United States District Court, D. Connecticut
JANICE C. AMARA et al, individually, and on behal of others similarly situated, Plaintiffs,
CIGNA CORP. and CIGNA PENSION PLAN, Defendants.
RULING ON METHODOLOGY FOR CALCULATING ATTORNEYS'
BOND ARTERTON, UNITED STATES DISTRICT JUDGE
before the Court are two disputes between the parties
relating to the proper methodology for the calculation of
attorneys' fees to be awarded to class counsel. For the
reasons set forth below, the Court adopts Plaintiffs'
proposed methodology on both questions.
Court assumes the parties' familiarity with this
case's background and long history. The parties dispute
the proper calculation of the present value of the common
fund recovery, which must be determined in order for the
Court to rule on Plaintiffs' pending motion for
attorneys' fees, which in turn must be ruled on in order
for remedy payments to begin issuing to class members.
parties agree that the differences in their respective
calculations of the value of the common fund are attributable
to four methodological disputes. At the July 25, 2018
telephonic status conference, Plaintiffs expressed their view
that Defendant's approach to all four methodological
disputes shows that Defendant intends to violate the
Court's previous orders, a contention that Defendant
rejected. The Court noted that “the plan administrator
has its directives, has the legal principles to be used in
administering [the plan], has the whole history of trial and
appeal and rulings and decisions in this case; and if [going
forward] they breach the fiduciary duty to act solely in
the benefit of the beneficiaries that maximize their benefit,
then there's . . . either another ERISA case that's
brought or the Court retains continuing jurisdiction for
remedy and possible contempt.” ([Doc. # 538] at 10.)
The Court further stated that it did not “see that at
this point we can or should be relitigating any of the
methodology[, ]” but that Defendant implements its
interpretation of the reformed plan at its own “risk[,
]” if it is later found to have done so in violation of
its fiduciary duties or previous court orders.
subsequently clarified by emails to the Court, both parties
agree that at least two of the methodological disputes at
issue affect not only the present value of the common fund
recovery but also the actual remedy amounts paid to class
members. The Court made clear that with respect to
these methodological issues, once the Court rules on the
attorneys' fee petition, “if there is [a] further
amount of money thereafter that [Defendant] will owe as a
result of erroneously calculated benefits, then the Court
will order a supplement and may not be limited to 17.5
percent, and may not take it out of the beneficiaries'
portion but may require [Defendant] to shoulder it.”
(Id. at 23-24.) As the Court explained, “the
incentive for [Defendant] to get it right the first time is
there, because the additional fees owed to the
Plaintiffs” in this scenario will “come out of
[Defendant]'s pot” and will not be taken out of
class member remedy payments. (Id. at 25.)
contends, however, that at least two remaining methodological
disputes affect only the calculation of attorneys' fees,
and not the remedy amounts received by class members: the use
of adjusted 25-year stabilization rates instead of IRC
Section 417(e) rates for the calculation of the relief
payments' present value, and Defendant's assumed
payment dates for participants who have not yet commenced
Part B benefits.
light of the possibility that the dispute between the parties
on these two methodological questions would not be captured
going forward by any future cause of action by plan members
for breach of fiduciary duty or contempt motion, the Court
requested that the parties provide briefing on the two
outstanding methodological disputes that, in the view of at
least one party, affect only the calculation of
attorneys' fees and not remedy amounts. It is this
briefing that the Court now addresses.
contend that the “Court should use the IRC §
417(e) interest rates for the ‘determination of present
value' of annuities to value the class' recovery[,
]” (Pls.' Br. on Methodology [Doc. # 544] at 1),
while Defendant contends that the present value of the
recovery should be calculated using “the rates . . .
prescribed by ERISA Section 303(h), ” (Def.'s Br.
on Methodology [Doc. # 546] at 6-7.)
proposed rates come from 29 U.S.C. § 1083, which sets
“[m]inimum funding standards for single-employer
defined benefit pension plans[.]” Id.
Subsection (h) therein establishes the “[a]cturial
assumptions and methods” to be used in “the
determination of any present value or other computation under
this section[.]” Id. § 1083(h)(1).
Plaintiffs argue that “the only interest rates this
Court has used for A relief calculations have been the IRC
§ 417(e) interest rates[, ]” and that “the
same interest rates used to make the annuity calculations
must also be used to determine the present value of those
benefits.” (Pls.' Br. at 4-5.) While
Defendant's reply brief addresses and challenges other
arguments advanced by Plaintiffs, Defendant fails to address
this argument. (See generally Def.'s Reply Br.
at 2-4.) Defendant explains why it should not be bound by the
rates that it uses in its SEC filings, (id. at 2-3),
argues why it would be appropriate, on the merits, to adopt
the Section 303(h) rates, (id. at 3-4), and advances
policy arguments in favor of using the Section 303(h) 25-year
stabilization rate, (id. at 4), but nowhere
addresses Plaintiffs' contention that the rates used for
calculating present value should match the rates used for A
the Court must decide whether the net present value should be
calculated using the interest rates used in the Court's
previous remedy rulings, or using the rates established by a
portion of ERISA that sets funding standards for certain
categories of pension plans-in the context of which the
statute delineates a methodology for calculating the present
value of future plan obligations. Neither party has
identified any procedurally-apposite authority providing
guidance on the proper method for calculating the net present
value of an ERISA remedy for the purpose of determining
attorneys' fees. Notwishstanding the absence of any such
binding or persuasive authority presented by either party,
the Court finds Plaintiffs' proposal to be more
persuasive. Defendant fails to rebut Plaintiffs'
common-sense argument that the interest rates used in the
remedy rulings should similarly be used to calculate the net
present value of the remedy. Moreover, Defendant fails to
present any statutory or other authority indicating that
ERISA's methodology for calculating net present value in
the context of minimum funding standards for single-employer
defined benefit pension plans should be applied outside of
that context, or in the attorneys' fees context
specifically. Accordingly, the Court adopts Plaintiffs'
proposed interest rates.