## Facts

- Crown Vantage, Inc. and Crown Paper Company employed roughly 2,600 workers and sponsored 17 single-employer defined-benefit pension plans, with Crown acting as both sponsor and plan administrator.
- After filing for bankruptcy and entering liquidation, Crown decided to terminate the plans through a standard termination under ERISA.
- Crown pursued termination by purchasing annuities, which would satisfy benefit liabilities and allow Crown to retain a reversion of about $5 million.
- The union (PACE) proposed an alternative: merging the single-employer plans into a multiemployer Taft–Hartley plan (the PACE Industrial Union-Management Pension Fund).
- PACE alleged Crown breached ERISA fiduciary duties by failing to give serious consideration to the merger proposal and by not acting solely in participants’ and beneficiaries’ interests.

## Issues

1. Whether ERISA permits a plan administrator to terminate a single-employer defined-benefit plan through merger into a multiemployer plan as part of a standard termination.
2. If merger is not a permissible termination method, whether the administrator has any ERISA fiduciary duty to consider such a merger when implementing a termination decision.

## Decision

- The Supreme Court unanimously reversed the Ninth Circuit.
- The Court held that merger into a multiemployer plan is not a permissible method of terminating a single-employer defined-benefit plan under ERISA’s standard-termination provisions.
- Because merger is not a lawful termination method under ERISA, Crown had no fiduciary obligation to consider PACE’s merger proposal as part of implementing termination.

## Legal Principles

- ERISA’s standard-termination “final distribution” methods in 29 U.S.C. § 1341(b)(3)(A) are limited to those specified by statute (including annuity purchases and other authorized methods that fully provide benefit liabilities, such as lump-sum distributions where permitted).
- Plan merger/transfer is treated in ERISA as distinct from plan termination; a merger continues the plan in another form rather than ending it.
- A plan administrator cannot have an ERISA fiduciary duty to pursue or consider an option as a termination method when ERISA does not authorize that option.
- The Court gave weight to the Pension Benefit Guaranty Corporation’s consistent interpretation that § 1341(b)(3)(A) does not permit merger as a method of termination.

## Conclusion

ERISA does not allow a single-employer defined-benefit plan to be terminated through merger into a multiemployer plan under the standard-termination framework, so the plan administrator did not breach fiduciary duties by declining to consider the proposed merger.


Beck v. PACE Int’l Union, 551 U.S. 96 (2007)