a defendant’s failure to exhaust administrative remedies did

not preclude him from asserting the invalidity of his Selective Service

Act classification as a defense to prosecution for failing to report for

induction into the armed forces. 395 U.S. at 196-201. Although there

were multiple factors counseling against requiring exhaustion in that

pursuant to ERISA, claiming that the administrators’ decision

deeming them ineligible for certain benefits violated (inter alia)

the terms of the plan. In concluding that the plaintiffs were first

required to exhaust their administrative remedies by appealing

the administrators’ decision to the plan’s benefits committee, we

relied in part on the fact that the standard of review of the

administrators’ construction of the plan’s terms was abuse of

discretion.9 That standard made it “important for the plan to

provide a final, fully considered, and reasoned explanation for

the court to evaluate.” Id. But because the “Benefits Committee

. . . never rendered a final determination, and thus never

provided a fully reasoned explanation for such a decision, the

District Court had nothing before it, except the arguments of

counsel, to which it could defer.” Id. “By permitting appellees’

ERISA claim to proceed before obtaining a final decision from

the Plan, the District Court left itself unable to apply properly

the . . . rule of deference.” Id. Were we to permit the pilots’

claims to proceed here, we would face a similar disability.10 
16

case, see id., the Court did find persuasive the fact that the issue was

“solely one of statutory interpretation,” id. at 197-98. In that preChevron case, however, the Court stated that “judicial review would

not be significantly aided” by having the Selective Service System’s

interpretation of the statute because “the proper interpretation [was]

certainly not a matter of [agency] discretion” to which the Court

would have to defer. Id. at 198-99. Here, the plaintiffs concede that

deference to a reasonable agency interpretation is required.

3. Finally, the pilots point out that courts have recognized

certain circumstances “in which the interests of the individual

[plaintiff] weigh heavily against requiring administrative

exhaustion.” McCarthy, 503 U.S. at 146. They assert that two

such circumstances are relevant here.

First, the pilots argue that they should be excused from

exhausting administrative remedies because the PBGC has

already predetermined the questions at issue. In particular, the

pilots note, the PBGC has stated “that its position on calculating

annuities for recipients of partial lump sum payments is

longstanding.” Appellants’ Br. 34. Accordingly, an

administrative appeal would be futile and should not be

required. Id.

We reject this argument. The “‘futility exception is . . .

quite restricted,’” Communications Workers, 40 F.3d at 432

(quoting Committee of Blind Vendors of the District of

Columbia v. District of Columbia, 28 F.3d 130, 133 n.5 (D.C.

Cir. 1994)), and “has been applied only when resort to

administrative remedies is ‘clearly useless,’” id. (quoting

Randolph-Sheppard Vendors of Am. v. Weinberger, 795 F.2d 90,

105 (D.C. Cir. 1986)). In order to come within its terms,

plaintiffs “must show that it is certain that their claim will be
17

denied on appeal, not merely that they doubt an appeal will

result in a different decision.” Id. (internal quotation marks

omitted). In Communications Workers, we rejected a similar

argument contending that appeal to the pension plan’s benefits

committee would be futile because plan administrators had

consistently interpreted the plan to deny the kinds of claims

sought by plaintiffs. See id. at 432-33. “Even if one were to

concede that an unfavorable decision from the Benefits

Committee was highly likely,” we said, “that does not satisfy our

strict futility standard requiring a certainty of an adverse

decision.” Id. at 433. 

The PBGC’s actions to date belie the pilots’ concerns.

Even the pilots concede that the PBGC has corrected two of the

four errors they initially alleged. See supra Part II; Appellants’

Br. 2, 6-7. It is difficult to argue persuasively that appeals to the

PBGC are futile when the Corporation has already reversed

course and remedied half of the plaintiffs’ complaints.

Moreover, that reversal took place without the involvement of

the PBGC Appeals Board, which -- as far as the record reflects

-- has not yet taken a position on the remaining two questions of

statutory and regulatory construction. Plaintiffs have thus failed

to meet their heavy burden of showing that a request for relief

to the Appeals Board would be futile. 

Second, the pilots observe that courts do not require

exhaustion of administrative remedies where “a particular

plaintiff may suffer irreparable harm if unable to secure

immediate judicial consideration of his claim.” McCarthy, 503

U.S. at 147. “Each day that PBGC delays in calculating

estimated benefits,” the pilots contend, “results in prejudice to

plaintiffs.” Appellants’ Br. 33. “For every month that retirees

have to wait for PBGC to correct its erroneous benefit

calculations, the retirees have to figure out what sacrifices in
18

their standard of living they must make to continue to support

themselves on an unexpectedly diminished pension.” Id. at 7.

Like the district court, we do “not doubt that the reduction

of plaintiffs’ benefits has caused them financial hardship,

particularly in light of the fact that the plaintiffs are all retirees.”

Boivin, 297 F. Supp. 2d at 118. But we cannot conclude that

such a temporary (if later proven erroneous) reduction warrants

exemption from the generally applicable requirement of

exhaustion. It certainly does not constitute “irreparable harm,”

McCarthy, 503 U.S. at 147, since the PBGC’s regulations

provide that, if it is subsequently determined that a beneficiary

in a terminated plan has been underpaid, the beneficiary will

receive reimbursement of the underpaid amount, plus interest,

see 29 C.F.R. § 4022.81-.83; Appellee’s Br. 14. 

We stress that this resolution does not sentence the plaintiffs

to an interminable wait for their final benefit determinations. As

the Court warned in McCarthy, exhaustion may be excused

where “prejudice . . . result[s] . . . from an unreasonable or

indefinite timeframe for administrative action.” 503 U.S. at 147.

And the PBGC itself concedes that, if it takes too long to make

a final determination, the plaintiffs may bring suit under the

Administrative Procedure Act to “compel agency action

unlawfully withheld or unreasonably delayed.” 5 U.S.C. §

706(1); see Appellee’s Br. 16; Oral Arg. Tape at 52:32. 

We have not, however, reached that point. The PBGC’s

stated goal is to issue benefit determinations within three years

of a plan’s termination date. See Campbell Decl. ¶ 15.

Although it has not achieved that goal in this case, the PBGC

represented at oral argument that it expected to come close to

the three-year mark by completing the pilots’ final benefit

determinations within the next few months. See Oral Arg. Tape

at 49:29. We have no reason to doubt that representation. That
19

said, if the PBGC fails to complete the formal benefit

determinations within a reasonable time period, the appellants

may bring suit under the Administrative Procedure Act to

compel agency action. See Telecommunications Research &

Action Ctr. v. FCC, 750 F.2d 70 (D.C. Cir. 1984); see also

McCarthy, 503 U.S. at 147 (noting that a “claimant ‘is not

required indefinitely to await a decision of [an administrative]

tribunal before applying to a federal court for equitable relief’”

(quoting Smith v. Illinois Bell Tel. Co., 270 U.S. 587, 591-92

(1926)).

4. In sum, we conclude that the plaintiffs’ claims against

the PBGC must be dismissed because they have failed to

exhaust their administrative remedies. Our ruling is limited to

the facts of this case: a challenge to benefit calculations, where

the dispute is over the meaning of statutory and regulatory

terms, and where the construction of those terms has not yet

been definitively established by either the courts or the PBGC.

Under these circumstances, we hold that plaintiffs must exhaust

administrative remedies before they may seek judicial

intervention.

IV

The district court’s grant of partial summary judgment for

the PBGC is vacated, and the case is remanded to that court with

instructions to dismiss the pilots’ claims against the PBGC,

without prejudice, for failure to exhaust administrative remedies.

So ordered.