Court Awards Restoration of Benefits to Former Westinghouse Employees

April 3, 2008 ( - The U.S. District Court for the Western District of Pennsylvania has ordered Siemens Corp. to restore separation from employment benefits to former employees of Westinghouse Electric Corp.

According to the court opinion, “A ‘make-whole’ remedy for defendants’ statutory violation [of the anti-cutback provision of the Employee Retirement Income Security Act] necessarily has as components a restoration to the benefits defendants should have been paying since plaintiffs’ separation from employment and a recognition of their entitlement to those restored benefits into the future.” The court said relief for back benefits in such a setting is a recognized form of restitution under ERISA.

The court allowed for the elimination of all Permanent Job Separation (PJS) benefits which are not protected by section 204(g) of ERISA – specifically, that portion of the benefits that were plant shut-down type benefits and continued only to the age of normal retirement, the opinion said.

The latest opinion in Shaver v. Siemens Corporation is here  

In March 2007, the court concluded that in the absence of an effective waiver, the plaintiffs in the case were denied accrued PJS pension benefits which were available to them for the thirteen-day period in which Siemens committed itself in the agreement to purchase Westinghouse to provide transitional coverage for them. The commitment meant that the Siemens Plans that became effective on September 1, 1998, constituted an amendment of an ERISA plan that eliminated accrued pension benefits in violation of the anti-cutback prohibition.

Siemens’ contention that the purchase agreement did not transfer liabilities between the plans was undermined by the relevant provisions of the agreement, the court said. The contract language expressing commitment to obligate Siemens to provide benefits equal to those available in the Westinghouse Plan forcefully suggests the parties understood the transaction to constitute a transfer of liabilities.

The court rejected the defendants’ argument that the intent of the parties to the agreement was improperly ignored, saying the various provisions of the instrument are clear and unambiguous and should be interpreted as a matter of law according to its plain meaning.

The previous ruling in the case is here .