PricewaterhouseCoopers agreed to pay $267 million to settle a 16-year lawsuit filed by participants in a company pension plan who claimed they were shortchanged because fiduciaries incorrectly calculated lump-sum payments for a cash balance plan in violation of ERISA.
The parties announced an agreement in principle in early August, but they didn't provide details to the U.S. District Court at that time. The Monday filing must be approved by the court.
"The agreement provides very substantial benefits to class members while at the same time eliminating the risk that they would end up with no recovery whatsoever or a recovery smaller than the settlement amount," said the settlement document filed by Gottesdiener Law Firm, the plaintiffs' attorneys.
The settlement covers about 16,000 participants who will receive an average of about $11,000 if the court approves the full settlement amount, said the document in the Laurent et al. vs. PricewaterhouseCoopers LLP et al.
The settlement class covers participants between March 2000 and Aug. 17, 2006, who claimed the plan "undervalued and underpaid the pre-age 65 lump sum pension benefits," the document said.
The plaintiffs sued in March 2006, saying PwC violated ERISA in its calculations that undervalued their cash balance accounts.
They argued that the PwC plan's definition of "normal retirement age" violates ERISA's guidelines and that the plan's use of 30-year Treasury securities in making its calculations shortchanged their accounts, according to court documents.
Following a series of lower court and appeals court rulings over the years, the 2nd U.S. Circuit Court of Appeals in New York issued an opinion in December 2019 supporting the plaintiffs.
PwC petitioned the Supreme Court in October 2020 to review the case. The Supreme Court declined in June 2021.
"The parties believe in the merits of their respective positions," the settlement document said. "However, to avoid the expense and uncertainty of protracted litigation, the parties entered into the proposed settlement."
The defendants said the agreement "is in the best interests of the plan and plan participants," the document said. "Plaintiffs and their counsel likewise believe that the benefits promised by this agreement make the settlement fair, reasonable and adequate, and in the best interests of the class."
