Gelesky v. AK Steel Corp. Pensions Agreement Plan
828 F. Supp. 2d 935
S.D. Ohio2011Background
- Gelesky retired in 1999 from Armco/AK Steel and elected a lump-sum payment under the AK Steel Pension Plan, a cash balance plan.
- The lump sum was calculated as the employee’s hypothetical cash balance with a whipsaw dispute over actuarial equivalence under ERISA.
- West v. AK Steel Corp. Retirement Accumulation Pension Plan (Sixth Circuit) held that whipsaw requires projecting the hypothetical balance to retirement age using the plan’s crediting rate and discounting with IRS rates.
- Schmidt v. AK Steel Corp. Pension Agreements Plan settled a related class claims in SD Ohio, with a limited six-year window for lump-sum distributions prior to suit.
- Plaintiff filed this ERISA action on July 2, 2009 seeking to recover whipsaw benefits and plan reformation; Defendants moved to dismiss as time-barred.
- The court concluded the most analogous statute of limitations is Ohio Rev. Code 2305.07 (six-year period for statutory liability) and that accrual occurred in 1999 on receipt of the lump sum.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Which statute of limitations applies to ERISA whipsaw claims? | Meade (15-year contract) should apply. | Ohio 2305.07 six-year statutory period applies. | Ohio 2305.07 is the most analogous statute. |
| When did the ERISA claim accrue? | Accrual occurred in 2008 when whipsaw was first learned. | Accrual occurred in 1999 at lump-sum receipt. | Accrual occurred in 1999 upon receipt of the lump sum. |
| Is administrative exhaustion required for ERISA whipsaw claims? | Exhaustion should be excused as futile. | Exhaustion is required. | Exhaustion is not required; court treated merits aside for limitation ruling. |
| Do plan terms create a contractual basis for whipsaw recovery? | Specific plan provisions promise ERISA/IRC compliance and whipsaw. | Plan terms do not guarantee whipsaw calculation. | Plaintiff's claims based on ERISA/statutory requirements; contract terms do not support whipsaw claim. |
Key Cases Cited
- Redmon v. Sud-Chemie Inc. Retirement Plan for Union Employees, 547 F.3d 531 (6th Cir. 2008) (clear repudiation rule; accrual upon cessation of benefits or denial of further benefits)
- Moody v. Turner Corp., (unreported in provided text) (—) (applied six-year statutory period for whipsaw claims; accrual at lump sum)
- West v. AK Steel Corp. Retirement Accumulation Pension Plan, 484 F.3d 395 (6th Cir. 2007) (whipsaw calculation standard for lump-sum benefits)
- Fallin v. Commonwealth Industries, Inc. Cash Balance Plan, 521 F.Supp.2d 592 (W.D. Ky. 2007) (considered analogous statute approach; persuasive to Moody/Redmon reasoning)
- Santino v. Provident Life & Accident Insurance Co., 276 F.3d 772 (6th Cir. 2001) (contractual vs. statutory limitations considerations in ERISA context)
- Meade v. Pension Appeals & Review Comm., 966 F.2d 190 (6th Cir. 1992) (principle that the most analogous statute for ERISA benefits claims may be contract-like)
- Morrison v. Marsh & McLennan Cos., 439 F.3d 295 (6th Cir. 2006) (clear repudiation rule governing accrual of benefits)
- Romero v. Allstate, 404 F.3d 212 (3d Cir. 2005) (amendment accrual/application rather than plan adoption date)
- Young v. Verizon’s Bell Atl. Cash Balance Plan, 615 F.3d 808 (3d Cir. 2010) (accrual on lump-sum payment or administrative resolution depending on context)
- Thompson v. Retirement Plan for Employees of S.C. Johnson & Son, Inc., 651 F.3d 600 (7th Cir. 2011) (whipsaw accrual upon lump-sum payment; supports current decision)