K. Lewis v. PBGC [REISSUED OPINION]

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 16, 2017 Decided August 21, 2018

Reissued December 21, 2018

No. 17-5068

K. WENDELL LEWIS, ET AL.,

APPELLEES

v.

PENSION BENEFIT GUARANTY CORPORATION,

APPELLANT

Appeal from the United States District Court

for the District of Columbia

(No. 1:15-cv-01328)

Charles L. Finke, Deputy Chief Counsel, pro hac vice,

argued the cause for appellant. With him on the briefs were

Judith R. Starr, General Counsel, Kenneth J. Cooper, Assistant

General Counsel, Paula J. Connelly, Assistant Chief Counsel,

and Mark R. Snyder, Attorney.

Anthony F. Shelley argued the cause for appellees. With

him on the brief were Timothy P. O’Toole and Michael N.

Khalil.

Before: GRIFFITH and PILLARD, Circuit Judges, and

WILLIAMS, Senior Circuit Judge.

2

Opinion for the Court filed by Circuit Judge GRIFFITH.

Circuit Judge GRIFFITH: In this interlocutory appeal, we

reverse the district court’s decision allowing participants in a

pension plan to seek recovery of an increase in the value of plan

assets that took place after the plan had been terminated.

I

A

In 2005, Delta Airlines, Inc. (“Delta”) filed for bankruptcy

and stopped contributing to the pension plan it sponsored for

its pilots. That plan was called the Delta Pilots Retirement Plan

(the “Delta Plan”). The following year, Delta and the Pension

Benefit Guaranty Corporation (the “Corporation”) agreed to

terminate the Delta Plan because it had insufficient assets to

support the benefit payments it promised to the pilots.

Title IV of the Employee Retirement Income Security Act

(ERISA), 29 U.S.C. §§ 1301-1461, created the Corporation “to

ensure that employees and their beneficiaries would not be

completely deprived of anticipated retirement benefits by the

termination of pension plans before sufficient funds have been

accumulated in the plans.” PBGC v. LTV Corp., 496 U.S. 633,

637 (1990) (internal quotation marks omitted). To that end, the

Corporation collects premiums from plan sponsors like Delta

and guarantees certain benefits to plan participants even if a

plan terminates without enough money to pay its ongoing

obligations. See 29 U.S.C. §§ 1306-1307, 1322, 1361; LTV

Corp., 496 U.S. at 636-38; Davis v. PBGC (“Davis II”), 734

F.3d 1161, 1164-65 (D.C. Cir. 2013). Importantly, guaranteed

benefits are subject to limitations outlined in Title IV. See 29

U.S.C. §§ 1322(b), 1361; LTV Corp., 496 U.S. at 638.

3

When a plan terminates without enough funding to provide

even the guaranteed benefits established by Title IV, a statutory

trustee collects the plan’s remaining assets and begins making

promised payments according to a list of statutory priorities.

See 29 U.S.C. §§ 1341(c)(iii)(B)(3), 1342(b)-(d), 1344; 29

C.F.R. pt. 4044. The Corporation then provides additional

money from its own funds to make up the difference between

those payments and the guaranteed benefits. See 29 U.S.C.

§ 1322; 29 C.F.R. pt. 4022; LTV Corp., 496 U.S. at 637-38;

Davis II, 734 F.3d at 1164-65. Although not required, the

Corporation is almost always appointed as the statutory trustee

who administers terminated plans, assuming this responsibility

in addition to its role as guarantor. See Boivin v. U.S. Airways,

Inc., 446 F.3d 148, 150 (D.C. Cir. 2006). When Delta and the

Corporation agreed to terminate the Delta Plan, they agreed the

Corporation would become the statutory trustee.

The Corporation determined the Delta Plan had a deficit of

over $2.5 billion in unfunded benefits when it terminated,

almost $800 million of which were guaranteed under Title IV.

Actuarial Case Memo for Delta Pilots Retirement Plan (Mar.

24, 2010), J.A. 201-03. Based on this information, the

Corporation began paying estimated post-termination benefits

to the pilots. It took six years, however, to finish making final

benefit determinations. Administrative appeals filed by the

pilots to challenge their benefit determinations concluded the

following year, in 2013. See 29 C.F.R. pt. 4003 (explaining the

process for determining post-termination benefits); Davis v.

PBGC (“Davis I”), 571 F.3d 1288, 1291 (D.C. Cir. 2009)

(same); Boivin, 446 F.3d at 151 (same). If the Corporation

found that participants were entitled to larger benefit payments

than they were receiving under their initial estimates, the

Corporation reimbursed those pilots with interest for any

difference and adjusted their benefits going forward. See 29

C.F.R. § 4022.81-.83; Davis I, 571 F.3d at 1291.

4

B

Nearly 1,700 pilots in the Delta Plan or their beneficiaries

sued the Corporation to further challenge their benefit

determinations, assert violations of the Administrative

Procedure Act, 5 U.S.C. § 706, and request various forms of

injunctive and declaratory relief. The pilots also allege that the

Corporation breached its fiduciary duty as statutory trustee in

various ways, such as creating procedural obstacles for and

withholding necessary information from participants who were

trying to appeal their benefit determinations, improperly

denying those appeals for untimeliness, hiring incompetent

contractors to estimate the value of plan assets and leaving

them unsupervised, and misallocating pension funds to

younger participants who would not retire and collect the

money for many years. Am. Compl. ¶¶ 66-72, J.A. 300-03. All

of this, the pilots claim, allowed the Corporation to control

Delta Plan assets for a longer period and collect “massive

investment returns” rather than timely paying the pilots what

they were owed. Id. ¶ 72, J.A. 303. The pilots argue that 29

U.S.C. § 1303(f)(1) authorizes “appropriate equitable relief”

and so the Corporation “should be required to disgorge itself of

this unjust enrichment.” Am. Compl. ¶ 72, J.A. 303. And they

ask to recover this money individually instead of on behalf of

the Delta Plan.

The Corporation moved to dismiss the breach of fiduciary

duty claim on numerous grounds, including that 29 U.S.C.

§ 1344(c) prevents disgorgement in this case. Section 1344(c)

provides that “[a]ny increase or decrease in the value of the

assets of a single-employer plan occurring after the date on

which the plan is terminated shall be credited to, or suffered by,

the [C]orporation.” Disgorgement, the Corporation explained,

5

would impermissibly redirect to the pilots the post-termination

increase in the value of plan assets.

The district court denied the Corporation’s motion to

dismiss and its subsequent motion for reconsideration. Lewis v.

PBGC, 197 F. Supp. 3d 16 (D.D.C. 2016), reconsideration

denied, No. 15-cv-1328, 2017 WL 7047932 (D.D.C. Jan. 23,

2017). The district court explained that the pilots were trying

only to “recoup the alleged ill-gotten investment returns on

[Delta] Plan benefits that the plaintiffs claim should have been

distributed to them, not . . . divert from the Corporation any

gains (or losses) from assets properly held in the [Delta] Plan.”

Lewis, 197 F. Supp. 3d at 26 (citation omitted); accord Lewis,

2017 WL 7047932, at *3. Such a claim, it said, might not be

prohibited by § 1344(c). Lewis, 2017 WL 7047932, at *3.

However, the district court concluded that “the dearth of

controlling precedent that supports the Court’s determination

regarding the fiduciary breach claim, coupled with the

Corporation’s credible contention that . . . ERISA does not

permit the plaintiffs to pursue this claim, raise[s] a controlling

question of law as to which a substantial ground for difference

of opinion exists.” Id. The district court then certified for

interlocutory appeal its order denying the motion to dismiss,

and identified four “controlling questions of law” for us to

consider: First, can individuals bring a fiduciary breach claim

against the Corporation under § 1303(f) in addition to

requesting judicial review of the Corporation’s post-

termination benefit determinations? Second, can plan

participants in such a lawsuit recover more than their statutorily

defined benefits under Title IV of ERISA? Third, can plan

participants in such a lawsuit recover individual, as opposed to

plan-wide, relief for the alleged fiduciary breach? And fourth,

does § 1344(c) preclude the remedy of disgorgement of post-

termination investment gains derived as a result of the alleged

6

fiduciary breach? Order Certifying Interlocutory Appeal, J.A.

384-85; see 28 U.S.C. § 1292(b). We granted the petition for

leave to file an interlocutory appeal. J.A. 653. Since that time,

the district court has resolved in favor of the Corporation all

other claims in this lawsuit. Lewis v. PBGC, No. 15-cv-1328,

2018 WL 2926157 (D.D.C. June 11, 2018).

The district court has jurisdiction over this case pursuant

to § 1303(f), and we have jurisdiction under 28 U.S.C.

§ 1292(b) to decide this interlocutory appeal. We review de

novo the district court’s decision on the motion to dismiss.

Jones v. Kirchner, 835 F.3d 74, 79 (D.C. Cir. 2016). Because

we conclude that § 1344(c) prevents the pilots from recovering

any post-termination increase in the value of Delta Plan assets,

disgorgement is not an available remedy in this case and we do

not address the other questions.

II

A

We begin by examining the text of § 1344(c), which

provides in full:

Any increase or decrease in the value of the assets of a

single-employer plan occurring during the period

beginning on the later of (1) the date a trustee is appointed

under section 1342(b) of this title or (2) the date on which

the plan is terminated is to be allocated between the plan

and the [C]orporation in the manner determined by the

court (in the case of a court-appointed trustee) or as agreed

upon by the [C]orporation and the plan administrator in

any other case. Any increase or decrease in the value of

the assets of a single-employer plan occurring after the

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date on which the plan is terminated shall be credited to,

or suffered by, the [C]orporation.

29 U.S.C. § 1344(c) (emphasis added).

The two halves of this subsection are in tension. The first

half of § 1344(c) explains that any change in the value of plan

assets occurring after “a trustee is appointed under § 1342(b)”

or “the plan is terminated,” whichever comes later, should be

allocated “in a manner determined by the court (in the case of

a court-appointed trustee) or as agreed upon by the

[C]orporation and the plan administrator.” This seems to

conflict with the second, italicized half of § 1344(c), which

clearly assigns all post-termination gains and losses to the

Corporation. See Kinek v. Paramount Commc’ns, Inc., 22 F.3d

503, 515 (2d Cir.), amended on denial of reh’g (June 13, 1994).

We need not resolve that conflict here. One of the two

events referenced in the first half of § 1344(c) is the

appointment of a pre-termination trustee under § 1342(b). See

29 U.S.C. § 1342(b)(1) (providing “for the appointment of a

trustee to administer the plan . . . pending the issuance of a

decree . . . ordering the termination of the plan”). There was no

such trustee in this case. Indeed, the Corporation became the

statutory trustee by an agreement with Delta only after the

parties terminated the Delta Plan. See id. § 1342(c) (providing

for appointment of a trustee when a plan terminates). And there

was no court determination—which is contingent on a court-

appointed trustee—nor agreement between the Corporation

and the plan administrator—previously Delta, now the

Corporation itself—to supply competing instructions as to the

allocation of any post-termination increase or decrease in the

value of plan assets. In short, the first half of § 1344(c) does

not apply in this case.

8

Moreover, although we do not decide the question, the

reference to § 1342(b) suggests the first half of § 1344(c) was

meant to govern changes in the value of assets pending plan

termination, while the second half allocates post-termination

gains and losses to the Corporation. The pilots acknowledge as

much, explaining that § 1344(c) “is properly treated as a

measure giving necessary guidance on the thorny issue of

whose accounts are to be ‘credited’ with the gains or losses

during the lengthy period when a plan is in the process of being

terminated . . . with the monies going to the Corporation’s

account (for the then-terminated plan) after termination.”

Pilots’ Br. 47-48. The increase in the value of plan assets at

issue in this case occurred after, not before, the plan terminated.

Recognizing that § 1342(b) governs the appointment of

pre-termination trustees also reveals a potential defect in the

first half of § 1344(c) itself. The first half of § 1344(c) applies

“on the later of” the appointment of a pre-termination trustee

or when the plan terminates. But a pre-termination, statutory

trustee will by definition be appointed before plan termination,

rendering meaningless the question of which event comes later.

This suggests the first half of § 1344(c) contains a drafting

error, as both parties agree. See Oral Arg. Tr. at 8-9, 20.1

1

Congress has considered amending § 1344(c). For example,

in 1994 the U.S. House of Representatives considered a

“clarification” to § 1344(c) as part of a larger bill, amending the

subsection to read: “Any increase or decrease in the value of the

assets of a single-employer plan occurring during the period

beginning on the later of (1) the date a trustee is appointed under

section 1342(b) of this title or (2) and ending on the date on which

the plan is terminated is to be shall be allocated between the plan and

the corporation in the manner determined by the court (in the case of

a court-appointed trustee) or as agreed upon by the corporation and

the plan administrator in any other case (in any other case). Any

increase or decrease in the value of the assets of a single-employer

9

We thus apply the second half of § 1344(c), which by its

express terms governs the allocation of post-termination gains

at issue in this case.

B

The Corporation argues that it is entitled under § 1344(c)

to any post-termination increase in the value of pension plan

assets. In other words, the Corporation reasons, Congress has

already decided who benefits or suffers the loss from a change

in the value of plan assets once that plan has been terminated.

Therefore, the Corporation concludes that the pilots cannot

recover that money as equitable relief for an alleged breach of

fiduciary duty. We agree.

The Corporation guarantees certain benefits to participants

in pension plans. See 29 U.S.C. § 1322. And, in exchange for

paying the difference between those benefits and the plan

assets once the plan terminates, as well as absorbing any

subsequent “decrease in the value of the assets of a . . . plan,”

Congress allocated any post-termination “increase” to the

Corporation. Id. § 1344(c); see Paulsen v. CNF Inc., 559 F.3d

1061, 1073 (9th Cir. 2009) (“ERISA . . . mandates that a post-

termination increase or decrease in the [plan] assets be credited

or suffered by [the Corporation].”). That money is not available

to plan participants.

The pilots argue that statutory trustees of terminated

pension plans have a fiduciary duty to plan participants, and

plan occurring after the date on which the plan is terminated shall be

credited to, or suffered by, the corporation.” H.R. Rep. No. 103-632,

at 204 (Aug. 26, 1994). But the House of Representatives never voted

on the proposed bill.

10

§ 1303(f)(1) authorizes “appropriate equitable relief” if that

duty is breached. The pilots explain that 29 U.S.C.

§ 1132(a)(3)(B) in Title I of ERISA, which governs ongoing

plans, provides for “appropriate equitable relief” as well. In

that context, they continue, the Supreme Court has defined

“equitable relief” as “those categories of relief that were

typically available in equity.” Mertens v. Hewitt Assocs., 508

U.S. 248, 256 (1993). The pilots insist that “[e]quity courts

possessed the power to provide monetary ‘compensation’ for a

loss resulting from a trustee’s breach of duty, or to prevent the

trustee’s unjust enrichment,” CIGNA Corp. v. Amara, 563 U.S.

421, 441 (2011), through a remedy such as disgorgement. And

they point out that other circuits have allowed claims for

disgorgement to proceed under Title I with regard to ongoing

plans. See, e.g., Pender v. Bank of Am. Corp., 788 F.3d 354,

364-65 (4th Cir. 2015); Edmonson v. Lincoln Nat’l Life Ins.

Co., 725 F.3d 406, 419-20 (3d Cir. 2013). But see Rochow v.

Life Ins. Co. of N. Am., 780 F.3d 364, 370-76 (6th Cir. 2015)

(en banc).

According to the pilots, if disgorgement is available as

“appropriate equitable relief” under § 1132(a)(3) to prevent the

unjust enrichment of fiduciaries of ongoing plans, then the

presumption of consistent usage dictates that disgorgement is

also “appropriate equitable relief” under § 1303(f)(1) with

regard to terminated plans. See Envtl. Def. v. Duke Energy

Corp., 549 U.S. 561, 574 (2007) (recognizing the “natural

presumption that identical words used in different parts of the

same act are intended to have the same meaning” (quoting Atl.

Cleaners & Dyers v. United States, 286 U.S. 427, 433 (1932))).

In fact, ERISA even equates the fiduciary status of a post-

termination, statutory trustee with that of a fiduciary of an

ongoing plan. See 29 U.S.C. § 1342(d)(3) (“[A] trustee

appointed under this section [in Title IV] . . . shall be, with

respect to the plan, a fiduciary within the meaning of [Title

11

I].”). The pilots conclude that § 1344(c) says nothing about

available remedies if the Corporation breaches its fiduciary

duty and, as a result, should not limit the broad wording of

§ 1303(f)(1).

We are unpersuaded. Section 1344(c) does not apply to

ongoing plans so “the presumption of consistent usage ‘readily

yields’ to context.” Util. Air Regulatory Grp. v. EPA, 134 S. Ct.

2427, 2441 (2014) (quoting Envtl. Def., 549 U.S. at 574).

Ongoing plans are not subject to the same statutory instructions

as terminated plans when it comes to “[a]ny increase or

decrease in the value of the assets.” 29 U.S.C. § 1344(c).

In addition, ERISA repeatedly qualifies the fiduciary

status of post-termination trustees “to the extent that the

provisions of [Title IV] are inconsistent” with fiduciary

requirements. Id. § 1342(d)(3). Requiring the Corporation to

disgorge a post-termination increase in the value of plan assets

flatly contradicts § 1344(c). By statute, the pilots are entitled to

their guaranteed benefits, while Congress directed that any

post-termination increase or decrease in the value of plan assets

should go to the Corporation. The pilots cannot circumvent that

decision under the heading of equitable relief. In other words,

disgorgement would not be “appropriate” here. Id.

§ 1303(f)(1).

The pilots also claim that “duties imposed on the statutory

trustee do not fall by the wayside just because the

[Corporation], and not a private party, becomes the trustee.”

Wilmington Shipping Co. v. New Eng. Life Ins. Co., 496 F.3d

326, 337 (4th Cir. 2007). They reason that the Corporation

should not be able to escape the liability for its misdeeds that

would otherwise apply to a private trustee. Underlying this

argument is an assumption that the pilots would be entitled to

any post-termination increase in the value of plan assets if a

12

private party, and not the Corporation, were the trustee in this

case. But nothing in § 1344(c) suggests that the identity of the

statutory trustee affects who takes gains and losses after the

plan terminates. They all go to the Corporation. The pilots

cannot have the increase, and they presumably would not want

the decrease, regardless of who acts as statutory trustee of the

terminated Delta Plan.

The pilots’ request for post-termination investment gains

is fundamentally flawed. Because § 1344(c) does not depend

on whether the Corporation acts as statutory trustee of the

terminated plan, any post-termination change in the value of

plan assets must be “credited to, or suffered by” the

Corporation in its capacity as guarantor. 29 U.S.C. § 1344(c).

This makes sense: Each participant’s benefits are calculated at

the time of plan termination and shielded from additional loss

by the Corporation. If plan assets increase in value, the

Corporation is likewise credited with that gain. The

Corporation assumes this responsibility as guarantor of certain

plan benefits. But the pilots sue the Corporation for fiduciary

breach in its capacity as statutory trustee. See Am. Compl. ¶ 64,

J.A. 300; 29 U.S.C. § 1342(d)(3) (“Except to the extent

inconsistent with the provisions of [ERISA], . . . a trustee

appointed under this section shall be . . . a fiduciary . . . .”).

The disconnect between suing the Corporation in its role as

statutory trustee, yet requesting a remedy that the Corporation

can supply only in its role as guarantor, further demonstrates

that disgorgement is inconsistent with the statutory scheme for

terminated pension plans and therefore not “appropriate

equitable relief.” See K Mart Corp. v. Cartier, Inc., 486 U.S.

281, 291 (1988) (“In ascertaining the plain meaning of the

statute, the court must look to the particular statutory language

at issue, as well as the language and design of the statute as a

whole.”).

13

Finally, the district court distinguished between assets

properly held by the statutory trustee and assets held in breach

of a fiduciary duty. Lewis, 197 F. Supp. 3d at 26; accord Lewis,

2017 WL 7047932, at *3. If the statutory trustee retains plan

assets improperly, the argument goes, § 1344(c) simply does

not apply and plan participants can recover any post-

termination increase. The pilots repeat that argument here,

suggesting it avoids any tension between the broad wording of

“appropriate equitable relief” in § 1303(f)(1) and the directive

in § 1344(c) that any post-termination increase or decrease in

the value of plan assets goes to the Corporation.

We do not see this distinction in § 1344(c). And “given the

express language of the statute” allocating post-termination

gains and losses to the Corporation, we decline to create an

“implied exception” to those unambiguous terms. Bennett v.

Arkansas, 485 U.S. 395, 397-98 (1988). Indeed, § 1344(c)

allocates to the Corporation “any” post-termination increase in

the value of plan assets. “[T]he expansive word ‘any’ and the

absence of restrictive language” promotes a sweeping

application of that provision. Ali v. Fed. Bureau of Prisons, 552

U.S. 214, 219 (2008). By contrast, we are reluctant to expand

the scope of “appropriate equitable relief” in a way that would

impose trustee liability on the Corporation in its role as

guarantor.

This does not mean the pilots lacked possible remedies for

their alleged injuries. Both parties agree that other forms of

equitable relief are generally available in cases of fiduciary

breach, including removal of the Corporation as statutory

trustee of the terminated plan. See, e.g., Pineiro v. PBGC, 318

F. Supp. 2d 67, 94 (S.D.N.Y. 2003); cf. 29 U.S.C. § 1109(a)

(allowing for removal of an ongoing-plan fiduciary). And the

pilots have been able to challenge their benefit determinations,

although the district court rejected those claims on the merits.

14

But recovering the post-termination increase in the value of

plan assets is not an available remedy where, as here, the

limitation of § 1344(c) applies.

III

We reverse the district court’s ruling that disgorgement is

an available remedy against the Corporation and we remand to

the district court for further proceedings consistent with this

opinion.2

So ordered.

2

In their petition asking that we amend the opinion, the pilots

assert that their amended complaint—specifically, the fiduciary

breach claim—seeks remedies in addition to disgorgement, which

the pilots hope to pursue on remand. See Pet. 6-11. The Corporation

responds that the fiduciary breach claim seeks only disgorgement,

the pilots have not pursued additional remedies throughout “multiple

years of litigation,” and the panel “should not resuscitate the

fiduciary breach claim” “for reasons [the pilots] did not advance in

the district court.” Resp. 2, 8. Our “normal rule” is to avoid passing

on an issue that the district court has not fully addressed, Liberty

Prop. Tr. v. Republic Props. Corp., 577 F.3d 335, 341 (D.C. Cir.

2009), and remand is particularly appropriate when the issue hinges

on the proper construction of the available remedies in litigation over

which the district court long presided, see Blessing v. Freestone, 520

U.S. 329, 345-46 (1997) (remanding because “the complaint is less

than clear” with regard to the rights asserted and the specific relief

sought, and that “defect is best addressed by sending the case back

for the District Court to construe the complaint in the first instance,

in order to determine exactly what rights, considered in their most

concrete, specific form, respondents are asserting”). Therefore, we

remand the matter to the district court for further proceedings

consistent with this opinion, and specifically to determine in the first

instance whether the amended complaint seeks remedies for the

alleged fiduciary breach in addition to disgorgement. Of course the

implications of the opinion’s statutory analysis remain unaltered.