Some of you may have read a recent article in a newsletter from a major benefits consulting firm which discussed developments in the cash balance plan litigation arena. The article states that “[t]he first appellate court to consider whether the plan design violates federal age discrimination laws has ruled in favor of the plans.” The article later describes how in an unpublished opinion, the “Ninth Circuit Court of Appeals ruled on CBS’ adoption of a cash balance plan and the conversion method it used” and “held that the plan and conversion method do not violate ERISA’s fiduciary standards, do not result in an impermissible cutback of benefits and do not violate federal age discrimination laws.”
Here is what the unpublished opinion in Godinez et al. v. CBS Corporation et al., 81 Fed.Appx. 949, 2003 WL 22803700 (9th Cir. 2003), actually said:
1. “Appellants’ ERISA fiduciary claim fails because ERISA’s fiduciary duty provisions are not implicated where the employer, acting as the Retirement Plan’s settlor, changes the form or structure of the Plan.”
2. “Appellants’ claim under 29 U.S.C. section 1054(g) fails because Appellants did not put forth any substantive evidence to show a decrease in their benefit accruals. As CBS carried its burden of production on summary judgment, Appellants were required to present specific evidence in response. . . .The closest Appellants came to offering evidence of a decline in their accrual rate was their experts’ promise that future study and analysis of the Cash Balance Plan would establish that the Appellants’ pensions would have been larger had CBS continued the Traditional Pension Plan. However, no calculations were provided to the court, and Appellants’ conclusory assertions are insufficient to defeat summary judgment. Therefore, the district court did not err in granting summary judgment in favor of CBS on Appellants’ claim for decrease of accrued benefits under ERISA.”
3. “Appellants’ ADEA claim fails because they failed to produce any evidence that conversion to the Cash Balance Plan disproportionately impacted older employees.”
When I first read the article, I became intrigued that there might now be a Court of Appeals decision supportive of cash balance plans. However, after reading the unpublished opinion, I do not think the case comes out quite as strongly in favor of cash balance plans as the article seems to imply, ruling instead that there was not any substantive evidence presented in favor of appellants’ claims.
For more on the cash balance plan controversy, there are links pertaining to cash balance plan litigation in the right-hand column. You can also access previous posts on the subject here or here.