Connecticut Employment Lawyer & Attorney : Daniel Schwartz : Stamford, Hartford New Haven, CT

Lawyers representing the class of retirees from CIGNA will argue that their clients are entitled to "hundreds of millions" of dollars in retirement benefits as a result of misrepresentations made by CIGNA, according to a report in yesterday's Hartford Courant. 

The Courant -- which finally reported on the decision 5 days after it came out and well after we posted on it  -- barely mentions the argument of whether the new cash balance plan is age discriminatory (which the court found it wasn't). Instead, it focuses on the fact that CIGNA failed to mention that the benefits could be subject to "wear-away". 

Eager to claim victory, the class representative attorneys now say that the disclosure argument is vitally important to the case:

Friday's ruling will serve as "an excellent blueprint for other courts to scrutinize these disclosures" that companies make concerning conversion to cash balance plans, said Tom Moukawsher in Hartford, co-counsel representing the CIGNA employees. "This court decision is a precedent for looking at the underbelly of the disclosures for basic honesty."

Certainly the court was disturbed by communications by CIGNA. For example, in a Newsletter discussing the changes, the Court found that: "nothing in the Newsletter indicated to plan participants that their rate of benefit accrual might decrease, much less by a significant margin. And yet that is exactly what happened." (Decision at 80.) Indeed, as the Court said later:

Taking all of this information into consideration, the Court concludes that CIGNA was aware of the significant reduction in the rate of future benefit accrual that would affect at least a substantial proportion of its employees as a result of the transition to Part B, that CIGNA wished to avoid the employee backlash likely to result from a thorough discussion of these aspects of Part B, and that CIGNA sought to negate the risk of backlash by producing affirmatively and materially misleading notices regarding Part B. As a result, its § 204(h) notice failed to meet ERISA's stringent standards.

As I indicated previously, both parties have until March 17th to brief the issue of what the appropriate remedy would be in this situation. 

Although the lawyers for the class have reason to be pleased with the decision, certainly CIGNA and other companies nationwide must be relieved that the underlying conversion from a defined benefit plan to a cash balance plan itself has been upheld.  If the court had found that the conversion was discriminatory, it could have had an impact nationwide; the decision here may have a more modest impact given the evidentiary findings of the court that are particular to this case.

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My post from last Friday's ERISA decision in Amara v. CIGNA Corp. has drawn quite a bit of interest. Since my post over the holiday weekend (from vacation) was intended merely as a brief summary until this week, it has drawn sufficient attention that a few points bear further elaboration, including disclosure of my knowledge of one of the class representatives.

• First, I know one of the named class representative as a longtime family friend. Other than being aware generally of her involvement, we haven't discussed the case in any specifics and I didn't discuss the decision with her either.  I don't believe this impacts my reporting of the case but readers should be aware of that fact.
  
  
• Second, in my discussion of the age discrimination claim, one reader has suggested that I may have oversimplified the judge's rationale. I can't dispute that since, after all, I'm attempting to reduce a 122 page decision to a few paragraphs.  I did not, for example, discuss whether this case suggests "that more and more courts are buying into the Easterbrook line of argument that cash balance plan conversions are generally not age discrimination" as Workplace Prof did.  As I have suggested, however, readers should review the entire decision for its analysis.  But this additional quote from Judge Kravitz bears review too:
  
             Finally and importantly, the Court agrees with CIGNA that what Plaintiffs see as age
  discrimination is merely the transition from one plan that was heavily age-favored to another plan that is still age-favored but less so. In the Court's view, that transition is not age discrimination.
  
  
• Third, in my discussion of the remedies that may be appropriate, I pointed out that the court suggests at one point that only injunctive relief may be appropriate against CIGNA (versus the plan administrator) in one of the claims.   It is hardly conclusive, however, and it may be that the court fashions a remedy that is more far-reaching on the notice and disclosure provisions.  The court left a discussion of remedies (i.e. damages) for further briefing.  There are also individual claims that need to be resolved as well.
  

The Pension Protection Act blog has another discussion of the case with some additional points that bear review.  And to review other original source documents, readers can go to  Attorney Stephen Bruce's webpage on the actual lawsuit as well.   And for readers that may question whether the attorneys, like Stephen Bruce, did their job well, I'll quote directly from the judge's opinion:

Counsel for each side distinguished themselves throughout this case by their skillful advocacy, professionalism, and civility. The Court is grateful to each of them.

The decision has lots of little items like this to review.  The best thing about a blog like this is that readers can and should decide for themselves what it ultimately means.

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