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Malia v. General Elec. Co.

filed: May 13, 1994.

SAM J. MALIA; JOHN A. GLUCKSNIS; MATTHEW J. LOFTUS
v.
GENERAL ELECTRIC COMPANY; RCA CORPORATION; RETIREMENT PLAN FOR THE EMPLOYEES OF RCA CORPORATION AND SUBSIDIARY COMPANIES; GE PENSION PLAN, SAM J. MALIA, JOHN A. GLUCKSNIS AND MATTHEW J. LOFTUS, FOR THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, APPELLANTS



On Appeal From the United States District Court for the Middle District of Pennsylvania. (D.C. Civil Action No. 91-01743).

Before: Stapleton, Roth and Lewis, Circuit Judges.

Author: Roth

Opinion OF THE COURT

ROTH, Circuit Judge :

I.

Appellants challenge the results of the merger of two large pension plans. The central issue of this case is whether pension plan participants whose plan is merged with another pension plan are entitled by law to receive only the defined benefits that they had actually accrued under the previous plan or are also entitled to receive a share of any surplus assets in their pension plan. Appellants allege that under two distinct sections of the Employee Retirement Income Security Act of 1974 ("ERISA") they are entitled to a share of the surplus assets that existed in their pension plan at the time of the merger. Appellants cite no case law supporting this position, relying solely on statutory language and legislative history. Appellants also allege that their employer's conduct of the merger violated its fiduciary duty under ERISA. Our detailed review of appellants' allegations and argument convinces us that the district court correctly dismissed their claims.

II.

Plaintiffs were entitled to receive benefits under RCA Corporation's ("RCA") pension plan as long-time employees of RCA and contributors to its pension fund. RCA's pension plan was a defined benefit plan that required employees to make contributions to the plan in order to receive a specified level of benefits upon retirement. In 1986, General Electric ("GE") bought out RCA, which became a wholly-owned subsidiary of GE. General Electric also sponsored a defined benefits plan for its employees.

Upon hearing of GE's intention to merge the two plans, appellant Sam J. Malia withdrew his contributions from the RCA plan effective December 10, 1988. In January 1989, the RCA and GE pension benefit plans were merged, and Malia's two co-appellants became participants in the GE pension plan. At the time of the merger, RCA's pension plan had residual assets -- assets in excess of liabilities -- of roughly $1.3 billion. The core of appellants' argument is that GE improperly "planned the capture of more than $1 billion in residual assets of the RCA Pension Plan for its own benefit." They further allege that GE intended to convert the RCA pension plan surplus to offset its own liabilities to GE employees. They contend that GE's capture of the surplus was improper in that under 29 U.S.C. §§ 1058 and 1344(d)(3) the RCA pensioners were entitled to receive a share of the excess assets from the former RCA pension plan.*fn1 However, appellants fail to point out that the assets of the GE plan also exceeded its liabilities by nearly $7.5 billion. Thus, all benefits that had accrued under the RCA plan were fully funded and protected under the merged GE-RCA plan.

Appellants further allege that GE intentionally misled RCA plan participants in an effort to get them to cash out of the plan in order to increase GE's share of any future distribution of residual assets, that GE breached a fiduciary duty owed to plaintiffs under 29 U.S.C. §§ 1021-25 by failing to inform them of a possible forfeiture of their interest in residual assets from the RCA plan, and that GE improperly failed to appoint an independent representative of the pension plan participants to review and approve the plan merger under 29 U.S.C. §§ 1104 and 1106(b)(1).

On August 10, 1992, the district court granted defendants' Rule 12(b)(6) motion to dismiss all counts. This appeal followed. We conclude that the district court correctly dismissed appellants' complaint on the ground that it failed to state a claim.

III.

The jurisdiction of the district court rested on 29 U.S.C. § 1132(e). The appellate jurisdiction of this Court rests on 28 U.S.C. § 1291. As we are reviewing the district court's grant of a Rule 12(b)(6) motion to dismiss for failure to state a claim, our standard of review is plenary. Unger v. National Residents Matching Program, 928 F.2d 1392, 1394 (3d Cir. 1991). In addition, all facts alleged in the complaint and all reasonable inferences ...


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