Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.


August 3, 1990


The opinion of the court was delivered by: Nickerson, District Judge.


Plaintiff, Pension Benefit Guaranty Corporation (Guaranty Corp.), a wholly-owned United States government corporation established pursuant to 29 U.S.C. § 1302, brought this action under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq.

Guaranty Corp., the successor trustee of the A & S Steel Rule Die Corporation Pension Trust ("the Plan"), alleged that defendant Solmsen, the former president and sole shareholder of A & S Steel Rule Die Corporation ("A & S"), a now defunct corporation, was personally liable under 29 U.S.C. § 1109(a) for breaches of his fiduciary duties with respect to the Plan because of his alleged failure to forward employee and employer contributions to the Plan.

The court, by Memorandum and Order, dated Sept. 16, 1987, familiarity with which is assumed, granted Guaranty Corp.'s motion for summary judgment as to liability and denied defendant's cross-motions to dismiss and for summary judgment. The court then referred the case to Magistrate Amon for a report and recommendation as to damages.

The magistrate conducted a hearing and issued her report recommending that 1) the Guaranty Corp. be awarded $185,640, the amount of the unpaid contributions when the Plan terminated; 2) interest be allowed from October 18, 1981, the date the Plan terminated to the date of judgment; 3) the interest be at the 52-week Treasury bill rate; and 4) defendant's guaranteed benefits be set off against the award.

Guaranty Corp. objected to the recommendation, arguing that the magistrate had adopted an improper prejudgment interest rate and that the defendant's total accrued benefits, not just guaranteed benefits, should be set off against the award. This court again referred the case to the magistrate.

In February 1990, the magistrate issued a Supplemental Report and Recommendation, recommending that defendant's full accrued benefit be set off against the damage award, and adhering to the recommendation that the court adopt the 52-week Treasury bill rate.

Guaranty Corp. now objects to the use of the Treasury bill rate as insufficient to compensate the Plan for losses suffered by defendant's breach.


The Guaranty Corp. is, as noted, a wholly owned United States Government Corporation, whose Board of Directors consists of the Secretaries of the Treasury, Labor and Commerce. 29 U.S.C. § 1302(d). Its function is to administer and enforce ERISA's Title IV, which includes a mandatory government insurance program protecting the pension benefits of many millions of private sector workers.

When a Title IV plan terminates with insufficient assets to satisfy its pension obligations to employees, the Guaranty Corp. takes over the plan's assets and liabilities and uses those assets to cover, to the extent possible and in accordance with statutory priorities, the benefit obligations. 29 U.S.C. § 1344. The Guaranty Corp. must then add its own funds to ensure payment of some of the remaining "nonforfeitable" benefits, that is, benefits to which participants have earned entitlement as of the termination date.

Employers that maintain pension plans bear most of the cost of the Guaranty Corp. insurance, paying annual premiums. 29 U.S.C. § 1306, 1307. Part of the cost is financed by the statutory liability imposed on employers that terminate underfunded pension plans. They become liable to Guaranty Corp. for the benefits it will have to pay out. Historically the Guaranty Corp. has recovered only a small part of the employers' liability, and Congress has had to increase the premiums repeatedly over the years. See Pension Benefit Guaranty Corp. v. LTV Corp., ___ U.S. ___, 110 S.Ct. 2668, 110 L.Ed.2d 579 (1990).

In the present case, the plan was underfunded and Guaranty Corp. was required to allocate the remaining plan assets and its own funds in accordance with the categories of statutory priorities set forth in 29 U.S.C. § 1344, and 29 C.F.R. § 2618-2618.16. Only three of those categories, namely, 2, 3, and 4, are pertinent here.

Category 2 consists of accrued benefits derived from mandatory employee contributions. This Category is divided into basic-type and non-basic-type benefits. Basic-type benefits are the sum of the present values of the annuity benefit and pre-retirement death benefit. Non-basic-type benefits only apply to participants who have elected a lump sum benefit, and consist of that ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.