Cockerill v. Corteva, Inc., No. CV 21-3966, 2024 WL 5159892 (E.D. Pa. Dec. 18, 2024) (Judge Michael M. Baylson)

We at Your ERISA Watch had intended to take last week and this week off for the holidays, but good news is always worth sharing, especially for the New Year. In that spirit, we are reporting this week on one case for our first issue of 2025: a win for two classes of DuPont workers and retirees represented by Kantor & Kantor attorneys Susan L. Meter and myself, Elizabeth Hopkins, along with attorneys at Edward Stone Law and Feinberg, Jackson, Worthman & Wasow LLP.

This action was filed in 2021 following the merger of two chemical behemoths, E.I. DuPont de Nemours & Company (“Historical DuPont”) and Dow Chemical Company. In 2019, these two companies split into three: DuPont de Nemours Inc., Dow Inc., and Corteva.

When the dust settled, the workers who remained at the company that continued to operate under the DuPont name lost their ability to obtain early and optional retirement benefits even though they continued to work in their same jobs at the same workplaces. This was because Historical DuPont, the company they formerly worked for, had been placed, along with the pension plan, as a subsidiary of Corteva. However, the workers were not told this and thus they did not understand how these complex corporate transactions affected their pension benefits.

The plaintiffs asserted multiple claims under ERISA. In Counts I and II, they sought clarification under ERISA Section 502(a)(1)(B) of their rights to early and optional retirement benefits under the terms of the plan. In Count IV, they alleged that defendants breached their fiduciary duties in failing to fully and clearly communicate the effect of the spin-off on their benefits. In Count V, they alleged that by “splitting employees from Historical DuPont,” defendants acted to prevent them from attaining benefits in violation of ERISA Section 510. And in Count VI, plaintiffs alleged that defendants “retroactively applied an amendment to the Optional Retirement Benefits” in violation of ERISA’s anti-cutback provision, Section 205.

The district court previously denied motions to dismiss and certified two classes encompassing workers both over and under the age of 50 who had at least fifteen years of employment at the time of the 2019 spin-off.

In this order, the court issued a lengthy liability decision following a six-day bench trial in the summer and fall of 2024. Although we started off saying this was a win for the plaintiffs, the decision began in defendants’ favor as the court ruled for them on Count I. The court concluded that, although the plan language was ambiguous as to whether employees who were under the age of 50 when they lost their jobs at Historical DuPont due to the spin-off remained eligible for early retirement benefits once they reached the age of 50, defendants’ interpretation that the under-50 workers were not eligible was reasonable.

Plaintiffs fared better on Count II, their claim for optional retirement benefits for the over-50 class. Here the court found the plan language unambiguous in providing benefits for workers in the optional retirement class who lost their employment with Historical DuPont for reasons other than cause. Likewise, the court found that the defendants’ contrary interpretation of the plan language as inapplicable in the case of a corporate spin-off controverted the plain plan language and was therefore arbitrary and capricious. Indeed, the court stated that even if the language of the optional retirement provision were ambiguous, the court would find defendants’ interpretation arbitrary and capricious given their financial conflicts of interest coupled with numerous procedural irregularities in interpreting the plan to preclude benefits for the optional retirement class.  

The court also ruled in plaintiffs’ favor on Count IV, their breach of fiduciary duty claim, finding that “Defendants did not inform Class Members how the spin-off would affect their benefits in a manner that a reasonable employee could understand,” and therefore defendants breached their fiduciary duties under ERISA” to both classes. The court ticked through the pre-spin-off communications on early retirement benefits and found that a “reasonable Plan participant would not understand the significance or implications of the Early Retirement communications or SPD on their Plan benefits.”

The court found only “one clear communication on Early Retirement – the PowerPoint Presentations” contained as links in an email sent to all employees. The court reasoned, however, that “a reasonable employee could not have been expected to review the PowerPoint” because “in the context of the SPD and other communications before the spin-off, Defendants’ March 2019 email, which contained links to the PowerPoint Presentations, was woefully insufficient to notify a reasonable Plan participant of the spin-off’s effect on Early Retirement Benefits.” Indeed, in the court’s view, “[f]ar from a disclosure that hundreds of employees were losing eligibility to receive Early Retirement Benefits, the March 2019 email that linked the PowerPoints reads as an anodyne notice advertising a perk for the employees who could begin their Early Retirement Benefit at the spin-off.” Moreover, the email directed “employees with pension questions to either the PowerPoint Presentations or the SPD,” but the SPD itself “did not explain the effect of the spinoff on Early Retirement.”

With respect to optional retirement benefits, the court noted that “Defendants never even informed Plan participants in any communications before spin-off that the Optional Retirement Benefit would no longer be available due to the spin-off.” The court thus concluded that “[t]he complete omission of any explanation of how the spin-off affected the Optional Retirement Benefit, coupled with repeated reassurances to employees that their employment and benefits were not changing, also constituted a breach of fiduciary duty owed to the Optional Retirement Class.”

Nor was the court persuaded by defendants’ claim that plaintiffs themselves were to blame for failing to make further inquiries about their benefits, an argument that the court rejected as an impermissible “attempt to shift the burden of disclosure to Plaintiffs.” Finally, the court noted that “Defendants’ attempt to terminate employment for one benefit but not another is not only inequitable, but leaves this Court with the firm impression that, between November 8, 2018, through the spin-off, Defendants shirked their ERISA fiduciary duties to Plaintiffs.” For all of these reasons, the court found in favor of plaintiffs on Count IV.

The court found in defendants’ favor on Count V, plaintiffs’ Section 510 claim, which posited that the placement of the plan with Corteva was intended to prevent plaintiffs’ attainment of early and optional retirement benefits. Although the court held that “Plaintiffs presented sufficient evidence of a prima facie ERISA § 510 violation,” the court ultimately “was persuaded that Defendants chose Corteva as the Plan sponsor for legitimate business reasons, and that splitting the Plan was not feasible or necessary.”

Rounding out the decision, the court found in plaintiffs’ favor on their anti-cutback claim. This claim turned on plaintiffs’ assertion that “Defendants amended the Plan through interpretation of the spin-off to cut back Plaintiffs’ Optional Retirement Benefits in violation of ERISA § 204(g).” Relying on Third Circuit case law that broadly reads the term “amend” in Section 204(g), the court concluded that “Administrative Committee’s interpretation of the spin-off vis-à-vis the Optional Retirement Benefit – which was arbitrary and capricious – had the effect of amending the Plan and cutting back Optional Retirement Class Members’ benefits.”

The court left the determination of remedies for the final stage of the bifurcated proceedings. In a subsequent order, the court appointed Pennsylvania attorney Richard L. Bazelon to serve as a special master for these purposes and asked Mr. Bazelon to report back to the court with a recommendation by March 28, 2025. The court also stated its intention to issue its final decision by April 15, 2025.

Happy New Year everyone. I am certainly celebrating.