Judge Lets Core Claims Proceed in PRT Case Against Bristol-Myers Squibb 

A federal judge has allowed the bulk of a pension risk transfer lawsuit against Bristol-Myers Squibb Co. to move forward, finding that former employees had plausibly alleged “substantial risk” to their retirement benefits as a result of the company offloading its pension obligations to a private insurer. 

U.S. District Judge Margaret M. Garnett, of the U.S. District Court for the Southern District of New York, ruled that plaintiffs Charles Doherty and Michael Noel, former Bristol-Myers employees, showed enough evidence to establish standing, since the 2019 risk transfer to Athene Annuity and Life Co. came with “substantial risk,” including the possibility of a default, according to Garnett’s ruling. 

The former employees argue that Bristol-Myers Squibb, its pension and management committees, and State Street Global Advisors breached fiduciary duties under the Employee Retirement Income Security Act when they transferred $2.6 billion in pension liabilities to Athene in 2019. 

Garnett rejected defense arguments that the plaintiffs faced no knowable injury. Instead, she concluded the complaint “adequately pleads a substantial risk” that Athene—described in the complaint as a high-risk insurer with thin capital reserves, heavy reliance on Bermuda affiliates and ownership ties to Apollo Global Management—could default on its obligations. Such a risk, she said, is enough to establish injury-in-fact even before benefit payments are missed. 

While the court dismissed three counts on other grounds, it declined to dismiss the central claims alleging violations of the ERISA fiduciary duties of loyalty and prudence. 

The decision keeps alive claims that Bristol-Myers improperly prioritized capturing $800 million in surplus plan assets over retirees’ security and that State Street steered the company toward Athene for self-interested reasons. 

In January, several industry groups urged the dismissal of the case against Bristol-Myers, as they have in other separate PRT cases, several of which included Athene as the annuity provider. 

In a recent case concerning Athene, a federal judge in the same district dismissed a lawsuit filed by former General Electric employees. The lawsuit challenged GE’s decision to transfer pension obligations to Athene Annuity Life Co., but the judge ruled that the plaintiffs lacked standing to sue under federal law. 

In similar cases where PRT complaints were dismissed, judges typically found that the transfer of risk did not diminish the plaintiffs’ benefits and, as such, did not violate ERISA. 

A spokesperson for Athene, in a statement, said the firm maintains “that these are frivolous claims instigated by predatory trial lawyers at the expense of retirees. We believe that the courts in Alcoa and GE got it right by dismissing the cases and rejecting their manufactured allegations.”

A similar lawsuit against Alcoa Corp. was dismissed in March.

Schlichter Bogard LLP, Edward Stone Law P.C., Zuckerman Spaeder LLP and Kantor & Kantor LLP represent the plaintiffs in the Bristol Myers case, while Covington & Burling, LLP and Goodwin, Procter, L.L.P. represent the defendants.