In 1991, Pan Am's pension plan was terminated after the Pension Benefit Guaranty Corporation determined that the plan was severely underfunded. According to the court, the plan covered over 39,000 employees. The Pension Benefit Guaranty Corporation and Pan Am agreed that the Pension Benefit Guaranty Corporation would act as the terminated plan's trustee.

In 1994, the Pension Benefit Guaranty Corporation recovered $110 million from Pan Am's bankruptcy estate. Between 1995 and 2003, the Pension Benefit Guaranty Corporation issued benefit determination letters (BDLs) to the plan's participants, informing them of the amount of benefits the Pension Benefit Guaranty Corporation had determined the participants were entitled to receive.

Three former Pan Am workers filed a class action in 1996 on behalf of themselves, the plan, and about 20,000 other Pan Am employees and retirees alleging, among other things, that the Pension Benefit Guaranty Corporation breached its fiduciary duties under ERISA by failing to timely issue BDLs, by failing to provide participants with meaningful information about the plan, and by commingling plan assets.

The court recently ruled that the Pension Benefit Guaranty Corporation acted as a statutory trustee, rather than as a government guarantor, when it calculated pension benefits owed to former Pan American World Airways employees, and thus can be sued for allegedly breaching its fiduciary duties. Because of its actions, the Corporation is now subject to the Employee Retirement Income Security Act's (ERISA) fiduciary responsibility provisions when it was acting as the terminated plan's trustee.