The class action lawsuit filed by IBM retirees who alleged they were shorted on pension payments has been revived by a federal appeals court. Initially dismissed after plaintiffs missed the three-year deadline to file a fiduciary claim, the case has garnered the support of the Labor Department, which intervened on behalf of the retirees. Last September, the Department of Labor requested the U.S. Court of Appeals to reopen the lawsuit.
The case, Joshua Knight v. International Business Machines, was originally filed in 2022. The plaintiffs argued that they were unjustly denied full pension benefits, and the Labor Department’s involvement underscores the significance of the claims.
The original case alleged that the IBM Personal Pension Plan violated several parts of the Employee Retirement Income Security Act (ERISA) of 1974. The specific allegations related to actuarial equivalence, anti-forfeiture, and joint and survivor annuity requirements. According to Knight and the other plaintiffs, IBM underpaid them by relying on outdated mortality tables from 1984, rather than using updated ones.
Mortality tables estimate the likelihood of individuals of various ages surviving until their next birthday. Pensions use these tables, alongside other actuarial calculations, to determine both payouts and the amount of money a plan needs to bring in from contributors to remain solvent. The lawsuit argued that relying on 1984 data, which was based on “mortality experience data among non-insured private pensioners observed over the years 1965-1970,” would have resulted in inaccurate predictions of lifespans, thereby underpaying pensioners.
Appeals court revives retirees’ lawsuit
The District Court did not address those arguments last year, deciding instead that Knight and his co-plaintiffs failed to file their complaints in a timely manner. As IBM’s retirement plan included a two-year statute of limitations, the case was dismissed based on the timing of the claims.
However, the Appeals panel disagreed with the lower court’s approach, arguing that the court “erred” by not allowing the parties the opportunity to conduct discovery, which could further support their claims. The panel suggested that it would have been more appropriate to convert IBM’s request for dismissal into a motion for summary judgement. This would have allowed both sides to conduct discovery and submit additional evidence.
With that decision, the matter is set to go back to circuit court for more hearings. Both sides were contacted for comment but had not responded by the time of publication. An attorney for the plaintiffs, Michelle Yau, expressed satisfaction with the Appeals Court’s decision.
“I’m very pleased the Second Circuit vacated the district court decision. This is an important pension case affecting IBM married retirees and their beneficiaries,” said Yau, who chairs Cohen Milstein’s ERISA practice and serves as counsel for the IBM pensioners who brought the lawsuit. “I look forward to helping our clients seek the justice they deserve.”
IBM is no stranger to claims of treating older employees and retirees poorly.
Retirees have even brought allegations of age discrimination against Big Blue to the US Supreme Court, and older employees have filed lawsuits alleging discrimination during layoffs. With the Appeals Court’s decision, the plaintiffs now have another opportunity to present their case and seek redress for their claims of pension miscalculations.
Image Credits: Photo by Sasun Bughdaryan on Unsplash
