Top court rejects Xerox case
Company stymied as earlier ruling in pension matter stands
(March
2007) — The U.S. Supreme Court on Monday declined to consider a dispute
centered on whether Xerox Corp. improperly calculated pension benefits
for several employees who left the company and were later rehired.The
decision lets stand a ruling by the 9th Circuit Court of Appeals, which
determined that the company’s formula for calculating certain pension
benefits violated the Employee Retirement Income Security Act, or
ERISA.Xerox had sought the top court’s review, contending that the 9th
Circuit’s ruling conflicted with an earlier decision by the 2nd Circuit
Court of Appeals in a separate case.”As a result, a nationwide pension
plan covering 40,000 employees is lawful in one circuit and unlawful in
another, and the lawfulness of numerous other pension plans is called
into question,” Xerox said.The 2nd Circuit case originated in
Rochester. A group of Xerox workers and retirees sued the company,
claiming Xerox improperly calculated the benefits of workers who also
left the company and later returned.The 2nd Circuit judges ruled Xerox
had also violated ERISA and sent the case back to U.S. District Court
Judge David Larimer. Earlier this year, Larimer ruled largely for the
plaintiffs when he decided what formula the company should use to pay
those affected workers.It is unclear how the Supreme Court’s decision
in the 9th Circuit case might affect the Rochester case. A Xerox
spokesman declined to comment, and Robert Jaffe, a New Jersey attorney
representing the local workers, could not be reached.The three
employees in the 9th Circuit case — Waldamar Miller, Thomas Sudduth and
J. Denton Allen — left the company in 1983 and were later rehired.Under
Xerox’s pension plan, the company reduced the employees’ retirement
benefits by the amount they received in cash payments when they first
left the company in 1983. The reduction, or “offset,” also assumed that
the employees subsequently earned the same rate of return on their cash
payments as the company’s pension fund received.The employees said
Xerox’s method resulted in an “exaggerated offset” that denied them
benefits they had accrued.