Tomlinson v. El Paso Corp.
51 Employee Benefits Cas. (BNA) 2740
10th Cir.2011Background
- This is a putative class action by Tomlinson, Ballesteros, and Muckelroy alleging age discrimination under ADEA and ERISA related to El Paso's switch from a traditional pension plan to a cash balance plan.
- El Paso implemented a five-year transition during which participants accrued benefits under both the old plan and the cash balance plan, with the old plan eventually frozen and the cash balance account growing.
- Some participants experienced wear-away periods where the minimum benefit under the old plan exceeded the cash balance benefit for a time, particularly affecting older employees.
- Notifications in 1996 (Business Update, October letter, and a brochure) warned that the new plan was less generous and that some participants would freeze old benefits; individualized account statements were later provided.
- A 2002 Summary Plan Description, read together with other notices, explained benefits calculations and the transition, but contained no explicit wear-away warning.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| ADEA § 4(i) applicability | Tomlinson argues wear-aways discriminate by age. | El Paso asserts § 4(i) governs benefit accrual inputs, not outputs; inputs are non-discriminatory. | § 4(i) controls; inputs not discriminatory, wear-aways not barred. |
| Anti-backloading under ERISA § 204(b)(1) | Plan backloads benefits during wear-away. | Plan frontloads benefits; wear-aways arise from transition, not backloading. | Anti-backloading claim properly dismissed; no violation. |
| ERISA § 204(h) notice adequacy | Wear-away effects should have been explicitly disclosed. | Early notice plus informative materials adequately warned of plan changes. | Notice found adequate; wear-aways need not be explicitly disclosed. |
| ERISA § 102 SPD disclosure | SPD failed to disclose wear-aways and reductions. | Wear-aways are consequences of plan terms and need not be in SPD per Jensen. | SPD disclosure not required to mention wear-aways. |
Key Cases Cited
- Cooper v. IBM Personal Pension Plan, 457 F.3d 636 (7th Cir. 2006) (benefit accrual inputs, not outputs, govern § 4(i))
- Register v. PNC Fin. Servs. Grp., Inc., 477 F.3d 56 (3d Cir. 2007) (cash balance inputs determine compliance with 133 1/3% test)
- Hurlic v. S. Cal. Gas Co., 539 F.3d 1024 (9th Cir. 2008) (wear-away notice and inputs-focused analysis)
- Jensen v. Solvay Chemicals, Inc., 625 F.3d 641 (10th Cir. 2010) (compliance with § 4(i) satisfies § 4; wear-aways need not be disclosed in SPD under older rules)