The latest move by US District Judge Shira Scheindlin of the US District Court for the Southern District of New York means that the Employee Retirement Income Security Act (ERISA) lawsuit could end up representing thousands of employees and past workers, the court noted.
Current or former Citigroup employees Michael Lonecke, Raymond Duffy, Anne Nelson, Robert Fash and Craig Harris sued the giant financial services firm over allegations that its cash balance plan violated ERISA because it discriminated against older workers – a claim Scheindlin accepted December 12 (See Court Gives Thumbs Down to Citigroup Cash Balance Plan ).
Scheindlin said it made sense for her to group the plaintiffs’ claims together since they all would be seeking to have the plan fixed so it complies with ERISA and to have their benefits calculated again.
“Because the claims here are premised on statutory violations caused by the terms of the Plan, and because plaintiffs seek injunctive relief – including the retroactive reformation of the Plan and recalculation of benefits – inconsistent dispositions of these claims by different courts ‘could create an untenable situation’,” Scheindlin wrote in the latest decision.
In the first ruling, Scheindlin asserted that Citigroup’s plan ran afoul of ERISA because the rates of benefit accrual diminished each year based on an employee’s increasing age. Scheindlin also said that Citigroup violated ERISA’s anti-backloading rule because Citigroup applied a “fractional test” for computing minimum accruals only when a participant separates his or her service from Citigroup, rather than on a year-by-year basis as required by ERISA.
In addition to certifying the suit as a class action, Scheindlin scheduled a January 2 hearing so that the lawyers can assist her in working out the details of who will be in the plaintiffs’ group.
The case is In re Citigroup Pension Plan ERISA Litigation, S.D.N.Y., No. 05 Civ. 5296, 12/19/06.
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