Union appeals from a judgment following an order of the United States District Court for the Southern District of New York, Owen, J., which denied its motion to stay and/or vacate a Consent Order previously signed by the court. The Consent Order was submitted to the court by the LTV Corporation and LTV Steel Company, the administrators of certain pension plans, and the Pension Benefit Guaranty Corporation. The Consent Order appointed the Pension Benefit Guaranty Corporation as statutory trustee of the plans and terminated them. The Union complains that, by approving the termination without affording participants and other interested parties prior notice and an adjudication, the district court's orders violate Title IV of the Employee Retirement Income Security Act of 1974, 29 U.S.C.A. §§ 1301-1461 (West 1985 & Supp. 1987), as amended by the Single-Employer Pension Plan Amendments Act of 1986, Pub. L. No. 99-272, Title XI (1986), and the Due Process Clause of the Fifth Amendment. Affirmed.
Before: VAN GRAAFEILAND, MESKILL and CARDAMONE, Circuit Judges.
This is an appeal from a judgment following an order of the United States District Court for the Southern District of New York, Owen, J., which denied the motion of intervenor United Steelworkers of America (Union) to vacate and/or stay a Consent Order previously signed by Judge Owen that terminated various pension plans of which the Union's members are participants. The Consent Order was submitted to the district court by LTV Corporation and LTV Steel Company (collectively "LTV"), the administrators of the plans, and the Pension Benefit Guaranty Corporation (PBGC). The Order appointed PBGC as statutory trustee of the various plans and terminated them.
The Union complains that the Consent Order was obtained in a procedurally deficient manner. Specifically, the Union claims that, under Title IV of the Employee Retirement Income Security Act of 1974, 29 U.S.C.A. §§ 1301-1461 (West 1985 & supp. 1987) (ERISA), as amended by the Single-Employer Pension Plan amendments Act of 1986, Pub. L. No. 99-272, Title XI (1986), and the Due Process Clause of the Fifth Amendment, it and other interested parties were entitled to notice and an adjudication prior to the district court's approval of the termination. We affirm the judgment of the district court.
The Consent Order terminated the Jones & Laughlin Hourly Pension Plan and the Pension Plan of Republic Steel. These plans governed the benefits of thousands of past and present employees of Jones & Laughlin Steel, Republic Steel and Youngstown Sheet & Tube. The termination marks the largest involuntary termination in ERISA's history.
PBGC is the national insurer of pension plans. A wholly owned United States Government corporation, it was created to administer the mandatory termination insurance program established under Title IV of ERISA, guaranteeing plan participants a minimum level of benefits if their employers are unable to fund their plans. See In re Pension Plan For Employees of Broadway Maintenance Corp., 707 F.2d 647, 648-49 (2d Cir. 1983) (describing PBGC in detail); Pension Benefit Guaranty Corp. v. Heppenstall Co., 633 F.2d 293, 295-97 (3d Cir. 1980) (same).
The Union has served as the collective bargaining representative of the employees of LTV and its predecessors for over forty years. The Union and LTV currently are parties to various collective bargaining agreements.
LTV filed a petition in the United States Bankruptcy Court for the Southern District of New York under Chapter 11 on January 17, 1986. LTV thereafter notified PBGC that it could not and would not make the contributions to the plans that ERISA's minimum funding standards require.
On January 12, 1987, PBGC informed LTV of its intention to terminate the plans. On the same day LTV assented to the Consent Order and the district court signed it. The plans; participants, the Union and other interested parties did not receive prior notice or a hearing. The next day newspaper advertisements publicized the terminations.
As a result of the terminations, PBGC will guarantee some but not all of the plans' benefits. The PBGC estimates the fifteen percent of current retirees will have their benefits reduced. Further accrual of benefits ended as a consequence of the termination.