<nobr>Dec 19, 2003</nobr>

ERIC Amicus Brief: Cooper v. IBM

The ERISA Industry Committee and the American Benefits Council on December 19 jointly filed an amicus brief in the case Cooper v. IBM before the U.S. District Court for the Southern District of Illinois. The brief opposes the plaintiffs’ motion for entry of remedial relief and instead, argues for a prospective remedy. The district court held that both the Pension Credit Formula and the Cash Balance Formula in IBM’s Personal Pension Plan violated ERISA. Currently, the court is considering the appropriate remedy for that violation.

The brief maintains that any retroactive relief granted by the court to the plaintiffs would disrupt plans offered by employers across the country adversely affecting the retirement security of millions of individuals. “Any type of retroactive relief awarded by this Court will not only impact the parties to this case, but also will send a shock wave through other pension plans by disrupting the reasonable actuarial assumptions and funding expectations on which those plans are based the brief states. This disruption would cause plans across the country to be severely underfunded, leading to massive restrictions of future benefits.”

The brief argues that the Supreme Court has, in three separate cases, denied retroactive relief in the pension plan context. The Court set forth a three-part test, which provides that retroactive relief should not be awarded in a pension case where (1) employers could reasonably have assumed that the plan design at issue satisfied the pertinent statutory requirement; (2) retroactive relief is unnecessary to ensure future compliance; and (3) retroactive relief would create significant disruption and inequity with respect to retirement plans, plan participants, and/or the economy. Based on the three-part test, the Court denied retroactive relief in each of the cases.

The brief also argues that under the Manhart standard, retroactive relief is inappropriate (the Manhart three-part test is used to determine whether retroactivity is appropriate). The brief states that “this case clearly satisfies the three part test to a far greater degree than even the Manhart trilogy of cases. Prior to this Court’s opinion, there was a long line of authority all of which supports the validity of cash balance and pension equity plans.”


Text Files:

Cooper v. IBM

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