U.S. SUPREME COURT RULING FAVORS XEROX

[Anonymous]

http://www.rbj.net/article.asp?aID=183675
U.S. SUPREME COURT RULING FAVORS XEROX
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
method.

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.”

[Author]

May 10, 2010 at 9:31 AM