A U.S. District Court in St. Louis rejected a request by Anheuser-Busch Cos. to dismiss an ERISA complaint by a defined benefit plan participant who alleged the company violated ERISA by using an outdated mortality table in its pension calculations and thus shortchanging his and other participants' benefits.
In rejecting the company's petition on March 27, U.S. District Judge Stephen R. Clark cleared the way for a trial in the case of Michael Duffy vs. Anheuser-Busch Cos.
"The court finds that Duffy adequately pleads that use of the 1984 mortality table is unreasonable," the judge wrote. "He argues, and sufficiently alleges, that the actuarial assumptions (the company) uses to calculate alternative benefits are unreasonable and fail to conform to ERISA's actuarial-equivalence requirement. That is all he must do at the pleading stage."
Mr. Duffy, who is seeking class-action status, sued the company and plan fiduciaries in May 2019, saying the use of a 1984 mortality table failed to pay benefits to retirees that were actuarially equivalent to a single-life annuity. Mr. Duffy said the mortality table decreases the amount of annuities the company pays in its plan and fails to use updated tables reflecting longer life expectancies.
The judge noted that Anheuser-Busch's parent company, Anheuser-Busch InBev, "uses up-to-date actuarial assumptions when calculating pension plan costs in its independently audited financial statements."
The 2014 mortality table used by the parent company meant that it "used actuarial assumptions in financial reporting to report greater liability for benefits than (Anheuser-Busch) was paying out using the 1984 table," the judge wrote.
In seeking to have the case dismissed, Anheuser-Busch made five arguments, all of which were rejected by the judge. For example, the company asserted that ERISA grants employers "wide latitude" in using mortality tables.
"Regardless of any latitude or discretion ERISA may (or may not) provide to plan sponsors, Duffy sufficiently alleges that (the company) uses unreasonable actuarial factors that result in benefits that fail to meet ERISA's actuarially equivalent requirement," the judge wrote. "Because he has done so, the court will not dismiss his complaint on this basis."
In rejecting Anheuser-Busch's arguments, the judge the judge wrote that Mr. Duffy's complaint met the legal pleading standard because "it includes factual allegations to support his argument that the actuarial assumption is unreasonable" because of the company's use of the 1984 mortality table.
