On January 31, 2006 a group of participants in J.P. Morgan Chase's Retirement Plan filed suit under the Employee Retirement Income Security Act of 1974, as amended (ERISA), 29 U.S.C. § 1001 et seq, in United Stated District Court of the Southern District of New York. The plaintiffs, represented by private counsel, asked the Court for declaratory, injunctive and compensatory relief alleging that the defendant used cash balance formulas in a discriminatory manner based on age and for other violations of ERISA. Specifically, the plaintiffs contended that the defendant's cash balance plan helps their corporation save money and the older workers shoulder the burden; thus such a practice is discriminatory as it systemically harms a particular group. (Consolidated class-action complaint, page 1).
On October 30, 2006, the Court (Judge Baer) granted in part the defendants' motion to dismiss. The Court distinguished cash balance and "regular" pension plans. The major difference is the flexibility between the plans. A cash balance system allows the participant to take a lump sum after five years in the program. In re J.P. Morgan Chase Cash Balance Litigation, 460 F.Supp.2d 482 (S.D.N.Y. 2006). This type of information is valuable to know as a participant in the plan, but this points to another problem with JP Morgan's version: there was not good publicity for these changes. In fact, counts IV-VI of the complaint alleged that failure to provide notice. In re J.P. Morgan Chase Cash Balance Litigation, 460 F.Supp.2d 480 (S.D.N.Y. 2006). The Court did not dismiss those parts of the complaint, nor the parts about age discrimination. Thus, the plaintiffs continued to press in Court for class certification.
On May 30, 2007, the Court (Judge Baer) certified a class. The class was comprised of all plan participants, whether active, inactive or retired, their beneficiaries and Estates, whose accrued benefits or pension benefits are based in whole or in part on the Plan's cash balance formulas, from January 1, 2002 to present. In re J.P. Morgan Chase Cash Balance Litigation, 242 F.R.D. 270 (S.D.N.Y. 2007). In essence, the class claim said more about what the plaintiffs failed to do, than what they did. The age discriminations through ERISA was being reviewed by a higher court, and the notices part of the complaint could only be certified from 2002 onwards. This according to the Court was a result of JP Morgan being such a large company; It was the factual diversity of the notice claims that posed an insurmountable hurdle to class certification of the notice claims. In re J.P. Morgan Chase Cash Balance Litigation, 242 F.R.D. 274 (S.D.N.Y. 2007).
On July 31, 2007, the Court (Judge Baer) denied the plaintiffs motion to reconsider. Not only was the motion denied, but the opinion was written in a clearly frustrated tone. In the opinion, the Court accused the class counsel of not knowing the difference between confusion and hardship. In re J.P. Morgan Chase Cash Balance Litigation, 2177019 WL 3 (S.D.N.Y. 2007). And at the end of the opinion, the Court States, that "the Clerk of the Court is instructed to close this motion and remove it from my docket." In re J.P. Morgan Chase Cash Balance Litigation, 2177019 WL 3 (S.D.N.Y. 2007). Thus, not only is the litigation going poorly for the plaintiffs, but they are getting on the wrong side of the Court.
In light of this, on January 30, 2009, the parties entered into a Stipulation for Voluntary Dismissal of Certified Claims, according to which the Certified Claims would be dismissed with prejudice, and each party should bear its own costs and fees.
On October 19, 2009, the Court (Judge Cote) approved the parties' motion to dismiss the certified claims.
On July 15, 2010, the Court (Judge Cote) approved the parties' Settlement Agreement, according to which the plaintiffs' counsel was awarded $600,000 as reimbursement of costs and expenses.Kunyi Zhang - 09/09/2010