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Horan v. Kaiser Steel Retirement Plan

filed: November 4, 1991.

ROBERT PATRICK HORAN, ET AL., PLAINTIFF, AND JONNIE S. KOCH, PLAINTIFF-APPELLANT,
v.
KAISER STEEL RETIREMENT PLAN; PERMA PACIFIC, INC.; MONTE H. RIAL; CHARLES H. BLACK, ET AL., DEFENDANTS-APPELLEES. ROBERT PATRICK HORAN, ET AL., PLAINTIFF, AND ERNEST G. DICK, PLAINTIFF-APPELLANT, V. KAISER STEEL RETIREMENT PLAN; PERMA PACIFIC, INC.; MONTE H. RIAL; CHARLES H. BLACK, ET AL., DEFENDANTS-APPELLEES. ROBERT PATRICK HORAN, ET AL., PLAINTIFF, AND JAMES GRADY BUTLER, PLAINTIFF-APPELLANT, V. KAISER STEEL RETIREMENT PLAN; PERMA PACIFIC, INC.; MONTE H. RIAL; CHARLES H. BLACK, ET AL., DEFENDANTS-APPELLEES. ROBERT PATRICK HORAN, ET AL., PLAINTIFF, AND JOHN THOMAS LOGUE, PLAINTIFF-APPELLANT, V. KAISER STEEL RETIREMENT PLAN; PERMA PACIFIC, INC.; MONTE H. RIAL; CHARLES H. BLACK, ET AL., DEFENDANTS-APPELLEES. ROBERT PATRICK HORAN, ET AL., PLAINTIFF, AND GEORGE E. JOHNSON, PLAINTIFF-APPELLANT, V. KAISER STEEL RETIREMENT PLAN; PERMA PACIFIC, INC.; MONTE H. RIAL; CHARLES H. BLACK, ET AL., DEFENDANTS-APPELLEES. ROBERT PATRICK HORAN, ET AL., PLAINTIFF, AND WALTER SACCANI, PLAINTIFF-APPELLANT, V. KAISER STEEL RETIREMENT PLAN; PERMA PACIFIC, INC.; MONTE H. RIAL; CHARLES H. BLACK, ET AL., DEFENDANTS-APPELLEES. ROBERT PATRICK HORAN, ET AL., PLAINTIFF, AND EDWIN D. BAUMANN, PLAINTIFF-APPELLANT, V. KAISER STEEL RETIREMENT PLAN; PERMA PACIFIC, INC.; MONTE H. RIAL; CHARLES H. BLACK, ET AL., DEFENDANTS-APPELLEES. ROBERT PATRICK HORAN, ET AL., PLAINTIFF, AND DONALD W. DUFFY, PLAINTIFF-APPELLANT, V. KAISER STEEL RETIREMENT PLAN; PERMA PACIFIC, INC.; MONTE H. RIAL; CHARLES H. BLACK, ET AL., DEFENDANTS-APPELLEES. ROBERT PATRICK HORAN, ET AL., PLAINTIFF, AND FINNIS ARNOLD EPPERSON, PLAINTIFF-APPELLANT, V. KAISER STEEL RETIREMENT PLAN; PERMA PACIFIC, INC.; MONTE H. RIAL; CHARLES H. BLACK, ET AL., DEFENDANTS-APPELLEES. ROBERT PATRICK HORAN, ET AL., PLAINTIFF, AND DONALD JOSEPH ODENBACH, PLAINTIFF-APPELLANT, V. KAISER STEEL RETIREMENT PLAN; PERMA PACIFIC, INC.; MONTE H. RIAL; CHARLES H. BLACK, ET AL., DEFENDANTS-APPELLEES. ROBERT PATRICK HORAN, ET AL., PLAINTIFF, AND WILLIAM R. BARNES, PLAINTIFF-APPELLANT, V. KAISER STEEL RETIREMENT PLAN; PERMA PACIFIC, INC.; MONTE H. RIAL; CHARLES H. BLACK, ET AL., DEFENDANTS-APPELLEES. ROBERT PATRICK HORAN, ET AL., PLAINTIFF, AND GERALD J. SCOTT, PLAINTIFF-APPELLANT, V. KAISER STEEL RETIREMENT PLAN; PERMA PACIFIC, INC.; MONTE H. RIAL; CHARLES H. BLACK, ET AL., DEFENDANTS-APPELLEES



Appeal from the United States District Court for the Central District of California. D.C. No. CV-86-4424-RB. Robert C. Bonner, District Judge, Presiding.

William A. Norris and David R. Thompson, Circuit Judges, and Samuel P. King, District Judge.*fn* Opinion by Judge Thompson.

Author: Thompson

THOMPSON, Circuit Judge

OVERVIEW

The plaintiffs are former employees of Kaiser Steel Corporation. They brought this suit under the Employee Retirement Income Security Act to recover annuities they contend they are entitled to under the terms of Kaiser's pension plan, and/or as a result of the individual defendants' breach of their fiduciary duties. The district court granted the defendants' summary judgment motion and dismissed the plaintiffs' claims. We have jurisdiction under 28 U.S.C. § 1291, and we affirm.

FACTS AND PROCEDURE

Twenty-four former Kaiser Steel Corporation ("Kaiser") employees brought this action against the Kaiser Steel Retirement Plan ("Plan") and former members of the Plan's Investment Committee. The plaintiffs were beneficiaries of the Plan, which was a defined benefit plan under the Employee Retirement Income Security Act ("ERISA"). The Investment Committee was responsible for directing Plan investments.

From 1977 to 1984, the Plan purchased annuities for each retiree. To purchase an annuity, the Plan would pay between $150,000 to $200,000 per retiree to an insurance company. The insurance company would then assume responsibility for the monthly pension payments.

In the late 1970s, Kaiser began facing economic difficulties. In 1983, Kaiser decided to close its Fontana mill. All the plaintiffs were employed at the Fontana mill at this time. As a result of the closure, an unusually large number of employees became eligible for retirement. In 1984, 199 employees retired, and the Plan spent $15.1 million to purchase an annuity for each of these retirees. By 1985, the Plan was facing a financial crisis. A memo directed to the Investment Committee stated that the Plan assets totaled only $1.1 million and that the continued purchases of annuities would completely exhaust the Plan by February 1985.

In February 1985, the Investment Committee responded by adopting a resolution ("1985 resolution") to discontinue the purchase of annuities. The Investment Committee decided to begin paying pension benefits directly from the Plan trust. The 1985 resolution stated that annuities would not be purchased for employees retiring after January 1985, or for those employees who had retired prior to January 1985 but had not had annuities purchased for them.

The amount received in monthly payments directly from the trust was the same amount the retirees would have received had an annuity been purchased for them. The Plan's assets were sufficient to continue these monthly payments until February 1987, when Kaiser filed for Chapter 11 bankruptcy. The Plan then terminated under Title IV of ERISA, and the Pension Benefit Guaranty Corporation ("PBGC") became the statutory trustee of the Plan and began making the payments to the beneficiaries. The retirees who were receiving monthly benefits directly from the trust suffered a reduction in monthly benefits when the PBGC took control. In contrast, the amount of monthly payments remained the same for those employees for whom an annuity had been purchased.

The plaintiffs brought suit in an attempt to gain an annuity for each individual plaintiff. The district court granted the defendants' motion for summary judgment and dismissed the case. This appeal followed.

Discussion

The plaintiffs present two claims which they allege entitle them to annuities. The first claim arises under 29 U.S.C. § 1132(a)(1)(B) (the "benefits claim"), and alleges the terms of the Plan entitle the plaintiffs to an annuity. The second claim arises under either sections 1109 and 1132(a)(2), or section 1132(a)(3) (the "fiduciary breach claim"). This claim ...


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