THIS CASE IS PRINCIPALLY A “WHIPSAW” CASE CHALLENGING THE LUMP SUM AMOUNT YOU RECEIVED FROM THE PLAN BETWEEN MARCH 23, 2000 AND AUGUST 17, 2006
Specifically, this case addresses Plaintiffs' claim that the Plan, a "cash balance" defined benefit pension plan, failed to lawfully calculate the lump sum pension benefits it paid during the relevant time (March 23, 2000 to August 17, 2006) to pre-retirement age participants in accordance with ERISA’s standards, which require a lump sum to be the present value of a participant’s projected balance at normal retirement age. See Laurent v. PricewaterhouseCoopers LLP, 794 F.3d 272, 274-75 (2d Cir. 2015).
Plaintiffs’ contentions here are that PwC violated the law’s whipsaw requirements by employing two distinct contrivances, either one of which if upheld as valid would have precluded any recovery for the Class.
First, Plaintiffs challenged the validity of the Plan’s definition of Normal Retirement Age as equal to the date the Plan participants completed five years of service regardless of their age—a Plan term that, if found lawful under ERISA § 3(24), would have disposed of Plaintiffs’ claims because whipsaw projections are only required when lump sums were distributed before the attainment of normal retirement age.
Second, the Plan projected the future value of participants’ accounts at retirement age using the 30-year Treasury rate, even though the Plan offered a broad menu of stock and bond investments that historically produced a higher rate of return.
Although the current lawsuit was filed in the Southern District of New York in March 2006, the history of this dispute dates back further still, with an initial suit filed by Plaintiff Laurent in Illinois in 2004 and a second suit filed in the District of Columbia in 2005, both of which, after some discovery, were dismissed without prejudice before the case was filed in New York.
From 2006 until 2015, the bulk of the litigation concerned the validity of the Plan’s definition of Normal Retirement Age. In response to Plaintiffs’ filing of the Second Amended Complaint in 2012, PwC filed a motion for judgment in its favor on the grounds that the Plan’s “five years of service” Normal Retirement Age was valid as a matter of law. The District Court denied that motion, but certified its Order for interlocutory review by the Court of Appeals.
While the interlocutory appeal was pending, in June 2014 the District Court certified a class consisting of Participants and their Beneficiaries who elected to take a lump-sum distribution of their benefits under the Plan between March 23, 2000, and August 17, 2006.
In July 2015, the Second Circuit affirmed the District Court’s determination that the Plan’s “five years of service” Normal Retirement Age was unlawful. Laurent v. PricewaterhouseCoopers LLP, 794 F.3d 272 (2d Cir. 2015). After a period of discovery, PwC moved for judgment on the pleadings on the grounds that the whipsaw relief Plaintiffs seek is not authorized by ERISA § 502(a). Shortly thereafter, Plaintiffs moved for summary judgment seeking judicial imposition of a replacement projection rate for the Plan and recalculation of Plaintiffs’ lump-sum benefits using that rate.
In July 2017, the District Court denied Plaintiffs’ motion for summary judgment and granted PwC’s motion for judgment on the pleadings, dismissing the case with prejudice. Laurent v. PricewaterhouseCoopers LLP, 2017 WL 3142067, at *2 (S.D.N.Y. July 24, 2017).
In December 2019, the Second Circuit concluded that the Second Amended Complaint stated a claim for relief. Laurent v. PricewaterhouseCoopers LLP, 945 F.3d 739 (2d Cir. 2019). The Second Circuit vacated the District Court Judgment and remanded the case for further proceedings consistent with its Opinion. The Second Circuit stated that “the nature of any reformation and consequent relief to which Plaintiffs may be entitled, whether on their motion for summary judgment or otherwise, [are] questions to be resolved by the district court in the first instance.”
When PwC petitioned for certiorari, the Supreme Court asked the U.S. Solicitor General’s office for its view. After the Solicitor General recommended that the Court deny review because, among other reasons, the case was not yet ripe for review, the Supreme Court denied certiorari in June 2021.
Following issuance of the Supreme Court’s and Second Circuit’s mandates, in September 2021 the District Court granted Plaintiffs partial summary judgment that the Plan’s stated projection rate was unlawful under ERISA, but the Court declined to grant judgment regarding the appropriate remedy, if any. Laurent v. PricewaterhouseCoopers LLP, 565 F.Supp.3d 543 (S.D.N.Y. 2021). PwC filed a timely motion for reconsideration and proposed that if Defendants’ motion were denied, the case should proceed to trial. That motion remained sub judice until such time as the parties notified the Court of an agreement in principle to resolve the case, after previous unsuccessful attempts over the years to negotiate a resolution of their dispute.
That agreement was reached in August 2022. After additional negotiations over the concrete terms of the agreement and working with their actuaries and experts to ensure the completeness and accuracy of the participant benefit calculations data needed to implement it, on September 15, 2022 the Class Action Settlement Agreement was fully memorialized and signed and on September 19, 2022 was submitted to the District Court to consider on Plaintiffs’ Motion for Preliminary Approval. That motion explains in detail why Plaintiffs and Class Counsel believe that the proposed settlement is fair, reasonable, and adequate and in the best interests of Class Members.
In his Order of October 31, 2022, Judge Oetken granted preliminary approval of the proposed settlement and authorized Mailed Notice to be sent to members of the Class and Publication Notice to be published in USA Today. He has scheduled a final approval hearing for January 27, 2023 at 12:30 p.m.
On December 13, 2022, Plaintiffs filed their Motion for Final Approval of the proposed settlement and for approval of Class Counsel’s motion for attorneys’ fees and expenses, settlement administration costs, and named Plaintiff service awards.
On January 27, 2023, the Court granted final approval of the settlement and Class Counsel's fee, expenses and named plaintiff service award requests in its Final Order and Judgment.