The U.S. Supreme Court on Monday denied a petition for a writ of certiorati filed by PricewaterhouseCoopers LLP to reverse a Second Circuit Court's 2019 decision, regarding a lawsuit alleging PwC violated ERISA law in the design of its cash balance plan.
The case, Laurent vs. PricewaterhouseCoopers LLP, was originally filed in the U.S. District Court in East St. Louis, Ill., in November 2004 by former employee Timothy D. Laurent.
The plaintiffs, former employees of PwC, claimed their accrued benefits upon withdrawing from the firm's cash balance plan before age 65 were not calculated properly under the Employee Retirement Income Security Act and the tax code, and that they were entitled to larger payments. They asserted that under ERISA, the firm should have used a "whipsaw calculation" of 9% to 10% to project their benefits to age 65 and not the 30-year Treasury rate the firm used.
Judge Michael B. Mukasey ruled in September 2006 that PwC must perform a whipsaw calculation. PwC filed a motion to dismiss that ruling, which was denied in August 2011.
In 2019, the U.S. Court of Appeals for the Second Circuit ruled in favor of the plaintiffs.
In its July 2020 petition for a writ of certiorari, PwC argued that the U.S. Congress amended ERISA in its Pension Protection Act of 2006 to "clarify that cash-balance plans are not required to perform whipsaw calculations or pay 'future interest credits' to plan participants who elect lump-sum distributions of their account balances before reaching 'normal retirement age' and the "current version of ERISA thus expressly permits PwC to pay pre-'normal retirement age' lump sums in an amount equal to a participant's notional account balance — just as the plan always provided."
A writ of certiorari is an order by the Supreme Court for a lower court to send up a case for review.
Acting U.S. Solicitor General Elizabeth Prelogar submitted a brief on May 25 saying the petition should be denied by the Supreme Court. In her brief, she said the petitioners (PwC) primarily contended that an appeals court erred in permitting respondents to ask for reforms to the cash balance plan's structure and pursue a claim for benefits pursuant to the existing plan.
In her brief, Ms. Prelogar said the appeals court was correct in allowing respondents to seek both.
"We are disappointed that the Supreme Court decided not to review the Second Circuit's flawed decision before trial," PwC said in a statement emailed by spokeswoman Ellen Burr. "That 2019 decision departs from Supreme Court precedent and permits plaintiffs to seek a windfall payment not available to ERISA plan participants under current law. When the plaintiffs left PwC, they received an immediate and full payment of the benefits they were promised by the plan; they should not receive anything more, as we intend to demonstrate at the trial court."
Leon Dayan, attorney at Bredhoff & Kaiser, attorneys for Mr. Laurent, could not be immediately reached for comment.