several reasons. First of all, the Trustee concludes this argument by contending that because Rome Cable did not challenge the PBGC's calculation before the agency, Rome Cable cannot assert "that a question of fact exists with respect to the calculation of the amount of outstanding benefit commitments." Memorandum in Support of Plaintiff's Motion for Summary Judgment on the Amount of Defendant's Liability ("Pl. Memo.") at 5. The Trustee is missing the point. As mentioned at the outset, there are no factual issues created by this record; the only issues before this court are legal issues as to which statute or statutes govern the amount of Rome Cable's liability as to the principal and the interest thereon, if any. In any event, the court does not read Rome Cable's motion papers as asserting the existence of a factual issue which would preclude summary judgment.
The second aspect of this argument which is bothersome is that although not couched in precisely these terms, presumably the Trustee is asserting that Rome Cable failed to exhaust its administrative remedies before the PBGC with respect to the amount of its liability on the outstanding benefit commitments.
If, indeed, the Trustee is arguing exhaustion, the court finds it curious that she did not specifically invoke 29 C.F.R. § 2606.7, which expressly states, in relevant part, "[A] person aggrieved by an initial determination of the PBGC covered by this part, . . ., has not exhausted his or her administrative readies until he or she has filed a request for reconsideration. . ., and a decision granting or denying the relief requested has been issued." 29 C.F.R. § 2606.7 (1995). As already mentioned, the court also finds it troubling, as just mentioned, that the Trustee did not adequately brief this issue. In any event, because, under some circumstances, a court should not engage in judicial review where administrative remedies have not been exhausted,
the court will address this exhaustion issue now.
Exhaustion "is premised on the notion that it is better to allow an agency to employ its expertise first in developing the facts." Golden Hill Paugussett Tribe of Indians v. Weicker, 39 F.3d 51, 58 (2d Cir. 1994) (citation omitted). "The exhaustion requirement protects the integrity of the administrative process and prevent[s] parties from avoiding agency procedures." Id. Stated somewhat differently, "the exhaustion doctrine is concerned with the timing of judicial review and provides that a court should resist premature intervention in a dispute." Olympus Corp. v. United States, 627 F. Supp. 911, 917 (E.D.N.Y. 1985), aff'd on other grounds, 792 F.2d 315 (2d Cir. 1986), cert. denied, 486 U.S. 1042, 108 S. Ct. 2033, 100 L. Ed. 2d 618 (1988). "Judicial relief is premature when an agency has not had the opportunity to fully develop factual findings, apply its expertise to new issues, and to exercise its discretionary powers." Id. (citing, inter alia, McKart v. United States, 395 U.S. 185, 193-94, 89 S. Ct. 1657, 1662-63, 23 L. Ed. 2d 194 (1969)).
Putting aside the procedural posture in which this exhaustion argument comes before the court,
because the reasons favoring exhaustion are absent here, the court concludes that exhaustion is not required. One well-recognized exception to the exhaustion requirement is "when the issue . . . presented . . . is one of purely statutory interpretation." Miss America Organization v. Mattel, Inc., 945 F.2d 536, 544 (2nd Cir. 1991) (internal quotations and citations omitted). The primary issue which this motion presents - the amount of Rome Cable's statutory liability for the unguaranteed benefits - does not involve statutory interpretation per se. Nonetheless, the same reasons for excusing exhaustion when a court is faced with an issue of statutory interpretation apply here where, in essence, Rome Cable is claiming that the PBGC acted ultra vires10 in determining the amount of its statutory liability for the unguaranteed benefits because it applied the current version of section 1362, rather than the version in effect at the time of the distress termination. As with statutory interpretation, in determining which statute governs Rome Cable's liability, there is no need for the court to defer to the PBGC's expertise or discretion. Furthermore, because the issue of Rome Cable's statutory liability does not require any factual development, there is no need for the court to require exhaustion so that the PBGC can employ its expertise in developing the facts. See Touche Ross & Co. v. Securities & Exch. Comm'n, 609 F.2d 570, 577 (2nd Cir. 1979) (exhaustion not necessary where issues presented were whether a Security & Exchange Commission rule had been promulgated without statutory authority, and whether the plaintiff had been burdened by the agency acting without authority of law).
As the foregoing demonstrates, the interests requiring exhaustion are not particularly strong here.
An additional reason for excusing Rome Cable's failure to exhaust (assuming arguendo it had such an obligation)
is that implicit in Rome Cable's argument as to which statute governs its liability is the assumption that, in determining the amount of liability for the unguaranteed benefits, the PBGC exceeded its powers when it applied the current version of 29 U.S.C. § 1362(c), instead of the version in effect when the plan was terminated. See Greenberg v. Comptroller of the Currency, 938 F.2d 8, 12 (2nd Cir. 1991) (citation omitted) ("Unless an agency is exceeding its jurisdiction, courts ordinarily do not interfere before the agency has completed its task."); and American Cyanamid Co., Lederle Lab v. Roudebush, 411 F. Supp. 1220, 1222 (S.D.N.Y. 1976) (exhaustion requirement may be avoided where, among other things, "the administrative agency has grossly exceeded its powers"). There is one other factor which also weighs in favor of excusing exhaustion under the particular facts of this case (again, assuming exhaustion is a prerequisite here), and that is that requiring exhaustion undoubtedly would lead to undue delay.
See Skubel v. Sullivan, 925 F. Supp. 930, 936-37 (D.Conn. 1996) (in considering whether to bar a suit based upon exhaustion, one of five "primary" factors is whether exhaustion would "lead to undue delay"). For all of these reasons, to the extent that Rome Cable may have had an obligation to exhaust its administrative remedies with respect to the PBGC's determination of the amount of its liability for the unguaranteed benefits, that fact does not, as the Trustee suggests, bar this court from independently examining the issue of which statute governs the amount of Rome Cable's liability on the principal.
C. Governing Version of Section 1362?
At last, the court is free to turn to the central inquiry on this motion and that is whether, pursuant to former 29 U.S.C. § 1362(c), Rome Cable is liable for "75 percent of the total outstanding amount of benefit commitments under the plan," or, whether under the current version of that statute, it is liable for one hundred (100) percent of the unguaranteed benefits.
"The provisions of ERISA at issue in this case [including section 1362], . . ., are a type of insurance designed to ensure that employees are not deprived of retirement benefits in the event that a pension plan is terminated before sufficient funds are accumulated in the plan." See United Steelworkers v. United Engineering, Inc., 52 F.3d 1386, 1390 (6th Cir. 1995) ("United Steelworkers II ")(citation omitted). "Under . . .ERISA. . . as amended by the Single-Employer Pension Plan Amendments Act of 1986 (SEPPAA), . . ., the termination of a pension plan in such circumstances is called a distress termination[,]" and that is exactly the type of termination to which Rome Cable found itself subject in 1987. See Ricke v. Armco Inc., 92 F.3d 720, 721-22 (8th Cir. 1996) (citations, quotations and footnote omitted). "This scheme is intended to ensure the benefits of the pension plan to the participants and beneficiaries and possibly to salvage the employer's business, thereby safeguarding the employment of the participants." Ricke v. Armco Inc., 882 F. Supp. 896, 898 (D.Minn. 1995) ("Ricke I ")(internal quotations and citation omitted).
Prior to SEPPAA's effective date of April 7, 1986,
ERISA did not provide for payment of unguaranteed benefits in the event of a distress termination. Congress remedied that gap in ERISA by enacting SEPPAA, which amended ERISA to provide, "for the first time, the protection of non-guaranteed pension benefits." United Steelworkers II, supra, 52 F.3d at 1391. "SEPPAA established a trust fund called the 'Section 4049 trust' that would receive funds from employers and distribute those funds to plan participants to cover unguaranteed benefits. SEPPAA made employers liable to the trustee for up to 75% of the amount of unguaranteed benefits." Id. In 1987, Congress repealed SEPPAA and enacted the Pension Protection Act (PPA), . . . which is the current law regarding payment of unfunded pension benefits." Id. (citation omitted). "Under the PPA, the PBGC is entitled to seek recovery of 100% of the unguaranteed pension benefits." Ricke I, supra, 882 F. Supp. at 899. Of particular significance for purposes of this motion is the fact that "the PPA amendments do not apply to pension plans, . . ., that were terminated prior to December 17, 1987." In re Chateaugay Corp., 87 Bankr. 779, 788 (S.D.N.Y. 1988) (emphasis added), aff'd on other grounds, 875 F.2d 1008 (2d Cir. 1989), rev'd on other grounds, 496 U.S. 633, 110 S. Ct. 2668, 110 L. Ed. 2d 579 (1990); see also In re Chateaugay Corp., 130 Bankr. 690, 699 n.10 (S.D.N.Y. 1991) ("This section  was repealed in 1987 but still applies to pension plan terminations initiated between January 1, 1986 and December 17, 1987.").
It necessarily follows that because section 1362(c) in its present form was a part of the PPA amendments, that section does not apply to this plan termination, occurring, as it did, prior to December 17, 1987.
The holdings in both Chateaugay cases are wholly consistent with the legislative history of section 1362, which, as to the former version of that section, designated an effective date of January 1, 1986. 29 U.S.C. § 1362 Historical and Statutory Notes (West Supp. 1996). Likewise, as part of the PPA amendments, section 1362(c) in its current form became effective after December 17, 1987. Id. Read together, then, there was only a short period of time - from January 1, 1986, until December 17, 1987 - when section 4049 trusts were used as the mechanism under ERISA for payments of benefits above guaranteed levels. In other words, the section 4049 termination trust mechanism was an "interim solution[,]"
and, as it happens, Rome Cable's distress termination occurred during the narrow time frame of that interim solution. Congress' clear legislative intent,
in conjunction with the two Chateaugay cases noted above, convinces the court that SEPPAA, of which former section 1362(c) was a part, rather than the PPA amendments to ERISA, governs the amount of Rome Cable's liability in this instance.
Moreover, the current version of section 1362(c) pertains to liability to a trustee appointed under section 1342(b) or (c), which in this case is the PBGC. It does not speak to liability to a trustee such as plaintiff Fusco who was appointed under 29 U.S.C. § 1341(c)(3)(B)(iii)(II).
Thus the fact that section 1362 in its present form governs liability to a different type of trustee than plaintiff Fusco makes her reliance upon that particular statute all the more tenuous. Consequently, for all of these reasons, the court finds that Rome Cable is liable under SEPPAA, and former section 1362(c) in particular, for "75 percent of the total outstanding amount of benefit commitments[.]" See Rizzo Affirm., exh. D thereto (former 29 U.S.C. § 1362(c)).
The next issue which the court must address is whether Rome Cable is liable for interest on these unguaranteed benefits. Given the amount of money potentially involved, particularly because the Trustee is asserting that the interest accrual date should be September 14, 1987 (the date of the plan termination), the issue of interest is not trivial.
Putting aside the issue of whether Rome Cable may be held liable for interest under 29 C.F.R. § 2622.7,
the court will consider whether, as the Trustee strongly contends, Rome Cable may be found liable for interest on the principal based upon former 29 U.S.C. § 1349, which as noted earlier, has since been repealed.
Rome Cable offers several reasons as to why former section 1349 has no place in the court's analysis of the interest issue.
First, Rome Cable believes that it should not be held liable for interest because former section 1362(c) is silent in that regard. Thus, according to Rome Cable, the court's inquiry should end there: Rome Cable should not be required to pay interest on the principal for which it is liable under former section 1362(c). Perhaps Rome Cable's interpretation of former section 1362(c) would be defensible if that section were read in isolation. Despite Rome Cable's assertion to the contrary,
former section 1362(c) cannot be read alone; it must be read in light of the statutory scheme and purpose at the time. See Richards v. United States, 369 U.S. 1, 3, 11, 82 S. Ct. 585, 591-92, 7 L. Ed. 2d 492 (1962) (internal quotations and footnotes omitted) ("It [is] fundamental that a section of a statute should not be read in isolation from the context of the whole Act; and that in fulfilling our responsibility in interpreting legislation, we must not be guided by a single sentence or member of a sentence, but [should] look to the provisions of the whole law, and to its object and policy.") When that is done, the court is convinced that former section 1349, taken together with former section 1362(c), provide an additional basis for finding Rome Cable liable for the interest on the principal herein.
True, there is nothing in former section 1362, which set forth the liability to a section 1349 trust, pertaining to interest on liability for unguaranteed benefits.
In the court's opinion, however, Rome Cable makes too much of the fact that former section 1362(c) is silent on the issue of interest, because former section 1349 did contain an interest provision. More specifically, former section 1349(c)(1)(A) read, in pertinent part, as follows:
(c) Distributions from trust
(1) In general
Not later than 30 days after the end of each liability payment year . . . with respect to a terminated single-employer plan, the corporation, or its designee . . ., shall distribute from the trust. . . to each person who was (as of the termination date) a participant or beneficiary under the plan-
(A) . . ., an amount equal to the outstanding amount of benefit commitments to such person under the plan ( including interest calculated from the termination date), to the extent not previously paid under this paragraph, . . . .