Xerox Cash Balance Calc Appeal Rejected

>The Seventh Circuit of the US Court of Appeals ordered the world’s largest maker of copiers to pay about $300 million to settle a dispute over how the company calculated retirement benefits for former employees.

>The decision came just a day after another federal judge ruled 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 ).

>While both cases involved cash balance plan calculations, the Xerox case was different, in that it didn’t involve complaints of age discrimination, but rather a complaint that the company had underpaid employees when it calculated their pension payouts from their Retirement Income Guarantee Plan.   In April, Xerox recorded a quarterly charge of $183 million for litigation tied to the judgment (see  Xerox Records Pension Suit Litigation Charge ).  

Class Actions

>The class action suit covers some 25,000 former Xerox workers who, after January 1, 1990, chose to receive pension benefits in a single payment rather than monthly checks. 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, Judge David R. Herndon of the US District Court for the Southern District of Illinois (the same court that ruled in the IBM case) adopted the retiree’s method for calculating damages, which amounted to $284 million (see  Xerox: What Not To Copy ).

“As the court of appeals has made its ruling, Xerox is disappointed in the ruling and intends to seek a rehearing,” Xerox spokesman Bill McKee told Reuters.

>The appeals court said it modified the original ruling related to the rate by which some of the pension assets were calculated, which means that the company can now ask the court’s three-judge panel to rehear the case, or request that the entire Seventh Circuit Court listen to the arguments again, according to Reuters.   Xerox is not expected to pay the penalty until all of its legal options are exhausted, and even if the judgment holds, any payment would come directly from the pension plan, not the company’s coffers.