Coleman v. Pension Benefit Guaranty Corp.

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 17, 2006 Decided December 5, 2006
Reissued December 11, 2006

No. 05-5496

RICHARD COLEMAN, ET AL.,
APPELLANTS

v.

PENSION BENEFIT GUARANTY CORPORATION,
A PUBLIC CORPORATION,
APPELLEE

Appeal from the United States District Court
for the District of Columbia
(No. 99cv00278)

David B. Rodes argued the cause for appellants. With him
on the briefs were John T. Tierney, III and Betsy Lehrfeld.
John A. Menke, Assistant Chief Counsel, Pension Benefit
Guaranty Corporation, argued the cause for appellee. With him
on the brief were Jeffrey B. Cohen, Chief Counsel, Israel
Goldowitz, Deputy Chief Counsel, Paula J. Connelly, Assistant
Chief Counsel, and Erika E. Barnes, Attorney. Nancy S.
Heermans, Associate Chief Counsel, entered an appearance.
Before: SENTELLE and KAVANAUGH, Circuit Judges, and
EDWARDS, Senior Circuit Judge.
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Opinion for the Court filed Per Curiam:
Per Curiam: Appellants, a certified class of former
employees of McLouth Steel Products Corporation
(“McLouth”), seek review of a grant of summary judgment in
favor of the Pension Benefit Guaranty Corporation (“PBGC”),
successor to McLouth’s terminated pension plan (the “Products
Plan”). Appellants filed suit under §§ 406, 502 and 4003(f) of
the Employee Retirement Income Security Act of 1974, 29
U.S.C. §§ 1106, 1132, 1303(f) (2000), claiming that, under the
Products Plan, they are entitled to (1) mutual consent benefits
that attach when qualifying individuals experience breaks in
continuous service and (2) shutdown benefits that attach when
a plant is permanently shutdown. The District Court rejected
appellants’ claims. Coleman v. PBGC, No. Civ. A. 99-00278
(D.D.C. Nov. 28, 2005). We affirm for the reasons stated in the
decision of the District Court.
* * *
The Retirement Equity Act of 1984 (“REA”), Pub. L. No.
98-397, 98 Stat. 1426 (codified as amended in scattered sections
of 26 U.S.C. and 29 U.S.C.) prohibits discretionary benefit
provisions in pension plans. Appellants contend that McLouth
failed to comply with Treasury Regulation 1.411(d)-4, Q&A 8,
which governs the amendment of pension plans to remove
mutual consent pension benefits (a type of discretionary
benefit). The regulation required McLouth to decide, by
November 1, 1989, to terminate the discretionary benefits and
to amend the plan, by October 31, 1995, to reflect that decision.
The regulation explicitly states that there is no requirement that
the plan sponsor memorialize or document the decision made,
and requires only that the plan be administered in accordance
with that decision. In short, it is an “operational compliance
requirement.” Treas. Reg. 1.411(d)-4, Q&A 8(c).
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Appellants, who during the relevant period were members
of the United Steelworkers of America (the “Union”), contend
that, while McLouth and the Union agreed to amend the plan to
remove the discretionary benefit provisions, the amendment was
neither properly executed nor authorized. The District Court
rejected this allegation, finding that “[t]he record in this case is
clear that the Union and McLouth did ‘mutually agree’ . . . that
subsections 2.6(d) and 2.7(d), the mutual consent provisions,
would be eliminated from the Products Plan in order to comply
with the relevant Treasury regulations.” Coleman, No. Civ. A.
99-00278, slip op. at 25. We agree. The relevant parties did
agree and this mutual agreement is all that is required for
amendment under the terms of the Products Plan. Appellants’
contention that the amendment is defective because it did not
conform to what appellants argue is McLouth’s standard
practice for corporate action is without merit.
Similarly unavailing is appellants’ allegation that McLouth
did not in fact administer the plan in accordance with its
decision not to grant mutual consent benefits. The sole
“evidence” to which they point in support of their claim is an
unsworn declaration by the former recording secretary for the
Union, averring that he “recall[ed] at least one (1) employee of
McLouth Steel Products was granted and received a mutual
consent [benefit] in the early 1990’s.” Joint Appendix 591a.
While a party challenging summary judgment need only allege
facts that, if true, create a dispute concerning a material fact,
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 255
(1986), “some statements are so conclusory as to come within an
exception to that rule,” Greene v. Dalton, 164 F.3d 671, 675
(D.C. Cir. 1999). The recording secretary’s declaration is such
a statement and does not preclude a grant of summary judgment.
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* * *
Next, appellants contend that they are entitled to shutdown
benefits because the plant was permanently shut down prior to
the termination of the Products Plan. They cite the layoff of
most McLouth employees and the shutdown of production as
evidence of a permanent shutdown of the plant. The District
Court rejected this claim, as do we. Pursuant to a Memorandum
of Understanding (“MOU”), McLouth, the Union, and PBGC
agreed that PBGC would not unilaterally terminate the plan until
just before the plant was to be shut down. In exchange for
PBGC’s forbearance from terminating the plan (and allowing
plan beneficiaries to continue accruing benefits), the parties
agreed that the termination date of the Products Plan would be
one day before the plant was permanently shut down. The
principal effects of the MOU were two-fold: it ensured that
PBGC would not be liable for shutdown benefits; and it allowed
employees to continue accruing benefits until the plant was
ready to be shut down. On August 7, 1996, both McLouth and
the Union represented to PBGC that a permanent shutdown was
imminent. PBGC terminated the Products Plan on August 13,
1996, and the plant was permanently shut down the next day.
Appellants insist that, because employees were laid off
before the plan was terminated and had no expectation of
returning to work, the plant was closed permanently before
termination of the Products Plan. We disagree. As the District
Court recognized, “neither McLouth nor the Union considered
the shutdown in production to be the equivalent of a ‘permanent
shutdown’ for purposes of the Products Plan.” Coleman, No.
Civ. A. 99-00278, slip op. at 20. The District Court also
concluded that PBGC reasonably relied on the representations
of McLouth and the Union in determining when the plant was to
be permanently shut down. Id. at 19. We agree.
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Because there are no genuine issues of material fact, and
because the District Court correctly construed and applied the
agreements, Treasury Regulation, and statutory provisions at
issue in this case, summary judgment was fully justified. We
therefore affirm.
So ordered.