U.S. District Judge Michael A. Telesca of the U.S. District Court for the Western District of New York ruled that Xerox was not legally blocked from capping Vicki M. Aken’s benefits at 27 years of service even though Aken had received an earlier benefits statement from an outside service provider indicating she was being credited with 32 years of service. Granting the request by Xerox to dismiss Aken’s suit, Telesca ruled that the plan documentunambiguously excluded from the calculation of pension benefits any pre-1976 years of service performed by the employee before she had a break in service.
In addition, Telesca pointed out that the plan capped years of service at 30 years, making it unreasonable for Akento believe that the benefit statement she received reflecting 32 years of service was correct. Among other things, the benefits statement indicated it was only an estimate of her benefits, Telesca added.
According to the ruling, Aken worked for Xerox from 1970 to 1975, then was rehired in 1978. During her employment, Aken participated in Xerox’s defined benefit pension plan. When she was rehired in 1978, she received a summary plan description detailing the method in which her benefits would be calculated. The plan, as well as the SPD, stated that “periods of employment which terminated prior to January 1, 1976 shall be ignored.” The plan and SPD also stated that an employee would only receive credit for “up to 30” years of service.
Aken retired on January 28, 2006. Before doing so, she logged onto a benefits Web site run by Hewitt Associates to determine her benefit level. The Web site erroneously included Aken’s pre-1976 employment with Xerox and indicated she had a total of 32 years of service. The Web site reflected that Aken was eligible to receive a lump-sum distribution of $296,536 for her 32 years of service.
Three days after Aken retired, the plan administrator determined that Aken’s pre-1976 years of service had incorrectly been included in the calculation of her benefits, contacted Aken and told her that she had 27 years of service after 1976 and as such would receive a lump-sum distribution of $242,401.
The case is Aken v. Xerox Corp., W.D.N.Y., No. 07-CV-6253, 7/22/08.