(CN) - A federal judge refused to certify a class of 650 former U.S. Airways pilots who say that the airline delayed their lump-sum retirement benefits and owes them interest.
The complaint, filed by lead plaintiffs James Stephens and Richard Mahoney, took aim at a U.S. Airways policy to delay lump-sum pension payments by 45 days.
The retired pilots claimed the delay was unreasonable, and that the Employee Retirement Income Security Act requires lump-sum payments to be the actuarial equivalent of an annuity payment.
Over the years, the lawsuit has wound from the Northern District of Ohio to the 6th Circuit, and then to the District Court in Washington, the D.C. Circuit and back.
Though the D.C. Circuit ultimately denied the ERISA violation claim, it looked into whether the pilots deserve interest from the delay in their benefits payments. This finding would determine whether the delay itself was reasonable.
Relying on precedent set by Internal Revenue Service regulation, the court held that the 45-day delay was not reasonable because it was "unrelated to the administrative calculation of plaintiffs' lump sum benefits" and did not "correspond to administrative necessity."
With the District Court poised to calculate interest on remand, Stephens and Mahoney pressed for class certification. They hoped to represent all participants and/or beneficiaries of the Retirement Income Plan for Pilots of U.S. Air Inc., who, from February 28, 1997, to March 31, 2003, elected to receive a lump-sum payment as a full or partial distribution of their retirement benefits, but did not receive them in the time prescribed by the plan.
U.S. District Judge Rosemary Collyer sided with the airline Friday after finding that, unlike the other pilots, Stephens has exhausted his administrative remedies under the plan.
"No other pilot who received a lump sum before or after did so," she wrote.
"Thus, Mr. Stephens's case is in a drastically different posture from the cases of other putative plaintiffs as to a potentially dispositive affirmative defense asserted by the PBGC," she added, abbreviating the name of the Pension Benefit Guaranty Corp., which took over U.S. Airways pension plan after the airline's 2003 bankruptcy.
Stephens and Mahoney claimed that there is precedent against requiring exhaustion in a case such as theirs, and that the court could even excuse the exhaustion requirement as futile.
But this argument did not sway Collyer.
"The case law is clear that 'barring exceptional circumstances, parties aggrieved by decisions of pension plan administrators must exhaust the administrative remedies available to them under their pension plans before challenging those decisions in court,'" the decision states.
This effectively makes Stephens a class of one, Collyer found.
"Plaintiffs challenging a pension plan administrator's decision are required to exhaust their administrative remedies before filing suit," Collyer wrote. "Of the hundreds of members of the putative class, only Mr. Stephens did so. He is differently situated from the other pilots in a way that makes him not 'typical' as required by Rule 23(a)(3) as a prerequisite to class certification. Accordingly, plaintiffs' second motion for class certification will be denied."
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