Former Price Waterhouse employees get class certified in ERISA case

Posted on: August 1st, 2014 by Steve Larson
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Blog Wage and HourIn 2006, former employees of Price Waterhouse filed a putative class action alleging that when they were paid a lump sum distribution of their benefits under Price Waterhouse’s retirement benefit plan before age 65, Price Waterhouse’s calculations didn’t meet Employee Retirement Income Security Act standards.

Recently, U.S. District Judge J. Paul Oetken certified a class in this long running litigation.  The class consists of those employees who took a lump sum payouts under Price Waterhouse’s retirement benefit accumulation plan between March 23, 2000, and Aug. 17, 2006.  The class may include thousands according to the motion for class certification.

The nature of the claim is fairly complicated. The Price Waterhouse plan is a cash balance pension plan under which a hypothetical account for each employee serves as the basis for determining benefits payable.  According to the court records, the complaint involves the so-called whipsaw problem, which refers to a complicated formula that provides retiring workers a much richer lump-sum payment than their actual cash balances in the pension fund.

When Price Waterhouse made the lump sum payout, it used a projection rate based on the 30-year Treasury rate.  The plaintiffs claim that the fair projection rate ought to be higher than the 30-year Treasury rate because, under the plan, they could invest the money in their accounts in one or more of a selection of mutual funds provided. Plaintiffs contend the investments selected by plan participants beat the 30-year Treasury rate of return.

The case is Timothy D. Laurent et al. v. PricewaterhouseCoopers LLP, case number 1:06-cv-02280 in the United States District Court for the Southern District of New York.