Pension Benefit Claims

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This week’s notable decision is a short and sweet read in the matter of Reed v. KRON/IBEW Local 45 Pension Plan, No. 17-17176, __F.App’x__, 2019 WL 2145652 (9th Cir. May 16, 2019), where the Ninth Circuit reversed the district court’s decision finding that it was not an abuse of discretion for Defendant to deny survivor-spousal benefits to a same-sex domestic partner.

By way of background, Plaintiff David Reed and Donald Lee Gardner, an employee of KRON-TV, were registered as domestic partners in California on 2004.  Mr. Gardner retired in 2009 and elected a single-life annuity pension under the KRON/IBEW Local 45 Pension Plan (the “Plan”).  Reed claimed that KRON-TV’s HR department never mentioned the availability of a joint-and-survivor form of benefit although they knew he and Gardner were registered domestic partners.  In May 2014, Reed and Gardner got married and then Gardner passed away five days later.  Reed submitted a claim for a survivor benefit to the KRON/IBEW Local 45 Pension Plan (the “Committee”), which it denied.
Continue Reading Ninth Circuit Holds that Same-Sex Domestic Partner Is Entitled to Joint-and-Survivor Pension Benefits

The Sixth Circuit is back in the news.  This week’s notable decision is Clemons v. Norton Healthcare Inc. Ret. Plan, No. 16-5063, __F.3d__, 2018 WL 2142640 (6th Cir. May 10, 2018), an upset to the Plaintiff-Retirees who had prevailed on behalf of a certified class at the district court on their claim for underpaid pension benefits.  This lengthy opinion is succinctly summarized by the Court as follows:

This appeal is the latest installment in an ERISA litigation saga that has spanned almost ten years. At the risk of oversimplifying their case, the Plaintiff–Retirees claim that Defendant Norton Healthcare, Inc. Retirement Plan (“Norton”) underpaid them under the terms of the plan. The district court found that the plan was unambiguous in the Retirees’ favor. We agree with the district court on most issues.
Continue Reading Sixth Circuit Holds that Contra Proferentum and Firestone Deference Are Incompatible on Issues of ERISA Plan Interpretation

This week’s notable decision is Teufel v. Northern Trust Co., No. 17-1676, __F.3d__, 2018 WL 1734700 (7th Cir. Apr. 11, 2018). In Teufel, the Seventh Circuit considered whether an amendment to the Northern Trust pension plan decreased Teufel’s accrued benefit and harmed older workers relative to younger ones, in violation of ERISA’s anti-cutback rule and the Age Discrimination in Employment Act (ADEA).  

The gist of the amendment is as follows:  In 2012, Northern Trust changed its pension plan from a defined-benefit plan under which retirement income depended on years worked, times an average of each employee’s five highest-earning consecutive years, times a constant (“Traditional formula”) to a new PEP formula that multiplies the years worked and the high average compensation not by a constant but by a formula that depends on the number of years worked after 2012.  The parties agree that it reduces the pension-accrual rate.  For people hired before 2002, Northern Trust provided a transitional benefit that treated them as if they were still under the Traditional formula except that it would deem their salaries as increasing at 1.5% per year, without regard to the actual rate of change in their compensation.
Continue Reading Expectation of Future Salary Increases Is Not An “Accrued Benefit” for Purposes of Anti-Cutback Rule