>Justice John Paul Stevens, who is assigned to consider applications from the Chicago-based US 7 th Circuit Court of Appeals, turned down the company’s stay request in the case of Berger v. Xerox , in which Xerox was accused of underpaying ex-employees in its cash balance plan, according to the Wall Street Journal.
>A stay would have temporarily blocked lower courts from wrapping up the case, which would likewise delay the beginning of the Xerox payouts. Court watchers said Stevens’ ruling wasn’t a good sign for Xerox since one of the standards for granting the stay is the “reasonable probability” that at least four of the nine justices will ultimately agree to hear the case on its merits.
>If Xerox ultimately can’t get the judgment overturned, it will have to pay about $256 million to about 14,800 workers who left Xerox between 1990 and 2000. However, at this point, it is still unclear when Xerox will have to start cutting checks for the payouts. In the first quarter, the company took an after-tax charge of $183 million in anticipation that it might lose the Supreme Court appeal (See Xerox Records Pension Suit Litigation Charge).
>Xerox lost in the 7 th Circuit, where it hoped to reverse a lower court ruling against Stamford, Connecticut giant.(See Xerox Cash Balance Calc Appeal Rejected).
>In the suit, originally heard in the US District Court for the Southern District of Illinois, plaintiffs said the pension plan incorrectly calculated “lump sum” retirement payments given to the departing employees, resulting in lower payments than the workers were due under federal pension benefits rules. The retirees claim their pensions were sharply discounted because they retired before age 65 (See Federal Judge Backs Xerox Retiree Claim ). In that decision, handed down last September, US District Judge David Herndon adopted the retiree’s method for calculating damages (See Xerox: What Not To Copy ).
>Cash-balance pension plans are controversial because they can save companies millions of dollars by reducing pensions for older workers, and because in some cases, companies including Xerox have paid lump sums to departing employees that were smaller than pension laws would have required.
A federal judge ruled in August that International Business Machines Corp. (IBM) discriminated against older workers in the calculations used in its conversion to a cash balance plan in 1999 (See Murphy’s Law: IBM Loses Cash Balance Ruling ).