Thompson v. Retirement Plan for Employees of S.C. Johnson & Sons, Inc.

265 F.R.D. 405, 48 Employee Benefits Cas. (BNA) 2227, 2010 U.S. Dist. LEXIS 17423, 2010 WL 697237
CourtDistrict Court, E.D. Wisconsin
DecidedFebruary 25, 2010
DocketNos. 07-CV-1047, 08-CV-0245
StatusPublished
Cited by2 cases

This text of 265 F.R.D. 405 (Thompson v. Retirement Plan for Employees of S.C. Johnson & Sons, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Wisconsin primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Thompson v. Retirement Plan for Employees of S.C. Johnson & Sons, Inc., 265 F.R.D. 405, 48 Employee Benefits Cas. (BNA) 2227, 2010 U.S. Dist. LEXIS 17423, 2010 WL 697237 (E.D. Wis. 2010).

Opinion

ORDER

J.P. STADTMUELLER, District Judge.

Plaintiffs filed this class action lawsuit alleging that defendants Retirement Plan for Employees of S.C. Johnson & Sons, Inc., (“the SCJ Plan”) and Retirement Plan for Employees of JohnsonDiversey, Inc., (“the JDI Plan,” collectively, “the Plans”) violated the Employee Retirement Income Security Act of 1974 (ERISA) by impermissibly “backloading” pension benefits and incorrectly calculating lump sum distributions paid to pre-retirement age plan participants. The plaintiffs have moved for certification of two classes regarding their “backloading” claim and four subclasses pertaining to their “lump sum” claim. The court finds that the proposed classes fulfill the requirements of Federal Rule of Civil Procedure 23 and will grant certification.

I. PROCEDURAL BACKGROUND

Plaintiffs Michael Thompson, David Troestler, and James Patrick Johnson originally filed this class action suit against the SCJ and JDI Plans on November 27, 2007, alleging that the Plans miscalculated lump sum distributions resulting in a forfeiture of benefits for the plaintiffs. Each named plaintiff was a former participant in the SCJ Plan who chose to receive a lump sum pension distribution prior to normal retirement age of 65. The complaint did not assert that any named plaintiff had enrolled in, received a pension from, or otherwise participated in the JDI Plan. Consequently, the JDI Plan moved to dismiss the action against it. A separate but similar action was then filed against the JDI Plan on March 13, 2008, captioned DeCubellis v. the Retirement Plan for Employees of Johnson Diversey, Inc., No. 08-CV-245. The DeCubellis lawsuit raised the same claim for wrongly-calculated lump sum pension distributions as the original action, but was filed by a former JohnsonDiver-sey, Inc., employee on behalf of a class of [408]*408participants in the JDI Plan. The court later consolidated the two cases.

On March 27, 2008, the plaintiffs in the instant case filed an amended complaint naming three additional plaintiffs who had participated in the JDI Plan and two additional plaintiffs who were current participants in the Plans, as well as adding a claim that the Plans violated ERISA age discrimination rules. The Plans moved for dismissal of the complaint, which the court granted in part, dismissing the age discrimination claim. The plaintiffs subsequently filed a second amended complaint on June 2, 2009, reasserting the “lump sum” claim, adding more plaintiffs, and asserting new claims for violations of ERISA § 204(g), § 204(h), and § 204(b)(1). The Plans subsequently moved to dismiss these new claims. Shortly after the motion to dismiss was fully briefed, the plaintiffs filed their first motion for class certification. One week later, on October 2, 2009, the court issued a decision granting the Plans’ motion to dismiss the § 204(g) and § 204(h) claims and denying the motion to dismiss the § 204(b)(1) “backloading” claim. The parties then filed cross-motions for summary judgment and the plaintiffs filed an amended motion for class certification. This motion for certification of two classes and four subclasses is now before the court for decision.

II. FACTUAL BACKGROUND

The SCJ and JDI Plans are “cash balance” plans, a type of defined benefit pension plan whereby participants accrue pension benefits to a notional account based on annual amounts credited to that account. The notional accounts for SCJ and JDI Plan participants are credited with Annual Earnings Credits, which are interest credits equaling the greater of 4% interest or 75% of the rate of return generated by the Plan’s Trust for that year. Plan participants are entitled to the greater of their cash balance benefit, or a “grandparent benefit” calculated under a pre-existing formula. Under the Plans’ terms, a participant could elect to receive a lump sum distribution of their benefits equal to their notional account balance, unless the actuarial equivalent present value of their “grandfathered benefit” was greater than the notional account balance.

The Plans’ interest credit and the Plans’ method of calculating lump sum distributions give rise to the plaintiffs’ “backloading” and “lump sum” claims. The plaintiffs allege that the Plans are impermissibly “backloaded” as to any future interest credits above the 4% minimum interest applied to a participant’s account. The plaintiffs also allege that the Plans violated ERISA by giving plan participants who elected to take their benefits as a lump sum distribution an amount equal to the balance in their notional accounts. The plaintiffs assert that the Plans failed to apply a proper “whipsaw” calculation projecting the value of a participant’s account forward to age 65 and then discounting it back to present value. The Plans acknowledge that they did not apply the “whipsaw” calculation when determining lump sum distributions and, as a result, participants receiving lump sum distributions may not have received the full amount of benefits to which they were entitled.

The plaintiffs now move the court to certify a number of classes and subclasses relating to their “backloading” and “lump sum” claims. They first propose an “SCJ Class” and a “JDI Class” that pertain to the “back-loading” claims, described as follows:

The SCJ Class
All persons for whom the Retirement Plan for Employees of S.C. Johnson & Sons, Inc., (the “SCJ Plan”) has ever maintained a notional account, who became vested in their Plan benefit, but who did not also participate in the Retirement Plan for Employees of JohnsonDiversey, Inc., (“JDI Plan”); and the beneficiaries and estates of such persons and alternate payees under a Qualified Domestic Relations Order. The JDI Class
All persons for whom the JDI Plan maintained a notional account prior to January 1, 2004, and who became vested in their Plan benefit; and the beneficiaries and estates of such persons and alternate payees under a Qualified Domestic Relations Order.

(Second Am. CompL, at 2). The plaintiffs also propose four subclasses that pertain to [409]*409the “lump sum” claims. The “lump sum” class members are all members of either the SCJ Class or JDI Class, but are only those individuals who received a lump sum distribution before normal retirement age. The plaintiffs propose two subclasses pertaining to each plan. These subclasses divide participants into subclasses “A” and “B” based on the date that a participant received his or her lump sum payment—whether the payment was received before or after November 27, 2002. The four proposed subclasses are described as follows:

SCJ Lump Sum Subclass A
All SCJ Class Members who received a lump sum distribution equal to the amount of their notional account balance or the present value of their grandfathered benefit between November 27, 2002, and August 17, 2006; and the beneficiaries and estates of such persons and alternate payees under a Qualified Domestic Relations Order.
SCJ Lump Sum Subclass B

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Bluebook (online)
265 F.R.D. 405, 48 Employee Benefits Cas. (BNA) 2227, 2010 U.S. Dist. LEXIS 17423, 2010 WL 697237, Counsel Stack Legal Research, https://law.counselstack.com/opinion/thompson-v-retirement-plan-for-employees-of-sc-johnson-sons-inc-wied-2010.