United States District Court, D. Minnesota
Janet Smith, Debra Thorne, Sonja Lindley, and Pamela Kaberline, on behalf of themselves and all others similarly situated, Plaintiffs,
U.S. Bancorp, the Employee Benefits Committee, and John/Jane Does 1-5, Defendants.
MEMORANDUM AND ORDER
A. Magnuson United States District Court Judge
matter is before the Court on Defendants' Motion to
Dismiss. (Docket No. 21.) For the following reasons, the
Motion is denied.
case involves participants in the U.S. Bank Pension Plan
(“the Plan”) who elected to receive their
benefits before the Plan's anticipated retirement age of
65. Beginning in 2002, Plaintiffs accrued their retirement
benefits under the Plan's “Final Average Pay
Formula.” (Compl. (Docket No. 1) at 2.) Although the
Plan anticipates a retirement age of 65, those who receive
benefits under the Final Average Pay Formula can retire as
early as age 55. (Id.) Each Plaintiff commenced
their Plan benefit as an annuity before age 65. (Defs.'
Supp. Mem. (Docket No. 23) at 8.) When a participant elects
to start their retirement benefits before age 65, the terms
of the Plan require a reduction of their monthly benefit,
expressed as a percentage of the normal benefit the
participant would have received had they retired at 65.
(Compl. at 2.) This is known as the “Early Commencement
Factor” (“ECF”). The applicable ECFs for
each retirement age are stated in a 2002 “Plan
Document” and in subsequent “summary plan
descriptions.” (Defs.' Supp. Mem. at 12.) Upon
early retirement, each Plaintiff had their monthly benefit
reduced by the applicable ECF for their age in accordance
with the Plan's terms.
contend that the ECFs result in benefits that are not
actuarially equivalent to the retirement benefit they would
have received at age 65, in violation of the Early Retirement
Income Security Act of 1974 (“ERISA”), 29 U.S.C.
§ 1001 et seq. Simply put, Plaintiffs argue that
Defendants are paying retirees who retire before the age of
65 an unreasonably low percentage of their annuity benefit
based on unreasonable actuarial calculations.
assert that the Complaint must be dismissed because
Plaintiffs' claims rely on regulations that do not allow
for a private right of action and, in any event, ERISA does
not impose a reasonableness standard on the calculation of
ECFs. Defendants also contend that Plaintiffs' claims are
insufficiently pled and time-barred.
survive a motion to dismiss under Rule 12(b)(6), a complaint
need only “contain sufficient factual matter, accepted
as true, to ‘state a claim to relief that is plausible
on its face.'” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007)); see also Fed.R.Civ.P.
12(b)(6). A claim bears facial plausibility when it allows
the Court “to draw the reasonable inference that the
defendant is liable for the misconduct alleged.”
Iqbal, 556 U.S. at 678. When evaluating a motion to
dismiss under Rule 12(b)(6), the Court must accept plausible
factual allegations as true. Gomez v. Wells Fargo Bank,
N.A., 676 F.3d 655, 660 (8th Cir. 2012). But
“[t]hreadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, ” are
insufficient to support a claim. Iqbal, 556 U.S. at
678. “Though matters outside the pleading may not be
considered in deciding a Rule 12 motion to dismiss, documents
necessarily embraced by the complaint are not matters outside
the pleading.” Ashanti v. City of Golden
Valley, 666 F.3d 1148, 1151 (8th Cir. 2012).
bring their claims under 29 U.S.C. § 1132(a), which
states that retirement plan participants or beneficiaries may
bring a civil action to recover benefits, enforce or clarify
rights under their plan, enjoin practices that violate the
terms of their plan or ERISA subchapter I, or obtain
equitable relief to enforce provisions or redress violations.
29 U.S.C. § 1132(a)(1)(B), (3).
Section 1054(c)(3) and “Actuarial
allege that the allegedly improper benefit reductions violate
29 U.S.C. § 1054(c)(3). Section 1054(c)(3) provides that
“in the case of any defined benefit plan, if an
employee's accrued benefit is to be determined as an
amount other than an annual benefit commencing at normal
retirement age [e.g., a single life annuity beginning upon
early retirement] . . . the employee's accrued benefit .
. . shall be the actuarial equivalent of such benefit . . .
What these provisions mean in less technical language is
that: (1) the accrued benefit under a defined benefit plan
must be valued in terms of the annuity that it will yield at
normal retirement age; and (2) if the benefit is paid at any
other time (e.g., on termination rather than retirement) or
in any other form (e.g., a lump sum distribution, instead of
annuity) it must be worth at least as much as that annuity.
Esden v. Bank of Boston, 229 F.3d 154, 163 (2d Cir.
2000). “This rule that regardless of any option as to
timing or form of distribution, a vested participant in a
defined benefit plan must receive a benefit that is the
actuarial equivalent of her normal retirement benefit . .
.has been repeatedly recognized by courts.”
Id. (citing cases). Plaintiffs argue that sources
outside of ERISA provide guidance on what constitutes
“actuarial equivalence, ” including the Tax Code
and Treasury ...