This week’s notable decision is Black v. Pension Benefit Guar. Corp., No. 19-1419, __ F.3d __, 2020 WL 5201400 (6th Cir. Sept. 1, 2020). Plaintiffs in this case were retirees of Delphi Corporation, an automotive parts supplier and former subsidiary of General Motors. In 2005, Delphi filed for bankruptcy and sought to terminate its pension benefit plan for its salaried workers, including Plaintiffs. The Pension Benefit Guaranty Corporation (“PBGC”) then stepped in and notified Delphi that while it agreed the plan should be terminated, it would seek to be appointed as statutory trustee of the plan. PBGC filed a new civil action to adjudicate termination and transfer of the plan. The bankruptcy court then confirmed Delphi’s bankruptcy plan, which terminated the pension plan. PBGC responded by voluntarily dismissing its civil action, after which it reached a termination and trusteeship agreement with Delphi.
Continue Reading Sixth Circuit Rules in Favor of PBGC in Dispute over Termination of Delphi Corporation’s Pension Plan
Trustees Abuse Discretion by Interpreting Plan Amendment to Apply to “Pass-through” Payments Transferred to Out-of-State Plans
This week’s notable decision comes out of the Ninth Circuit Court of Appeals in a matter involving employer contributions to a union pension plan, Lehman, et al. v. Nelson, et al., No.18-35321, __F.3d__, 2019 WL 6484254 (9th Cir. Dec. 3, 2019). The Court affirmed the district court’s holding that trustees of the IBEW Pacific Coast Pension Fund (“Pacific Coast Fund”) abused their discretion by interpreting Plan Amendment 24 (an attempted Rehabilitation Plan to right the ship of its underfunded, ‘critical status’ pension plan pursuant to the terms outlined in the Pension Protection Act of 2006 (“PPA”)) to apply to “pass-through” payments to be transferred to out-of-state plans. As part of the Pacific Coast Fund’s rehabilitation plan, the Fund’s trustees used Amendment 24 to the Plan to specifically create “non-benefit contributions” and excluded those from the definition of “contributions” for which contributions would need to be made to a traveler’s home fund.
Continue Reading Trustees Abuse Discretion by Interpreting Plan Amendment to Apply to “Pass-through” Payments Transferred to Out-of-State Plans
Seventh Circuit Holds Employer to Promise of Lifetime Health-care Benefits for Retirees
Retired steelworkers and their families have something to be thankful for this week. And no, it’s not turkey. This week’s notable decision is Stone v. Signode Industrial Group LLC, No. 19-1601, __ F.3d __, 2019 WL 6139680 (7th Cir. Nov. 20, 2019), where the Seventh Circuit held that Signode Industrial Group LLC’s successors were obligated to continue to provide benefits to retirees even after the employer’s termination of the underlying collective bargaining agreement.
Defendant Signode was the sponsor of a health care benefit plan for retired steelworkers, the terms of which it had negotiated with a union. Defendant terminated the underlying benefits agreement and ceased paying benefits to the retirees and their families. Plaintiffs initiated a class action under both ERISA and the Labor-Management Relations Act contending that benefits under the plan were vested and thus could not be terminated. On cross-motions for summary judgment, the district court (Judge Thomas M. Durkin, N.D. Ill.) granted Plaintiffs’ motion and denied Defendants’ motion, holding that Defendant did not have the right to terminate benefits. The district court entered a permanent injunction against Defendants, who appealed.
Continue Reading Seventh Circuit Holds Employer to Promise of Lifetime Health-care Benefits for Retirees