ROSEMARY M. COLLYER, District Judge.
What happens when a union and employer agree to change the employee pension plan but the plan never gets changed, the agreed change is dropped from the next contract, the employer goes bankrupt,
Once the facts are sorted and the questions clarified, the answers are plain. Plaintiffs are (1) a former employee of Sandusky, Limited and (2) his representative union. They complain that PBGC has underpaid Mr. Burmeister's pension benefit because PBGC ignored negotiated changes to benefit terms embodied in a 1999-2002 collective bargaining agreement, before PBGC assumed responsibility in 2006. Two things are clear: whatever the meaning of the parties' negotiations in 1999, their agreement to change benefits was never reflected in an amendment to the pension plan and was not included in the 2002-2007 collective bargaining agreement (during which Sandusky filed for bankruptcy protection). The Court finds that PBGC's Appeals Board did not violate the Administrative Procedure Act ("APA"), 5 U.S.C. § 701 et seq., when it concluded that PBGC correctly determined Plaintiff Franklin Burmeister's monthly pension benefit in 2011 according to the terms of the pension plan without the temporary 1999-2002 contract change. Accordingly, PBGC's motion for summary judgment will be granted and Plaintiffs' cross-motion for summary judgment will be denied.
Plaintiff Franklin Burmeister was formerly employed by Sandusky, Limited and was represented by the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, Local 1957 ("UAW") during his employment there. The UAW is also a Plaintiff. The UAW represented a bargaining unit of Sandusky employees for many years and negotiated repeated collective bargaining agreements on their behalf. Defendant Pension Benefit Guaranty Corporation ("PBGC") is a wholly-owned government corporation created under federal law to administer the pension termination insurance program established under Title IV of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1301-1461. See id. § 1302. When an underfunded pension plan covered under Title IV terminates, PBGC typically becomes the statutory trustee and pays benefits to participants and beneficiaries under the plan, subject to statutory limits. See id. §§ 1341, 1342.
Sandusky established the Sandusky, Limited Pension Plan for Hourly Employees (the "Plan") effective January 1, 1972. Sandusky maintained the Plan separate from its Collective Bargaining Agreement ("CBA"), but the CBA identified and incorporated the Plan. The UAW negotiated a collective bargaining agreement covering 1999 to 2002 ("1999-2002 CBA") on behalf of Sandusky's employees. Plaintiffs allege that during the negotiations leading up to the 1999-2002 CBA, "the parties agreed to eliminate all reduction factors in the pension plan" for those employees retiring early. Compl. ¶ 7. The relevant paragraph of the 1999-2002 CBA provided:
Sandusky amended the Plan in 2000 and subsequently amended and restated it, effective January 1, 2003. AR 10. Plaintiffs allege that when Sandusky amended and restated the Plan in 2003, Sandusky failed to include the elimination of pension reduction factors in the Plan as required by the 1999 collective bargaining negotiations. They also allege that neither the UAW nor any bargaining unit employee was part of the Plan update process. The parties agree, however, that the terms of the Plan as of January 1, 2003, required that a participant's benefit be reduced for early retirement (unless certain exceptions, not applicable here, applied).
Sandusky and the UAW reached agreement on a new collective bargaining agreement, effective July 1, 2002 to July 1, 2007 ("2002-2007 CBA"), which replaced the predecessor 1999-2002 CBA. Plaintiffs acknowledge that the relevant terms in the 2002-2007 CBA were changed and stated:
AR 127. Plaintiffs do not dispute that the 2002-2007 CBA did not contain a provision eliminating pension reduction factors for early retirees.
On November 8, 2006, Sandusky filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code, 11 U.S.C. § 1101 et seq. Sandusky ceased all operations on December 22, 2006. Pursuant to 29 U.S.C. § 1348, the Plan was terminated effective December 22, 2006, and PBGC became the statutory trustee of the Plan.
Mr. Burmeister began working at Sandusky in October 1970 and was actively employed by Sandusky until December 22, 2006 when operations ceased. He retired on February 1, 2010, at 60 years of age.
By decision dated June 8, 2011, PBGC's Appeals Board denied Mr. Burmeister's
Mr. Burmeister and the UAW filed suit on June 15, 2012.
Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment shall be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); accord Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "In a case involving review of a final agency action under the Administrative Procedure Act, 5 U.S.C. § 706, however, the standard set forth in Rule 56[] does not apply because of the limited role of a court in reviewing the administrative record." Sierra Club v. Mainella, 459 F.Supp.2d 76, 89 (D.D.C. 2006); see also Charter Operators of Alaska v. Blank, 844 F.Supp.2d 122, 126-27 (D.D.C.2012); Buckingham v. Mabus, 772 F.Supp.2d 295, 300 (D.D.C.2011). Under the APA, the agency's role is to resolve factual issues to reach a decision supported by the administrative record, while "the function of the district court is to determine whether or not as a matter of law the evidence in the administrative record permitted the agency to make the decision it did." Sierra Club, 459 F.Supp.2d at 90 (quoting Occidental Eng'g. Co. v. INS, 753 F.2d 766, 769 (9th Cir. 1985) (internal quotation marks omitted)). "Summary judgment thus serves as the mechanism for deciding, as a matter of law, whether the agency action is supported by the administrative record and otherwise consistent with the APA standard of review." Id. (citing Richards v. INS, 554 F.2d 1173, 1177 & n. 28 (D.C.Cir. 1977)).
A reviewing court shall "hold unlawful and set aside agency action, findings,
Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983). "The scope of review under the `arbitrary and capricious' standard is narrow and a court is not to substitute its judgment for that of the agency." Id. Rather, agency action is normally "entitled to a presumption of regularity." Citizens to Pres. Overton Park, Inc. v. Volpe, 401 U.S. 402, 415, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971), abrogated on other grounds by Califano v. Sanders, 430 U.S. 99, 97 S.Ct. 980, 51 L.Ed.2d 192 (1977).
It bears stating at the outset that the issue before the Court is whether PBGC's Appeals Board complied with the requirements of the APA when it concluded that PBGC correctly determined Mr. Burmeister's monthly pension benefit. It is not whether Sandusky violated any contract term when it did not amend the Plan in 2000 to eliminate reduction factors as provided in the 1999-2002 CBA or when it did not include such language in the 2002-2007 CBA and then restated the Plan in 2003 without eliminating reduction factors.
The facts are not disputed. Mr. Burmeister applied for pension benefits before the Normal Retirement Age of 65 under the Plan. The Plan requires an actuarial reduction for early retirement benefits unless certain inapplicable exceptions (Disability Retirement, Early Retirement Window, or Special Early Retirement) apply. Mr. Burmeister did not qualify for any exception. No provision in the 2002-2007 CBA — the collective bargaining agreement in effect when the Plan terminated on December 22, 2006 — required elimination of reduction factors for early retirees. The Court finds that the provisions of the Plan and the collective bargaining agreement in effect when the Plan terminated fully support the decision of the Appeals Board sustaining PBGC's calculations of Mr. Burmeister's monthly pension benefit.
Plaintiffs do not contend that the Appeals Board misread the 2002-2007 CBA or that it was not the effective collective bargaining agreement as of December 22, 2006, when PBGC took over the Plan. Instead, acknowledging the absence of relevant language in that contract, they ask
Plaintiffs' argument does not reflect the legitimate scope of collective bargaining or their contracts. While the 1999-2002 CBA may have eliminated "all" factors that could reduce an employee's pension payment, by the 2002 negotiations, the parties' focus appears to have been elsewhere. The language concerning elimination of reduction factors was omitted and additional contributions and a bonus on retirement included. Thus, only an employee who happened to retire during the term of the 1999-2002 CBA enjoyed the benefit of the "elimination of reduction factors" that the Union had obtained in that contract. As the employees' exclusive bargaining representative, the Union had full authority to negotiate for the best terms it could, even if achieving a contract for 2002-2007 meant foregoing a benefit obtained only in the predecessor contract.
For the reasons stated above, PBGC's Motion for Summary Judgment [Dkt. 14] will be granted, and Plaintiffs' Cross-Motion for Summary Judgment [Dkt. 17] will be denied. A memorializing Order accompanies this Opinion.