Court Awards Legal Fees in ExxonMobil ERISA Claim

February 17, 2005 ( - A federal court has awarded $2 million in fees to lawyers in an Employee Retirement Income Security Act (ERISA) suit brought against ExxonMobil over severance pay issues.

>US District Judge Cynthia Rufe of the US District Court for the Eastern District of Pennsylvania has ruled that a contract between Mobil and the plaintiffs who sued the company over charges that they were cheated out of severance benefits mandated that the company pay for legal fees, according to The Legal Intelligencer. Because Mobil promised to award fees to any employee who won an ERISA claim against the company and because the lawyers had agreed to take one-third of any ultimate payout instead of hourly wages, the lawyers were awarded $2 million after $6 million was won by 52 plaintiffs they represented.

>The suit brought by the employees was in regards to severance plans established in 1999 when Exxon and Mobil merged, a move that was expected to cost 12,000 jobs. As an incentive, the company had announced an enhanced package for severance so employees would not leave en masse.

>The employees who sued claimed that they were denied such benefits, which they were entitled to under a summary plan description.

>ExxonMobil had argued that the workers were not entitled to benefits because they had never really lost their jobs. The company asserted that they had just been moved to a different employer – Tosco Corp. – which had purchased some of the company’s assets so that the merger could be cleared with regulators. At trial, Rufe ruled that although the severance plan documents showed that such workers should not get the benefits, the summary plan documents did not include that fact. Because workers should not be expected to read the plan documents and only view the summary, they should be awarded the severance benefits. The severance benefits are worth between $80,000 and $250,000 a person, according to the Intelligencer.

>Lawyers for the company had argued that the lawyers’ fees should not be paid because the plaintiffs did not first ask the plan administrator for reimbursement; Rufe disagreed, ruling that the plan did not require them to do so.