Three large employer organizations have asked a federal appeals court in Cincinnati to support FedEx Corp.’s legal fight with defined benefit participants who claim the company shortchanges benefit payments to married retirees.
The organizations filed an amicus brief Feb. 27 in the 6th U.S. Circuit Court of Appeals asking the court to uphold a September 2024 ruling by a federal District Court judge in Memphis, Tenn., supporting the company.
Overturning the judge’s ruling would create “administrative burdens, sometimes unworkable ones, and pointlessly increased costs,” said the amicus brief by the ERISA Industry Committee, American Benefits Council, and Committee on Investment of Employee Benefit Assets.
Plaintiffs had accused FedEx and its pension plan fiduciaries of using outdated mortality tables to calculate benefits for married retirees, alleging that this practice violated ERISA.
They argued that FedEx’s calculations for married retirees failed to achieve “actuarial equivalence” to pension calculations for individual retirees and ignored reasonable actuarial assumptions.
U.S. District Court Judge Jon P. McCalla dismissed the complaint with prejudice, meaning plaintiffs couldn’t refile in his court in Watt et al. vs. FedEx Corp. et al., a consolidation of two similar lawsuits filed in 2023.
“There is no extra-statutory reasonableness requirement for defendants to follow” when calculating pension benefit payments for married retirees, McCalla wrote. “Thus, the plan’s mortality methodology does not violate ERISA.”
The plaintiffs appealed.
“The district court here correctly rejected appellants’ invitation to fashion unwritten, judge-made standards for actuarial assumptions where the Congress elected not to specify any,” the trade groups wrote Feb. 27.
ERISA gives sponsors “wide discretion to determine how their plan will calculate benefits earned by employees, including discretion over the assumptions that will be used to convert a single life annuity into a QJSA,” they wrote.
A single life annuity is the standard for individual retirees. The qualified joint and survivor annuity, or QJSA, covers married retirees, and its calculation is based on mortality data and interest rates.
The trade groups’ legal argument is similar to one they filed Feb. 3 supporting Southern Company Services in a mortality-table lawsuit.
Southern Company Services retirees sued in September 2022 alleging the company’s use of outdated mortality tables depressed benefit payments for married retirees. A U.S. District Court judge in Atlanta ruled for the company in July 2024, saying participants weren’t harmed and ERISA wasn’t violated in Drummond et al. vs. Southern Company Services et al.
The plaintiffs appealed to the 11th U.S. Circuit Court of Appeals, Atlanta. The three trade groups filed an an amicus brief endorsing the company's actions. The Department of Labor filed an amicus brief supporting the retirees. The case is pending.
The FedEx and Southern Company Services lawsuits are among a series of mortality-table complaints with no clear trend among various federal courts. Judges have dismissed some complaints, but they have denied motions to dismiss others, leading in some instances to settlements.
FedEx Corp. Employees Pension Trust, Collierville, Tenn., had $25.5 billion in assets as of Dec. 31, 2022, according to the latest Form 5500.
