Furfari v. Pension Benefit Guar. Corp.

ANTHONY FURFARI, Plaintiff, v. PENSION BENEFIT GUARANTY CORPORATION, Defendant.

Civil Action No. 20-2424 (CKK)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

July 14, 2021

MEMORANDUM OPINION

This case involves Mr. Anthony Furfari's claim that he is entitled to a disability pension guaranteed by the Pension Benefit Guaranty Corporation ("PBGC"). Mr. Furfari first pursued his claim through administrative proceedings before the PBGC, but on April 18, 2018, the PBGC Appeals Board issued a final decision denying Mr. Furfari's benefit claim. Mr. Furfari now seeks judicial review of the PBGC's decision, and the parties' respective cross-motions for summary judgment are currently pending before the Court. Upon consideration of the pleadings, the relevant legal authorities, and the record as a whole,¹ the Court will GRANT IN PART Mr. Furfari's [20] Motion for Summary Judgment. Specifically, the Court will VACATE the April 18, 2018 Appeals Board decision and REMAND this case back to the PBGC for proceedings consistent with this Memorandum Opinion. In turn, the Court will DENY WITHOUT PREJUDICE the PBGC's [21] Cross-Motion for Summary Judgment.

I. BACKGROUND

A. Statutory Framework

One of the "principal purposes" of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., "was to ensure that employees and their beneficiaries would not be deprived of anticipated retirement benefits by the termination of pension plans before sufficient funds have been accumulated in the plans." PBGC v. R.A. Gray & Co., 467 U.S. 717, 720 (1984) (citing Nachman Corp. v. PBGC, 446 U.S. 359, 361-62 (1980)). To achieve this goal, Title IV of ERISA "created a plan termination insurance program, administered by the Pension Benefit Guaranty Corporation ("PBGC"), a wholly owned Government corporation within the Department of Labor." Fisher v. PBGC, 994 F.3d 664, 667 (D.C. Cir. 2021). "If [the] PBGC determines that [a] plan lacks sufficient assets to satisfy its pension obligations, [the] 'PBGC becomes trustee of the plan, taking over the plan's assets and liabilities.'" Id. (quoting PBGC v. LTV Corp., 496 U.S. 633, 639 (1990)). "As trustee, the PBGC administers the plan—i.e., determines who is entitled to benefits, and acts as a fiduciary with respect to the plan." Davis v. PBGC, 734 F.3d 1161, 1165 (D.C. Cir. 2013) (internal citations omitted).

By statute, the PBGC guarantees certain "nonforfeitable benefits," 29 U.S.C. § 1322(a), by "reimbursing eligible participants or beneficiaries when a guaranteed plan terminates without sufficient funds," Davis, 734 F.3d at 1164. A "nonforfeitable benefit" is defined as "a benefit for which a participant has satisfied the conditions for entitlement under the plan or the requirements of [ERISA]." 29 U.S.C. § 1301(a)(8). One such "nonforfeitable benefit" guaranteed by the PBGC is "an annuity which is payable . . . under the terms of a plan on account of the total and permanent disability of a participant which is expected to last for the life of the participant[.]" 29 C.F.R. § 4022.6(a). The PBGC, however, only guarantees such disability benefits where those benefits"began on or before the termination date" of the relevant pension plan. Id.; see also Deppenbrook v. PBGC, 778 F.3d 166, 169 (D.C. Cir. 2015) ("The PBGC guarantees only those benefits that are nonforfeitable as of the plan termination date."). Where a plan sponsor files for bankruptcy and the bankruptcy proceeding has not been dismissed as of the termination date of the plan, the date of the bankruptcy petition operates as the plan termination date for the purposes of the PBGC's benefit guarantee obligations. 29 U.S.C. § 1322(g).

The PBGC "has promulgated regulations regarding how it handles benefit determinations." Davis, 734 F.3d at 1166. Under those regulations, the PBGC makes "initial determinations" regarding "a participant's or beneficiary's benefit entitlement and the amount of benefit payable under a covered plan." 29 C.F.R. § 4003.1(e)(2). As a general matter, "[a]ll initial determinations . . . will be in writing, will state the reason for the determination, and . . . will contain notice of the right to request review of the initial determination." Id. § 4003.21. If a person receives an adverse initial determination from the PBGC, the aggrieved individual may file an appeal with the PBGC's Appeals Board. Id. § 4003.51. In their appeal, the aggrieved individual must "[s]pecifically explain why the PBGC's determination is wrong" and "[d]escribe the relevant information the appellant believes is known by [the] PBGC, and summarize any other information the appellant believes is relevant." Id. § 4003.54(a)(3), (4). The Appeals Board then renders a written decision after it "consider[s] those portions of the file relating to the initial determination, all material submitted by the appellant and any third parties in connection with the appeal, and any additional information submitted by PBGC staff." Id. § 4003.59(a).

The PBGC's regulations also include an administrative exhaustion requirement. See id. § 4003.7. Thereunder, an individual challenging an adverse initial determination subject to review by the Appeals Board "has not exhausted his or her administrative remedies until he or she hasfiled . . . an appeal" with the Appeals Board and "a decision granting or denying the relief requested has been issued." Id. "The decision of the Appeals Board constitutes the final agency action by [the] PBGC with respect to the initial determination which was the subject of the appeal and is binding on all parties who participated in the appeal[.]" Id. § 4003.59(b). Following a final decision from the Appeals Board, a plan participant or beneficiary who "is adversely affected by any action of the [PBGC] with respect to a plan in which such person has an interest . . . may bring an action against the [PBGC] for appropriate equitable relief in the appropriate court." 29 U.S.C. § 1303(f)(1).

B. Factual and Procedural Background

In September 1976, Mr. Anthony Furfari started working as a part-time packer for Riverside Markets, which was then a division of a corporation called the Penn Traffic Company ("Penn Traffic"). JA at 138-39. In 1985, Riverside Markets reclassified Mr. Furfari as a full-time grocery clerk. Id. at 140-001. Mr. Furfari continued to work as a grocery clerk with Riverside Markets until he suffered a work-related injury to his left shoulder in August 2005. Id. at 106-001. This shoulder injury required Mr. Furfari to undergo surgery in December 2005, which ultimately limited his ability to serve as a grocery clerk. Id. Mr. Furfari was later released to return to "light duty" work in 2006, but Riverside Markets did not have any light duty work for Mr. Furfari to perform. Id. Riverside Markets eventually terminated Mr. Furfari on December 1, 2006. Id. at 2-002.

At the time of his 2006 termination, Mr. Furfari was a participant in the Amendment and Restatement of the Riverside Division of Penn Traffic Company Bargaining Employees PensionPlan (the "Pension Plan"),² see id. at 149-001; id. at 2-005, an amended version of the pension plan that Penn Traffic originally negotiated with the United Food and Commercial Workers Union in 1974, id. at 2-030. The Pension Plan was administered by a Joint Board of Trustees that was mutually selected by both Penn Traffic and the union. Id. Under the Pension Plan, a participant with at least fifteen years of credited service and covered employment terminated by reason of a "Total and Permanent Disability" could qualify for a disability pension. Id. at 2-081. Section 5.06(d) of the Pension Plan defines a "Total and Permanent Disability" as:

[A] physical or mental condition of a Participant resulting from a bodily injury or disease or mental disorder which, in the sole judgment of the Trustees, will render the Participant totally unable ever to discharge or resume such part of his/her duties of employment with the Employer, or such other duties with the Employer, as the Trustees may determine and as are acceptable to the Employer, regardless of type or kind, deemed to be necessary to the Participant's satisfactory continued employment with the Employer.

Id. at 2-084; see also id. at 2-040 (defining "Employer" as the "Riverside Division of Penn Traffic Company" or other businesses contributing to the Pension Fund with Penn Traffic's approval). Under the Pension Plan, "[t]he determination of a Total and Permanent Disability of any Participant and entitlement to an award of a Disability Pension" was to be made by the plan's Trustees. Id. at 2-085.

In 2008, Mr. Furfari requested information from the Pension Plan administrators regarding his eligibility for a disability pension. On December 30, 2008, a benefits administrator named Beth Downey sent Mr. Furfari a letter confirming that, effective January 1, 2009, Mr. Furfari would be eligible for a disability pension of $626.84 per month. Id. at 147-001. Ms. Downey also stated in her December 30, 2008 letter, however, that Mr. Furfari "must be Social Security Disabled" toqualify for a disability benefit under the Pension Plan. Id. Mr. Furfari subsequently completed an application for a disability pension in April 2009. Id. at 143. With his application, Mr. Furfari included a signed statement from his treating physician, Dr. Michael Comas, M.D., declaring that Mr. Furfari was completely disabled. Id. at 81-001. On August 17, 2009, the Pension Plan sent Mr. Furfari a letter acknowledging the acceptance of his pension application, but also stating that Mr. Furfari's pension eligibility was "contingent on [him] receiving a[n] SSA disability award letter." Id. at 2-002. On November 18, 2009, however, Penn Traffic filed for bankruptcy, and on January 25, 2010, the Pension Plan was terminated without sufficient assets to cover its benefit obligations. Id. at 2-001. The record does not contain any final decision made by Penn Traffic...