Tuesday, May 21, 2013

Pension Benefit Guarantee Corp. v. LTV Corp case brief

Pension Benefit Guarantee Corp. v. LTV Corp case brief
496 U.S. 633, 110 S. Ct. 2668, 110 L. Ed. 2d 579, 12 EBC 1593 (1990)

CASE SYNOPSIS: Petitioner Pension Benefit Guaranty Corporation sought review of a decision of the United States Court of Appeals for the Second Circuit, which held that petitioner's decision to restore certain pension plans was arbitrary and capricious.

FACTS: Petitioner corporation was a United States government corporation that administered and enforced the Employee Retirement Income Security Act (ERISA). Petitioner corporation entered into an agreement with respondent corporation to terminate respondent's pension plans, in order to bolster respondent's bargaining power with unions and to assist in bankruptcy reorganization. The agreement guaranteed that petitioner corporation would cover any shortfall in the terminated plans. Respondent eventually instituted a follow-on plan, which basically meant that they reinstituted the terminated pension plans, with petitioner corporation taking up the entire shortfall. Petitioner corporation then moved to restore respondent's old pension plans and have respondent pay for them. This was consistent with petitioner's prohibition of follow-on plans and the objectives of petitioner corporation under ERISA. On review, the Court held that petitioner was not required to consider all potentially relevant areas of law, but was free to act in its own best interests under ERISA. Therefore, the appellate court decision was reversed.

CONCLUSION: Petitioner corporation was granted relief on review and the Court held that petitioner's failure to consider all potentially relevant areas of law did not render its restoration decision arbitrary and capricious. The Court further held that petitioner's anti-follow-on policy, as an asserted basis for restoration, was permissible. The judgment of the appellate court was reversed and the case was remanded.

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