REDACTED VERSION OF SEALED DOCUMENT 

IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF MICHIGAN 

SOUTHERN DIVISION 

Dennis Black, et al., 

Plaintiffs, 

v. 

Pension Benefit Guaranty Corporation, 

Defendant. 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

Case No. 2:09-cv-13616 

Hon. Arthur J. Tarnow 

Magistrate Judge Mona K. Majzoub 

PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT 

Pursuant to Federal Rule of Civil Procedure 56(a), Plaintiffs Dennis Black, 

Charles Cunningham, Ken Hollis, and the Delphi Salaried Retirees Association 

(collectively, “Plaintiffs”) move for summary judgment in their favor on all Counts 

of their Second Amended Complaint as to Defendant Pension Benefit Guaranty 

Corporation’s liability. A memorandum of law in support of and explicating the 

bases for this Motion is attached in accordance with Local Rule 7.1. Plaintiffs 

further request that the Court thereafter order briefing on the appropriate remedy 

and relief to be afforded Plaintiffs. 

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Dated: September 21, 2018 Respectfully submitted, 

 /s/ Anthony F. Shelley 

Alan J. Schwartz (P38144) 

JACOB & WEINGARTEN, P.C. 

25800 Northwestern Highway 

Suite 500 

Southfield, Michigan 48075 

Telephone: 248-649-1900 

Facsimile: 248-649-2920 

E-mail: alan@jacobweingarten.com 

Anthony F. Shelley 

(admitted E.D. Michigan Dec. 22, 2009) 

Timothy P. O’Toole 

(admitted E.D. Michigan Dec. 22, 2009) 

Michael N. Khalil 

(admitted E.D. Michigan Sept. 24, 2010) 

MILLER & CHEVALIER CHARTERED 

900 Sixteenth St. NW 

Washington, DC 20006 

Telephone: 202-626-5800 

Facsimile: 202-626-5801 

E-mail: ashelley@milchev.com 

 totoole@milchev.com 

mkhalil@milchev.com

Attorneys for Plaintiffs 

Case 2:09-cv-13616-AJT-MKM ECF No. 308 filed 09/21/18 PageID.12397 Page 2 of 190
REDACTED VERSION OF SEALED DOCUMENT 

IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF MICHIGAN 

SOUTHERN DIVISION 

Dennis Black, et al., 

Plaintiffs, 

v. 

Pension Benefit Guaranty Corporation, 

Defendant. 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

Case No. 2:09-cv-13616 

Hon. Arthur J. Tarnow 

Magistrate Judge Mona K. Majzoub 

PLAINTIFFS’ MEMORANDUM OF LAW IN SUPPORT OF 

THEIR MOTION FOR SUMMARY JUDGMENT 

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CONCISE STATEMENT OF ISSUES 

(1) Defendant Pension Benefit Guaranty Corporation (“PBGC”) terminated 

Plaintiffs’ pension plan (the “Plan”) in the summer of 2009 pursuant to 

an agreement between the PBGC and the pension plan’s administrator. 

Plaintiffs’ Second Amended Complaint raises important constitutional 

and statutory questions regarding whether a hearing before this Court 

was required to protect the rights and interests of the Plan’s participants, 

including Plaintiffs, and whether, if not, the PBGC’s termination of the 

Plan nonetheless was arbitrary and capricious. The first question 

presented is whether, in order to avoid reaching those constitutional and 

statutory questions, the record demonstrates that the PBGC would have 

carried its burden of proof in a hearing before this Court, conducted 

pursuant to 29 U.S.C. § 1342(c), by demonstrating that the Plan had to 

be terminated as of July 31, 2009, to avoid any unreasonable increase in 

the liability of the PBGC’s insurance fund? Plaintiffs answer “no.” 

(2) Was the PBGC’s termination of the Plan invalid because the PBGC failed 

to obtain a Court order, under 29 U.S.C. § 1342(c), adjudicating that the 

Plan must be terminated in order to avoid any unreasonable increase in the 

liability of the PBGC’s insurance fund? Plaintiffs answer “yes.” 

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ii

(3) The actions of plan administrators are subject to ERISA’s fiduciary duty 

of loyalty, one of the highest duties known under the law. This duty of 

loyalty requires that a plan administrator act with an eye focused solely 

on the best interests of the plan’s participants, and avoid situations where 

the administrator’s own interests conflict with those of the participants. Is 

the PBGC’s termination of the Plan additionally invalid under 29 U.S.C. 

§ 1342(c), given that the PBGC relies upon a plan termination agreement 

entered with a plan administrator that put its own corporate interests ahead 

of those of the Plan’s participants? Plaintiffs answer “yes.” 

(4) Did the PBGC’s termination of the Plan also violate the U.S. Constitution 

because it deprived Plaintiffs of their vested pension benefits (and the 

rights associated with those benefits) with no pre-deprivation process at 

all? Plaintiffs answer “yes.” 

(5) Finally, given that there were viable alternatives to termination that the 

PBGC failed to pursue, given that the PBGC acquiesced in the Plan’s 

termination in service to interests beyond the statutory considerations 

enumerated in 29 U.S.C. § 1342(c), and given that the termination 

otherwise rested on irrelevant factors, were the PBGC’s actions in 

terminating the Plan arbitrary and capricious and therefore invalid under 

the Administrative Procedures Act? Plaintiffs answer “yes.” 

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iii

CONTROLLING AUTHORITIES FOR RELIEF SOUGHT 

U.S. Const. amend. V 

29 U.S.C. § 1342 

Celotex Corp. v. Catrett, 477 U.S. 317 (1986) 

In re UAL Corp., 468 F.3d 444 (7th Cir. 2006) 

Zinermon v. Burch, 494 U.S. 113 (1990) 

Fed. R. Civ. P. 56 

ECF No. 193, Order Sustaining Plaintiffs’ Objections to Magistrate Judge’s 

Scheduling Order, Granting Plaintiff’s Motion for Adoption of Scheduling Order, 

Administratively Terminating PBGC’s Motion for Protective Order, 

Administratively Terminating Plaintiffs’ Motion to Compel Discovery, and 

Entering Scheduling Order (Sept. 1, 2011) 

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iv

TABLE OF CONTENTS 

Page 

CONCISE STATEMENT OF ISSUES ...................................................................... i 

CONTROLLING AUTHORITIES FOR RELIEF SOUGHT ................................. iii 

TABLE OF AUTHORITIES ................................................................................. viii 

EXHIBIT LIST TO PLAINTIFFS’ MOTION FOR SUMMARY 

JUDGMENT ........................................................................................................... xvi 

INTRODUCTION ..................................................................................................... 1 

STATEMENT REGARDING DISCOVERY ........................................................... 6 

STATEMENT OF UNDISPUTED MATERIAL FACTS ...................................... 11 

A. ERISA.................................................................................................. 11 

B. The GM-Delphi Relationship .............................................................. 13 

C. Plaintiffs .............................................................................................. 16 

D. The PBGC’s Efforts to Protect the Delphi Plans During 

Bankruptcy .......................................................................................... 16 

E. Delphi’s Proposal for a GM Reassumption of the 

Salaried Plan, and the PBGC’s Embrace of that Proposal .................. 18 

F. The Financial Crisis and GM’s Request for Federal Aid .................... 21 

G. The PBGC Continued Its Advocacy on Behalf of the 

Salaried Plan as the Treasury Began to Familiarize Itself 

with the GM/Delphi Relationship ....................................................... 25 

H. As the Auto Team Inserted Itself Into Negotiations Over 

Delphi, the PBGC Ceased Advocating for GM’s 

Reassumption of the Salaried Plan ...................................................... 40 

I. The PBGC’s Initial Decision to Terminate the Delphi 

Plans .................................................................................................... 50 

J. The Emergence of New GM and New Delphi .................................... 62 

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v

STANDARD OF REVIEW ..................................................................................... 73 

ARGUMENT ........................................................................................................... 75 

I. BECAUSE THERE WERE VIABLE ALTERNATIVES TO 

TERMINATION THAT THE PBGC COULD HAVE 

PURSUED, THE PBGC COULD NOT HAVE OBTAINED 

AN ORDER FROM THIS COURT ADJUDICATING THAT 

THE PLAN’S TERMINATION WAS NECESSARY UNDER 

§ 1342(c), AND THE COURT SHOULD PROCEED TO 

CONSIDER COUNTS ONE THROUGH FOUR ......................................... 75 

A. GM’s Dependence on Delphi Parts Provided the PBGC 

With Sufficient Leverage to Avoid the Plan’s 

Termination ......................................................................................... 78 

B. Similarly, the PBGC’s Liens and Claims on Delphi’s 

Foreign Assets Provided the PBGC With Tremendous 

Leverage to Persuade Delphi’s Purchasers to Consider 

Assuming the Plan ............................................................................... 91 

C. The PBGC’s Termination Case Is Further Undermined 

by the Fact That, Compared to Other Similarly-Sized 

Plans, the Salaried Plan Was Relatively Well Funded........................ 96 

D. Extra-Statutory Factors Undergirded the PBGC’s Actions 

in Terminating the Plan ..................................................................... 100 

E. The Record in Full Establishes that the PBGC Cannot 

Prove It Would Have Succeeded in Obtaining a Judicial 

Termination Decree in July 2009, Had It Tried ................................ 108 

II. BECAUSE THE DELPHI PLAN WAS TERMINATED 

WITHOUT THE NECESSARY COURT ADJUDICATION, 

PLAINTIFFS ARE ENTITLED TO JUDGMENT AS A 

MATTER OF LAW ON COUNT 1 ............................................................ 111 

A. The Plain Language of § 1342(c)(1) Requires That the 

PBGC Obtain a Court Decree Before Terminating a Plan, 

Even If the Plan Administrator Agrees to Plan 

Termination ....................................................................................... 112 

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vi

B. Requiring the PBGC to Obtain a Court Decree Before 

Terminating a Plan Best Serves ERISA’s Objectives and 

Comports With the Statute’s Legislative History ............................. 120 

C. It Is Undisputed That the PBGC Failed to Obtain a Court 

Decree Before Terminating the Plan, Making Summary 

Judgment Appropriate ....................................................................... 124 

III. PLAINTIFFS ARE ENTITLED TO SUMMARY JUDGMENT 

ON COUNT 2 BECAUSE DELPHI EXECUTED THE 

TERMINATION AGREEMENT IN A CORPORATE 

RATHER THAN FIDUICARY CAPACITY, RENDERING IT 

INVALID ..................................................................................................... 125 

A. An Employer’s Decision to Enter Into a Summary 

Termination Agreement With the PBGC Under 29 

U.S.C. § 1342(c)(1) Is Subject to ERISA’s Fiduciary 

Standards ........................................................................................... 126 

B. Delphi Did Not Execute the Termination and Trusteeship 

Agreement With the PBGC According to ERISA’s Duty 

of Loyalty .......................................................................................... 134 

IV. BECAUSE THE PBGC’S SUMMARY TERMINATION OF 

THE PLAN DEPRIVED PLAINTIFFS OF THEIR DUE 

PROCESS RIGHTS, SUMMARY JUDGMENT IS 

APPROPRIATE ON COUNT 3 .................................................................. 137 

A. Plaintiffs Have a Protected Property Interest in Their 

Vested Pension Benefits .................................................................... 138 

B. The PBGC Provided the Plaintiffs No Process 

Whatsoever Before Depriving Them of Their Protected 

Pension Benefits ................................................................................ 141 

1. Failing to Provide Plaintiffs a Hearing Before 

Depriving Them of Their Vested Pension Benefits 

Violated the Due Process Clause ............................................ 142 

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vii

2. The Court Need Not Consider the Government’s 

Interest in Foregoing a Pre-Deprivation Hearing in 

Evaluating the Adequacy of the Process in This 

Case — Zero Process Is Per Se Insufficient ........................... 146 

3. Assuming, Arguendo, that the PBGC’s Interest in 

Foregoing a Pre-Deprivation Hearing is Relevant, 

that Interest is Still Insufficient to Justify its Failure 

to Hold a Pre-Deprivation Hearing .......................................... 149 

V. PLAINTIFFS ARE ENTITLED TO SUMMARY JUDGMENT 

ON COUNT 4 BECAUSE, EVEN ON AN ARBITRARYAND-CAPRICIOUS REVIEW, THE PBGC’S 

TERMINATION OF THE SALARIED PLAN IS 

UNSUSTAINABLE .................................................................................... 156 

CONCLUSION ...................................................................................................... 159 

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viii

TABLE OF AUTHORITIES 

 Page(s) 

Cases 

Bd. of Regents v. Roth, 

408 U.S. 564 (1972) .......................................................................................... 143 

Beck v. PACE Int’l Union, 

551 U.S. 96 (2007) .................................................................................... 127, 129 

Boddie v. Connecticut, 

401 U.S. 371 (1971) .................................................................................. 142, 143 

Boggs v. Boggs, 

520 U.S. 833 (1997) .......................................................................................... 121 

Botany Worsted Mills v. United States, 

278 U.S. 282 (1929) .......................................................................................... 118 

BP Am. Prod. Co. v. Burton, 

549 U.S. 84 (2006) ............................................................................................ 112 

Bussian v. RJR Nabisco, Inc., 

223 F.3d 286 (5th Cir. 2000) ............................................................................ 132 

Celotex Corp. v. Catrett, 

477 U.S. 317 (1986) ............................................................................................ 73 

Chao v. Hall Holding Co., 

285 F.3d 415 (6th Cir. 2002) ............................................................................ 134 

Citizens to Preserve Overton Park, Inc. v. Volpe, 

401 U.S. 402 (1971) .......................................................................................... 158 

Cleveland Bd. of Educ. v. Loudermill, 

470 U.S. 532 (1985) .......................................................................................... 142 

Conkey v. Reno, 

885 F. Supp. 1389 (D. Nev. 1995) .................................................................... 148 

Coyne & Delany Co. v. Selman, 

98 F.3d 1457 (4th Cir. 1996) ............................................................................ 127 

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ix

In re Delphi Corp., 

No. 05-44481, 2009 Bankr. LEXIS 4663 (Bankr. S.D.N.Y. July 30, 

2009) ............................................................................................................. 71, 72 

Dodd v. United States, 

545 U.S. 353 (2005) .......................................................................................... 119 

Doe v. Cummins, 

662 F. App’x 437 (6th Cir. 2016) ..................................................................... 148 

Doe v. Devine, 

703 F.2d 1319 (D.C. Cir. 1983) ........................................................................ 156 

Donovan v. Bierwirth, 

680 F.2d 263 (2d Cir. 1982) ..................................................................... 134, 135 

Flannelly v. Bd. of Trs. of N.Y. City Police Pension Fund, 

6 F. Supp. 2d 266 (S.D.N.Y. 1998) .................................................................. 139 

Fusari v. Steinberg, 

419 U.S. 379 (1975) .......................................................................................... 151 

Ginaitt v. Haronian, 

806 F. Supp. 311 (D.R.I. 1992) ........................................................................ 139 

In re GMC, 

407 B.R. 463 (Bankr. S.D.N.Y. 2009) .......................................................... 22, 24 

Gregg v. Transp. Workers of Am., Int’l, 

343 F.3d 833 (6th Cir. 2003) ............................................................................ 134 

Griffith v. Coburn, 

473 F.3d 650 (6th Cir. 2007) .............................................................................. 74 

Guba v. Huron Cty., 

600 F. App’x 374 (6th Cir. 2015) ..................................................................... 142 

Harris Trust & Sav. Bank v. Salomon Smith Barney, Inc., 

530 U.S. 238 (2000) .......................................................................................... 133 

Harris v. City of Akron, 

20 F.3d 1396 (6th Cir. 1994) ............................................................................ 145 

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x

Henry v. City of Middletown, Ohio, 

655 F. App’x 451 (6th Cir. 2016) ............................................................. 148, 149 

Holly v. City of Ecorse, 

No. 05-74238, 2006 U.S. Dist. LEXIS 68160 (E.D. Mich. Sept. 22, 

2006) ................................................................................................................. 147 

Hudson v. Palmer, 

468 U.S. 517 (1984) .......................................................................................... 144 

In re Jones & Laughlin Hourly Pension Plan, 

824 F.2d 197 (2d Cir. 1987) ....................................................................... 80, 120 

King v. Burwell, 

135 S. Ct. 2480 (2015) .............................................................................. 113, 120 

Kuper v. Iovenko, 

66 F.3d 1447 (6th Cir. 1995) ............................................................................ 134 

Larson v. Northrop Corp., 

21 F.3d 1164 (D.C. Cir. 1994) .................................................................. 130, 131 

Lockheed Corp. v. Spink, 

517 U.S. 882 (1996) .......................................................................................... 128 

Logan v. Zimmerman Brush Co., 

455 U.S. 422 (1982) .......................................................................................... 149 

Mathews v. Eldridge, 

424 U.S. 319 (1976) .....................................................................................passim

McDarby v. Dinkins, 

907 F.2d 1334 (2d Cir. 1990) ........................................................................... 138 

MCI Telecommc’ns Corp. v. AT&T Co., 

512 U.S. 218 (1994) .......................................................................................... 124 

McMahon v. McDowell, 

794 F.2d 100 (3d Cir. 1986) ..................................................................... 134, 135 

Mertik v. Blalock, 

983 F.2d 1353 (6th Cir. 1993) .......................................................................... 144 

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xi

Mid-Am. Waste Sys., Inc. v. City of Gary, 

49 F.3d 286 (7th Cir. 1995) .............................................................................. 116 

Mitchell v. Fankhauser, 

375 F.3d 477 (6th Cir. 2004) .................................................................... 138, 141 

Mullane v. Cent. Hanover Tr. Co., 

339 U.S. 306 (1950) .......................................................................................... 142 

Nachman Corp. v. Pension Benefit Guar. Corp., 

446 U.S. 359 (1980) .................................................................................... 12, 132 

Nat’l R.R. Passenger Corp. v. Nat’l Ass’n of R.R. Passengers, 

414 U.S. 453 (1974) .......................................................................................... 118 

Parratt v. Taylor, 

451 U.S. 527 (1981), overruled on other grounds, Daniels v. 

Williams, 474 U.S. 327 (1986) ................................................................. 143, 144 

Payonk v. HMW Indus., Inc., 

883 F.2d 221 (3d Cir. 1989) ............................................................. 127, 128, 131 

PBGC v. Republic Techs. Int’l LLC, 

386 F.3d 659 (6th Cir. 2004) ............................................................................ 155 

PBGC v. United Air Lines, Inc., 

436 F. Supp. 2d 909 (N.D. Ill. 2006) .......................................................... 79, 110 

Shaw v. Delta Air Lines, Inc., 

463 U.S. 85 (1983) ............................................................................................ 121 

Smith v. Shettle, 

946 F.2d 1250 (7th Cir. 1991) .......................................................................... 116 

Tackitt v. Prudential Ins. Co. of Am., 

758 F.2d 1572 (11th Cir. 1985) ........................................................................ 156 

Tenn. Valley Auth. v. Hill, 

437 U.S. 153 (1978) .......................................................................................... 119 

Traverse Bay Area Intermediate Sch. Dist. v. Mich. Dep’t of Educ., 

615 F.3d 622 (6th Cir. 2010) ............................................................................ 119 

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xii

U.S. Dep’t of Treasury v. Black, 

719 F. App’x 1 (D.C. Cir. 2017) ......................................................................... 10 

U.S. Dep’t of Treasury v. PBGC, 

222 F. Supp. 3d 38 (D.D.C. 2016) ........................................................................ 9 

U.S. Dep’t of Treasury v. PBGC, 

249 F. Supp. 3d 206 (D.D.C. 2017) ................................................................ 9, 52 

U.S. Dep’t of Treasury v. PBGC, 

301 F.R.D. 20 (D.D.C. 2014)................................................................................ 8 

In re UAL Corp., 

468 F.3d 444 (7th Cir. 2006) .................................................................. 4, 74, 122 

United States v. Williamson, 

154 F.3d 504 (3d Cir. 1998) ............................................................................. 115 

United Steel Workers v. PBGC, 

707 F.3d 319 (D.C. Cir. 2013) .......................................................................... 157 

Varity Corp. v. Howe, 

516 U.S. 489 (1996) .................................................................................. 127, 132 

Waller v. Blue Cross of Cal., 

32 F.3d 1337 (9th Cir. 1994) .................................................................... 129, 130 

Wenk v. O’Reilly, 

783 F.3d 585 (6th Cir. 2015) .............................................................................. 73 

Whitman v. Am. Trucking Ass’n, Inc., 

531 U.S. 457 (2001) .......................................................................................... 124 

Withrow v. Larkin, 

421 U.S. 35 (1975) ............................................................................................ 148 

Zinermon v. Burch, 

494 U.S. 113 (1990) .................................................................................. 144, 145 

Statutes 

5 U.S.C. § 706 ........................................................................................................ 156 

11 U.S.C. § 363 ........................................................................................................ 62 

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xiii

26 U.S.C. § 412 .................................................................................................. 17, 18 

26 U.S.C. § 430 ........................................................................................................ 18 

Employee Retirement Income Security Act of 1974, 

88 Stat. 829, 29 U.S.C. §§ 1001 et seq. .......................................................passim

29 U.S.C. § 1001 ....................................................................................... 120, 121 

29 U.S.C. § 1002 ............................................................................... 126, 129, 131 

29 U.S.C. § 1021 ............................................................................................... 121 

29 U.S.C. § 1024 ............................................................................................... 121 

29 U.S.C. § 1082 ................................................................................................. 18 

29 U.S.C. § 1083 ................................................................................................. 18 

29 U.S.C. § 1103 ............................................................................................... 121 

29 U.S.C. § 1104 ....................................................................................... 121, 134 

29 U.S.C. § 1133 ............................................................................................... 121 

29 U.S.C. § 1301 ................................................................................................. 77 

29 U.S.C. § 1302 ................................................................................. 12, 102, 157 

29 U.S.C. § 1303 .........................................................................72, 133, 137, 157 

29 U.S.C. § 1305 ................................................................................................. 77 

29 U.S.C. §§ 1305-1307 ..................................................................................... 13 

29 U.S.C. § 1322 ................................................................................................. 13 

29 U.S.C. § 1341 ............................................................................... 128, 129, 131 

29 U.S.C. § 1342 ..........................................................................................passim

29 U.S.C. § 1344 .........................................................................13, 139, 141, 150 

29 U.S.C. § 1362 ................................................................................................. 18 

29 U.S.C. § 1368 ................................................................................................. 18 

Emergency Economic Stabilization Act of 2008, 

Pub. L. No. 110-343, 122 Stat. 3765 ............................................................ 21, 22 

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xiv

Other Authorities 

H.R. Rep. No. 93-1280 (1974) (Conf. Rep.) ......................................................... 122 

154 Cong. Rec. H10702 (daily ed. Oct. 3, 2008) (statement of Rep. 

Slaughter) ............................................................................................................ 21 

1A Norman J. Singer & J.D. Shambie Singer, Sutherland Statutes and 

Statutory Construction § 21:6 (7th ed. 2009) ........................................... 115, 116 

Employee Benefits Dictionary (1992) ...................................................................... 97 

Chris Isidore, Auto Parts Makers Get $5B Bailout (Mar. 19, 2009) ....................... 32 

Dep’t of Labor, Field Assistance Bulletin No. 2014-01, Fiduciary 

Duties and Missing Participants in Terminated Defined 

Contribtion Plans 2 (Aug. 14, 2014) 

https://www.dol.gov/sites/default/files/ebsa/employers-andadvisers/guidance/field-assistance-bulletins/2014-01.pdf ................................ 129 

https://quotes.wsj.com/index/DJIA/historical-prices ............................................. 140 

https://quotes.wsj.com/index/SPX/historical-prices .............................................. 140 

Past PBGC Directors and Executive Directors, 

https://www.pbgc.gov/about/who-we-are/pg/past-pbgc-directorsand-executive-directors (last updated Apr. 27, 2017) ........................................ 27 

PBGC Annual Reports, https://www.pbgc.gov/about/annual-reports 

(last updated June 26, 2018) ............................................................................. 141 

Remarks by the President to Chrysler Workers in Toledo, Ohio (June 

3, 2011), https://obamawhitehouse.archives.gov/the-pressoffice/2011/06/03/remarks-president-chrysler-workers-toledo-ohio ............... 108 

Steven Rattner, The Auto Bailout: How We Did It, Fortune (Oct. 21, 

2009) 

http://archive.fortune.com/2009/10/21/autos/auto_bailout_rattner.f

ortune/index.htm ................................................................................................. 33 

Steven Rattner, Overhaul: An Insider’s Account of the Obama 

Administration’s Emergency Rescue of the Auto Industry (2010) ............... 36, 88 

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xv

Jim Ruttenberg, Peter Baker, & Bill Vlasic, 100 Days: Early Resolve: 

Obama Stand in Auto Crisis, N.Y. Times, Apr. 29, 2009 .................................. 33 

Time for Plan D, Financial Times (Nov. 13, 2008) ................................................. 24 

Gordon Trowbridge, Poll: Most U.S. Voters Question Auto Aid, The 

Detroit News (Mar. 5, 2009) ............................................................................... 32 

A.D. Wilkie, A Stochastic Investment Model for Actuarial Use (1984) ................. 99 

George F. Will, TARP and ADD, Newsweek (Nov. 21, 2008) ............................... 24 

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xvi

EXHIBIT LIST TO PLAINTIFFS’ MOTION 

FOR SUMMARY JUDGMENT 

Exhibit 

# Description Beginning Bates Number 

1

Excerpts of Disclosure Statement with 

Respect to Joint Plan of Reorganization 

of Delphi Corporation and Certain 

Affiliates, Debtors, and Debtors-inpossession (Aug. 31, 2007)Bankr. S.D.N.Y. 

ECF No. 9264

2

PBGC-BL2-

00900169

3

Audit Report: Treasury's Role in the 

Decision for GM to Provide Pension 

Payments to Delphi Employees, dated 

Aug. 15, 2013 (SIGTARP 13-003)

PBGC-BL2-

01003705

4

PBGC-BL2-

00786835

5

Letter from IRS to J. Whitson regarding 

approval of conditional waiver of 

minimum funding standard for Salaried 

Plan for plan year ending Sept. 30, 2006 

(Apr. 4, 2008)

PBGC-BL2-

0045671

6 UST-BL-018099

7 UST-BL-036872

8

PBGC-BL2-

00902655

9

Press Release - PBGC Director Praises 

Pension Transfer from Delphi to GM 

(Sept. 25, 2008)

PBGC-BL2-

00571388

10

PBGC-BL2-

00859399

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xvii

Exhibit 

# Description Beginning Bates Number 

11

PBGC-BL2-

00782890

12

PBGC-BL2-

00829419

13

PBGC-BL2-

00797510

14

Deposition Transcript of C. Dana Cann 

(Mar. 25, 2013) N/A

15

PBGC-BL2-

00717914

16

PBGC document summarizing 

information from Delphi's Modified 

Disclosure Statement (Oct. 3, 2008)

PBGC-BL2-

00714968

17

PBGC-BL2-

00786517

18

PBGC-BL2-

00827136

19 

PBGC-BL2-

00826205

20

Email from Keith Stipp with Discussion 

Points for Call Regarding GM 

Reassuming Delphi Salaried Plan (Dec. 

4, 2008) 110224-040548

21

PBGC-BL2-

00832004

22

Email from Karen Morris Regarding 

Delphi Waiver Request to GM's 

assumption of Delphi plan (Apr. 8, 2009)

PBGC-BL2-

00770588

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xviii

Exhibit 

# Description Beginning Bates Number 

23

Email Exchange Between Rodney O'Neal 

and Fritz Henderson Regarding GM 

Reassuming Delphi Plans (Jan. 25 and 

26, 2009) 110224-041074

24

Email Exchange Arranging Meeting 

Between GM and Delphi Attorneys (Feb. 

2, 2009) 110224-041198

25

PBGC Internal Emails Circulating 

Funding Projections for GM 

Reassumption of Delphi Plans (Jan. 22, 

23, 2009)

PBGC-BL2-

00779082

26

PBGC Charts Containing Funding 

Projections for GM Reassumption of 

Delphi Plans

PBGC-BL2-

00779089

27 110224-041080

28

PBGC-BL2-

00825056

29

PBGC-BL2-

00826188

30

PBGC-BL2-

00831236

31

PBGC-BL2-

00861745

32

Email from PBGC to Treasury Regarding 

Delphi (Feb. 10, 2009)

PBGC-BL2-

00581947

33

Compass Advisors Meeting Minutes from 

February 12, 2009 Official Committee of 

Unsecured Creditors' Meeting PBGC-BL-0184871

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REDACTED VERSION OF SEALED DOCUMENT 

xix

Exhibit 

# Description Beginning Bates Number 

34 UST-BL-000217

35

Email regarding GM Revisions to 

Preliminary Comparison of Term Sheet 

Proposals/Identification of Open Issues 

(Feb. 18, 2009) 110224-041412

36 REV00000248

37 REV00000836

38

PBGC-BL2-

00847087

39

PBGC-BL2-

00726559

40 UST-BL-000618

41

PBGC-BL2-

00794872

42

PBGC-BL2-

00832497

43

PBGC-BL2-

00824169

44 UST-BL-017680

45 UST-BL-017681

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xx

Exhibit 

# Description Beginning Bates Number 

46 REV00000154

47 REV00000767

48 UST-BL-035839

49 UST-BL-017803

50

PBGC-BL2-

00827217

51

Email from John Sheehan Describing 

Call with GM and Treasury (Mar. 7, 

2009) 110224-042856

52

PBGC-BL2-

00823877

53

PBGC-BL2-

00838281

54

PBGC-BL2-

00793246

55

Email Exchange Regarding Delphi 

Mediation Submission (May 22, 2009) 110224-050596

56

Deposition Transcript of Vincent K. 

Snowbarger (Mar. 12, 2013) N/A

57

PBGC-BL2-

00824595

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xxi

Exhibit 

# Description Beginning Bates Number 

58

PBGC-BL2-

00868853

59

Email from Joseph House 

Communicating Disinvitation from 

Treasury Meeting (Apr. 3, 2009) PBGC-BL-0185271

60 UST-BL-038157

61

Treasury Privilege Log Description of 

Email Regarding Delphi Pensions (Apr. 

15, 2009) PL00000001

62

PBGC-BL2-

00722443

63

Email from M. Feldman to H. Wilson, 

Forwarding Email from J. Sheehan 

Regarding Delphi Meeting (Apr. 17, 

2009) UST-BL-038442

64

Deposition Transcript of Joseph R. House 

(May 29, 2013) N/A

65

 Deposition Transcript of Terrence 

Deneen 

(Apr. 28, 2015) N/A

66

Email Exchange Arranging Call Between 

J. House and M. Feldman, forwarded to 

T. Snyder (Apr. 14, 2009)

PBGC-BL2-

00757434

67 REV00000627

68

PBGC-BL2-

00847059

69

Treasury Privilege Log - Descriptions of 

Memorandum Discussing Delphi's PL00000002

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xxii

Exhibit 

# Description Beginning Bates Number 

Liquidity Issues and Consequences of 

Shutdown 

70 UST-BL-018798

71 UST-BL-038433

72 UST-BL-017953

73 REV00000652

74 UST-BL-038490

75 UST-BL-018926

76 UST-BL-038511

77 UST-BL-005961

78

PBGC-BL2-

00730437

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xxiii

Exhibit 

# Description Beginning Bates Number 

79

PBGC-BL2-

00795826

80 UST-BL-018932

81

PBGC-BL2-

00793033

82 UST-BL-039752

83

PBGC-BL2-

00758009

84

PBGC-BL2-

00901435

85

PBGC-BL2-

00764502

86

PBGC-BL2-

00847064

87 UST-BL-038933

88

UST-BL006032/UST-BL006034

89

UST-BL006075/UST-BL006076

90 UST-BL-019135

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xxiv

Exhibit 

# Description Beginning Bates Number 

91

PBGC-BL2-

00902755

92

PBGC-BL2-

00872407

93

PBGC-BL2-

00832213

94

Email from M. Feldman to J. House 

Requesting Delphi Call (May 22, 2009) PBGC-BL-0058140

95 UST-BL-042155

96 UST-BL-003247

97

Email Exchange Between Delphi Counsel 

and Matt Feldman regarding Delphi (May 

29, 2009) 110224-054417

98

PBGC-BL2-

00722013

99 UST-BL-011324

100

Excerpts of Supplement to Plan 

Modification Approval Motion, S.D.N.Y. 

Bankr. Filing (June 1, 2009)

Bankr. S.D.N.Y. 

ECF No. 16646

101 REV00000876

102 REV00000856

103

Email from J. House to PBGC Staff 

Regarding Treasury Meeting (June 30, 

2009) PBGC-BL-0170325

104

PBGC-BL2-

00792551

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xxv

Exhibit 

# Description Beginning Bates Number 

105

PBGC-BL2-

00793138

106

 PBGC-BL2-

00823113

107

PBGC-BL2-

00722130

108

PBGC-BL2-

00832945

109

Email from J. House to PBGC Staff re 

Update on Coord w/UST (July 8, 2009)

PBGC-BL2-

00774642

110 REV00000753

111 REV00000799

112 REV00000874

113 REV00000875

114

PBGC-BL2-

00782933

115

PBGC-BL2-

00830191

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xxvi

Exhibit 

# Description Beginning Bates Number 

116

Plaintiffs Black, Cunningham, and 

DSRA's Objection to Debtors' Prposed 

Modifications to Debtors' First Amended 

Plan of Reorganization (As Modified) 

(Bankr. S.D.N.Y. July 15, 2009) N/A

117

PBGC-BL2-

00762865

118

November 6, 2014 Recovery Valuation 

and Allocation Memorandum for Delphi 

Corp. (Nov. 6, 2014)

PBGC-BL2-

00970978

119

PBGC-GM Settlement Agreement 

(Bankr. S.D.N.Y. July 27, 2009) N/A

120

PBGC-BL2-

00873459

121

PBGC-BL2-

00899299

122

PBGC-BL2-

00783350

123

Actuarial Case Memo for Delphi 

Retirement Program for Salaried 

Employees (Sept. 30 ,2015)

PBGC-BL2-

00997879

124 March 2009 GM Funding Projections PBGC-BL-0265641

125

PBGC-BL2-

00837407

126

Email from N. Ranade to J. House re IRC 

412(e) (Feb. 4, 2009)

PBGC-BL2-

00779152

127

Email from N. Ranade to J. House 

regarding GM Projections - Clarification 

Needed (Mar. 12, 2009)

PBGC-BL2-

00779147 

128

Expert Report of Dr. Noor Rajah, dated 

June 30, 2016 N/A 

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xxvii

Exhibit 

# Description Beginning Bates Number 

129

PBGC January 29, 2009 Delphi Update 

Memo

PBGC-BL2-

00778962

130

Sept. 16, 2008 Delphi Proposal to PBGC 

re Liens PBGC-BL-0184842

131

PBGC's Responses to Plaintiffs' First Set 

of Interrogatories, dated Jan. 17, 2014 N/A 

132

Deposition Transcript of C. Travia 

(Mar. 14, 2013) N/A

133 110224-041254 

134

Deposition Transcript of K. House 

(Mar. 27, 2012) N/A

135

Email from D. Cann to J. House and N. 

Ranade regarding GM Phone Call

PBGC-BL2-

00778858

136

PBGC-BL2-

01229861 

137

PBGC-BL2-

00891384

138

Stipulation Concerning the Automatic 

Stay In Connection With the 

Commencement of an Action Against the 

Pension Benefit Guaranty Corporation

Bankr. S.D.N.Y. 

ECF No. 18896

139

July 29, 2009 Bankruptcy Proceeding 

Motion Hearing Transcript N/A

140 REV00000778

141

List of attendees at May 26, 2009 

Mediation Session in the Bankruptcy 

action

PBGC-BL2-

00004268

142

Delphi Corporation - Pension Information 

Profile calculated on Dec. 17, 2009 PBGC-BL-265639

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INTRODUCTION 

In the summer of 2009, Defendant Pension Benefit Guaranty Corporation 

(“PBGC”) terminated the Delphi Retirement Program for Salaried Employees 

(“Salaried Plan” or the “Plan”), a defined benefit pension plan covering roughly 

20,000 salaried employees and retirees of Delphi Corporation (“Delphi”). This 

lawsuit challenges the PBGC’s termination of the Plan. 

Delphi was originally a division of General Motors Company (“GM”), and 

the Plan’s participants spent most of their careers as GM employees, earning the 

bulk of their pension benefits as participants in GM’s salaried pension plan. Even 

after Delphi was spun off from GM in 1999, it remained GM’s largest parts 

supplier for the next decade. 

In the fall of 2008, Delphi proposed that GM reassume Delphi’s pension 

plans. The PBGC supported this effort, using statutory liens and claims it 

possessed against Delphi assets as leverage to promote a GM reassumption. 

However, the PBGC abruptly ceased its efforts to save the Salaried Plan and 

acquiesced in its termination, following the intervention of the United States 

Department of Treasury (“Treasury”), which was at that time attempting to 

restructure the auto industry in general, and GM in particular. Because of the 

Plan’s termination, the Plan’s participants lost more than $500 million in vested 

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pension benefits, and the insurance fund the PBGC administers suffered a $1.5 

billion loss at that time. 

Plaintiffs’ lawsuit presents four grounds for invalidating the PBGC’s 

termination of their pension plan. First, 29 U.S.C. § 1342(c), in the Employee 

Retirement Income Security Act of 1974 (“ERISA”), which governs PBGCinitiated plan terminations, requires that the PBGC obtain a court adjudication that 

termination is necessary under one of three statutory criteria. Here, however, the 

PBGC purported to accomplish the termination pursuant to a “termination and 

trusteeship agreement” with the Plan’s administrator, 

 On this ground, the termination is procedurally defective 

(as with the second and third grounds described below). 

Second, Delphi purported to execute the “termination and trusteeship 

agreement” pursuant to its powers as the Plan’s administrator, meaning the act was 

subject to ERISA’s fiduciary duty of loyalty. But instead of putting the interests of 

the Plan’s participants first in considering whether to enter the agreement (as the 

duty of loyalty requires), Delphi entered into that agreement for its own corporate 

interests, thereby irretrievably tainting the agreement the PBGC used to 

consummate the termination and providing a separate and alternative basis to 

invalidate the termination. 

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Third, the PBGC’s termination of the Plan without a hearing violated the 

Fifth Amendment’s Due Process Clause, in that it deprived Plaintiffs of a 

significant property interest without the requisite pre-deprivation process. 

Fourth, Plaintiffs allege that the PBGC’s termination of the Plan was invalid 

because the PBGC could not satisfy the standards for termination under 29 U.S.C. 

§ 1342(a) and (c), and that its actions undertaken in connection with the 

termination were arbitrary and capricious. The PBGC’s termination actions 

resulted from the consideration of political factors rather than the relevant statutory 

criteria, and indeed the PBGC could have prevented the Plan’s termination but for 

influence of these extra-statutory considerations. Because the PBGC’s actions in 

undertaking the termination– even if procedurally sufficient – are reviewable 

substantively to determine whether they were arbitrary or capricious, and because 

those actions were arbitrary and capricious given that the termination was 

avoidable and contrary to the relevant statutory criteria, the termination was 

unlawful. 

In 2010, the Court denied without prejudice the PBGC’s dispositive motions 

as to Counts 1-4, and specifically permitted discovery to proceed as to Plaintiffs’ 

Second Amended Complaint. Nonetheless, the PBGC resisted any discovery for 

approximately one year. Plaintiffs, accordingly, moved to compel, which was 

effectively granted by the Court’s September 1, 2011 Order, ECF No. 193, (the 

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“September 1, 2011 Order”). In the September 1, 2011 Order, the Court ordered 

the Parties post-discovery to submit dispositive motions addressing: 

under Count 4 whether termination of the Salaried Plan would have 

been appropriate in July 2009 if, as Plaintiffs contend, Defendants were 

required under 29 U.S.C. § 1342(c) to file before this court ‘for a decree 

adjudicating that the plan must be terminated in order to protect the 

interests of the participants or to avoid any unreasonable deterioration 

of the financial condition of the plan or any unreasonable increase in 

the liability of the fund.’ 

Id. at 7 (quoting 29 U.S.C. § 1342(c)). 

The Court further held that in addressing this question “and assuming that a 

hearing was required before termination, this Court w[ould], pursuant to In re UAL 

Corp., 468 F.3d 444 (7th Cir. 2006), conduct a de novo review of the PBGC’s 

decision to terminate the Plan.” Id. at 5. Because “[t]he only authority that the 

PBGC has under § 1342 is to ask a court for relief,” the PBGC, “[a]s the plaintiff,” 

bears the “burden of persuasion.” Id. (quoting UAL Corp., 468 F.3d at 449-50). 

The Court said that, if the PBGC fails to demonstrate that termination was proper 

under the factors set forth in § 1342(c), then the Court will consider “the remainder 

of the complaint pertaining to the PBGC.” Id. The Court established this order of 

inquiry as a matter of judicial economy, noting that it could, for instance, avoid the 

constitutional and other procedural challenges to the PBGC’s termination of the 

Plan if, in reality, conducting a judicial adjudication of the propriety of termination 

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(under the standard of review applicable in such proceedings) would have 

nonetheless led to the Plan’s termination. 

For the last seven years, Plaintiffs have fought costly battles to try and 

obtain discovery from the PBGC and Treasury. While discovery is, amazingly, 

still not complete, Plaintiffs have gathered sufficient evidence to demonstrate that 

the PBGC cannot satisfy its burden of persuasion on whether the Plan would have 

been terminated in a lawful judicial adjudication under § 1342, because there were 

viable alternatives to termination, the most likely (though not only) option being a 

reassumption of the Salaried Plan into GM’s still-existing salaried plan. Given that 

the PBGC had significant liens and claims over Delphi assets essential to GM’s 

supply-chain, the PBGC had substantial leverage to negotiate a reassumption, and 

in fact not only had the PBGC had been actively advocating for this result prior to 

the Treasury’s intervention, but Delphi’s unions used the same sort of leverage to 

negotiate significant pension benefits from Treasury (funded through the Troubled 

Asset Relief Program, see infra p.22) and the GM entity surviving its restructuring 

(“New GM”). As demonstrated below, the PBGC’s decision to stop advocating for 

a reassumption by GM’s salaried plan is unjustifiable in light of the PBGC’s 

significant leverage and the relative affordability of a reassumption to New GM. 

Additionally, the PBGC could have used its leverage, including its liens and 

claims on Delphi assets, to help negotiate an assumption of the Salaried Plan by the 

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various parties that were competing to purchase Delphi’s business and assets. The 

PBGC failed even to explore this possibility, notwithstanding the fact that it 

routinely does so in other cases, and it had a variety of tools available to it to make 

a pension assumption a competitive advantage to potential purchasers. 

Nonetheless, the PBGC acquiesced in the Plan’s termination, not because of 

anything related to its statutory role under ERISA, but as a result of pressure 

imposed by the Treasury and the related Auto Task Force to support their chosen 

route to restructure the auto industry in general and GM in particular. 

Because the PBGC cannot meet its burden of proof, that termination would 

have occurred in a judicial proceeding under § 1342, Plaintiffs remaining statutory 

and constitutional claims are ripe for consideration. And, Plaintiffs are entitled to 

summary judgment on Counts 1-4 as to the PBGC’s liability. As a result, the 

Court should enter summary judgment in Plaintiffs’ favor on Counts 1-4 as to the 

PBGC’s liability and schedule briefing on the appropriate relief to be afforded 

Plaintiffs 

STATEMENT REGARDING DISCOVERY 

In its September 1, 2011 Order, the Court anticipated that the Parties would 

be able to complete discovery by April 30, 2012, and that the Parties would submit 

dispositive motions by May 31, 2012. See ECF No. 193 at 7. Yet, as noted above, 

discovery still remains pending. As summarized below, this delay is a direct result 

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of extraordinary efforts by both the PBGC and Treasury to prevent Plaintiffs from 

obtaining relevant documents requested more than six years ago.

Following the Court’s September 1, 2011 Order, Plaintiffs served the PBGC 

with two sets of discovery requests in 2011, seeking 17 categories of documents. 

See ECF No. 197-1 and 197-2. The PBGC refused to respond to any of these 

requests, ostensibly on relevance grounds, despite the fact that the requests plainly 

fell within the scope of the Court’s September 1, 2011 Order, necessitating the 

filing of a motion to compel under Fed. R. Civ. P. 37. See ECF No. 197. 

Magistrate Judge Majzoub held a hearing on the motion to compel in 

February 2012, during which the PBGC’s counsel acknowledged that the only way 

to uphold its refusal to produce documents was to disregard the Court’s September 

1, 2011 Order. See, e.g., ECF No. 205 at 10:14-12:22. Judge Majzoub granted 

Plaintiffs’ motion to compel in March 2012, ordering the PBGC to produce full 

and complete responses within 90 days. See ECF No. 204 at 2. 

Despite the Court’s 90-day timetable, the PBGC subsequently sought and 

received from Plaintiffs agreements to extend the discovery schedule to allow the 

PBGC more time to produce responses to Plaintiffs’ discovery requests. By 

February 2013, the PBGC was still withholding tens of thousands of responsive 

documents, and Plaintiffs subsequently filed another motion to compel, ECF No. 

218, which Judge Majzoub granted in August 2013. See ECF No. 231. The PBGC 

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still refused to provide full discovery responses, even after the Court denied the 

PBGC’s objections to the August 2013 Order in July 2014, see ECF No. 257; the 

PBGC then sought a writ of mandamus from the Sixth Circuit, which was denied 

in September 2014. See ECF No. 266. 

The PBGC still refused to comply fully with the 2011 document requests, 

requiring yet another motion to compel, which Judge Majzoub granted in March 

2016, noting that, “while the Court declines to do so, one could reasonably 

construe Defendant’s argument as a frivolous last-ditch effort to delay or ultimately 

avoid the production of these documents.” See ECF No. 282 at 7 (emphasis 

added). 

Meanwhile, in January 2012, Plaintiffs served Treasury with a “narrow” 

subpoena duces tecum, seeking documents from just three Treasury officials, 

“relating only to Delphi.” See U.S. Dep’t of Treasury v. PBGC, 301 F.R.D. 20, 28 

(D.D.C. 2014). Like the PBGC, Treasury also stonewalled Plaintiffs’ attempts at 

discovery, refusing to produce any documents, and asking the United States 

District Court for the District of Columbia (“D.C. Court”) to quash the subpoena, 

which motion the D.C. Court denied in June 2014. Id. at 30. 

Nonetheless, Treasury withheld hundreds of responsive documents under an 

assortment of dubious privilege assertions, needlessly prolonging the proceedings 

before the D.C. Court. Indeed, in the summer of 2016, after the D.C. Court 

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ordered Treasury to justify its privilege assertions through in camera submissions, 

Treasury, without any explanation, “suddenly withdrew its privilege assertions 

over nearly 75% of the documents.” U.S. Dep’t of Treasury v. PBGC, 222 F. 

Supp. 3d 38, 41 (D.D.C. 2016). In December 2016, the D.C. Court resolved a 

large portion of the remaining privilege claims, holding that Treasury had 

“miserably failed” to justify its remaining assertions of the deliberative process 

privilege, noting that in the process Treasury had “essentially wasted” the court’s 

“precious and limited time.” Id. at 44-45. 

There remained 85 Treasury documents in dispute, the majority of which 

were withheld pursuant to Treasury’s assertion of the presidential communications 

privilege. See U.S. Dep’t of Treasury v. PBGC, 249 F. Supp. 3d 206, 209-10 

(D.D.C. 2017). In April 2017, the D.C. Court resolved those remaining privilege 

claims, upholding Treasury’s assertion of the presidential communications 

privilege over 63 documents; however, noting Plaintiffs’ assertion that the 

documents likely would “show pressure exerted by Treasury or the White House to 

terminate the Delphi [Salaried] Plan for impermissible or political reasons,” the 

D.C. Court found that Plaintiffs’ litigation need for these documents overcame the 

privilege, and ordered their production. Id. at 212-13. 

Treasury then sought a stay of the D.C. Court’s disclosure order in order to 

decide whether it would appeal the order, and during a hearing on that motion, the 

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Court specifically noted its “very serious concerns about whether the government’s 

proceeding in good faith or not,” observing that Treasury had “wasted the [c]ourt’s 

time on three prior occasions.” See May 16, 2017 Mot. Hr’g Tr. at 4:9-14, U.S. 

Dep’t of Treasury v. Black, No. 12-mc-100 (D.D.C. July 11, 2017), ECF No. 61. 

Treasury ultimately appealed the disclosure order, and following multiple 

rounds of briefing and oral argument, the D.C. Circuit determined that the record 

was inadequate for appellate review, vacated the production order and remanded 

back to the D.C. Court to “balance the public interests at stake and more 

thoroughly analyze whether [Plaintiffs] demonstrated a need sufficient to 

overcome the privilege.” U.S. Dep’t of Treasury v. Black, 719 F. App’x 1, 3 (D.C. 

Cir. 2017). 

On remand, the D.C. Court ordered additional briefing, which was 

completed on May 16, 2018. In that briefing, Plaintiffs argued that each of the 

disputed Treasury documents likely contains information that goes to the heart of 

the § 1342(c) inquiry this Court has asked the Parties to address, because, inter 

alia, they will likely contain evidence as to the viability of a GM reassumption of 

the Salaried Plan, the leverage that the PBGC possessed to advocate for a GM 

reassumption, and whether Treasury improperly influenced the PBGC to acquiesce 

in the Salaried Plan’s termination. Notwithstanding that Plaintiffs continue to 

believe that this information could be critically important to their case, as 

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demonstrated below, the record is sufficient to show that the PBGC could not have 

obtained a judicial decree adjudicating that the Plan needed to be terminated in 

July 2009. 

STATEMENT OF UNDISPUTED MATERIAL FACTS 

The following Statement of Undisputed Material Facts summarizes the 

lengthy history of the Salaried Plan’s termination. It shows: (1) that the PBGC – 

laudably – initially sought to save the Plan; (2) that the financial crisis of 2008 and 

the federal government’s subsequent effort to rescue the auto industry through the 

Auto Task Force resulted in the PBGC being frozen out of discussions regarding 

the Salaried Plan’s future, notwithstanding the PBGC’s statutory obligations under 

ERISA; (3) that the Auto Task Force ultimately insisted that the Salaried Plan be 

terminated, acting consistently with political imperatives (not with the PBGC’s 

statutory directives or even Delphi’s or GM’s wishes) that as little federal money 

as possible be used to ensure the auto industry’s survival; and (4) that the federal 

government – also for political reasons – ensured full pensions for union-backed 

workers similarly situated to Plaintiffs, leaving the Salaried Plan as essentially the 

only “road kill” in the Auto Task Force saga. 

A. ERISA 

1. “On September 2, 1974, following almost a decade of studying the 

Nation's private pension plans, Congress enacted the Employee Retirement Income 

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Security Act of 1974 (ERISA), 88 Stat. 829, 29 U. S. C. §[§] 1001 et seq.” 

Nachman Corp. v. Pension Benefit Guar. Corp., 446 U.S. 359, 361 (1980). “One 

of Congress’ central purposes in enacting [ERISA] was to prevent the ‘great 

personal tragedy’ suffered by employees whose vested benefits are not paid when 

pension plans are terminated[,] . . . by making sure that if a worker has been 

promised a defined pension benefit upon retirement -- and if he has fulfilled 

whatever conditions are required to obtain a vested benefit -- he actually will 

receive it.” Id. at 374-75. 

2. Title IV of ERISA established the PBGC within the Department of 

Labor to administer a mandatory government pension insurance program. See 29 

U.S.C. § 1302(a). Governed by a three-person board of directors that comprises 

the Secretaries of Labor, Treasury and Commerce, see id. § 1302(d)(1), the PBGC 

has three statutory goals: (1) “to encourage the continuation and maintenance of 

voluntary private pension plans for the benefit of their participants,” (2) “to 

provide for the timely and uninterrupted payment of pension benefits to 

participants and beneficiaries” under covered plans, and (3) to maintain its 

insurance premiums at the lowest possible level. Id. § 1302(a). The PBGC may 

also seek a court adjudication to have a pension plan terminated involuntarily 

where certain statutory criteria are present. See id. § 1342. In cases where there is 

a possibility that a pension plan may be terminated involuntarily under § 1342, the 

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PBGC may seek to serve as a statutory trustee, a fiduciary function similar to that 

of a plan administrator, that is responsible for conserving a plan’s assets pending a 

termination determination, and ensuring that the plan’s assets are distributed 

according to ERISA’s asset-allocation scheme if a plan is ultimately terminated. 

See id. § 1342; 1344. While ERISA’s insurance guarantee is funded entirely by 

premiums the PBGC collects from plan sponsors, see id. §§ 1305-1307, 1322, the 

PBGC generally keeps the investment returns from the assets of terminated plans it 

trustees, and uses these investment returns to fund its own operations. See id. 

§ 1344(c). 

B. The GM-Delphi Relationship 

3. Tracing its roots back to 1908, General Motors Company (“GM”), 

was “one of the world’s largest automakers.” See ECF No. 48-9 at 1. “For most of 

its history, GM itself manufactured a large proportion of the parts used in its 

vehicles. In 1991, GM combined its parts manufacturing facilities into a single 

parts division, which was originally known as the Automotive Components Group 

and eventually renamed Delphi Automotive Systems. This division produced parts 

primarily for GM and, to a lesser extent, other automakers.” Ex. 1 at DS-23. 

4. Delphi Automotive Systems “was incorporated in Delaware in 1998 

as a wholly-owned subsidiary of GM.” Id. “On January 1, 1999, GM transferred 

the assets, liabilities, manufacturing sites, and most of the employees assigned to 

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Delphi Automotive Systems to the newly-created Delphi Automotive Systems 

Corporation, a wholly-owned subsidiary of GM . . . making Delphi an independent 

business.” Id. Delphi Automotive Systems was renamed Delphi Corporation 

(“Delphi”) in 2002. 

5. While Delphi initially met with some financial success, its financial 

condition subsequently deteriorated, and in October 2005, Delphi and certain of its 

U.S. subsidiaries and affiliates filed voluntary petitions for reorganization relief 

under Chapter 11 of the Bankruptcy Code, with the reorganization cases jointly 

administered under the caption “In re Delphi Corporation, et al., No. 05-44481 

(RDD).” See ECF No. 66 at AR000373. The Delphi debtors continued to operate 

their businesses as debtors-in-possession, meaning that they could continue to 

operate as ongoing businesses, but could not engage in transactions outside the 

ordinary course of business without the prior approval of the bankruptcy court. Id. 

Delphi’s non-U.S. subsidiaries were not included in the Chapter 11 filings. Id. 

6. Delphi attributed its financial deterioration in large part to the 

collective bargaining agreements that GM had forced upon it through the spin-off. 

See Ex. 1 at DS-29 (asserting Delphi had been “required to assume the terms and 

conditions of the collective bargaining agreements negotiated by its unions and 

GM,” with “increasingly unsustainable U.S. legacy liabilities and operational 

restrictions driven by [those] agreements,” which “limited Delphi’s ability to 

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compete effectively with its U.S. peers”). 

 

7. At the time of the spin-off, GM established two defined-benefit 

pension plans, with assets and liabilities transferred from their GM counterparts: 

the Delphi Retirement Program for Salaried Employees (i.e., the “Salaried Plan”), 

and the Delphi Hourly-Rate Employees Pension Plan (“Hourly Plan”). See ECF 

No. 49-9 at 5. After their spin-off from the respective GM plans, Delphi became 

the sponsor and administrator of both plans. 

8. The Salaried Plan covered the majority of Delphi’s non-unionized 

workforce, while the Hourly Plan covered Delphi’s hourly employees in three 

unions, the United Auto Workers (“UAW”), the International Union of Electronic, 

Electrical, Salaried, Machine and Furniture Workers (“IUE”), and the United Steel 

Workers (the “USW”). In connection with the spin-off, the UAW, IUE, and USW 

all negotiated agreements with GM in which GM guaranteed that, “if Delphi could 

not fully fund its pensions, GM would ‘top up’ or increase, pension benefit 

payments of the unions’ hourly retirees to their full benefit levels under certain 

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conditions (called ‘pension benefit guarantees,’ or ‘top-up agreements’).” See Ex. 

3 (SIGTARP Report) at 6. 

C. Plaintiffs 

9. Plaintiffs Dennis Black, Chuck Cunningham, and Ken Hollis are 

participants in the Delphi Salaried Plan, and prior to the spin-off, were participants 

in the defined benefit plan that GM offered to its salaried employees, and spent the 

bulk of their careers as GM employees. See ECF No. 145 ¶ 5; ECF No. 150 ¶ 5; 

ECF No. 7-4 ¶¶ 2-4. As a result of the Plan’s termination, Messrs. Black, 

Cunningham, and Hollis lost a substantial portion of their pension income. Id. 

Plaintiff Delphi Salaried Retiree Association is an association comprising 

thousands of participants in the Delphi Salaried Plan or their beneficiaries, many of 

whom have suffered significant pension losses. See ECF No. 47-4 ¶¶ 7-10, 14-16; 

 Ex. 123 at 1 (PBGC 

actuarial case memo for the Plan noting $521,525,998 in unfunded non-guaranteed 

benefits). 

D. The PBGC’s Efforts to Protect the Delphi Plans During 

Bankruptcy 

10. 

 

During that same time, the PBGC “worked successfully with 13 auto parts 

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companies that have emerged from Chapter 11 protection without terminating their 

pension plans. These include Federal Mogul Corp., Tower Automotive and Dana 

Corp.” Ex. 9. 

11. Throughout its bankruptcy, Delphi continued to operate its business as 

a debtor-in-possession, and repeatedly reaffirmed its intention to maintain the 

Salaried Plan. While Delphi was in bankruptcy, it filed multiple applications with 

the Internal Revenue Service (“IRS”) under 26 U.S.C. § 412(d) for funding 

waivers for the its pension plans. The PBGC was “extremely supportive” of 

Delphi’s waiver requests, because it believed they were needed “to allow Delphi to 

emerge from bankruptcy with the plans ongoing.” Ex. 10 at 3. 

12. On May 1, 2007, the IRS granted Delphi a conditional funding waiver 

for the plan year ending September 30, 2006 for the Salaried Plan, and approved 

multiple modifications to that conditional funding waiver in 2007 and 2008. See

Ex. 5 at 1. Consistent with those funding waivers, Delphi did not make the full 

contributions to the Salaried Plan that would have otherwise been required under 

§ 412; however, it consistently contributed “amounts necessary to fund benefits 

accrued on account of post[-bankruptcy] petition service.” See ECF No. 66 at 

AR000423. Additionally, in connection with the funding waivers, Delphi provided 

the PBGC with a $50 million letter of credit in favor of the Salaried Plan, to be 

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deposited as a Plan asset if Delphi failed to meet any of the funding waiver’s 

conditional terms. Id. 

13. To help protect against unnecessary pension plan terminations, the 

PBGC may assert liens and claims against a pension plan sponsor (and those 

companies within the sponsor’s controlled group) to cover any missed 

contributions or even to cover the full amount of a plan’s underfunding. See 29 

U.S.C. §§ 1082, 1083, 1362, 1368; 26 U.S.C. §§ 412, 430. 

. 

14. 

E. Delphi’s Proposal for a GM Reassumption of the Salaried Plan, 

and the PBGC’s Embrace of that Proposal 

15. While Delphi remained committed to maintaining its pension plans 

throughout its bankruptcy, it also recognized as the capital markets dried up in 

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2008 that it might require help from the pension plans’ former sponsor (GM) to 

maintain those plans going forward. GM had a history of providing financial 

support to Delphi. For example, after the investors in Delphi’s planned 

reorganization pulled out in April 2008, GM provided Delphi with “significant 

incremental liquidity necessary for Delphi to continue operating.” ECF No. 189-4 

¶ 11. GM provided this support to Delphi in large part because of its operational 

importance to GM. Between 1999 – 2009, Delphi was GM’s largest component 

parts supplier. See ECF No. 168-2 ¶ 5. “Consequently, if Delphi ever cease[d] 

shipping even a small fraction of production parts to GM, the GM plants relying on 

such shipments may run out of inventory of such parts and have to shut down 

within a matter of days,” id. ¶ 7, and “a prolonged cessation in the supply of parts 

from Delphi to GM would have [had] a devastating effect on GM.” Id. ¶ 11. In 

total, during Delphi’s bankruptcy, “GM ha[d] been forced to spend billions of 

dollars and incur billions of dollars of additional liabilities primarily to protect its 

supply base by supporting Delphi.” ECF No. 168-3 ¶ 6. 

16. 

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17. At this point, Delphi proposed that GM reassume the pension 

liabilities of some of its former employees, 

 The PBGC’s 30(b)(6) deponent testified that the 

PBGC was “cheerleading for the transfer [i.e., the reassumption], . . . utilizing [the 

PBGC’s] liens overseas as potential leverage to get it done.” Ex. 14 at 67:6-14. 

, GM agreed to assume over $2 billion in 

Delphi pension liabilities associated with Delphi’s Hourly Plan. ECF No. 49-9 at 

AR000031. And in exchange for the pension transfer, the PBGC stated that it had 

released more than $1.2 billion worth of liens it had asserted on Delphi assets. See

Ex. 9 (Sept. 25, 2008 PBGC Press Release). 

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18. Because the PBGC continued to possess the ability to assert liens and 

claims against Delphi assets (i.e., the plants that made the parts GM depended 

upon) to the extent the Delphi pension plans were underfunded, the resolution of 

Delphi’s pension obligations, and the associated PBGC liens and claims, were a 

major threat to GM’s supply and were one of the last major hurdles to resolving 

Delphi’s bankruptcy. See, e.g., ECF No. 49-9 at 13 (AR000040); Ex. 15 (same). 

19. In September 2008, Delphi implemented a freeze of the Salaried Plan, 

see ECF No. 66 at AR000418, meaning that the Plan’s participants’ benefits were 

frozen, or fixed, and the Plan’s liabilities (and therefore the exposure of the 

PBGC’s insurance fund) were likewise frozen. On October 3, 2008, Delphi filed a 

modified disclosure statement, noting that “Delphi now expects to be able to meet 

its pension funding strategy without the benefit of the previously issued pension 

funding waivers. . . . Delphi will need to satisfy its funding obligation to the 

Salaried Plan upon emergence in cash or qualifying employer securities. This 

obligation is estimated to be $70 million as of October 1, 2008.” Ex. 16 at DS-96. 

F. The Financial Crisis and GM’s Request for Federal Aid 

20. In the fall of 2008, the United States “[stood] on the precipice of the 

most serious financial crisis since the Great Depression.” 154 Cong. Rec. H10702 

(daily ed. Oct. 3, 2008) (statement of Rep. Slaughter). In response, on October 3, 

2008, Congress enacted the Emergency Economic Stabilization Act of 2008 

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(“EESA”), Pub. L. No. 110-343, 122 Stat. 3765. Seeking “to immediately provide 

authority and facilities that the Secretary of the Treasury [could] use to restore 

liquidity and stability to the financial system of the United States,” EESA 

authorized the Secretary of the Treasury “to establish the Troubled Asset Relief 

Program (or ‘TARP’).” EESA §§ 2(1), 101(a)(1), 122 Stat. at 3766, 3767. Subject 

to certain conditions, EESA authorized the Secretary of the Treasury to spend up to 

$700 billion to purchase “troubled assets.” Id. § 115(a)(3), 122 Stat. at 3780. 

21. The financial crisis impacted the auto industry. An Obama 

administration official testified that, “in 2008, the U.S. auto industry lost 50% of its 

sales volume and over 400,000 jobs.” Ex. 3 at 4. “By the fall of 2008, GM was in 

the midst of a severe liquidity crisis, and its ability to continue operations grew 

more and more uncertain with each passing day. As a result, in November 2008, 

GM was compelled to seek financial assistance from the U.S. Government.” In re 

GMC, 407 B.R. 463, 476-77 (Bankr. S.D.N.Y. 2009). 

22. 

 

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23. 

 

24. During this time, GM continued to tell Delphi that it was open to the 

idea of a reassumption of the Salaried Plan. See, e.g., Ex. 20 at 2 (Dec. 4, 2008 

Delphi email noting that Delphi was continuing to press GM to agree to take back 

the Salaried Plan, and that “[t]here have been some preliminary indications from 

GM that they are willing to consider this as part of a final solution”); 

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25. “In December 2008, Treasury, under the Bush Administration, 

announced TARP’s Automotive Industry Financing Program with the stated goal 

to prevent a significant disruption to the American automotive industry that would 

pose a systemic risk to financial market stability and have a negative effect on the 

U.S. economy.” Ex. 3 at 4. Pursuant to that authority, and “after negotiations, the 

U.S. Treasury and GM entered into a term loan agreement on December 31, 

2008, . . . that provided GM up to $13.4 billion in financing on a senior secured 

basis.” In re GMC, 407 B.R. at 477. “Treasury’s Loan and Security Agreement 

(‘TARP loan agreement’) required GM and Chrysler to each submit by February 

17, 2009, for review and approval by the President’s Designee a restructuring plan 

showing how they would use the TARP funds to achieve ‘long-term viability.’” 

Ex. 3 at 4.1

1 The government’s decision to use TARP funds to rescue the auto industry was, to 

say the least, controversial. See, e.g., Time for Plan D, Financial Times (Nov. 13, 

2008), http://www.ft.com/cms/s/0/471f2266-b1bc-11dd-b97a0000779fd18c.html#axzz4KpUqxYGA (“Helping the carmakers, however, is not a 

job for the Tarp. They have financial divisions, but are not financial companies.”); 

George F. Will, TARP and ADD, Newsweek (Nov. 21, 2008), 

http://www.newsweek.com/george-f-will-tarp-and-add-84997 (“Can anyone 

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G. The PBGC Continued Its Advocacy on Behalf of the Salaried Plan 

as the Treasury Began to Familiarize Itself with the GM/Delphi 

Relationship 

26. “[O]n January 16, 2009, Delphi filed amended Forms 5500 [] with the 

IRS that applied all contributions made to the . . . Salaried Plan[] in 2008, 

including the proceeds from the [$50 million] letters of credit, back to the plan year 

ended September 30, 2007.” See ECF No. 66 at AR000424. While 

“[a]pproximately $56 million remain[ed] due as a minimum funding contribution 

under the Salaried Plan for the plan year ended September 30, 2008, . . . . [a]s 

permitted under [ERISA] and [the Internal Revenue Code], Delphi elected to defer 

the contribution necessary to satisfy this remaining obligation until no later than 

the due date for minimum contributions, which [was] June 15, 2009 for the 

Salaried Plan.” Id. Additionally, “[o]n December 15, 2008, Delphi applied to the 

IRS for a waiver of the obligation to make the minimum funding contribution to 

the Salaried Plan by June 15, 2009, and permission to instead pay the amount due 

in installments over the next five years.” Id. Accordingly, Delphi had at least until 

June 15, 2009 to satisfy the Plan’s minimum funding contributions, and potentially 

longer if the IRS granted its waiver request. 

discern the principle implicit—it certainly is not explicit—in the Troubled Asset 

Relief Program (TARP) that authorizes disbursement of perhaps $1 trillion in 

bailouts? . . . [TARP] has made Treasury Department bureaucrats into legislators; 

or perhaps it has made Secretary Hank Paulson the fourth branch of government.”). 

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, the PBGC – 

according to an email by the PBGC’s Karen Morris, was now putting the waiver 

request “on ice,” pending “an agreement . . . under which [GM] will assume 

Delphi’s plan(s),” and noting that the “government’s commitment to grant a 

waiver” could be used as an “incentive” for GM to “take the plan(s).” Ex. 22. 

27. On January 26, 2009, the heads of GM and Delphi engaged in a frank 

piece of correspondence about the leverage the PBGC possessed to ensure a GM 

reassumption: 

We must find a pension plan solution in which GM participates. Your 

team has said that GM will not be permitted to address (or does not 

intend to address) legacy obligations relating to Delphi’s [Salaried 

Plan] . . . . This does not make sense to us because, for example, if there 

is a distressed pension termination, both GM and Delphi have been told 

by the PBGC that it will assert liens against Delphi ROW [rest of the 

world assets] and will sue GM for what the PBGC has told us it views 

as GM’s prior unlawful follow-on plan at the time that the pension 

plans were split and transferred to Delphi. We will not be able to sort 

out a solution where GM takes the keep sites and the DIP lenders take 

the rest of the world without a pension solution that, among other 

matters, eliminates any contingent PBGC claims and related PBGC 

liens both in the US and in the rest of the world. 

Ex. 23 at 3 (emphasis added). 

28. GM followed up by arranging a meeting with Delphi’s attorneys in 

early February 2009, with the purpose of “obtain[ing] factual info concerning the 

state of play with the PBGC/Pension plans as well as understand[ing] better 

Delphi’s concerns relating to liens on foreign assets etc. This is [important] so we 

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have a full picture of the pension issues as we proceed.” Ex. 24 at 1. As these 

discussions were taking place, both the PBGC and GM began preparing funding 

projections for GM’s pension plans that assumed a GM reassumption of the Delphi 

pension plans. See Ex. 25 at 1 (Jan. 23, 2009 internal PBGC email attaching 

presentation with “4 new scenarios for GM” to account for assumption of the 

Delphi pension plans); Ex. 26; 

 

29. 

 

30. On January 20, 2009, President Obama took office, and that same day, 

the PBGC’s director under George W. Bush, Charles Millard, resigned.2 Vince 

2 See Past PBGC Directors and Executive Directors,

https://www.pbgc.gov/about/who-we-are/pg/past-pbgc-directors-and-executivedirectors (last updated Apr. 27, 2017).

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Snowbarger assumed the role of Acting Director of the PBGC. See Ex. 56 (V. 

Snowbarger Dep. Tr.) at 14:17-18. 

31. 

 

32. 

 

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33. On February 10, 2009, the PBGC followed up on the meeting by 

emailing Treasury to argue that “[i]f GM does not absorb Delphi’s pension 

liabilities, the cost to the U.S. government (Treasury and PBGC) for resolving 

GM/Delphi may increase by almost $6 billion, as PBGC’s insurance funds will be 

called upon to honor benefit obligations under the Delphi pension plans.” Ex. 32 

at 2. A few days later, the PBGC’s consultant, Compass Advisors, concluded its 

recommendations regarding the Delphi pension by urging that the PBGC “continue 

their full court press to convince GM and Government officials that the 414(L) 

transfer [of Delphi pensions back to GM] is in everyone’s best interest [as] GM 

doesn’t need two classes of employees and should provide pensions to all retirees.” 

Ex. 33 at 8. The PBGC’s advisor noted that the “PBGC can help GM with waivers 

if equity markets don’t turn around in the next two years providing an adequate 

return on their pension assets.” Id. 

34. 

 Similarly, Delphi and GM 

were at this time exchanging information on unresolved issues, and both agreed 

that “Delphi and GM recognize that the status of the Delphi [Hourly Plan] and 

Delphi [Salaried Plan] must be resolved in connection with Delphi’s emergence 

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from chapter 11. The status of the [Hourly Plan] and [Salaried Plan] will be 

discussed with the U.S. Government, including the Treasury Department and the 

PBGC.” Ex. 35 at 9 (Feb 17, 2009 GM revisions to Delphi’s side-by-side term 

sheet chart). 

35. On February 15, 2009, the President appointed the Auto Task Force to 

oversee the Administration’s efforts to support and stabilize the domestic 

automotive industry, naming Treasury Secretary Geithner and NEC Director 

Summers to serve as co-chairs of the Auto Task Force. Ex. 3 (SIGTARP Report) 

at 4. Treasury created an “Auto Team” that was “delegated ... the responsibility of 

evaluating the auto companies’ restructuring plans and negotiating the terms of any 

further assistance.” Id. at 4-5. 

36. “Leading the Auto Team was Steven Rattner, co-founder of 

Quadrangle Group, a private equity firm.” Id. at 5. Ron Bloom, a former head of 

collective bargaining for the USW (one of the Delphi unions whose members were 

covered by Delphi’s Hourly Plan) “served as his deputy and then the head of the 

Auto Team after Mr. Rattner left Treasury in July 2009.” Id. “With a staff of 15 

people, the other key members of the Auto Team who worked on GM’s 

restructuring with Mr. Rattner and Mr. Bloom, included Matthew Feldman, who 

told the Special Inspector General for the Troubled Asset Relief Program 

(“SIGTARP”) that he was brought in to be the bankruptcy lawyer for Treasury, 

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and Harry Wilson, a former member of the hedge fund management firm Silver 

Point Capital.” Id. 

37. Silver Point Capital, it so happened, was one of a group of hedge 

funds that had provided a significant amount of debtor-in-possession loans to 

Delphi (referred to throughout the bankruptcy proceedings as the Tranche C DIP 

lenders). The Tranche C DIP Lenders were a driving force in Delphi’s bankruptcy, 

and would ultimately (with the consent of the Treasury) become the owners of the 

New Delphi that emerged from Delphi’s bankruptcy. Interestingly, Mr. Feldman 

also had a connection with this hedge fund group -- his law firm (Willkie Farr & 

Gallagher) represented a group of Delphi’s Tranche C lenders. 

38. “The[] Auto Team officials told SIGTARP that they were directed by 

Treasury and the Administration to act in a ‘commercially reasonable’ manner. 

There were no policies and procedures defining commercially reasonable; it was 

subject to interpretation.” Ex. 3 at 5. 

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 Indeed, as Presidential advisor David Axelrod noted in an 

interview with the New York Times in April 2009, “‘The issues were obvious – 

balancing [President Obama’s] interest in seeing the companies survive and 

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prosper for the benefit of the workers and communities in which they operate and 

all the offshoot businesses, versus the interests of American taxpayers . . . . And 

overlaid on that is, when is it appropriate for the government to intervene?’” Jim 

Ruttenberg, Peter Baker, & Bill Vlasic, 100 Days: Early Resolve: Obama Stand in 

Auto Crisis, N.Y. Times, Apr. 29, 2009, at A1; see also Steven Rattner, The Auto 

Bailout: How We Did It, Fortune (Oct. 21, 2009) (“[a]n important part of our job 

was going to be to convince the stakeholders that the government wasn’t going to 

be everyone’s piggy bank.”).3

39. GM submitted its first viability plan to Treasury on Feb. 17, 2009. 

Ex. 3 at 7. The same day, “the Auto Team sent a memo to Auto Task Force chairs 

Dr. Summers and Secretary Geithner with ‘first-blush impressions’ of the auto 

companies’ restructuring plans. As for GM, the memo listed four risks,” including 

Delphi and its pension liabilities. Id. Consistent with this conclusion, during a 

Feb. 18, 2009 press conference, GM’s Fritz Henderson, in responding to a question 

about Delphi, noted that while GM did not anticipate taking on any additional 

pension liabilities, “[i]f Delphi is unsuccessful in addressing its underfunded 

pension plans and raising exit financing, it would represent a significant risk to 

[GM’s] revised Plan.” Id. at 6. 

3 http://archive.fortune.com/2009/10/21/autos/auto_bailout_rattner.fortune/index.htm. 

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40. 

 

. 

41. 

4

 

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. 

42. 

 

 

5 Mr. Cann was at the time a financial analyst in the PBGC’s Department of 

Insurance Supervision and Compliance, see Ex. 14 at 14:13-18, responsible for 

working “with ongoing pension plan sponsors,” and “charged with keeping 

pension plans ongoing,” or when a plan’s continued survival is no longer possible, 

to shift “to risk mitigation and recovery maximization. Id. at 15:17-19. Because of 

the PBGC’s “large exposure” to Delphi’s pension plans, the PBGC was “keenly 

interested in what was going on at the company,” and Mr. Cann began working on 

the Delphi matter for the PBGC around 2004. Id. at 17:22-19:13. The PBGC 

designated Mr. Cann as its deponent for several subjects related to Plaintiffs’ 

30(b)(6) deposition notice. Id. at 13:02-09.

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43. Also, that day, the Auto Team had a meeting in Larry Summers’s 

office to discuss, among other things, the question of how to determine when 

Treasury should use TARP funds to assist auto suppliers (like Delphi). As noted 

above, the Administration was facing mounting skepticism regarding its use of 

TARP funds to bailout the auto industry. See supra p.24, 32-33. Consistent with 

this concern, Mr. Rattner has written that President Obama directed that he and Mr. 

Bloom should “‘be tough [and] commercial,’” which Mr. Rattner understood as a 

direction that the Task Force reach its goals “in a way that was prudent from the 

taxpayer’s standpoint.” Steven Rattner, Overhaul: An Insider’s Account of the 

Obama Administration’s Emergency Rescue of the Auto Industry at 132 (2010) 

(“Overhaul”). In order to balance its competing goals of saving the auto industry 

while using as little TARP funding as possible, the Task Force “quickly agreed that 

the administration’s goal should be not to save suppliers per se but to save only 

those that were of critical importance to the automakers.” Id. at 90-91(emphasis 

added). Additionally, in light of the concerns regarding the potential impropriety 

of government improperly interfering in the private sector, Mr. Rattner has written 

that “[t]hroughout its rescue operations, the Obama administration had wanted to 

minimize at least the appearance of intervention in the private sector.” Id. at 133-

34. 

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44. 

6 The actual memorandum has been withheld by Treasury pursuant to the 

presidential communications privilege, and is one of the documents currently in 

dispute in the Treasury subpoena litigation, which remains pending in the D.C. 

Court.

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45. 

 

46. 

 

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47. 

 On 

March 7, 2009, Delphi and GM had a call during which GM related that it had told 

Treasury that Delphi’s emergence funding and pension issues needed to be 

addressed in connection with GM’s Viability Plan. Ex. 51. 

48. 

 

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H. As the Auto Team Inserted Itself Into Negotiations Over Delphi, 

the PBGC Ceased Advocating for GM’s Reassumption of the 

Salaried Plan 

49. By the beginning of March 2009, Treasury officials began to prepare 

for the possibility of a GM bankruptcy that would utilize Section 363 of the 

Bankruptcy Code. Ex. 3 at 8. “An Auto Team official testified in a deposition that 

363 was selected because of speed, certainty, and the ability to leave behind 

liabilities that a commercial buyer would not want in the new company.” Id. By 

the end of March 2009, Treasury had replaced GM’s CEO and rejected GM’s 

restructuring plan, determining that GM’s “best chance at success may well require 

utilizing the bankruptcy code in a quick and surgical way.” Id. at 9. Treasury’s 

March 30, 2009 Viability Determination “gave GM until June 1 to resubmit the 

plan, and gave GM an additional $6 billion in TARP funds – enough working 

capital to continue operations over the following 60 days.” Id. 

50. “With only 60 days of funding from TARP, GM developed a new 

restructuring plan with significant influence and leverage from Treasury’s Auto 

Team.” Id. at 11. Under the TARP loan agreement, Treasury had the right to 

approve or prohibit transactions over $100 million that were not in the ordinary 

course of GM’s business or any increase in pension obligations,” and the TARP 

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Special Investigator found that “Treasury’s Auto Team had significant influence 

over GM’s decisions, even in the areas where Treasury’s consent was not required 

under the TARP loan agreement.” Id. “One GM official told SIGTARP, 

‘Ultimately it was that GM is not in control. And GM is totally dependent.’” Id. 

51. According to the TARP Special Investigator’s report, “[w]hat 

followed was the Auto Team’s direct involvement in the decisions affecting GM. 

Treasury’s Auto Team used their financial leverage as GM’s only lender to 

significantly influence the decisions GM made during the time period leading up to 

and through GM’s bankruptcy.” Id. at 8. Indeed, “the Auto Team used their 

leverage as GM’s largest lender to influence and set the parameters for GM to 

make decisions.” Id. at 11. According to SIGTARP, “[t]he Auto Team specifically 

pressed GM to be less generous in relation to Delphi and pensions.” Id. at 13 

(emphasis added). 

52. On March 23, 2009, the Auto Task Force intervened in Delphi’s 

bankruptcy case and objected to GM’s proposed purchase of the Delphi Steering 

transaction and GM’s agreement to provide Delphi with additional interim 

financing. See ECF No. 189-4 ¶ 29. The Auto Team informed both Delphi and 

GM that there would be no additional financial support to Delphi, in any form, 

absent a “global solution.” See ECF No. 189-6 (M. Feldman Dep. Tr.) at 135:4-8

(“[O]ur position has always been the same, which is if Delphi wanted funding from 

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General Motors, there needed to be a signed deal that could lead to emergence 

from Chapter 11.”). In order to achieve its global solution, the Treasury took the 

lead in vetting offers from Delphi, and from a number of entities that were 

seriously considering acquiring Delphi or its business (including Delphi’s DIP 

Lenders, Platinum Equity, and Federal Mogul) in deciding what form a new or 

reorganized Delphi would ultimately take. See generally, ECF No. 189-4 ¶¶ 41, 

43, 44, 48. 

53. Both GM and the Treasury determined that there could be no global 

solution that would secure GM’s supply while Delphi assets were subject to the 

threat of PBGC liens and claims, which were a threat not only to GM’s supply, but 

also to the potential for a speedy GM bankruptcy proceeding. See ECF No. 168-3 

¶ 15 (“neither GM nor Parnassus (nor presumably any other potential purchaser) is 

willing to purchase the assets (or shares in the non-debtor affiliates that own the 

assets) while they are subject to the threat of the PBGC liens”); Ex. 3 at 13-14 

(“GM officials told SIGTARP that GM needed PBGC to release liens on Delphi 

assets so Delphi could successfully emerge from bankruptcy.... ‘Ultimately to get 

Delphi out of bankruptcy, we needed the [pension] plans to be terminated.’”); see 

also ECF No. 189-6 (M. Feldman Dep. Tr.) at 204:24-205:7 (“If I understand, if 

there could not have been a consensual resolution with the PBGC, and it would 

have taken 3 months to terminate the pension plan, would have had -- you would 

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have had to weigh that delay in Delphi emergence against whatever economic 

benefits you had against -- in not taking the liability.”). Thus, arriving at a global 

solution meant dealing with Delphi’s pension plans and the PBGC’s associated 

liens and claims. 

54. The Treasury negotiated directly with the PBGC on GM’s behalf on 

Delphi-related issues, and one of the Treasury’s perceived objectives in these 

negotiations was “induc[ing] PBGC to waive alleged ‘rest of world’ liens against 

Delphi’s non-debtor affiliates . . . .” See Ex. 55 at 2. However, the shift in 

negotiating partner was problematic for the PBGC, as the Treasury was wearing 

“at least” three conflicting hats: (1) through its Auto Team, it was the agency 

charged with restructuring the auto industry; (2) as a PBGC board member, it was 

one of three agencies charged with providing oversight and direction to the PBGC; 

and (3) as a major competing creditor in the Delphi bankruptcies that, as the chief 

lender to GM, would ultimately decide whether GM would be permitted to fund a 

reassumption of the Delphi pension plans. See, e.g., Ex. 56 (V. Snowbarger Dep. 

Tr.) at 39:6-12, 62:13-63:2. GM perceived a benefit to Treasury taking the lead on 

negotiations with the PBGC “because it was ‘Government agency to Government 

agency’ and Treasury would get a better deal for GM.” Ex. 3 (SIGTARP Report) 

at 14 (emphasis added). 

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55. In the beginning of April 2009, financing issues in Delphi’s 

bankruptcy reached a critical juncture. On April 2, 2009, Delphi announced that 

an agreement had been reached amongst itself, its DIP lenders, GM and the 

Treasury to allow a short period of time for the relevant parties to negotiate a 

global solution to the Delphi situation. ECF No. 49-9 at AR0000029. Under this 

agreement, Delphi had until April 17, 2009 to deliver to the DIP lenders “a detailed 

term sheet,” agreed to by both GM and Treasury, setting forth “the terms of a 

global resolution of matters relating to GM’s contribution to the resolution of 

Delphi’s Chapter 11 cases.” Id. 

56. Failure by Delphi to deliver the term sheet by April 17 would trigger a 

$117 million repayment oblation to Delphi’s DIP lenders on April 20, 2009, and 

failure to deliver both the term sheet and the repayment obligation would constitute 

“events of default” under the DIP credit agreements. Id. Those credit agreements 

also provided a five-business-day grace period, such that, in the event of an April 

17, 2009 default, Delphi could continue to use its DIP borrowing until April 24, 

2009, following which Delphi’s DIP lenders could exercise all their remedies, 

including foreclosure on their collateral. Id. at AR000030. This possibility was 

alarming to the PBGC, because it threatened the PBGC’s leverage. As the PBGC 

noted in an internal memo: 

Among the collateral pledged to the DIP lenders is 100% of the stock 

in Delphi’s foreign subsidiaries – stock currently owned by Delphi 

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Automotive Systems Holding, Inc. (“DASHI”), a debtor entity. The 

foreign subsidiaries remain outside of bankruptcy, and according to . . . 

PBGC’s outside financial advisor, comprise substantially all of the 

value of the Delphi controlled group. As such, PBGC must initiate a 

termination and set a date of plan termination (“DOPT”) prior to April 

24, 2009, or risk a controlled group break-up, whereby substantially all 

value available for PBGC recoveries leaves the controlled group. 

Id. 

57. 

 

58. While Treasury initially invited the PBGC to attend the meeting, 

Treasury withdrew the PBGC’s invitation shortly before the meeting began. See

Ex. 59. In the meantime, as documented below, Treasury spent a great deal of time 

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(without input from the PBGC) considering the investment it should allow GM to 

make in Delphi. 

59. On April 13 and 14, 2009, Delphi’s DIP lenders had meetings with the 

Auto Task Force, during which “the DIP lenders presented an analysis of the cost 

to GM if Delphi were unwilling or unable to provide supply to GM should the DIP 

lenders exercise certain remedies resulting in a shutdown of Delphi.” ECF No. 

189-4 ¶ 38. “The analysis was the product of a detailed operational and financial 

analysis performed by third party consultants for the DIP lenders that had 

previously held senior management positions in GM’s purchasing organization.” 

Id. “The analysis asserted that it would take GM years and tens of billions of 

dollars to fully re-source Delphi’s products because Delphi is a sole source 

provider of many components for every vehicle GM produces.” Id. 

60. 

 Additionally, Mr. 

Feldman emailed fellow Auto Team member Harry Wilson regarding Delphi 

pensions and the “potential inheritance of pension/PBGC liability” (though the 

Treasury has withheld the substance of the communication, asserting that it was 

covered by the attorney-client privilege, see Ex. 61 (First Treasury privilege log, 

describing Item No. 30 re: UST-BL-005947) at 2. 

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61. 

 

62. It was at about this time that the PBGC finally decided to engage with 

Treasury. From this point forward, throughout August 2009, Treasury and the 

PBGC communicated about Delphi issues almost exclusively through two 

individuals, Joe House at the PBGC, and the Auto Team’s Matt Feldman. See, 

e.g., Ex. 56 at 47:16-19; Ex. 64 at 118:4-19. 

63. Mr. Feldman has testified that he began his discussions with the 

PBGC with a clear agenda -- “to reach an agreement where the salaried Delphi 

plan[] would be terminated and General Motors would assume the hourly pension 

plan[].” ECF No. 189-6 (M. Feldman Dep. Tr.) at 158:24-159:4. 

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64. Notwithstanding that the PBGC had previously been engaged in a 

“full court press” to have GM assume the Salaried Plan, once Treasury took over 

negotiating for GM, the PBGC took on a much more submissive role in those 

negotiations, eventually abandoning altogether its advocacy that GM reassume the 

Salaried Plan. For instance, the PBGC simply stopped treating its interactions with 

Treasury as a negotiation. According to Mr. House (the PBGC negotiator), “the 

word ‘negotiation’ doesn’t really describe the nature of the liasing. It was much 

more of a – a coordination exercise.” Ex. 64 (J. House Dep. Tr.) at 12:4-

7. Terrance Deneen, who served at the time as the PBGC’s Chief Insurance 

Program Officer, and was Mr. House’s supervisor at the time, made a similar 

observation, saying that, because both agencies were part of the same government, 

“I’m not sure it would be fair to characterize those as negotiations. They were 

discussion of common issues and what we were going to do.” Ex. 65 (T. Deneen 

Tr.) at 97:21-98:03. 

65. The PBGC, however, did not view itself as an equal in the 

relationship. Instead, the PBGC was, according to Mr. Deneen, a “mouse,” and the 

Treasury’s Auto Team “an elephant,” and the PBGC could only “make sure that 

the elephant knew that we were there so we didn’t get stepped on by mistake.” Id.

at 82:13-15. Going a step further, Mr. Deneen asserted that the PBGC’s “was the 

smallest and least-important voice in any room.” Id. at 111:20-112:01. Mr. 

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Deneen asserted that the PBGC “didn’t have tools” to advocate on behalf of a GM 

assumption of the Delphi plans, and that the PBGC’s only hope to avoid 

termination of the Delphi plans was to “inform and urge.” Id. at 116:07-16. 

66. Consistent with Mr. Deneen’s view of the PBGC as an impotent 

subordinate agency with no tools or leverage at its disposal with respect to 

Treasury or GM, Mr. House testified that he could not remember a single instance 

of ever trying to persuade the Treasury to fund a GM reassumption of the Salaried 

Plan. See Ex. 64 at 45:6-8 (Mr. House testifying he had no “recollection of trying 

to persuade Treasury of anything”). 

67. The House/Feldman meetings began in earnest around April 16, 2009 

 Mr. House was unalarmed when Treasury disinvited the 

PBGC from the early April Delphi meetings, asserting that it was “for the best.” 

See Ex. 59. Finally, on April 14, 2009, Mr. House emailed Mr. Feldman to arrange 

a call to discuss Delphi. See Ex. 66. 

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. 

68. 

 

I. The PBGC’s Initial Decision to Terminate the Delphi Plans 

69. On April 17, 2009, Mr. House, on behalf of the PBGC’s Department 

of Insurance Supervision & Compliance (“DISC”), submitted a memo to the 

PBGC’s Trusteeship Working Group (“TWG”) requesting that the TWG concur 

with DISC’s recommendation that the PBGC initiate termination of Delphi’s 

Hourly and Salaried Plans prior to the April 24 deadline to allow the PBGC “to 

maximize its recoveries in the case.” See ECF No. 49-9 at AR000038. With 

regard to the Salaried Plan, DISC recommended termination under ERISA 

§ 4042(a)(1), 29 U.S.C. § 1342(a)(1) (because the Plan had supposedly failed to 

meet the minimum-funding standard for the 2005 plan year), and § 4042(a)(2), 29 

U.S.C. § 1342(a)(2) (because a foreclosure by the DIP lenders could potentially 

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force a Delphi liquidation, whereby supposedly both Delphi “Plans risk[ed] 

abandonment”). Id. at AR000037-38. 

70. The DISC memo notes that, with respect to the Hourly Plan, the 

PBGC did not possess any statutory liens, but that more than $165 million in 

statutory liens had arisen in connection with the Salaried Plan. Id. at AR000034. 

The memo also states that “Treasury’s interest in the negotiations is GM’s role in 

the resolution, as GM requires ongoing support in the form of existing and 

prospective loans from Treasury.” Id. at AR000035. It goes on to say that 

“[b]ecause Delphi is still GM’s largest supplier, Treasury is trying to weigh the 

benefits of additional GM investments in Delphi against the risks if the supply of 

parts from Delphi is interrupted.” Id. 

71. Nonetheless, the memo stated that based on the previous day’s 

conversation between Mr. House and Mr. Feldman, id. at AR000033 n.9, “GM 

assumption of the [Hourly Plan] is still a possibility.” Id. at AR000033. The 

memo does not explain why GM assumption of the Salaried Plan was no longer 

still a possibility; it omits mention of how, if at all, the PBGC was using the 

statutory liens in favor of the Salaried Plan to prevent its termination; and it does 

not even hint that the PBGC was still advocating to promote a GM reassumption of 

the Plan. Id. But, the memo does note that “[i]f a Treasury resolution is reached 

that includes assumption of either of the [Delphi] Plans, PBGC can hold the notice 

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of determination (“NOD”), if it has not yet been issued, or rescind the NOD, 

pending GM assumption.” Id. 

72. At about this time, Treasury’s Auto Team determined “that GM 

needed to be shepherded through a prepackaged bankruptcy.” Ex. 3 (SIGTARP 

Report) at 17. The Auto Team believed that GM needed to have “a quick-rinse 

bankruptcy,” because of concerns that “GM could not survive a lengthy 

bankruptcy and GM’s failure would have broader systemic consequences.” Id. at 

18. In conjunction with this determination, on April 16, 2009, Treasury circulated 

a memo discussing “Delphi’s liquidity issues and potential consequences of Delphi 

shutdown.” See Ex. 69 (excerpts of Treasury’s Privilege Log, Item Nos. 856 & 

860) at 4. Treasury has withheld the memo pursuant to the presidential 

communications privilege, asserting that this memo was one of a handful of 

documents relating “to the President’s decisions as to how the United States should 

address the financial distress of several of its large automobile corporations and 

protect the country from the potential consequences of their bankruptcy.” See U.S. 

Dep’t of Treasury v. Black, 249 F. Supp. 3d 206, 210 (D.D.C. 2017) (internal 

quotation omitted). 

 

 

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73. Throughout the next few days, GM and Delphi’s DIP lenders 

exchanged offers and counter-offers regarding a reorganized Delphi, see, e.g., ECF 

No. 189-4 ¶¶ 39-40. 

74. 

 On April 21, 2009, the PBGC’s 

Trusteeship Working Group (i.e., the TWG) met to consider the recommendation 

to initiate termination of the Delphi Plans. See ECF No. 58 at AR000022-24. 

 

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75. On April 21, 2009, 

, and 

“Delphi’s DIP lenders agreed to provide PBGC five-days written notice prior to 

exercising their right of foreclosure, and PBGC agreed to forebear from 

terminating until after it had received that notice.” See ECF No. 54 at AR000010. 

76. At about this time, Delphi’s CEO testified to a “fundamental change 

to the landscape” of Delphi’s bankruptcy, “when GM, with the support of the Auto 

Task Force, agreed to support a comprehensive resolution of the Delphi chapter 11 

cases.” ECF No. 189-4 ¶ 39. 

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77. 

 

78. 

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79. 

 

 

 

80. 

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81. “On May 5, 2009, counsel for the Auto Task Force sent a letter to 

Delphi disclosing that negotiations were ongoing with two potential buyers and 

setting a May 18, 2009, target for completion of negotiations.” ECF No. 189-4 ¶ 

43. 

82. On May 11, 2009, Treasury’s Auto Team had a meeting with Larry 

Summers, President Obama’s principal economic advisor, to discuss the team’s 

plans for GM’s expedited bankruptcy filing. See Ex. 3 at 18. “Treasury [had] 

determined that GM would need $30 billion, but the Auto Team was concerned 

about giving the TARP funds in a loan that would be too much debt on GM’s 

balance sheet, so the Auto Team proposed to senior Treasury officials that 

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Treasury fund GM’s bankruptcy with a loan that would convert to common stock 

ownership in New GM – the purchaser of Old GM’s assets in bankruptcy.” Id. 

“This would mean that the Government would have a substantial ownership 

interest in a private company.” Id. 

83. “Dr. Summers, Secretary Geithner, and ultimately President Obama 

approved an additional $30.1 billion in a TARP loan (in the form of a debtor-inpossession (‘DIP’) loan) that, when combined with the $19.4 billion in prior TARP 

injection, totaled $49.5 billion in TARP funds in GM.” Id. “The TARP 

investment in GM would convert to 61% Government ownership of common stock 

in New GM.” Id. The TARP loan was scheduled to be effective on June 1, 2009, 

and the Auto Team would plan to condition the TARP financing on GM exiting 

bankruptcy in only 40 days, in what Mr. Rattner referred to as a “quick-rinse 

bankruptcy.” Id. “Treasury Auto Team officials were concerned that if GM’s 

bankruptcy was prolonged, consumers would stop purchasing GM’s automobiles, 

and GM would likely fail.” Id. 

84. 

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85. 

 

86. Throughout the remainder of May, the PBGC continued to advocate 

with Treasury for a GM reassumption of the Hourly Plan. On May 26-27, 2009, 

certain key stakeholders in the Delphi bankruptcy participated in a court-ordered 

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mediation; Delphi, the PBGC, GM, the Auto Task Force, and Delphi’s DIP lenders 

were among the attendees. See Ex. 141. On May 22, 2009 (the Friday prior to the 

start of the mediation), Mr. Feldman emailed Mr. House to request another one of 

their off-the-record phone conversations, this time to discuss the upcoming 

mediation in light of a conversation that Mr. Feldman had just had with the Delphi 

mediator. See Ex. 94. Mr. House testified that he could not recall the substance of 

this conversation. See Ex. 64 at 141:17-19. 

87. 

 

88. Again, notwithstanding the PBGC’s statutory mission to preserve 

pension plans, its leverage to advocate for GM reassumption of the Plan, and the 

fact that the Treasury entered the mediation agreeing that the treatment of Delphi’s 

pension plans was an open issue for discussion, Mr. House testified that during the 

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mediation the PBGC attendees passively “sat in a room and read books all day,” 

see Ex. 64 at 144:10-11. 

89. At the conclusion of the mediation, a “solution” emerged that 

involved the PBGC initiating termination of the Delphi Salaried Plan, the 

reassumption by GM of the Delphi Hourly Plan, and a settlement by the PBGC of 

all its liens and claims. See, e.g., Ex. 97 (May 28, 2009 email chain from Delphi’s 

counsel to Mr. Feldman) at 1, stating that the PBGC: 

needs to hear from you on what GM/UST plan to do with the HRP and 

SRP. . . in the event that GM takes the [Hourly Plan] and leaves behind 

the [Salaried Plan], the PBGC will terminate the [Salaried Plan] and 

will waive ROW liens on the [Salaried Plan] if they can receive some 

reasonable settlement on the termination liabilities. 

; Ex. 64 at 147:6-165:6. 

90. 

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 When asked about this 

settlement proposal, the PBGC’s Mr. House could not remember how the proposal 

originated, or whether it was entirely a creation of Mr. Feldman. Ex. 64 at 159:12-

160:1. 

J. The Emergence of New GM and New Delphi

91. “On June 1, 2009 GM filed a voluntary petition for reorganization 

under Chapter 11 of the U.S. Bankruptcy Code[] and conducted a court-supervised 

asset sale (under 11 U.S.C. § 363) in which substantially all of the operating assets 

of the company were sold to General Motors Company, or New GM, and most of 

the company’s debt and liabilities remained in the possession of Motors 

Liquidation Company, or Old GM.” Ex. 3 at 27 n.28. Moreover, the additional 

$30.1 billion in TARP financing became effective on this date, with the caveat 

“that the loan would default if GM failed to obtain certain bankruptcy court orders 

acceptable to Treasury by July 10, 2009 (40 days later).” Id. at 18. “New GM 

would ultimately emerge from GM’s bankruptcy on July 10, 2009.” Id. at 27 n.28. 

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92. Also on June 1, 2009, Delphi filed with the bankruptcy court 

modifications to its reorganization plan, which proposed, among other things, to 

effect its reorganization through a transaction with an affiliate of Platinum Equity, 

with the support of both Treasury and GM. See Ex. 100 at 7-8. The filing also 

announced Delphi’s expectation that, in connection with the modified plan, the 

PBGC would “involuntarily terminate[]” the Salaried Plan, while the Hourly Plan 

would be “addressed by GM.” Id. at 10. 

93. 

 According to Mr. Rattner, “‘GM 

wanted to do something for the [Delphi] Salaried retirees.’” Ex. 3 at 28 (quoting 

Mr. Rattner, with alteration in original). 

 

However, Mr. Rattner told SIGTARP that while he “could not remember the 

specifics of the conversation,” he determined that GM would not be permitted to 

do anything for the Salaried Plan participants because he “thought there was 

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nothing defensible from a commercial standpoint that could be done for the Delphi 

salaried retirees.” Ex. 3 at 28. 

94. 

 

 

 

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95. On June 30, 2009, Mr. House and his supervisor at the PBGC, Terry 

Deneen, were summoned to a meeting at the Treasury with Mr. Feldman and Mr. 

Wilson. Following the meeting, Mr. House emailed a number of PBGC staffers to 

say that he and Mr. Deneen had “just returned from a meeting over at [Treasury]. 

It is now clear that the Delphi Hourly Plan will not be assumed by GM, and thus 

we will be terminating/trusteeing that pension plan along with the Salaried and the 

four small plans.” Ex. 103 at 2 (June 30, 2009 PBGC email chain) (emphasis 

added). The email makes clear that the decision was one made by Treasury, as up 

until that point Treasury’s Auto Team had “consulted/deliberated exclusively 

amongst itself and [the White House/National Economic Council].” Id. at 1. 

According to the email, Mr. Feldman would wait until the next day to inform GM 

of Treasury’s decision. Id. at 1-2. 

96. 

 

 

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97. 

 Ex. 109 (July 8, 2009 PBGC email 

chain noting that Mr. House had just spoken with Mr. Feldman, who had “made 

progress discussing our proposal with a number of key folks in Treasury and at 

White House”); 

98. 

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99. 

7

Initially, unlike members of the UAW, 

members of Delphi’s splinter unions were not going to receive the so-called “topups” from the reorganized New GM (via TARP funds) to make up for pension 

benefits lost as a result of the termination of Delphi’s hourly plan. See, e.g., ECF 

No. 189-6 at 199:16 – 200:18 (discussing “top-up guarantee” and noting that “in 

the case of the UAW,” Mr. Feldman understood that New GM would be assuming 

the agreement of Old General Motors to top-up benefits, while the agreement to 

top-up the benefits of the splinter unions had been left at the old General Motors). 

“However, after GM’s bankruptcy, New GM decided to top up the pensions” of 

these splinter unions. Ex. 3 at 27.

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100. 

 

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101. On July 10, 2009, New GM emerged from GM’s bankruptcy. See Ex. 

3 at 27 n.28. 

102. 

 

103. On July 15, 2009, Dennis Black, Charles Cunningham, and the DSRA 

filed in the United States Bankruptcy Court for the Southern District of New York 

an objection in In re Delphi Corp., Case No. 05-44481, to Delphi’s proposed 

modifications to its first amended plan of reorganization (as modified) because the 

proposed plan modifications depended on the termination of the Salaried Plan, 

which was “neither assured nor imminent.” See Ex. 116 at 2. 

104. 

 

105. On July 21, 2009, the PBGC executed separate settlement agreements 

with Delphi and New GM resolving all of the PBGC’s liens and claims with 

respect to the Delphi plans. See Ex. 118 at 4 (Nov. 6, 2014 Recovery Valuation 

and Allocation Memorandum for Delphi Corp.). The bulk of the PBGC’s recovery 

came from its settlement with New GM, pursuant to which the PBGC received a 

$70 million cash payment from GM, along with a direct, non-voting equity 

membership interest from New GM in Delphi Automotive LLP (“New Delphi”), 

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which was the purchaser of Delphi’s foreign assets in the bankruptcy proceedings. 

See Ex. 119 (PBGC – GM Settlement Agreement). On March 31, 2011, the PBGC 

sold its interests in New Delphi for $594 million, meaning that in total New GM 

paid more than $664 million in cash and equity to the PBGC in consideration for 

the release by the PBGC of its liens and claims on Delphi’s assets. See Ex. 118 

(Recovery Val. Memo) at 4-6. Pursuant to its settlement agreement with Delphi, 

the PBGC also received a $3 billion general unsecured claim in Delphi’s 

bankruptcy proceedings, which the PBGC sold in 2011 for $53.2 million, id. at 4-

6, meaning that in total the PBGC received a settlement of approximately $717 

million in exchange for releasing its liens and claims on Delphi’s assets. At the 

time of the Salaried Plan’s termination, the PBGC asserted that there was a total 

statutory lien amount of $195.9 million in connection with missed contributions to 

the Salaried Plan, see ECF No. 37 ¶ 7, 

 See ECF No. 52 at AR000036. 

106. On July 22, 2009, the PBGC issued a notice of determination 

(“NOD”) to Delphi, notifying Delphi that the PBGC was instituting termination 

proceedings for the Salaried Plan under 29 U.S.C. § 1342(a)(1), (2) and (4) of 

ERISA, and that, under § 1342(c) of ERISA, the Plan “must be terminated in order 

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to avoid any unreasonable increase in the liability of the PBGC insurance fund.” 

See ECF No. 53 at AR000003. Asserting that the PBGC’s TWG would “be unable 

to convene in light of the time constraints and circumstances,” the NOD relied on 

the PBGC findings from its April 2009 termination record as the basis for its 

commencement of termination proceedings. See ECF No. 54 at AR000010. 

107. The same day, the PBGC initiated an action in this Court, asking that 

the Court adjudicate that the Delphi Salaried Plan be terminated pursuant to 29 

U.S.C. § 1342(c); that the PBGC be appointed trustee of the Salaried Plan pursuant 

to § 1342(c) and (d), and that the Court establish July 22, 2009 as the termination 

date of the Salaried Plan pursuant to § 1348(a)(4). See PBGC v. Delphi Corp., 

Case No. 2:09-cv-12876 (E.D. Mich., filed July 22, 2009). 

108. On July 26, and 27, 2009, Delphi conducted an auction pursuant to 

Section 363 of the Bankruptcy Code. In re Delphi Corp., No. 05-44481, 2009 

Bankr. LEXIS 4663, at *18-19 (Bankr. S.D.N.Y. July 30, 2009). In connection 

with that auction, Delphi’s DIP Lenders purchased the majority of Delphi’s foreign 

assets and businesses through a credit bid, and New GM purchased a number of 

Delphi’s U.S.-based operating assets, including Delphi’s Steering business. 

109. On July 30, 2009, the United States Bankruptcy Court for the 

Southern District of New York approved Delphi Corporation’s modified plan of 

reorganization. See generally id. In that order, the court, among other things, 

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overruled all objections to confirmation of the modified plan, while also 

confirming that: 

Nothing in this order prohibits employees . . . adversely affected by any 

plan termination from (a) seeking to intervene in any district court 

action filed by the PBGC under section 4042 of ERISA, 29 U.S.C. § 

1342, to terminate the plans or (b) pursuing any independent action 

against the PBGC regarding the termination of the plan under section 

4003(f) of ERISA, 29 U.S.C. § 1303(f). 

Id. at *127-28. 

110. 

 

111. 

 Delphi executed the termination and 

trusteeship on August 7, 2009, and the PBGC subsequently filed a notice of 

voluntarily dismissal of its termination action. See PBGC v. Delphi Corp., No. 

2:09-cv-12876, ECF No. 5 (E.D. Mich. Aug. 7, 2009). 

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112. On August 10, 2009, the PBGC executed the termination and 

trusteeship agreement, purporting to authorize the PBGC to terminate the Plan and 

serve as statutory trustee as of as of July 31, 2009. 

113. As a result of the termination, the PBGC ultimately determined that its 

insurance fund would cover roughly $1.495 billion in guaranteed benefits, but that 

participants would still lose approximately $521 million in unfunded nonguaranteed benefits. See Ex. 123 at 1. 

114. The PBGC’s final calculations stand in stark contrast to the estimates 

that the PBGC initially presented to the Court. The PBGC initially asserted that it 

would cover $2.1 billion from its own resources to cover the unfunded guaranteed 

liability under the Plan, see ECF No. 37 at 4, meaning that the PBGC overstated its 

insurance liability by over $600 million. Similarly, the PBGC overestimated the 

Plan’s total liability by roughly $670 million, initially representing the total Plan 

liabilities as being $5.2 billion, id. at 3, while its final calculation came in at $4.53 

billion. See Ex. 123 at 1. 

STANDARD OF REVIEW 

Summary judgment is warranted “if the record shows that ‘there is no 

genuine issue as to any material fact and that the moving party is entitled to a 

judgment as a matter of law.’” Wenk v. O’Reilly, 783 F.3d 585, 593 (6th Cir. 

2015) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)). In 

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determining whether summary judgment is proper, the Court “‘must view the facts 

and any inferences reasonably drawn from them in the light most favorable to the 

nonmoving party.’” Griffith v. Coburn, 473 F.3d 650, 655 (6th Cir. 2007) (citation 

omitted). 

As noted earlier, see supra, p. 4, pursuant to its September 1, 2011 Order, 

the Court, in an exercise of judicial restraint, has asked the Parties to submit 

dispositive motions on whether, had a hearing been held prior to termination, the 

PBGC could have obtained an adjudication from the Court in July 2009 that the 

Salaried Plan’s termination was necessary under 29 U.S.C. § 1342(c). See ECF 

No. 193 at 4. In addressing this question and assuming that a hearing was required 

before termination, the Court, pursuant to In re UAL Corp., 468 F.3d 444 (7th Cir. 

2006), indicated that it would conduct a de novo review of the PBGC’s decision to 

terminate the Plan under 29 U.S.C. § 1342(c). ECF No. 193 at 5. Having the 

obligation to commence litigation under § 1342, the burden of proof to justify 

termination in that setting rests with the PBGC, as it “bears the same burden of 

persuasion” as the Antitrust Division of the Department of Justice would when it 

files suit under the Sherman Act. Id. In turn, showing that the PBGC could not 

under the applicable standard of review succeed in terminating the Salaried Plan 

via a judicial adjudication under § 1342 – or at least that the result was open to 

question – would ensure that the Court needed to reach the threshold procedural 

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claims raised by Plaintiffs (i.e., that a termination by agreement violated ERISA 

and the Constitution). 

Accordingly, the first question is whether, after viewing the facts under a 

standard in which the PBGC bears the burden of proof, there is no genuine issue as 

to any material fact or as a matter of law that the PBGC could have obtained a 

decree from the Court in July 2009 terminating the Plan under § 1342(c). If the 

Court answers this question in the negative, the burden on this motion shifts, and 

the Court evaluates Counts One through Four to determine whether Plaintiffs have 

demonstrated an entitlement to summary judgment. 

ARGUMENT 

I. BECAUSE THERE WERE VIABLE ALTERNATIVES TO 

TERMINATION THAT THE PBGC COULD HAVE PURSUED, THE 

PBGC COULD NOT HAVE OBTAINED AN ORDER FROM THIS 

COURT ADJUDICATING THAT THE PLAN’S TERMINATION WAS 

NECESSARY UNDER § 1342(c), AND THE COURT SHOULD 

PROCEED TO CONSIDER COUNTS ONE THROUGH FOUR 

Under § 1342(c), after initiating termination proceedings, the PBGC may 

apply to a United States district court “for a decree adjudicating that a plan must be 

terminated in order to protect the interests of the participants or to avoid any 

unreasonable deterioration of the financial condition of the plan or any 

unreasonable increase in the liability of the fund.” 29 U.S.C. § 1342(c)(1). 

However, the PBGC did not obtain the § 1342(c) adjudication here, instead 

purporting to terminate the Plan pursuant to an agreement between it and the Plan’s 

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administrator. As Plaintiffs demonstrate below, the PBGC could not have satisfied 

the statutory criteria at a § 1342(c) termination hearing because the Plan’s 

termination was avoidable. Accordingly, because the Plan’s termination was not 

assured in a proceeding under § 1342(c), the PBGC’s termination through other 

means was not harmless error and the Court must, as a result, decide Counts One 

through Four of the amended complaint, which challenge the procedure and 

substance of the manner in which the PBGC did terminate the Plan. 

When it did initially apply to this Court for a decree of termination, The 

PBGC sought to justify the Plan’s termination under § 1342(c)(1)’s third criterion, 

i.e., that the Plan “must be terminated in order to avoid an unreasonable increase in 

the liability of the . . . fund.”8 See ECF No. 53 at AR000003; see also PBGC v. 

Delphi Corp, Case No. 2:09-cv-12876 (E.D. Mich., filed July 22, 2009). The 

“fund” in question is the insurance fund used by the PBGC as Title IV’s insurance 

guarantor, to pay the benefits guaranteed by ERISA. See 29 U.S.C. §§ 1301(a)(5), 

1305(a). Judged by this statutory standard, the Plan’s termination was patently 

8 The PBGC’s Trusteeship Working Group, which again is the internal PBGC body 

tasked with making termination recommendations, initially considered, and then 

rejected, seeking to terminate the Plan as being in the best interests of the Plan’s 

participants, in light of the significant amount of unfunded, non-guaranteed 

benefits those participants stood to lose in connection with the Plan’s termination. 

See Ex. 79. Here, the PBGC has determined that the Plan’s participants have lost 

roughly $521 million in unfunded, non-guaranteed benefits. See Ex. 123 at 1.

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unjustifiable. The Plan’s termination increased the fund’s liability by nearly $1.5 

billion, and as the factual record demonstrates, that liability was entirely avoidable. 

The PBGC had powerful negotiating leverage (especially, but not limited to, 

its liens and claims on Delphi assets) that it could (and should) have exercised to 

ensure the Plan’s continuation. Indeed, the PBGC initially sought to use its 

leverage to persuade GM, the Plan’s original sponsor, to reassume the Plan, and it 

eventually did use that leverage to negotiate with Treasury a $664 million recovery

from New GM in exchange for the PBGC’s release of its liens and claims on 

Delphi’s assets. Had the PBGC instead used that leverage to negotiate a 

reassumption of the Salaried Plan into the GM salaried plan, not only could the 

PBGC have avoided the Plan’s termination in the summer of 2009, the PBGC’s 

own estimates show that the GM salaried plan could have been funded until at least 

2018, at a lower cost to New GM than what it wound up paying to the PBGC as a 

recovery. 

Additionally, during the spring of 2009, there were a number of businesses 

seriously considering purchasing Delphi’s business, including Platinum Equity, 

Federal Mogul, and Delphi’s DIP Lenders (who ultimately used Delphi’s DIP debt 

to fund a credit purchase of a substantial portion of Delphi’s foreign assets). The 

PBGC’s standard practice in similar cases is actively to negotiate with potential 

acquirers to convince them to assume the pension plan of the acquired company, in 

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exchange for the PBGC’s support in their bids to acquire the particular business. 

Here, the PBGC had substantial leverage for such a negotiation given its liens and 

claims on Delphi’s assets, and the PBGC could have made assumption even more 

palatable by offering to allow the new sponsor to share in the PBGC’s $717 

million recovery in order to fund contributions to the Salaried Plan. However, the 

PBGC, again inexplicably, engaged in no such negotiations. 

Given that the PBGC ignored these viable alternatives to termination, the 

PBGC could not have demonstrated at a § 1342(c) hearing that the Plan’s 

termination was necessary to avoid an unreasonable increase in the PBGC’s 

insurance fund. See PBGC v. United Air Lines, Inc., 436 F. Supp. 2d 909, 924 

(N.D. Ill. 2006) (under § 1342(c), reasonableness is “measured in the context of 

PBGC’s economic position, the dollar amount of PBGC’s increased liability, and 

the ability of PBGC to avoid that liability)” (emphasis added). As shown below, 

because the record shows that the Plan’s termination was avoidable, the PBGC was 

not entitled to a § 1342(c) adjudication. 

A. GM’s Dependence on Delphi Parts Provided the PBGC With 

Sufficient Leverage to Avoid the Plan’s Termination 

 Accordingly, 

in the latter part of 2008, through the beginning of 2009, PBGC advisors, staff, and 

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leadership advocated that the PBGC use its leverage with GM to cause GM to 

reassume the Delphi pension liability (from both the Salaried and Hourly Plans) 

that it had shed in connection with Delphi’s spin-off. See, e.g., id. ¶¶ 17-19, 23, 

27, 29, 31, 33, 40, 41, 42, 48. 

The primary source of the PBGC’s leverage was its liens and claims on 

Delphi assets related to the unfunded pension liabilities for Delphi’s pension plans. 

See, e.g., id. ¶¶ 17-19, 42, 48. As of July 21, 2009, the PBGC had perfected more 

than $195 million in statutory liens against Delphi assets on behalf of the Salaried 

Plan, and was asserting claims against the assets of Delphi’s foreign, non-debtor 

controlled group members for the entire unfunded liability associated with 

Delphi’s pension plans, giving rise to a lien against those 

assets. See SUMF ¶ 105. 

These liens and claims on Delphi assets were of significant operational and 

strategic concern to GM. From the time of the spin-off in 1999 through the time of 

the Plan’s termination in 2009, Delphi was GM’s largest parts supplier, and an 

interruption of Delphi parts could have had a crippling effect on GM and its ability 

to reorganize, providing the PBGC with powerful leverage to facilitate a GM 

reassumption of the Salaried Plan. See, e.g., SUMF ¶¶ 15-18, 27, 28, 39, 42, 44-46 

48, 53, 54, 78, 87, 89, 97, 105. 

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In the fall of 2008, Delphi proposed that GM re-assume the pension 

liabilities of some of its former employees, and the PBGC looked for ways to help 

facilitate the transfer. Using its foreign liens as “leverage,” the PBGC helped 

Delphi convince GM to assume over $2 billion in liabilities associated with 

Delphi’s Hourly Plan covering union workers, in exchange for which the PBGC 

released over $1.2 billion worth of liens asserted against Delphi assets. See id. 

¶ 17. 

Beginning in the latter part of 2008, and throughout the early part of 2009, 

GM sought and received roughly $50 billion in TARP funding from the U.S. 

Treasury. See id. ¶¶ 20-21, 25, 39, 49, 51, 91. 

 

Because of GM’s dependence on TARP financing, the determination 

regarding a GM pension transfer belonged ultimately to Treasury. See, e.g., id. 

¶¶ 50-51, 61, 70, 76, 78, 79, 85. 

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. The PBGC continued this advocacy 

prior to the intervention of the Auto Task Force and Treasury’s Auto Team in 

Delphi issues. See, e.g., id. ¶¶ 26, 29, 31, 32, 33, 40, 41, 47, 48. 

Beginning in mid-April 2009, the PBGC’s Joe House and the Auto Team’s 

Matt Feldman began a virtually exclusive coordination with one another regarding 

Delphi and Chrysler pension issues. See id. ¶ 62. From this point forward, the 

PBGC entirely ceased advocating for GM reassumption of the Salaried Plan, and 

indeed, Mr. House has testified these interactions were not “negotiations,” and that 

he had no “recollection of trying to persuade Treasury of anything.” See id. ¶¶ 64, 

66. In contrast, Mr. Feldman began his discussions with the PBGC hoping “to 

reach an agreement where the [Salaried Plan] would be terminated and General 

Motors would assume the [Hourly Plan].” See id. ¶ 63. Between that mid-April 

discussion, and through the time of the Salaried Plan’s termination, the PBGC 

made no effort to persuade Treasury to undertake efforts to save the Salaried Plan, 

 

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The PBGC’s failure to use its liens and claims to advocate with Treasury for 

New GM to reabsorb Delphi’s Salaried Plan into the GM salaried plan is statutorily 

indefensible. Again, termination under § 1342(c) in this instance is only justifiable 

if the PBGC cannot avoid the loss in question. The PBGC’s refusal to use its 

leverage to try and convince Treasury that New GM should have assumed these 

liabilities is, as a result, dispositive of the termination question, especially given 

how strong that leverage was. 

 During this time period, the Treasury was making determinations about 

which liabilities New GM would assume. “As explained by an Auto Team official 

in a deposition, the [§] 363 bankruptcy sale allowed New GM and the Auto Team 

to assume Old GM’s assets and ‘cherry-pick’ the liabilities that a ‘commercial 

buyer’ would want and New GM would need.” Ex. 3 at 19. “GM’s then-CFO 

Young told SIGTARP that GM and the Auto Team went down GM’s balance sheet 

(including pensions and the supplier base), going over some line items in great 

detail.” Id. at 19-20. 

According to Treasury, “the strength of the negotiating parties during GM’s 

bankruptcy and throughout labor negotiations was dictated by the leverage each 

group held.” Id. at 21. The UAW, for example, “had significant leverage due to 

the threat of a labor disruption . . . . ‘All you need is one missing part and it stops 

production.’” Id. at 22 (quoting a “GM official”). Additionally, the time 

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constraints associated with Treasury’s desire for a quick-rinse bankruptcy “was 

well known to the UAW and helped give it a bargaining advantage.” Id. at 23. 

Further, “[t]he UAW had leverage because it knew and understood from 

Treasury’s public statements that Treasury was committed to reorganizing GM and 

not letting GM fail.” Id. at 24. Among other things, the UAW was able to 

persuade Treasury and New GM to assume top-ups for its members that 

participated in the Hourly Plan, a liability that exceeded $1 billion. Id. at 14. 

Similarly, in September 2009, after New GM’s emergence from GM’s 

bankruptcy proceedings, New GM agreed to honor the IUE’s and USW’s Delphi 

top-up agreements, at an estimated cost of $350 million because “there was a clear 

inference that IUE could strike at Delphi, which would have shut down GM. 

GM’s then-CFO Young told SIGTARP ‘If Delphi shut down, we shut down.’” Id. 

at 32. According to another GM official, “the unions got the agreement because 

liquidation of Delphi would have been a disaster for GM.” Id. at n.38. According 

to SIGTARP, “New GM agreed to top up the smaller unions because of the 

leverage those unions had to prolong Delphi’s bankruptcy or strike, which GM 

believed would significantly impact its ability to survive.” Id. at 39. 

The PBGC’s liens and claims on Delphi’s assets provided it with the same 

sort of leverage that the UAW and IUE exercised to convince Treasury to authorize 

pension top-ups by New GM. Again, the PBGC had liens and claims over Delphi 

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plants that were critical to New GM’s supply, meaning that the commercial 

necessity for removing those liens and claims warranted negotiation with the 

PBGC. See SUMF ¶¶ 15-18, 27, 28, 39, 42, 44-46, 48, 53, 54, 78, 87, 89, 97, 105. 

Ultimately, the UAW, IUE, and the PBGC all possessed the same leverage vis-àvis New GM, which was a threat to supply at a time when New GM simply could 

not afford uncertainty. 

Further proof of the PBGC’s leverage is that it was ultimately able to 

negotiate with Treasury a $664 million recovery from New GM in exchange for 

the PBGC’s release of its liens and claims on Delphi’s assets. See id. ¶¶ 97, 105. 

Thus, at a minimum, Treasury agreed that the commercial necessity of removing 

the PBGC’s liens and claims on Delphi assets was sufficient to justify a TARPfunded expenditure by New GM of $664 million. The PBGC’s own 

contemporaneous estimates showed that this amount would have been more than 

sufficient to save the Plan. Indeed, again according to the PBGC’s estimates, had 

New GM agreed to absorb the Salaried Plan back into the GM salaried plan, that 

amount would have been sufficient to fund the combined plan for roughly a 

decade. 

In March 2009, the PBGC prepared a document projecting the necessary 

minimum funding contributions for the GM Hourly and Salaried Plans over the 

next eight years assuming a GM reassumption of the Delphi pension plans. See

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Ex. 124 (the “Funding Projections”). The Funding Projections, 

 showed that the cost to GM of a reassumption of 

the Salaried Plan was extremely affordable. 

The Funding Projections calculated minimum contributions for GM’s hourly 

and salaried pension plans under various scenarios, both with and without a 

reassumption of the two Delphi plans. Under the most optimistic of the PBGC’s 

Funding Projections involving reassumption of Delphi’s Salaried Plan, GM would 

have needed to make only a $300 million contribution to the combined Delphi-GM 

salaried plan in 2009, and then would not have needed to make another 

contribution until 2018, at which time a $100 million contribution would have been 

required. See Ex. 124 at 6 (scenario 3c). Hence, the total contribution required to 

avoid the termination of the Salaried Plan and maintain it (along with GM’s 

salaried plan) for the next 10 calendar years under this scenario would have been 

only $400 million. Plus, again, GM itself was open to reassuming the Salaried 

Plan. See SUMF ¶¶ 22, 24, 28, 34, 41, 93. 

To put these numbers in context, under the PBGC’s own projections, a 

reassumption of the Salaried Plan could have cost New GM $264 million less than 

the amount it paid in its settlement agreement with the PBGC, while 

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simultaneously removing the liens and claims associated with the Salaried Plan’s 

missed contributions and underfunding. Additionally, and more importantly for 

the purposes of the § 1342(c) analysis, the PBGC would have been able to avoid 

entirely the $1.5 billion loss to the PBGC’s insurance fund (not to mention the 

hundreds of millions of dollars the Salaried Plan’s participants lost as a result of 

the Plan’s termination). 

As noted, the scenario above was the most optimistic of the PBGC’s 

projections, and among other things, assumed that the GM salaried plan would take 

advantage of that plan’s carry over balance and that it could amortize the additional 

Delphi liability over 17 years. See Ex. 124 at 1. While the second assumption 

(amortizing the Delphi liability over 17 years) would have been a departure from 

the standard 7-year amortization schedule, Congress had previously made an 

exception to this requirement for the airline industry, and the PBGC’s inclusion of 

this scenario in its Funding Projections demonstrated its belief that GM could 

obtain similar exception here for the assumed Delphi liability. See also Ex. 126 

(“If we adopt [the 17 year airline special] rule for GM with Delphi transfer, we 

could possibly amortize the unfunded liability for all of GM”); Ex. 127 (“I am 

thinking that politically they would be able to get the legislative fix of extended 

amortization for the added Delphi liability only.”). 

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However, even under the most pessimistic of the Funding Projection’s 

scenarios, in which neither a carry-over balance or an extended amortization were 

assumed, the cost to New GM was plainly affordable. Under this more 

conservative scenario, $400 million would have been sufficient to avoid the 

Salaried Plan’s termination and fund the combined plan through the 2014 calendar 

year. See Ex. 124 at 6 (scenario 2). While contributions of over approximately 

$2.5 billion would then be due to fund the combined Delphi-GM salaried plan 

through 2018, the GM salaried plan even without a Delphi assumption would still 

have required itself a $700 million contribution for this period of time, meaning 

that the cost attributable to GM’s assumption of the Salaried Plan’s for the calendar 

years between 2014-2018 was estimated at $1.7 billion under the PBGC’s most 

pessimistic assumptions. Given that this additional increment indisputably was – 

at least theoretically – available to Treasury from TARP,9 and New GM’s need for 

Delphi’s parts, reassumption of the Delphi Salaried Plan was possible – or at least 

9 On the ability to tap TARP funds, Steve Rattner wrote in his book Overhaul: 

“[t]he existence of TARP allowed us to contemplate committing tens of billions of 

dollars freely, a surreal contrast to the normal process of prying money loose.” 

Overhaul at 119. When the Auto Team proposed to Larry Summers (Director of 

the National Economic Council) that they commit $100 billion to the auto bailout, 

“Larry barely batted an eye.” Id. Similarly, Mr. Feldman testified that Treasury 

“had a view, which was that we could provide unlimited capital to General Motors 

at zero cost of capital, and that if need be, we would do that[.]” ECF No. 189-6 at 

85:12-15. Of course, all of these statements reflected what was factually possible, 

not politically optimal.

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not obviously impossible (with the burden of proof on the PBGC to show 

otherwise, see supra p. 73-74) – even using the most conservative of the PBGC’s 

projections. 

Moreover, this number (i.e., the most pessimistic scenario) is overstated, not 

just because it failed to account for the possibility of the use of a carry-over 

balance or an extended amortization schedule, but also because all of the Funding 

Projection’s assumptions utilized an unrealistically conservative estimate of the 

market return on assets of 8.5%, undervaluing the market return that the combined 

Delphi-GM salaried plan’s assets would generate, and therefore overestimating the 

amount of contributions that would be necessary. 

As Plaintiffs’ expert witness, Professor Noor Rajah, noted, the Salaried 

Plan’s termination occurred at a time when “the capital markets were at an all-time 

low, meaning that the plan’s assets were severely depressed at the time.” See Ex. 

128 at 12. “Between January 1, 2008 and March 31, 2009, the S&P 500 decreased 

by approximately 44%. Between March 31, 2009 and May 31, 2015 [when Dr. 

Rajah’s report was completed], the S&P 500 increased by approximately 94%. Id. 

at n.5. Consequently, instead of the 8.5% used in the PBGC’s Funding 

Projections, Dr. Rajah would have expected an annual return of 12.3% per year 

between Oct. 1, 2009 and December 31, 2014, resulting in an additional $680 

million in plan assets for the combined Delphi-GM salaried plan by the time these 

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estimated contributions came due, which would have further reduced the size of 

the necessary contributions, and extended the time they were due.10 Id. at 18-19. 

The viability of a reassumption into the GM salaried plan is further 

augmented by the fact that in June 2009, GM’s Fritz Henderson approached the 

Auto Task Force’s Mr. Rattner to say that GM wanted to do something for 

Delphi’s salaried retirees, but that Mr. Rattner told SIGTARP that while he “could 

not remember the specifics of the conversation,” he determined that GM would not 

be permitted to do anything for the Salaried Plan participants because he “thought 

there was nothing defensible from a commercial standpoint that could be done for 

the Delphi salaried retirees.11” See SUMF ¶ 93. 

Mr. Rattner’s contention that there was nothing commercially defensible to 

do in this regard is, of course, belied by GM’s strong commercial need to address 

the PBGC’s liens and claims that had arisen in connection with the Salaried Plan’s 

10 Compass Advisors, recognized this 

underlying economic dynamic. See Ex. 129 at 1 (“[b]ecause Delphi does not have 

the liquidity to wait out the downturn, the company must be valued at what is 

believed to be the trough of the economic cycle”); 

11 In connection with this point, it is noteworthy that “at least one GM official told 

SIGTARP that GM thought there was some benefit to Treasury taking the lead on 

dealing with the PBGC because it was ‘Government agency to Government 

agency’ and Treasury would get a better deal for GM.’” Ex. 3 at 14.

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underfunding, a fact that would have been evident if the PBGC had continued to 

prosecute its termination action in a § 1342(c) hearing, instead of withdrawing that 

action to bypass judicial review and terminate the Plan by agreement. Put slightly 

differently, Mr. Rattner’s statement to SIGTARP that the Auto Task Force did 

simply what was commercially reasonable should be viewed as post hoc

rationalization and, frankly, spin. In a commercial situation, those associated with 

the surviving entity would – to be sure – seek to cherry pick the liabilities it needed 

to keep. But in a commercial situation, the leverage of the PBGC would have to be 

taken into account, and the PBGC would then force changes to that roster to take 

care of the pensioners if the surviving entity sought, in cherry picking, to discard 

pension plans. What happened here did not replicate that commercial scenario. 

In sum, the record is clear that a reassumption of Delphi’s Salaried Plan into 

the GM salaried plan was a viable option in the summer of 2009, that New GM had 

strong commercial reasons to assume Delphi’s Salaried Plan in exchange for a 

release of the PBGC’s liens and claims, and that such an arrangement would have 

been the best result for all parties. For this reason alone, Plaintiffs are entitled to a 

finding that, if had the Court held a § 1342(c) hearing, termination of the Salaried 

Plan would not have been appropriate in July 2009, because the PBGC would not 

have been able to demonstrate the necessity of the Plan’s termination. Termination 

was not necessary to avoid a loss to the PBGC’s insurance fund, as there were 

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other viable options far less costly to the PBGC (namely, compelling a 

reassumption of the Salaried Plan into the GM salaried plan). 

B. Similarly, the PBGC’s Liens and Claims on Delphi’s Foreign 

Assets Provided the PBGC With Tremendous Leverage to 

Persuade Delphi’s Purchasers to Consider Assuming the Plan 

In addition to its leverage with GM, the PBGC’s liens and claims provided 

the PBGC with leverage over Delphi’s potential purchasers, which the PBGC 

could (and should) have used to negotiate an assumption of the Salaried Plan by 

the successful purchasers. 

 

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 As the PBGC’s Dana 

Cann explained in his deposition, the PBGC was able to achieve this result, at least 

in part, because “there was competition for the assets, and [the agreement to 

assume the pension plan] was a way for them to improve their bid without 

necessarily coming out of pocket.” See Ex. 14 at 61:15-18. 

Here, there were at least three groups of businesses in competition to 

purchase Delphi’s business or its assets: Platinum Equity, Federal Mogul, and 

Delphi’s DIP Lenders (who ultimately used Delphi’s DIP debt to fund a credit 

purchase of a substantial portion of Delphi’s foreign assets). 

Nonetheless, the PBGC has been unable to document a single 

instance where it spoke to these potential purchasers about their intentions 

regarding Delphi’s pension plans. See e.g., id. at 192:22-193:3. 

Again, this failure is indefensible given the substantial leverage that the 

PBGC possessed to help convince one of these buyers to assume the Plan. As with 

GM, the existence of the PBGC’s liens and claims on Delphi asset was a 

significant point of leverage for the potential purchasers. See, e.g., ECF No. 168-3 

¶ 15 (asserting, in order to gain court approval for GM-PBGC settlement 

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agreement, that “neither GM nor Parnassus (nor presumably any other potential 

purchaser) is willing to purchase the assets (or shares in the non-debtor affiliates 

that own the assets) while they are subject to the threat of the PBGC liens”); 

Ex. 130 at 2-3 (“[t]he PBGC’s purported liens are 

unnerving the Debtors’ DIP lenders” making “both stakeholders and global 

suppliers very uneasy” and “overseas creditors and suppliers perceive that any 

fight with the PBGC is a fight with the U.S. government and that they will lose”). 

Nonetheless, the PBGC diverged from its normal practice and did not 

attempt to negotiate an assumption of the Salaried Plan with any of these potential 

purchasers. See, e.g., Ex. 14 at 192:22-193:3; Ex. 131 at 6-7 (PBGC interrogatory 

responses failing to cite a single example of any efforts the PBGC “undertook to 

ascertain whether any entity other than Delphi, including GM, the DIP lenders, 

Platinum Equity, LLC, and Federal Mogul Corporation would have been willing to 

take over responsibility for the Salaried Plan”). The PBGC’s failure to follow it 

standard procedures here, especially in light of this substantial leverage, would 

have been enough to defeat the PBGC’s contention at a § 1342(c) hearing that 

termination was necessary. 

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In addition, the PBGC could have made assumption more viable by offering 

to allow the new sponsor to use some or all of the PBGC’s $717 million settlement 

from New GM and Delphi to fund the Salaried Plan’ contributions. In order to 

avoid the need for termination, the Salaried Plan’s sponsor only needed to satisfy 

the $195 million in missed contributions, see Ex. 14 at 152:1-153:2 (“[m]y 

understanding is, for the salaried plan, they would have had to true up 200 million 

dollars”). Consequently, it would have required less than half of the PBGC’s 

settlement with New GM to forestall the Plan’s termination, without requiring the 

new sponsor to fund the pension true up at all. Moreover, while the PBGC had not 

completed any recent minimum funding projections for Delphi on a stand-alone 

basis, see, e.g., Ex. 132 (Dep. Tr. of C. Travia) at 11:8-9 (testifying that the last 

time that the PBGC completed Delphi minimum funding projections on a standalone basis was in the spring of 2008), 

 

Still further, as Compass Advisors noted in the context of a potential GM 

reassumption, the PBGC could have offered to help the new sponsor “with waivers 

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if equity markets don’t turn around in the next two years providing an adequate 

return on their pension assets,” Ex. 33 at 8, and indeed the Salaried Plan had a 

waiver request already pending, which had been put “on ice,” pending any 

agreement by GM to assume the Plan. See SUMF ¶ 26. 

And of course, the equity markets did turn around in the next few years. As 

noted above, between March 31, 2009 and May 31, 2015, the S&P 500 increased 

by approximately 94%. See Ex. 128 at 12 n.5. By looking at actual market 

returns, Dr. Rajah concluded that the Plan’s minimum funding contributions would 

be even more affordable post-assumption, requiring an estimated $70 million in 

2010, $300 million in 2011, and $210 million in 2012, with no further 

contributions required in 2013 or 2014. Id. at 24. Given the threat of the PBGC’s 

liens and claims, and the availability of the $717 million in settlement funds to help 

fund contributions, the PBGC could have made the Salaried Plan’s assumption not 

only viable, but attractive, to the buyers competing for Delphi’s assets, and avoided 

a $1.5 billion loss to the pension insurance system. That the PBGC did not even 

explore this possibility shows why the PBGC went to such lengths to avoid judicial 

scrutiny of its actions. 

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C. The PBGC’s Termination Case Is Further Undermined by the 

Fact That, Compared to Other Similarly-Sized Plans, the Salaried 

Plan Was Relatively Well Funded 

The PBGC’s refusal to advocate on behalf of the Plan is even more 

unjustifiable given that, contrary to the PBGC’s assertions, the Salaried Plan was a 

relatively well funded plan. 

Because of the prospective nature of payments under a defined benefit 

pension plan, the law requires that plan sponsors “must contribute annually an 

amount necessary to make reasonably certain that the benefits promised will be 

available when employees become eligible to receive them,” and these minimum 

contribution obligations will likely fluctuate from year to year. V. Briggs, M. 

Kushner, and M. Schinabeck, Defined benefit plan/defined benefit contribution 

plan, Employee Benefits Dictionary at 41 (1992). 

When Congress passed the Pension Protection Act in 2006, it updated “the 

rules for determining the minimum required contributions for qualified defined 

benefit pension plans.” Ex. 128 at 38. Pursuant to the PPA, a plan sponsor’s 

funding obligation is based on a calculation of “the ‘shortfall’ between the plan’s 

assets and the plan’s ‘funding target’ (i.e., liabilities) plus the anticipated increase 

in the plan’s costs for the year (‘the target normal cost’).” See id.

The PPA further requires that a plan complete annually an actuarial 

certification of its funded ratio under those rules, referred to as an “adjusted 

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funding target attainment percentage, or “AFTAP,” and imposes certain benefit 

restrictions on plans with AFTAPs of less than 80%, and even greater benefit 

restrictions for plans with AFTAPs of less than 60%. See, e.g., id. at 40-41. The 

AFTAP is “[o]ne measure of the funded status of [a] plan,” Ex. 134 at 32:8-9, in 

which “the liability determination [is made] using rules spelled out [by Congress] 

in the Pension Protection Act,” which is, “the present value of accumulated 

benefits for the participants in the plan as of [October 1, 2008],” using the interest 

rate prescribed “by the rules in the Pension Protection Act.” Id. at 34:22-35:3. 

On June 30, 2009 (i.e., less than a month before the Plan’s termination), 

Watson Wyatt (Delphi’s actuary at the time) provided an AFTAP certification 

letter for the Delphi Salaried Plan for the then-current plan year, i.e., the year that 

would end on September 30, 2009. See ECF No. 134-4 at 1. The AFTAP 

Certification for the current plan year was 85.62%, and the AFTAP Certification 

for the prior year was 86.9%. Id. 

To put these numbers in perspective, Kevin House, one of the Watson Wyatt 

actuaries responsible for the Salaried Plan AFTAP certifications described above, 

testified that, “[f]rom a plan funding level perspective,” the Salaried Plan’s funded 

ratio “wasn’t too dissimilar to a lot of large plans at the time, given the financial 

crisis that was going on.” See Ex. 134 at 45:21-23. Mr. House further testified 

that not only was this not an “abnormally poor[]” funding level, but that he had 

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seen plans that were well below a 60% funding level that had not been terminated. 

Id. at 37:25-38:12. 

To be sure, consistent with the PPA’s requirements, the Salaried Plan’s 2008 

AFTAP measured the Plan’s funded status as of the beginning of the then-current 

Plan year, i.e., as of October 1, 2008, and as noted above, the Plan’s assets lost a 

significant amount of value in the subsequent months. Accordingly, a snap shot of 

the Plan’s funded status as of the summer of 2009 would have shown that the Plan 

was less well funded as of July 2009 than as of October 2008. But that was true 

for every pension plan. For example, between September 30, 2008 and December 

31, 2008, on an accounting basis, the GM salaried plan went from being 

overfunded by $2.3 billion to being underfunded by $1.7 billion, and GM’s hourly 

plan declined by $11 billion in funding over the same period. See Ex. 135 at 1. 

This short-term decline in the GM plans’ assets did not, of course, precipitate a 

termination action by the PBGC. 

 

This is why “‘[t]he actuary’s usual horizon is many years ahead, and he is 

usually content to progress there by annual steps. It is therefore desirable . . . to 

have a stochastic model to describe the way in which appropriate investment 

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variables have moved over the long term without being too concerned with very 

short term fluctuations.’” Ex. 128 at 25 (quoting A.D. Wilkie, A Stochastic 

Investment Model for Actuarial Use (1984)). 

 that the market would recover, and when it did, the Plan’s assets would 

have recovered from the short-term market decline that all plans suffered during 

the bottom of the financial crisis. This was especially true given that Delphi had 

frozen the Salaried Plan in the fall of 2008, such that its liabilities would not 

continue to grow like other, unfrozen, pension plans. See SUMF ¶ 19. 

One would, therefore, have expected, erroneously as it turns out, that the 

PBGC’s recommendation regarding the Plan’s termination would have included 

estimations regarding the Plan’s minimum funding contributions under the 

scenarios described above. Yet, the PBGC’s administrative record in support of 

termination is devoid of any discussion of the minimum funding contributions, and 

in fact the PBGC hadn’t estimated Delphi’s minimum funding contributions on a 

stand-alone basis since the Spring of 2008. See generally ECF Nos. 52-60 

(AR000010-118). While, as noted above, the PBGC had recently completed 

minimum funding contributions in connection with a reassumption of the Delphi 

plans into GM’s plans, there was no discussion of those projections leading up to 

the Plan’s termination. See id. 

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In short, while the PBGC has implied that Delphi’s failure to make full 

funding contributions to the Plan while in bankruptcy justify the Plan’s 

termination, the numbers above demonstrate that what mattered for determining 

the Plan’s viability was the ability of a sponsor to be able to satisfy the Plan’s 

minimum funding contributions, and that when compared to other similarly 

situated pension plans (nearly all of which were underfunded during the time in 

question), the Plan’s funding level was not an objective barrier to its continued 

survival. 

D. Extra-Statutory Factors Undergirded the PBGC’s Actions in 

Terminating the Plan 

The PBGC, then, cannot show that it would have been entitled to a § 1342(c) 

termination adjudication on the grounds that termination was necessary to avoid a 

loss to the PBGC insurance fund. Instead, in light of its liens and claims, the 

PBGC had the ability to push for a GM reassumption of the Salaried Plan as part of 

GM’s reorganization; GM’s purchasers would have thought purchasing GM’s 

assets with the Salaried Plan in place (but without PBGC liens attached or claims 

pending) was a good deal, and indeed the PBGC had pressed for similar purchase 

solutions in analogous prior instances; and the Salaried Plan was, financially 

speaking, in similar shape to the vast majority of pension plans at the time. Under 

these circumstances, reassumption of the Salaried Plan by GM (and acceptable to 

GM’s eventual asset purchasers) was a solution that had viability and that, most 

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importantly, would have been far less costly to the PBGC (if it cost the PBGC 

anything at all), thereby dooming the PBGC under the statutory criteria in 

§ 1342(c). In light of the above, it is clear that the PBGC cannot carry its burden 

of showing that the facts and the law indisputably indicate that the PBGC could 

have accomplished a judicial termination under § 1342(c) in July 2009, and the 

Court must address Counts One through Four in the amended complaint. 

Given the viability of options other than termination, and particularly the 

PBGC’s initial push for reassumption by GM of the Salaried Plan and the PBGC’s 

typical stance in going to great lengths to protect pensioners (again, by its own 

estimation, it was able to save pension plans in 13 auto parts companies that were 

in bankruptcy during this same period of time), one necessarily is left to ask – why 

did the PBGC terminate the Salaried Plan? The record shows that the PBGC’s 

actions were influenced by extra-statutory political factors. 

Again, as described above, the record demonstrates that the PBGC 

dramatically altered its behavior after the intervention of Treasury’s Auto Team. 

See, e.g., supra 78-82. After its initial efforts to promote a GM reassumption of 

both of Delphi’s large pension plans, the PBGC abruptly ceased all efforts to save 

the Plan after the PBGC’s Joe House began coordinating on these issues with 

Treasury’s Matt Feldman. See id. The PBGC’s decision to abandon its advocacy 

of the Salaried Plan was objectively unreasonable in light of the substantial 

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leverage it possessed to save the Salaried Plan, supra 82-91, its statutory goal of 

continuing and maintaining pension plans, 29 U.S.C. § 1302(a), and ERISA’s 

requirement that a pension plan’s termination is only appropriate under § 1342(c) 

where necessary under one of three statutory criteria. 29 U.S.C. § 1342(c). And 

while the PBGC has never offered any explanation for its change and behavior, the 

record demonstrates that Treasury’s political wishes played a decisive role. 

 However, in deposition testimony, the acting 

director of the PBGC at the time of the termination, Vince Snowbarger, 

acknowledged the Treasury was wearing “at least” three conflicting hats in these 

interactions. Id. ¶ 54. First, as a PBGC board member, Treasury was one of three 

agencies charged with providing oversight and direction to the PBGC. Id. Second, 

through its Auto Team, Treasury was charged with restructuring the auto industry. 

Third, Treasury, as the chief lender to GM, was as a major competing creditor in 

the Delphi bankruptcies that would ultimately decide whether GM would be 

permitted to fund a reassumption of the Delphi pension plans. Id. In sum, the 

Treasury’s conflicting roles were problematic for the PBGC, in that they 

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threatened to subvert the PBGC’s interests in saving both of Delphi’s pension 

plans, to Treasury’s competing political and financial interests. 

 

 

These same concerns played out in Treasury’s approach to GM. 

 Treasury wanted to find ways 

to keep liabilities off New GM’s balance sheet and thus not noticeably subject to 

TARP subsidization. By Mr. Rattner’s own admission, Treasury needed to show 

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the public that “the government wasn’t going to be everybody’s piggybank.” See

SUMF ¶ 38. However, Treasury knew that, again for political reasons, New GM 

would be forced to assume significant liabilities related to the labor unions, 

particularly the UAW. Delphi’s salaried retirees, had no similar political leverage, 

and it was the PBGC, not the Plan’s participants, that was responsible for 

negotiating the release of the commercial leverage associated with the Salaried 

Plan’s survival, i.e., the PBGC’s liens and claims on Delphi’s assets. Treasury 

then proceeded to use its influence with the PBGC to accomplish these political 

goals. 

Mr. Feldman of the Auto Team has testified that he began his discussions 

with the PBGC in April 2009 with the express goal of achieving an agreement 

where the Salaried Plan was terminated, while saving Delphi’s Hourly Plan. See 

Id. ¶ 63. GM perceived a benefit to Treasury taking the lead on negotiations with 

the PBGC “because it was ‘Government agency to Government agency’ and 

Treasury would get a better deal for GM.” See id. ¶ 54 (quoting Ex. 3 at 14) 

(emphasis added). 

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which was a disadvantage to the PBGC because its acting director, Mr. 

 

. 

Consequently, during the late-May 2009 bankruptcy mediation, rather than use its 

liens and claims as leverage to negotiate in favor of the Salaried Plan, in an attempt 

to save the Salaried Plan, the PBGC’s representatives, according to Mr. House, 

“sat in a room and read books all day.” Id. ¶ 88. 

ged 

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Thus, the record demonstrates that Treasury sought to have the Plan 

terminated, in order to keep liabilities off of New GM’s balance sheet, despite the 

strong commercial necessity that would have argued in favor of an assumption of 

the Plan by New GM, and further that the PBGC acquiesced utterly with 

Treasury’s designs, contrary to its statutory mandate and the termination 

requirements of § 1342. Treasury sought to keep the liabilities on GM’s balance 

sheet as low as possible, because of the political necessity that federal funds be 

utilized as frugally as possible. See, e.g., SUMF ¶ 38. Indeed, emphasizing the 

political success of his Administration’s use of TARP funds in the auto situation, 

President Obama explained some years later (albeit when describing Chrysler’s 

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situation) that his Administration had with great care awarded funds to the auto 

makers and had now been paid back in full. See Remarks by the President to 

Chrysler Workers in Toledo, Ohio (June 3, 2011), 

https://obamawhitehouse.archives.gov/the-press-office/2011/06/03/remarkspresident-chrysler-workers-toledo-ohio. The President made no mention of the 

$1.5 billion liability to the Title IV insurance fund to cover guaranteed benefits 

associated with the Salaried Plan, as those were not on the GM balance sheet.12

E. The Record in Full Establishes that the PBGC Cannot Prove It 

Would Have Succeeded in Obtaining a Judicial Termination 

Decree in July 2009, Had It Tried 

What emerges from the full record is a picture of a PBGC that had 

substantial leverage through the combination of its liens and claims on Delphi 

12 It is important to note that the termination of the Salaried Plan and the Hourly 

Plan kept liabilities off of GM’s balance sheet, and thus outlays from TARP lower, 

but still (according to the PBGC’s estimates) cost the government billions in 

insurance payments for guaranteed benefits. However, these payment – i.e., 

liabilities – would appear on the PBGC’s balance sheet, not GM’s. Relegating the 

Salaried Plan’s participants to the PBGC’s insurance system, rather than allowing a 

reassumption of the Salaried Plan by GM, was a result that cost Plan’s participants 

dearly (through the loss of all benefits above guaranteed benefits); however, it 

served the political purpose of keeping the federal government’s grants and loans 

to GM minimized. Ironically, the cost to the federal government (when one adds 

the TARP expenditures and the loss to the Title IV insurance fund) was much 

greater than would have been the case had the reassumption of the Salaried Plan by 

GM occurred and any such liabilities been added to GM’s balance sheet, though 

perhaps less costly as a political matter. Indeed, this is precisely the pitch that the 

PBGC made to Treasury early in early 2009, before the PBGC’s decision to 

acquiesce in the termination of the Salaried Plan. See SUMF ¶ 33. 

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assets and GM’s great dependence on Delphi parts to press hard for a reassumption 

of the Salaried Plan by GM (and later New GM) in its interactions with Treasury – 

a scenario that may even have cost GM less than what it paid to the PBGC to 

resolve the PBGC’s liens and claims. The record also establishes that the PBGC’s 

leverage via the liens and claims likewise could have been sufficient to persuade 

Delphi’s purchasers to accept a reassumption – a scenario made more feasible 

given the availability of the funds from the PBGC settlement with GM to fund Plan 

contributions, and given the PBGC’s historic, consistent, and successful efforts to 

demand any solution for workers other than termination of the worker’s plan (with 

the concomitant costs of paying guaranteed benefits to the PBGC). But politics 

intervened through the more powerful Auto Task Force, which prevented the result 

likely to have occurred in a non-government setting (i.e., a reassumption) from 

happening in order to keep TARP expenditures to a minimum and public criticism 

of the government’s use of taxpayer funds for the auto industry as muted as 

possible. 

Given this backdrop, had the PBGC continued with its § 1342(c) termination 

action, the PBGC would not have been able to demonstrate that termination was 

necessary to save money for the insurance fund. Rather, the most probable result 

of a judicial adjudication pursuant to § 1342 would have been a finding that the 

termination could be “avoid[ed]” and, as a result, that a better scenario existed 

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whereby the PBGC’s insurance fund would save money, by avoiding the loss 

entirely. PBGC v. United Air Lines, Inc., 436 F. Supp. at 924. An adjudicating 

court, looking out for the public interest, and 

, and 

with the PBGC bearing the burden of proof, would have demanded that the PBGC 

return to the battlefield to get a better deal, and the facts indicate the PBGC had all 

the leverage to do so. 

Because the record does not establish that “termination of the Salaried Plan 

would have been appropriate in July 2009 if, as Plaintiffs contend, [the PBGC] 

were required under 29 U.S.C. § 1342(c)” to seek a judicial decree, ECF No. 193 

at 7, the Court should proceed to consider Counts 1 through 4 of the Second 

Amended Complaint. In other words, Plaintiffs have satisfied the Court’s 

prerequisite from the September 1, 2011 Order for reaching the merits of the 

claims in the Second Amended Complaint. And while Plaintiffs believe they have 

shown to the Court that, by any measure, the record indicates no judicial decree 

under § 1342 would have issued in July 2009, it should be enough given the 

summary-judgment stage of proceedings that they can establish genuine factual 

disputes as to whether the PBGC could have met the conditions for termination by 

judicial decree in July 2009. In that latter instance, the Court’s detailed review of 

the factual record and recognition even simply that the case is not clear as to 

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whether the PBGC could have succeeded under § 1342 would mean it had properly 

and meaningfully exercised judicial restraint before considering momentous 

statutory and constitutional issues. While the Court could hold a trial to determine 

any factual disputes regarding whether the PBGC could have met its burden under 

§ 1342, and Plaintiffs would certainly zealously participate in such a trial, 

Plaintiffs also, respectfully, believe a summary-judgment showing that the PBGC 

cannot prove a lack of genuine factual disputes regarding its ability to have 

succeeded in July 2009 under § 1342 is sufficient to warrant consideration of the 

merits of Counts 1 through 4. 

II. BECAUSE THE DELPHI PLAN WAS TERMINATED WITHOUT 

THE NECESSARY COURT ADJUDICATION, PLAINTIFFS ARE 

ENTITLED TO JUDGMENT AS A MATTER OF LAW ON COUNT 1 

Count 1 alleges that in order to termination a pension plan under 29 U.S.C. 

§ 1342(c), the PBGC must obtain a district court adjudication that the termination 

is necessary under the statutory criteria. ECF No. 145 ¶ 39 (citing 29 U.S.C. 

§ 1342(a), (c)). Critically, ERISA requires the PBGC to 

apply to the appropriate United States district court for a decree

adjudicating that the plan must be terminated in order to protect the 

interests of the participants or to avoid any unreasonable deterioration 

of the financial condition of the plan or any unreasonable increase in 

the liability of the fund. 

29 U.S.C. § 1342(c)(1) (emphasis added). 

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The statute forbids the PBGC from circumventing this process and 

terminating a plan via summary agreement with a plan’s administrator. As 

explained below, this reading of § 1342(c)(1) is supported not only by the statute’s 

plain text, but also by the purpose of the subsection and the purposes of ERISA 

more broadly. Because the PBGC failed to obtain the necessary court adjudication 

the Court should enter judgment in favor of Plaintiffs on Count 1. 

A. The Plain Language of § 1342(c)(1) Requires That the PBGC 

Obtain a Court Decree Before Terminating a Plan, Even If the 

Plan Administrator Agrees to Plan Termination 

Because the Court’s analysis of Count 1 presents a question of statutory 

interpretation, the Court must “start, of course, with the statutory text.” BP Am. 

Prod. Co. v. Burton, 549 U.S. 84, 91 (2006). “If the statutory language is plain, [a 

court] must enforce it according to its terms.” King v. Burwell, 135 S. Ct. 2480, 

2489 (2015). 

In this case, the text of the statute is clear: a plan cannot be terminated 

unless “the appropriate United States district court” issues “a decree adjudicating 

that the plan must be terminated in order to protect the interests of the participants 

or to avoid any unreasonable deterioration of the financial condition of the plan or 

any unreasonable increase in the liability of the fund.” 29 U.S.C. § 1342(c)(1). 

This remains the case, even if the PBGC and a plan administrator agree to plan 

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termination. In support of this conclusion, a brief review of portions of § 1342 is 

necessary at the start. 

Subsection 1342(a) describes the PBGC’s authority to initiate termination 

proceedings. Specifically, § 1342(a) allows, but does not require, the PBGC to 

institute termination proceedings whenever it determines that one of four 

conditions is satisfied. 29 U.S.C. § 1342(a). Additionally the statute requires the 

PBGC to institute termination proceedings when the PBGC determines that a plan 

cannot pay benefits currently owed. Id. 

Subsection (a) establishes a single exception to the requirement that the 

PBGC follow the statutory plan termination procedures. That exception, which 

applies only to small plans, permits the PBGC to prescribe a “simplified 

procedure” to terminate such plans, “as long as that procedure includes substantial 

safeguards for the rights of the participants and beneficiaries under the plans . . . 

(including the requirement for a court decree under subsection (c)).” 29 U.S.C. 

§ 1342(a) (emphasis added). Thus, even in the context of the “simplified 

[termination] procedure” that applies to “small” plans, the PBGC must provide 

substantial procedural safeguards to protect plan participants, including the 

requirement of a court decree. Id. Given that Congress imposed the court-decree 

requirement when it crafted the small-plan exception, it stands to reason that court 

approval is certainly required when the PBGC and the administrator of a large plan 

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sua sponte proceed to a termination in a streamlined manner through an agreement 

between themselves. See id. 

Upon the institution of termination proceedings under § 1342(a), the PBGC 

(or the plan administrator) may request, pursuant to § 1342(b), that the court 

appoint a trustee to administer the plan for the duration of the termination 

proceedings. 29 U.S.C. § 1342(b). No one disputes that the PBGC and plan 

administrator can, by agreement, achieve appointment of a trustee without court 

involvement. Id. 

If the PBGC chooses to, or is required to, initiate termination proceedings 

under § 1342(a), then the following procedure, set forth in § 1342(c)(1), applies: 

 The first sentence of § 1342(c)(1) describes the circumstances in which the 

PBGC may apply to a district court for a decree adjudicating that the plan 

in question must be terminated. 

 The second sentence permits a trustee appointed under § 1342(b) to either 

intervene in such proceedings or independently seek such a decree. 

 The third sentence directs the court to authorize a trustee appointed under 

§ 1342(b) to terminate the plan, but only after the court issues a decree 

applied for by the PBGC or the trustee. 

 The fourth sentence, which is key to the parties’ dispute, applies when two 

conditions are satisfied: the PBGC and plan administrator agree to (i) 

terminate a plan, and (ii) appoint a trustee. Then, the trustee will be subject 

to the powers set forth in § 1342(d)(1), as well as the duties set forth in 

§ 1342(d)(3), which include the duties of a bankruptcy trustee and an 

ERISA fiduciary. 

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Hence, the fourth sentence of § 1342(c)(1) relates solely to the powers given 

to the trustee. That sentence provides as follows: 

If the [PBGC] and the plan administrator agree that a plan should be 

terminated and agree to the appointment of a trustee without proceeding 

in accordance with the requirements of this subsection (other than this 

sentence), [then] the trustee shall have the power described in 

subsection (d)(1) and . . . is subject to the duties described in subsection 

(d)(3). 

29 U.S.C. § 1342(c)(1) (emphasis added). 

This sentence structure represents a classic example of a case or condition, 

used by Congress to “limit the generality of the statute” by establishing 

“circumstances or conditions that must operate or occur before the act applies to a 

given individual.” 1A Norman J. Singer & J.D. Shambie Singer, Sutherland 

Statutes and Statutory Construction § 21:6 (7th ed. 2009) [hereinafter Sutherland]. 

Such conditions often begin with the words “if” or “where.” Id. This “logical 

structure . . . clearly commands that a definite result . . . must follow.” United 

States v. Williamson, 154 F.3d 504, 505 (3d Cir. 1998); see also Mid-Am. Waste 

Sys., Inc. v. City of Gary, 49 F.3d 286, 290 (7th Cir. 1995) (“The if-then quality of 

the rule sets up a legitimate claim of entitlement to a particular decision if the 

condition holds.”). 

Put simply, if condition “X” is satisfied, then result “Y” must follow. See 

Smith v. Shettle, 946 F.2d 1250, 1253 (7th Cir. 1991) (“No magic form of words is 

required to make a regulation mandatory; all that is required is that it be clear that 

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if X (the substantive predicate), then Y (the specified outcome, from which the 

enforcement officials are not free to depart).”). And result “Y” is limited to only

the “definite result” set forth in the apodosis, or main clause, of the sentence. See 

Sutherland § 21:6 (explaining that the condition only serves to determine the set of 

facts subject to the result set forth in the statutory provision). 

The fourth sentence of § 1342(c)(1) employs this very sort of “if X, then Y” 

structure. In this case, however, Congress imposed two conditions: an agreement 

between the PBGC and the plan administrator on termination of a plan (“X-1”), 

and an agreement between the PBGC and the plan administrator to appoint a 

trustee (“X-2”). 29 U.S.C. § 1342(c)(1). If both conditions are satisfied, then a 

specific consequence (“Y”) is triggered: the trustee is given the powers 

enumerated in (d)(1) and duties enumerated in (d)(3). Id. This can be considered 

“if X-1 and X-2, then Y.” 13

13 Read correctly, the last sentence of § 1342(c) says that, if there is no dispute 

between the PBGC and the plan administrator over whether a plan should be 

terminated and over who should be the trustee (i.e., they “agree” on these two 

subjects), then one set of issues before the adjudicating court – namely, the 

appointment of a trustee and the trustee’s powers – can be quickly resolved by the 

PBGC and the plan administrator. This makes good sense because the result is that 

a trustee immediately is put in place, who is then, with full powers, singly working 

with an eye toward conserving the assets in the participants’ and beneficiaries’ 

interests. In other words, Congress thought the proverbial “federal case” need not 

be made out of every issue before the adjudicating court, if there was agreement 

between the PBGC and the plan administrator. And allowing a shortcut on the 

limited issue of trusteeship harms no participant or beneficiary interests, since they 

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The PBGC claims that the fourth sentence of § 1342(c)(1) allows it to 

bypass the court adjudication required by the first sentence of § 1342(c)(1). 

According to the PBGC, an agreement between it and the plan administrator to 

terminate a plan and appoint a trustee does more than just grant that trustee the 

powers laid out in § 1342(d)(1) and fiduciary duties laid out in (d)(3), as actually 

provided by the fourth sentence of § 1342(c)(1); the PBGC claims that the 

agreement also allows it to terminate that plan without a court decree. But notably 

absent from the “definite result” set out in the fourth sentence is this power to 

terminate a plan without a court decree. In effect, the PBGC asks the Court to add 

an additional result to the only one specifically enumerated by Congress. If the 

Court were to do so, it would transform the logic of the sentence to read: “if X-1 

and X-2, then Y and Z.” 

The Supreme Court has repeatedly rejected that sort of logic pattern. Nat’l 

R.R. Passenger Corp. v. Nat’l Ass’n of R.R. Passengers, 414 U.S. 453 (1974), for 

instance, involved the Rail Passenger Service Act of 1970, 42 U.S.C. § 547, which 

expressly provided for (i) a public cause of action “maintainable by the Attorney 

General,” and (ii) a private cause of action only in cases “involving . . . labor 

agreement[s].” 414 U.S. at 456-57. An association of railroad passengers, which 

are always protected by the trustee’s obligation to act as their fiduciary 

(irrespective of how the trustee gains appointment and powers). 

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brought a private suit to enjoin the announced discontinuance of certain passenger 

trains, argued that the statute “should not be read to preclude other private causes 

of action.” Id. at 457 (first emphasis added). 

Citing longstanding precedent, the Supreme Court invoked the “ancient 

maxim” of expressio unius est exclusio alterius and rejected the passengers’ 

position. The Court explained that “‘[w]hen a statute limits a thing to be done in a 

particular mode, it includes the negative of any other mode.’” Id. at 458 (quoting 

Botany Worsted Mills v. United States, 278 U.S. 282, 289 (1929)). “Since the Act 

creates a public cause of action for the enforcement of its provisions and a private 

cause of action only under very limited circumstances, this maxim would clearly 

compel the conclusion that the remedies created in [the statute] are the exclusive 

means to enforce the duties and obligations imposed by the Act.” Id. at 458; see 

also Tenn. Valley Auth. v. Hill, 437 U.S. 153, 188 (1978) (“Congress was . . . 

aware of certain instances in which exceptions to the [Endangered Species Act’s] 

broad sweep would be necessary. Thus, [the statute] creates a number of limited 

‘hardship exemptions’. . . . [But] there are no exemptions in the Endangered 

Species Act for federal agencies, meaning that under the maxim expressio unius est 

exclusio alterius, we must presume that these were the only ‘hardship cases’ 

Congress intended to exempt”); Traverse Bay Area Intermediate Sch. Dist. v. 

Mich. Dep’t of Educ., 615 F.3d 622, 630 (6th Cir. 2010) (denying an attempt to 

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read an additional enforcement mechanism into a statute that already lists other 

enforcement mechanisms). 

The fourth sentence in § 1342(c)(1) provides a specific outcome: the 

appointed or agreed-upon trustee is given certain powers and duties – nothing 

more. The Court must reject the PBGC’s attempt to read into this sentence a 

“specified outcome” that appears nowhere in the text of the sentence itself. Indeed, 

the Court “must presume that [the] legislature says in a statute what it means and 

means in a statute what it says there.” Dodd v. United States, 545 U.S. 353, 357 

(2005) (internal quotation marks omitted). Here, the text plainly states that a plan 

cannot be terminated unless “the appropriate United States district court” issues “a 

decree adjudicating that the plan must be terminated.” 29 U.S.C. § 1342(c)(1). 

The fourth sentence of § 1342(c)(1), which relates only to the powers of a trustee, 

does not change that.14

14 The Second Circuit is the only federal court to consider the first sentence of 

§ 1342(c)(1) in a meaningful way. In its decision, which is not binding on this 

Court, it concluded that the PBGC could “proceed . . . in summary fashion without 

affording plan members pretermination notice and hearings to contest the propriety 

of the termination decision.” In re Jones & Laughlin Hourly Pension Plan, 824 

F.2d 197, 199 (2d Cir. 1987). Yet, in that case the plan administrator and PBGC 

actually obtained a court decree, making the court’s opinion on that point mere 

dicta. 

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B. Requiring the PBGC to Obtain a Court Decree Before 

Terminating a Plan Best Serves ERISA’s Objectives and 

Comports With the Statute’s Legislative History 

Even if the Court were to conclude that § 1342(c) is ambiguous, the purpose 

of that provision (and of ERISA as a whole) as well as ERISA’s legislative history 

support the conclusion that the PBGC was required to obtain a court decree before 

terminating the Salaried Plan. See King v. Burwell, 135 S. Ct. 2480, 2492-93 

(2015) (finding that when the text of a statutory provision is unclear, the court must 

turn to the structure and purpose of the statute to determine the provision’s 

meaning). At the end of the day, the Court “cannot interpret federal statutes to 

negate their own stated purposes.” Id. at 2493; see also id. (rejecting interpretation 

of statute that would lead to the result “Congress designed the Act to avoid”). 

The purpose of ERISA is to “protect . . . the interests of participants in 

employee benefit plans.” 29 U.S.C. § 1001(b). Congress explicitly said so itself, 

see id., and the Supreme Court has recognized as much numerous times. See, e.g., 

Boggs v. Boggs, 520 U.S. 833, 845 (1997) (finding that the “principal object of 

[ERISA] is to protect plan participants and beneficiaries”); Shaw v. Delta Air 

Lines, Inc., 463 U.S. 85, 90 (1983) (recognizing that ERISA was “designed to 

promote the interests of employees and their beneficiaries in employee benefit 

plans”). 

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Consistent with that purpose, ERISA provides an array of participant 

protections. These include the right to certain notices (29 U.S.C. § 1021(f)), the 

requirement to provide plan documents and account information to participants (29 

U.S.C. § 1024), the imposition of fiduciary duties on individuals responsible for 

plan management (29 U.S.C. §§ 1103, 1104), claims procedure protections (29 

U.S.C. § 1133), and, of course, the insurance program that the PBGC administers. 

Requiring a court decree ordering termination of a plan “in order to protect 

the interests of the participants” — in effect, imposing a judicial safeguard — 

comports with ERISA’s purpose and is consistent with the statute’s other built-in 

participant protections. Indeed, § 1342(a) describes the “requirement for a court 

decree under subsection (c)” as a “substantial safeguard[]” of participant rights. 29 

U.S.C. § 1342(a). Without this judicial adjudication, there are no checks on the 

power of the PBGC and plan administrator to terminate a plan at their own behest, 

a decision with lasting and significant consequences to plan participants. 

To protect those participant rights, Congress wisely determined that the 

judiciary, in its role as an independent check on executive power, is best suited to 

decide whether particular circumstances warrant plan termination. As the Seventh 

Circuit has explained (and this Court alluded to in its September 1, 2011 Order), 

“[t]he only authority the PBGC has under § 1342 is to ask a court for relief. That 

implies an independent judicial role.” In re UAL Corp., 468 F.3d 444, 449 (7th 

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Cir. 2006) (refusing to apply “arbitrary and capricious review” to PBGC’s 

determination under § 1342(c) that a plan should be terminated because the PBGC 

did not use its rulemaking or adjudication authority to arrive at its decision). 

The PBGC, however, seeks to evade the very review process that Congress 

found necessary to protect plan participants. The PBGC should not be allowed to 

undermine the statute’s principal purpose by terminating a plan based on an 

agreement between two interested parties. There can be little doubt that Congress 

imposed that pre-termination safeguard in all cases, without exception. The 

Conference Report describing the final ERISA bill is telling. It provides: 

In the case of small plans, the corporation may prescribe a simplified 

procedure and may pool assets of small plans so long as the rights of 

the participants and employers (including the right to a court decree of 

termination) are preserved. Furthermore, the corporation may agree 

with any plan administrator to designate a trustee who, without court 

appointment, is to have the usual powers of trustees appointed by the 

court. 

H.R. Rep. No. 93-1280, at 373 (1974) (Conf. Rep.). 

Along with the statutory text, this legislative history shows that Congress 

knew how to clearly establish exceptions to the procedures the PBGC must follow 

to terminate a plan when it wanted to do so. As discussed above, Congress 

unambiguously established a narrow exception allowing the PBGC to establish a 

“simplified procedure” for terminating small plans only. 29 U.S.C. § 1342(a). 

Moreover, when Congress crafted this exception, it considered the right to a court 

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decree such a valuable participant protection that it still barred the PBGC from 

bypassing it, by requiring that any such “simplified procedure” for a small plan 

include “substantial safeguards for the rights of the participants . . . (including the 

requirement for a court decree).” Id.

Additionally, the legislative history passage (in the last quoted sentence 

above) confirms Plaintiffs’ reading of the fourth sentence of § 1342(c), because it 

mentions only agreements regarding the appointment of trustees and the trustees’ 

powers when referencing other agreements that the PBGC and “any plan 

administrator” may reach; nowhere in the passage (or, as far as Plaintiffs are 

aware, in any other part of the legislative history) did Congress suggest agreements 

could be reached by the PBGC and the plan administrator to terminate a large plan. 

Straightforwardly, the Conference Report indicates that Congress intended the 

fourth sentence of § 1342(c)(1) merely to endow a trustee appointed by agreement 

with the powers of a court-appointed trustee. These powers would enable the 

trustee, for instance, to act to conserve plan assets while the court adjudicated the 

plan termination. This explanation aligns completely with the plain text of the 

statute, under which an agreement between the PBGC and the plan administrator to 

terminate a plan and to appoint a trustee has a single consequence: the trustee 

designated by such an agreement possesses the same powers and duties as a trustee 

designated by court decree. 

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Given the clarity with which Congress established the small plan exception 

under § 1342(a) and the value it placed on the court adjudication procedure, had 

Congress meant to allow the PBGC to bypass that requirement for other plans or in 

other circumstances, it would have carefully articulated such an exception.

Congress “does not alter the fundamental details of a regulatory scheme in vague 

terms or ancillary provisions — it does not, [as] one might say, hide elephants in 

mouseholes.” Whitman v. Am. Trucking Ass’n, Inc., 531 U.S. 457, 468 (2001) 

(citing MCI Telecommc’ns Corp. v. AT&T Co., 512 U.S. 218, 231 (1994)). 

C. It Is Undisputed That the PBGC Failed to Obtain a Court Decree 

Before Terminating the Plan, Making Summary Judgment 

Appropriate

As described above, the PBGC initially took steps to comply with 

§ 1342(c)’s requirement that it obtain a court adjudication. See PBGC v. Delphi 

Corp. No. 2:09-cv-12876 (E.D. Mich., filed July 22, 2009). However, the PBGC 

then dismissed that action, see id. at ECF No. 5 (Aug. 7, 2009 Notice of Voluntary 

Dismissal), 

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Because the PBGC did not obtain a court decree before terminating the Plan, 

and ERISA requires one, the Court should grant summary judgment in favor of 

Plaintiffs on Count 1. 

III. PLAINTIFFS ARE ENTITLED TO SUMMARY JUDGMENT ON 

COUNT 2 BECAUSE DELPHI EXECUTED THE TERMINATION 

AGREEMENT IN A CORPORATE RATHER THAN FIDUICARY 

CAPACITY, RENDERING IT INVALID 

Count 2 alleges that even if a pension plan can be terminated by agreement 

between the PBGC and a plan administrator, the decision to select a summary 

method of termination can be undertaken, if at all, only by the plan administrator in 

a fiduciary capacity. This is the only reading of the statute – assuming 

terminations by agreement are at all allowable – that would make logical sense, 

that is consistent with ERISA and trust law, and that would be consistent with 

Congress’s insistence on any plan termination process including substantial 

safeguards for participants and beneficiaries. If a decision to select a summary 

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method of plan termination can be made by a plan administrator solely in a 

fiduciary capacity, then at the very least participants and beneficiaries (through 

their fiduciary) will have a real say in the process before their vested property 

interests (see infra p. 138-41) are diminished or extinguished. 

A. An Employer’s Decision to Enter Into a Summary Termination 

Agreement With the PBGC Under 29 U.S.C. § 1342(c)(1) Is 

Subject to ERISA’s Fiduciary Standards 

Beginning, as one must, with the statutory language, whatever power the 

fourth sentence of § 1342(c) provides with regard to an agreement with the PBGC 

for termination, it expressly provides any power to a “plan administrator.” This is 

significant because a “plan sponsor” is a distinct and separate entity from a “plan 

administrator” under ERISA. Compare 29 U.S.C. § 1002(3)(16)(a) (defining plan 

administrator) with 29 U.S.C. § 1002(3)(16)(b) (defining plan sponsor). 

While plan administrators (at least those with discretion) are, by definition, 

fiduciaries under ERISA, plan sponsors are not. See, e.g., 29 U.S.C. 

§ 1002(21)(A)(iii) (“a person is a fiduciary with respect to a plan to the extent . . . 

he has any discretionary authority or discretionary responsibility in the 

administration of such plan”) (emphasis added). Nothing in ERISA requires that 

the plan sponsor also be the plan administrator; consequently, plan sponsors 

usually do not have any fiduciary responsibilities unless they choose to retain some 

administrative powers. See, e.g., Coyne & Delany Co. v. Selman, 98 F.3d 1457, 

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1465 (4th Cir. 1996). Moreover, an employer can have dual roles with respect to a 

pension plan, in that the employer can serve as both plan sponsor and plan 

administrator. “Which hat the employer is proverbially wearing depends upon the 

nature of the function performed.” Beck v. PACE Int’l Union, 551 U.S. 96, 101 

(2007). 

Thus, whatever the extent of the power granted to a plan administrator by 

the fourth sentence of § 1342(c), it is vested in the plan administrator, not the plan 

sponsor. This is the beginning and the end of the inquiry. Delphi could only have 

had the power to execute the summary termination agreement in its capacity as 

plan administrator; as such there can be no question that fiduciary obligations must 

attach because “[t]he employer’s decision . . . was not an action which could be 

given effect as a corporate management decision.” Payonk v. HMW Indus., Inc., 

883 F.2d 221, 225, 227 (3d Cir. 1989); see also Varity Corp. v. Howe, 516 U.S. 

489, 502 (1996) (“The ordinary trust law understanding of fiduciary 

‘administration’ of a trust is that to act as an administrator is to perform the duties 

imposed, or exercise the powers conferred, by the trust documents.”) (internal 

citations omitted).

To be sure, when a plan sponsor voluntarily decides to terminate a pension 

plan under 29 U.S.C. § 1341, that decision is made using its non-fiduciary, settlor 

“hat.” See Lockheed Corp. v. Spink, 517 U.S. 882, 890 (1996) (“When employers 

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undertake [plan termination], they do not act as fiduciaries, but are analogous to 

the settlors of a trust”) (internal citations omitted). In these circumstances, 29 

U.S.C. § 1341 provides the plan sponsor with two options: it may pursue a 

standard termination or it may pursue a distress termination. Regardless, the 

decision by a plan sponsor to terminate a plan, whether standard or distress, does 

not actually terminate the plan under ERISA; it is simply a business decision 

indicating that the employer wishes to cease providing a pension plan benefit to its 

employees. See Payonk, 883 F.2d at 227 (explaining that electing to terminate a 

plan is “a corporate management decision”). 

After an employer unilaterally decides to terminate a plan under § 1341, it 

then dons the “hat” of a fiduciary if it, as opposed to a separate third-party 

administrator, actually implements the termination. This is because plan 

termination implicates various discretionary actions that could affect participants’ 

rights and benefits, such as choosing methods of locating all participants owed a 

distribution upon plan termination. See Dep’t of Labor, Field Assistance Bulletin 

No. 2014-01, Fiduciary Duties and Missing Participants in Terminated Defined 

Contribtion Plans 2 (Aug. 14, 2014)15 (“[T]he fiduciary responsibility provisions 

of ERISA govern the steps taken to implement this ‘settlor’ decision, including 

15 https://www.dol.gov/sites/default/files/ebsa/employers-andadvisers/guidance/field-assistance-bulletins/2014-01.pdf

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steps to locate missing participants.”); see also 29 U.S.C. § 1002(21)(A) (making a 

person a fiduciary to the extent he or she exercises discretion in connection with 

plan administration). 

Similarly, the selection of a particular method of plan termination is a 

fiduciary function subject to ERISA’s fiduciary obligations — for example, 

terminating a plan by purchasing annuities, versus issuing lump-sum distributions. 

See 29 U.S.C. § 1341(b)(3)(A)(i) (“[T]he plan administrator shall purchase 

irrevocable commitments from an insurer to provide all benefit liabilities under the 

plan”); Waller v. Blue Cross of Cal., 32 F.3d 1337, 1342 (9th Cir. 1994) (imposing 

fiduciary duties on plan administrator selecting annuity provider to distribute 

benefits under terminating plan); see also Beck, 551 U.S. at 102 (holding that if 

merger were a “permissible form of plan termination,” then the decision not to 

consider merger in terminating a plan could be subject to fiduciary duties). In 

Waller v. Blue Cross of California, for instance, the defendant terminated its 

retirement plan by purchasing annuities from a company that later entered 

conservatorship. 32 F.3d at 1338-39. Participants in and beneficiaries of the plan 

alleged that the defendant violated its fiduciary duties by selecting a lower-cost 

annuity provider with an eye toward maximizing the residual plan assets, which 

would revert back to the company following termination. Id. at 1341. In response, 

the defendant argued that the mere act of selecting an annuity provider does not 

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constitute a fiduciary act. Id. at 1342. The Ninth Circuit disagreed, finding the 

distinction between the “decision to terminate [and] the implementation of the 

decision . . . dispositive.” Id. Citing Congress’s intent in enacting ERISA, the 

court refused to excuse the defendant from its fiduciary duties “at such a critical 

moment in the life of the plan” — i.e., one with significant bearing on participants’ 

vested benefits. Id. at 1343. 

Larson v. Northrop Corp., 21 F.3d 1164 (D.C. Cir. 1994), similarly held that 

fiduciary standards affix to the implementation of plan termination. In Larson, a 

participant alleged that upon plan termination Northrop Corporation purchased 

annuity contracts that failed to include an early retirement subsidy that had been 

provided by the plan. Id. at 1166. To resolve a statute of limitations issue, the 

court had to pinpoint the timing of the fiduciary breach, and it explained that 

because “activities undertaken to implement the termination decision are generally 

fiduciary in nature,” a fiduciary breach, if any, “was fully completed when 

Northrop acquired the allegedly insufficient annuity.” Id. at 1169-70. In other 

words, at that point, the company had selected its method of termination under § 

1341, and had therefore made a fiduciary decision. 

This reasoning applies even more forcefully in the context of § 1342, which 

explicitly refers to a plan administrator. Assuming that the fourth sentence of 

§ 1342(c) really does allow for plan terminations by agreement between the PBGC 

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and a plan administrator, that would mean that the statute provided Delphi (in its 

role as plan administrator) with a choice: it could agree to summary termination 

(which, pursuant to Plaintiffs’ alternate arguendo reading of the statute in Count 2, 

terminated the plan without any further procedural protections), or it could 

disagree (in which case the PBGC would have been required to prove to a district 

court that the plan meets the statutory criteria for termination). See 29 U.S.C. 

§ 1342(c)(1). 

A decision to use powers provided solely to a plan administrator under 

ERISA to agree to terms resulting in the termination of vested pension rights is not 

a business decision insulated from fiduciary considerations. Cf. Payonk, 883 F.2d 

at 227. To the contrary, it was an exercise of discretion assigned solely to the 

“plan administrator,” see 29 U.S.C. § 1342(c)(1), who, by definition, acts subject 

to ERISA’s fiduciary obligations. See id. § 1002(21)(A) (“[A] person is a 

fiduciary with respect to a plan to the extent . . . he has any discretionary authority 

or discretionary responsibility in the administration of such plan”) (emphasis 

added); see also Bussian v. RJR Nabisco, Inc., 223 F.3d 286, 295 (5th Cir. 2000) 

(“[a] fiduciary’s acts undertaken to implement a plan’s termination may [not] 

deviate from ERISA’s [fiduciary duties]”). To the extent that § 1342(c) authorizes 

the PBGC to terminate a plan via agreement, Delphi could have had the power to 

execute the termination agreement – and formulate its terms – only in its capacity 

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as plan administrator. As such, there can be no question that fiduciary obligations 

attached. 

“One of Congress’ central purposes in enacting [ERISA] was to prevent the 

‘great personal tragedy’ suffered by employees whose vested benefits are not paid 

when pension plans are terminated[,] . . . by making sure that if a worker has been 

promised a defined pension benefit upon retirement -- and if he has fulfilled 

whatever conditions are required to obtain a vested benefit -- he actually will 

receive it.” Nachman Corp. v. PBGC, 446 U.S. 359, 374 (1980). Imposing 

fiduciary duties on individuals with discretion to impact participants’ vested 

benefits was a critical element of the statutory scheme Congress created when it 

enacted ERISA. See e.g., Varity Corp., 516 U.S. at 496 (“ERISA protects 

employee pensions and other benefits . . . by setting forth certain general fiduciary 

duties applicable to the management of both pension and nonpension benefit 

plans.”). Consistent with this intent, ERISA permits employers to terminate 

pension plans, so long as any decision that might denigrate vested benefits are 

made according to ERISA’s fiduciary duties. Because the mere act of deciding to 

terminate a fully funded pension plan does not innately affect vested benefits, 

Congress did not impose fiduciary duties on the business decision to terminate 

such a plan. But because the method and terms of termination can, and often do, 

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affect a participant’s vested benefits, Congress imposed fiduciary duties on 

decisions made as part of implementing the decision to terminate. 

Even more so, an agreement between the PBGC and a plan administrator to 

summarily terminate a plan necessarily strips participants of significant procedural 

protections for participants’ rights and vested benefits (e.g., court adjudication), 

leaving participants with just one final protection: a suit under § 1303(f) to undo 

the act where the fiduciary’s agreement violated its fiduciary duties. Failing to 

subject summary termination decisions to fiduciary duties eliminates this one 

remaining safeguard and leaves plan participants wholly unprotected — a result 

directly in conflict with the purposes of ERISA.16

16 Plaintiffs can sue, and seek relief against, solely the PBGC to nullify its 

agreement with Delphi, even with regard to Delphi’s behavior. It is the PBGC that 

has been carrying out that agreement, and the PBGC is subject to suit in connection 

with plan terminations under 29 U.S.C. § 1303(f). Furthermore, the Supreme 

Court has established that, under ERISA and traditional trust law, a third party can 

be sued for participating in a fiduciary’s breach, with appropriate equitable relief to 

be awarded against the third party for the fiduciary’s breach. See Harris Trust & 

Sav. Bank v. Salomon Smith Barney, Inc., 530 U.S. 238, 245-53 (2000). Quite 

openly, Plaintiffs admit that they have not sued, and cannot sue, Delphi; but the 

bankruptcy court handling Delphi’s bankruptcy has expressly approved Plaintiffs’ 

suit against the PBGC on the theory espoused in Count 2. See SUMF ¶ 109; see 

also Ex. 138. 

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B. Delphi Did Not Execute the Termination and Trusteeship 

Agreement With the PBGC According to ERISA’s Duty of 

Loyalty 

“The duties charged to an ERISA fiduciary are ‘the highest known to the 

law,’” see Gregg v. Transportation Workers of America, International, 343 F.3d 

833, 841 (6th Cir. 2003) (quoting Chao v. Hall Holding Co., 285 F.3d 415, 426 

(6th Cir. 2002)), and include the duty of loyalty and the duty of prudence. 29 

U.S.C. § 1104(a)(1)(B) (requiring ERISA fiduciaries to act “solely in the interest 

of participants and beneficiaries” and “with the care, skill, prudence, and diligence 

. . . that a prudent man . . . would use”). The duty of loyalty requires that “‘all 

decisions regarding an ERISA plan must be made with an eye single to the 

interests of the participants and beneficiaries.’” Gregg, 343 F.3d at 840 (quoting 

Kuper v. Iovenko, 66 F.3d 1447, 1458 (6th Cir. 1995)). 

Courts have consistently recognized that fiduciaries have an obligation under 

ERISA “‘to avoid placing themselves in a position where their acts as directors or 

officers of the corporation will prevent their functioning with the complete loyalty 

to participants demanded of them as trustees.’” McMahon v. McDowell, 794 F.2d 

100, 110 (3d Cir. 1986) (quoting Donovan v. Bierwirth, 680 F.2d 263, 271 (2d Cir. 

1982)). “This duty may, in some circumstances, require the fiduciary to step aside 

in favor of a neutral referee, or at the least, to conduct an explicit inquiry into the 

potential for a conflict of interest.” Id. (citing Donovan, 680 F.2d at 271). This is 

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a “rigorous standard,” taken from the “common-law conception of a trustee.” Id.

(citing F. Douglas Raymond, “ERISA Trusts and Tender Offers,” 13 Sec. Reg. L. 

Rev. 253, 257-59 (1985)). 

Here, in entering an agreement summarily to terminate the Salaried Plan, the 

PBGC unlawfully entered into an agreement with a plan administrator who did not 

act as a fiduciary of the Plan. Instead, as the evidence below reveals, Delphi 

entered into the termination agreement believing it to be a “settlor” function to be 

undertaken in its corporate interest, rather in in the Plan participants’ and 

beneficiaries’ interests. 

As noted above, in June 2009, Delphi proposed an amended plan of 

reorganization that contemplated the termination of the Salaried Plan in connection 

with a settlement that Delphi was negotiating with the PBGC. See ECF No. 17030 

§ 7.17, In re Delphi Corp., No. 05-44481 (Bankr. S.D.N.Y. June 19, 2009). The 

PBGC and Delphi executed that settlement agreement on July 21, 2009, which in 

turn required Delphi to execute a termination and trusteeship agreement with the 

PBGC terminating the Salaried Plan if the PBGC issued a notice of determination 

pursuant to 29 U.S.C. § 1342(c). See ECF No. 18559, Ex. 1 § 3(a), In re Delphi 

Corp., No. 05-44481 (Bankr. S.D.N.Y. July 21, 2009). As a result, once it entered 

into that settlement agreement with the PBGC, Delphi committed itself to 

executing the termination agreement, subject to the discretion of the bankruptcy 

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court (which would consider whether Delph was exercising proper business 

judgment to enter into it) and the PBGC (with its own institutional concerns), but 

without reference to any fiduciary considerations. 

Additionally, during a July 29, 2009 hearing on Delphi’s proposed plan of 

reorganization, Delphi’s counsel explicitly represented to the bankruptcy court that 

if Delphi were to execute the termination agreement with the PBGC, “in making 

the decision, Delphi acts in a settler or nonfiduciary capacity.” See Ex. 139 at 

193:20-21. Delphi’s counsel then went further, emphasizing that “Delphi’s board 

of directors ha[d already] directed the plan administrator, which is Delphi, to enter 

into the PBGC-Delphi settlement agreement, and upon [the bankruptcy court’s] 

approval of it, to execute a termination and trusteeship agreement if that agreement 

is proposed by the PBGC.” Id. at 194:7-11. Delphi’s agreement with the PBGC 

was “necessary,” according to Delphi’s counsel, because “this is what will allow 

Delphi to reorganize and to move forward.” Id. at 197:9-10. No documents that 

Delphi produced in discovery suggest that it considered the Plan participants’ 

interests in making the determination to enter into the settlement agreement with 

the PBGC, or the termination agreement. And of course, the agreement turned out 

not to be in the participants’ and beneficiaries’ best interests, because it resulted in 

the substantial loss of vested benefits to them when all other similarly situated 

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persons (such as union employees) retained their full benefits (through guaranteed 

benefits and top-ups). See SUMF ¶¶ 9, 98, 113. 

Because there are no genuine disputes of fact that Delphi failed to execute 

the termination agreement according to its fiduciary duty of loyalty, and as a 

matter of law Delphi’s actions in implementing and creating the terms for 

termination were subject to fiduciary obligations, Plaintiffs are entitled to summary 

judgment on Count 2. They are entitled to “appropriate equitable relief” against 

the PBGC pursuant to § 1303(f) for the PBGC’s participation in the fiduciary 

breach. 

IV. BECAUSE THE PBGC’S SUMMARY TERMINATION OF THE 

PLAN DEPRIVED PLAINTIFFS OF THEIR DUE PROCESS 

RIGHTS, SUMMARY JUDGMENT IS APPROPRIATE ON COUNT 3 

The Court need only reach Count 3 if it rejects the Plaintiffs’ arguments as 

to Count 1 and finds that § 1342(c) allows the PBGC and a plan administrator to 

summarily agree to terminate a pension plan. If the Court makes such a finding, it 

should nonetheless conclude that the summary termination in this case violated the 

Due Process Clause of the Fifth Amendment, which “‘provides that certain 

substantive rights – life, liberty, and property – cannot be deprived except pursuant 

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to constitutionally adequate procedures.’” Mitchell v. Fankhauser, 375 F.3d 477, 

479 (6th Cir. 2004) (citation omitted). 

The Sixth Circuit applies a two-part test to determine whether government 

action violates due process. First, the Court must “determine[] whether the 

plaintiff has a property interest entitled to due process protection.” Id. at 480. 

Second, if the plaintiff has a protected property interest, then the Court “must . . . 

determine what process is due.” Id. (internal quotation marks and citation 

omitted). 

Here, the PBGC’s summary termination of the Plan violated Plaintiffs’ 

constitutional rights: Plaintiffs were stripped of their vested pension benefits (and 

the rights associated with those benefits) with no pre-deprivation process at all. 

The PBGC’s actions robbed Plaintiffs of any opportunity to be heard before more 

than $520 million of vested pension benefits under the Plan were extinguished, 

benefits that were earned over a career of service, and were supposed to ensure 

their retirement security of the Plan’s participants. As a result, and for the reasons 

discussed below, summary judgment is appropriate on Count 3. 

A. Plaintiffs Have a Protected Property Interest in Their Vested 

Pension Benefits 

First of all, it is well-established that the right to receive vested pension 

benefits is a protected property interest. See, e.g., McDarby v. Dinkins, 907 F.2d 

1334, 1336 (2d Cir. 1990) (finding that the plaintiff had a “a protectible property 

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interest in his city pension benefit”); Flannelly v. Bd. of Trs. of N.Y. City Police 

Pension Fund, 6 F. Supp. 2d 266, 268 (S.D.N.Y. 1998) (“An individual’s disability 

benefits or pension has been found to constitute such a property interest.”); Ginaitt 

v. Haronian, 806 F. Supp. 311, 317 (D.R.I. 1992) (“There is little question that the 

plaintiff has a property interest in his pension.”). 

As noted, the PBGC’s termination of the Plan deprived Plaintiffs and other 

Plan participants of $521 million in vested pension benefits Plan-wide. See Ex. 

123 at 1. This loss has been spread out over the Plan’s 20,160 participants and 

beneficiaries. The PBGC’s termination of the Plan resulted in substantial pension 

losses to Plaintiffs, and many of the DSRA’s members suffered pension losses 

between 30% - 70%. See SUMF ¶ 9; 

 But for the PBGC’s termination of the 

Plan, these benefits would still be owed to Plaintiffs. 

Additionally, pursuant to the termination and trusteeship agreement with the 

Plan’s administrator, the PBGC assumed the role of statutory trustee to the Plan 

pursuant to § 1342. See SUMF ¶ 112. The statutory trustee holds the assets of a 

terminated plan in trust for the Plan’s participants, and must allocate them as the 

benefits come due, according to the priority scheme laid out in 29 U.S.C. § 1344, 

based on the Plan’s termination date. According to the PBGC’s valuation, the 

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Plan’s assets were worth approximately $2.513 billion as of the termination date 

(July 31, 2009). See Ex. 123 at 1. 

However, as Plaintiffs’ expert Dr. Rajah observed in his report, because of 

the timing of the Plan’s termination, the “plan’s assets were severely depressed” 

when the Plan was terminated in July 2009. See Ex. 128 at 12. “Between January 

1, 2008 and March 31, 2009, the S&P 500 decreased by approximately 44%” while 

“[b]etween March 31, 2009 and May 31, 2015 [the time when Dr. Rajah completed 

his report], the S&P increased by approximately 94%.” Id. at n.5. The numbers 

are even more dramatic when the last three years of market results are included in 

the comparison. On July 31, 2009, the S&P 500 closed at 987, and on August 31, 

2018 the S&P 500 closed at 2,901, an increase of roughly 194%.17 Similarly, the 

Dow Jones Industrial Average closed at 9,171 on July 31, 2009, and 25,964 on 

August 31, 2018, an increase of 183%.18

The timing of the PBGC’s termination thus deprived the Plan’s participants 

of their right to share in the market recovery that occurred over the last eight years. 

Unlike a normal trust, participants in a terminated plan normally (absent PBGC 

wrongdoing) do not enjoy the increases to the trust’s value over time. Instead, 

once a plan is terminated, “[a]ny increase or decrease in the value of the assets of a 

17 See https://quotes.wsj.com/index/SPX/historical-prices.

18 See https://quotes.wsj.com/index/DJIA/historical-prices.

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single-employer plan occurring after the date on which the plan is terminated shall 

be credited to, or suffered by, the [PBGC].” 29 U.S.C. § 1344(c). Therefore, the 

PBGC’s decision to terminate the Plan (if sustained) as of July 31, 2009 was, at 

least from the point of view of the Plan’s participants and the Title IV insurance 

fund, “made at the worst possible time, and on the basis of financial conditions that 

did not forecast the long-run expectation for the plan in a realistic or reasonable 

way.” Ex. 128 at 12. 

By terminating the Plan at the bottom of the market, not only did the PBGC 

deprive the participants of the benefit of this increase, the PBGC took for itself the 

ability to earn hundreds of millions of dollars in investment returns. According to 

the PBGC’s last eight annual reports, since terminating and trusteeing the Plan, the 

PBGC has, on average, enjoyed an 8.2% annual return on funds held in its trust 

account (including the $2.5 billion it took from the Salaried Plan).19

B. The PBGC Provided the Plaintiffs No Process Whatsoever Before 

Depriving Them of Their Protected Pension Benefits 

Given the property interests at stake, the PBGC’s termination of the Plan can 

only be upheld if it was accomplished pursuant to “‘constitutionally adequate 

procedures.’” Mitchell v. Fankhauser, 375 F.3d 477, 479 (6th Cir. 2004) (citation 

omitted). While determining the process required under a given set of 

19 See PBGC Annual Reports, https://www.pbgc.gov/about/annual-reports (last 

updated June 26, 2018).

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circumstances can be complicated, in this case it is not. The government provided 

Plaintiffs with no notice or pre-deprivation opportunity to be heard at all. In fact, 

as described above, supra p. 124-25, it specifically withdrew its termination action 

to avoid providing Plaintiffs with any process. Because the Due Process Clause 

requires the government to provide some level of process greater than zero before 

stripping individuals of their protected property interests, the process here is per se

constitutionally insufficient

1. Failing to Provide Plaintiffs a Hearing Before Depriving Them 

of Their Vested Pension Benefits Violated the Due Process 

Clause 

The Constitution generally requires that “‘an individual [must] be given an 

opportunity for a hearing before he is deprived of any significant property 

interest.’” Guba v. Huron Cty., 600 F. App’x 374, 382 (6th Cir. 2015) (quoting 

Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 542 (1985)). “Although 

‘many controversies have raged about the cryptic and abstract words of the Due 

Process Clause . . . there can be no doubt that at a minimum they require that 

deprivation of life, liberty or property by adjudication be preceded by notice and 

opportunity for hearing appropriate to the nature of the case.’” Boddie v. 

Connecticut, 401 U.S. 371, 377-78 (1971) (quoting Mullane v. Cent. Hanover Tr. 

Co., 339 U.S. 306, 313 (1950)) (emphasis added). 

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Plaintiffs’ vested property rights were taken from them without any 

procedural safeguards — a clear violation of the Due Process Clause. The PBGC’s 

termination of the Plan, effectuated by nothing more than an “agreement” between 

the PBGC and Delphi (who, as demonstrated above, had a conflict of interest), 

flies in the face of even the bare “minimum” required by the Due Process Clause. 

See Boddie, 401 U.S. at 378. 

To be sure, in certain “rare and extraordinary situations,” a pre-deprivation 

hearing is not required, and due process may be satisfied through post-deprivation 

procedures alone. Bd. of Regents v. Roth, 408 U.S. 564, 570 (1972). This, 

however, is not such a situation. For example, in Parratt v. Taylor, the Supreme 

Court held that “either the necessity of quick action by the State or the 

impracticality of providing any meaningful predeprivation process, when coupled 

with the availability of some meaningful means by which to assess the propriety of 

the State’s action at some time after the initial taking, can satisfy the requirements 

of procedural due process.” Parratt v. Taylor, 451 U.S. 527, 539 (1981), overruled 

on other grounds, Daniels v. Williams, 474 U.S. 327 (1986). The narrowness of 

this exception is illustrated by the facts in Parratt, where an inmate in a Nebraska 

prison alleged that prison officials violated his due process rights when they failed 

to deliver to him certain hobby materials that he had ordered and paid for. Id. at 

530. The Court held that where a deprivation occurs, as it did in Parratt, “as a 

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result of a random and unauthorized act by a state employee” as opposed to an 

“established state procedure,” “it is not only impracticable, but impossible, to 

provide a meaningful hearing before the deprivation.” Id. at 541. In Zinermon v. 

Burch, the Court went further, holding that “[i]n situations where the State feasibly 

can provide a predeprivation hearing before taking property, it generally must do 

so regardless of the adequacy of a postdeprivation tort remedy to compensate for 

the taking.” Zinermon v. Burch, 494 U.S. 113, 132 (1990). 

The current situation is not one of those “rare and extraordinary” 

circumstances, for two reasons. First, the PBGC’s termination of the Plan stripped 

Plaintiffs of their vested property rights pursuant to a procedure that the PBGC has 

repeatedly used to terminate plans. Where deprivation results from an established 

government procedure, a pre-deprivation hearing is feasible, and required, to 

comply with the Due Process Clause. See Mertik v. Blalock, 983 F.2d 1353, 1365 

(6th Cir. 1993) (“[In c]ases in which a due process challenge is made to 

deprivations resulting from the enforcement of an established state procedure . . . 

the actions at issue are not random or unauthorized, and it is both practical and 

feasible for the state to provide pre-deprivation process to the aggrieved party.”); 

see also Hudson v. Palmer, 468 U.S. 517, 532 (1984) (“[P]ostdeprivation remedies 

do not satisfy due process where a deprivation of property is caused by conduct 

pursuant to established state procedure, rather than random and unauthorized 

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action.”). The challenge here is to an established procedure, namely a summary 

termination procedure that the PBGC claims it has used in “the majority” of plan 

terminations. See, e.g., ECF No. 45 at 6-7. In short, there is no reasonable basis to 

conclude that this was some “random, unauthorized action,” rendering the 

existence of any post-termination procedures irrelevant. Harris v. City of Akron, 

20 F.3d 1396, 1401 (6th Cir. 1994). 

Second, a pre-deprivation hearing was plainly feasible here, and failed to 

occur only because the PBGC wanted to evade judicial review. See Zinermon, 494 

U.S. at 132 (“[i]n situations where the State feasibly can provide a predeprivation 

hearing before taking property, it generally must do so regardless of the adequacy 

of a postdeprivation tort remedy to compensate for the taking”). Not only did 

Congress clearly contemplate that the PBGC would terminate pension plans 

through district court adjudications – § 1342(c) sets out a detailed procedure for 

doing so – but the PBGC actually initiated those very proceedings in this case. 

See SUMF ¶ 107. Again, on July 22, 2009, the PBGC filed an action in this Court 

to terminate the Plan. Id. 

 The PBGC then filed a 

notice of voluntarily dismissal of its termination action. Id. The PBGC’s use of 

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this termination procedure was driven not by any exigent circumstances that made 

continuing with the termination action impractical, 

 This is 

plainly not a valid justification for foregoing pre-deprivation review. Because the 

PBGC could have feasibly continued with its termination action in the district 

court, due process required the PBGC to have done so. 

2. The Court Need Not Consider the Government’s Interest in 

Foregoing a Pre-Deprivation Hearing in Evaluating the 

Adequacy of the Process in This Case — Zero Process Is Per 

Se Insufficient 

The PBGC has argued in prior briefing that the Court should apply the 

framework set forth by the Supreme Court in Mathews v. Eldridge, 424 U.S. 319 

(1976), and, relying on Mathews, it has claimed that a pre-deprivation hearing was 

unnecessary because the government’s interest in foregoing such a hearing 

outweighed other pertinent factors. See ECF No. 23-2 at 13-15. As explained 

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below, however, Mathews applies only when actual administrative procedures have 

been provided. For obvious reasons, Mathews is inapt here. 

Mathews set forth several factors intended to determine whether 

“administrative procedures provided . . . [were] constitutionally sufficient.” 424 

U.S. at 334-35. Those factors include: 

First, the private interest that will be affected by the official action; 

second, the risk of an erroneous deprivation of such interest through the 

procedures used, and the probable value, if any, of additional or 

substitute procedural safeguards; and finally, the Government’s 

interest, including the function involved and the fiscal and 

administrative burdens that the additional or substitute procedural 

requirement would entail. 

Id. As these factors make clear, the Mathews balancing test applies to 

“administrative procedures” and is, therefore, relevant only where there are 

procedures to assess. 

Here, the complete absence of pre-deprivation procedures violated Plaintiffs’ 

due process rights. When other courts have been tasked with evaluating the 

constitutional sufficiency of a complete absence of process, they have found such 

an absence per se unconstitutional and concluded that Mathews was irrelevant. See

Holly v. City of Ecorse, No. 05-74238, 2006 U.S. Dist. LEXIS 68160, at *11 (E.D. 

Mich. Sept. 22, 2006) (“It is not necessary for the Court to decide the extent of the 

process that was due Plaintiff under these circumstances in order to determine if 

his due process rights were violated because Plaintiff was not given any due 

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process at all. Defendant conceded during oral argument that Plaintiff did not 

receive notice or a hearing prior to deprivation.”); Conkey v. Reno, 885 F. Supp. 

1389, 1398 (D. Nev. 1995) (“The Mathews v. Eldridge analysis does not determine 

whether a complete absence of process is permitted, but merely what process is 

due. Here, there was a complete failure of process. The Court need not apply the 

Mathews v. Eldridge analysis to determine whether adequate process was given.”). 

While the Sixth Circuit has not directly addressed whether the Mathews

balancing test is relevant when the government provides zero process, its prior 

holdings strongly suggest that the answer is “no.” The Sixth Circuit has refused to 

apply Mathews when the government deprives individuals of an “absolute” 

procedural requirement. See e.g., Doe v. Cummins, 662 F. App’x 437, 449 n.5 (6th 

Cir. 2016) (citing Withrow v. Larkin, 421 U.S. 35, 47 (1975)). In Doe v. Cummins, 

the Sixth Circuit observed that “the constitutional requirement of an unbiased 

decisionmaker is absolute,” such that the Mathews balancing test would be 

inapplicable, and a violation “would automatically trigger a due-process violation, 

irrespective of any balancing of interests.” See id.

Like the right to an unbiased decisionmaker, the right to notice and a hearing 

before being stripped of an established property interest is also “absolute.” See

Henry v. City of Middletown, Ohio, 655 F. App’x 451, 463 (6th Cir. 2016). In 

Henry, the Sixth Circuit established that “however weighty the governmental 

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interest may be,” the government must always provide “some notice and some

opportunity to be heard prior to final deprivation of a property interest.” See id. at 

463 (citing Logan v. Zimmerman Brush Co., 455 U.S. 422, 434 (1982)). Because 

Sixth Circuit precedent precludes application of the Mathews balancing test to 

“absolute” procedural rights, and because notice and some opportunity to be heard 

before losing a property interest qualifies as one such “absolute” right, Mathews

does not apply. 

3. Assuming, Arguendo, that the PBGC’s Interest in Foregoing a 

Pre-Deprivation Hearing is Relevant, that Interest is Still 

Insufficient to Justify its Failure to Hold a Pre-Deprivation 

Hearing 

Finally, assuming, arguendo, that the PBGC’s interest in foregoing a predeprivation hearing is constitutionally relevant, that interest is insufficient under 

Mathews to justify the PBGC’s failure to hold a pre-deprivation hearing. 

Mathews instructs that the first balancing factor is an evaluation of “the 

private interest that will be affected by the official action.” Mathews, 424 U.S. at 

334. While the PBGC has argued that the PBGC supposedly “did not deprive 

Plaintiffs of any property interest when it terminated the Plan,” ECF No. 23-2 at 

14, that contention simply is not credible. Here, as described above, the loss to the 

Plan’s participants as a result of the termination is significant, ranging between 20 

-70% in many instances. See SUMF ¶ 9. 

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Similarly, the PBGC’s argument that, as the result of the Title IV insurance 

guarantee, “Plaintiffs will receive more benefits from PBGC than they would have 

from the existing Plan assets alone,” is not borne out by the facts. Because the 

PBGC terminated the Plan at the bottom of the market, Plaintiffs were deprived of 

a stock market recovery in excess of 180% on $2.5 billion in Plan assets, supra p. 

140, and the PBGC, by virtue of its termination actions, took those assets and 

earned hundreds of millions in returns over the same period. 29 U.S.C. § 1344(c) 

provides that those investment returns normally inure to the PBGC’s benefit, and 

because of the statutory limits on Title IV benefits of terminated plans, the PBGC’s 

benefit guarantee is insufficient to make up for the losses. 

Finally, the benefit deprivation in Mathews, which involved 

government funded disability benefits, was a “temporary deprivation,” in that the 

government conceded that claimants could later receive full retroactive payments if 

the termination was later determined to be erroneous. See Mathews, 424 U.S. at 

340. Here, by contrast, the PBGC takes the opposite position. According to the 

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PBGC, once it terminates a pension plan by agreement with a plan administrator, 

its termination decision is irrevocable, and plan participants cannot receive more 

than their statutorily guaranteed benefits, regardless of whether § 1342(c)’s 

termination criteria are satisfied. Because “‘the possible length of wrongful 

deprivation of . . . benefits [also] is an important factor in assessing the impact of 

official action on the private interests,’” the “degree” of such a permanent 

deprivation of private retirement benefits is a significant factor disfavoring “the 

validity” of the PBGC’s “administrative decisionmaking process.” Id. at 341 

(quoting Fusari v. Steinberg, 419 U.S. 379, 389 (1975)). 

The second Mathews factor looks “the fairness and reliability of the existing 

pretermination procedures, and the probable value, if any, of additional procedural 

safeguards.” Id. at 343. This factor similarly militates decisively against 

upholding the PBGC’s termination action. 

In Mathews, the claimant had an opportunity to make an administrative 

showing to the Social Security Administration (SSA) prior to the termination of his 

benefits, and the Court noted there that that agency “periodically communicates 

with the disabled worker” during the administrative process, providing the 

claimant with the opportunity to submit relevant information to the agency prior to 

the termination decision. Id. at 337. Additionally, “[w]henever the agency’s 

tentative assessment of the beneficiary’s condition differs from his own 

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assessment, the beneficiary is informed that benefits may be terminated, provided a 

summary of the evidence upon which the proposed determination to terminate is 

based, and afforded an opportunity to review the medical reports and other 

evidence in his case file. He also may respond in writing and submit additional 

evidence.” Id. at 337-38. Following this interaction with the beneficiary, a state 

agency makes a determination that the SSA could then accept or reject. Id. at 338. 

If the SSA accepts the termination recommendation, benefits are terminated, 

however the recipient may seek reconsideration by the state agency and 

supplemental review by the SSA. Id. at 338-39. He then has a right to a nonadversary evidentiary hearing before an SSA administrative law judge, subsequent 

discretionary review by the SSA Appeals Council, and finally judicial review. Id. 

at 339. As noted above, if the recipient obtains a positive ruling at any phase of 

this administrative process, he is entitled to full retroactive payments. Id. 

Here, by contrast, there was no communication at all with the Plan’s 

participants during the administrative proceedings preceding the Plan’s 

termination. The PBGC put the Plan’s participants on notice of its intentions only 

on July 22, 2009, after its administrative procedures (such as they were) had 

already concluded. See SUMF ¶ 106. Plaintiffs were not permitted any 

administrative opportunity to challenge the PBGC’s determinations, 

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Worse still, the PBGC’s administrative proceedings in this case did not 

follow their normal course. See ECF No. 54 at AR000010. While the PBGC 

normally convenes its Trusteeship Working Group to consider plan termination 

recommendations, it did not do so here, ostensibly because of “time constraints” 

presented by Delphi’s DIP lenders communication, on July 15, 2009, that they 

would exercise their foreclosure rights on the stock of Delphi’s foreign affiliates, 

which the PBGC was concerned could threaten its recovery rights. Id. 

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In sum, instead of relying on its normal procedure, the PBGC bypassed that 

procedure without good cause, relying instead on an outdated record that failed to 

reflect the political considerations underlying the PBGC’s actions, or the relevant 

statutory factors that would properly govern a § 1342(c) determination. The 

PBGC’s administrative procedure provided no opportunity for Plan participants to 

engage administratively with the agency regarding its termination determination 

either ex ante or ex post, 

 At the risk of understating the case, the 

PBGC’s pretermination procedures were neither fair nor reliable. A § 1342(c) 

pretermination hearing could have remedied these problems. See supra 75-112. 

Last, “[i]n striking the appropriate due process balance,” Mathews requires 

an assessment of “the public interest.” Mathews, 424 U.S. at 347. This includes 

not only “the administrative burden” of requiring a predeprivation hearing, but also 

“other societal costs,” id., though “[t]he ultimate balance involves a determination 

as to when, under our constitutional system, judicial-type procedures must be 

imposed upon administrative action to assure fairness.” Id. at 348. Here, the cost 

of allowing a single adjudication of the propriety of a plan’s termination under the 

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§ 1342(c) criteria is hardly prohibitive, especially given the complete dearth of 

process the PBGC usually affords plan participants. 

Moreover, contrary to the PBGC’s earlier arguments, see ECF No. 23-2 at 

15, there was no danger here of increasing the loss to the Title IV insurance fund or 

the continuity of Plan payments pending a judicial adjudication of the Plan’s 

termination. If, after a court adjudication, the PBGC’s termination decision was 

ultimately upheld, the Plan could be retroactively terminated as of the date that 

participants were put on notice (July 22, 2009), so the delay would not increase the 

liability of the insurance fund by a single cent. See, e.g., PBGC v. Republic Techs. 

Int’l LLC, 386 F.3d 659, 665-68 (6th Cir. 2004). As for the Plan’s benefit 

payments, the § 1342 statutory trustee could take actions to limit temporarily 

benefit payments as necessary pending an adjudication; indeed, that is precisely 

what the language in the fourth sentence of § 1342(c) is supposed to accomplish. 

Providing participants with a hearing prior to terminating their pension plan would 

ensure that the most basic requirement of due process is satisfied: that participants 

are “given a meaningful opportunity to present their case.” Mathews, 424 U.S. at 

349. 

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V. PLAINTIFFS ARE ENTITLED TO SUMMARY JUDGMENT ON 

COUNT 4 BECAUSE, EVEN ON AN ARBITRARY-ANDCAPRICIOUS REVIEW, THE PBGC’S TERMINATION OF THE 

SALARIED PLAN IS UNSUSTAINABLE 

Assuming, arguendo, that the Salaried Plan could be terminated simply 

through an agreement between the PBGC and Delphi acting as plan administrator 

(but supposedly not subject to a plan administrator’s fiduciary duties of loyalty and 

prudence and with a conflict of interest) without violating either ERISA or the 

Constitution, the PBGC’s decision to terminate the Plan, under the prevailing 

circumstances, is still subject to judicial review. Judge, now Justice, Ginsburg 

writing at the time for the D.C. Circuit cogently emphasized that even an agency’s 

decision to enter into a negotiated agreement is subject to arbitrary-and-capricious 

review under the Administrative Procedure Act (“APA”), 5 U.S.C. § 706. 

A court reviewing an agency’s negotiation of a contract . . . properly 

may demand (1) a coherent, even if post-hoc, statement of the agency’s 

bargaining objectives and concerns, that the court may compare against 

the objectives prescribed by law, and (2) an adequate account of the 

bargaining history, that allows the court to determine whether the 

agency reasonably pressed its own objectives and did not unreasonably 

accommodate those of the other party to the negotiation. 

Doe v. Devine, 703 F.2d 1319, 1326 (D.C. Cir. 1983) (Ruth B. Ginsburg, J.) 

(emphasis added); accord Tackitt v. Prudential Ins. Co. of Am., 758 F.2d 1572, 

1575 (11th Cir. 1985). Put another way, even if the PBGC could circumvent the 

requirement for a court adjudication that termination is warranted under § 1342(c), 

it must still have engaged in reasoned, supportable action in agreeing to terminate 

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the Plan, and to release its liens and claims on Delphi assets, in light of the facts 

before it and the applicable law. See United Steel Workers v. PBGC, 707 F.3d 319, 

323 (D.C. Cir. 2013) (finding APA imprinted into action under § 1303(f) against 

PBGC). 

On the factual bases fully laid out earlier, the PBGC’s actions in terminating 

the Plan cannot be sustained under an arbitrary-and-capricious standard, even 

accounting for any deference APA review usually affords federal agencies. The 

starting point for determining the reasonableness of any agreement to terminate the 

Salaried Plan is the criteria set forth in § 1342(c), for that is the provision under 

which the PBGC claims authority to terminate the Plan (as opposed to authority to 

initiate termination proceedings). Here, the PBGC claimed that termination was 

necessary under § 1342(c), in order to avoid any unreasonable increase in the 

liability of the PBGC’s insurance fund. See SUMF ¶¶ 106-07. Further, as Justice 

Ginsburg indicated, the PBGC’s agreement must show that it accommodated the 

overall objectives set forth in the relevant sections of ERISA and that the PBGC 

did not unreasonably accommodate the interests of other parties to its negotiations, 

such as Treasury, New GM, or Delphi. One overriding interest in this part of 

ERISA is “to encourage the continuation and maintenance of voluntary private 

pension plans for the benefit of their participants.” 29 U.S.C. § 1302(a)(1). 

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However, the PBGC did not act consistently with this statutory purpose. 

The undisputed facts show that the PBGC had powerful leverage to advocate for 

either New GM, see supra 78-91, or one of Delphi’s potential purchasers, supra

91-95, to assume the Salaried Plan, thus preventing its termination. But, it is also 

undisputed that, at least as of the middle of April 2009, the PBGC took no actions 

to avoid the Salaried Plan’s termination, but instead acquiesced in that termination, 

in order to accommodate unreasonably, the objectives of Treasury. Supra 100-

112. The PBGC’s utter failure to press its own statutory goals, in conjunction with 

its passive accommodation of Treasury’s objectives, demonstrate that the PBGC’s 

termination actions are fatally arbitrary and capricious. 

Moreover, through its own findings, the PBGC determined that termination 

was not in the best interests of the Salaried Plan’s participants and beneficiaries. 

See SUMF ¶ 74. Their interests are an overriding concern under ERISA (see id. 

¶ 1) that the PBGC had to take into account and advance; yet, the PBGC acted 

counter to their interests, by its own admission. Arbitrary-and-capricious review 

necessitates that an agency’s decision be “based on a consideration of the relevant 

factors,” and here the PBGC’s termination was inconsistent with the overarching 

factor of the participants’ and beneficiaries’ best interests. Citizens to Preserve 

Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971). Thus, while the PBGC 

could have attempted to terminate the Plan through a judicial adjudication but 

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could have relied on one of just three statutory criteria to be successful, its strategy 

instead to attempt to accomplish termination through an agreement (assuming that 

route is at all allowable) means the PBGC subjects itself to a broader review of its 

weighing of all relevant factors. In this instance, the PBGC acted counter to the 

relevant (indeed, overriding) participant concerns and, anyway, failed to satisfy 

any of the three statutory factors in § 1342 for termination. Its action in 

terminating the Plan is, as a consequence, arbitrary and capricious and unlawful, 

and Plaintiffs are, on this basis, entitled to summary judgment on Count 4. 

CONCLUSION 

The Court should grant summary judgment in Plaintiffs’ favor on Counts 1 

through 4 of the Second Amended Complaint as to the PBGC’s liability, and order 

briefing as to the remedy and relief to be afforded. 

Respectfully submitted, 

 /s/ Anthony F. Shelley 

Alan J. Schwartz (P38144) 

JACOB & WEINGARTEN, P.C.

25800 Northwestern Highway 

Suite 500 

Southfield, Michigan 48075 

Telephone: 248-649-1900 

Facsimile: 248-649-2920

E-mail: alan@jacobweingarten.com 

Anthony F. Shelley 

Timothy P. O’Toole 

Michael N. Khalil 

MILLER & CHEVALIER CHARTERED 

900 Sixteenth St. NW 

Washington, DC 20006 

Telephone: 202-626-5800 

Facsimile: 202-626-5801 

E-mail: ashelley@milchev.com 

 totoole@milchev.com 

mkhalil@milchev.com

Attorneys for Plaintiffs 

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CERTIFICATE OF SERVICE 

I hereby certify that on September 21, 2018, I caused the foregoing 

electronically to be filed with the Clerk of the Court using the CM/ECF system 

which will send notification of such filing to the following e-mail addresses: 

owen.wayne@pbgc.gov (C. Wayne Owen) 

david.glass@usdoj.gov (David M. Glass) 

edward.w.risko@gm.com (Edward W. Risko) 

rswalker@jonesday.com (Robert S. Walker) 

/s/ Anthony F. Shelley 

Anthony F. Shelley 

MILLER & CHEVALIER CHARTERED 

900 Sixteenth St. NW 

Washington, DC 20006 

Telephone: 202-626-5800 

Facsimile: 202-626-5801 

E-mail: ashelley@milchev.com 

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