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 user 2010-05-10 at 9:31:43 am Views: 35
  • #23710
    Xerox Corp. workers who disputed the company’s calculation of
    their retirement benefits will have to live with Xerox’s math, the U.S.
    Supreme Court ruled.Document company workers who took early retirement
    buyouts in the 1980s and then went back to work for the company sued
    Xerox in 1999, arguing with the method the company’s pension plan
    administrator used to calculate offsets for the value of the lump-sum
    payouts they took in the buyouts.U.S. District Judge David
    Larimer ruled in the company’s favor in 2004, but saw the ruling vacated
    and sent back to him in 2006 by a Second Circuit Court of Appeals
    panel. Larimer then ruled offsets should be calculated by a method
    favored by the workers.The Second Circuit approved, but in a decision
    Tuesday, the Supreme Court reversed the appeals court, 5-3, sending the
    case back for a further ruling determining the appropriate calculation

    Justice Sonia Sotomayor did not take part in the
    Supreme Court ruling.

    Xerox initially used a method that reduced
    workers’ benefits by amounts the workers would have received had the
    lump-sum payouts stayed in the plan. Under Larimer’s second ruling,
    workers would have seen offsets equal to their lump-sum payouts’
    original dollar amount.  

    The Supreme Court ruling accorded with
    previous high court decisions in which the justices held that courts
    should defer Employee Retirement Income Security Act plan
    administrators’ decisions and should only change plan administrators’
    calculations if the result is unreasonable. Even plan administrators’
    errors, if honestly made, should stand, the high court held.   “People
    make mistakes. Even administrators of ERISA plans,” Chief Justice John
    Roberts Jr. wrote in the majority opinion. “The question here is whether
    a single honest mistake in plan interpretation justifies stripping the
    administrator of that deference for subsequent related interpretations
    of the plan. We hold that it does not.”

    ERISA plan calculations
    already are complicated, and further court instructions on how plan
    benefits should be figured would make plans even more opaque. More
    complicated rules would be unduly burdensome and could discourage
    employers from offering retirement benefits, Roberts added.  In
    a statement Thursday, Xerox said, “We are gratified by the Supreme
    Court’s decision and appreciate the thoughtful and thorough analysis of
    the case. This decision should help reduce the complexity and expense of
    ERISA litigation going forward and allow for more predictability and
    uniformity in the administration of pension plans.”