Class Treatment Denied in RBC Capital Pension Lawsuit

Pension & Benefits Daily™ covers all major legislative, regulatory, legal, and industry developments in the area of employee benefits every business day, focusing on actions by Congress,...

By Jacklyn Wille

May 27 — A long-running lawsuit over how to categorize one of RBC Capital Markets Corp.'s employee benefit plans is moving forward, but not as a class action ( Tolbert v. RBC Capital Mkts. Corp. , 2016 BL 169116, S.D. Tex., No. 4:11-cv-00107, 5/26/16 ).

The question is a significant one for former RBC workers like Brenda Tolbert, who allegedly stands to lose about $27,000 in benefit payments if her lawsuit is unsuccessful. Tolbert argues that RBC's “wealth accumulation plan” is a pension plan that must comply with the vesting requirements of the Employee Retirement Income Security Act, while RBC contends that the plan is a “top hat plan” exempt from these requirements.

If RBC prevails, it will have the ability to forfeit the benefits earned by Tolbert and other participants.

The parties have been litigating this question since 2011. RBC scored an early victory by convincing the district court that the wealth accumulation plan wasn't a pension plan subject to ERISA. The U.S. Court of Appeals for the Fifth Circuit disagreed and found the plan to be ERISA-governed in 2014, but it tasked the district court with deciding whether the plan was nevertheless a “top hat plan” and thus exempt from many statutory requirements (136 PBD, 7/16/14).

Unlike the typical pension plan, top hat plans are intended to provide benefits for a select group of highly paid employees. Because they benefit a more sophisticated and affluent group of workers, they're exempt from providing certain worker protections, such as the ERISA-mandated vesting schedule at issue in this case.

No Class Treatment

Judge Keith P. Ellison of the U.S. District Court for the Southern District of Texas considered Tolbert's request to have the lawsuit certified as a class action.

On May 26, Ellison rejected each of Tolbert's arguments, finding that she hadn't satisfied any of the class certification prerequisites of Federal Rule of Civil Procedure 23(a).

Ellison also rejected RBC's attempt to have the lawsuit dismissed.

RBC argued that Tolbert didn't exhaust her administrative remedies before filing suit, as is typically required in lawsuits for benefits under the Employee Retirement Income Security Act. This held no sway with Ellison, who explained that Tolbert's lawsuit wasn't best characterized as a claim for ERISA benefits.

In a similar vein, Ellison declined RBC's request to dismiss the lawsuit as untimely filed.

Gardere Wynne Sewell LLP represents Tolbert. Morgan Lewis & Bockius LLP represents RBC.

To contact the reporter on this story: Jacklyn Wille in Washington at

To contact the editor responsible for this story: Jo-el J. Meyer at