TRUSTEES OF PENSION PLAN PREVAIL ON ACTION BY PLAN PARTICIPANT TO REMOVE TRUSTEES
In the Eastern District of Pennsylvania Case of Perelman vs. Perelman, PICS Case No. 14-0132 (E.D. PA., February 18, 2014), the Honorable John R. Padova granted the Defendant’s Motion for Summary Judgment on Plaintiffs’ action for equitable relief to remove the General Refractories Co. pension plan fiduciaries, appoint an independent trustee, have the individual defendants disgorge improper profits and restore them to the plan, and have the indemnification provisions of the plan declared void as against public policy. Plaintiff was a participant in General Refractories Co. pension plan for salaried employees.
The Defendants asserted the company and its shareholders did not have control over management of the pension plan assets and payment of benefits to participants and beneficiaries. Defendants noted that the market value of the plan assets available to pay benefits exceeded the plan’s liabilities when calculated using the procedure required under the Internal Revenue Code, known as the MAP-21 rates.
In response to defendant’s summary judgment motion, plaintiff submitted the report of an expert claiming the plan was underfunded. However, the expert conceded that if the plan sponsor made an election under the IRC to use MAP-21, then the MAP-21 formula was mandatory for determining whether the plan was adequately funded. The court held defendants were entitled to summary judgment on plaintiff’s audit claim, because there was no genuine dispute that federal law permitted plan sponsors to use MAP-21 rates to determine how much sponsors were required to contribute to a plan and whether the plan was adequately funded. Because the plan was properly funded according to MAP-21 calculations, plaintiff was not entitled to audit relief.
The court also granted defendants’ motion for summary judgment on plaintiff’s equitable claim for an order declaring the indemnity provision of the plan’s prior trust agreement to be void as against public policy. Because plaintiff was not entitled to receive monetary forms of equitable relief, the indemnification clause could never have been used by defendants to recoup any monetary recovery by plaintiff. Additionally, only the plan itself had the right to assert the indemnification clause was void as against public policy, not plaintiff individually.
Lastly, Judge Padova ruled that the Plaintiff did not have standing to bring his monetary claims because he alleged no individual harm. Only the plan sponsor had standing to raise those types of claims.
Reference: Digest of Recent Opinions, Pennsylvania Law Weekly (March 11, 2014)
Filed Under: ERISA, Pension Litigation; Removal of Trustees; Business Law; Business Litigation
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