DELTA PILOTS’ PENSION SUIT DISMISSED
September 14, 2018
On August 21, 2018, the D.C. Circuit dismissed a lawsuit against Pension Benefit Guaranty Corp. (PBGC) by approximately 1,700 Delta Air Lines pilots. The Circuit Court’s ruling reversed the lower court’s decision to deny PBGC’s Motion to Dismiss, effectively ending the pilots’ suit. The pilots brought suit against PBGC in 2014, arguing that the company violated its fiduciary duty by incorrectly allocating the Delta Pilots Retirement Plan’s assets, depriving the retired pilots of $544 million.
PBGC assumed responsibility of the plan’s assets in 2006, a year after Delta’s bankruptcy. Under the Employee Retirement Income Security Act, fiduciaries must allocate assets according to a formula that places participants into six categories and assigns each category a priority level. The pilots argued that they were misclassified by being placed in a lower priority category, resulting in them receiving less money.
The Circuit Court found that PBGC met its obligations by paying out $800 million worth of retirement benefits. Further, the Court ruled that any investment earnings the plan brought in after PBGC took it over in 2006 belonged to the company, not the plan participants.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com or 202-659-6622); Drew Derco (dderco@eckertseamans.com or 202-659-6665), or Alexander Matthews (amatthews@eckertseamans.com or 202-659-6633).
Share This Post
Authors
