Court Opinion

ID: 2668558
Source: CourtListenerOpinion
Date Created: 2014-04-04 15:20:23.67626+00
Date Added: 2024-06-11T13:23:01.325460
License: Public Domain

UNITED STATES DISTRICT COURT
                    FOR THE DISTRICT OF COLUMBIA

                                )
LEROY MONTGOMERY,               )
                                )
               Plaintiff,       )
                                )   Civil Action No. 07-2234(EGS)
               v.               )
                                )
PENSION BENEFIT GUARANTY        )
CORPORATION,                    )
                                )
               Defendant.       )
                                )

                         MEMORANDUM OPINION

     Plaintiff Leroy Montgomery seeks judicial review of a

February 4, 2005 determination by the Pension Benefit Guaranty

Corporation (“PBGC” or “agency”) that he is not entitled to

benefits under the LTV Steel Hourly Pension Plan (“Plan”), the

successor to the Pension Plan for Hourly Employees of Youngstown

Sheet and Tube Company and Affiliates (“YS&T Plan”).   Although

plaintiff acknowledges that he did not work sufficient calendar

years to qualify for benefits under the YS&T Plan, he claims that

he is entitled to benefits based on the number of hours he

actually worked during that time.   Pending before the Court is

the PBGC’s Motion for Summary Judgment.   Upon consideration of

the motion, response and reply thereto, the applicable law, the

entire administrative record, and for the reasons stated herein,

the Court GRANTS the PBGC’s motion.
I.   Legal Framework

     A.   Statutory Background

     The Employee Retirement Income Security Act of 1974 (“ERISA”

or “Act”), 29 U.S.C. § 1001 et seq., is a “comprehensive and

reticulated statute” imposing a wide range of requirements on

private pension plans.    Nachman Corp. v. Pension Benefit Guar.

Corp., 446 U.S. 359, 361 (1980).       One such requirement contained

in ERISA is minimum vesting standards, which include a ceiling on

the amount of time an employee may be required to work before his

benefits vest.    See 29 U.S.C. § 1053(a)(2).     These requirements

were enacted to protect employees who were otherwise being denied

access to benefits despite long periods of employment.       See Holt

v. Winpisinger, 811 F.2d 1532, 1536-37 (D.C. Cir. 1987) (“One of

ERISA’s principal aims in reforming the Nation’s employee pension

plans was to establish vesting ceilings so that employees with

lengthy service would no longer lose accrued benefits simply

because their employment terminated before they became eligible

to retire.”).    The vesting provisions contained in ERISA,

however, apply only prospectively to “persons actually employed

when [ERISA] became effective” on January 1, 1976.       Cohen v.

Martin’s, 694 F.2d 296, 298 (2d Cir. 1982) (reasoning that

because the vesting requirements in 29 U.S.C. § 1053(a) refer to

“employees” and are subject to the applicability provision in §

1061(b)(2), which limits application to “plan years beginning

                                   2
after December 31, 1975," § 1053(a)’s requirements apply only to

individuals employed as of that date); Fremont v. McGraw-Edison

Co., 606 F.2d 752, 755 (7th Cir. 1979) (applying similar

reasoning and concluding that § 1053(a) “only protects against

forfeiture the benefits of those who are in an employee status on

January 1, 1976, or thereafter”); see also Stewart v. Nat’l

Shopmen Pension Fund, 563 F. Supp. 773, 777 (D.D.C. 1983)

(relying on above interpretations of the vesting requirements in

distinguishing another ERISA provision on the basis that the

latter provision referred to “participants” rather than

“employees”), rev’d on other grounds, 730 F.2d 1552 (D.C. Cir.

1984).

     ERISA, through Title IV of the Act, also established a

mandatory federal insurance program to protect certain private-

sector employees and their beneficiaries from being “deprived of

anticipated retirement benefits by the termination of pension

plans before sufficient funds have been accumulated in the

plans.”   Pension Ben. Guaranty Corp. v. LTV Corp., 496 U.S. 633,

637 (1990) (quoting Pension Benefit Guar. Corp. v. R.A. Gray &

Co., 467 U.S. 717, 720 (1984)); see also Nachman Corp., 446 U.S.

at 374 (“One of Congress’ central purposes in enacting this

complex legislation was to prevent the ‘great personal tragedy’

suffered by employees whose vested benefits are not paid when

pension plans are terminated.” (footnote omitted)).   In addition,

                                 3
Title IV created the PBGC, a wholly owned U.S. corporation that

administers the insurance program.   See 29 U.S.C. § 1301 et seq.

Thus, “[w]hen a plan covered under Title IV terminates with

insufficient assets to satisfy its pension obligations to the

employees, the PBGC becomes trustee of the plan, taking over the

plan’s assets and liabilities.   The PBGC then uses the plan’s

assets to cover what it can of the benefit obligations.”       LTV

Corp., 496 U.S. at 637 (citing 29 U.S.C. § 1344).

     The PBGC guarantees “all nonforfeitable benefits,” 29 U.S.C.

§ 1322, which are defined as benefits “for which a participant

has satisfied the conditions of entitlement under the plan.”         Id.

§ 1301(a)(8).   When the PBGC becomes the trustee of a terminated

plan, the agency obtains both plan and participant records and

determines how much each participant is or will be due.       Def.’s

Mot. Summ. J. at 4.   The agency then sends a determination letter

to the participant, who may challenge the benefit determination

by appealing to the PBGC Appeals Board.    See 29 C.F.R. §§

4003.21, 4003.51.   “In reaching its decision, the Appeals Board

shall consider those portions of the file relating to the initial

determination, all material submitted by the appellant and any

third parties in connection with the appeal, and any additional

information submitted by PBGC staff.”     Id. § 4003.59(a).    Such a

decision constitutes the PBGC’s final agency action.     Id. §

4003.59(b).   After exhausting these administrative remedies, a

                                 4
plan participant may then seek judicial review of the PGBC’s

determination.    29 U.S.C. § 1303(f).

     B.   Standard of Review

     Under Rule 56 of the Federal Rules of Civil Procedure,

summary judgment is appropriate if the pleadings on file,

together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that the moving party

is entitled to judgment as a matter of law.      Fed. R. Civ. P.

56(c).    Material facts are those that “might affect the outcome

of the suit under the governing law.”       Anderson v. Liberty Lobby,

Inc., 477 U.S. 242, 248 (1986).    The party seeking summary

judgment bears the initial burden of demonstrating an absence of

a genuine issue of material fact.     Celotex Corp. v. Catrett, 477

U.S. 317, 322 (1986); Tao v. Freeh, 27 F.3d 635, 638 (D.C. Cir.

1994).    In considering whether there is a triable issue of fact,

the court must draw all reasonable inferences in favor of the

non-moving party.    Tao, 27 F.3d at 638.    The non-moving party’s

opposition, however, must consist of more than mere unsupported

allegations or denials and must be supported by affidavits or

other competent evidence setting forth specific facts showing

that there is a genuine issue for trial.      Fed. R. Civ. P. 56(e);

see Celotex Corp., 477 U.S. at 324.

     As a government agency, the PBGC is subject to the

provisions of the Administrative Procedure Act (“APA”).      5 U.S.C.

                                  5
§ 551 et seq.; see LTV Corp., 496 U.S. at 636.   When reviewing

agency action pursuant to the APA, the Court must determine

whether the challenged decision is “arbitrary, capricious, an

abuse of discretion, or otherwise not in accordance with law.”     5

U.S.C. § 706(2)(A).   In applying the “arbitrary and capricious”

standard, a court “may not supply a reasoned basis for the

agency’s action that the agency itself has not given,” but a

court should “uphold a decision of less than ideal clarity if the

agency’s path may reasonably be discerned.”   Motor Vehicle Mfrs.

Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983).

Upon review of an agency’s action, the Court must engage in a

“thorough, probing, in-depth review” to determine “whether the

decision was based on a consideration of the relevant factors and

whether there has been a clear error of judgment.”   Citizens to

Preserve Overton Park v. Volpe, 401 U.S. 402, 415-16 (1971).     The

Court’s review, however, is limited to the administrative record

that was before the agency at the time that its decision was

made.   5 U.S.C. § 706; Florida Power & Light Co. v. Lorian, 470

U.S. 729, 743-44 (1985).

II.   Factual and Procedural Background

      Plaintiff was employed by Youngstown Sheet and Tube Company

(“YS&T”) from May 19, 1959 until March 17, 1973 – a period

totaling approximately thirteen years and nine months.

                                 6
Administrative Record (“A.R.”) 7.          As a YS&T employee, he was a

participant in the YS&T Plan.        See generally id. at 122-81.

Plaintiff claims that he left YS&T because he believed that the

work environment was unhealthy, and attributes his subsequently

diagnosed lung cancer to his employment at YS&T.              Id. at 114-15.

In June 1991, plaintiff applied to LTV Steel Company, the

successor to YS&T, for pension benefits.           Id. at 7.    The

administrative record does not reveal the precise disposition of

the application, but given plaintiff’s subsequent application to

the PBGC for benefits, it appears that plaintiff’s LTV

application was denied.

      In September 2004, after the PBGC became the statutory

trustee of the Plan, plaintiff applied to the agency for

benefits.1   Id. at 4-5.     The PBGC issued a determination letter

in October 2004, finding that plaintiff was not entitled to a

pension benefit because he did not meet the fifteen-year service

requirement contained in the YS&T Plan.           Id. at 14.

      Plaintiff then filed an appeal with the PBGC Appeals Board,

raising five issues for review.           See id. at 18-19.    Specifically,

plaintiff claimed that he qualified for pension benefits because

      1
         Plaintiff’s daughter, Vikki Montgomery, acted on her father’s behalf
in most of the proceedings before the PBGC. Moreover, various parts of the
administrative record refer to the claimant as the “Estate of Leroy
Montgomery.” Plaintiff is alive, however, so that designation was erroneous.
This Court will not distinguish between plaintiff and his daughter when
discussing the proceedings below, but notes that plaintiff was at no point
represented by legal counsel at the administrative level.

                                      7
(1) the fifteen-year service requirement did not apply because of

the vesting requirements contained in 29 U.S.C. § 1053(a); (2) he

had worked “enough overtime hours (500) to qualify for the 15

years”; (3) he had served in the military for a number of years

before his employment at YS&T began; (4) he retired on disability

in 1990; and (5) other employees who had worked at the company

for less time than he had were receiving pension benefits.      Id.

     The Appeals Board denied plaintiff’s appeal in February

2005.   First, it explained that 29 U.S.C. § 1053(a) did not apply

to plaintiff because his employment with YS&T ended before 1974.

Id. at 28.   With respect to plaintiff’s overtime hours, the

Appeals Board stated that the YS&T Plan “measures continuous

service from hire date until continuous service is broken,

regardless of how many hours are worked.”      Id.   The Appeals Board

thus concluded that “overtime may not be used to increase

[plaintiff’s] service.”     Id.   The PBGC likewise rejected

plaintiff’s claims regarding his military service and disability

status, explaining that neither of those entitled him to pension

benefits under either statutory provisions or the YS&T Plan

language.    Id. at 30.

     Finally, the Appeals Board addressed plaintiff’s statement

about other employees receiving pensions while having worked for

less time than plaintiff:

     Plan provisions are complicated and have varying
     effective dates. For example, with only 5 years of

                                    8
       service a Plan participant who worked after 1988 could
       earn a vested benefit. Thus, seemingly similarly-
       situated participants may be affected by different Plan
       provisions. Therefore, other participants receiving a
       benefit with less service than [plaintiff] do not show
       [plaintiff] is entitled to a benefit.

Id.    The Appeals Board also explained that the PBGC “will always,

even after an appeal is closed, consider any new, specific

evidence that you may be entitled to a different benefit.”       Id.

Plaintiff corresponded with the agency two more times in 2005,

but the agency maintained its position that plaintiff was not

entitled to benefits under the YS&T Plan.

       Plaintiff, acting through counsel, filed the instant lawsuit

in December 2007.    In his Complaint, plaintiff alleges that the

PBGC’s determination “was an abuse of discretion and was not in

accordance with law” because (1) plaintiff worked “a substantial

number of overtime hours such that he effectively had far more

than 15 years of continuous service”; (2) hours of service, not

calendar years, were used to determine pension eligibility for

other YS&T Plan participants whose employment ended before ERISA

went into effect; and (3) the fifteen-year service requirement

was “unreasonable and unconscionable” because it was actively

concealed from plaintiff and other YS&T Plan participants by the

company.    Compl. ¶ 13.   The PBGC’s Motion for Summary Judgment,

filed in May 2008, is now ripe for decision by this Court.

III.    Discussion

                                   9
      The agency’s argument in favor of summary judgment is

straightforward, mirroring the determination that it made in the

administrative proceedings:       Plaintiff “did not have the

requisite years of service to receive a benefit under the YS&T

Plan that were in effect when he retired in 1973.            Therefore, he

is not entitled to a benefit.”        Def.’s Mot. Summ. J. at 3.        In

particular, the PBGC argues that section 2.6 of the Pension

Agreement for Employees of Youngstown Sheet and Tube Company

(effective July 31, 1972) (“the YS&T Agreement”) unambiguously

requires a participant to have fifteen years of continuous

service in order to be eligible for benefits under the YS&T

Plan.2    Furthermore, according to the PBGC, section 5.1 of the

YS&T Agreement makes clear that service “is measured by the

length of time that a participant was employed, not the number of

hours worked.”     Def.’s Mot. Summ. J. at 9.       The agency therefore

argues that even if plaintiff could demonstrate he worked

overtime hours, such a showing would not be relevant to his

benefit determination.      Id.

      Plaintiff, in his Opposition to the agency’s Motion for

Summary Judgment, acknowledges that “the full extent of [his

      2
         Although multiple pension agreements – reflecting the various plans
that have succeeded the YS&T Agreement – appear in the administrative record,
the parties agree that the YS&T Agreement is the governing document in this
case. See Def.’s Mot. Summ. J. at 8 (referring to the YS&T Agreement as the
“governing document for the YS&T Plan in 1973”); Pl.’s Opp’n to Def.’s Mot.
Summ. J. at 8 (citing to the YS&T Agreement when referring to “[t]he relevant
terms of the pension agreement in effect at the time of Plaintiff’s
resignation”).

                                     10
overtime hours] was not developed in the administrative record.”

Pl.’s Opp’n to Def.’s Mot. Summ. J. at 4.          He argues, however,

that “YS&T’s practice was to calculate a participant’s years of

continuous service based on the total number of hours worked

rather than on the number of calendar years the individual was

employed.”3   Id. at 8.    According to plaintiff, this past

practice created an implied term in the YS&T Agreement.            See id.

at 7.   Furthermore, he claims that because the administrative

record does not contain evidence as to “whether this implied

contractual term existed and, if it did, whether Plaintiff had

sufficient overtime hours to qualify for a pension benefit under

it,” the Court should remand to the agency for additional

investigation.     Id. at 8 (citing Florida Power & Light Co., 470

U.S. at 743-44).

     Upon review of the relevant terms of the YS&T Agreement, the

Court concludes that the PBGC’s interpretation of that agreement

is not only reasonable, but indeed is the only reasonable

reading.   See, e.g., United Mine Workers of Am. 1974 Pension v.

      3
         The PBGC argues that plaintiff failed to make this argument during
the administrative proceedings and that it is therefore outside the scope of
this Court’s appropriate consideration. Def.’s Mot. Summ. J. at 10. As
discussed above, a review of the administrative record demonstrates that
plaintiff did raise the argument that the overtime hours were sufficient to
qualify him for a benefit under the YS&T Plan. See A.R. 18-19. That argument
must be construed liberally because plaintiff proceeded pro se before the
agency. See Calloway v. Brownlee, 366 F. Supp. 2d 43, 55 (D.D.C. 2005)
(“[T]his Court and the agency must take pains to protect the rights of pro se
parties against the consequences of technical errors.” (citing Haines v.
Kerner, 404 U.S. 519, 520 (1972)). The Court therefore rejects the PBGC’s
argument that this particular claim has been waived.

                                     11
Pittston Co., 984 F.2d 469, 473 (D.C. Cir. 1993) (“In cases

requiring the court to construe the meaning of a contract, the

dispute may be resolved as a matter of law if the contested

agreement admits of only one reasonable interpretation.”).              As

the agency notes, section 5.1 does not speak in terms of hours.

The term “hours” actually appears nowhere in the YS&T Agreement.

Rather, section 5.1 measures continuous service from the hire

date to the date that a participant terminates employment with

the company.    A.R. 36 (YS&T Agreement § 5.1) (calculating

“continuous service” as service “from the participant’s last

hiring date” to a number of fixed dates, including resignation,

discharge, and termination).

      In short, the unambiguous terms of the YS&T Agreement simply

do not contemplate the consideration of hours worked – whether

regular hours or overtime hours – in the calculation of

continuous service.4     This Court therefore rejects plaintiff’s

contention that the administrative record is somehow incomplete

for failing to demonstrate how many overtime hours plaintiff

actually worked.     Contrary to plaintiff’s argument, the Court

agrees with the PBGC’s assertion that such information is

irrelevant to the determination of benefits in this case and that

a remand to the agency is unnecessary.

      4
         Likewise, the application for benefits filled out by plaintiff in
1991 included spaces in which to report years, months, and days of employment,
but provided no place to account for hours worked. A.R. 7.

                                     12
      In light of the plain and unambiguous language of the YS&T

Agreement, the Court is also unpersuaded by plaintiff’s argument

that an implied term of the agreement was created by the

company’s alleged practice of calculating continuous service

based on hours worked.      Although plaintiff correctly states that

“[a]n employer’s established past practice can become an implied

term of a collective bargaining agreement,” Bonnell/Tredegar

Industries, Inc. v. NLRB, 46 F.3d 339, 344 (4th Cir. 1995), the

agency did not abuse its discretion in this case by failing to

investigate whether – more than thirty years ago – YS&T

calculated the continuous service of other employees in a manner

that would have been wholly inconsistent with the express,

unambiguous terms of the YS&T Agreement.

      Finally, the Court finds significant that a 1980 regulation

promulgated by the Department of Treasury, an agency partially

responsible for administering ERISA, expressly authorizes an

employers’ use of the exact method contained in the YS&T Plan

when calculating a plan participant’s length of service for

vesting purposes.5     See 26 C.F.R. § 1.410(a)-7(a); Johnson v.

Buckley, 356 F.3d 1067, 1072 (9th Cir. 2004) (upholding against

      5
         Of course, ERISA prohibits employers to require the length of service
required by the YS&T Plan. But plaintiff has apparently conceded in this case
that 29 U.S.C. § 1053(a) does not apply to him. See generally Compl. (no
reference to ERISA’s vesting requirements). The Court also agrees with the
agency that plaintiff abandoned his argument that the YS&T Plan’s vesting
requirement was unconscionable and unreasonable by failing to address that
claim in his opposition to the PBGC’s motion. Based on that conclusion, the
Court need not address whether that argument was properly presented at the
administrative level.

                                     13
challenge the “elapsed-time regulation,” which permits to

calculate entitlement to benefits “with reference to the total

period of time which elapses while the employee is employed”

(quoting 26 C.F.R. § 1.410(a)-7(a)(1)(ii)); Swaida v. IBM

Retirement Plan, 570 F. Supp. 482, 490 (S.D.N.Y. 1983) (same),

aff’d 728 F.2d 159 (2d Cir. 1984).     The regulation lends weight

to the PBGC’s contention that its interpretation of the YS&T

Agreement is reasonable, particularly because the method

described and authorized by the 1980 regulation “was a reflection

of the manner in which vesting and benefit accrual for many

private retirement benefit plans were already being calculated

across the country.”    Johnson, 356 F.3d at 1072; see also Swaida,

570 F. Supp. at 489 (explaining that before the passage of ERISA,

the elapsed-time method “was the almost universal method . . . ,

accepted by labor and management alike to measure an employee’s

service for vesting purposes”).

      In sum, the Court agrees with the PBGC that plaintiff is not

entitled to benefits under the YS&T Plan because he did not meet

the continuous-service requirement in the YS&T Agreement.    The

agency’s determination therefore could not have been “arbitrary,

capricious, an abuse of discretion, or otherwise not in

accordance with law.”   5 U.S.C. § 706(2)(A).

IV.   Conclusion

                                  14
     For the foregoing reasons, the PBGC’s Motion for Summary

Judgment is GRANTED.   An appropriate Order accompanies this

Memorandum Opinion.

Signed:   Emmet G. Sullivan
          United States District Judge
          March 2, 2009

                                15