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 user 2010-05-10 at 9:30:49 am Views: 58
  • #23387

    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.”