Court Opinion

ID: 1021508
Source: CourtListenerOpinion
Date Created: 2013-07-04 23:07:38.699758+00
Date Added: 2024-06-11T15:14:26.059953
License: Public Domain

UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT

                               No. 05-2375

PENSION BENEFIT GUARANTY CORPORATION,

                                                 Plaintiff - Appellee,

           and

THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS,

                                                    Party in Interest,

           versus

UNITED AIRLINES, INCORPORATED, a Delaware
Corporation, as Plan Administrator for the
United Airlines Ground Employees’ Retirement
Plan,

                                                             Defendant,

           and

AIRCRAFT MECHANICS FRATERNAL ASSOCIATION,

                                    Intervenor/Defendant - Appellant.

Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Claude M. Hilton, Senior
District Judge. (CA-05-269-CMH-BRP)

Argued:   September 18, 2006                 Decided:   January 9, 2007
Before WILKINSON and DUNCAN, Circuit Judges, and Henry F. FLOYD,
United States District Judge for the District of South Carolina,
sitting by designation.

Affirmed by unpublished per curiam opinion.

ARGUED: Stanley J. Silverstone, SEHAM, SEHAM, MELTZ & PETERSEN,
L.L.P., White Plains, New York, for Appellant.        Stephanie L.
Thomas, PENSION BENEFIT GUARANTY CORPORATION, Office of the General
Counsel, Washington, D.C., for Appellee. ON BRIEF: Lee Seham,
SEHAM, SEHAM, MELTZ & PETERSEN, L.L.P., White Plains, New York, for
Appellant. Jeffrey B. Cohen, Chief Counsel, Nancy S. Heermans,
Associate Chief Counsel, Paula Connelly, Assistant Chief Counsel,
PENSION BENEFIT GUARANTY CORPORATION, Office of the General
Counsel, Washington, D.C., for Appellee.

Unpublished opinions are not binding precedent in this circuit.

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PER CURIAM:

     The Aircraft Mechanics Fraternal Association (AMFA) brings

this appeal asserting that the district court erred by concluding

that the Pension Benefit Guaranty Corporation’s (PBGC) publication

of notice of the termination of the United Air Lines (UAL) ground

crews’   pension   plan   (Ground   Plan)   on   the   termination   date

constituted “reasonable notice” to the plan participants.              We

disagree and, thus, for the reasons stated below, affirm the

judgment of the district court.

                                    I.

     As recited by the district court, the relevant and undisputed

facts are as follows:

     PBGC is a government corporation responsible for paying
     a certain amount to a pension’s beneficiaries if the
     pension has insufficient funds and the plan is covered by
     PBGC.   PBGC may choose to unilaterally terminate a
     pension plan if it determines that the plan has not met
     certain minimum funding requirements or “the possible
     long-run loss of the corporation with respect to the plan
     may reasonably be expected to increase unreasonably if
     the plan is not terminated.” 29 U.S.C. § 1342. Once
     PBGC has terminated a plan pursuant to § 1342, it can
     establish a termination date by agreement with the plan
     administrator.    29 U.S.C. § 1348.      If there is no
     agreement between PBGC and the plan administrator, a
     court establishes a termination date. Id.

     UAL is an airline that employs many thousands of
     employees.   Some of those employees received pension
     benefits as part of their compensation from UAL. UAL
     administered [the Ground Plan], a large portion of which
     was made up of aircraft mechanics. AMFA represents many
     of UAL’s employees covered by the Ground Plan, including
     many of the aircraft mechanics. AMFA signed a collective

                                    3
     bargaining agreement (CBA) with UAL on March 14, 2002, on
     behalf of many of the Ground Plan participants. If the
     Ground Plan was still effective on March 14, 2005, then
     UAL would owe an additional $88 million of guaranteed
     benefits to Ground Plan participants.

     UAL filed for bankruptcy on December 9, 2002. UAL failed
     to pay its minimum funding to PBGC for the Ground Plan on
     September 15, 2004. On March 10, 2005, PBGC determined
     that the Ground Plan should be terminated involuntarily
     pursuant to § 1342 because UAL did not pay its minimum
     funding and PBGC could suffer unreasonable long term harm
     by allowing the plan to continue. PBGC sent notices of
     termination which were received on March 11, 2005, to
     AMFA’s national director, the president of AMFA Local 9
     in San Francisco, and UAL. On March 11, 2005, PBGC also
     published notices of termination in the newspapers of
     UAL’s major hubs: USA Today, San Francisco Chronicle, Los
     Angeles Times, Rocky Mountain News, Denver Post, Chicago
     Tribune, and Washington Post.     Finally, PBGC issued a
     press release about the termination and posted that
     information on its website on March 11, 2005.        AMFA
     actually issued a press release about the termination and
     posted it on its website that same day, March 11, 2005.

     UAL initially opposed the establishment of March 11,
     2005, as the termination date, leading PBGC to commence
     this action. On April 22, 2005, PBGC and UAL settled
     their dispute and agreed to the termination date proposed
     by PBGC. The bankruptcy court approved the settlement
     agreement, and it became official on May 23, 2005. AMFA
     intervened on behalf of the Ground Plan participants and
     filed a counterclaim challenging the March 11, 2005,
     termination date pursuant to 29 U.S.C. § 1303(f)
     [(allowing certain third parties to contest the
     termination and termination date of a plan)].

Pension Benefit Guar. Co. v. United Air Lines, Inc., No. 05-0269,

2005 WL 3088455, at *1-2 (E.D. Va. Nov. 10, 2005).

     The sole question for the district court on cross motions for

summary judgment was whether March 11, 2005, was the appropriate

termination date. Stated differently, the court was called upon to

consider whether the publication of notice of the termination of

                                4
the Ground Plan on the termination date constituted “reasonable

notice” to the plan participants. The district court answered that

question in the affirmative.         This appeal by AMFA followed.

                                       II.

       We review the district court’s granting of summary judgment de

novo.       In re Maco Homes, Inc., 180 F.3d 163, 165 (4th Cir. 1999).

Summary judgment is properly granted when there are no genuine

issues of material fact and when the record taken as a whole could

not lead a rational trier of fact to find for the non-moving party.

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986).            In

determining whether summary judgment is appropriate, the facts are

viewed in the light most favorable to the non-moving party. Id. at

255.

                                      III.

                                       A.

       As     observed   by   the   district   court,   when   disagreements

regarding a termination date occur, they are generally between the

plan administrator and PBGC. In the instant matter, however, it is

AMFA, an outside party, which is marshaling the arguments against

the March 11, 2005, termination date.

       The district court noted that it was construing “PBGC’s date

of termination as an agency determination” and then went on to

                                        5
explain that it would review the decision “to see if it was

arbitrary, capricious, an abuse of discretion, or otherwise not in

accordance with law.”   United Air Lines,     2005 WL 3088455, at *2

(citation omitted). The Seventh Circuit Court of Appeals, however,

recently rejected the application of this standard in a matter

somewhat similar to the one before us today.

     Deference is appropriate when agencies wield delegated
     interpretive or adjudicatory power-the former usually
     demonstrated   by   rulemaking    and   the   latter   by
     administrative adjudication (which also may yield rules
     in common-law fashion).    The PBGC did not use either
     rulemaking or adjudication to decide that United's plan
     should be wrapped up [by a certain date]. Its decision
     was made unilaterally and was not self-executing. The
     only authority that the PBGC has under § 1342 is to ask
     a court for relief. That implies an independent judicial
     role. When making its decision a court must respect any
     regulations issued after notice-and-comment rulemaking,
     but the PBGC has not promulgated any rules pertinent to
     this subject. Nor has it issued the sort of interpretive
     guidelines   that   deserve   the    court's   respectful
     consideration even though they lack the power to control.
     All the PBGC had done is commence litigation, and its
     position is no more entitled to control than is the view
     of the Antitrust Division when the Department of Justice
     files suit under the Sherman Act. As the plaintiff, a
     federal agency bears the same burden of persuasion as any
     other litigant.

In re UAL Corp., (Nos. 06-1867, 06-2843, 06-2662, 06-2714), 2006 WL

3019451, at *3 (7th Cir. October 25, 2006) (citations omitted).

     Moreover, in Pension Benefit Guar. Co. v. Heppenstall Company,

633 F.2d 293, 301 (3d Cir. 1980), the court was unpersuaded by

PBGC's   contention   that   the   court   should   defer   to   PBGC's

administrative expertise in deciding a plan's termination date on

the basis that the statutory scheme makes clear that it is the

                                   6
province of the court to resolve disputes over the termination

date.1      See 29 U.S.C. § 1348(b)(3) (stating that “if no agreement

is reached, the [termination] date [is] established by the court”).

       Nevertheless, AMFA failed to argue that the district court

applied the incorrect standard of review.                     Thus, the issue is

deemed waived for purposes of deciding this appeal.2                       Carter v.

Lee,       283   F.3d    240,   252    n.11    (4th   Cir.   2002)   (stating   that

contentions        not    raised      in   the     opening   brief   are   generally

considered waived); In re Apex Express Corp., 190 F.3d 624, 630 n.5

(4th Cir. 1999) (noting that issue not argued in appellant's brief

is deemed waived on appeal); Baltimore Boulevard, Inc. v. Prince

George's County, 58 F.3d 988, 993 n.7 (4th Cir. 1995) (holding that

arguments not discussed in appellate briefs are deemed abandoned).

                                              B.

       Our determination of whether the March 11, 2005, termination

date is valid is governed by the tripartite test set forth in

Pension Benefit Guar. Co. v. Mize Co., Inc., 987 F.2d 1059, 1063

(4th Cir. 1993).           According to the Mize court, we must 1) first

determine the earliest date on which participants had notice of

       1
      While it is true that AMFA is proceeding under 29 U.S.C. §
1303(f), it would appear that these cases discussing §§ 1342 and
1348 are equally applicable here.
       2
      Assuming, without deciding, that we reviewed the decision of
PBGC de novo, our final disposition of this matter would be the
same.

                                              7
termination, (2) then determine the later date that serves the

interests of PBGC, 3) while always assuring that there has been

strict compliance with the statutory requirements for termination.

Id.

      There is no dispute that factors two and three are satisfied

here.   Thus, the only remaining issue is to determine the earliest

date on which participants had reasonable notice of termination of

the plan so that the plan participants “no longer had a justifiable

expectation in the accrual of vested pension rights.” Heppenstall,

Inc., 633 F.2d at 302.         Either actual or constructive notice is

allowed.     Pension Benefit Guar. Co. v. Republic Techs. Int’l, LLC,

386   F.3d    659,    664,   668   (6th       Cir.    2004)    (stating   that     the

publication of a notice in the local newspapers and the issuing of

a notice of termination the day before the termination date to the

plan administrator and the union representative were sufficient);

Heppenstall, 633 F.2d at 302 (expressing in dicta that, “Possibly

notice to [the] collective bargaining representative as a class

representative is sufficient); In re Pan Am, 777 F. Supp. 1179,

1185 (S.D.N.Y. 1991) (finding that the receipt of actual notice by

plan participants satisfied PBGC’s notice requirement);                       Pension

Ben. Guar. Corp. v. United Air Lines, Inc., 436 F. Supp. 2d 909,

920   (N.D.Ill.      2006)   (holding     that       the   union   representative’s

receipt of the notice of PBGC’s intent to seek termination of the

pension    plan,     publication   in     numerous         newspapers   and   on   the

                                          8
websites       of    PBGC,    the    employer     and     the    union–-all         on   the

termination         date--provided       constructive          notice    to      the     plan

participants that the plan would be terminated).                         PBGC relies on

constructive        notice    in    arguing      that    its    notice      to    the    plan

participants was sufficient.

     According to the record before us today, and as already noted,

PBGC 1) sent notices of termination of the plan, which were

received on March 11, 2005, to AMFA’s national director, the

president of AMFA Local 9 in San Francisco, and UAL3 2) published,

on March 11, 2005, notices of termination in the newspapers of

UAL’s major hubs: USA Today, San Francisco Chronicle, Los Angeles

Times, Rocky Mountain News, Denver Post, Chicago Tribune, and

Washington         Post;    and    3)   issued    a     press    release         about   the

termination and posted that information on its website on March 11,

2005.       AMFA also issued a press release about the termination and

posted it on its website that same day, March 11, 2005.

     We agree with the district court that, under the arbitrary and

capricious standard, these efforts by PBGC were sufficient to

provide       to    the    plan    participants       reasonable        notice      of   the

termination of the plan on March 11, 2005, such that they “no

longer had a justifiable expectation in the accrual of vested

pension      rights.”        Heppenstall,       633     F.2d    at   302.        Thus,   any

        3
      Thus, these individuals and/or entities                         received         actual
notice of the termination of the plan.

                                            9
expectations that the plan participants had that the plan would

continue were extinguished on March 11, 2005, when they received

constructive notice of the termination. Republic Technologies, 386

F.3d at 667 (“Every court to consider the issue has concluded that

expectation interests in the accrual of benefits are extinguished

on the date the participants receive reasonable notice from PBGC

that the plan is going to be terminated.”).

     Moreover, we note that there is no competent evidence in the

record   before   us    that   the   plan   participants   did   not   receive

sufficient     notice    of    the    plan’s   termination.       Conclusory

allegations that they were unaware of the termination, without

more,    are   insufficient    to    survive   PBGC’s   motion   for   summary

judgment.

                                       C.

     We will briefly address the remaining arguments here.              First,

AMFA’s arguments concerning In re Pan Am., 777 F. Supp. 1179, are

unavailing.        Nevertheless,        even    if   the   district      court

misapprehended that decision, and we do not think that it did, a

decision by a New York district court presents us with persuasive,

not controlling authority.

     Second, to the extent that AMFA contends that the propriety of

the termination date is affected by UAL’s failure to provide the

plan participants with adequate notice of the plan’s termination

                                       10
date, we reject that argument. Simply stated, PBGC is charged with

protecting the interests of the pension insurance system, 29 U.S.C.

1302(a), and cannot be required to rely on the actions of third

parties, some of whose interests may be adverse to those of PBGC,

in fulfilling its duty.

                               IV.

     For the foregoing reasons, we hold that, under the applicable

standard, PBGC’s publication of notice of termination of the Ground

Plan on the termination date constituted “reasonable notice” to the

plan participants.   Accordingly, we affirm the judgment of the

district court.

                                                          AFFIRMED

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