United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued May 5, 2009 Decided July 10, 2009
No. 08-5524
THOMAS G. DAVIS, ET AL.,
APPELLANTS
v.
PENSION BENEFIT GUARANTY CORPORATION,
APPELLEE
Appeal from the United States District Court
for the District of Columbia
(No. 1:08-cv-01064-JR)
Anthony F. Shelley argued the cause for appellants. With
him on the brief for stay or injunction pending appeal and for
expedited consideration and the reply was Timothy P. O'Toole.
James J. Armbruster, Assistant Chief Counsel, Pension
Benefit Guaranty Corporation, argued the cause for appellee.
With him on the opposition and brief to dispose of the appeal in
its entirety were Judith R. Starr, General Counsel, Israel
Goldowitz, Chief Counsel, Paula J. Connelly and Garth D.
Wilson, Assistant Chief Counsel, and Jean Marie Breen,
Attorney.
Before: HENDERSON, BROWN, and KAVANAUGH, Circuit
Judges.
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Opinion for the Court filed by Circuit Judge BROWN.
Concurring opinion filed by Circuit Judge KAVANAUGH,
with whom Circuit Judge HENDERSON joins.
BROWN, Circuit Judge: Approximately 1,700 U.S. Airways
current and retired pilots are in the midst of a lawsuit
challenging benefit determinations of the Pension Benefit
Guaranty Corporation (“PBGC”). A subset of 111 plaintiffs
(“the pilots”) requested a preliminary injunction to prohibit the
PBGC from implementing its benefit determinations while the
suit is pending. After considering the four factors for a
preliminary injunction, the district court denied the motion.
Because the pilots show neither a substantial likelihood of
success on the merits nor irreparable harm, we affirm.
I. Background
On August 11, 2002, U.S. Airways filed for Chapter 11
reorganization in the bankruptcy court for the Eastern District of
Virginia. See generally In re U.S. Airways Group, Inc., 296
B.R. 734 (Bankr. E.D. Va. 2003). The bankruptcy court found
the reorganization plan would create “a serious funding shortfall
for the [company’s] defined benefit pension plan.” Id. at 738.
The company moved for judicial findings to permit distress
termination of the pilots’ retirement plan and notified the PBGC
of its intent to terminate the plan. The bankruptcy court
approved distress termination, and U.S. Airways agreed with the
PBGC to set March 31, 2003 as the termination date of the plan.
The PBGC is a federal government corporation — created
by the Employee Retirement Income Security Act of 1974
(“ERISA”) — that insures private sector defined-benefit pension
plans. See 29 U.S.C. § 1302. The PBGC acts as guarantor of
underfunded pension plans, paying benefits to participants such
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as the pilots in this action. See id. § 1322. When a plan is
underfunded, the PBGC’s benefit payments are subject to
statutory and regulatory limits. See, e.g., id. §§ 1322, 1361; 29
C.F.R. § 4044.13. ERISA permits the PBGC to serve as trustee
to administer an underfunded plan in addition to its role as
guarantor. 29 U.S.C. § 1342(b). The PBGC has applied to serve
as trustee in every terminated plan, and courts typically grant its
application. Pineiro v. PBGC, 318 F. Supp. 2d 67, 72 (S.D.N.Y.
2003). Following this pattern, the PBGC was appointed to serve
as trustee of the U.S. Airways retirement plan.
Under its usual practice, the PBGC began making initial
payments to pilots based on an estimate of what the benefits
would be. See Boivin v. U.S. Airways, Inc., 297 F. Supp. 2d 110,
114 (D.D.C. 2003). The parties agree that it normally takes the
PBGC between two and three years to make a final, formal
determination of benefits for each participant. See id. Without
waiting for the final determination, a group of pilots challenged
the estimated benefits. This court dismissed the claim for failure
to exhaust, holding the pilots must await the final determination.
Boivin v. U.S. Airways, Inc., 446 F.3d 148, 158–59 (D.C. Cir.
2006).
When a final benefits determination differs from the
estimate, the PBGC either repays the shortfall or collects the
surplus. If a participant was initially paid a lump-sum estimate
and the PBGC later determined the estimate to be too high, it
requests repayment of the surplus amount in a process it calls
“recovery.” If a participant is still receiving monthly benefit
payments based on an initial estimate but the PBGC has
determined that the estimate was too high, it reduces the amount
of future monthly payments to recover the surplus in a process
it calls “recoupment.”
In February 2008, the PBGC finalized its formal benefit
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determinations and notified 111 out of the 1,700 plaintiffs that
it would be seeking recovery or recoupment, depending on the
circumstance. According to the PBGC, of the 111 pilots, 74
were sent recovery notices. Jones Decl. at 4. Those 74 pilots,
on average, received lump-sum payments of over $680,000. Id.
On average, the PBGC is seeking $7,049.67 in recovery, and no
pilot’s recovery amount is more than 1.53% of the initial lump-
sum amount. Id. The other 37 pilots are still receiving monthly
payments; as to them, the PBGC is seeking an average
recoupment of $59.86 per month. Id. No pilot’s recoupment is
more than 10% of their current monthly payment. Id.
The 111 pilots sought a preliminary injunction against the
PBGC’s recovery and recoupment efforts. The district court
denied the injunction, Davis v. PBGC, 596 F. Supp. 2d 1, 5
(D.D.C. 2008), and we affirm.
II. Standard of Review
The denial (or grant) of a preliminary injunction is
classified as an immediately appealable interlocutory order. 28
U.S.C. § 1292(a)(1). On a motion for a preliminary injunction,
the district court must balance four factors: (1) the movant’s
showing of a substantial likelihood of success on the merits, (2)
irreparable harm to the movant, (3) substantial harm to the non-
movant, and (4) public interest. CFGC v. England, 454 F.3d
290, 297 (D.C. Cir. 2006). This Court “review[s] a district
court’s weighing of the four preliminary injunction factors and
its ultimate decision to issue or deny such relief for abuse of
discretion.” Id. Legal conclusions — including whether the
movant has established irreparable harm — are reviewed de
novo. Id.
The four factors have typically been evaluated on a “sliding
scale.” Davenport v. Int’l Bhd. of Teamsters, 166 F.3d 356, 361
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(D.C. Cir. 1999). If the movant makes an unusually strong
showing on one of the factors, then it does not necessarily have
to make as strong a showing on another factor. For example, if
the movant makes a very strong showing of irreparable harm
and there is no substantial harm to the non-movant, then a
correspondingly lower standard can be applied for likelihood of
success. See, e.g., WMATC v. Holiday Tours, 559 F.2d 841, 843
(D.C. Cir. 1977). Alternatively, if substantial harm to the non-
movant is very high and the showing of irreparable harm to the
movant very low, the movant must demonstrate a much greater
likelihood of success. It is in this sense that all four factors
“must be balanced against each other.” Davenport, 166 F.3d at
361. When seeking a preliminary injunction, the movant has the
burden to show that all four factors, taken together, weigh in
favor of the injunction. CFGC, 454 F.3d at 297.
The pilots, misreading our precedent, insist they need “only
establish that serious legal questions are at issue” in order to
succeed on appeal. Appellants’ Br. at 6. They reach that
conclusion by focusing on language in Holiday Tours, where
this court noted a movant need not necessarily show a 51%
likelihood of success on the first prong of the preliminary
injunction analysis. 559 F.2d at 843. But Holiday Tours did not
eliminate the other factors. The court simply acknowledged that
a lessor likelihood of success might suffice if each of the other
three factors “clearly favors” granting the injunction. Id. The
pilots argue that, because the other three factors are “not
contrary to” a preliminary injunction, they need only raise
serious legal questions. Appellants’ Br. at 7. They are wrong.
The Supreme Court has recently addressed the standard for
a preliminary injunction. See Winter v. NRDC, 129 S. Ct. 365,
375 (2009) (holding that irreparable injury must be likely, “not
just a possibility”). We note that the analysis in Winter could be
read to create a more demanding burden, although the decision
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does not squarely discuss whether the four factors are to be
balanced on a sliding scale. See id. at 392 (Ginsburg, J.,
dissenting) (“[C]ourts have evaluated claims for equitable relief
on a ‘sliding scale,’ sometimes awarding relief based on a lower
likelihood of harm when the likelihood of success is very high.
This Court has never rejected that formulation, and I do not
believe it does so today.”). We need not decide whether a
stricter standard applies, because the pilots fail even under the
“sliding scale” analysis of Davenport.
III. Discussion
Of the eleven substantive claims in the lawsuit, only three
are proffered in support of a preliminary injunction. First, the
pilots argue the PBGC incorrectly interprets an ERISA provision
prioritizing benefits. The relevant language from ERISA limits
Priority Category 3 — the prioritization level relevant here —
to benefits “based on the provisions of the plan (as in effect
during the 5-year period ending on [the plan’s termination] date)
under which such benefit would be the least.” 29 U.S.C. §
1344(a)(3)(A). The PBGC has determined the plan has
sufficient assets to cover all benefits in Priority Category 3, but
the pilots believe the PBGC has improperly excluded the U.S.
Airways Early Retirement Incentive Program from Priority
Category 3.
The program authorizes incentives for early retirement. The
question is whether the program was “in effect during the 5-year
period ending on [the plan’s termination] date.” Id. (emphasis
added). The phrase is not defined in § 1344(a)(3)(A). The
parties do not dispute the relevant dates: The program was
adopted by U.S. Airways on December 4, 1997. The program
included a self-defined effective date of January 1, 1998. By the
terms of the program, no pilots could retire or collect payments
under the program until May 1, 1998. The pension plan in this
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case was terminated on March 31, 2003, so the statutory five-
year period began on March 31, 1998. If the early retirement
plan was “in effect” before March 31, 1998, then it satisfies the
statutory requirement of being “in effect” for the full five-year
period. If, however, the early retirement plan did not go into
effect until after March 31, then it would not satisfy the statute’s
five-year requirement and thus would not fall into Priority
Category 3.
The PBGC says “in effect” means operationally effective —
when pilots could elect to retire under the Early Retirement
Incentive Program and when they could begin receiving
payments under the program. Thus, according to the PBGC, the
program was not “in effect” until May 1, 1998 — after the
beginning of the five-year period on March 31, 1998. The pilots
argue for a de novo, non-deferential interpretation, but we think
Chevron-deference applies.
The pilots acknowledge the PBGC generally receives
Chevron-deference for its authoritative interpretations of
ambiguous provisions of ERISA. See PBGC v. LTV Corp., 496
U.S. 633, 651–52 (1990); Mead Corp. v. Tilley, 490 U.S. 714,
722 (1989). But deference should not apply, they say, when the
PBGC is acting as trustee rather than guarantor, noting that no
case or court has addressed the question of whether the PBGC
receives Chevron-deference for decisions it makes as trustee.
We see no reason to depart from the usual deference we give to
an agency interpreting its organic statute. The pilots point out
that a private party serving as trustee would not receive
Chevron-deference, but this point proves nothing. Unlike a
private trustee, the PBGC has unique experience and “practical
agency expertise” in interpreting ERISA. LTV Corp., 496 U.S.
at 651. The PBGC is therefore “better equipped” to interpret
ERISA than courts, id., and it is for this reason we defer to the
PBGC’s authoritative and reasonable interpretations of
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ambiguous provisions of ERISA.
The PBGC’s interpretation of the relevant ERISA provision
is embodied in its regulations limiting benefits in Priority
Category 3 to “the lowest annuity benefit payable under the plan
provisions at any time during the 5-year period.” 29 C.F.R.
4044.13(b)(3)(i) (emphasis added). Because this language refers
to benefits that are “payable,” and because the early retirement
program, by its own terms, did not allow the benefits to be
payable until May 1, 1998, the PBGC determined that the
program was not in effect for the full five-year period. Lacking
any statutory definition or guidance, the meaning of the phrase
“in effect” is ambiguous. See Chevron v. NRDC, 467 U.S. 837,
843 (1984). And, because the Early Retirement Incentive
Program only became operationally effective when it was first
possible for pilots to retire under the program — or even collect
payments under it — it is reasonable for the PBGC to use May
1, 1998 as the date the program came into effect.
The pilots’ second claim also relates to inclusion of benefits
in Priority Category 3. The parties agree that for the entire five-
year period prior to termination of the plan, the plan capped
maximum benefits, tying the maximum cap to the level
established in an IRS statute (26 U.S.C. § 415(b)). Congress
amended the IRS statute approximately two years before
termination, increasing the maximum cap in the statute.
Because the plan tied itself to § 415(b), the maximum under the
plan for the final two years was correspondingly raised.
Although the PBGC agrees the maximum cap was in effect
for the entire five years, it does not agree that the amended
increase was in effect for all five years. Indeed, the PBGC is
factually correct on this point, as even the pilots concede the
amendment only occurred during the last two years of the
relevant period. The PBGC therefore based its final
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determination on the lower cap. Though the pilots prefer the
higher cap, the statutory text is plainly against them: Priority
Category 3 is “based on the provisions of the plan (as in effect
during the 5-year period ending on [the plan’s termination] date)
under which such benefit would be the least.” 29 U.S.C. §
1344(a)(3)(A) (emphasis added). The question here is not when
the maximum-cap provision came into effect, but for which
value “such benefit would be the least.” Because the benefit
“would be the least” based on the figure applied during the first
three years, the PBGC appropriately applied the lower value.
The pilots again argue against Chevron-deference. Nothing
about this second claim alters our earlier analysis. Since its
action on the maximum cap is plainly consistent with the
statutory language, the PBGC’s interpretation is sound. The
pilots also claim Rettig v. PBGC, 744 F.2d 133 (D.C. Cir. 1984),
requires automatic increases based on congressional action. But
Rettig is unhelpful. That case dealt with vesting standards for a
pension plan terminated within the immediate aftermath of
ERISA’s enactment. Id. at 135. This court held the PBGC was
not permitted to phase-in vesting improvements which were
made mandatory by statute without providing reasonable
justification for the phase-in. Id. at 156. The case is not
relevant here and it adopts none of the sweeping propositions the
pilots cite.
The pilots’ third claim also involves a matter of statutory
interpretation. ERISA states “the corporation shall guarantee,
in accordance with this section, the payment of all nonforfeitable
benefits.” 29 U.S.C. § 1322(a). In other words, the statute
prescribes that the PBGC “shall guarantee” some defined
“amount of monthly benefits,” up to a certain limit. The
question is: what does it mean for the defined amount to be
“guaranteed”?
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The PBGC argues a “guarantee” is the amount a participant
is “guaranteed” to receive, either from the plan assets or with
help from the PBGC. For example, suppose the maximum
amount of monthly benefits to be “guaranteed” is $4,000. If the
pension plan is supposed to pay someone $9,000 per month, and
if there are enough assets to pay $7,000 per month, then the
PBGC has no obligation. The participant received the $4,000
that was “guaranteed” — and more — so the PBGC need not
provide any additional payment. The pilots, on the other hand,
believe the PBGC is still on the hook for the remaining $2,000
in the above scenario. The pilots see the guaranteed amount not
as the amount a participant is guaranteed to receive, but as an
amount the PBGC is obligated to pay.
The statutory text only says “the corporation shall
guarantee” the specified amount. Id. It does not explain
whether the specified amount is the amount the recipient is
guaranteed to receive or whether it is the amount the PBGC is
obligated to pay. We agree with the PBGC that the better
interpretation is that a “guarantee” is the amount that a
participant is “guaranteed” to receive.
For each of their three claims, the pilots have failed to
demonstrate a substantial likelihood of success and thus make a
very poor showing on the first prong. Their arguments on the
second prong are similarly weak, as they cannot establish
irreparable harm. The only alleged injuries in this case are
economic. The pilots complain that they are not getting enough
money from the PBGC. If they succeed in their suit on the
merits, the PBGC will have to give them the money they
request. As this court has held, “in the absence of special
circumstances, . . . recoverable economic losses are not
considered irreparable.” Taylor v. Resolution Trust Corp., 56
F.3d 1497, 1507 (D.C. Cir. 1995). The Supreme Court has
echoed this message, finding that “the temporary loss of income,
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ultimately to be recovered, does not usually constitute
irreparable injury.” Sampson v. Murray, 415 U.S. 61, 90 (1974).
The only case the pilots cite to demonstrate irreparable
harm is Friends for All Children, Inc. v. Lockheed Aircraft
Corp., 746 F.2d 816 (D.C. Cir. 1984). In that case, this court
affirmed the long-standing principle that an injunction will not
be given for monetary relief prior to final judgment on the
merits. Id. at 828–29. In fact, in Friends, the court held only
that there was an exception to that general rule in cases where
liability had already been established on the merits. Id. at 829.
This case is distinguishable from the unique procedural setting
in Friends, where liability had already been found and a
preliminary injunction was sought prior to the complicated
determination of monetary remedies. Additionally, although not
explicitly stated in Friends, its analysis is consistent with the
“sliding scale” on which preliminary injunctions are to be
assessed. Davenport, 166 F.3d at 361. In Friends, liability had
already been determined on the merits; the showing on prong
one was not just a high likelihood of success, but a certainty of
success. In such a case, where one factor has been shown to a
certainty, it is appropriate to apply a lower threshold on other
prongs, such as irreparable injury, in the balance of the four
factors. See, e.g., CFGC, 454 F.3d at 297. In this case,
however, the pilots do not make a good showing on the first
prong, and we see no reason to depart from the general rule that
economic harm does not constitute irreparable injury. The pilots
argue their case is distinguishable from ordinary economic
injury because many of their members are old and may not live
to see final judgment. Their assertion that the possibility of
death converts mere economic injury into irreparable harm is
without citation or precedent, and we do not adopt it here.
Regarding the third and fourth prongs, the district court
found minimal harm to the PBGC, noting that its injury was also
12
purely economic, and found “[t]he public interest factor is a
wash.” Davis, 596 F. Supp. 2d at 5. Both parties devote very
little argument to either of these prongs. We see no need to
revisit the district court’s analysis. Given that the pilots have
made very weak showings on prongs one and two, it is clear
they cannot make the corresponding strong showings required
to tip the balance in their favor.
IV. Conclusion
Because the pilots have failed to demonstrate either a
substantial likelihood of success on the merits or irreparable
harm, we affirm the district court’s denial of a preliminary
injunction.
So ordered.
KAVANAUGH, Circuit Judge, with whom Circuit Judge
HENDERSON joins, concurring: I join the opinion of the Court.
I write separately to add a few words about a point alluded to
in the Court’s opinion: that this Circuit’s traditional sliding-
scale approach to preliminary injunctions may be difficult to
square with the Supreme Court’s recent decisions in Winter v.
Natural Resources Defense Council, Inc., 129 S. Ct. 365, 374-
76 (2008), and Munaf v. Geren, 128 S. Ct. 2207, 2219 (2008).
In the Winter decision, the Supreme Court stated the
requirements for a preliminary injunction definitively and
clearly: “A plaintiff seeking a preliminary injunction must
establish that he is likely to succeed on the merits, that he is
likely to suffer irreparable harm in the absence of preliminary
relief, that the balance of equities tips in his favor, and that an
injunction is in the public interest.” Winter, 129 S. Ct. at 374.
Importantly, the Winter Court rejected the idea that a strong
likelihood of success could make up for showing only a
possibility (rather than a likelihood) of irreparable harm. In
other words, the Court ruled that the movant always must
show a likelihood of irreparable harm. See id. at 375-76.
In last year’s decision in Munaf, the Court similarly
stated: “We begin with the basics. A preliminary injunction is
an extraordinary and drastic remedy; it is never awarded as of
right. Rather, a party seeking a preliminary injunction must
demonstrate, among other things, a likelihood of success on
the merits.” 128 S. Ct. at 2219 (internal quotation marks and
citations omitted). Munaf made clear that a likelihood of
success is an independent, free-standing requirement for a
preliminary injunction. Munaf means that a strong showing
of irreparable harm, for example, cannot make up for a failure
to demonstrate a likelihood of success on the merits.
In the related context of stays, moreover, the Court has
reiterated the same principles. See Nken v. Holder, 129 S. Ct.
1749, 1762 (2009) (requiring that movant for a stay
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“satisf[y]” first two factors of likelihood of success and
irreparable harm). There, Justice Kennedy added: “When
considering success on the merits and irreparable harm, courts
cannot dispense with the required showing of one simply
because there is a strong likelihood of the other.” Id. at 1763
(Kennedy, J., concurring).
In light of the Supreme Court’s recent decisions, I tend to
agree with Judge Fernandez’s opinion for the Ninth Circuit
that the old sliding-scale approach to preliminary injunctions
– under which a very strong likelihood of success could make
up for a failure to show a likelihood of irreparable harm, or
vice versa – is “no longer controlling, or even viable.” Am.
Trucking Ass’ns v. City of Los Angeles, 559 F.3d 1046, 1052
(9th Cir. 2009). It appears that a party moving for a
preliminary injunction must meet four independent
requirements. To be sure, the third preliminary injunction
factor requires a balancing of the equities, but that’s an
additional requirement, not a substitute for the first two
requirements. In other words, under the Supreme Court’s
precedents, a movant cannot obtain a preliminary injunction
without showing both a likelihood of success and a likelihood
of irreparable harm, among other things. With that
observation, I join the opinion of the Court.