Category: Erisa

Proskauer Rose has posted on their website a very useful review and analysis of the IBM and Xerox cash balance plan cases handed down last week: “Cash Balance Plans: The Debate Continues.“

Seyfarth Shaw has posted these helpful items as well:

• Two Setbacks for Cash Balance and Pension Equity Plans
• Transcript of Teleconference on Cash Balance Plans

You can access this transcript of a CNBC interview with Seventh Circuit Judge Richard Posner entitled “Richard Posner discusses his position on law, pragmatism and democracy” at this link. (Thanks to Howard and JD2B for the link.) The interview occured Monday, July 28th, prior to the issuance of the opinion in the Xerox case, Berger et al. v. Xerox, which was written by Judge Posner. Mario Bartiromo for CNBC asked Judge Posner about how he views cases involving employees who are suing pension funds over reduced payments. You can read his response at the link above. Interestingly enough, as mentioned here before, Judge Posner may also be one of the judges who will decide the appeal in Cooper et al. v. IBM Personal Pension Plan et al. since that case will go to the Seventh Circuit as well.

The Wall Street Journal has an intriguing article today that raises all sorts of questions in my mind: “Memos Sent to IBM Show Awareness Of Pension Moves.” (Subscription required.) While I am sure that there are many other cases where internal memos have been terribly damaging to a defendant’s cause, one comes to mind which has been in the news lately . . .More on this later.

Ari Weinberg for Forbes reports: “Pension Plans Wade Into Murky Water.” The article quotes James Klein, president of the American Benefits Council, as saying that even though the IBM decision issued last week really “flies in the face of other court decisions,” critics of cash balance plans will try to play it for all that is worth. The article suggests plaintiffs’ attorneys may attempt to bring more lawsuits in the cash balance plan arena.

Mary Deibel for Scripps Howard News Service via the Albuquerque Tribune also has this article entitled “Pension tension prompts legal fight.” The article contains some information regarding the cash balance plans for Verizon and FedEx which give older workers a choice between the old formula and the cash balance plan formula.

Andrea Coombes for CBS Marketwatch reports: “Cash-balance plans under fire: Court ruling against IBM could invalidate all such plans.

There is an interesting discussion going on at the Message Boards for Benefitslink.com on the recent IBM cash balance plan decision which you can access at this link.

Monday, Howard posted his 20 Questions for Circuit Judge Gerald Bard Tjoflat of the U.S. Court of Appeals for the Eleventh Circuit. As usual, it is very enjoyable reading. I particularly liked this statement by Circuit Judge Tjofliat:

. . .for justice to be done in a case three things are required: (1) a fair and impartial judge; (2) lawyers who adhere to the highest ethical and professional standards; and (3) witnesses who testify truthfully. I likened these requirements to a three-legged stool. If one leg breaks, the stool collapses.

Circuit Judge Tjoflat also expresses his views on the Feeney Amendment which was apparently adopted by Congress in April to strengthen judges’ adherence to new, stricter sentencing guidelines and which was the subject of this Wall Street Journal article today. (Subscription required.)

Christopher Oster for today’s edition of the Wall Street Journal reports: “The ERISA Trap: When Employees Can’t Sue.” The article makes the point that whether or not a disability insurance plan is covered by ERISA could make a big difference from a litigation standpoint if the employee is wrongfully denied a claim and wants to sue, i.e. that insurance companies prefer that ERISA apply because the likelihood of recovery by the employee is less.

The subject was also covered by Workforce Management magazine (at Workforce.com) in their July, 2003 issue in an article by Douglas P. Shuit entitled “Nasty Business.” (Subscription required.) That article provides a more in depth discussion of why recovery under ERISA is so difficult to obtain, stating correctly that ERISA limits the participant’s right to a jury trial and prevents participants from recovering punitive or compensatory damages. (Despite the difficulties with suing under ERISA, the article quotes Raymond Bourhis of San Francisco as predicting that there are going to be a huge number of class action “lawsuits filed against employers, as well as insurance companies, alleging conspiracy and collusion to deprive ERISA-preempted workers’ protections under state law.”)

Note: In contrast, another area of ERISA litigation–involving alleged ERISA fiduciary breaches–has been called an “oasis for plaintiffs’ lawyers.” (See this previous post which mentions an article by Jason Hoppin for the Recorder at Law.com–“A Matter of Trust: Stung by corporate collapses, workers look to ERISA for relief“–which discusses how ERISA has become an “oasis for plaintiffs’ lawyers, where you can make new law, the bar is friendly on both sides of the aisle, there are few competitors and, of course, huge recoveries are the norm.”)

The ABA Litigation Section has posted an article with tips for lawyers for that dreaded daily detail of preparing timesheets. (Thanks to Ernie Svenson for the link. By the way, you should check out Ernie Svenson’s new pad–I mean Typepad, that is.)

“Judge Gives Initial Approval To Medco Settlement“: the Journal reports in this article that a federal court judge has given preliminary approval to an agreement to settle a series of ERISA-related class action lawsuits against pharmacy benefit manager Medco Health Solutions for $42.5 million.” FT.com also reports: “Medco wins tentative approval for settlement.” However, this article–Federal Judge Grants Preliminary Approval to Medco Health Class-Action Settlement“–at Stock World (Germany) provides the most detailed coverage of the settlement.

Deloitte & Touche has published this detailed analysis of the IBM cash balance plan case, Cooper, et. v. The IBM Personal Pension Plan, et al.: IBM’s Cash Balance and Pension Equity Formulas Violate ERISA, District Court Rules .

Also, Brian Tumulty for the Journal Washington bureau via the Poughkeepsie Journal reports on the IBM and Xerox cash balance plan cases: “Pension rulings put pressure on fed officials: IBM says it will appeal decision.” The article provides an interesting view of how some plaintiffs’ lawyers are viewing the decision and quotes Eva Cantarella, a Michigan-based lawyer who represents Georgia Pacific employees in a pension case pending before the 11th U.S. Circuit Court of Appeals in Atlanta, as saying:

[M]any employers have amended their plans to avoid the deficiencies that occurred in the IBM and Xerox plans. A lot of them have done a pretty good job or come so close that we wouldn’t even bother bringing a suit. . .We have looked at over 40 plans and only felt compelled to file lawsuits in two.

Apparently, Cantarella also represents employees challenging the legality of pension plan changes at another paper company, Bowater.

Finally, “Mandated employer health insurance gains support” in California, reports Kathy Robertson for the Sacramento Business Journal via MSNBC.com. Richard Costigan, a lobbyist for the California Chamber of Commerce, states that if the legislation is passed it will create a Pandora’s box on many levels, one of which is ERISA which makes self-insured plans exempt from state insurance laws.