A lawsuit brought by a group of former Delta Air Lines Inc. pilots against the Pension Benefit Guaranty Corp. can move forward, a U.S. District Court in Washington has ruled.
“At this early stage in the case, the court deems these allegations sufficient to state a plausible claim of fiduciary breach,” Judge Reggie Walton said in his July 6 order denying the agency's motion to dismiss. Mr. Walton also denied the plaintiffs' bid for a jury trial and attorney fees.
After Delta filed for bankruptcy in 2005, the Delta Air Lines Pilots Retirement Plan was terminated and the PBGC became trustee in December 2006. At the time, the plan's assets were valued at $1.99 billion, court filings state.
The PBGC gained some assets in a settlement agreement with Delta, and later recovered additional assets valued at $1.28 million, which the retired pilots allege in the lawsuit should have been shared with them, instead of being kept by the PBGC. The plaintiffs, representing many of the 1,784 plan participants who disagreed with the PBGC over their benefit levels, are claiming the agency earned “massive investment returns” off the recovered assets, instead of sharing with participants, which they argue constitutes a fiduciary breach. The lawsuit was filed in December 2014 after the PBGC's internal benefit determination and appeals process had been exhausted.
PBGC officials declined to comment on Mr. Walton's ruling, and calls to plaintiffs' lawyers at Miller & Chevalier were not returned by press time.