Smith v. U.S. Bancorp

Smith v. U.S. Bancorp

Opinion

MEMORANDUM AND ORDER

This matter is before the Court on Defendants' Motion to Dismiss. (Docket No. 21.) For the following reasons, the Motion is denied.

BACKGROUND

This case involves [*2]  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.

Plaintiffs contend that [*3]  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.

Defendants 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.

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