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May 25 — The Department of Labor is urging a federal appeals court to make it easier for workers to bring class actions challenging misleading statements about their pension benefits.
The DOL has asked the U.S. Court of Appeals for the Second Circuit to rule that a group of Foot Locker Inc. workers can bring a class action against the company without having to prove that each individual worker relied on Foot Locker's misrepresentations about the effects of a 1996 pension plan change. If the Second Circuit agrees with the DOL, the ruling would make it easier for workers to file class actions under the Employee Retirement Income Security Act, whereas a decision to the contrary would limit the ability to obtain class-wide relief in cases claiming that an employer misled its workers about retirement benefits.
In February, three industry groups filed a brief arguing the other side of this issue. They urge the Second Circuit to require each Foot Locker worker to individually demonstrate detrimental reliance on the company's misrepresentations.
Foot Locker and its workers have spent nearly a decade in court over the company's switch from a traditional pension plan to a cash balance plan, with the workers claiming that Foot Locker concealed the way this switch would negatively affect their benefits. The lawsuit is noteworthy because the workers' requested relief—reformation of the Foot Locker pension plan to restore the benefits they lost—is a form of equitable relief that has only recently gained traction in disputes over ERISA benefits.
In its May 24 brief, the DOL challenges Foot Locker's argument that each worker must individually demonstrate that he or she relied on Foot Locker's statements about pension benefits in order for the class to obtain reformation of the plan.
According to the DOL, these individual showings of detrimental reliance aren't necessary in the face of evidence that Foot Locker misstated the effects of the conversion and "intentionally obscured" that its goal was to save money on pension benefits.
In a similar vein, the department argued that the class members weren't required to individually show that they were mistaken about the effects of the pension conversion.
Finally, the DOL urged the Second Circuit to find that Foot Locker's fraud or concealment of the conversion's effects extended the deadline for the workers to file their lawsuit.
This isn't the first time the department has weighed in on the Foot Locker dispute. In 2013, the DOL asked the Second Circuit to allow the workers to seek an award of equitable surcharge (178 PBD, 9/13/13).
The Second Circuit ultimately ruled in favor of the Foot Locker workers and ordered a district judge to rethink its earlier decision dismissing the case (31 PBD, 2/14/14). The district judge then issued multipledecisions in favor of the workers, causing Foot Locker to file this appeal.
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Text of the DOL's brief is at http://src.bna.com/fk0.
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