October 08, 2015 Category: Class Actions & Collective Action
Underwood v. Carpenters Pension Trust Fund Detroit & Vicinity (“Pension Plan”) et. al.
Case No. 2:13-cv-14464; U.S. Dist. Ct. E.D. Mich.; Hon. Laurie J. Michelson
For those of you who have been following this Pension Plan class action, you may interested to learn that the Class members recently received another major victory in the case. Here’s a summary of the main events, including the most recent favorable decision from the district court.
In May of 2013, I started receiving calls from participants in the Pension Plan whom the Trustees had determined were totally and permanently disabled from performing any more work in the construction industry. These disabled Pension Plan participants told me they had received a notice that the Pension Plan was amended, effective August 1, 2013, to drastically reduce their disability retirement benefits. I subsequently learned that the average benefit reduction was over 60%! I also determined that the reductions were illegal. Therefore, on October 24, 2013, I and my partners Bob Geller and Brad Schram filed a class action against the Pension Plan and its Trustees seeking to recover the disability retirement benefits wrongfully withheld and to have the original amount of the disability retirement benefit reinstated. Thereafter, the parties extensively briefed the merits of the Claim and whether the proposed Class should be certified.
On September 15, 2014, the Court ruled that the amendment reducing the disability retirement benefits was illegal and that the Class should be certified. The Court reasoned that (i) §10.4 of the Plan unambiguously states that no amendment of the Plan may reduce the benefits of persons receiving benefits on the effective date of the amendment, and (ii) the Class members were all receiving the disability retirement benefit on the effective date of the amendment. Notwithstanding these rulings and the sound reasoning of the Court, on October 7, 2014, Defendants again amended the Pension Plan, this time to (i) retroactively change certain Plan provisions, in particular §10.4, to read the way they wish those provisions had read when the Court issued its September 15, 2014 ruling, and (ii) make the same benefit cuts the Court had just ruled a few weeks earlier were unlawful. Defendants memorialized these changes in a fully restated Pension Plan (“the Restatement”), and took the position that the Restatement eliminated or severely reduced the Class members’ damages.
Upon learning that Defendants had adopted another amendment purporting to do what the Court had just a few weeks earlier ruled was illegal, the Court ordered the parties to participate in settlement negotiations with a neutral facilitator. These negotiations took place on May 20, 2015, but did not result in a settlement. Thereafter, the parties extensively briefed for the Court the effect of the Restatement on the Defendants’ liability and the Class members’ damages.
On September 25, 2015, the Court issued an Opinion and Order addressing the Restatement. Perhaps predictably, the Court ruled that, to the extent the Restatement eliminated or reduced the Class members’ disability retirement benefits, it was just as violative of §10.4 as the initial Pension Plan amendment that gave rise to their claims.
So, where does the case go from here? That depends. The parties could give settlement negotiations another try. Or, if Defendants have no interest in trying to settle the dispute, the case could continue with the parties litigating the remaining damages issues, including whether Defendants should be compelled to pay prejudgment interest on the back benefits owed and plaintiffs’ litigation costs and attorneys’ fees. Defendants will also have appeal rights after all liability and damages issues have resolved in the district court. However, given that the score is now 3-0 in the district court on the main liability and class certification issues, and that there is no probability that the Court of Appeals will reverse the district court on those issues (in our opinion), it would be foolish for Defendants to risk having to pay the additional costs and attorneys’ fees plaintiffs would incur in litigating an appeal. At any rate, we should know within a few weeks what direction the case will next take. So, look for another blog from me sometime in November of 2015.
Lastly, throughout this litigation, Defendants have contended that they cut the Class members’ disability retirement benefits because the Pension Plan is underfunded and the cuts were needed to “save” the Plan. This argument is specious because our actuary has determined that payment of the back benefits to all 307 Class members will impact the Plan’s funded status by less than 1/4 of 1%, which is nothing. By contrast, the cuts to the disability retirement benefits has caused horrific and devastating impacts on the lives of the Class members, many of whom have lost their homes or cars, or had their credit ruined, or been forced to move in with children or friends, etc, because they are unable to make ends meet on the reduced disability retirement benefit. We aim to right this wrong and are confident that we will continue to prevail in this litigation, including any appeal of the dispute.
Eva T. Cantarella, Attorney for the Class