Opinion ID: 668555
Heading Depth: 2
Heading Rank: 2

Heading: Form of the Award

Text: 36 The defendants next assert a multifaceted attack on the district court's order that the defendants pay the damages award in one lump sum to the PBGC. The defendants challenge both the lump sum nature of the award and the payment of it to the PBGC, rather than to the Kinek plaintiffs. The defendants contend that the award is inconsistent with the Kinek plaintiffs' contractual entitlement, if any, and with the Kinek plaintiffs' theory of standing. The defendants also assert that the PBGC has no standing at all as trustee of the NJ Zinc Plan to sue them. We are not persuaded. 37 The district court carefully considered the two competing proposals posited by the parties as to the form of the award: first, the defendants' proposal that they pay directly to the Kinek plaintiffs both (a) the difference between what the Kinek plaintiffs had received to date and what they would have received if the spun off portion of the G & W Plan had been fully funded, and (b) future benefits, by making direct monthly payments as the benefits become due or by purchasing annuities; and, second, the plaintiffs' proposal that the defendants pay a lump sum for all past and future benefits. Kinek III, 817 F.Supp. at 358-59. The district court adopted the plaintiffs' proposal on the ground that the defendants' contractual obligation had been to fund the NJ Zinc Plan, not to pay the Kinek plaintiffs directly. Because it was that contractual obligation that the defendants had breached, the district court concluded, the appropriate remedy was to order the defendants to pay the PBGC the amount of the spun off portion's funding shortfall as of September 30, 1981. Kinek IV, 1993 WL 229012, at 2, 1993 U.S.Dist. LEXIS 8478, at  3- 4; Kinek III, 817 F.Supp. at 359. This determination was not an abuse of discretion. 38 First, the district court properly concluded that the wrong committed by the defendants was the breach of an obligation to fund fully the spun off portion of the G & W Plan at the time of the spinoff, and that the appropriate remedy for this wrong was an order to fund fully that portion as of September 30, 1981. Kinek III, 817 F.Supp. at 359. The defendants' obligation follows clearly from the pertinent language of section 3.1: the Employer will fully fund ... all vested benefits. This provision thus called for the defendants to transfer to the NJ Zinc Plan not just existing plan assets allocable to the Kinek plaintiffs, but also the additional assets necessary to fund fully the transferred liabilities allocable to the transferred employees. 39 The defendants contend, however, that because section 10.2 provides the Kinek plaintiffs with an entitlement to benefits, not to funding, the Kinek plaintiffs should receive only benefits. We disagree. Section 10.2 merely provides that, in the event of a spinoff, participants in the G & W Plan become entitled to receive that which they would have been entitled to receive in the event of an actual termination. Section 3.1, on the other hand, dictates that, upon termination, participants in the spun off portion of the plan become entitled to have their vested pension benefits fully funded. Participants in the spun off plan thus have a contractual right to full funding of their vested benefits upon the spinoff. That they may have a right personally to receive only benefits does not diminish this contractual right to full funding, which right is satisfied when the spun off plan is fully funded. 40 Second, the award is not inconsistent with either the Kinek plaintiffs' standing or the PBGC's standing. As to the PBGC, we agree with the district court's determination that, pursuant to ERISA section 4042(d)(1)(B)(ii), 29 U.S.C. Sec. 1342(d)(1)(B)(ii), the PBGC, as trustee of the NJ Zinc Plan, has the authority to collect for the plan any amounts due the plan. 29 U.S.C. Sec. 1342(d)(1)(B)(ii) (emphasis added). This grant of authority does not limit the PBGC to collecting amounts due under contracts to which the plan is a party, as the defendants contend, citing Pension Benefit Guaranty Corp. v. Beadle, 685 F.Supp. 628 (E.D.Mich.1988). In Beadle, the district court sustained the PBGC's power to collect amounts due under such a contract. Id. at 631. In light of the unmistakably broad language of section 4042(d)(1)(B)(ii), however, we decline to construe the factual circumstances presented in Beadle as setting the high water mark with respect to the PBGC's authority. See also Kinek I, 720 F.Supp. at 279-80. 41 Next, the defendants contend that the Kinek plaintiffs have no standing to seek full funding of the NJ Zinc Plan. ERISA section 502(a)(1)(B), 29 U.S.C. Sec. 1132(a)(1)(B), one of the provisions under which the Kinek plaintiffs sued, provides that [a] civil action may be brought ... by a participant or beneficiary ... to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan. 29 U.S.C. Sec. 1132(a)(1)(B). In the prayer for relief in their amended complaint, the Kinek plaintiffs sought inter alia 42 [an] order [that] defendants G & W and the G & W Plan ... comply with the terms of the collectively-bargained pension agreement ... by transferring to the NJ Zinc Plan an additional amount of assets that, together with the amount previously transferred, is sufficient to fully fund on a sound actuarial basis the benefits that had vested under the terms of the G & W Plan as of September 30, 1981. 43 This prayer for relief establishes that the Kinek plaintiffs sought to enforce their right under the G & W Plan to have their vested benefits fully funded at the time of the spinoff. Pursuant to ERISA section 502(a)(1)(B), the Kinek plaintiffs have standing to seek to enforce this right. The award ordered by the district court is, therefore, consistent with the Kinek plaintiffs' standing. 6 44 We thus conclude that the district court did not abuse its discretion in formulating the award.