Colgate Can’t Have $150M Pension Lawsuit Dismissed

Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...

By Jacklyn Wille

Colgate-Palmolive Co. can’t escape a lawsuit by former workers who claim the company tried to skip out on paying about $150 million in pension benefits ( Caufield v. Colgate-Palmolive Co. , 2017 BL 57434, S.D.N.Y., No. 1:16-cv-04170-LGS, 2/24/17 ).

A proposed class of about 2,000 Colgate workers claims the company is interpreting its pension plan in a “crassly manipulative” way to avoid paying about $150 million in benefits owed to its workers. A federal judge in New York on Feb. 24 refused to dismiss the lawsuit, finding that it wasn’t barred by a 2014 settlement agreement between Colgate and its workers or by any relevant statute of limitations.

Colgate and its workers have been fighting over pension benefits since 2007, when the workers accused the company of calculating benefits in a way that violated federal law. The parties settled that lawsuit for nearly $46 million.

The underlying dispute involves Colgate’s 1989 decision to convert its traditional pension plan to a cash balance plan with a different benefit formula. This conversion required Colgate to make supplemental payments to employees in some situations. The lawsuits claim that those payments weren’t enough.

This latest ruling by Judge Lorna G. Schofield of the U.S. District Court for the Southern District of New York allows the workers to move forward with claims that Colgate wrongfully denied them benefits, failed to provide plan documents and committed fiduciary breach under the Employee Retirement Income Security Act.

Schofield also found the workers stated a valid claim for contempt of court based on Colgate’s alleged failure to comply with the 2014 settlement agreement.

The workers are represented by Gottesdiener PLLC. Colgate is represented by Morgan Lewis & Bockius LLP.

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bna.com

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

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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