MEMORANDUM OF DECISION
Plaintiff has commenced the above-captioned lawsuit, styled as a putative
class action, pursuant to the Employee Retirement Income Security Act ("ERISA")
and Age Discrimination in Employment Act ("ADEA") seeking equitable
relief for alleged failure to comply with ERISA's non-forfeiture and age discrimination
provisions. Pending before the court is plaintiff's motion to certify the proposed
class. n1 For the reasons set forth herein, this motion (dkt. # 23) is GRANTED.1
The amended complaint, memoranda, and affidavits submitted in support
of the motion for class certification and the response thereto reveal the
facts material to the court's decision. 2
Plaintiff's claims arise from defendant CIGNA's conversion of its prior traditional
defined benefit pension plan, CIGNA Pension Plan Part A ("Part A"),
into a defined benefit cash balance pension plan, CIGNA Pension Plan Part
B ("Part B") This conversion changed the method of calculating
and accounting for annuity benefits by basing the amount of the annuity upon
hypothetical individual account balance. This hypothetical balance is derived
from "credits" reflecting a predetermined percentage of the employee's
salary ("benefit credit") and interest at a predetermined rate
credit"). Thus, the cash balance plan resembles a defined [*3] contribution
plan, but remains a defined benefit plan. Plaintiff challenges this conversion
and contends that Plan B fails to meet the requirements governing defined
benefit plans set forth in ERISA, the Internal Revenue Code ("IRC"),
and the ADEA. 3
Specifically, plaintiff claims that the conversion of the pension plan necessarily
conditioned receipt of further benefits under the provisions of Part B upon
her acceptance of CIGNA's valuation of her accrued benefit under the prior
plan. Upon conversion, plaintiff's annuity benefit was no longer based upon
the formula set forth in Part A, but rather was transformed into a hypothetical
individual account, [*4] with a particular "balance." This "initial
retirement account" was based upon the present actuarial value of the
annuity benefit due plaintiff at her normal retirement age, which is sixty-five
years of age, under Part A. Part B provides that when plaintiff elects to receive
her benefit, she would receive the greater of the account balance, or the "minimum
benefit" as that term is defined under Part B.
In layman's terms, as a result of these calculations plaintiff experienced
a period where benefits "constructively" accrued in hercash balance
account. This is so because the minimum benefit payable to plaintiff was greater
than her hypothetical account balance, which means that plaintiff would not
begin to realize the accrual of benefits under Plan B until her hypothetical
account balance exceeded the amount of the minimum benefit. Thus, under Part
A, plaintiff would have received a certain amount upon her retirement. When
the plan converted to Part B, plaintiff's annuity benefit would remain constant
for a certain period of time even though she is technically accruing additional
benefits under Part B. Plaintiff contends that this methodology violates either
ERISA's non-forfeiture provision, [*5] 29 U.S.C. ß 1053(a), or the IRC's "133 & 1/3" rule,
29 U.S.C. ß 1054(b)(1). As a remedy, plaintiff seeks equitable relief
pursuant to 29 U.S.C. ß 1132(a).
In addition, plaintiff also contends that CIGNA's summary plan description
("SPD") is misleading, and that Plan B impermissibly discriminates
on the basis of age in that it provides for decreasing benefits commensurate
with increasing age. She also seeks equitable relief as a remedy for these
claims as well.
In order to obtain class certification, plaintiff must satisfy each of the
four prerequisites set forth in Rule 23(a) of the Federal Rules of Civil
Procedure. See Caridad v. Metro-North Commuter Railroad, 191 F.3d 283, 291
(2d Cir. 1999).
Once those prerequisites are satisfied, plaintiff must also establish the
requirements set forth in Rule 23 (b)
Rule 23(a) requires satisfaction of the following four factors. First,
the class must be so numerous that joinder of all members is impracticable.
there must exist questions of law or fact common to the class. Third, the
claims or defenses of the representative [*6] parties must be typical of
or defenses of the class. Fourth, the representative parties must be able
to protect the interests of the class fairly and adequately. These four elements
are often referred to, respectively, as "numerosity," "commonality," "typicality," and
adequacy of representation."
CIGNA's principal objections to class certification do not relate to the
specific requirements set forth in Rule 23, but rather are premised upon
considerations. First, CIGNA argues that it is bound to, or has agreed to,
provide any relief ordered by the court on a class-wide basis, thereby rendering
class certification superfluous. CIGNA's legal requirements and proposed
agreements do not render the question of class certification moot. Should
the court must, consistent with its obligations under ERISA, administer appropriate
relief notwithstanding CIGNA's assurances.
Second, CIGNA claims that providing the relief requested in the complaint
on a class-wide basis may actually harm some members of the class. Specifically,
CIGNA argues that provision of this relief could actually reduce benefit
to members of the class. If CIGNA is correct, [*7] this problem can be addressed
when the court determines what remedy should be provided if plaintiff prevails
on the merits of her claims. Further, this problem could also be addressed
by members of the class asserting these arguments once the class has been
certified. At any rate, certification of the class is the first step toward
a solution to this problem, if the problem indeed exists.
CIGNA's prudential objections do not persuade the court that class certification
is not warranted. Further, as discussed below, plaintiffs have met their
burden under Rule 23(a) and have demonstrated that their putative class meets
four factors set forth therein.
The first prerequisite, numerosity, requires that the proposed class be
that joinder of all members is impracticable." Fed. R. Civ. P. 23(a)(1).
Plaintiff has submitted evidence that there are at least 25,000 class members.
(See Bruce Dec. PP 4-5). Joinder of 25,000 plaintiffs is impracticable, and
plaintiff has established the first prerequisite.
B. Commonality & Typicality
The second and third requirements of Rule 23(a) are the existence of questions
of law or fact common to the [*8] class, and whether the named plaintiff's
claims are typical of the claims of the class. See generally Caridad v.
Metro-North Commuter Railroad, 191 F.3d 283, 293 (2d Cir. 1999) (explaining that the
commonality criterion often merges with the typicality requirement and that
issue of law or fact must "occupy essentially the same degree of centrality
to the named plaintiff's claim as to that of other members of the proposed
class"). In such circumstances, "the presence of even an arguable
defense peculiar to the named plaintiff or a small subset of the plaintiff
class may destroy the required typicality of the class as well as bring into
question the adequacy of the named plaintiff's representation." J.H. Cohn & Co.
v. American Appraisal Assocs., 628 F.2d 994, 999 (7th Cir. 1980); see also
Kline v. Wolf, 88 F.R.D. 696, 699 (S.D.N.Y. 1981) ("The members of [a]
class are entitled to representatives unencumbered by unique defenses.'")
Plaintiff Amara has presented claims with common questions of law and fact
to those of each class member. Adjudication of the first count of the class
action complaint turns upon the pure legal [*9] question of whether CIGNA's
pension plan violates ERISA. The second count of the class complaint also
turns upon a common legal question generally applicable to all members of
whether CIGNA's SPD is misleading. 4 Finally, the third court of the class
complaint also turns upon a legal question concerning the applicability of
the parallel age discrimination provisions of the ADEA, ERISA, and the IRC
to CIGNA's pension plan. Regardless of whether the answer to each of these
inquiries is affirmative or negative, the answer is identical as to each
member of the class. Thus, plaintiff has established the second and third
CIGNA's contentions to the contrary are without merit. The fact that plaintiff
Amara left the employ of CIGNA for a brief period and then returned does
not render her claim fundamentally different from those of the other class
The key provision in this analysis is the provision dictating the method
of calculating the participant's initial account balance. The relevance of
timing of this calculation is not readily apparent. Further, any specialized
knowledge about the requirements of ERISA does not render plaintiff Amara's
claims atypical because her knowledge has no bearing on the common legal
questions prevalent in the class complaint.
In order to certify a class, the plaintiff must demonstrate that he or
she will "fairly and adequately protect the interests of the class." Fed.
R. Civ. P. 23(a)(4). "The adequacy inquiry under Rule 23(a)(4) serves
to uncover conflicts of interest between named parties and the class they seek
to represent." Amchem Products, Inc. v. Windsor, 521 U.S. 591,
625 (1997) Here, plaintiff Amara is an adequate class representative. Plaintiff
has affirmatively stated her dedication to pursuing this lawsuit, [*11] and
has selected competent counsel to prosecute her claims on behalf of the class.
CIGNA's argument to the contrary regarding a potential conflict of interest
involving counsel for the plaintiff fails to detract from this conclusion
because the purported conflict is, first, highly speculative, and, second,
relevant to the claims being asserted by these plaintiffs.
D. Rule 23(b)
Having found that plaintiff has demonstrated the prerequisites to class
certification set forth in Rule 23(a), the class shall be certified under
Rule 23(b)(2) states that class certification is appropriate when "the
party opposing the class has acted or refused to act on grounds generally applicable
to the class, thereby making appropriate final injunctive relief or corresponding
declaratory relief with respect to the class as a whole. ..." Fed. R.
Civ. P. 23(b)(2). Plaintiffs' claims fall squarely within the purview of
this provision because they seek injunctive relief, pursuant to ERISA, generally
applicable to the entire class.
For the reasons set forth herein, plaintiff's motion to certify the putative
class (dkt. # 23) is GRANTED. The certified [*12] class is defined as follows:
Any and all persons who:
1. Are former and current CIGNA employees;
2. Participated in the CIGNA Pension Plan before January 1, 1998; and
3. Have participated in the "Part B" CIGNA Pension Plan at any
time since January 1, 1998.
So ordered at Hartford, Connecticut this 20th day of December, 2002.
DOMINIC J. SQUATRITO
UNITED STATES DISTRICT JUDGE
1 Also pending is CIGNA's motion to supplement the record (dkt. # 36).
This motion is GRANTED.
2 The court offers this brief discussion of plaintiff's claims by way
of summary only; plaintiff's claims are in no way limited or construed by
3 Employers' conversion of their traditional pension plans to cash balance
plans has incited vigorous commentary within the practice area, which has
just begun to permeate into courts throughout the country. See, e.g., Edsen
v. Bank of Boston, 229 F.3d 154 (2d Cir. 2000); Eaton v. Onan Corp., 117
F. Supp. 2d 812 (S.D. Ind. 2000)
4 The parties dispute whether, in order to prevail on this claim, each plaintiff
must make an individualized showing of detrimental reliance upon the misleading
SPD provision. The U.S. Court of Appeals for the Second Circuit has not yet decided
this issue. However, the threshold inquiry on this claim, whether the SPD was
misleading, is a legal question common to each class member. Therefore, class
certification to decide this question is appropriate. Should plaintiffs prevail
on this threshold question, and the court accept defendant's interpretation of
the law on this point, the court will revisit class certification on this issue