Dennis Black, et al. v. Pension Benefit Guaranty Corporation

The Employee Retirement Income Security Act (“ERISA”) carefully spells out the process to termi­ nate a distressed pension plan insured by the Pension Benefit Guaranty Corporation (“PBGC”). Under 29 U.S.C. §1342(a), PBGC may “institute proceedings” to terminate a plan it deems in distress; under § 1342(b), a trustee can take charge of the plan while those pro­ ceedings are underway; and under §1342(c), PBGC or the trustee ultimately may apply to a district court for a decree terminating the plan, which the court may grant “in order to protect the interests of the partici­ pants or to avoid any unreasonable deterioration of the financial condition of the plan or any unreasona­ ble increase in the liability of the [PBGC insurance] fund.” Here, the Sixth Circuit held that, as an alter­ native to these procedures, PBGC may terminate a plan through an agreement with the plan’s adminis­ trator, with no judicial oversight or hearing of any sort for participants who will lose benefits upon ter­ mination. The Questions Presented are:

1. Does ERISA permit the termination of a dis­ tressed pension plan through an agreement between PBGC and the plan administrator?

2. Does termination through such an agreement, which avoids a hearing, violate the participants’ con­ stitutional rights to due process?

3. If ERISA and due process allow for termina­ tion by agreement, is the termination’s substantive legality to be judged under the standards in § 1342(c), or is it enough that the conditions in § 1342(a) to “in­ stitute” proceedings may exist? <