Alfieri v. Conkright; Conkright v. Frommert; Pietrowski v. Conkright
Justices step into Xerox pension fight (June 29, 2009)
The Supreme Court has agreed to decide whether a U.S district court must defer to an ERISA plan administrator's "reasonable" interpretation of the terms of the plan if such an interpretation is reached outside the context of an administrative claim for benefits.
Nearly 100 Xerox employees and retirees who had worked for the imaging and printing company, left for a time and then were rehired, filed a lawsuit under the Employee Retirement Income Security Act of 1974. When they left the company, the workers received a lump-sum payment under the company’s Retirement Income Guarantee Plan. When they were rehired, they began earning benefits again.
The company has maintained that the lump-sum amount, plus interest, should be subtracted from the pension benefits of the rehired workers. That subtraction in some cases lowered pension values by hundreds of thousands of dollars. The group of employees sued in 1999.
The U.S. District Court for the Western District of New York entered summary judgment in favor of Xerox. The 2nd U.S. Circuit Court of Appeals reversed in part, ruling that a federal court plan to recalculate pensions for a group of current and former Xerox workers was valid, though the court also said that release forms some of those employees signed barred them from making claims.
"We find that the plan has not always contained a phantom account, that it was not properly added to the plan through amendment until 1998, that its application to employees rehired prior to 1998 violates ERISA's anti-cutback provision by impermissibly reducing their benefits, and that its adoption in 1998 was made without proper notice to plan participants," the court noted.
Question presented: Whether the statutory requirements for releases of claims under the Older Workers Benefit Protection Act are applicable to ERISA claims; whether Firestone deference applies to a plan administrator’s interpretation of benefits when issued outside of the administrative claims process; and whether a totality-of-the-circumstances test should be used to determine if an employee has “knowingly and voluntarily” waived pension benefits by signing a boilerplate release.