Summary of DSRA’s Litigation Against the PBGC

     Updated Wednesday, 25 November 2020
      In September 2009, the DSRA sued the PBGC in Federal District Court in Detroit to challenge the PBGC’s then-recent termination of the Delphi Salaried Pension Plan.  The PBGC terminated the plan by simple agreement with Delphi, rather than through a court adjudication as required by the Employee Retirement Income Security Act (ERISA).
      In its lawsuit, the DSRA asserted that the termination: (1) violated ERISA and constitutional due process because it was accomplished without a court adjudication; and (2) is substantively insupportable because the PBGC had not satisfied the criteria for terminations that ERISA establishes, and instead ordered the Plan terminated to comply with the preference of then-President Obama's ad hoc Auto Task Force created under the U.S. Treasury Department.  For relief, the DSRA requested that the retirees be put in the position we would have been in had the termination not occurred, so that, at a minimum, the PBGC would now run the Plan and pay benefits as if the Plan had never been terminated.
      The DSRA tried for nearly a decade to just get facts from the government during the discovery phase of the lawsuit.  The process was fraught with delays caused by the PBGC and U.S. Treasury that very nearly resulted in both being sanctioned.  In March of 2019, the federal court in Detroit granted summary judgment to the PBGC, dismissing the DSRA’s claims.  The DSRA then appealed to the U.S. Sixth Circuit Court of Appeals which – on September 1, 2020 – upheld the District Court’s ruling.
      DSRA continues to believe the PBGC’s actions were unlawful, and we filed with the Court of Appeals on October 15 a petition for rehearing – by either the three-judge panel or the full Court – on several legal issues.  On November 11, the PBGC filed its Response to the DSRA Petition for Rehearing as requested by the court. The court then invited DSRA to submit a Supplemental Memorandum of Law, which was submitted to the court on January 12, 2021. The court has now directed the PBGC to provide its response by January 28.