Petition for Writ of Certiorari — Edwards v. Department of Energy (No. 06-1056)

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OFFICE OF THE CLERK

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Supreme Court of the Anited States

*

ART K. EDWARDS, et al.,

Petitioners,

VS.

UNITED STATES OF AMERICA, DEPARTMENT

OF ENERGY (DOE); LOCKHEED MARTIN

ENERGY SYSTEMS, INC. (LMES); UNITED STATES a

ENRICHMENT CORPORATION (USEC),

Respondents.

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Sixth Circuit

PETITION FOR A WRIT OF CERTIORARI

e

RICHARD L. WALTER

CHARLES D. WALTER*

Counsel for the Petitioners

410 Broadway

Paducah, KY 42061

(270) 442-4369

*Counsel of Record

COUKLE LAW BRIDF PRINTING CO. Sots 225-€964

CHR CALL COLLECT? (402) $42-u841

QUESTION PRESENTED

Prior to June 29, 2000, did the Petitioners have

knowledge that the Respondents did not intend to transfer

the “surplus fund” associated with their retirement bene-

fits from their “old pension fund” to their “new pension

fund?”

il

LIST OF PARTIES

ART K. EDWARDS; JAMES H. CHESNUT; VELVA

YEOMANS; CHUCK HOBBS; B. J. BOND; TOM EMER-

SON; HARRY P. COLBERT; C. R. BEVERLY; BILL D.

PENRY; TYRONE T. SIVELS; BILL LINDSEY; and CARL

W. WALTER

ill

TABLE OF CONTENTS

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TABLE OF AUTHORITIES

Page

CASES

Holmberg v. Armbrecht, 327 U.S. 392, 66 S. Ct. 582,

FR Ry Le RRR Area Mttera ie ae Reser Sees Pama 6

Hughes v. Vanderbilt University, 215 F.3d 543 (6th

Oe Be iaseaiicb dascsresnaehas taechidbligabetssintalacniasaediieaiaadineakarmaniabsinliasatn 6

Robertson v. Tennessee, 399 F.3d 792 (6th Cir. 2005)......... 6

STATUTE

USEC Privatization Act (42 USC Section 2297h-

SITE sirailitslitsicshasuitinindaiiudiidantekwiiisibdiainiaindtaaemdnananned passim

OPINION BELOW

The Sixth Circuit Court of Appeals did not select its

opinion for publication in the Federal Reporter. The

decision is reported at 2006 U.S. App. Lexis 20854. The

District Court published an opinion in this case. Its

opinion is reported at 371 F.Supp. 2d 859 (W. D. Ky. 2005).

¢

JURISDICTION

The Sixth Circuit filed its decision on August 11, 2006,

and entered an Order denying Petitioner’s Motion for

Rehearing on October 31, 2006. This Court has jurisdiction

under 28 U.S.C. § 1254(1) to review the circuit court’s

decision on a writ of certiorari. |

¢

STATUTORY PROVISION INVOLVED

(42 U.S.C. § 2297h-8(a)(2)) provides:

2297h-8. Employee protections

(a) Contractor employees.

(2) In the event the private corporation termi-

nates or changes the contract at either or both of

the gaseous diffusion plants, the plan sponsor

or other appropriate fiduciary of the pension plan

covering employees of the prior operating con-

tractor shall arrange for the transfer of all plan

assets and liabilities relating to accrued pension

benefits of such plan’s participants and benefici-

aries from such plant to a pension plan spon-

sored by the new contractor or the private

2

corporation or a joint labor-management plan, as

the case may be. (Emphasis added).

*

STATEMENT OF THE FACTS

The central issue in the underlying action involves the

interpretation and implementation of the USEC Privatiza-

tion Act. The trial court dismissed this action concluding

that the action had not been commenced within the four

(4) year statute of limitations.

As the Court would expect, the issues involving the

interpretation and implementation of the USEC Privatiza-

tion Act were briefed in detail to the lower courts. In order

to correctly apply the Statute of Limitations, it is neces-

sary to understand how the USEC Privatization Act was

implemented. Thus, a history of the USEC Privatization

Act and its implementation is relevant.

Petitioners are retirees, who retired from various

contractors who operated the Department of Energy

(DOE) facility at the Paducah Gaseous Diffusion Plant

(PGDP) located in Paducah, Kentucky. During the forma-

tion of the United States Enrichment Corporation (USEC),

these retirees were moved out of the Lockheed Martin

Energy Systems, Inc.’s (LMES) pension plan and into the

USEC pension plan. The “surplus fund” associated with

the Petitioners’ pension plan was not transferred with the

Petitioners but rather left in the “LMES pension plan”

and, as a consequence of the transfer, the surplus fund for

the “LMES pension plan” grew even larger. Shortly after

the transfer of the Petitioners to the “USEC pension plan,”

the beneficiaries of the “LMES pension plan” received two

different increases in their benefits funded in part by the

. 3

surplus funds created by the transfer of the Petitioners to

the “USEC pension plan.”

Petitioners assert that the USEC Privatization Act

was specific legislation which required the transfer of a

proportional share of the surplus funds associated with

their pension benefits to the “USEC pension plan.”

The relevant portion of the USEC Privatization Act

(42 USC § 2297h-8(a)(2)) provides:

2297h-8. Employee protections

(a) Contractor employees.

(2) In the event the private corporation termi-

nates or changes the contract at either or both of

the gaseous diffusion plants, the plan sponsor

or other appropriate fiduciary of the pension plan

covering employees of the prior operating con-

tractor shall arrange for the transfer of all plan

assets and liabilities relating to accrued pension

benefits of such plan’s participants and benefici-

aries from such plant to a pension plan spon-

sored by the new contractor or the private

corporation or a joint labor-management plan, as

the case may be. (Emphasis added).

A Senate Report titled “Senate Report 104-173-USEC

Privatization Act” offered a “Section by Section” analysis of

the USEC Privatization Act. The relevant portion of that

Senate Report states:

Section 10 - Employee protections

Subsection (a) provides for the protection of em-

ployees at the gaseous diffusion plants in Ken-

tucky and Ohio in the following manner:

4

Pens’ Plans: Paragraphs (1) and (2) of subsec-

tion (« pecify that privatization will not dimin-

ish the accrued, vested pension benefits of the

plant’s operating contractor employees, and

that, in the event the private corporation termi-

nates or changes the operating contractor at ei-

ther or both of the gaseous diffusion plants, (the

appropriate fiduciary of the pension plan

covering contractor) employees will ar-

range for the transfer of the assets (includ-

ing any surpluses) and liabilities of the

pension plan to the extent that they relate to ac-

crued pension benefits of the plan’s participants

and beneficiaries for the relevant gaseous diffu-

sion plant to the pension plan sponsored by the

new contractor, the private corporation (if it op-

erates the plant without an operating contrac-

tor), or a joint labor-management plan as

appropriate. (Emphasis added).

As briefed to the lower courts, the Petitioners assert

that the interpretation of the USEC Privatization Act

requires the Court to consider the legislative history. This

particular piece of legislation and its Senate Report were

“joined at the hip” as the legislation was considered by the

members.

Petitioners further assert that the USEC Privatiza-

tion Act is specific legislation and it consequently trumps

any general legislation such as ERISA and the Internal

Revenue Code. It is undisputed that Respondents applied

sections of ERISA and the Internal Revenue Code to avoid

transferring any portion of the “surplus fund.” It is also

undisputed that there was a “surplus fund” which was not

transferred to the USEC Pension Plan and retained in the

LMES Pension Plan.

USEC terminated the LMES contract on May 18, 1999,

and thus triggered the provisions of 42 USC § 2297h-

8(a)(2). On May 24, 2000, USEC and LMES entered into a

“Pension Plan Asset Transfer Agreement” which desig-

nated the “Initial Transfer Date” as July 1, 1999, and the

“Final Transfer Date” as June 30, 2000. This Agreement

was not a published document and there is no evidence or

assertion in the record that the Petitioners were ever

provided notice of this Agreement or its contents. The

lower courts determined that the Petitioners claim began

accruing on May 24, 2000. However, the Agreement was

not even fully executed with the acknowledgment and

consent of DOE until June 6, 2000. There is simply no

evidence establishing when the Agreement (which is not

written in layman’s terms) was provided to the Petitioners.

In the lower court’s Petitioners contended that the earliest

possible date they could have received notice was the date

established as the “Final Transfer Date,” but in reality, the

actual date that the Petitioners received notice of the

contents of the “Pension Plan Asset Transfer Agreement”

was well after the “Final Transfer Date” of June 30, 2000.

The Petitioners filed their complaint on June 29, 2004.

Beginning on page 13 of the “Pension Plan Asset

Transfer Agreement,” DOE assumes the liability of LMES

with regard to the “Pension Plan Asset Transfer Agree-

ment.” Specifically the Agreement provides:

Any right and/or interest which is acquired by

LMES under this Agreement shall pass directly

from LMES to DOE or its designee(s) at the

discretion of DOE upon notice to USEC. The ob-

ligations and rights of LMES under this Agree-

ment may be transferred, in whole or in part, to

DOE or its designee(s) at the discretion of DOE

upon notice of such transfer to USEC, and to the

6

extent of such transfer and notice thereof to

USEC, LMES shall have no further responsibili-

ties hereunder. Notwithstanding anything in this

Agreement to the contrary, in the event the

LMES or any successor or transferee pursuant to

this section 7 is unable to fulfill any of its obliga-

tions, financial or otherwise under this Agree-

ment, then DOE should be obligated to fulfill

such obligations about LMES or any of its suc-

cessors or transferees pursuant to this section 7.

In the acknowledgment and consent portion of the

“Pension Plan Asset Transfer Agreement,” DOE agreed to

be bound by the terms and conditions of the Agreement. _ >

Specifically, the Agreement states,

The undersigned hereby agrees to be bound by

such terms and conditions to the extent that such

terms and conditions are imposed on it by the

Agreement and hereby consents to such terms

and conditions.

¢

REASON FOR GRANTING THE PETITION

Petitioners assert that the Sixth Circuit Court of

Appeals’ decision conflicts with the previous decisions of

this Court in determining when a plaintiff is time barred

from “the enforcement of Federally created equitable

rights.” Holmberg v. Armbrecht, 327 U.S. 392, 66 S. Ct.

582, 90 L.Ed. 743 (1946).

Robertson v. Tennessee, 399 F.3d 792, 794 (6th Cir.

2005) (quoting Hughes v. Vanderbilt University, 215 F.3d

543, 548 (6th Cir. 2000) stands for the position that courts

should take “a common sense approach to this task,

inquiring as to what event should have alerted the typical

lay person to protect his or her rights.” (Emphasis added).

In addition, these proceedings involve a question of excep-

tional importance; in that, the opinion determines whether

the Petitioners have initiated this class action in time to

contest the failure to transfer a surplus fund of an amount

that exceeds $100,000,000.

Petitioners’ Argument for Granting the Petition

The USEC Privatization Act became public law on

April 26, 1996. Upon the occurrence of certain events, the

USEC Privatization Act required the Respondents to

transfer “all assets and liabilities related to accrued

pension benefits” to a new pension plan. 42 USC § 2297h-

8(a)(2). The last and most significant piece of legislative

history which accompanied the USEC Privatization Act to

the floor votes of both the House and Senate was Senate

Report 104-173 which offered a “section by section” analy-

sis of the USEC Privatization Act. The relevant portion of

that Senate Report explained that the Respondents “will

arrange for the transfer of the assets (including any

surplus) and liabilities of the pension plan.”

Petitioners assert that as laymen they were certainly

entitled tc interpret the USEC Privatization Act and the

“section by section” analysis which accompanied the

Act to the floor for its vote to mean that the transfer of

assets relating to their pension plan would eventually

include the surplus fund. Petitioners assert that “common

sense” suggests that if the members: of Congress were

using a “section by section” analysis to help them

understand the USEC Privatization Act, the typical lay

person should be afforded the same luxury. There is simply

nothing confusing about what is meant by the words

—

8

contained in the “section by section” analysis. No party

or court has ever proffered any other possible explanation

for the words “including any surplus” other than the fact

that the drafters intended for the surplus to be trans-

ferred. Petitioners assert that the question for the Court to

determine is when should common sense have had the

effect of alerting the Petitioners that the Respondents

were not going to transfer the surplus.

The lower courts determined that the Petitioners’

_ statute of limitations began to run on May 24, 2000, which

was the date that USEC and LMES partially executed the

“Pension Plan Asset Transfer Agreement.” However, the

“Pension Plan Asset Transfer Agreement” was not fully

executed until Respondent, DOE, signed the acknowl-

edgement and consent portion of the “Pension Plan Asset

Transfer Agreement” on June 7, 2000.

Furthermore, the terms of the “Pension Plan Asset

Transfer Agreement” specified two different dates for the

transfer of assets: (1) the first was the “Initial Transfer

Date” (July 1, 1999) which actually pre-existed the date of

the agreement, and (2) the second was the “Final Transfer

Date” on June 30, 2000. The trial court apparently misun-

derstood the Petitioners’ argument as to when the statute

of limitations began to run. In the lower courts, the Peti-

tioners ‘asserted that the statute of limitations could not

have begun to run before June 30, 2000, which was the

“Final Transfer Date” for the “Pension Plan Asset Transfer

Agreement.” However, the actual date that the Petitioners

could have received notice of the contents of the “Pension

Plan Asset Transfer Agreement” was well after the “Final

Transfer Date” of June 30, 2000. Probably because there

has been no discovery as to the issue of when the Petition-

ers could have learned that the Respondents were not

9

going to transfer the surplus fund, the courts have been

somewhat confused as to what was public knowledge,

what could have been known about the terms of the

“Pension Plan Asset Transfer Agreement,” and when that

knowledge could have been learned.

This is significant for inquiry, as Circuit Judge

Batchelder expressed in her concurrence:

“... passage by Congress of the Privatization Act

in 1996 could not have given the petitioners rea-

son to know of a claim arising from a transfer

that occurred over four years later on May 24,

2000. In addition, the May 12, 1999, letter from

{[LMES] to the petitioners, although relied upon

by the district court, also gave the petitioners no

reason to know of their claim.”

However, Circuit Judge Batchelder went on to con-

clude that the combined effect of the December 21, 1999,

LMES plan amendment, together with the content of the

“Pension Plan Asset Transfer Agreement” of May 24, 2000,

worked together to place the Petitioners on notice that the

Respondents were not going to transfer the surplus. Using

that logic, the December 21, 1999, LMES plan amendment

did not by itself give the Petitioners notice but rather it

was the combined effect of the later “Pension Plan Asset

Transfer Agreement.”

Consequently, there is a huge unanswered question in

this case. When the Petitioners learned of the May 24,

2000, agreement or when they even could have learned of

the contents of the May 24, 2000, agreement is simply

unknown by any party or any court who has reviewed this

case. It is common sense that Petitioners could not have

learned of the terms of a May 24, 2000, agreement to

10

which they were not a party, until sometime after May 24,

2000. The combined effect of the panel’s decision, as with

the reasoning of the lower court, is the utilization of an

unfounded presumption that the Petitioners were actually

present and in the room when the private agreement

between LMES and USEC (the Pension Plan Asset Trans-

fer Agreement) was signed. They were not. In other words,

the lower courts’ application of law requires magical facts

to justify their result. The pension agreement was not a

public record which was posted on the Internet. This was

not an agreement which was mailed to the Petitioners.

This agreement was not even in final form until it was

signed, acknowledged, and consented to by the Depart-

ment of Energy on June 7, 2000.

Only if the Petitioners had a covert insider who

conveyed knowledge of this document to them, which then

caused them to immediately request a copy under the

terms of the Freedom of Information Act, could they have

learned of the terms of the Pension Plan Asset Transfer

Agreement at the earliest by late July or August of 2000.

Because the Petitioners filed their Complaint on June 29,

2004, the Court must determine whether the Petitioners

failed to use diligent efforts to discover their potential

injury during a twenty-two (22) day window after the

terms of the private agreement were finally executed by

the Department of Energy on June 7, 2000.

Had the Petitioners magically known of the terms of

the June 7, 2000, agreement on June 7, 2000, it would

have taken time for them to get a copy of the agreement

and employ a professional who could put the contents of

the agreement together with the previous plan amend-

ments to determine that the Respondents had made a

decision to not transfer the surplus fund. If one agrees

11

that expecting the Respondents to immediately know the

contents of an agreement to which they are not a party is

an unreasonable standard, then this case should be

remanded.

With all due respect, the combined effect of the panel’s

Opinion is not the implementation of the common-sense

approach in determining what events should have alerted

a typical lay person to protect his or her rights. Rather it

is the utilization of a fiction that the Petitioners were

standing in the room when the Pension Plan Asset Trans-

fer Agreement was signed. Petitioners could not have

possibly learned of the contents of the Pension Plan Asset

Transfer Agreement before June 29, 2000 because the

agreement was never published nor sent to the Petition-

ers. It was not even in a final executed state until after

June 7, 2000. The Petitioners certainly did not know of

such facts on May 24, 2000. The fact that a majority of the

lower court is of the opinion that the statute of limitation

began to run with the passage of the USEC Privatization

Act in 1996 (June 7, 2000) is an indication that the court

below is misunderstanding the facts of this case.

¢

12

CONCLUSION

The Court should grant the petition for a writ of

certiorari and reverse the decision of the Sixth Circuit

Court of Appeals.

Respectfully submitted,

BOEHL STOPHER & GRAVES

RICHARD L. WALTER

CHARLES D. WALTER*

*Counsel of Record

Counsel for the Petitioners

410 Broadway

Paducah, KY 42001

(270) 442-4369

App. 1

2006 WL 2348493

NOT RECOMMENDED FOR

FULL-TEXT PUBLICATION

No. 05-5788

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

ART K. EDWARDS, JAMES H.

CHESNUT, VELVA YEOMANS,

CHUCK HOBBS, B.J. BOND,

TOM EMERSON, HARRY P.

COLBERT, C.R. BEVERLY, BILL

D. PENRY, TYRONE T. SIVELS,

)

)

)

)

)

) ON APPEAL FROM

BILL LINDSEY, and ) aden

CARL W. WALTER, i: a ve : a I 5

Plaintiffs-Appellants, ) FOR THE WESTERN

) DISTRICT OF

of | KENTUCKY

UNITED STATES DEPARTMENT )

OF ENERGY, LOCKHEED ) (Filed Aug. 11, 2006)

MARTIN ENERGY SYSTEMS,

INC., and UNITED STATES )

ENRICHMENT CORPORATION,

Defendants-Appellees. )

BEFORE: BATCHELDER and GRIFFIN, Circuit Judges;

and ZATKOFF, District Judge.*

GRIFFIN, Circuit Judge.

* The Honorable Lawrence P. Zatkoff, United States District

Judge for the Eastern District of Michigan, sitting by designation.

App. 2

Plaintiffs Art K. Edwards, James H. Chesnut, Velva

Yeomans, Chuck Hobbs, B.J. Bond, Tom Emerson, Harry

P. Colbert, C.R. Beverly, Bill D. Penry, Tyrone T. Sivels,

Bill Lindsey, and Carl W. Walter (collectively hereinafter

“Edwards”) appeal the district court’s dismissal of their

claims against defendants United States Department of

Energy (“DOE”), Lockheed Martin Energy Systems, Inc.

(*“LMES”), and United States Enrichment Corporation

(“USEC”). Edwards contends that the district court erred

in (1) finding that the doctrine of sovereign immunity

precluded their claims against DOE, and (2) holding that

the federal “catch-all” statute of limitations barred the

balance of their claims against LMES and DOE. For the

following reasons, we affirm the district court’s judgment.

A. Background.

Plaintiffs are a class of retirees from the Paducah Gas

Diffusion Plant (“PGDP”) who were “participants” in the

pension plans created for PGDP employees. The PGDP is

an 1,800 employee uranium enrichment facility built by

the federal government in the early 1950s and, for some

time, was operated by various private contractors on

behalf of DOE, including Lockheed Martin Utilities

Services. Rainer v. Union Carbide Corp., 402 F.3d 608, 611

(6th Cir.), cert. denied, ___ U.S. ___, 126 S. Ct. 562 (2005).

In part, because of its management by a government

agency, S. Rep. No. 104-173, at § 18 (1995), the United

‘ As the government notes, one consequence of PGDP being

managed by a government agency was, for example, the requirement

that DOE publish certain commercially sensitive materials in the

Federal Register. A private company, however, would have treated such

(Continued on following page)

App. 3

States’ uranium enrichment program began to suffer and,

as a result, Congress created USEC, a government corpo-

ration, as part of the Energy Policy Act of 1992, H.R. 776,

102nd Cong. § 901 (1992) (enacted). Although the statute

established USEC as a governmental entity, id. §§ 1301(b)

& (c), it simultaneously set forth a strategic plan for

privatization, id. § 1501. While USEC remained a “wholly

owned Government corporation,” id. § 1301(b), it employed

private contractors to operate enrichment plans, including

PGDP, Rainer, 402 F.3d at 611.

Although the Energy Policy Act optimistically called

for privatization within two years of its enactment, H.R.

776, § 1501(a), potential investors were skeptical because

it remained unclear what liabilities a potential buyer

would be asked to assume, S. REP. No. 104-173, at § 18

(1995). Accordingly, Congress enacted the USEC Privatiza-

tion Act in 1996 (hereinafter “the Act”) to clarify the

manner and means by which USEC would be privatized.

Omnibus Consolidated Recessions & Appropriations Act of

1996, H.R. 3019, 104th Cong. §§ 3107-17 (1996). In doing

so, the Act ordered the directors to “establish a private for-

profit corporation under the laws of a State for the purpose

of receiving the assets and obligations of the Corporation

at privatization and continuing the business operations of

the Corporation following privatization.” 42 U.S.C.

§ 2297h-3(a)(1). The private corporation would thereafter

be responsible solely for “any liabilities arising out of its

operations after the privatization date.” Id. § 2297h-7(c).

The Act makes clear that the private corporation “shall not

be an agency, instrumentality, or establishment of the

information as proprietary and, as a result, would not have been

required to issue it for publication. S. REP. No. 104-173, at § 18 (1995).

App. 4

United States, a Government corporation, or a Govern-

ment-controlled corporation.” Jd. § 2297h-3(b)(1). Corre-

spondingly, the Act expressly withdrew the United States’

consent to suit on any claim related to the privatization of

USEC. Id. § 2297h-7(a)(4).

Pursuant to the foregoing, the privatization process

was completed on July 28, 1998, thereby creating the

private corporation known as USEC. United States En-

richment Corporation, 63 Fed. Reg. 42,201 (Aug. 7, 1998)

(codified at 10 C.F.R. pt. 1101). Assuming that the newly

formed USEC elected to terminate or change the contrac-

tor for current/retired employee pension plans, the Act

required USEC to “arrange for the transfer of all plan

assets and liabilities relating to accrued pension benefits

of such plan’s participants and beneficiaries from such

plant to a pension plan sponsored by the new contrac-

tor... .” 42 U.S.C. § 2297h-8(a)(2).

At the time of privatization, Lockheed Martin Utility

Systems, Inc. (“LMUS”) served as the operating contractor

of PGDP, and LMUS employees participated in a pension

plan maintained by defendant LMES. In May 1999,

although USEC terminated LMUS as operating contractor

of PGDP, roughly 4,000 LMUS employees remained at

PGDP and simply became employees of USEC. In accor-

dance with the Act, USEC then effectuated the transfer of

more than $548 million worth of pension assets via

agreement between LMES and USEC on May 24, 2000

(“the new plan”). At the time of the agreement, a surplus

of funds existed in the LMES pension plan beyond the sum

necessary to cover the vested benefits of plan participants.

Significantly, only PGDP workers were affected by the

pension asset transfer agreement between LMES and

USEC; employees and retirees from enrichment plans

App. 5

other than PGDP continued to be covered under the

previous pension plan (“the old plan”).

Four years later, the sponsor of the old plan increased

pension benefits for remaining plan participants, including

employees of other enrichment plants. That same year, the

USEC pension plan denied an increase in benefits to

PGDP employees and retirees.

B. The instant action.

Plaintiffs in this case are a putative class comprised of

PGDP retirees who, prior to the pension asset transfer,

were participants in the LMES-administered pension

plan. Consistent with the above, plaintiffs became partici-

pants in the USEC plan after the completion of the asset

transfer. Apparently dissatisfied with their pension bene-

fits, plaintiffs commenced this action on June 29, 2004,

against LMES, USEC, and DOE, alleging violations of the

Privatization Act and the breach of various fiduciary

duties under the Employee Retirement Income Security

Act (“ERISA”).’ The totality of plaintiffs’ claims arise from

their central contention that defendants failed to transfer

a pro rata share of the surplus associated with the LMES

pension plan into the USEC plan.

* Specifically, plaintiffs asserted four counts against each of the

three defendants. First, plaintiffs claimed that defendants deprived

them of equal protection pursuant to the Fourteenth Amendment

because plaintiffs were arbitrarily burdened by the award of an

increase in benefits exclusively to participants in the old plan. Second,

plaintiffs asserted that defendants violated the terms of the Privatiza-

tion Act. Third, plaintiffs alleged that defendants breached fiduciary

duties imposed on them by ERISA. Finally, plaintiffs asserted civil-

rights claims pursuant to 42 U.S.C. § 1983.

App. 6

Both DOE and LMES subsequently moved to dismiss

the complaint or, alternatively, to grant summary judg-

ment. Similarly, USEC moved the court to grant a judg-

ment on the pleadings or, in the alternative, to grant

summary judgment. On April 13, 2005, the district court

dismissed plaintiffs’ claims. Edwards v. United States

Dep't of Energy, 371 F. Supp. 2d 859 (W.D. Ky. 2005). First,

the court concluded that the sovereign immunity doctrine

precluded plaintiffs’ claims against DOE. Second, the court

likewise dismissed plaintiffs’ claims against LMES and

USEC, concluding that (1) plaintiffs’ § 1983 claims must

fail because neither LMES nor USEC is a “state actor,”

and (2) plaintiffs’ Privatization Act and ERISA claims were

time-barred.

In concluding that plaintiffs’ Privatization Act claims

were time-barred, the district court applied 28 U.S.C.

§ 1658, the federal “catch-all” four-year statute of limita-

tions that governs statutory remedies created after De-

cember 1, 1990. Applying that tolling period, the district

court found that plaintiffs either knew or had reason to

know of their injury on May 24, 2000, the date of the

Pension Plan Transfer Agreement. Although plaintiffs

claimed that the statute of limitations did not begin to run

until June 30, 2004, designated the “final transfer date” by

the terms of the Pension Plan Asset Transfer Agreement,

the district court disagreed and stated as follows:

Plaintiffs’ contention that their claim accrued on

June 30, 2000 is not consistent with Sixth Circuit

case law which focuses on the date of an event

which should have alerted the typical lay person

to protect his or her rights. See e.g., Roberson v.

Tennessee, 399 F.3d 792, 2005 WL 350946 (6th

Cir.2005). The Plaintiffs’ decision to wait until

the date of the final installment prior to filing

App. 7

suit is identical to the decision of the medical

student in Roberson, who decided to wait out the

appeals process rather than filing a civil rights

suit at the point at which a reasonable person

would have acted to protect his or her rights. Jd.

at *2, *4,

This timely appeal followed.

II.

We conduct a de novo review of a district court’s

decision to grant motions seeking either dismissal, sum-

mary judgment, Mich. Paytel Joint Venture v. City of

Detroit, 287 F.3d 527, 533 (6th Cir. 2002), or judgment on

the pleadings, Penny/Ohlmann/ Nieman, Inc. v. Miami

Valley Pension Corp., 399 F.3d 692, 697 (6th Cir. 2005).

Summary judgment is appropriate when there are no

issues of material fact in dispute and the moving party is

entitled to judgment as a matter of law. FED. R. Clv. P.

56(c). A complaint is properly dismissed for failure to state

a claim when “it is clear that no relief could be granted

under any set of facts that could be proved consistent with

the allegations.” Hishon v. King & Spalding, 467 U.S. 69,

73 (1984). Although we must view the complaint in the

light most favorable to plaintiffs and accept well-pled facts

as true, we need not accept legal conclusions as true.

Morgan v. Church’s Fried Chicken, 829 F.2d 10, 12 (6th

Cir. 1987). Thus, pure questions of law are subject to de

novo review. S.J. v. Hamilton County, 374 F.3d 416, 418

(6th Cir. 2004) (“[This Court] review(s] de novo the legal

question of whether [a litigant] is entitled to sovereign

immunity, but acceptis] any pertinent factual findings by

the district court unless they are clearly erroneous.”

(citations omitted)).

App. 8

Ill.

Plaintiffs first contend that the district court incorrectly

concluded that the federal “catch-all” statute of limitations

operates to bar their Privatization Act claims against

LMES and USEC. Specifically, plaintiffs renew their

argument that the statute of limitations did not begin to

run prior to June 30, 2000, and, additionally, “[t]here is

simply nothing in the record as to when the Appellants

learned of the contents of the ‘Pension Asset Transfer

Agreement’ or even its existence.” Even if they possessed

the Agreement, plaintiffs assert that “[t]o conclude that

the Appellants claim began accruing on the date of a

pro[flessionally written private agreement with technical

references to which the Appellants were not a party is

unfair and not consistent with the law as has been applied

in this Court.” Indeed, plaintiffs state, the focus should be

on whether plaintiffs received notice of the pension asset

transfer in layman’s terms; i.e., notice stating affirma-

tively and unambiguously that the surplus fund would not

be transferred in the transfer agreement. Given that they

did not receive such notice, plaintiffs conclude that revers-

ing the district court’s grant of summary judgment against

LMES and USEC is appropriate.

At the outset, a question exists as to what statute

provides the applicable limitations period. The district

court accurately observed that the employee protection

provisions of the Privatization Act do not include a statute

of limitations. See 42 U.S.C. § 2297h-8. Noting the absence

of a specific limitations period in the Privatization Act, the

district court applied the so-called “catch-all” provision

found in 28 U.S.C. § 1658. In pertinent part, that statute

provides:

App. 9

Except as otherwise provided by law, a civil ac-

tion arising under an Act of Congress enacted af-

ter the date of the enactment of this section

lenacted Dec. 1, 1990] may not be commenced

later than 4 years after the cause of action ac-

crues.

28 U.S.C. § 1658(a). As the Supreme Court observed, “[a]

cause of action ‘aris[es] under an Act of Congress enacted’

after December 1, 1990 — and therefore is governed by

§ 1658’s 4-year statute of limitations — if the plaintiff’s

claim against the defendant was made possible by a post-

1990 enactment.” Jones v. R.R. Donnelley & Sons Co., 541

U.S. 369, 382 (2004). Given that the Privatization Act was

enacted in 1996, and therefore after 1990, the district

court properly applied § 1658.

The question therefore becomes whether plaintiffs

commenced the instant action within the applicable four-

year statute of limitations. A statute of limitations begins

to run “when the plaintiff knows or has reason to know of

the injury which is the basis of his action. A plaintiff has

reason to know of his injury when he should have discov-

ered it through the exercise of reasonable diligence.”

Sevier v. Turner, 742 F.2d 262, 273 (6th Cir. 1984). “Courts

have taken a common-sense approach to this task, inquir-

ing as ‘to what event should have alerted the typical lay

- person to protect his or her rights.’” Roberson v. Tennessee,

399 F.3d 792, 794 (6th Cir. 2005) (quoting Hughes v.

Vanderbilt Univ., 215 F.3d 543, 548 (6th Cir. 2000)).

In this case, USEC argues, and the district court

agreed, that plaintiffs had notice of the Privatization Act

claims as early as April 26, 1999, when Congress enacted

the Act. Specifically, USEC relies on the language of

the Act warning of the “transfer of all plan assets and

App. 10

liabilities related to accrued pension benefits.” 42 U.S.C.

§ 2297h-8(a)(2). Highlighting the plain language of the Act

is indeed appropriate; it does not provide for a transfer of

surplus assets from the original plan to the new plan.

Alongside this argument, plaintiffs confusingly concede

that “[aJll parties had constructive and actual notice of the

USEC Privatization Act and its legislative history which

created the impression and obligation that LMES would

be transferring ‘any surplus funds’ with the transfer of the

Appellants to the USEC Pension Fund.”

Assuming that the Act itself failed to provide the

requisite notice, USEC highlights a written notice sent to

plaintiffs on May 12, 1999, indicating that LMUS would

no longer exist and PGDP employees would become

employees of USEC on May 18, 1999. The notice likewise

noted that, as a result of that transition, “USEC will

provide your pension plan benefits.” The notice further

explained varied points about the forthcoming transition

and invited employees to ask questions by calling a pro-

vided phone number or, alternatively, attending informa-

tion sessions “for those retirees who would like local HR-

representatives to address questions or concerns in a face-

to-face setting.” Plaintiffs could undoubtedly have asked

questions via phone or at an information session and then

subsequently filed a complaint if they learned that the so-

called “surplus assets” would not be transferred to their

new pension plan.

Even assuming the foregoing was insufficient to

provide plaintiffs with notice of their possible cause of

action, USEC highlights a plan amendment effective as of

App. 11

May 18, 1999.’ A pertinent portion of the transfer amend-

ment labeled “Transfer to the United States Enrichment

Corporation Defined Benefit Plan” provides as follows:

At the direction of the Committee and upon the

assumption of such accrued benefit liabilities by

the USEC Plan, the Insurance Company and/or

Trustee shall transfer to the funding vehicle es-

tablished for the USEC Plan, assets in cash or in

kind equal in value to the then Accrued Benefit

of each transferred LMUS Participant.... Ex-

cept as provided herein, or in the Pension Trans-

fer Agreement between USEC and the Company,

or at the direction of the United States Depart-

ment of Energy, no other assets or liabilities shall

be transferred to the USEC Plan from the [old]

Plan.

(Emphasis added.) Finally, the district court highlighted

the May 24, 2000, Pension Plan Asset Transfer Agreement

itself, which formalized the agreement between USEC and

* USEC suggests that the Amendment became effective on

December 21, 1999. That date is, however, the date the Amendment

was signed. The Amendment itself reflects that it “shall be effective as

of the dates set forth herein.” The specific provision governing “Trans-

fer” states that it “is hereby amended effective as of May 18, 1999[.]”

* Plaintiffs thematically suggest that language like that contained

in the May 18 transfer amendment is beyond the purview of “laymen.”

Plaintiffs likewise suggest that there is no evidence in the record to

indicate that they were provided with this language. Perhaps if this

were the sole ground upon which the district court ruled, plaintiffs’

arguments would be well-taken. Reference to the May 18 transfer

amendment, however, is hardly the sole opportunity plaintiffs had to

learn about the pension asset transfer agreement. Instead, the amend-

ment merely provides further evidence that, following a reasonably

diligent investigation, plaintiffs could have inquired into whether the

“surplus assets” would be transferred to the new plan.

App. 12

LMES to commence an initial asset transfer of approxi-

mately $400 million on or about July 1, 1999.

Taken together, the foregoing events undoubtedly

provided plaintiffs with the requisite notice necessary to

discover the existence of their cause of action through the

exercise of reasonable diligence. As the district court aptly

noted, “{iJt should have been clear to the Plaintiffs that

they may have had a possible cause of action long before

but in any event no later than May 24, 2000, the date of

the Pension Plan Agreement.” Accordingly, plaintiffs’ June

29, 2004, complaint was untimely filed.

IV.

Plaintiffs next renew their contention that the sover-

eign immunity doctrine does not preclude their claims

against DOE. Plaintiffs specificaily argue that the lan-

guage of 42 U.S.C. § 2297h-8(a)(7)(C) provides them with a

cause of action.”

The United States is protected from suit by sovereign

immunity absent a waiver, Fed. Deposit Ins. Corp. uv.

Meyer, 510 U.S. 471, 475 (1994), and “a claim falling

within the terms of the waiver,” United States v. White

Mountain Apache Tribe, 537 U.S. 465, 472 (2003) (citations

° As noted above, plaintiffs mention that a waiver of sovereign

immunity applies because “DOE is a required party to enforce the

provisions of the USEC Privatization Act.” To the extent that this

sentence renews their argument below that FED. R. Civ. P. 19(b) applies

to this case and renders the United States an “indispensable party,” it,

too, fails. California v. Arizona, 440 U.S. 59 (1979) (concluding that if

the United States is an indispensable party pursuant to Rule 19, but

that it has not waived sovereign immunity, then “[t}he suit . . . could not

be maintained in any court”).

App. 13

omitted). Significantly, the requisite waiver “cannot be

implied but must be unequivocally expressed.” United

States v. King, 395 U.S. 1, 4 (1969) (citing United States v.

Sherwood, 312 U.S. 584 (1941)). Moreover, even in the

presence of a valid waiver, the “ ‘limitations and conditions

upon which the Government consents to be sued must be

strictly observed and exceptions thereto are not to be

implied.’” Lehman v. Nakshian, 453 U.S. 156, 161 (1981)

(quoting Soriano v. United States, 352 U.S. 270, 276

(1957)).

In this case, plaintiffs renew their contention that 42

U.S.C. § 2297h-8(a)(7)(C) provides an express waiver of

sovereign immunity:

Any suit alleging a violation of any provision of

this subsection, to the extent it does not allege a

violation of the National Labor Relations Act,

may be brought in any district court of the

United States having jurisdiction over the par-

ties, without regard to the amount in controversy

or the citizenship of the parties.

Id.

The question therefore becomes whether § 2297h-8’s

statutory grant of subject-matter jurisdiction likewise

qualifies as a waiver of sovereign immunity. As the district

court observed, and the government argues, the mere fact

that a federal court has jurisdiction to entertain a cause of

action does not correspondingly mean that the United

States has waived its immunity from being sued on that

same cause of action. United States v. Nordic Village, Inc.,

503 U.S. 30, 37-38 (1992); see, e.g., Blatchford v. Native

Village of Noatak, 501 U.S. 775, 786 n.4 (1991) (“The fact

that Congress grants jurisdiction to hear a claim does not

App. 14

suffice to show Congress has abrogated all defenses to that

claim.”); United States v. Certain Land Situated in the City

of Detroit, 361 F.3d 305, 307 (6th Cir. 2004) (concluding 28

U.S.C. § 1367(a), the supplemental-jurisdiction statute,

“does not constitute a waiver of sovereign immunity”), cert.

denied, 543 U.S. 1120 (2005); Reed v. Reno, 146 F.3d 392,

398 (6th Cir. 1998) (“Section 1331’s general grant of

federal question jurisdiction, however, does not by its own

terms waive sovereign immunity and vest in district

courts plenary jurisdiction over claims for money judg-

ments against the United States.”) (internal citation and

quotation marks omitted).

More importantly, upon its enactment, the Privatiza-

tion Act expressly withdrew the government’s consent to

be sued:

Any stated or implied consent for the United

States, or any agent or officer of the United

States, to be sued by any person for any legal,

equitable, or other relief with respect to any

claim arising from any action taken by any agent

or officer of the United States in connection with

the privatization of the Corporation is hereby

withdrawn.

42 U.S.C. § 2297h-7(a)(4). As the Supreme Court has

observed, “the power to withdraw the privilege of suing

the United States or its instrumentalities knows no

limitations.” Maricopa County v. Valley Nat'l Bank, 318

U.S. 357, 362 (1943) (citing Lynch v. United States, 292

U.S. 571, 581 (1934) (noting “Congress retained power to

withdraw the consent at any time” and “consent to sue the

United States is a privilege”)). The district court therefore

correctly concluded that DOE has not waived its sovereign

App. 15

immunity and, as a result, plaintiffs’ action against DOE

cannot be maintained.

Affirmed.

ALICE M. BATCHELDER, Circuit Judge. I concur in

the result and most of the reasoning of the majority

opinion but write separately to express my view that

passage by Congress of the Privatization Act in 1996 could

not have given the plaintiffs reason to know of a claim

arising from a transfer that occurred over four years later

on May 24, 2000. In addition, the May 12, 1999, letter

from LMUS to the plaintiffs, although relied upon by the

district court, also gave the plaintiffs no reason to know of

their claim. Although the letter described the level of

benefits under the new plan, it did not describe the trans-

fer of assets, surplus or otherwise. It therefore could not

have alerted the plaintiffs to the possibility that LMUS

would not transfer a portion of the surplus assets to the

USEC plan.

I nonetheless agree with the majority and the district

court that later events should have alerted the plaintiffs to

the need to protect their rights. See Sevier v. Turner, 742

F.2d 262, 273 (6th Cir. 1984). The full details of the trans-

fer from the LMUS plan to the USEC plan were described

in the LMUS plan amendment of December 21, 1999, and

the Pension Plan Transfer Agreement of May 24, 2000.

Together, these documents specified that no assets other

than “accrued benefits” would be transferred to the new

plan and that the transfer would comply with Internal

Revenue Code § 414(1), which, among other things, gov-

erns disposition of excess assets in the spin-off of a defined

benefit plan. See 26 U.S.C. § 414(1)(2). These provisions,

App. 16

when read jointly, should have put the plaintiffs on notice

of the need to inquire into the propriety of the transfer

described by the plan amendment. Because the plaintiffs

could have discovered their claim after May 24, 2000

through the exercise of reasonable diligence, I concur in

the result reached by the majority.

App. 17

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF KENTUCKY

PADUCAH DIVISION

CIVIL ACTION NUMBER: 5:04CV-138-M

ART K. EDWARDS, ET AL. PLAINTIFFS

vs.

DEPARTMENT OF ENERGY, ETAL DEFENDANTS

JUDGMENT

KKKKKAKAK KKK KEK KOK OK

This matter having come before the Court on disposi-

tive motions filed by Defendants, and the Court on this

date having issued a Memorandum Opinion and Order

granting said motions, |

IT IS HEREBY ORDERED that judgment be

entered in favor of the Defendants consistent with the

Court’s Memorandum Opinion and Order and the Plain-

tiffs’ Complaint be dismissed, with prejudice.

THIS IS A FINAL AND APPEALABLE ORDER

AND THERE IS NO JUST CAUSE FOR DELAY.

This the 13th day of April, 2005.

JEFFREY A. APPERSON,

CLERK

BY: /s/ Erica A. Skinner

Erica A. Skinner,

Deputy Clerk

Copies to: Counsel of record

App. 18

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF KENTUCKY

PADUCAH DIVISION

CIVIL ACTION NO: 5:04CV-138-M

ART K. EDWARDS, e? al. PLAINTIFFS

¥.

UNITED STATES OF AMERICA, DEFENDANTS

DEPARTMENT OF ENERGY,

LOCKHEED MARTIN ENERGY

SYSTEMS, INC., and UNITED STATES

ENRICHMENT CORPORATION

MEMORANDUM OPINION AND ORDER

This matter is before the Court on motions by Defen-

dants, Lockheed Martin Energy Systems, Inc. [DN 14], the

United States Department of Energy [DN 15], and the

United States Enrichment Corporation [DN 36]. Both the

United States Department of Energy and Lockheed

Martin Energy Systems move the Court to either dismiss

the Complaint of Plaintiffs, Art K. Edwards, et. al, or, in

the alternative, to grant summary judgment. The United

States Enrichment Corporation moves the Court to grant

a judgment on the pleadings, or, in the alternative, to

grant summary judgment. Fully briefed, these matters

stand ripe for decision. For the following reasons, Defen-

dants’ motions are all GRANTED.

I. STANDARD OF REVIEW

Upon a motion to dismiss for failure to state a claim

pursuant to Fed. R. Civ. P. 12(b)(6), the Court must construe

the complaint in a light most favorable to the plaintiff, accept

all the factual allegations as true, and determine whether

App. 19

the plaintiff undoubtedly can prove no set of facts in

support of its claim that would entitle it to relief. Sistrunk

uv. City of Strongsville, 99 F.3d 194, 197 (6th Cir.1996), cert.

denied, 520 U.S. 1251 (1997). Ajudge may not grant a Fed.

R. Civ. P. 12(b)(6) motion based on a disbelief of a com-

plaint’s factual allegations. Wright v. MetroHealth Medical

Center, 58 F.3d 1130, 1138 (6th Cir.1995), cert. denied, 516

U.S. 1158 (1996). A Fed. R. Civ. P. 12(b)(6) motion tests

whether the plaintiff has stated a.claim for which the law

provides -relief. Gazette v. City of Pontiac, 41 F.3d 1061,

1064 (6th Cir. 1994).

The standard of review requires that a plaintiff plead

more than bare legal conclusions. Lillard v. Shelby County

Bd. of Educ., 76 F.3d 716, 726 (6th Cir. 1996). The com-

plaint must give the defendant fair notice of what the

plaintiff’s claim is and the grounds upon which it rests.

Gazette, 41 F.3d at 1064. “In practice, a... complaint must

contain either direct or inferential allegations respecting

all the material elements to sustain a recovery under some

viable legal theory.” Lillard, 76 F.3d at 726 (citation omit-

ted). In deciding a motion to dismiss, the Court may

consider all papers and exhibits appended to the com-

plaint, as well as any matters of which judicial notice may

be taken. Hirsch v. Arthur Anderson & Co., 72 F.3d 1085,

1092 (2d Cir. 1995).

The Court reviews a motion for judgment on the

pleadings pursuant to Rule 12(c) under “the same de novo

standard applicable to a motion to dismiss under Rule

12(b)(6).” Ziegler v. IBP HogMarket, Inc., 249 F.3d 509,

511-12 (6th Cir. 2001). “In reviewing the motion, the Court

must construe the complaint in the light most favorable to

the plaintiff, accept all of the complaint’s factual allegations

as true, and determine whether the plaintiff undoubtedly

App. 20

can prove no set of facts in support of his claim that would

entitle him to relief.” Jd. at 512. However, the Court “need

not accept as true legal conclusions or unwarranted

factual inferences.” Mixon v. Ohio, 193 F.3d 389, 400 (6th

Cir. 1999). Judgment in the defendant’s favor is warranted

if plaintiffs cannot prove any set of facts in support of their

claims that would entitle them to relief. Jd.

In order to grant a motion for summary judgment, the

Court must find that the pleadings, together with the

depositions, interrogatories, and affidavits, establish that

there is no genuine issue of material fact and the moving

party is entitled to judgment as a matter of law. Fed. R.

Civ. P. 56. The moving party bears the initial burden of

specifying the basis for its motion and of identifying that

portion of the record which demonstrates the absence of a

genuine issue of material fact. Celotex Corp. v. Catrett, 477

U.S. 317, 322 (1986). Once the moving party satisfies this

burden, the non-moving party thereafter must produce

specific facts demonstrating a genuine issue of fact for

trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48

(1986).

Although the Court must review the evidence in the

light most favorable to the non-moving party, the non-

moving party is required to do more than simply show

there is some “metaphysical doubt as to the material

facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Co., 475

U.S. 574, 586 (1986). The Rule requires the non-moving

party to present “specific facts showing there is a genuine

issue for trial.” Fed. R. Civ. P. 56(e) (emphasis added). “The

mere existence of a scintilla of evidence in support of the

[non-moving party’s] position will be insufficient; there

must be evidence on which the jury could reasonably find

for the [non-moving party].” Anderson, 477 U.S. at 252. It

App. 21

is against these standards that the Court reviews the

following facts.

II. BACKGROUND

The Plaintiffs, a class of retirees from the Paducah

Gas Diffusion Plant (PGDP), were “participants” in the

Pension Plans for employees who worked at PGDP. In this

action, Plaintiffs argue that they are not receiving the full

retirement due to them under the Pension Plans and bring

claims against Lockheed Martin Energy Systems (LMES),

the United States Department of Energy (DOE), and the

United States Enrichment Corporation (USEC) pursuant

to the USEC Privatization Act, 42 U.S.C. § 2297h et seq.,

the Employee Retirement Income Security Act (ERISA), as

amended, 29 U.S.C. § 1001 et seq., the Equal Protection

Clause of the U.S. Constitution, and 42 U.S.C. § 1983.

Before 1993, the PGDP was operated by various

contractors acting on behalf of the DOE. In 1992, Congress

determined that due to a shrinking market share, the

domestic uranium enrichment program needed to have

“the flexibility of a private sector operation to adequately

respond to an intensely competitive international market.”

Accordingly, Congress created the United States Enrich-

ment Corporation (Enrichment Corporation), a govern-

ment-owned corporation, to carry out that privatization

mission.

On July 1, 1993, all DOE contracts “relate[d] to

uranium enrichment and related services” were trans-

ferred as a matter of law to the Enrichment Corporation.

Private contractors continued to operate the PGDP on behalf

of the Enrichment Corporation until it developed its own

plan for privatization. On June 30, 1995, the Enrichment

App. 22

Corporation presented President Clinton and Congress

with its plan for privatization. On April 2, 1996, the

“USEC Privatization Act,” 42 U.S.C. § 2297h, was signed

into law. Prior to the implementation of the USEC Privati-

zation Act (Privatization Act), the employees of the various

contractors who operated the PGDP were all “plan partici-

pants” in a pension plan which was sponsored by the

various contractors as well as the DOE. The Privatization

Act created a new scheme that is the subject of this litiga-

tion.

Pursuant to the Privatization Act, the Government-

owned Enrichment Corporation transferred its assets to

the publicly traded United States Enrichment Corpora-

tion, Inc. (USEC) and became a wholly-owned subsidiary

of the USEC. On July 28, 1998 the privatization of the

USEC took effect after an initial public offering of 100

percent of the corporation’s stock to private investors.

Since that date, the USEC has operated the PGDP.

As previously noted, the PGDP has been operated by

various contractors over the last 54 years. Despite changes

in the operating contractors at the PGDP, the labor and

management force of employees remained constant. In

other words, any change in the operating contractor

preserved the labor and management force of the previous

operating contractor and that labor and management force

became employees of the new operating contractor. Thus,

when Lockheed Martin Utility Systems became the new

operating contractor in 1995, the employees at the PGDP

continued to be participants in what was then called “The

Retirement Program Plan for Employees of Lockheed

Martin Energy Systems, Inc.”

App. 23

Once USEC completed privatization, it terminated

LMES as the operating contractor of the Paducah plant.

That decision triggered one of the “employee protections”

provisions in the Privatization Act, 42 U.S.C. § 2297h-

8(a)(2), which states as follows:

In the event the private corporation terminates

or changes the contract at either or both of the

gaseous diffusion plants, the plan sponsor or

other appropriate fiduciary of the pension plan

covering employees of the prior operating con-

tractor shall arrange for the transfer of all plan

assets and liabilities relating to accrued pension

benefits of such plan’s participants and benefici-

aries from such plant to a pension plan spon-

sored by the new contractor or the private

corporation or a joint labor-management plan, as

the case may be.

At the time USEC terminated LMES’ contract on May

18, 1999, USEC informed all retirees in the class that

Plaintiffs purport to represent that they were going to be

transferred from LMES’ pension plan (the “original plan”)

to a pension plan established by USEC (the “new plan”).

The notice, however, did not state that any surplus assets

would be transferred from the original plan to the new

plan. On December 21, 1999, the original plan was

amended to clearly state that the original plan would

transfer assets to the new plan in an amount equal to the

accrued benefit of each transferred participant. Then, on

* The term “original plan” refers to the plan that was formerly

maintained by LMES and that is now maintained by BWXT Y-12

L.L.C., an operating contractor subsequent to LMES that took over the

original plan. The term “new plan” refers to the plan covering current

USEC employees and retirees.

App. 24

May 24, 2000, USEC and LMES entered into a Pension

Plan Asset Transfer Agreement, thus formalizing an

arrangement that began with an initial asset transfer of

approximately $400 million on or about July 1, 1999. This

Agreement provided that the asset transfer would comply

with section 414(I) of the Internal Revenue Code, and the

Agreement made no provision whatsoever for the transfer

of any surplus. Furthermore, the Agreement designated

July 1, 1999 as the “initial transfer date,” and June 30,

2000 as the “final transfer date.” On June 15, 2000, LMES

transferred the remaining balance from the original plan

to the new plan.

Dissatisfied with both their transfer into the new plan

and LMES’ failure to transfer the surplus into the new

plan, the Plaintiffs brought this action on June 29, 2004

naming as Defendants, USEC, LMES, and the DOE.

Specifically, the Plaintiffs assert four counts against each

of the Defendants. First, they aver that Defendants have

deprived them of equal protection of the laws under the

14th Amendment in that they have been arbitrarily

burdened by the award of an increase in benefits only to

participants in the predecessor plan. Second, they contend

that the Defendants have violated the express terms of the

Privatization Act. Third, Plaintiffs aver that the Defen-

dants have breached their fiduciary duties under ERISA.

Fourth, Plaintiffs allege that the Defendants are liable to

them under 42 U.S.C. § 1983 as a result of each of the first

three purported violations enumerated in the Complaint.

III. DISCUSSION

Defendants LMES, DOE, and USEC argue that all of

these claims as set forth by the Plaintiffs cannot survive

App. 25

their respective motions. The DOE, in addition to arguing

the merits of the Plaintiffs’ claims, assert the defense of

sovereign immunity. The Court will first address the

DOE’s sovereign immunity argument.’ Thereafter, the

Court will address the Plaintiffs’ claims in the following

order: (1) the Constitutional claim, (2) the Privatization

Act claim, (3) the ERISA claim.

A. Plaintiffs’ Claims against the DOE

Although the Plaintiffs raise several legal issues in

their claims against the DOE, the Court need not address

them all. Resolution of the sovereign immunity question

will decide the matter. The DOE contends that, in enacting

the Privatization Act, the United States expressly retained

its sovereign immunity from any suit seeking to hold it

liable for any of its actions in connection with the privati-

zation of USEC, or for any of the operations of USEC after

its privatization. The Plaintiffs argue that the Privatiza-

tion Act contained a waiver of sovereign immunity.

The sovereign immunity doctrine essentially holds

that a sovereign cannot he sued without its consent. Hans

v. Louisiana, 134 U.S. 1, 15-18 (1890). Thus, the Court’s

subject matter jurisdiction over the United States exists

only to the extent that the United States has waived its

sovereign immunity. See Hercules, Inc. v. United States,

516 U.S. 417, 422-423 (1996). When a question of waiver is

at issue, any waiver of sovereign immunity must be

strictly construed in favor of the United States since the

* Whether there has been an adequate waiver of sovereign

immunity is a threshold issue. See e.g., Britell v United States. 372 F.3d

1370, 1376 (Fed. Cir. 2004).

App. 26

“limitations and conditions upon which the Government

consents to be sued must be strictly observed and excep-

tions thereto are not to be implied.” Lehman v. Nakshian,

453 U.S. 156, 161 (1981).

The Plaintiffs argue that 42 U.S.C. § 2297h-8(a)(7)(c)

provides such an express waiver of sovereign immunity:

Any suit alleging a violation of any provision of

this subsection, to the extent it does not allege a

violation of the National Labor Relations Act,

may be brought in any district court of the

United States having jurisdiction over the par-

ties, without regard to the amount in controversy

or the citizenship of the parties.

However, simply because a district court may have

jurisdiction to hear a certain cause of action does not mean

that the United States has waived its immunity if that

action were to be brought against it. United States v.

Nordic Village, Inc., 503 U.S.‘30, 37-38 (1992). In other

words, the mere fact that Congress has granted jurisdic-

tion to hear a claim does not suffice to show that Congress

has abrogated all defenses to that claim. Id. at 38.

The Plaintiffs’ argument is further unconvincing in

light of the express text of the Privatization Act. The

Privatization Act expressly withdraws the government’s

consent to be sued “for any legal, equitable, or other relief

with respect to any claim arising from any action taken by

any agent or officer of the United States in connection

with the privatization” of USEC, Inc. 42 U.S.C. § 2297h-

7(a)(4). The Privatization Act also states that the USEC is

not an “agency, instrumentality, or establishment of the

United States, a Government corporation, or a Govern-

ment-controlled corporation.” 42 U.S.C. § 2297h-3(b)(1).

App. 27

Finally, the Privatization Act assigns any liability arising

out of the operation of USEC, after its privatization date,

solely to that corporation, not to the United States. 42

U.S.C. § 2297h-7(c).

The Plaintiffs also assert that the United States was

“in charge” of the establishment of the new pension plan,

that it is likely that the United States would be an indis-

pensable party to this lawsuit under F.R.C.P. 19(b), and

that therefore the United States has waived its immunity

from suit. It does not necessarily follow that if the United

States is an indispensable party it has waived its immu-

nity. If the sovereign has retained its immunity but is an

indispensable party to the lawsuit, the only course of

action available to the court would be to dismiss the suit in

its entirety, not to mandate the joinder of the sovereign as

a defendant. See California v. Arizona, 440 U.S. 59, 62

(1979); Spirit Lake Tribe v. North Dakota, 262 F.3d 732,

746-47 (8th Cir.2001).

For these reasons, the Court holds that the DOE has

not waived its sovereign immunity and its motion to

dismiss for failure to state a claim is thus granted.

B. Plaintiffs’ Claims against LMES and USEC

Having found the DOE to be immune from suit, the

Court now turns its attention to Plaintiffs’ claims against

LMES and USEC.

App. 28

1. Constitutional Claim

The Plaintiffs bring an equal protection claim in

Count I of the Complaint pursuant to 42 U.S.C. § 1983° as

set forth in Count IV of the Complaint. Specifically, Plain-

tiffs contend that as a result of the Defendants’ application

and administration of the Privatization Act, they have

been classified in a manner which has arbitrarily bur-

dened them as a class and has denied them “equal protec-

tion” as guaranteed by the 14th Amendment. The issue is

the applicability of the 14th Amendment to USEC and

LMES. Plaintiffs argue that as USEC was formerly owned

by the federal government and LMES contracted with the

federal government, an equal protection claim against

both is appropriate. In response, LMES contends that «

private corporation is not liable for a “constitutional tort”

for damages when it contracts with the federal govern-

ment. USEC argues that as it became a private corpora-

tion on July 28, 1998, it likewise cannot be held liable for a

“constitutional tort.”

Only a state actor can violate the 14th Amendment.

Rendell-Baker v. Kohn, 457 U.S. 830, 838 (1982). Thus,

any 14th Amendment claim brought against a private

actor must necessarily fail. However, an action that

violates the 14th Amendment guarantee of equal protec-

tion when committed by a state actor violates the due

process guarantee of the 5th Amendment when committed

by a federal actor. United States v. Elliott, 89 F.3d 1360,

* 42 U.S.C. § 1983 states in pertinent part: “Every person who,

under color of any statute, ordinance, regulation, custom, or usage of

any State ... subjects or causes to be subjected, any citizen ... to the

deprivation of any rights, privileges, or immunities secured by the

Constitution .. . shall be liable...”

App. 29

1364 (8th Cir.1996), Thus, if the Plaintiffs can show that

either USEC or LMES is a federal actor, they can state a

claim under the Due Process Clause of the 5th Amend-

ment. The Court will thus treat the Plaintiffs’ equal

protection claim under the 14th Amendment as a due

process claim under the 5th Amendment.

In Corr. Servs. Corp. v. Malesko, 534 U.S. 61, 66

(2001), the Supreme Court refused to recognize a “consti-

tutional tort” for damages, under a Bivens theory, against

a corporation which contracts with the federal govern-

ment. See generally Bivens v. Six Unknown Fed. Narcotics

Agents, 403 U.S. 388 (1971); see also Ruff v. Runyon, 258

F.3d 498, 502 (6th Cir.2001) (stating that § 1983 and

Bivens actions are identical except for the requirement of a

state actor under § 1983 and federal actor under Bivens).*

In this case, LMES and USEC are both private

corporations.’ The record illustrates that USEC became a

private corporation on July 28, 1998. This date was well

before any of the incidents which provided the basis for

the Plaintiffs’ claims, and so Plaintiffs’ constitutional claim

against USEC fails. Likewise, LMES is not a “federal

* The Plaintiffs brought their equal protection claim under § 1983.

The Court found that the Plaintiffs’ equal protection claim was actually

a due process claim under the 5th Amendment, which is applicable only

to the federal government. Thus, Plaintiffs cannot bring an equal

protection claim under § 1983. Rather, their claim is more appropriately

stated as a due process claim under Bivens.

* Based on this finding, all of Plaintiffs’ claims in Count IV of the

Complaint fail.

App. 30

actor” based on Malesko, and Plaintiffs’ constitutional

claim against it fails as well.”

2. Privatization Act

Based on the language of the Privatization Act and

its legislative history, Plaintiffs argue that they should

not have been transferred from the original plan to the

new plan. Alternatively, the Plaintiffs argue that, even if

they should have been transferred, their transfer should

have been accompanied by a transfer of additional

assets reflecting a “surplus” in the original plan. Be-

cause neither of the aforementioned events occurred,

Plaintiffs contend that LMES and USEC violated the

terms of the Privatization Act. Plaintiffs aver that

LMES violated the Privatization Act in that they failed

to transfer “all plan assets relating to accrued pension

benefits.” Plaintiffs aver that USEC violated the Priva-

tization Act by not taking affirmative steps to facilitate

what Plaintiffs view as a required transfer by law.

LMES extensively addresses the language and the

legislative history of the Privatization Act in its brief

and argues that the text, when interpreted in light of

ERISA, does not support the Plaintiffs’ argument.’

* The remaining issue presented by Count I is the assertion that

the transfer of the retiree benefits was “unauthorized.” This issue calls

for an examination of the merits of the Plaintiffs’ claims under the

Privatization Act and ERISA. The Court need not discuss this issue

based on its holdings in sections B2 and B3.

” LMES further filed a motion in which it argued that the Plain-

tiffs made erroneous assertions regarding the legislative history of the

Privatization Act. As the Court has decided this case on other grounds,

it need not assess the accuracy of LMES’ contentions.

App. 31

USEC addresses this issue in its brief but also argues

that the Plaintiffs’ Privatization Act claim must fail for

two additional reasons: (1) the Plaintiffs’ claim is time-

barred under the federal “catch-all” statute of limita-

tions and (2) the Plaintiffs lack Article III standing. The

Court finds that the statute of limitations argument is

controlling, and thus it need not address any other issue

presented by the parties.*

The employee protection provisions of the Privatiza-

tion Act, which give plaintiffs the right to bring an en-

forcement action, do not include a specific statute of

limitations for bringing such actions. 42 U.S.C. § 2297h-8.

The Privatization Act was enacted in 1996. In cases where

a federal piece of legislation was enacted on or after

December 1, 1990, the applicable statute of limitations is

28 U.S.C. § 1658, the federal “catch-all” statute of limita-

tions, which provides, “except as otherwise provided by

law, a civil action arising under an Act of Congress enacted

after the date of the enactment of this section may not be

commenced later than 4 years after the cause of action ,

accrues.”

The Plaintiffs in this action filed their Complaint on

June 29, 2004. Neither the Plaintiffs nor any of the Defen-

dants dispute the applicability of 28 U.S.C. § 1658 to the

* Although LMES makes no mention of a defense based on the

statute of limitations in its motion, the Plaintiffs’ claims against LMES

under the Privatization Act and ERISA are, in the Court’s view, time-

barred by the statutes of limitations as set forth in 28 U.S.C. § 1658

and 29 U.S.C. 1113(2) respectively. Plaintiffs had an opportunity to

respond to USEC’s statute of limitations argument as to their claims

under the Privatization Act and ERISA. Thus, Plaintiffs are not

prejudiced by the Court’s application of the statute of limitations

defense to the claims Plaintiffs asserted against LMES.

App. 32

instant case, and the Court likewise concludes that it is

applicable. Thus, the relevant question becomes at what

point did the Plaintiffs’ claim under the Privatization Act

accrue for purposes of the statute of limitations. If the

Plaintiffs’ Privatization Act claim accrued before June 29,

2000, then the claim is barred by the federal “catch-all”

statute of limitations. If the Plaintiffs’ claim accrued after

June 29, 2000, then the Plaintiffs’ claim is not time barred.

Both parties cite the Pension Plan Asset Transfer

Agreement, dated May 24, 2000, as relevant in determin-

ing when Plaintiffs’ Privatization Act claim accrued. By

the terms of the agreement, July 1, 1999 was designated

as the “initial transfer date,” and June 30, 2000 was

designated as the “final transfer date.” The Plaintiffs

argue that the “final transfer date” marks the time at

which its Privatization Act claim began to accrue. USEC

contends that the Plaintiffs’ claim accrued no later than

May 24, 2000, the date of the Pension Plan Asset Transfer

Agreement.

A “statute of limitations commences to run when the

plaintiff knows or has reason to know of the injury which

is the basis of his action.” Sevier v. Turner, 742 F.2d 262,

273. “A plaintiff has reason to know of his injury when he

should have discovered it through the exercise of reason-

able diligence. Jd. In deciding when a statute of limitations

should begin to run, courts inquire as “to what event

should have alerted the typical lay person to protect his or

her rights.” Hughes v. Vanderbilt Univ., 215 F.3d 543, 547

(6th Cir.2000).

In the instant case, USEC cites four dates at which

point the Plaintiffs should have known to protect their

rights:

App. 33

1. On April 26, 1996, Congress enacted the

USEC Privatization Act. The Privatization Act

did not provide for a transfer of surplus assets

from the original plan to the new plan.

2. In May 1999, all retirees in the class Plain-

tiffs purport to represent were sent written no-

tices that they — and the assets attributable to

their accrued benefit — would be transferred from

the original plan to the new plan. The notice fur-

ther stated that their pensions would be paid

from the assets of the new plan. The notice did

not state that surplus assets would be trans-

ferred from the original plan to the new plan.

3. On December 21, 1999, the original plan was

amended to clearly state that the original plan

would transfer assets to the new plan in an

amount equal to the accrued benefit of each

transferred participant.

4. On May 24, 2000, USEC and LMES entered

into a Pension Plan Asset Transfer Agreement,

thus formalizing an arrangement that began

with an initial asset transfer of approximately

$400 million on or about July 1, 1999. This

Agreement provided that the asset transfer

would comply with section 414(I) of the Internal

Revenue Code. The Agreement made no provi-

sion whatsoever for any transfer of surplus.

It should have been clear to the Plaintiffs that they

may have had a possible cause of action long before but in

any event no later than May 24, 2000, the date of the

Pension Plan Transfer Agreement. As May 24, 2000

reflects that latest possible date at which Plaintiffs should

have known that they may have had a cause of action,

App. 34

Plaintiffs’ surplus transfer claim could not have accrued

after that date.”

Plaintiffs’ contention that their claim accrued on June

30, 2000 is not consistent with Sixth Circuit case law

which focuses on the date of an event which should have

alerted the typical lay person to protect his or her rights.

See e.g, Roberson v. State of Tennessee, 2005 WL 350946,

No. 03-6181 (6th Cir. Feb. 15, 2005). The Plaintiffs’ deci-

sion to wait until the date of the final installment prior to

filing suit is identical to the decision of the medical stu-

dent in Roberson, who decided to wait out the appeals

process rather than filing a civil rights suit at the point at

which a reasonable person would have acted to protect his

or her rights. Id. at *2, *4.

3. ERISA

In Count III of the Complaint, the Plaintiffs’ set forth

a claim under ERISA. That claim is based upon a breach

of fiduciary duty. Specifically, the Plaintiffs aver that the

Defendants have failed to comply with ERISA transfer

requirements, have unlawfully and without authorization

transferred the Plaintiffs as “plan participants” from the

original plan to the new plan, and have withheld the pro

rata share of the surplus fund related to the Plaintiffs’

_pensions from the new plan. They also argue that USEC is

in continuing breach of its fiduciary duty. Defendants

LMES and USEC set forth several defenses in response to

* On May 18, 1999, Plaintiffs were told that they would be trans-

ferred from the original plan to the new plan. Based on that communi-

cation alone, Plaintiffs wrongful transfer claim must fail as barred by

the federal “catch-all” statute of limitations. Thus, the focus of the

Court’s inquiry is on the surplus transfer claim.

App. 35

these claims, but the Court again need only discuss the

statute of limitations defense set forth by USEC, as it is

controlling.

Under ERISA, when a fiduciary breaches an obliga-

tion or duty, the victim of the breach normally has six

years in which to file suit. 29 U.S.C. § 1113(1). However,

this period may be shortened to three years where the

victim had “actual knowledge of the breach or violation.”

29 U.S.C. § 1113(2).” The appellate courts are conflicted on

the proper interpretation of the phrase “actual knowl-

edge.” See Wright v. Heyne, 349 F.3d 321 (6th Cir.2003).

The Sixth Circuit, however, recently settled on the follow-

ing interpretation of the phrase “actual knowledge:”

[T]he relevant knowledge required to trigger the

statute of limitations under 29 U.S.C. § 1113(2) is

knowledge of the facts or transaction that consti-

tuted the alleged violation; it is not necessary

that the plaintiff also have actual knowledge that

the facts establish a cognizable legal claim under

ERISA in order to trigger the running of the

statute. This view is not only in accord with our

” Section 413 of ERISA, 29 U.S.C. § 1113 states as follows: No

action may be commenced under this subchapter with respect to a

fiduciary’s breach of any responsibility, duty, or obligation under this

part, or with respect to a violation of this part, after the earlier of —

(1) six years after (A) the date of the last action which constituted a

part of the breach or violation, or (B) in the case of an omission, the

latest date on which the fiduciary could have cured the breach or

violation, or

(2) three years after the earliest date on which the plaintiff had actual

knowledge of the breach or violation;

except that in the case of fraud or concealment, such action may be

commenced not later than six years after the date of discovery of such

breach or violation.

App. 36

previous ERISA “actual knowledge” decisions but

it also furthers the policies underlying statutes of

limitations. Among the basic policies served by

statutes of limitations is preventing plaintiffs

from sleeping on their rights and prohibiting the

prosecution of stale claims.

Id. at 330.

The Sixth Circuit also rejected an argument that the

three-year statute of limitations is tolled until the plaintiff

consults with an attorney and learns from the attorney

that he has a claim for breach of ERISA fiduciary duties.

Id. at 331.

Furthermore, courts have rejected the continuing

violation theory in an ERISA benefit case arising under

§ 1113(a)(2) since application of the continuing violation

theory would read the “actual knowledge” requirement out

of the statute. See Phillips v. Alaska Hotel and Restaurant

Employees Pension Fund, 944 F.2d 509, 520 (9th Cir.

1991), cert.. denied 504 US. 911 (1992). “Once a plaintiff

knew of one breach, an awareness of later breaches would

impart nothing materially new.” Jd. at 520.

The three-year statute of limitations as set forth in 29

U.S.C. § 1113(2) is applicable in the instant case as the

Plaintiffs do not allege fraud or concealment. The Court’s

reasoning as to the timing of the accrual of Plaintiffs’

claim under the Privatization Act is likewise applicable

here. Plaintiffs’ claim under ERISA could have accrued no

later than May 24, 2000. Thus. Plaintiffs’ ERISA claim is

barred by the statute of limitations.

App. 37

IV. CONCLUSION

For the reasons set fort [sic] above, the motions of

Defendants LMES [DN 14], DOE [DN 15], and USEC [DN

36] are all GRANTED.

[SEAL]

/s/ Joseph H. McKinley, Jr.

Joseph H. McKinley, Jr., Judge

United States District Court

April 11, 2005

ce: counsel of record

04-138Edwards

App. 38

No. 05-5788

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

ART K. EDWARDS, ET AL. )

Plaintiffs-Appellants,

y, ) ORDER

UNITED STATES DEPART- ) (Filed Oct. 31, 2006)

MENT OF ENERGY, ET AL..,

Defendants-Appellees. )

BEFORE: BATCHELDER and GRIFFIN, Circuit

Judges; and ZATKOFF,* District Judge.

The court having received a petition for rehearing en

banc, and the petition having been circulated not only to

the original panel members but also to all other active

judges of this court, and no judge of this court having

requested a vote on the suggestion for rehearing en banc,

the petition for rehearing has been referred to the original

panel.

The panel has further reviewed the petition for

rehearing and concludes that the issues raised in

the petition were fully considered upon the original

* Hon. Lawrence P. Zatkoff, Senior United States District Judge

for the Eastern District of Michigan, sitting by designation.

App. 39

submission and decision of the case. Accordingly, the

petition is denied.

ENTERED BY ORDER OF THE COURT

/s/ Leonard Green

Leonard Green, Clerk [Illegible]

App. 40

EXHIBIT 4

PENSION PLAN ASSET TRANSFER AGREEMENT

THIS AGREEMENT (this “Agreement”) dated as of

May 24, 2000, by and among United States Enrichment

Corporation, a Delaware corporation (“USEC”) and Lock-

heed Martin Energy Systems, Inc., a Delaware corporation

(“LMES”).

WHEREAS, effective as of May 18, 1999 (the “Transi-

tion Date”), USEC has terminated the Operation and

Maintenance Contract between USEC and Lockheed

Martin Utility Services, Inc. (“LMUS”), dated as of October

1, 1995; and

WHEREAS, in accordance with the applicable provi-

sions of the privatization legislation (42 USC 2297h-

8(a)(2)) (the “Privatization Legislation”), in the event of

such termination, the plan sponsor of the Retirement

Program Plan for Employees of Martin Marietta Energy

Systems, Inc. (the “LMES Plan”) shall cause certain assets

and liabilities of the LMES Plan to be transferred to a

pension plan adopted or maintained by USEC for this

purpose (the “USEC Plan”); and

WHEREAS, the parties hereto desire to provide for

the transfer of certain assets and liabilities from the

LMES Plan to the USEC Plan on behalf of certain employ-

ees and retirees of LMUS and certain predecessors to

LMUS, as more fully set forth herein;

NOW, THEREFORE, in consideration of the foregoing

and the premises and mutual covenants and agreements

herein contained, the parties hereto agree as follows:

App. 41

1. Transfer of Assets and Accrued Benefit Liabili-

ties.

(a) Effective as of the Transition Date, USEC shall

cause (i) any active employee of LMUS immediately prior

to the Transition Date who is participating in the LMES

Plan, and (ii) any former employee of LMUS or any prede-

cessor thereto who (A) is entitled to current or future

benefits under the LMES Plan and (B) was employed at

the gaseous diffusion plant at Paducah, Kentucky or

Piketon, Ohio immediately prior to such employee’s

termination of employment (each, a “Transferred Partici-

pant,” and collectively, the “Transferred Participants”) to

be covered under the USEC Plan. USEC shall cause the

USEC Plan to be qualified under section 401(a) of the

Internal Revenue Code of 1986, as amended (the “Code”),

and the related trust to be exempt from taxation under

section 501(a) of the Code. The USEC Plan shall credit

each Transferred Participant who becomes a participant in

the USEC Plan as of the Transition Date with all service

credited to such Transferred Participant prior to the

Transition Date under the LMES Plan, for all purposes

required to be credited pursuant to applicable law. Effec-

tive as of the Initial Transfer Date (as defined below), the

liability for each Transferred Participant’s accrued benefit

under the LMES Plan as of the Transition Date shall be

transferred to and assumed by the USEC Plan, as herein

described.

As promptly as practicable, USEC shall provide

LMES with a copy of the USEC Plan and executed trust

agreement between USEC and a trustee (or trustees)

designated by it. Upon USEC’s receipt of a favorable

determination letter from the Internal Revenue Service

(the “IRS”) regarding the tax qualification of the USEC

App. 42

Plan, USEC shall promptly provide LMES with a copy of

such letter.

LMES has provided USEC or (USEC’s counsel) with

(i) a copy of the most recent favorable determination letter

from the IRS regarding the tax qualification of the LMES

Plan and (ii) a copy of the LMES Plan and executed trust

agreement between LMES and the trustee of the LMES

Plan. Upon LMES’ receipt of a subsequent favorable

determination letter from the IRS regarding the tax

qualification of the LMES Plan, LMES shall promptly

provide USEC with a copy of such letter. In addition,

LMES hereby represents that the provisions of any appli-

cable collective bargaining agreements are consistent with

the terms of the LMES Plan.

(b) On or about July 1, 1999 (the “Initial Transfer

Date”), LMES caused the trustee of the trust under the

LMES Plan to transfer to the trustee of the trust under

the USEC Plan, in cash and in kind, an amount equal to

approximately four hundred million dollars ($400,000,000)

(the “Initial Transfer Amount”). The remaining amount to

be transferred pursuant to this Agreement (the “Residual

Amount”) shall be transferred as promptly as practicable

after the calculations relating to such transfer have been

completed (which LMES and USEC shall use all reason-

able efforts to accomplish as promptly as practicable), but

in no event later than June 30, 2000, unless the parties

agree to an extension (the “Final Transfer Date”). Also on

the Final Transfer Date, LMES shall cause the trustee of

the trust under the LMES Plan to transfer to the trustee

of the trust under the USEC Plan an additional amount

(in cash or in kind, to the extent reasonably and mutually

acceptable to USEC and LMES) representing the actual

earnings or losses on (i) the Initial Transfer Amount from

App. 43

May 31, 1999 to the Initial Transfer Date (the “Initial

Transfer Amount Earnings”), (ii) the Initial Transfer

Amount Earnings from the Initial Transfer Date to the

Final Transfer Date, and (iii) the Residual Amount from

May 31, 1999 to the Final Transfer Date.

The parties hereto shall cooperate in the filing of any

required forms or applications, and in taking all other

actions that are necessary or appropriate relating to the

IRS, the Pension Benefit Guaranty Corporation, the U.S.

Department of Labor, and any other regulatory agency

that has jurisdiction over such transfers, to consummate

the transfers contemplated by this Agreement within the

time periods contemplated by this Agreement.

(c) The Initial Transfer Amount and the Residual

Transfer Amount (together, the “Transfer Amount”) shall

be calculated based on such actuarial assumptions as are

determined and agreed to by an actuary retained by

LMES (“LMES’ Actuary”) and an actuary retained by

USEC (“USEC’s Actuary,” and together with LMES’

Actuary, the “Actuaries”), and which are set forth on

Schedule A attached hereio. In addition, the transfer and

all other related transactions contemplated by this Agree-

ment shall be made in accordance with the terms of the ©

proposal set forth by the United States Department of

Energy (the “DOE”) by letter to USEC dated May 5, 1999,

and the acceptance and modification to such proposal by

USEC by letter to the DOE dated June 21, 1999, as

accepted by DOE by letter to USEC dated July 30, 1999.

(d) Notwithstanding the foregoing, all transfers of

assets and liabilities hereunder shall comply with section

414(1) of the Code. In the event that the Transfer Amount

is less than the amount that is required to be transferred

App. 44

pursuant to section 414(1) of the Code (the “414(1) Transfer

Amount”), then LMES shall promptly cause the trustee of

the trust under the LMES Plan to transfer to the trustee

of the trust under the USEC Plan, in cash, or in kind, to

the extent reasonably and mutually acceptable to USEC

and LMES, an amount to the 414(1) Transfer Amount

minus the Transfer Amount.

(e) Qualified domestic relations orders (““QDROs”)

that relate to Transferred Participants under the LMES

Plan, and that have either been previously approved by

the LMES Plan administrator or that are currently await-

ing approval, shall be transferred to the USEC Plan

effective as of the Transition Date. LMES shall provide

USEC with a list of such QDROs on, or as soon as practi-

cable following, the Transition Date together with com-

plete files on such QDROs. LMES hereby represents that

the QDROs that have been approved by LMES satisfy the

requirements of section 414(p) of the Code.

(f) The assets of both the LMES Plan and USEC

Plan include group annuity contracts (each, a “GAC” and

collectively, the “GACs”) issued by the Prudential Insur-

ance Company of American and the Metropolitan Life

Insurance Company (each, an “Insurance Company and

collectively, the “Insurance Companies”). The USEC Plan

GACs were funded initially with assets transferred from

the LMES Plan GACs. In the event that a demutualization

or comparable transaction occurs with respect to an

Insurance Company and in connection therewith consid-

eration is paid to the LMES Plan with respect to a GAC

issued by or on behalf of such Insurance Company, the

LMES Plan shall be entitled to the entire amount of such

consideration; provided, however, that (i) if the amount of

the consideration paid to the LMES plan was determined

App. 45

on the basis of how long the GAC assets were held by

policyholders and/or (ii) if the longevity factor used by the

Insurance Companies took into account periods on or prior

to July 1, 1999, then the LMES Plan shall transfer to the

USEC Plan consideration received from the Insurance

Company in respect of such transferred GAC assets as

determined under this subparagraph (f). If consideration is

owed the USEC plan by the LMES Plan in accordance

with this subparagraph (f), the amount of such considera-

tion shall be determined by multiplying the total amount

of consideration received by the LMES Plan from the

insurance company in connection with the demutualiza-

tion or comparable transaction by a fraction, the numera-

tor of which is the dollar amount of LMES Plan GAC

liabilities transferred to the USEC Plan GAC that were

included in the Insurance Company’s determination of the

consideration paid to the LMES plan, and the denomina-

tor of which is the total dollar amount of GAC liabilities

that were used by the Insurance Company to determine

the amount of consideration that was paid to the LMES

Plan. LMES shall cause the trustee of the LMES plan or

the Insurance Company to pay any consideration owed to

the USEC Plan as soon as practicable following the date

the LMES Plan or LMES Plan GAC receives such consid-

eration from the Insurance Company.

Notwithstanding the foregoing, consideration with

respect to the demutualization or comparable transaction

of the Insurance Companies shall not be owed the USEC

Plan by the LMES Plan with respect to assets transferred

from the LMES Plan GAC to the USEC Plan GAC to the

extent consideration is paid with respect to such demutu-

alization or comparable transaction by the Insurance

Companies to the USEC Plan with respect to such assets.

App. 46

g. If a Transferred Participants: (i) returns to

employment with LMES or an employer which at that

time is an adopting employer of the LMES Plan (or any

successor plan to the LMES Plan), and (ii) USEC and

LMES or such other employer, as the case may be, agree

that the accrued benefit of such Transferred Participant

in the USEC Plan will be transferred from the USEC Plan

to the LMES Plan (or any successor plan to the LMES

Plan), then, unless otherwise agreed to by USEC and

LMES or such other employer, USEC agrees to direct the

trustee of the USEC Plan to transfer an amount to the

LMES Plan (or such successor plan) equal to such trans-

ferred liabilities, determined using the assumptions then

used by the Pension Benefit Guaranty Corporation (or any

successor thereto) for determining benefit liabilities upon

plan termination.

2. Indemnifications and Representations.

(a) LMES shall indemnify and hold USEC, its

officers, directors, employees, agents and affiliates harm-

less from and against any and all costs, damages, losses,

expenses or other liabilities (collectively, the “Liabilities”)

arising from or related to a breach of the representations

provided by LMES in this Agreement, or by LMES or DOE

in any other communications by LMES or DOE (including

their respective counsel), including the letter from King &

Spalding to USEC dated May 19, 1999, regarding the

LMES Plan, and USEC shall indemnify and hold LMES,

its officers, directors, employees, agents and affiliates

harmless from and against any and all Liabilities arising

from or related to a breach of the representations provided

by USEC in this Agreement, or in any other communica-

tions by USEC (including its counsel), including the letter

App. 47

from Skadden, Arps, Slate, Meagher & Flom LLP to LMES

dated May 20, 1999, regarding the USEC Plan.

(b) LMES represents that the LMES Plan is quali-

_ fied under section 401(a) of the Code and the LMES Plan

trust is exempt from taxation under section 501(a) of the

Code. In addition, LMES represents that the accrued

benefit of each Transferred Participant that is being

assumed by the USEC Plan has been calculated in accor-

dance with the terms of the LMES Plan and any applica-

ble collective bargaining agreement, and that the list of all

Transferred Participants who terminated employment

prior to the Transition Date and are entitled to benefits

under the LMES Plan as of the Transition Date (“Retir-

ees”), furnished to USEC Pursuant to Section 3 constitutes

all Retirees. To the extent the accrued benefit of a Trans-

ferred Participant has been calculated incorrectly or a

Retiree has been omitted from the list of Transferred

Participants, LMES and DOE agree to transfer additional

assets from the LMES Plan to the USEC Plan to correct

such calculation or omission using the actuarial assump-

tions reasonably and mutually agreed upon by the Actuar-

ies to calculate the remaining accrued benefit of such

Transferred Participant or omitted Retiree. The USEC

Plan shall thereafter assume the liability to pay the

correct amount of the accrued benefit of such Transferred

Participant or Retiree and the LMES Plan shall be re-

lieved of the liability to pay for any such Retiree. If the

accrued benefit of a Transferred Participant was calcu-

lated incorrectly or a Retiree was included in the list of

Transferred Participants in error, resulting in excess

assets being transferred from the LMES Plan to the USEC

Plan, USEC agrees, to the extent permitted by applicable

law, to transfer from the USEC Plan to the LMES Plan

App. 48

assets sufficient to correct such error (less any liabilities

incurred by the USEC Plan with respect to such incorrect

payment or additional Retiree), using the actuarial as-

sumptions reasonably and mutually agreed upon by the

Actuaries. In the case of the erroneous transfer of a

Retiree, the LMES plan shall thereafter assume the

liability to pay the accrued benefit of such Retiree, and the

USEC Plan shall be relieved thereof.

3. Furnishing and Auditing Data; Cooperation.

As soon as practicable following the date hereof,

LMES shall provide to USEC a schedule containing the

accrued liabilities, as of May 31, 1999 (the “Accrued

Liabilities”), for each Transferred Participant, shall

identify each Transferred Participant that is a Retiree,

and shall provide such additional current census data,

plan documents and other pertinent information that

USEC may reasonably require to reasonably audit the

calculations prepared by LMES’ Actuary. In the event the

USEC Actuary or LMES’ Actuary find any material

discrepancies in the information or calculations provided

by LMES’ Actuary, the Actuaries shall attempt to resolve

such discrepancies. In the event that such attempt is

unsuccessful, then the Actuaries shall notify the parties

hereto of their failure to reach a resolution, and such

discrepancies shall be resolved by a third actuary, retained

by the actuaries. The expenses of the third actuary shall

be shared equally by the parties hereto, and its resolution

of such discrepancies shall be binding on the parties.

LMES shall promptly provide to USEC such records,

other information and related assistance that USEC shall

reasonably request to enable USEC to complete an audit of

App. 49

Transferred Participants and their respective benefits,

and such other audits as USEC may reasonably complete

in connection with the USEC Plan.

4. Notice.

Any notice or other communications required or

permitted hereunder shall be in writing and shall be

sufficiently given (and shall be deemed to have been duly

given upon receipt), if personally delivered or sent by

registered or certified mail, return receipt requested,

postage prepaid, or by facsimile, addressed as follows:

To USEC:

USEC Inc.

Two Democracy Center

6903 Rockledge Drive

Bethesda, Maryland 20817-1818

Attn: Director, Investments

cc: General Counsel

To LMES:

Lockheed Martin Energy Systems, Inc.

701 Scarboro Road

P.O. Box 2008

Oak Ridge, Tennessee 37830

Attn: Director, Employee Benefits

cc: General Counsel

Any party hereto may change the address to which each

such notice or communication shall be sent by giving

written notice of such change of address to the other party

hereto in the manner above stated.

App. 50

5. Entire Agreement; Amendment.

This Agreement shall contain the entire understand-

ing and agreement among the parties hereto with respect

to the subject matter hereof and thereof and shall super-

sede all prior agreements made by and among the parties.

No alteration, amendment, assignment or modification of

any of the terms or provisions of this Agreement shall be

valid unless by an instrument in writing signed by each of

the parties hereto; provided, however, that the waiver by

any party hereto of compliance with a provision hereof or

any breach or default by any other party hereto need to

signed only by the party waiving such provision, breach of

default.

6. Counterparts

This Agreement may be executed in any number of

counterparts each of which shall be an original, but all of

which taken together shall constitute one and the same

instrument.

7. Successors and Assigns.

Any right and/or interest which is acquired by

LMES under this Agreement shall pass directly from

LMES to DOE or its designee(s) at the discretion of DOE

upon notice to USEC. The obligations and rights of

LMES under this Agreement may be transferred, in

whole or in part, to DOE or its designee(s) at the discre-

tion of DOE upon notice of such transfer to USEC, and

to the extent of such transfer an notice thereof to USEC,

LMES shall have no further responsibilities hereunder.

Notwithstanding anything in this Agreement to the

contrary, in the event that LMES or any successor or

App. 51

transferee pursuant to this Section 7 is unable to fulfill

any of its obligations, financial or otherwise, under this

Agreement, then DOE shall be obligated to fulfill such

obligations of LMES, or any of its successors or trans-

ferees pursuant to this Section 7.

8. Severability of Provisions.

If any provision of this Agreement is invalid, illegal

or incapable of being enforced by any rule of law or

public policy, all other provisions of this Agreement

shall nevertheless remain in full force and effect so long

as the economic or legal structure of the transactions

contemplated hereby is not affected in any manner

adverse to any party. Upon such determination that any

provision is invalid, illegal or incapable of being en-

forced, the parties hereto shall negotiate in good faith to

modify this Agreement so as to effect the original intent

of the parties as closely as possible in an acceptable

manner to the end that the transactions contemplated

here by fulfilled.

9. Governing Law.

The Agreement shall be construed and enforced in

accordance with the laws of the State of Delaware

without giving effect to the conflict of law principles

thereof.

10. Captions.

The captions herein are included for convenience of

reference only and shall be ignored in the construction

or interpretation hereof.

App. 52

IN WITNESS WHEREOF, the parties hereto have

caused this Agreement to be executed as of the day and

year first above written.

UNITED STATES ENRICHMENT CORPORATION

/s/ Henry Z. Shelton

Name: Henry Z. Shelton

Title: Senior Vice President & CFO

LOCKHEED MARTIN ENERGY SYSTEMS, INC.

/s/ Joseph M. Wolfe, Jr.

Name: Joseph M. Wolfe, Jr.

Title: Vice President and CFO

—

ACKNOWLEDGMENT AND CONSENT

The undersigned hereby acknowledges that it has read

and fully understands the terms and conditions of the

foregoing Agreement to which this Consent and Ac-

knowledgment is attached and of which this Consent

and Acknowledgment is hereby made a part for all

purposes. The undersigned hereby agrees to be bound by

such terms and conditions to the extent such terms and

conditions are imposed on it by the Agreement and

hereby consents to such terms and conditions.

UNITED STATES DEPARTMENT

OF ENERGY '

By: /s/ William Westrom

Name: William Westrom

Title: Contracting Officer

Date: 6/6/2000