Full opinion text
MEMORANDUM OPINION AND ORDER JENKINS, Chief Judge. TABLE OF CONTENTS I. INTRODUCTION A. Jurisdiction........................................................1509 B. Nature of the Claims..............................................1509 C. Parties............................................................1510 1. Defendant................................................ 1510 2. Plaintiffs.....................................................1511 a. Layoffs..................................................1511 b. Actives...................................................1511 c. Managements.............................................1511 d. Retireds..................................................1512 e. LaRoches ................................................1512 D. Trial..............................................................1512 II. CASE SUMMARY A. Pre-Work Stoppage................................................1513 B. LaRoche Sale .....................................................1513 C. Work Stoppage....................................................1513 D. Geneva Closure....................................................1514 E. June Agreement and Sale to BM & T..............................1514 F. Affirmative Defenses..............................................1514 III. GENERAL FACTUAL BACKGROUND A. Geneva............................................................1514 B. United Steel Workers of America..................................1515 C. USX Benefit Plans................................................1515 D. Rule of 65 and 70/80 Retirement Benefits..........................1516 E. USX’s Recent Restructurings ......................................1517 IV. STATUS OF GENEVA ON DECEMBER 31, 1986 A. Introduction.......................................................1518 B. Facts.............................................................1519 1. USX-POSCO Joint Venture...................................1519 2. June and November 1985 Studies .............................1520 3. 1986 Discussions as to the Sale of Geneva....................1521 4. Work Stoppage...............................................1521 5. Facility Rationalization and Related Studies....................1522 6. Steel Division Business Plan..................................1522 7. USX Board of Directors Authorization Request................1522 8. Accounting Treatment of the Restructuring....................1523 9. Settlement of the 1986 Labor Negotiations ....................1524 C. Analysis ..........................................................1524 1. “Decision” Under Section 16(A) Requires Express Board Action... 1525 2. “Decision” Under Section 16(A) Without Express Board Action... 1527 a. Plaintiffs’ Shutdown Theory...............................1528 b. Analysis..................................................1528 V. SECTION 510 OF ERISA A. Introduction.......................................................1531 B. Layoffs...........................................................1534 1. Introduction..................................................1534 2. Facts ........................................................1534 3. Analysis......................................................1535 a. Section 510 of ERISA....................................1535 1. Prima Facie Case....................................1536 2. Nondiscriminatory Reasons ...........................1537 3. Evidence of Pretext..................................1538 b. The Statute of Limitations................................1540 C. Retireds...........................................................1541 1. Introduction..................................................1541 2. Facts ........................................................1541 3. Analysis......................................................1543 a. Lump-Sum Retirement Benefits...........................1543 b. Retirement Medical Benefits ..............................1544 c. Misrepresentations........................................1545 D. Actives and Managements/Indefinite Idling.........................1545 1. Introduction..................................................1545 2. Facts ........................................................1546 3. Analysis......................................................1547 a. Prima Facie Case.........................................1548 b. Nondiscriminatory Reasons................................1550 c. Evidence of Pretext......................................1550 E. Actives and Managements/June Agreement and Sale................1552 1. Facts ........................................................1553 2. Analysis......................................................1555 a. Prima Facie Case.........................................1556 VI. SECTION 204(g) OF ERISA A. Introduction.......................................................1559 B. Analysis ..........................................................1559 VII. SECTION 204(h) OF ERISA A. Introduction.......................................................1560 1. June Agreement..............................................1561 2. Proper Notice and the June Agreement.......................1563 3. LaRoche Sales Agreement....................................1564 4. Proper Notice and the LaRoche Sales Agreement..............1564 B. Effect of USX’s Failure to Give Notice Under Section 204(h)........1564 VIII. SECTION 404(a) OF ERISA A. Introduction.......................................................1566 B. USX as a Fiduciary...............................................1567 C. Fiduciary Duties...................................................1568 IX. CONCLUSION.........................................................1569 I. INTRODUCTION A. Jurisdiction Jurisdiction of this matter, brought under section 502(a), 29 U.S.C. § 1132(a) (1988), of the Employee Retirement Income Security Act of 1974 (“ERISA”), is footed on subsection (e) of section 502, 29 U.S.C. § 1132(e). Because defendant, a Delaware corporation, was doing business in the State of Utah during the time of the acts complained of in this lawsuit, venue is proper under 28 U.S.C. § 1391(c) (1990 & Supp.1992). The action was tried to the court without jury pursuant to section 502(a)(3) of ERISA, which empowers benefit plan participants or beneficiaries “to obtain ... appropriate equitable relief....” 29 U.S.C. § 1132(a)(3). Because section 502(a)(3) provides only equitable relief, there is no right to a jury trial. See Cox v. Keystone Carbon Co., 861 F.2d 390, 393 (3d Cir.1988) (citing Great American Fed. Sav. and Loan Assoc. v. Novotny, 442 U.S. 366, 375, 99 S.Ct. 2345, 2350, 60 L.Ed.2d 957 (1979)). B. Nature of the Claims Plaintiffs assert five general claims for relief. First, plaintiffs allege that defendant USX Corporation (“USX”) interfered with plaintiffs’ employment, thereby depriving them of identified and vested employee benefits, and did so in violation of section 510 of ERISA, 29 U.S.C. § 1140 (1988). Section 510 provides in pertinent part: It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan, ... or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan____ Id. Second, plaintiffs assert the USX decreased plaintiffs’ accrued benefits by amending a defined benefit plan without obtaining appropriate approval for such an amendment in violation of section 204(g) of ERISA, 29 U.S.C. § 1054(g) (1988). Section 204(g) provides in pertinent part: “The accrued benefit of a participant under a plan may not be decreased by an amendment of the plan, other than an amendment described in section 1082(c)(8) ... of this title....” Id. Third, plaintiffs assert that USX significantly reduced the rate of plaintiffs’ future benefit accrual by amending a defined benefit plan without giving appropriate notice in violation of section 204(h) of ERISA, 29 U.S.C. § 1054(h) (1990). Section 204(h) provides in pertinent part: A [defined benefit plan] may not be amended so as to provide for a significant reduction in the rate of future benefit accrual, unless, after adoption of the plan amendment and not less than 15 days before the effective date of the plan amendment, the plan administrator provides a written notice, setting forth the plan amendment and its effective date, to— (A) each participant in the plan, (B) each beneficiary who is an alternate payee ..., and (C) each employee organization representing participants in the plan---- Id. Fourth, plaintiffs assert that USX failed to discharge its fiduciary duties solely in the interest of the participants or beneficiaries of a defined benefit plan in violation of section 404(a)(1) of ERISA, 29 U.S.C. § 1104(a)(1) (1988 & Supp. II 1990). Section 404(a)(1) provides in pertinent part: [A] fiduciary shall discharge his [or her] duties with respect to a plan solely in the interest of the participants and beneficiaries and— (A) for the exclusive purpose of: (i) providing benefits to participants and their beneficiaries; and (ii) defraying reasonable expenses of administering the plan; (B) with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims; (D) in accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent with the provisions of [ERISA]____ Id. C. Parties 1. Defendant USX is a Delaware corporation currently headquartered in Pittsburgh, Pennsylvania. Originally named United States Steel Corporation, USX is the largest integrated steel manufacturer in the United States. On July 9, 1986, United States Steel changed its name to USX to reflect the fact that it had diversified its corporate operators to include oil and other non-steel businesses. For purposes of this Opinion, however, defendant will be referred to as USX regardless of whether the events discussed occurred before or after July 9, 1986. At all times relevant to this lawsuit, USX was an “employer” within the meaning of section 3(5) of ERISA, 29 U.S.C. § 1002(5) (1988). 2. Plaintiffs Plaintiffs are 1,892 former employees of USX, who were employed prior to July 31, 1986, at either the Geneva Works or the Keigley Quarry (collectively referred to as “Geneva”), both of which are located in the State of Utah. The majority of the plaintiffs are hourly, union-represented employees whose terms and conditions of employment were established through collective bargaining between USX and the United Steel Workers of America (the “USWA”). The terms and conditions of employment of the non-union represented employees and the management employees were established unilaterally by USX. At all times relevant to their claims, each plaintiff was a “participant” under the relevant benefit plans, within the meaning of section 3(7) of ERISA, 29 U.S.C. § 1002(7) (1988). For convenience, the court categorizes the plaintiffs in the following five groups: “Layoffs”, “Actives”, “Management”, “Retireds”, and “LaRoches”. The separate causes of action as filed by each category of plaintiffs are summarized below. a. Layoffs Of the 1,892 plaintiffs, 238 are union-represented employees who were laid off by USX prior to July 31, 1986 (the “Layoffs”). The Layoffs state four claims as follows: 1. USX violated section 510 of ERISA by failing to recall laid off workers in order to avoid future pension liability; 2. USX violated section 204(g) of ERISA by amending a benefit plan on June 8, 1987 and February 8, 1988, to reduce benefits which were accrued and vested in plaintiffs as of December 31, 1986; 3. USX violated section 204(h) of ERISA by amending a benefit plan on June 8, 1987 and February 8, 1988, to significantly reduce the future accrual of benefits without proper notice; and 4. USX breached its fiduciary duty under section 404(a)(1) of ERISA by failing to acknowledge benefits which were accrued and vested as of December 31, 1986. The Layoff plaintiffs’ section 204(g) and 404(a)(1) claims are dependant on the court finding that USX “shut down” Geneva on December 31, 1986. b. Actives The Active plaintiffs are 1,349 union-represented employees who were actively employed by USX as of July 31, 1986 (the “Actives”). The Actives state four claims as follows: 1. USX violated section 510 of ERISA by shutting Geneva down on December 31, 1986, idling Geneva at the end of the work stoppage, and/or selling Geneva on August 31, 1987; 2. USX violated section 204(g) of ERISA by amending a benefit plan on June 8, 1987 and February 8, 1988, to reduce benefits which were accrued and vested as of December 31, 1986; 3. USX violated section 204(h) of ERISA by amending a benefit plan on June 8, 1987 and February 8, 1988, to significantly reduce the future accrual of benefits without proper notice; and 4. USX breached its fiduciary duty under section 404(a)(1) of ERISA by failing to acknowledge benefits which were accrued and vested as of December 31, 1986. The Active plaintiffs’ section 510, 204(g) and 404(a)(1) claims are dependant either in whole or in part on the court finding that USX “shut down” Geneva on December 31, 1986. ' c. Managements The Management plaintiffs are 66 nonunion represented employees who were actively employed by USX as of July 31,1986 (the “Management”). The Management’s claims are identical to the Actives’ claims. d. Retireds The Retired plaintiffs are 208 union-represented employees who retired from USX prior to the date Geneva was sold to Basic Manufacturing and Technology (“BM & T”) on August 31, 1987 (the “Retireds”). The Retireds state four claims as follows: 1. USX violated section 510 of ERISA by misrepresenting facts in order to interfere with accrued benefits, and by requiring the suspension or repayment of pensions upon employment with BM & T; 2. USX violated section 204(g) of ERISA by amending a benefit plan on June 8, 1987 and February 8, 1988, to reduce benefits which were accrued and vested as of December 31, 1986; 3. USX violated section 204(h) of ERISA by amending a benefit plan on June 8, 1987 and February 8, 1988, to significantly reduce the future accrual of benefits without proper notice; and 4. USX breached its fiduciary duty under section 404(a)(1) of ERISA by misrepresenting facts, wrongly advising plaintiffs and failing to disclose material information. The Retired plaintiffs’ section 510 and 204(g) claims are dependant in whole or in part on the court finding that USX “shut down” Geneva on December 31, 1986. e. LaRoches The LaRoehe plaintiffs are 31 union represented employees who were actively employed at the nitrogen plant at Geneva when it was sold to LaRoehe Industries on May 30, 1985 (the “LaRoches”). The LaRoches state three claims as follows: 1. USX violated section 204(g) of ERISA by amending a benefit plan on May 30, 1985 and August 11, 1986, to reduce benefits which were accrued and vested as of May 30, 1985; 2. USX violated section 204(h) of ERISA by amending a benefit plan on May 30, 1985 and August 11, 1986, to significantly reduce the future accrual of benefits without proper notice; and 3. USX breached its fiduciary duty under section 404(a)(1) of ERISA by failing to acknowledge benefits which were accrued and vested as of May 30, 1985, and by misrepresenting facts, wrongly advising plaintiffs and failing to disclose material information. The LaRoehe plaintiffs’ section 204(g) and 404(a)(1) claims are dependant in whole or in part on the court finding that USX “shut down” the Geneva nitrogen plant on May 30, 1985. D. Trial This matter originated in three separate actions, Pickering v. USX Corp., No. 87-C-838J (D.Utah filed Sept. 20, 1987), Barney v. USX Corp., No. 88-C-763J (D.Utah filed Aug. 30, 1988), and Kenney v. USX Corp., No. 91-C-636J (D.Utah filed June 20, 1991). Pickering and Barney were consolidated on January 31, 1989, encompassed the individual claims of 1,869 named plaintiffs, and formed the basis of the trial. Kenney was consolidated with Pickering and Barney post-trial on July 29, 1991 upon a finding that Kenney involved substantially the same questions of law, the same defendant, and similarly situated plaintiffs. The court bifurcated the trial as to the issues of liability and damages or other relief, with the liability phase commencing on March 25, 1991, and concluding on May 31, 1991. The purpose of the liability phase was to deal with questions of fact and law common to some or all of plaintiffs and defendant, and if liability be determined, to provide a common legal and factual context in which the instant claims could be consistently determined. II. CASE SUMMARY Plaintiffs’ various claims are based on an allegedly multifaceted benefits avoidance scheme, implemented by USX to interfere with the rights of the Geneva work force, in violation of section 510, 29 U.S.C. § 1140, section 204, 29 U.S.C. § 1054, and section 404, 29 U.S.C. § 1104, of ERISA. The alleged scheme can be summarized in five categories: Pre-work stoppage; La-Roche sale; Work stoppage; Geneva closure; and June Agreement and sale to BM & T. A. Pre-Work Stoppage USX’s benefits avoidance scheme allegedly began in the early 1980’s. At that time, USX began a cost reduction program throughout its steel division that led to the lay off of many Geneva workers. It is conceded by plaintiffs that while some initial layoffs may have been legitimate, USX allegedly violated section 510 of ERISA by failing to recall laid-off workers in order to interfere with the accrual of future pension benefits. B. LaRoche Sale On May 30, 1985, USX sold the nitrogen plant located at Geneva to LaRoche Industries. As part of the sale, USX limited the future calculation of USX pension benefits for those USX workers who went to work for LaRoche Industries. Plaintiffs assert that USX violated ERISA in connection with the LaRoche Industries sale in two ways. First, USX allegedly violated section 204 by improperly amending the USX pension plan so as to diminish both vested and future pension benefits. Second, USX allegedly breached its fiduciary duty under section 404, by misrepresenting material facts to the LaRoche plaintiffs concerning their pension benefits. C. Work Stoppage From August 1986 to February 1987, Geneva was closed due to a “work stoppage.” Sometime during the work stoppage, plaintiffs claim that USX decided to shut down Geneva on December 31, 1986. If a plant were shut down within the terms of the relevant labor agreements, workers are automatically eligible for “shutdown” benefits, benefits generally more valuable to a plan participant than “normal” retirement benefits. Plaintiffs assert USX that violated section 510 of ERISA by concealing its decision to shut down Geneva so as to induce the Retireds to retire prior to the planned shutdown, and thereby avoid paying the Retireds shutdown benefits. USX’s supposed concealment of the planned shutdown also allegedly breached USX’s fiduciary duty under section 404 of ERISA to provide material information to the Retireds. In August of 1987, Geneva was sold. At that time, USX incorrectly advised the Retireds that if they went to work for the purchasing company, their USX retirement pensions would be suspended. Accordingly, plaintiffs allege that USX also breached its fiduciary duty under sections 510 and 404 of ERISA by providing misinformation to plan participants. D. Geneva Closure Plaintiffs allege that USX’s secret decision to shut down Geneva in December 1986, also violated the rights of the non-retiring plaintiffs. Plaintiffs argue that USX’s motive in choosing a December 31, 1986 shutdown date, as compared to a later date, was to interfere with the future benefit eligibility of non-retiring workers in violation of section 510 of ERISA. Additionally, plaintiffs claim that USX violated section 510 by idling Geneva after the work stoppage so as to interfere with the accrual of plaintiffs’ pension benefits. E. June Agreement and Sale to BM & T On August 31, 1987, USX sold Geneva to BM & T. In anticipation of the sale, on June 8, 1987, USX and the USWA negotiated an agreement (the “June Agreement”), which limited the calculation of USX pension benefits payable after the sale. Both the retiring plaintiffs and the non-retiring plaintiffs maintain that the sale of Geneva violated ERISA in three ways. First, the sale violated section 510 because it was allegedly motivated by USX’s desire to interfere with plaintiffs’ pension benefits. Second, the agreement negotiated by USX and the USWA allegedly violated section 204 by improperly amending the USX pension plan to dimmish both vested and future benefits. Third, USX allegedly breached its fiduciary duty under section 404 by failing to reveal to plaintiffs that their benefits vested on December 31, 1986. F. Affirmative Defenses In addition to disputing each of plaintiffs’ claims, USX also argues that plaintiffs’ claims are barred by one or more affirmative defenses. These affirmative defenses are: 1. under the June Agreement, plaintiffs are estopped to contend that Geneva was shut down on December 31, 1986; 2. plaintiffs ratified the June Agreement; 3. plaintiffs failed to carry their burden of proving that the USWA breached its duty of fair representation and therefore, the June Agreement is valid and binding on the parties; 4. assuming discriminatory conduct, USX would have taken the same action absent the discriminatory motive; 5. plaintiffs’ claims are barred by the statute of limitations; 6. plaintiffs’ claims are barred by prior arbitration decisions; 7. plaintiffs who received their pension benefits in a lump sum lack standing; 8. plaintiffs failed to mitigate their damages; and, 9. plaintiffs failed to exhaust their contractual remedies as required by ERISA, Federal Labor Law, or the Federal Arbitration Act. Several of USX’s affirmative defenses are addressed in the body of the Opinion as they arise. Those defenses that are not specifically addressed are otherwise subsumed by the findings of the court. III. GENERAL FACTUAL BACKGROUND A. Geneva In 1941, USX designed and built a steel mill in Orem, Utah on behalf of the United States Government. Utah was chosen because of its accessibility to iron ore, coal, lime-stone, dolomite and fresh water, as well as its distance from the Pacific Coast. The new steel mill was named Geneva after a small summer resort on the shore of Utah Lake. At the close of World War II, the War Assets Administration sold Geneva to USX. Since that time, USX has added new facilities to Geneva, increased its steel-making capacity and expanded its product line. Geneva’s principal post-war products have included steel plates, hot-rolled sheets and coils, structural shapes, welded steel pipe, pig iron, coke blast furnace and open hearth slag products, cold chemicals, and nitrogen products. B. United Steel Workers of America In 1939, the USWA was designated as the exclusive collective bargaining representative of certain USX employees. Since that time, USX and the USWA have entered into successive collective bargaining agreements establishing the terms and conditions of employment for union-represented employees at USX’s basic steel facilities nationwide, including Geneva. Such nationwide collective bargaining agreements between USX and the USWA are commonly referred to as Basic Labor Agreements (“BLAs”). The “Agreement between United States Steel Corporation and the United Steelworkers of America”, dated March 1, 1983 (the “1983 BLA”), and the “Agreement between USS Division of USX Corporation and the United Steelworkers of America”, dated February 1, 1987 (the “1987 BLA”), are the two BLAs which were in effect during the relevant time frame of this action. See Defendant’s Exhibits (“DX’s”) 3 and 5. For several years USX and the USWA have also entered into successive collectively bargained pension agreements that established the pension rights and benefits for represented employees. The “Pension Agreement between United States Steel Corporation and United Steelworkers of America”, dated July 31, 1980, (the “1980 Pension Agreement”), and the “Pension Agreement between USS Division of USX Corporation and United Steelworkers of America”, dated January 31, 1987 (the “1987 Pension Agreement”), are the two pension agreements which were in effect during the relevant time frame of this action. See DX’s 7 and 8. C. USX Benefit Plans In addition to the collective bargaining agreements, USX maintained an employee pension benefit plan, the “United States Steel Corporation Plan for Employee Pension Benefits” (the “Pension Plan”), and other employee benefit plans, within the meaning of subsections 3(2)(A) and 3(35) of ERISA, 29 U.S.C. § 1002(2)(A) and (35) (1990). See DX’s 9 and 10. Pursuant to the Pension Agreements, the Pension Plan provided additional benefit terms and conditions to employees represented by the USWA. The terms and conditions of the Pension Plan that govern different classes of employees are set forth in “pension rules”. For example, the terms and conditions of the Pension Plan for union-represented employees are set forth in the “USX 1987 Non-Contributory Pension Rules”. See DX’s 11A and B. Similarly, the terms and conditions of the Pension Plan for nonunion represented salaried plaintiffs are set forth in the “United States Steel 1984 Salaried Pension Rules”. See DX 12. In addition to pension benefits, USX also provided its workers various types of insurance benefits. For example, union-represented active employees received short term disability, hospital, surgical, major medical, dental and vision benefits. Retired union employees were provided life insurance, hospital, surgical and major medical benefits. The various insurance benefits were set forth in the “Programs of Insurance Benefits” between USX and the USWA. See DX’s 17 and 18. USX also provided “Supplemental Unemployment Benefit Plan(s)” to both its union and management employees. See DX’s 14 and 15. The Pension Fund, a nonprofit Pennsylvania Membership Corporation, is a named administrator of the USX Pension Plan and related employee benefits plans within the meaning of section 3(16) of ERISA, 29 U.S.C. § 1002(16) (1988). The majority of the Pension Fund’s officers are employees of USX. The other Pension Fund employees work exclusively for the Fund. D. Rule of 65 and 70/80 Retirement Benefits Eligibility for receipt of pension benefits under USX retirement benefits such as “normal retirement”, “62/is retirement”, “30-year retirement” and “deferred vested retirement”, is generally based upon a formula which consists of a combination of age and years of service without any contingent events, such as a shutdown or layoff, occurring. The Pension Agreements also provide for other types of early retirement “shutdown” or “layoff” pensions, sometimes referred to in the industry as “Magic Number” pensions. Employees generally become eligible for Magic Number pensions only if they are laid off or if a plant is shut down. Thus, if USX shuts down a plant, or a worker is laid off, and the worker achieves the needed combination of age and years of service (or magic number), the worker becomes eligible for a Magic Number pension. A major portion of plaintiffs’ case seeks Magic Number pensions. Magic Number pensions are generally more valuable to an employee than a normal retirement pension, and, in turn, generally cost USX more than a normal pension. An employee eligible for a Magic Number pension can receive lifetime monthly pension benefits commencing at an earlier age than normal benefits, and hence would receive a pension for a longer period of time, than an employee retiring on an age 65-pension. In addition to the pension, the employee entitled to a Magic Number pension could also receive a special monthly supplement of $400 until reaching age 62, or, until the employee earns sufficient income to trigger a suspension of the supplement. USX provides two types of Magic Number pensions; a “Rule of 65” pension, and a “7%o” pension. Section 2.7 of both the 1983 and the 1987 Pension Agreements set forth the eligibility requirements for Rule of 65 retirement in pertinent part as follows; Any participant (i) who shall have had at least 20 years of continuous service as of his [or her] last day worked, (ii) who has not attained the age of 55 years, and (iii) whose combined age and years of continuous service shall equal 65 or more but less than 80, and (a) whose continuous service is broken by reason of a layoff or disability, or (b) whose continuous service is not broken and who is absent from work by reason of a layoff resulting from his election to be placed on layoff status pursuant to the provisions of the Basic Agreement applicable in the event of a permanent shutdown, or (c) whose continuous service is not broken and who is absent from work by reason of a physical disability or a layoff other than a layoff resulting from an election referred to above and whose return to active employment is declared unlikely by his Employing Company, or (d) who considers that it would be in his interest to retire, and his [or her] Employing Company considers that such retirement would likewise be in its interest and it approves an application for retirement under mutually satisfactory conditions, and who has not been offered suitable long-term employment as defined in Appendix A, shall be eligible to retire on or after January 31, [1983 or 1987, respectively], and shall upon his retirement ... be eligible for a pension____ DX’s 7 and 8. Thus, in addition to age and service requirements, section 2.7 of the Pension Agreements requires either that continuous service be broken, or that layoff or retirement be elected in lieu of termination. Section 2.6 of both the 1980 and 1987 Pension Agreements set forth the eligibility requirements for 7%o retirement in pertinent part as follows: Any participant who has not attained the age of 62 years and who shall have had at least 15 years of continuous service and (i) shall have attained the age of 55 years and whose combined age and years of continuous service shall equal 70 or more, or (ii) whose combined age and years of continuous service shall equal 80 or more, and (a) whose continuous service is broken by reason of a permanent shutdown of a plant, department or subdivision thereof or by reason of a layoff or physical disability, or (b) whose continuous service is not broken and who is absent from work by reason of: (1) a layoff resulting from his [or her] election to be placed on layoff status pursuant to the provisions of the Basic Agreement applicable in the event of a permanent shutdown, or (2) a physical disability or a layoff other than a layoff resulting from an election referred to above and whose return to active employment is declared unlikely by his [or her] Employing Company, or (c) whose continuous service is not broken and who, while on layoff status by reason of his [or her] election to be placed on such status pursuant to the provisions of the Basic Agreement applicable in the event of a permanent shutdown, accepts a job with an Employing Company and, prior to the expiration of 90 consecutive calendar days from the first day worked on such job, elects to retire, or (d) who considers that it would be in his [or her] interest to retire, and his [or her] Employing Company considers that such retirement would likewise be in its interest and it approves an application for retirement under mutually satisfactory conditions, shall be eligible to retire on or after January 31, [1983 or 1987, respectively] and shall upon his [or her] retirement ... be eligible for a pension. DX’s 7 and 8. Thus, in addition to age and service requirements, section 2.6 of the Pension Agreements also requires either that continuous service be broken by reason of a shutdown, or that layoff be elected in lieu of termination as a result of a plant shutdown. E. USX’s Recent Restructurings In 1979, USX engaged in a major restructuring which involved the permanent shutdown of several facilities. The restructuring plan, which was drafted in the summer of 1979, and approved by the USX Board of Directors in December of that year, estimated restructuring liabilities in excess of $500 million, and appropriate accounting entries were made. After the restructuring plan was implemented, USX determined that the estimates made in 1979 had resulted in a $163 million over accrual of liability. USX’s liability accounts were adjusted by that amount in later years. In 1982, USX again contemplated a major restructuring. Accordingly, following several costs studies, USX engaged in another massive restructuring in 1983. As with the 1979 restructuring, the 1983 restructuring proposal was drafted early in the restructuring year, and was subsequently approved by the USX Board of Directors. Following the restructuring, USX noted in its Annual Report that the Board of Directors specifically approved the shutdown of several facilities. See DX 88D at 48-49. Although the facilities involved in the 1983 restructuring were not actually shut down until sometime in 1984, the estimated cost relating to the restructuring was accounted for in the USX financial statements as of December 31, 1983. IV. STATUS OF GENEVA ON DECEMBER 31, 1986 A. Introduction Several of plaintiffs’ ERISA claims are contingent on the court first finding that Geneva was shut down on December 31, 1986. Accordingly, the court begins its analysis of plaintiffs' case by examining the following two issues: (1) whether Geneva was “shut down” on December 31, 1986, within the terms of the 1983 BLA; and if so, (2) whether plaintiffs are entitled to shutdown benefits as of that date. The relevant terms, conditions, and procedure necessary for USX to effect a plant shutdown as of December 31, 1986, are set forth in section 16(A) of the 1983 BLA which states in relevant part: When, in the sole judgment of the Company, it decides to close permanently a plant or discontinue permanently a department of a plant or substantial portion thereof and terminate the employment of individuals, an employee whose employment is terminated either directly or indirectly as a result thereof because he was not entitled to other employment with the Company under the provisions of Section 13 — Seniority of this Agreement and paragraph B-2 below shall be entitled to a severance allowance in accordance with and subject to the following provisions. Before the Company shall finally decide to close permanently a plant or discontinue permanently a department of a plant it shall give the Union, when practicable, advance written notification of its intention. Such notification shall be given at least 90 days prior to the proposed closure date, and the Company will thereafter meet with appropriate Union representatives in order to provide them with an opportunity to discuss the Company’s proposed course of action and to provide information to the Company and to suggest alternative courses. Upon conclusion of such meetings, which in no event shall be less than 30 days prior to the proposed closure or partial closure date, the Company shall advise the Union of its final decision. The final closure decision shall be the exclusive function of the Company. DX 3 (emphasis in original). Accordingly, section 16(A) of the 1983 BLA outlines a five-step process for shutting down a facility, as follows: (1) “[wjhen, in the sole judgment of [USX], it decides to close permanently a plant ... ”; (2) USX “shall give the Union, when practicable, advance written notification of its intention ... ”; (3) “[s]uch notification shall be given at least 90 days prior to the proposed closure date ... ”; (4) USX will “meet with appropriate Union representatives in order to provide them with an opportunity to discuss the Company’s proposed course of action and to provide information to the Company and to suggest alternative courses and (5) “[u]pon conclusion of the meetings, which in no event shall be less than 30 days prior to the proposed closure ..., [USX] shall advise the Union of its final decision.” DX 3 (emphasis in original). B. Facts 1. USX-POSCO Joint Venture Prior to July of 1986, approximately 70 percent of Geneva’s steel was shipped to Geneva’s sister plant in Pittsburgh, California (“Pit-Cal”) for finishing into hot-rolled sheets and coils, otherwise known as hot bands. The production of tin plate, a steel used in the food processing industry, was also a major product produced at Pit-Cal. In the early 1970’s, Pit-Cal was receiving over 400,000 tons of raw steel annually for the production of tin plate. By the 1980’s however, with increasing competition from domestic and foreign competitors, Pit-Cal’s tin plate sales were cut in half. In an effort to remain in the West Coast tin plate market, USX met with Pohang Iron & Steel Co., Ltd. (“POSCO”) of The Republic of Korea during November, 1984, to discuss possible joint business arrangements. The preliminary discussions led to negotiations during February, 1985, regarding the formation of a partnership between USX and POSCO, which would acquire and modernize Pit-Cal. On November 23, 1985, USX and POSCO entered into a “Memorandum of Understanding” which set forth the proposed terms of the venture. See DX 213. On January 9, 1986, a “Partnership Agreement” was signed which created “USS-POSCO Industries” (“UPI”). See DX 215. At the time the Memorandum of Understanding was signed, the amount of steel that foreign nations such as Korea could sell in American markets was limited by the “U.S. Voluntary Restraint Adjustment” program (the “VRA” program). Under the VRA program, POSCO could not supply more than a minor portion of Pit-Cal’s hot band requirements until October 1989, when the VRA program was to expire. Accordingly, during the UPI negotiations, an important issue was whether Geneva would continue to supply Pit-Cal with hot bands until such time that the hot bands could be shipped from Korea. The USS-POSCO Memorandum of Understanding reflected USX’s desire that Geneva continue to provide Pit-Cal hot bands through the expiration of the VRA program. See Trial Transcript (“Tr.”) at 4021-22, 24. However, the Memorandum of Understanding gave USX the option to supply Pit-Cal from a source other than Geneva should USX so desire. See id. at 5746. Specifically, the Memorandum of Understanding states that USX will supply hot bands to Pit-Cal “from either U.S. Steel’s Geneva Plant or some other specified source____” DX 213 at 4 (emphasis added). The UPI joint venture was announced to Geneva employees on December 16, 1985, in a letter from USX Chairman David Roderick (“Roderick”). See DX 216. The letter assured employees that Geneva’s operations would continue at least until the expiration of the VRA’s in 1989, by stating: The benefits of this move will be to assure existing employment at the Pittsburgh Plant well into the next century and allow continued operation of Geneva until at least the latter part of 1989 when the future of our Utah plant beyond that date will be determined by then prevailing market conditions. Meanwhile, this advance notice should provide as much lead time as circumstances permit for our western employees and communities to make any necessary adjustments to the economic impact this development may have and to plan accordingly for the future. DX 216 at 2 (emphasis added). On December 16,1985, USX also circulated a press release announcing the joint venture. See DX 218. As with Roderick's letter, the press release announced Geneva as the continued source of hot bands to Pit-Cal until the expiration of the VRA’s by stating: The agreement provides for [USX] to supply hot-rolled steel coils for finishing by the joint venture from its Geneva Plant near Provo, Utah, as required, until almost 1990. On completion of the modernization and only after the expiration of the President’s steel trade program in October 1989, will POSCO become the primary supplier of high quality cast steel coils for finishing at the California plant. Until then, the joint venture agreement assures a continued market for hot-rolled coils produced by [USX’s] Geneva Plant. Id. at 1-2. On February 5, 1986, the UPI joint venture formalized the supplying of hot bands to Pit-Cal in the “U.S. Steel Hot Band Requirements Agreement”. See DX 214. Contrary to the Memorandum of Understanding, Roderick’s letter to Geneva employees, and the USX press release, the Hot Band Requirements Agreement does not provide for Geneva to be the source of hot bands to Pit-Cal through October of 1989. The Agreement simply states that, “[a]ll Hot Bands shall be produced by Seller at one of Seller’s producing plants____” Id. at 2. Thus, USX had no contractual obligation under the Hot Band Requirements Agreement that Geneva supply Pit-Cal its hot bands requirements through the expiration of the VRA program. Despite the fact that the Hot Bands Agreement did not specifically name Geneva to supply Hot Bands to Pit-Cal, from January to May of 1986, officers of USX made several requests to the USX Corporate Policy Committee which are some evidence of USX’s desire that Geneva continue to supply Pit-Cal through the expiration of the VRA’s. These requests were as follows: (1) A January 31 Purchasing Memorandum discussing a proposed five-year agreement with Union Pacific for transportation of hot bands from Geneva to Pit-Cal. See DX 230. (2) A February 17 Authorization Request seeking a five-year agreement with Union Pacific for transportation of hot bands from Geneva to Pit-Cal. See DX 230. (3) An April 23 Authorization Request seeking a three-year lease agreement for ten new or remanufactured late model locomotives and two new or re-manufactured locomotive cranes for use at Geneva. See DX 231. (4) An April 23 Authorization Request seeking a five-year agreement with applicable transporters for the shipment of pellet and natural ores into Geneva for the manufacturing of hot bands. See DX 232. (5) A May 19 Appropriation Request seeking $3.35 million to rehabilitate the No. 2 blast furnace at Geneva. See DX 235. The May 19 Appropriation Request noted that Geneva would continue to supply Hot Bands to Pit-Cal by stating that, “[t]he hot metal plan over the next four years calls for this furnace to produce 2.1 million tons after the rehabilitation.” DX 235 at 115133. 2. June and November 1985 Studies On June 24, 1985, USX estimated the employee-related pension costs of shutting Geneva down on December 31, 1986. See PX 12. USX testified that the “Employee Benefit Costs Potential Shutdown of Geneva Plant” study was prepared during the joint venture negotiations in anticipation that Geneva might not be approved by POSCO as the primary source of hot bands to Pit-Cal. See Tr. at 4025-27. According to the June 24 study, the estimated employee-related costs if Geneva were shut down on December 31, 1986, would be approximately $169,056,000. See PX 12. On November 27, 1985, shortly after the UPI Memorandum of Understanding was executed, USX ran a second study which estimated the employee-related pension costs of shutting Geneva down in 1989. See PX 14. The “Geneva Works Employee Benefit Eligibility in Event of Shutdown in 1989” study recalculated the totals of the June 24 study to see which pensions the employees would be eligible for in 1989. Like the June study, the November study also estimated that the employee-related costs if Geneva were shut down in 1989 would be $169,056,000. See PX 14. The reason that the June and November studies estimated identical employee-related costs as of two different shutdown dates was because the November study was limited to a totalling of the pension benefit categories that the Geneva work force would fall into in 1989, and did not contain a summary calculation of the total 1989 pension shutdown liability. Roderick testified that such a calculation was made, but he did not recall the figure. See Tr. at 4285. An expert for plaintiffs testified that, based on the June and November studies, USX’s increased shutdown liability in 1989 as compared to 1986, would be an additional $50 million. See id. at 413. 3. 1986 Discussions as to the Sale of Geneva Soon after the execution of the UPI Memorandum of Understanding and the November study, USX engaged in discussions with Joseph Cannon (“Cannon”), a Washington D.C. attorney, concerning the possible sale and purchase of Geneva. See PX 502. The talks continued through mid-1986. As part of the discussions with Cannon concerning the sale and purchase of Geneva, USX ordered the preparation of two more Geneva studies. On July 15, 1986, USX compared the cost of selling Geneva in 1986 to the cost of shutting the plant down in 1989. See PX 29. USX testified that the “Geneva Plant Shutdown Costs as of December 31, 1989” study was ordered based on the potential sale of Geneva. See Tr. at 5239-40. Two days later, on July 17, USX estimated the cash flow of Geneva. See PX 29. The “Geneva Works — P & L and Cash Flow” study calculated the anticipated cash flow from Geneva if the plant were kept open through 1989. The July 17 study, which subtracts the 1989 shutdown costs of the July 15 study from Geneva’s anticipated cash flow, estimated that the 1989 shutdown costs would exceed anticipated cash flow through the years 1986 through 1989. The Cannon discussions culminated in an August 4, 1986 offer to purchase Geneva, which USX rejected. See PX 30. Roderick testified that USX rejected the offer because the Company had no serious interest in selling Geneva at that time. See Tr. at 5629. 4. Work Stoppage Under the 1983 BLA, either USX or the USWA could terminate the Agreement at midnight, July 31, 1986, by giving 60 days prior written notice to the other party. On May 15, 1986, USX notified the USWA of its intention to terminate the 1983 BLA at its expiration, and offered to meet with the USWA and negotiate a successor labor agreement. On May 20, the USWA sent USX a similar termination notice. Despite numerous ensuing negotiating sessions the parties were unable to bargain a new labor agreement pre-shutdown. In mid-July, USX began to curtail operations at its various plants and facilities nationwide in anticipation of a work stoppage at midnight July 31. At Geneva, the curtailment began on July 25, 1986. On July 27, USX informed the USWA that USX was beginning the final idling phase of its plants and facilities. On July 29, 1986, USX presented the USWA with its final proposal for a new basic labor agreement. On July 31, the USWA rejected USX’s proposal, but offered to allow its members to continue working after July 31, while a new agreement could be negotiated. USX rejected the USWA’s offer. Representatives of USX and the USWA met on July 31. No new basic labor agreement was reached. On August 1, 1986, the work stoppage began during which union-represented employees did not work. During the work stoppage, USX cut expenses at Geneva by not purchasing coal for continued coke production. USX also laid off several management and non-union represented employees, and cut the salaries of those that remained employed. At an estimated cost of about three million dollars per month, however, the Geneva coke batteries were retained on hot idle status. Failure to maintain the coke batteries on hot idle could cost millions of dollars to rebuild the damaged batteries. See Tr. at 6827-8. While Geneva was idled, Pit-Cal, which had special arrangements with the USWA, continued to operate and receive delivery of hot bands from the USX Gary and Fairless steel facilities. See DX 90E. At no time during the work stoppage did USX publicly state that it was shutting down Geneva. The only statements made during that time which alluded to a possible USX plant shut down, occurred in July and August of 1986. In a July press conference, USX stated that certain plants were more vulnerable to a shutdown than others. See DX 197N. In August, USX made a similar statement to the Geneva Advisory Council in Provo, Utah. See Tr. at 4075-76. 5. Facility Rationalization and Related Studies For the year 1986, the USX Steel Division nationwide had operating losses of $44 million in January, $37 million in February, $33 million in April, $36 million in May, and $28 million in June. See DX 90E. There was an operating profit of $14 million in March. See id. During the first six months of 1986, the Steel Division operated at only 36.6 percent of its capacity. See DX 277. To combat these losses, USX resolved to reduce its Steel Division to a core of facilities which could generate enough cash to permit the surviving core plants to be modernized. See Tr. at 2544. Accordingly, in May of 1986, USX began developing a plan similar to the 1979 and 1983 restructuring plans. USX also employed two investment firms to develop restructuring proposals. As part of the 1986 restructuring, USX studied various aspects of Geneva’s status and possible future. For example, on May 27, 1986, before the work stoppage, USX analyzed the employee cost liability numbers of several USX facilities including Geneva. The “Employee Related Costs Potential Shutdown of Selected Facilities Steel and Coal Operations” study estimated liability for employee-related costs as of two alternative dates: July 31, 1986 and December 31, 1986. See PX 21. The estimated employee related cost liabilities for Geneva, if shut down, were $92,874,000 for July 31, and $91,974,000 for December 31. As part of the restructuring plan, USX also prepared a “major corporate study” entitled “Facility Rationalization”, one of several restructuring related studies. See Tr. at 5633. The Facility Rationalization proposed shutting down three USX facilities in December of 1986, including Geneva. See PX 32. According to the Facility Rationalization, the continued operation of the USX Fairfield, National and Geneva plants would result in a monthly loss of $100,000, as compared to a monthly profit of $15 million, if those plants were shut down. 6. Steel Division Business Plan Concurrently with the development of the Facility Rationalization, USX employees also began developing the 1986 “Steel Division Business Plan”, a formal yearly plan used in the budgeting and management process. See PX 79. Because of the uncertainties of the work stoppage, however, the 1986 Business Plan, which would normally have been presented to the USX Board of Directors in January of 1987, was not presented, considered or approved until April, 1987. An early draft of a portion of the Business Plan, dated August 12, 1986, after the work stoppage began, showed that there was to be no post-work stoppage production at Geneva. See PX 79. Subsequent drafts of the Business Plan, completed in October and December of 1986, similarly showed that there was to be no post-work stoppage production at Geneva. USX testified that future Geneva production was excluded from the Business Plan drafts in anticipation that the Facility Rationalization, which proposed the shutdown of Geneva, would be adopted by the USX Board of Directors. See Tr. at 4076-81. 7. USX Board of Directors Authorization Request On January 15, 1987, the Corporate Policy Committee reviewed both the USX generated proposal and investment bankers’ restructuring proposals. At that time, Roderick specifically recommended to the Committee that the USX restructuring proposal, which included the Facility Rationalization, be pursued in preference to the proposals developed by the investment bankers. See DX 73. However, Roderick recommended the “indefinite idling” of Geneva at that time as opposed to shutting down the plant. Based on Roderick’s recommendation, the Corporate Policy Committee authorized a modified version of the Facility Rationalization restructuring proposal to the USX Board of Directors, and included the recommendation that Geneva be idled. The Authorization Request to the Board of Directors states in relevant part: [W]e recommend the following actions for the consideration of the Board: 1. Approve the indefinite idling and recognition of impairment of the operating assets at Geneva____ 3. Since under various agreements with certain labor unions, [USX] is obligated to to [sic] discuss with such unions its proposed course of action before such action is final, then with respect to facilities where employees covered by such agreements are affected, authorize the Corporate Policy Committee to add or delete facilities from those as to which the indefinite idling and/or recognition of impairment is approved where such action is deemed advisable as a result of such discussions. DX 73 (emphasis added). At trial, Roderick defined “indefinite idling” as putting a facility on stand-by until USX decided to operate, sell or shut down the plant. Simply put, Roderick testified that he was concerned about the condition of the steel market after the work stoppage, and deemed it premature to make shutdown decisions at that time. See Tr. at 5639. On January 27, 1987, the USX Board of Directors approved the Corporate Policy Committee’s Authorization Request. See DX 56. The Board Approval states in pertinent part: RESOLVED: That the restructuring by this Corporation, ... by the indefinite idling and recognition of impairment of operating assets, certain facilities, certain costs and shortfall, ... including termination and modification of agreements, contracts and leases, related employee costs, termination or transfer of affected employees and incurring onetime costs and the taking of other actions necessary to effect the shutdowns and idling of facilities, ... and the same hereby is, recommended. DX 56 (emphasis added). In sum, the Board’s resolution involved a $1.02 billion write-down charge associated with asset impairment, employee costs, and supply contract terminations and modifications. The action projected to improve future annual before tax profits by $230 million. See DX 73. On February 4, 1987, USX held a Press Conference to discuss, among other things, the indefinite idling of Geneva. At that time, USX emphasized that Geneva was not shut down. See DX 197A. Similarly, the 1987 USX Annual Report also noted that Geneva had not been shut down. The Report states in applicable part: In early February, 1987, USX announced the indefinite idling of four [USX] plants: Geneva Works (Provo, Utah) These operations are not permanently shut down. Improved market conditions for the products from these plants may make it feasible to reopen some of them. On the other hand, a lack of any future market improvement may necessitate their permanent closing. DX 88G at 16-17 (emphasis added). 8. Accounting Treatment of the Restructuring Although Geneva was designated as indefinitely idled, financial account records as of December 31, 1986, reflected: (1) a total write-down of the restructured assets, including Geneva, to zero book value; and, (2) an accrual of employee benefit and other costs as if Geneva had been shut down. See 88G at 32. Both USX and its outside auditor, Price Waterhouse, testified that under generally accepted accounting principles (“GAAP”), it was proper for USX to account for the estimated financial impact of a Geneva closure, regardless of the fact that Geneva had not been shut down. See Tr. at 3625-26, 4465-66, 4860-61. USX testified that under GAAP, when there was an “event” (the 1986 proposed restructuring) in the accounting year in question, and a subsequent “confirming event” (the Board authorization of January 27, 1987), which occurred before financial statements were issued, and the confirming event provided further evidence of conditions existing before year end (overcapacity, weak steel markets, operating losses), the confirming event was considered a “Type I” subsequent event and its estimated results were to be reflected in the financial statements if the results were “probable” and the effects were “reasonably estimable.” See Tr. at 3165, 3602, 3608-10, 3625-26, 4613-14, 4468-72. The accounting pronouncements and practices which purportedly made such reporting appropriate and necessary in connection with USX’s 1986 financial statements included: FAS 5 (losses must be recognized when probable and reasonably estimable), see Tr. at 3595, 3821, 4468-69; the interpretation of APB 30 (accounting for the disposal of part of a business), see Tr. 4620, 3825, 4468-75; FAS 88 (certain pension costs must be recognized when probable and reasonably estimable), see Tr. at 3599, 4476; and the doctrine of conservatism (reporting of losses early and income late), see Tr. at 4447-4474. In sum, USX “booked” or recognized the contingent liabilities of a Geneva shutdown by estimating potential employee-related costs and by taking a credit to accumulated depreciation on Geneva’s assets involved up to their full book value. All anticipated employee costs associated with a shutdown of Geneva as of December 31, 1986, were entered on the corporate books. As to Geneva’s assets, they remained on the books, but added nothing to the net equity because of the full booked offset of accumulated depreciation. USX’s Annual Report stated that the provision for estimated restructuring charges totalled $1,457,000,-000 of which $927 million was a write down of assets and $530 million were employee-related costs. See DX 88G at 32 n. 3. 9. Settlement of the 1986 Labor Negotiations On January 27, 1987, the same date the USX Board of Directors approved the indefinite idling of Geneva, USX and the USWA reached a tentative agreement settling the nationwide work stoppage. The agreement was ratified by local union officers and members employed at Geneva on February 1, 1987. As part of the settlement, USX and the USWA agreed on the terms of the 1987 Pension Agreement, which by agreement became retroactively effective as of January 1, 1987. See DX 8. The parties to the new BLA also agreed that non-working union-represented employees, nationwide, would be considered on layoff as of February 1, 1987, and that the work stoppage time would be counted for purposes of computing continuous service of an employee under the applicable BLA and Pension Agreement. See DX 439. C. Analysis To prevail on the status issues, plaintiffs must demonstrate, by a preponderance of the evidence, that Geneva was “shut down” on December 31, 1986, within the terms, conditions, and procedures set forth in section 16(A) of the 1983 BLA. As analyzed below, the court finds that plaintiffs failed to prove that USX, in its sole judgment, made a “decision” to shut down Geneva as of December 31, 1986. See DX 5 at 142. 1. “Decision” Under Section 16(A) Requires Express Board Action Historically, the U.S. Supreme Court has held that arbitration decisions interpreting the terms of a collectively bargained contract are part of the labor contract itself. See United Steelworkers v. American Mfg. Co., 363 U.S. 564, 568-69, 80 S.Ct. 1343, 1346-47, 4 L.Ed.2d 1403 (1960); United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 581-82, 80 S.Ct. 1347, 1352-53, 4 L.Ed.2d 1409 (1960); United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 596, 80 S.Ct. 1358, 1360, 4 L.Ed.2d 1424 (1960). In Warrior, 363 U.S. at 581, 80 S.Ct. at 1352, the Court stated: [T]he grievance machinery under a collective bargaining agreement is at the very heart of the system of industrial self-government. Arbitration is the means of solving the unforeseeable by molding a system of private law for all the problems which may arise and to provide for their solution in a way whic