author: ASPEN, District Judge:

text:
    WYMAN-GORDON COMPANY, a Massachusetts Corporation Doing Business in the State of Illinois, Plaintiff, v. UNITED STEELWORKERS OF AMERICA, AFL-CIO and its Local Union, Local Union No. 3669, Labor Organizations, Defendants.
    Nos. 85 C 0102/85 C 360.
    United States District Court, N.D. Illinois, E.D.
    June 13, 1985.

      Gerald C. Peterson, Winston and Strawn, Chicago, 111., for plaintiff.
    David L. Gore, Kleiman & Whitney, Chicago, 111., for defendants.
   MEMORANDUM OPINION AND ORDER

ASPEN, District Judge:

Wyman-Gordon Company (“the Company”) filed this suit under § 301 of the Labor Management Relations Act of 1947, 29 U.S.C. § 185, seeking to vacate an arbitration decision ordering the Company to reinstate employee Ronald Brown (“Brown”) with full seniority, benefits and back pay of about $30,000. The Company had fired Brown for collecting unemployment benefits while working for and drawing a salary from the Company. The defendant Union (“the Union”) grieved the firing, which ultimately led to the arbitration decision favoring the Union. The parties have filed cross-motions for summary judgment. The material facts are undisputed. For the reasons stated below, the Court grants the Union’s motion and denies the Company’s.

I.

The Company manufactures steel forgings, including crankshafts for the auto and farm implement industries. During the severe 1982 recession, it laid off about half of its hourly workforce of over 900. On September 5, 1982, it closed its Harvey, Illinois, plant, laying off the remaining workers, including Brown. Brown and others filed for and received unemployment compensation from the State of Illinois. The Company recalled Brown from September 14 through October 17 and then laid him off again until November 29, when he was recalled for good. Brown had certified to the State that he was unemployed even during his period of recall. He thereby collected six weeks of benefits unlawfully. Brown was not the only worker to do so. After an investigation in March 1983, the Company learned that thirty-eight employees had received one or more weeks of unlawful benefits. It decided not to discipline employees who received excess benefits for only two weeks or less, because such employees could have received their benefits through some error. But to receive benefits for three or more weeks, an employee must have certified to the State at least twice that he or she was not working. The Company decided to fire the nine workers who fell into this group. The Union grieved each of the nine discharges under the relevant Collective Bargaining. Agreement.

Because the grievances involved many common issues, the Union asked the Company to agree to arbitrate all nine before one arbitrator, but the Company refused. In March 1984, Arbitrator Dolnick heard the first case, involving another employee. The issue, as in the Brown arbitration, was whether the Company had “just cause” to fire the employee for unlawfully receiving unemployment benefits, and if not, what the proper remedy was. Arbitrator Dolnick ruled that the Company had just cause under the Collective Bargaining Agreement (“Agreement”) to fire that employee. That Agreement provides that:

In discipline and discharge cases, the arbitrator shall have the right to change the degree, type or method of discipline or discharge as the equities of each discipline or discharge case may require. The decision of the arbitrator shall be final, conclusive, and binding on both parties for the life of this Agreement.

The Union did not challenge Arbitrator Dolnick’s decision.

The Company fared worse in grievance two, also involving an employee other than Brown. Arbitrator Wolff found that the Company lacked just cause for firing that employee. Although he distinguished Arbitrator Dolnick’s decision, Arbitrator Wolff also expressly disagreed with it and rejected the Company’s argument that principles of stare decisis or res judicata apply to arbitrations. The Company disagrees with this decision, but abided by it.

The Company then lost its second in a row in arbitration three, the one involving Brown. In a twenty-five page opinion, Arbitrator Goldstein ruled that the Company lacked just cause to fire Brown. As a remedy, he ordered that Brown be reinstated with back pay, benefits and seniority. Agreeing with Arbitrator Wolff, Arbitrator Goldstein also rejected notions of stare decisis and res judicata, and declined to follow Arbitrator Dolnick’s decision.

The Company has reinstated Brown, but refuses to comply with the rest of the decision. In this suit to vacate the award, the Company makes essentially three arguments. Most significantly, it argues that the arbitrator’s decision violated Illinois’ clear public policy forbidding fraudulent collection of unemployment benefits. It also complains that the arbitrator read a “subjective intent” requirement into the “just cause” clause and thus modified the clause. Finally, the Company argues that the Collective Bargaining Agreement required Arbitrator Goldstein to follow Arbitrator Dolnick’s decision. Below we'reject each of these contentions.

II.

Federal courts are not arbiters of labor arbitrators’ decisions. The well-established case law holds that arbitrators have great leeway to make even wrong decisions, that is, decisions a reviewing court might disagree with. The Supreme Court defined the Court’s narrow scope of review in the Steelworkers’ Trilogy. When labor and management submit a question of contract interpretation to an arbitrator, the Court’s review “is confined to ascertaining whether the party seeking arbitration is making a claim which on its face is governed by the contract.” Steelworkers v. American Mfg. Co., 363 U.S. at 568, 80 S.Ct. at 1346. Courts “have no business weighing the merits” of the dispute, id., because in the labor relations context, arbitration replaces and quells strife. Arbitration is “part and parcel of the collective bargaining process itself.” Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. at 578, 80 S.Ct. at 1350. But while the court has a highly deferential role, its mission is not merely to rubber stamp an arbitrator's ruling mindlessly. The arbitrator has great freedom only when interpreting and applying the collective bargaining agreement:

[H]e does not sit to dispense his own brand of industrial justice. He may of course look for guidance from many sources, yet his award is legitimate only so long as it draws its essence from the collective bargaining agreement. When the arbitrator’s words manifest an infidelity to this obligation, courts have no choice but to refuse enforcement of the award.

Steelworkers v. Enterprise Wheel and Car Corp., 363 U.S. at 597, 80 S.Ct. at 1361; see also Young Radiator Co. v. International Union, U.A.W, 734 F.2d 321, 323-24 (7t Cir.1984). With our limited mission thus defined, we turn to the merits.

III.

Of the Company’s three arguments, only the “public policy” one is strong. We will deal with the two weaker arguments before addressing that one.

A.

We first reject the Company’s argument that Arbitrator Goldstein was bound by Arbitrator Dolnick’s decision upholding a discharge. It essentially argues that the arbitrator was bound by stare decisis, or, more precisely, by the principle of defensive collateral estoppel. Both Arbitrators Wolff and Goldstein rejected this argument.

Courts have held that arbitrators are not bound by arbitral precedent. Derwin v. General Dynamics Corp., 719 F.2d 484, 491 (1st Cir.1983); Courier-Citizen v. Boston Electrotypers Union No. 11, 702 F.2d 273, 280 (1st Cir.1983); Metropolitan Edison Co. v. N.L.R.B., 663 F.2d 478, 483 (3d Cir.1981), aff'd, 460 U.S. 693, 103 S.Ct. 1467, 75 L.Ed.2d 387 (1983); Westinghouse Elevators v. S.T.U. de Puerto Rico, 583 F.2d 1184, 1187 (1st Cir.1978); United Electrical Radio and Machine Workers v. Honeywell, Inc., 522 F.2d 1221, 1228 (7th Cir.1975) (res judicata applies only where there exists strict factual identity). Arbitrator Wolff aptly stated the reason for this rule:

The purpose served in preclusion ... in the legal setting is really at war with a central purpose of the grievance arbitration machinery of the collective bargaining agreement. The latter is intended in large measure as a safety valve or catharsis for the individual grievant’s pent-up emotions frequently attendant upon the industrial scene. It is also ordinarily a quid pro quo for the barring of resorting to economic sanctions by the parties during the contract term. If a current grievance must be denied merely because a similar one was ruled upon previously by an arbitrator, ill-will may fester to the detriment of all parties.

Wolff Decision at 18-19. He also cited extensive arbitral authority stating this rule. The Company has cited no contrary authority to this Court.

One exception to this rule applies where the parties contractually agree that stare decisis should apply. See, e.g., Courier-Citizen, 702 F.2d at 280. At the outset, we observe that by refusing the Union’s request to hear the nine grievances at once, the Company surely indicated that the hearings should be independent. As Arbitrator Goldstein wrote, the Company wanted “nine chews at the apple.” We doubt that if the Company had lost the first hearing it would have sung the virtues of precedent in the next hearing. Indeed, it did not sing the virtues of Arbitrator Wolff’s precedent. In any event, we do not think the Agreement creates a rule of stare decisis. The Company points only to the clause which makes “[t]he decision of the arbitrator ... final, conclusive, and binding on both parties for the life of this Agreement.” This clause certainly does not expressly create a rule of stare decisis or issue preclusion. Indeed, we think the plain meaning of this typical clause is that the decision of an arbitrator concerning any one grievance is final and binding. Thus, the Union abided by Arbitrator Dolnick’s ruling, and the Company abided by Arbitrator Wolffs ruling. Each ruling was binding as to the employee at issue in each. But each ruling did not necessarily bind later arbitrators confronted with similar facts. The most that can be said in the Company’s favor is that the clause is arguably ambiguous. Even if it is, we are to resolve ambiguities in contract construction in favor of the arbitrator’s result. We cannot say that the decisions of two arbitrators rejecting stare decisis failed to “draw their essence” from the Agreement or were manifestly unfaithful to the Agreement.

B.

The Company also challenges Arbitrator Goldstein’s conclusion that the Company lacked “just cause” to fire Brown within the meaning of the Agreement. This is clearly a question of interpretation and application of the Agreement. We cannot substitute our opinion for that of the arbitrator’s. American Mfg., 363 U.S. at 568, 80 S.Ct. at 1346. As noted earlier, we need only decide whether the decision “draws its essence” from the Agreement.

The Agreement does not define “just cause.” Nor does it specifically prohibit dishonesty of the sort involved here. The specific question for the Arbitrator was whether Brown’s unlawful receipt of unemployment benefits constituted “just cause.” In ruling “no,” the Arbitrator made several findings. First, he decided that the facts before him did not support the Company’s claim that Brown had intended to defraud the Company. The Company does not seriously challenge this factual finding here. Second, he rejected the Company’s argument that it had suffered actual harm from Brown’s misconduct. Distilled to its essentials, the argument states that the Company, like other employers, finances unemployment benefits. See Ill.Rev.Stat. ch. 48, §§ 300 et seq. (1983). The Company’s contribution rate depends on its unemployment history. As a general proposition, because the program is one of “insurance,” a company must contribute more when it has a history of unemployment. The Arbitrator agreed with this argument in theory, but ruled that its application to the Brown case was speculative. The Company had not shown concretely that Brown’s transgressions led to any real increase in the Company’s contribution rate. Arbitrator Wolff had reached the same conclusion.

Next, Arbitrator Goldstein rejected the Company’s arguments that it had a longstanding practice of discharging employees for dishonesty. Both he and Arbitrator Wolff indicated that they would support such a policy if it existed. See Goldstein Decision at 23 & n. 11; Wolff Decision at 27. But both held that the evidence did not show that the Company had such a policy when the workers collected their excess benefits. The only evidence each found was a letter dated January 18, 1983, after the frauds were committed, stating that fraudulent receipt of benefits would be disciplined. Both held that the concept of “just cause” does not by itself encompass such general dishonesty that works no harm on the Company. We cannot say that this conclusion was manifestly unfaithful to the Agreement.

We reject the Company’s attempt to prove anew in this Court that it had a clear past policy and practice of discharging employees for dishonesty. We do not sit in review of arbitrator’s factual findings, unless they lack any support, which they do not. Amalgamated Meat Cutters v. Great Western Food Co., 712 F.2d 122, 123 (5th Cir.1983). Also, under the Steelworkers’ Trilogy, we must defer to the Arbitrators’ reading of the “just cause” provision, regardless of whether we would have acted differently. We see nothing in the Agreement which clearly compels a contrary result. To the contrary, the Agreement expressly grants the arbitrator in discharge cases “the right to change the degree, type or method of discipline or discharge as the equities of each ... case may require.” The Company may disagree with the equities, but that is unavailing. Nor would it matter if we disagreed with the arbitrator’s view of the equities. Since we hold that the arbitrator’s words did not manifest an infidelity to the Agreement, our view of the merits is irrelevant.

The Company argues that the “just cause” standard is an objective one, and that a “reasonable person” would necessarily find that Brown’s dishonesty was just cause for the dismissal. Even assuming some objective standards applies, we do not believe the Arbitrator’s conclusion was unreasonable or subjective. It is significant that the Arbitrator found as facts that Brown did not intend to defraud the Company, that the company was not harmed, and that the company had no previous policy punishing dishonesty of this sort. On balance, the arbitrator could reasonably conclude that discharge was too severe a sanction for the harm done, especially when the employee had no notice that his transgression would subject him to discipline. The Arbitrator also reasonably took into account the facts that Brown had offered to reimburse the State, and the Union offered to reimburse the Company if its rates went up.

That the Arbitrator looked to Brown’s lack of subjective intent to harm the Company does not mean he failed to use an objective approach to “just cause.” A reasonable person would want to know what Brown intended and then “objectively” weigh that intent against all of the other relevant factors in deciding whether “just cause” existed. Young Radiator, relied upon by the Company, does not compel a different result. There the employer fired an employee for theft of company property. The arbitrator found that the employer lacked “just cause” because the theft was not the employer’s “motivating cause” for the discharge. The Seventh Circuit held that this finding ignored the collective bargaining agreement, which specifically authorized theft as a “just cause” for discharge. 734 F.2d at 324. In contrast, the Agreement here is silent about Brown’s type of misconduct. Also, the employer in Young was harmed in fact, unlike here. Finally, the Company misreads Young’s treatment of the employer’s “motivating cause” as a bar on consideration of the employee’s motivations in this case. The Court reasoned that whether an arbitrator cannot look to an employer’s real motivations for a discharge is separate from “just cause” as defined in a collective bargaining agreement. But an employee’s motivation for doing the acts he is accused of is highly relevant to an objective determination of whether an employee should be disciplined, and if so, how.

C.

The Company’s strongest contention is that the arbitrator’s decision violates public policy. Before detailing that argument, we shall first clarify the issue by describing what it does not entail. The question is not whether Brown’s conduct violated public policy. It surely did. Nor is the question whether a discharge would have better served public policy than reinstatement. We express no opinion on that question. The question is whether the decision to reinstate Brown with full benefits, seniority and back pay actually violated public policy.

Our review of this question is not as deferential as was our review above. If the “just cause” provision, as interpreted and applied by the Arbitrator, violates some public policy, “we are obliged to refrain from enforcing it.” W.R. Grace & Co. v. Local Union 759, 461 U.S. 757, 765, 103 S.Ct. 2177, 2183, 76 L.Ed.2d 298 (1983). This question is ultimately one for the Court, as well as the arbitrator. Id.; see also Amalgamated Meat Cutters v. Great Western Food Co., 712 F.2d 122, 124 (5th Cir.1983); Local No. P-1236 v. Jones Dairy Farm, 680 F.2d 1142, 1144-45 (7th Cir.1982); International Ass’n of Machinists v. Campbell Soup Co., 406 F.2d 1223, 1227 (7th Cir.), cert. denied, 396 U.S. 820, 90 S.Ct. 57, 24 L.Ed.2d 70 (1969). To be given effect, the public policy must be clearly defined. See W.R. Grace, 461 U.S. at 765, 103 S.Ct. at 2183; Jones Dairy, 680 F.2d at 1145. And we must be extremely cautious about setting aside an arbitration award because of public policy. Meat Cutters, 712 F.2d at 124.

The public policy here is clear. Illinois outlaws false claims of unemployment benefits. Ill.Rev.Stat. ch. 48, § 491 (1983). The Company is correct that the State has a strong interest in protecting the integrity of its unemployment compensation system and in preventing fraud to that system. But it does not necessarily follow that the reinstatement of Brown runs afoul of that policy. Just because Brown himself violated public policy does not mean an arbitrator’s decision not to let the Company fire him also violates public policy.

The Arbitrator found that Brown had offered to make the State whole for its losses. The State has apparently decided not to prosecute. There is no evidence that Brown is a recidivist. These facts suggest that discharge is not the only fair result. Criminal law, for example, does not. mandate that a person be punished severely for every crime he commits, let alone the first one. Other interests, such as restitution and rehabilitation, figure into the calculus of what vindicates the public interest when a crime is committed. In sum, it was not necessary to serve public policy that Brown be fired or even that he be denied back pay. It is at least arguable that the public interest was served enough in this case by the offer of restitution and the rehabilitative effects of the continued employment. And the public interests of deterrence are served by the Company’s now-established policy forbidding such dishonesty, as well as the State’s criminal code. This is not to say that discharge, or at least a denial of back pay or some benefits, would not have also served the public interest. Cf. Kane Gas, Light & Heating v. International Brotherhood of Firemen, 687 F.2d 673, 682 (3d Cir.1982) (public interest vindicated by sanctions of suspension rather than discharge). All we say is that the course taken did not clearly violate public policy. Whether it was the best course is not the Court’s concern.

Campbell Soup, supra, supports, this result. Campbell’s fired a worker for gambling at the plant. He had pleaded guilty to a misdemeanor violation of an Illinois gambling law, was fined $1,000 and sentenced to probation for a year. There, unlike here, a specific company rule called for firing an employee for violating a penal law on the premises. The arbitrator reinstated the worker without back pay. The Seventh Circuit held that this remedy was within the arbitrator’s broad remedial power. 406 F.2d at 1226-27. It also held that the reinstatement did not violate public policy. It noted that the conviction and fine vindicated the gambling law at issue, and that the public policy of rehabilitation overrode an automatic policy of precluding reinstatement of one convicted.

The Company correctly observes that the arbitrator in Campbell’s denied back pay, and the worker had paid a fine. Thus, the worker there had been punished, and the public policy against gambling had been vindicated. Here, argues the Company, Brown has not been convicted, has not been punished and is getting full back pay to boot. Thus, the Unemployment Compensation Act has not been vindicated, concludes the Company. We do not agree that Campbell’s implies any sort of “conviction” requirement. The case clearly states that other interests are relevant besides the penal statute at issue — the federal policy of industrial peace and the State policy of rehabilitation. Id. at 1227. As noted above, those policies were served here by the reinstatement, as well as by the policy of restitution. And given the continued deterrence of the penal statute, now combined with a clearly defined company policy, the likelihood of a repeat offense is diminished. In sum, we do not agree with the Company that this arbitration decision will signal to other employees that they can cheat on benefits without risk. Thus, we also do not believe that upholding this decision amounts to “a judicial condonation of a criminal act.” Kane Gas, 687 F.2d at 682.

The principal cases which did vacate arbitration decisions on public policy grounds do not compel a similar result here. In Local No. P-1236 v. Jones Dairy Farm, 680 F.2d 1142 (7th Cir.1982), the Court vacated the arbitrator’s decision to uphold a rule in a meat-packing plant which had completely forbade workers from ever reporting unsanitary conditions to government inspectors. Unlike the ruling in the present case, the arbitrator’s ruling in Jones Dairy had serious future consequences: in no uncertain terms it directly threatened public health. Here, the arbitrator’s decision poses no direct, certain danger to the Illinois unemployment compensation scheme. Future violations are still deterred by statute and company rule and restitution has been offered for past harm. Similarly, the arbitrator’s decision in Meat Cutters, supra, entailed serious threat of harm to public safety. The arbitrator had reinstated a truck driver who had gotten into a serious accident while driving drunk. The Court vacated the decision on the basis of the clear public policy of preventing drunk driving. Obviously, discharge in that case served a vital prophylactic purpose. Professional drivers must not drink on the job. Here, the public danger is less severe and the need for a prophylactic ruling less compelling. As noted above, deterrents are already in place. And even if Brown repeated his offense, the harm to the public would not be irreparable. A death caused by drunk driving, however, would be irreparable.

IY.

We conclude, then, that the Arbitrator’s decision should stand. This result does not mean we disagree wholly with all the contentions of the Company. Like the Arbitrators, we think the Company had a right to create prospectively its rule against dishonesty. We also agree that benefits fraud is serious. But we cannot agree that the Arbitrator’s decision failed to draw its essence from the Collective Bargaining Agreement or manifestly violated public policy. Accordingly, we grant the Union’s motion for summary judgment and deny the Company’s. It is so ordered.

      . The Company claims that, with one historical exception, its past practice with the Union has been to arbitrate all cases separately. It says that Article XVI of the Collective Bargaining Agreement compels this result. We see no language in the Article compelling this result. So far as we can tell, the Company was free to agree to arbitrate all nine cases in one hearing, despite its past practice.

      . The Agreement also codifies the general rule that the arbitrator is constrained to interpret and apply the Agreement as written:
      The arbitrator shall have no power to add to, nor subtract from, nor modify any of the terms of this Agreement of any supplements to this Agreement specifically referred to herein.
      Agreement, Art. XVI.

      . In light of its agreement to reinstate Brown, it is not clear to us whether the Company is chalIenging only the part of the decision awarding back pay and benefits, or whether it continues to want to fire Brown as well. The result we reach makes this doubt immaterial.

      . Steelworkers v. American Mfg. Co., 363 U.S. 564, 80 S.Ct. 1343, 4 L.Ed.2d 1403 (1960); Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960); Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960).

      . Instead, the Company ignores the extensive arbitral authority rejecting stare decisis and distinguishes the cases we have cited above. The Company is correct that those cases did not involve arbitration cases with as close a similarity as the ones here. But the rule stated in those cases — that arbitral precedent is persuasive authority at most — applies here.

      . In light of this conclusion that the Agreement does not mandate stare decisis, we need not examine whether the Company’s decision to sever the nine hearings somehow waived any such provision.

      . We note that Arbitrator Goldstein did not ignore precedent. He did consider the Dolnick decision. Further, he was presented with two, conflicting decisions and chose the one he thought was better. No matter what he did, he would have been unfaithful to one precedent. The Company created this conflict by not agreeing to have one hearing, so its arguments concerning precedent ring hollow.

      . As noted below, the Company challenges the relevance of the finding, but not its accuracy. A challenge to accuracy would have been fruitless, given our broad deference to arbitrators’ findings of fact.

      . Arbitrator Wolff also noted that the Union had offered to reimburse the Company to the extent its rates went up because of the workers’ misconduct. Arbitrator Goldstein did not mention this fact about the Union, but Arbitrator Wolff did, Wolff Decision at 12 n.* & 24, and the former expressly adopted the reasoning and approach of the latter. Goldstein Decision at 23. In any event, since the State knew of the error, there is no reason to expect it would raise the Company’s rates. See Wolff Decision at 24. We cannot say that either Arbitrator’s treatment of these facts was arbitrary.

      . Our function here is not to decide what the best course of action would have been. Arguably, reinstatement with some reduction of benefits could have been more reasonable. But we sit here to decide whether the course taken was wholly unreasonable or arbitrary, not whether it was the most reasonable one.

      . Under the Company’s logic, it, instead of the State, serves as ultimate vindicator of the public interest. It chose not to fire about thirty employees who received benefits unlawfully. While we commend the Company for giving these employees the benefit of the doubt, it is likely that at least a few of these employees filed a false form intentionally. Yet the Company would not argue, we think, that it violated public policy by not disciplining these employees. Similarly, we do not think the Company would feel it had violated public policy if it had decided to warn rather than fire Brown. Also along those lines, if the State decided that the public interest did not warrant prosecution, we do not see why that public interest would necessarily warrant punishment meted out by the Company.


source: Caselaw Access Project

author: BARRINGTON D. PARKER, District Judge.

license: Public Domain

text:
    Charles S. FOLTZ, et al., Plaintiffs, v. U.S. NEWS & WORLD REPORT, INC., et al., Defendants.
    Civ. A. No. 84-0447.
    United States District Court, District of Columbia.
    June 14, 1985.

      Alan Raywid, John D. Seiver, Susan P. Baxter, Cole, Raywid & Braverman, Washington, D.C., for plaintiffs Foltz, Handle-man, Price, Williamson.
    Richard J. Leighton, Avis Black, Washington, D.C., for Save the Fund.
    Leslie A. Nicholson, Jr., Hannah E.M. Lieberman, Washington, D.C., for defendants U.S. News, Madana Realty.
    Lawrence Latto, William Galeota, Julie Melamud, Shea & Gardner, Washington, D.C., for Profit-Sharing Plan.
    Richard J. Wertheimer, Hadrian Katz, Edward Wolf, Washington, D.C., for defendants Sweet, Stone, Dunn, Keker.
    Willis B. Snell, Willard K. Tom, Steuart H. Tomsen, Washington, D.C., for defendant The American Appraisal Co.
   MEMORANDUM OPINION

BARRINGTON D. PARKER, District Judge.

INTRODUCTION

On March 28, 1985, this Court denied the plaintiffs’ motion for a preliminary injunction prohibiting the distribution of funds by defendants U.S. News and World Report, Inc. (“U.S. News”) and the Profit-Sharing Plan of U.S. News (“Plan”), and issued a Memorandum Opinion in support of its decision, 608 F.Supp. 1332. The plaintiffs are former employees of U.S. News who challenge the undervaluation of their interests in the company and the Plan. The Court of Appeals affirmed this Court’s decision in part, vacated it in part and remanded the proceedings to this Court for further proceedings, “in light of the fuller explication of the legal issues on this appeal.” Foltz v. U.S. News & World Report, Inc., 760 F.2d 1300, 1301-02 (D.C.Cir.1985).

At this time, the Court determines that the plaintiffs are entitled to some equitable relief against the Plan under the provisions of section 1132(a)(1)(B) of the Employee Retirement Income Security Act (“ERI-SA”), 29 U.S.C. §§ 1001-1461. The reasons for this determination are set forth below. Before embarking on this discussion, the Court will address a few preliminary matters.

Following remand, the parties have expressed some disagreement about the meaning and breadth of this Court’s initial opinion as it relates to the scope of the inquiry which the Court of Appeals directed this Court to undertake after remand. To dispel any remaining confusion or doubt, the Court will briefly summarize its initial findings and conclusions, and then turn to the questions raised by the Court of Appeals. Because the factual background of this litigation was discussed in great detail in both opinions, it will not be repeated here, except where it serves to clarify any additional findings and conclusions.

After remand, only the question of the propriety of injunctive relief against the Plan need be addressed. 760 F.2d at 1301, 1306-07. During the relevant period represented by the class plaintiffs, the Plan Committee, appointed by the U.S. News’ Board of Directors, had responsibility for overseeing the daily activities of the Plan. The Committee continues to exercise this responsibility, and is the named fiduciary under the Plan. The Mercantile Safe Deposit & Trust Company is the trustee. The Court’s March 28, 1985 opinion, of course, addressed the propriety of injunctive relief under ERISA against both U.S. News and the Plan. The findings and conclusions expressed in that opinion will be discussed in the context of the equitable relief which is available against the Plan. Such an inquiry, however, should also assess the damages which may ultimately be recovered from defendants other than the Plan.

A.

Memorandum Opinion of March 28, 1985

In its initial opinion, the Court canvassed the four factors which traditionally govern the issuance of a preliminary injunction: “the likelihood of success on the merits, the possibility that the plaintiffs will suffer irreparable injury in the absence of equitable relief, the balance of hardships between the parties, and the public interest.” 608 F.Supp. at 1340. The plaintiffs’ request for injunctive relief was disallowed because, in the Court’s view, they had not “made the requisite showing of irreparable harm.” Id. at 1343. In reaching that conclusion, the Court primarily relied on two factors: first, the well established rule that except in unusual circumstances, “monetary relief in a legal action may not be ordered prior to a final determination of liability and computation of damages,” id. at 1341 (citing Friends for All Children, Inc. v. Lockheed Aircraft Corp., 746 F.2d 816 (D.C.Cir.1984)), and second, the plaintiffs’ inability to demonstrate that “the substantial assets of the individual and corporate defendants would be insufficient or unavailable to satisfy a judgment.” Id. at 1343.

Before reaching this conclusion, the Court examined the basis for the plaintiffs’ claims that their interests in the company were liquidated at grossly undervalued, rates. They supported their charges by arguing that five policies and practices of various defendants resulted in undervaluation: “failure to properly value U.S. News’ significant real estate holdings, improper application of a marketability discount to reflect the fact that the stock was owned by a closely-held corporation, valuation of the stock on a minority basis rather than on a control premium basis, the inclusion of certain items as liabilities, and manipulation of the appraisals to match certain predetermined values fixed by U.S. News.” Id. at 1337. These practices were criticized in an affidavit in which Mr. John Hemp-stead, the plaintiffs’ expert, gave his opinion as to the proper fair market value of U.S. News’ stock during the class period. His calculations were based on the crucial assumption that the sale price of the company in 1984, along with other financial indicia, should be utilized to determine the value of the company in previous years. These values, in turn, determined the fair market value of U.S. News’ stock during that period. The plaintiffs utilized these figures to determine the amount by which their interests in the Plan were undervalued. This amount, plus prejudgment interest, equaled the plaintiffs’ claimed damages. At the initial stage of the proceedings, the plaintiffs’ claimed maximum damages of approximately $75 million from the Plan, including prejudgment interest.

Next, the Court discussed in some detail the basis for two of the allegedly improper appraisal practices identified by the plaintiffs: the claim that U.S. News’ real estate holdings were undervalued and the claim that a marketability discount was improperly applied. The Court found that these practices supported the plaintiffs’ claims that at least some of the non-Plan defendants breached the fiduciary duties imposed by ERISA. Id. at 1338, 1345. With respect to the question of the plaintiffs’ likelihood of succeeding on their cause of action for breach of fiduciary duty against the non-Plan defendants, the Court stated that “[t]he plaintiffs have raised serious legal questions concerning whether some of the parties to this action have complied with the strict standard of care imposed by ERISA [29 U.S.C. § 1109].” Id. at 1345. The propriety of the minority discount and the validity of including certain items as liabilities on the balance sheet was left unanswered. This latter practice allegedly affected U.S. News’ applicable earning ratios, and resulted in the undervaluation of its stock.

Nor did the Court reach any conclusions about the amount of damages which might be attributed to the various components of the plaintiffs’ undervaluation claims. These elements of the plaintiffs’ damages rested in part on the appraisal policies and practices which have already been discussed: the minority and marketability discounts, real estate undervaluation, and the failure to make the appropriate adjustments to U.S. News’ income. A detailed analysis of the damage estimates was unnecessary because the Court found that the distribution of the Plan’s assets would not irreparably injure the plaintiffs under any likely scenario. In the Court’s view, the creditworthiness of the non-Plan defendants meant that a later judgment in favor of the plaintiffs would not go unsatisfied, even if that judgment equalled the plaintiffs’ most generous damage estimates. In short, the Court viewed the assets of the Plan as a potential deep pocket source of damages whose dispersion did not threaten irreparable injury.

B.

Court of Appeals Opinion

The scope of this Court’s inquiry on remand is clearly articulated in the thorough opinion issued by the Court of Appeals. First and foremost, the Court of Appeals distinguished the cause of action asserted against the Plan under section 1132(a)(1)(B) from the cause of action for breach of fiduciary duty against the non-Plan defendants asserted under section 1109(a). Based on this analysis, the Court of Appeals directed this Court to

examine whether the former employees would lose a potential legal claim against the Plan under [ERISA] were the Plan to pay out all or virtually all of its assets, and if so, whether the loss of a eongressionally provided cause of action would work irreparable injury to the class.

760 F.2d at 1302. For purposes of this analysis, the Court of Appeals noted that

the [district] court will be called upon to determine whether plaintiffs have demonstrated a substantial likelihood of success on the merits [on their claim for benefits due under a covered plan, 29 U.S.C. § 1132(a)(1)(B)]. If, moreover, the court finds on remand that irreparable injury would occur, then the more modest question is whether the plaintiffs have raised a serious legal question in this respect.

Id. at 1308 n. 7. Finally, the Court of Appeals stated:

This is, emphatically, not to say that injunctive relief should in fact be afforded against the Plan. We make no such determination. To the contrary, we leave that question for the District Court to determine expeditiously on remand, in light of the full set of facts and circumstances as they now exist and continue to unfold.

id. at 1309, and then identified a variety of factors bearing on this consideration. This Court now turns to the inquiry directed by the Court of Appeals.

LEGAL ANALYSIS

A.

Likelihood of Success on the Merits: the Claim for Unpaid Benefits Pursuant to 29 U.S.C. § 1132(a)(1)(B)

The plaintiffs have asserted a theory of liability against the Plan under ERISA which in many respects is separate and distinct from their ERISA asserted claims against the other defendants. The plaintiffs allege that the Plan has violated ERI-SA by withholding benefits owed to them by virtue of their status as participants in the Plan during the class period. This theory rests on section 502(a)(1)(B) of ERISA, which provides in pertinent part that:

(a) A civil action may be brought—
(1) by a participant or beneficiary—
(B) to recover benefits due to him under the terms of his plan....

29 U.S.C. § 1132(a)(1)(B). This cause of action provides a different defendant and a different theory of liability than does the concept of breach of fiduciary duty which may be redressed under section 1109(a).

The plaintiffs’ theory of the Plan’s alleged liability under section 1132(a)(1)(B), as now articulated, is straightforward. Relying on the language of the statute, the plaintiffs quite simply argue that Congress has provided participants in an ERISA plan a cause of action against their plan for any unpaid benefits which are due and owing. According to them, their interests in the Plan were appraised at grossly undervalued rates, and the Plan retained benefits which would have been paid on the basis of proper appraisals. They deftly sidestep the question of the elements of this cause of action and the precise standard which should be applied by the Court in determining whether benefits have been improperly withheld.

The plaintiffs’ reluctance to precisely articulate the scope of their cause of action against the Plan is quite understandable, given the unusual nature of their claims. This Court has found no ERISA case quite like the present one, and agrees with the Court of Appeals that the claims raise “novel questions in the labyrinthine complexities of ERISA law and practice.” 760 F.2d at 1308. As the Ninth Circuit aptly stated, “[n]o provision of ERISA mentions the circumstances under which a plan participant or beneficiary is entitled to recover disputed benefits from a plan,” Menhorn v. Firestone Tire & Rubber Co., 738 F.2d 1496, 1499 (9th Cir.1984), and the legislative history on the question is sparse. Despite these difficulties, a few preliminary conclusions can be drawn about the scope of the congressionally created right of action provided by section 1132(a)(1)(B).

First, the legislative history of ERI-SA indicates that the avenues of relief and the right of action afforded pension plan participants should be generously construed. Congress gave “participants and beneficiaries [ ] broad remedies for redressing or preventing violations of the Act.” H.R.Rep. No. 533, 93rd Cong., 2d Sess. 17, reprinted in 1974 U.S.Code Cong. & Ad. News 4639, 4655. These remedies include actions for “recovery of benefits due to participants.” Id.

Second, the legislative history also reveals that Congress gave the federal courts considerable latitude to develop “a body of Federal substantive law ... to deal with issues involving rights and obligations under private welfare and pension plans.” 120 Cong.Rec. S 29942 (Aug. 22, 1974) (Statement of Sen. Williams). As the Court has already indicated and the parties agree, this “body of substantive law” does not include any case involving a claim for benefits due which closely resembles this situation. Most of the cases under section 1132(a)(1)(B) involve judicial review of a plan’s determination, through its administrators, that plan participants are not eligible for benefits. See, e.g., Haggard v. O’Connell, 671 F.2d 568, 570-71 (D.C.Cir.1982). Here, in contrast, the question is not the plaintiffs’ eligibility for benefits, but rather, the value of those benefits.

The judicial decisions reviewing eligibility determinations nevertheless provide a useful yardstick with which to measure the propriety of all benefit determinations made by employee benefit plans. The case law suggests that a determination which results in the withholding of benefits allegedly due must, at the very least, satisfy the arbitrary and capricious standard of review. See, e.g., id. at 570-71. Although a stricter standard might conceivably apply in certain situations, these decisions articulate a minimum standard which governs a Plan’s benefit determinations under section 1132(a)(1)(B).

Third, as the defendants correctly assert, benefit determinations cannot be arbitrary and capricious as a matter of law if those decisions contain no element of discretion. For instance, a court may not invalidate as arbitrary and capricious a denial of benefits based solely on eligibility requirements which were established by a collective bargaining agreement. United Mine Workers of America Health & Retirement Funds v. Robinson, 455 U.S. 562, 573-74, 102 S.Ct. 1226, 1232-33, 71 L.Ed.2d 419 (1982). Moreover, an employer’s strict compliance with the substantive terms of an employee benefit plan cannot be termed arbitrary and capricious, unless the provision itself violates federal law. Moore v. Reynolds Metals Co. Retirement Program for Salaried Employees, 740 F.2d 454, 456 (6th Cir.1984), cert. denied, — U.S. ---, 105 S.Ct. 786, 83 L.Ed.2d 780 (1985). See Hoffa v. Fitzsimmons, 673 F.2d 1345, 1353 (D.C.Cir.1982) (nonERISA decision holding that finality clause in benefit plan precludes discretion to deny benefits). In sum, these eases stand for the general proposition that an administrator who strictly adheres to the lawful terms of an employee benefit plan may not be found to have acted arbitrarily and capriciously.

In light of these observations, the Court does not hesitate to conclude that the plaintiffs’ claim for unpaid benefits against the Plan satisfies the first factor in the equitable calculus: likelihood of success on the merits. On the basis of the current record, and as the Court has already noted, the plaintiffs have made a colorable claim that the undervaluation of U.S. News’ real estate holdings, coupled with the questionable practice of discounting the plaintiffs’ interests in the Plan for their lack of marketability, resulted in appraisals which underestimated the value of the plaintiffs’ interest in the Plan. 608 F.Supp. at 1339-1340, 1345. These appraisals were in turn relied on by the Plan’s fiduciaries in paying the plaintiffs less than the true value of their interests in the Plan. If proven at trial, the liquidation of the plaintiffs’ interests at undervalued rates constitutes a withholding of benefits due under the terms of a plan, and is arbitrary and capricious.

Nor are the Plan actions insulated from judicial review by virtue of the terms of the Plan document. The Plan argues that the Plan document, which admittedly governed the disbursement of benefits to the plaintiffs, mandated the value assigned to the plaintiffs’ interests in the Plan, and thereby precluded the Plan from exercising any discretion to reject the annual appraisals of U.S. News’ stock transmitted to it by the Board of Directors. The Plan document directs the U.S. News’ Board of Directors or other responsible officials to notify the Committee of the fair market value of U.S. News’ stock, and the Committee in turn notifies the Plan Trustee of this figure. Article 6.3. For each year of the class period, the defendant American Appraisal Associates, Inc. (“American Appraisal”) was retained by U.S. News to determine the value of its stock, in accordanee with Article Fifth (e) of the U.S. News Articles of Incorporation. Px 2 at 9.

The value of plaintiffs’ interests in the Plan were admittedly based on these appraisals. As Article 6.3 of the Plan document provides:

the market value of shares of stock of the Employer, which are held by the Trustee as a part of the Fund, shall be the fair market value established under Article Fifth, Paragraph (e), of the Certificate of Incorporation of U.S. News & World Report, Inc.

It further provides that the Committee and the Trustee “shall be fully justified and exonerated in relying” on these values. The Board of Directors, charged with reporting these values to the Plan, is not similarly exonerated.

Contrary to the Plan’s assertion, the Court cannot conclude that the Plan was forced to rely on the appraisals transmitted by the Board of Directors. This provision might arguably protect the Plan from liability for minor discrepancies in valuing its shares of U.S. News’ stock, or as the Plan puts it, in determining values “which, in hindsight, might appear to be a more accurate reflection of a metaphysical ‘true’ market value of the shares.” Plan Post-Remand Memorandum at 28, filed May 10, 1985. Here, however, the plaintiffs have presented a colorable claim that their interests in the Plan were vastly undervalued and that this undervaluation was part of a common scheme, whose participants included members of the Committee, to enhance their ownership and profit-sharing interests in U.S. News at the expense of the plaintiffs. These are serious allegations which remain to be proved at trial. At this stage of the proceedings, however, the plaintiffs have made a threshold showing that the Plan’s actions were arbitrary and capricious. The Plan document should not be interpreted to insulate this type of conduct from review under section 1132(a)(1)(B), or to permit the Plan to accept any appraisal submitted by the Board, no matter how inaccurate.

The interlocking membership and close relationship between the Board of Directors and the Plan managers buttresses the conclusion that the determination of benefits made by the Plan should be closely examined. The Plan Committee was appointed by the Board, and Board members frequently served on the Committee. Among the individual defendants, all of whom were former directors of U.S. News, only two individuals did not serve as Committee members during the relevant period. This tightly knit circle of control is illustrated by the fact that “a single individual within the Company’s hierarchy could serve as director, officer, Plan committee member and trustee.” 760 F.2d at 1302. The Plan document might insulate the Plan from liability if its administrators had no personal financial stake in the Plan, did not stand to gain from the alleged undervaluation, or were not the very same individuals who had approved the appraisals in their capacities as members of the Board. Here, however, these individuals and entities were not independent and unrelated, and they cannot argue that the responsibility for the benefit determinations lies elsewhere.

The Plan also argues that it is not liable under section 1132(a)(1)(B) because none of the other defendants occupied a fiduciary status with respect to benefit determinations. There are several reasons why this argument must be summarily rejected.

First, the Court does not read section 1132(a)(1)(B) to necessarily require a showing that the non-Plan defendants occupied a fiduciary status, or that they breached any existing fiduciary duties. These are the elements of a cause of action for breach of fiduciary duty under section 1109(a), not for a cause of action for “benefits due” under section 1132(a)(1)(B). It is conceivable, although perhaps unlikely, that the plaintiffs could state a cause of action under the latter section without making out a case of individual liability under section 1109(a). In any event, the two causes of action are not identical.

Second, while the non-Plan defendants need not play fiduciary roles in order for liability to be asserted against the Plan under section 1132(a)(1)(B), it would appear that U.S. News and the individual defendants were in fact fiduciaries with respect to these benefit determinations. The precise status of American Appraisal has not yet been determined. See 608 F.Supp. at 1344 n. 4. Although an individual may be a fiduciary with respect to certain actions and a non-fiduciary with respect to other actions, see United Independent Flight Officers, Inc. v. United Air Lines, Inc., 756 F.2d 1262, 1268 (7th Cir.1985), U.S. News and the individual defendants exercised sufficient discretion over the valuation of the Plan’s assets so as to occupy the role of fiduciaries with respect to benefit determinations. See 608 F.Supp. at 1344.

It cannot be the case, as the Plan suggests, that no one occupied a fiduciary role in determining the value of the plaintiffs’ interests in the Plan. If the Plan document in fact provides for such a result, it would violate ERISA. The terms of employee benefit plans which conflict with federal law are invalid. See Short v. United Mine Workers of America 1930 Pension Trust, 728 F.2d 528, 537 (D.C.Cir.1984). If the Plan document violates ERI-SA, the plaintiffs could assert different grounds for relief. For the above reasons, the Court concludes that the plaintiffs have demonstrated that they are likely to prevail on their claim for benefits due under 29 U.S.C. § 1132(a)(1)(B). This. conclusion does not depend on a finding that the non-Plan defendants were fiduciaries with respect to benefit determinations, although such a finding may possibly grow out of this litigation.

B.

Irreparable Injury: The Status of the Plan and the Viability of the Plaintiffs’ Cause of Action After Distribution of the Plan’s Assets

At present, the Plan holds approximately $141 million dollars in assets. These funds were received from Mortimer Zuckerman, the new owner of U.S. News, in exchange for the Class A stock held by the Plan. The Plan has indicated its desire to free these assets for distribution to the current participants as soon as is practicable. The Court must thus address the likely status of the assets remaining in the Plan after the intended distribution, and whether these remaining assets would be sufficient to preserve the plaintiffs’ cause of action against the Plan. The plaintiffs will not recover any benefits due from the Plan in the event that these assets are negligible. If this transpires, the central question is whether this loss of a cause of action for benefits due constitutes irreparable injury.

Although the parties have extensively briefed the question of the appropriateness of equitable relief following remand, they have provided very little information about the expected financial viability of the Plan after benefits are disbursed to the current participants. They cannot be faulted for this omission because the amount of assets which will remain in the Plan is completely speculative. Absent a court order restraining distribution of some or all of these funds, the Plan administrators are free to exercise their discretion to make these funds available to the current participants. These participants could elect to receive their account balances, or choose to leave a portion of their benefits in the Plan. Although the intentions of these individuals are not known, it is highly likely that most participants would elect distribution. Since it would appear that the plaintiffs would be hard-pressed to assert a claim to these benefits once they are received by innocent current employees, see 760 F.2d at 1307 n. 5, the employees will probably elect to receive their benefits, rather than leave them in the Plan where they might be recouped at a later date. Thus, the account balances of the current employees cannot be relied on to defray any damages which might be awarded at the conclusion of this litigation.

Once the Plan distributes the proceeds of the sale, the $10 million contingency fund which has been set aside to defray U.S. News’ litigation expenses in this lawsuit is another potential source of funds available to pay a judgment. The terms of the merger agreement provide that most of this money will revert to the Plan after the conclusion of this litigation. The current participants, however, possess the right to any unexpended proceeds. Even if the current participants were precluded from exercising their rights to any remaining money, it is not inconceivable that the expenses of this litigation could consume a significant portion of the funds. Given these uncertainties, the availability of any Plan funds after this litigation has concluded is highly doubtful.

Moreover, the Plan has not voiced any intention to withhold some portion of the sale proceeds in the absence of a court order. In the absence of such a representation, it would appear that the Plan will be “drained of all or virtually all of its assets,” 760 F.2d at 1309, regardless of its formal status. Although the Plan may remain in existence after the distributions have been made, the Court concludes that any assets remaining in the Plan will be minimal at best. Given the Court’s preliminary conclusion that approximately $29 million in damages, plus prejudgment interest, may realistically be recovered from the Plan, these assets are plainly insufficient to satisfy the plaintiffs’ cause of action for benefits due. Thus, "it is clear beyond cavil that any cause of action under ERISA ... would forever be lost.” Id. at 1308.

In light of the conclusion that a cause of action under section 1132(a)(1)(B) will not survive in the absence of equitable intervention, the question is whether this loss constitutes irreparable injury. In its initial opinion, this Court concluded that the creditworthiness of the defendants against whom liability was asserted under section 1109(a) presented “the plaintiffs with an almost insurmountable task of demonstrating that they will suffer irreparable harm in the absence of an order enjoining the distribution of the Plan’s assets.” 608 F.Supp. at 1343. The Court then concluded that the plaintiffs had not made such a showing under the prevailing case law. Id.

Although the Court of Appeals conceded the viability of this precedent, it adopted an alternative approach to the question of irreparable harm, and directed this Court to analyze the question of irreparable injury from this alternative perspective. In the Court of Appeals’ view, the creditworthiness of the non-Plan defendants should not be a relevant factor in this analysis. 760 F.2d at 1309. Whatever the assets of the non-Plan defendants, the Court declared that the loss of a cause of action under section 1132(a)(1)(B) “could in our judgment, well work irreparable injury warranting” an injunction, id. at 1308, if the “weighing of the other factors in consideration of entitlement to equitable relief warranted, under settled principles, the fashioning of such relief.” Id. n. 8.

This Court has already concluded that the plaintiffs have asserted a viable cause of action against the Plan under section 1132(a)(1)(B), that they are likely to succeed in their claim that their interests in the Plan were undervalued, and that the assets remaining in the Plan after the intended distribution will be insufficient to satisfy the claim against the Plan. These conclusions mean that a contrary finding that the plaintiffs will not suffer irreparable harm in the absence of equitable relief is all but foreclosed. See id. at 1308-09.

To the extent that this issue has not already been resolved by the Court of Appeals, this Court now determines the loss of a cause of action under section 1132(a)(1)(B) would irreparably injure the plaintiffs. Congress intended that ERISA participants’ entitlement to benefits should be preserved. 29 U.S.C. § 1001(a), (c); Connolly v. Pension Benefit Guaranty Corp., 581 F.2d 729, 731-32 (9th Cir.1978), cert. denied, 440 U.S. 935, 99 S.Ct. 1278, 59 L.Ed.2d 492 (1979). In view of this remedial purpose, the loss of a cause- of action for benefits due would work irreparable harm to the class plaintiffs.

C.

The Damages Which May Be Recovered From the Plan

Introduction

Finally, the Court must make a preliminary determination of the amount of damages which may “realistically be sought and recovered against the Plan itself,” or put differently, “the likely extent of damages which might eventually be recovered were plaintiffs to prevail at trial.” 760 F.2d at 1309-10. The plaintiffs suggest that the Court need not scrutinize the submissions of its experts because “damages need not be determined with a mathematical exactitude or certainty,” Plaintiffs’ Post-Remand Memorandum at 23, and argue that their estimates are “sufficient for purposes of framing appropriate equitable relief.” Id. at 22. Although the Court cannot at this time precisely fix the damages which may be recovered against the Plan, it will not abandon its obligation to carefully analyze the plaintiffs’ claimed damages. Any other course would do violence to the Court of Appeals’ express direction that any equitable remedy must be “carefully crafted in light of the entire set of circumstances before the trial court.”

760 F.2d at 1309.

As compensatory damages, the class plaintiffs seek from the Plan unpaid benefits equal to the amount by which their interests were undervalued over the class period. The reasoning which supports their claim is simple. They seek “benefits due” from the Plan; benefits which were not paid because of undervaluation appear to be an appropriate source of compensatory damages, within the meaning of section 1132(a)(1)(B). To arrive at a workable damage estimate, however, is not without difficulty. It requires a determination of the value of the U.S. News company during the class period, and a determination of the value attributable to a single share of its stock.

The Parties’ Damage Estimates

The parties’ views on this matter differ widely, both with respect to the value of the company as a whole and the value of one share of its stock.

The plaintiffs’ expert John Hempstead uses the 1984 sale price as the starting point for determining the value of the company during the class period. He then compares that price to certain financial indicia to develop earnings ratios, and applies these ratios to the relevant financial indicia in previous years in order to estimate the value of the company in each of those years. He also factors in information relevant to the alleged value of U.S. News’ real estate. He then assumes that the value of a single share of stock equals the value of the company as a whole, divided by the total number of outstanding shares of stock. In other words, the value of the parts, added together, equals the value of the whole.

Once Mr. Hempstead determines the value of a single share of U.S. News’ stock, the estimate of the plaintiffs’ damages is a fairly mechanical. In brief, this value is used to determine the “true” value of the assets held by the Plan in any given year, and the plaintiffs’ percentage interest in this sum is then calculated. Finally, these sums added together, and excluding the benefits received by the class plaintiffs, represent the total undervaluation of the plaintiffs’ interests in the Plan. The amount of this undervaluation represents their total claim for compensatory damages, excluding prejudgment interest. This estimate, revised following remand from the Court of Appeals, equals approximately $30 million if damages for phantom stock are excluded.

On the other hand, the Plan argues that the 1984 sale price is an inappropriate yardstick to utilize in estimating damages which might be recovered. Counsel for the Plan urge that such an approach is flawed in two major respects: first, the 1984 sale price, while it may represent the value of the company in 1984, is not a value which the defendants could have anticipated at the time the appraisals were rendered. Thus, the sale price is not relevant to the validity of these appraisals.

Second, the 1984 sale price includes a control premium because a transfer of a majority interest in U.S. News took place. The current employees, as the beneficiaries of this transfer, received a value for their interests in the Plan which included this control premium. In contrast, the plaintiffs liquidated their interests in the Plan well before the sale, and these values were discounted to reflect the transfer of a minority interest. The Plan argues that this discount was entirely appropriate in view of the fact that no control premium accompanies a transfer of a less than fifty percent share of a going concern. Both criticisms rest on the assumption that a valid appraisal must be based on factors in existence at the time of the appraisal, rather than information which has later come to light.

The Plan then sets forth its estimate of damages attributable to the various appraisal practices which have been challenged by the plaintiffs. The Plan does not concede that these practices were in fact invalid; instead it addresses the more mechanical question of the effect of these practices, whether or not they were valid, on the valuation of the plaintiffs’ interests in the Plan. The computation of the various damages which can be attributed to each of these practices shows that this theory supports maximum damages of $25 million.

The plaintiffs reject the Plan’s theory of damage recovery, and continue to assert their preference for the Hempstead approach. Nevertheless, they offer their own version of the damages which flow from the Plan’s theory. This version does not differ remarkably from the Plan’s estimates, and results in a total damage claim of $29 million. Moreover, this sum is in all relevant respects nearly identical to the revised Hempstead estimate of approximately $30 million.

Under all of the above scenarios, the damage totals depend on the Court construing the underlying merits in a manner most favorable to the plaintiffs. The Plan argues that a more realistic damage assessment demonstrates that the plaintiffs’ claim cannot possibly exceed $10 million. The Plan arrives at this estimate by attacking the validity of several of the plaintiffs’ undervaluation premises on the merits, and reducing their damages accordingly. In other words, if any one of the challenged appraisal practices is upheld, this will reduce the total damages claimed because these damages rest on the theory that all of the practices will be found invalid.

Phantom Stock

As a preliminary matter, the Court must address the question of whether phantom stock damages may be recovered against the Plan. The claim for such damages arises from the alleged negative effect of the phantom stock obligations on the earnings ratios calculated by Mr. Hempstead, and the related effect on the value of U.S. News’ stock. The value of phantom stock claims is approximately $4 million. The plaintiffs theorize that if the funds used to satisfy phantom stock obligations were instead shared on a pro rata basis by the current employees, the applicable earnings ratios would increase, and thus augment the value of the stock held by the Plan.

This reasoning means that the Plan received less for its shares of stock than it would have received in the absence of phantom stock payments. Thus, all of the potential claimants to the Plan assets are damaged by the phantom stock payments, except for the individual defendants who are the recipients of these funds. In this respect, the plaintiffs’ claim for phantom stock damages differs markedly from their other claims, which are premised on allegations that the Plan and its current beneficiaries received a windfall by retaining funds which were owed the plaintiffs.

Whatever the merits of the claim for phantom stock damages against U.S. News and the individual defendants, such claims do not lie against the Plan. This is so because the Plan does not hold any assets representing the value of the phantom stock obligations. The funds representing the phantom stock are held by U.S. News and are payable to the several individual defendants who are charged with wrongfully enriching themselves at the expense of the plaintiffs and the current employees. If and when the phantom stock arrangements are found to be invalid, the funds held by U.S. News should be the source of damages.

Moreover, to permit the plaintiffs to assert a claim for phanton stock damages against the Plan would mean that the current employees would not receive the benefits which are due them. As an equitable matter, the current employees should not be deprived of their entitlement to benefits. If a cause of action for phantom stock damages lies against the Plan under any circumstances, the Plan at most serves as a secondary pool of assets to satisfy any losses from unpaid benefits suffered by the plaintiffs. If there is liability, U.S. News and the individual defendants are primarily liable, and U.S. News holds the relevant fund. As the Circuit Court opinion states, the extended payment period for the notes “guarantees that the vast majority of this fund will remain available to satisfy any future judgment.” 760 F.2d at 1306. Under the circumstances, injunctive relief against the Plan based on the alleged losses caused by the issuance of phantom stock should be denied.

Balancing the Equities

After a careful review of the record in this proceeding, the Court concludes that three options are available as a basis for determining any damages which may realistically be recovered from the Plan, and the corresponding amount which should be withheld and subject to a preliminary injunction. First, the Court could approve the approach which utilizes the 1984 sale price as the appropriate measure, and restrain the distribution of $37 million, based on Mr. Hempstead’s latest estimate. See supra at 644, n. 11. Second, the Court could assume for purposes of this motion that all of the allegedly improper appraisal practices identified by the plaintiffs were in fact erroneous. The Court would then have to choose between the plaintiffs’ estimate ($29 million) and the Plan’s estimate ($25 million). See supra at 645. Finally, the Court could adopt the Plan’s suggestion and assume that only the challenges to the marketability and real estate practices are remotely meritorious, apply the reductions suggested by the Plan, and enjoin the distribution of something less than $10 million.

This is not a simple task. Without benefit of the trial testimony which will likely invoke considerable theorizing and explanations by experts, the Court cannot make any precise determinations about the amount of damages which may be awarded against the Plan. The task is complicated by the fact that the expert analysis is ongoing. Indeed, the deadline for the Plan’s identification of experts has not yet elapsed. The Plan, in challenging the merits of the practices which the plaintiffs have identified as invalid, has relied in large part on the contentions of Michael Megna, a vice-president of American Appraisal, as well as other relevant authority. Most importantly, the plaintiffs’ claim for benefits due must be balanced against the rightful claims of the current employees. Any damages awarded must ultimately respect these competing equities.

Despite these difficulties, the Court has the responsibility to make a realistic, albeit possibly imperfect, estimate of the damages which may be recovered against the Plan. Equitable considerations require that it balance the interests of the plaintiffs against the interests of the 505 current employees of U.S. News, who will undoubtedly suffer the impact of an order restraining a distribution of funds.

This has been undertaken and the Court concludes that the second option best resolves the competing interests. Thus, equitable relief should be based on the assumption that the plaintiffs are likely to prove that the specific appraisal practices which have been challenged were improper. Moreover, the Court in the exercise of discretion and caution will adopt the plaintiffs’ estimate of $29 million, rather than the Plan’s estimate which is $4 million less.

This approach is considered most prudent for the following reasons. First, the plaintiffs’ challenges to these appraisal practices satisfy the threshold elements for injunctive relief. Since irreparable injury would occur if inadequate funds remain in the Plan, the plaintiffs need only raise serious legal questions with respect to these practices. At this time, the Court reaffirms its conclusion that they have, at the very least, raised serious legal questions concerning the validity of the real estate and marketability discount practices. See 608 F.Supp. at 1345. Moreover, the challenge to the minority discount raises serious questions, although this practice, on its face, is perhaps more justifiable than the other two. Hypothetically, a control premium would increase the value of a single share of stock within the control block, and, absent a control block, a minority discount might be appropriate. Here, however, the Plan document lends some support to the argument that the Plan’s shares, and the value of a single share within that block, should be more appropriately valued on the basis of a control premium. Although the Court is not prepared to draw any definitive conclusions at this point in the proceedings, serious questions have been raised with respect both to this practice, and the practice of including the profit-sharing contribution as a liability of the corporation. See Hempstead Aff. at ¶ 28.

Second, and perhaps more important, this approach best permits the Court to balance the respective interests of both the plaintiffs and the current employees, the two groups affected by a decision to restrain distribution of a portion of the Plan’s assets. The other two options are questionable; they tip the scales too far in the direction of their respective advocates. The Plan’s estimate of $10 million raises the specter that the plaintiffs’ damages will be severely underestimated. This underestimate would be tantamount to the loss of a congressionally provided cause of action, and, as such, would constitute irreparable harm. See discussion supra at 642-643. The middle ground approach protects against the possibility that the damages which may ultimately be asserted against the Plan will not be available at the conclusion of this litigation.

On the other hand, adoption of the Hempstead measure — $37 million— presents the possibility that damages would more than likely be overestimated. An order restraining the distribution of any Plan assets will harm the current beneficiaries, who are also protected individuals under ERISA. In this sense, an order which in hindsight is found to have restrained excessive funds is only slightly less undesirable than an order restraining insufficient funds.

Moreover, there are other creditworthy defendants present in this litigation should the plaintiffs face the risk that inadequate assets have been held back and retained by the Plan. If the plaintiffs’ losses are slightly in excess of $29 million, at least some of the remaining defendants will likely be exposed to liability for those amounts, although the theories supporting recovery may differ. The Court has already found that all of these defendants are creditworthy. 608 F.Supp. at 1343.

Thus, the Court concludes, on the basis of the above findings, that the plaintiffs might realistically recover damages against the Plan in this litigation in the amount of $29 million, apart from the question of prejudgment interest. The Court cannot assume that the current employees will voluntarily leave their benefits in the Plan or that the $10 million contingency fund will be available to satisfy a judgment. See supra at 1309-10. Thus, the Plan shall withhold this entire sum from distribution. The Court will now turn to the question of “whether prejudgment interest claims can appropriately and lawfully lie against the Plan under any circumstances.” 760 F.2d at 1310.

Prejudgment Interest

In Massachusetts Law Reform Institute, Inc. v. Legal Services Corp., 601 F.Supp. 415 (D.D.C.1984), the Court awarded prejudgment interest after canvassing the relevant case law. That decision is instructive here. A decision to award such interest is within the Court’s discretion in the absence of statutory guidance. Prejudgment interest is awarded in order

to compensate the prevailing party for the financial loss represented by his inability to use the money due him between the date his claim accrued and the date of judgment.

Id. at 424 (citations omitted). See also Donovan v. Carlough, 581 F.Supp. 271, 272 (D.D.C.1984) (ERISA). Put differently, such an award can be seen as a means to transfer to the prevailing party the gain the losing party realized, or could have realized, from the use of the money during the relevant time period. See, e.g., Short v. Central States, Southeast & Southwest Areas Pension Fund, 729 F.2d 567, 576 (8th Cir.1984); Donovan v. Carlough, 581 F.Supp. at 272. Because the law does not protect a losing party who is either a spendthrift or otherwise improvident, the amount of interest is calculated on the basis of a statutory rate, or under unusual circumstances, the prevailing market rate. The availability, as well as the amount, of this relief should be determined in accord with equitable principles. Lodges 743 and 1746, International Ass’n of Machinists and Aerospace Workers, AFL-CIO v. United Aircraft, 534 F.2d 422, 447 (2d Cir.1975), cert. denied, 429 U.S. 825, 97 S.Ct. 79, 50 L.Ed.2d $7 (1976).

Prejudgment interest may be awarded against employee benefit plans for the withholding of benefits due under ERISA. See, e.g., Short v. Central States, 729 F.2d at 576; Donovan v. Carlough, 571 F.Supp. at 272. Those holdings are premised on the fact that the plans in question received a windfall from the use of the money, while the employees suffered a concomitant loss. The Donovan court did not attempt to estimate the value of this windfall, but instead ordered the payment of simple interest at the rate of 6% per annum pursuant to D.C.Code § 28-3302.

In this case, like Donovan, it is reasonable to conclude that the Plan received a windfall from retaining the benefits allegedly owed to the plaintiffs. The amount of this gain, however, cannot be estimated with any precision. The parties themselves have advanced no fewer than four separate theories, with attendant variations, to support their claims as to how it should be measured. They need not be examined in detail; suffice it to say that they rely on an array of data which includes corporate bond yields, 90-day Treasury bill rates, prime rates, appreciation rates, and the appropriate measure of the earnings of the Plan during the relevant period. This nearly indecipherable morass convinces the Court that the prudent and fair course is to follow Donovan, and award simple interest at the 6% rate.

The interest award in Donovan is particularly pertinent because it adopts the general rule that trustees, and presumably employee benefit plans, should be charged with simple interest at the applicable legal rate. The only exceptions to the general rule involve claims asserted against errant fiduciaries. See, e.g., Katsaros v. Cody, 744 F.2d 270, 281 (2d Cir.), cert. denied, — U.S. ---, 105 S.Ct. 565, 83 L.Ed.2d 506 (1984). But here, the Plan is not so characterized; nor should it be forced to disgorge its assets at the expense of innocent participants.

The decision to withhold from distribution an amount equal to prejudgment interest at the statutory rate rests on a careful assessment of the equities in an attempt to reach a result which is fair to both the plaintiffs and current participants. The Plan shall make the relevant computations, using as its base figure the $29 million sum, and shall assume that the benefits due for each class year may be derived from the tables attached to the Plaintiffs’ Post-Remand Memorandum. Tables IIIB and IVB. The minor discrepancies between the sum total of these figures and the $29 million figure are insignificant, given the vast sums involved in this litigation. These calculations should be extended through December 31,1985, and an amount equal to this sum shall be retained by the Plan.

CONCLUSION

In sum, and on the basis of the above discussion, the Court concludes that the class plaintiffs are entitled to a preliminary injunction prohibiting the distribution of Plan assets in an amount equal to the unpaid benefits which they may realistically expect to recover from the Plan, namely $29 million, in addition to prejudgment interest at a 6% rate. This is the Court’s realistic assessment of the plaintiffs’ claim for unpaid benefits in the event the Plan is found liable.

      . The alleged errors with respect to certain liabilities of U.S. News are set forth at ¶¶ 27-29 of the Hempstead Affidavit, filed March 6, 1985. This practice is better described as a failure to make appropriate adjustments to U.S. News’ income. See discussion infra at 637.

      . The plaintiffs’ assertion that the appraisal values were manipulated is not relevant to their claim for benefits due from the Plan. See discussion supra at 636-37. Although this charge may support the plaintiffs' theory of liability against the other defendants, it does not contribute to their damage estimates. Even if the trier of fact ultimately accepts plaintiffs’ claim that the defendants manipulated the appraisals downward to reach certain predetermined values, the plaintiffs can only obtain benefits due from the Plan. Benefits are due only to the extent that the plaintiffs can show that their interests were worth more than the sums they received. The plaintiffs will support these claims by presenting evidence that the first four practices described above were improper. In contrast, the manipulation claim is relevant to means or motive.

      . The plaintiffs cite Donovan v. Cunningham, 716 F.2d 1455, 1463-64 (5th Cir.1983), cert. denied, — U.S. ---, 104 S.Ct. 3533, 82 L.Ed.2d 839 (1984) for the proposition that a higher standard — that of "prudence” — should apply to benefit determinations that affect the eligibility of more than a single claimant. See, e.g., Plaintiffs’ Post-Remand Reply at 8 n. 5, filed May 17, 1985. Donovan, however, discussed a cause of action for breach of fiduciary duty, not a claim for benefits due. It cannot be assumed that the standards which govern recovery under these two distinct causes of action are identical.

      . The Plan Document, as amended and restated March 31, 1984, is attached as Ex. A to the Memorandum of the Plan, filed Feb. 20, 1985.

      . Px at — refers to the exhibits filed by the plaintiffs on March 7, 1985, in support of their motion for a preliminary injunction. Although section e provided U.S. News and its employees with the option of reaching an agreement concerning the value of the stock without the necessity of an official appraisal, this option was never exercised. Moreover, no appraisal was rendered in 1974.

      . The Plan's method of valuing its marketable securities has not been challenged. These marketable securities contributed to the value of the entire fund — defined as all of the Plan’s assets— and were accordingly reflected in the value of each participant’s interest in the fund. These liquid assets were also used to satisfy the fund balances of departing employees.

      . Only the non-Plan defendants are eligible for fiduciary roles. The Plan, of course, cannot be a fiduciary of itself.

      . The Court of Appeals did mention that the damages which might be recovered from other defendants should be considered in light of the damages which could be recovered from the Plan. Id. at 1309. This Court understands this statement to be a variant of the Court's earlier assertion that the causes of action against the Plan and the other defendants must be distinguished. Id. at 1307, 1308. This is the only way to reconcile this statement with the Court of Appeals' assertion that the loss of a cause of action under section 1132(a)(1)(B) constitutes irreparable injury, without regard to the damages available under a different section of ERI-SA.

      . These indicia include advertising and total revenues, circulation, and other factors. Hemp-stead Aff. at ¶ 14.

      . The reference to the revised Hempstead estimate refers to the calculations contained in the updated damage summary which is attached to Plaintiffs' Post-Remand Memorandum. These calculations contain minor revisions to the initial damage estimate, which amounted to $31 million. See Damage Summary, filed March 6, 1985. The plaintiffs have since proffered a third estimate of recoverable damages based on certain revisions their experts have made to their original calculations. This estimate equals $41 million which, adjusted to preclude phantom stock damages, amounts to approximately $37 million. See Damage Summary, attached to Plaintiffs' Post-Remand Reply.

      . If phantom stock were added, the estimate would increase by approximately $4 million. However, the Court will routinely exclude phantom stock damages from the plaintiffs' estimates because no claims for such damages may be asserted against the Plan. See discussion infra at 645.

      . This sum is derived from the Plan's estimates of the maximum degree of undervaluation which can be attributed to the four challenged practices: real estate manipulation ($10.1 million) (Plan Post-Remand Memorandum at 42), marketability discount ($.5 million) {id. at 45); balance sheet errors ($2.4 million) {id. Table II), and control premium ($12 million) {id. at 63). The third item is premised on the plaintiffs’ claim that U.S. News' contribution to the Plan was treated incorrectly on the balance sheet.

      . The plaintiffs' estimates exceed the Plan's estimate by $4 million because they attribute an additional $2.6 million to real estate damages and an additional $1.4 million to the alleged balance sheet error regarding the profit-sharing contribution.

      . The creditworthiness of the other defendants does not, however, make an order restraining the distribution of funds unnecessary. See discussion supra at 644, n. 9. Instead, the Court views the assets of the other defendants as a bulwark which guards against additional potential losses.

      . The Court rejects intcrvenor Save the Fund’s suggestion that distribution of the account balances of the individual defendants should be enjoined first before any injunctive relief is ordered against the account balances of the rcmaining current employees. The premise of the injunctive relief ordered is that all of the current employees may have received a windfall, and for this reason, the account balances of the individual defendants need not be treated differently.

      . Should the distribution take place after December 31, 1985, the Plan will be required to update its estimates and withhold additional funds. Once the distribution is effected, any withheld assets will earn interest, which means that additional prejudgment interest need not be calculated after distribution.