Court Sides With PBGC in Delphi Retiree Case

YOUNGSTOWN, Ohio – Salaried retirees from Delphi Automotive Systems have lost their decade-long battle to win back the bulk of their pensions that they say were illegally denied them.

The U.S. District Court Eastern District of Michigan ruled this week that the U.S. Pension Benefit Guaranty Corp. acted within the law when it terminated the salaried retiree pension plan per an agreement with Delphi in 2009.

“Plaintiffs fail to meet their heavy burden of establishing that PBGC’s conduct – as authorized by statute – deprived them of due process,” Judge Arthur J. Tarnow wrote in his ruling filed March 22. Furthermore, the court determined the PBGC did not owe any fiduciary obligations to the retirees until after the plan was terminated and it assumed sponsorship.

“This case is closed,” the judge wrote in a subsequent filing that day.

The pension plan included about 20,000 former employees – many who worked in the Mahoning Valley – of Delphi, at one time one of the largest auto parts suppliers in the world.

“I’m extremely disappointed in the court’s decision,” U.S. Rep. Tim Ryan, D-13, Ohio, said in a statement Wednesday. “The Delphi retirees put in a lifetime of work, investing in their retirement, and yet the rug was pulled out from under them. This federal ruling denies them their hard-earned pension – that’s not right. Retirement should be a protected asset in this country.”

Michael Hissam, spokesman for the Delphi Salaried Retirees Association, said the group is weighing its future legal options.  “Obviously we’re very, very disappointed in Judge Tarnow’s ruling,” he said. “Our legal team continues to examine that ruling prior to determining potential courses of action.”

U.S. Rep. Mike Turner, R-10, Ohio, introduced a bill yesterday that would give Delphi retirees and others the choice of continuing with their current health care, which is set to expire at the end of the year.

Delphi was spun off from General Motors Corp. in 1999 and filed for bankruptcy protection for its North American operations in 2005.

In 2009, during the Great Recession, the Obama administration restructured the auto industry and brought GM through a speedy bankruptcy.

The administration’s Automotive Task Force began negotiations with Delphi and GM, and it was agreed that GM would assume liability of the pension plans of Delphi’s hourly workers, but not its salaried employees.

Delphi, as part of its continued restructuring in Chapter 11, sought to jettison its pension plans to the PBGC, arguing it didn’t have the financial capability to fund the program. Thus, the PBGC would cover just a fraction of those pensions. In July 2009, a bankruptcy court in New York approved the deal.

In September 2009, members of the Delphi Salaried Retiree Association sued in federal court, alleging the PBGC violated the Employee Retirement Income Security Act of 1974, or ERISA.

Delphi, formerly Packard Electric, once had a formidable presence in the Mahoning Valley and employed more than 14,000 at its plants on North River Road in Warren. Today, those plants employ fewer than 600.

Copyright 2022 The Business Journal, Youngstown, Ohio.