United States District Court, S.D. Illinois
February 12, 2004.
KATHI COOPER, BETH HARRINGTON, and MATTHEW HILLESHEIM, Individually and on Behalf of All Those Similarly Situated, Plaintiffs
IBM PERSONAL PENSION PLAN and IBM CORPORATION, Defendants
The opinion of the court was delivered by: G. PATRICK MURPHY, Chief Judge, District
MEMORANDUM AND ORDER
Before the Court is Plaintiffs' motion to strike Defendants' attempt
to assert an affirmative defense out of time, or, in the alternative, to
compel discovery and for extension of time.
The underlying issue, retroactive relief, is occasioned by IBM's
response to the remedy proposed by the class. IBM argues that under
City of Los Angeles, Department of Water and Power v. Manhart,
435 U.S. 702 (1978), retroactive relief to the class is not appropriate.
The idea is that IBM, like the plaintiff in Manhart, was
blind-sided by what it characterized as a drastic change in the law.
Specifically, this Court's declaration that IBM's 1995 PCF and 1999 cash
balance plans violate the age discrimination prohibitions of ERISA §
204(b)(1)(H) is a startling new development in pension law so that the
Court should exercise its discretion and grant only prospective relief.
The unfolding of this argument spawns other questions like: (1) is the
"prospective only" argument an affirmative defense which must be pleaded
and proved? (2) who has the burden of proof on
"prospective only"? (3) were the IBM pension managers and
high-level executives actually surprised to learn that the cash balance
plans fail as defined benefit plans under ERISA? and (4) how does the
attorney-client privilege work in this circumstance?
The parties have briefed the narrow issue of whether Manhart
is still good law or whether it has been overruled by Harper v.
Virginia Dep't of Taxation, 509 U.S. 86 (1993), as argued by
Plaintiffs. IBM's legal analysis is correct. Manhart addresses
the Court's statutory authority to grant retroactive relief for a
violation of Title VII, and it announces a rule that under certain
limited circumstances retroactive relief is not appropriate. The
Manhart court stated, "[t]here can be no doubt that the
prohibition against sex-differentiated employee contributions represents
a marked departure from past practice." Manhart, 435 U.S. at
But here, IBM is by no means in the sympathetic position of the
employer in Manhart. Defined benefit plans are highly regulated
and strictly scrutinized relative to defined contribution plans. The
prohibition against age discrimination existed long before the appearance
of cash balance plans. Indeed, the voluminous record in this case
unequivocally shows that cash balance plans were a "response" to the long
standing restrictive proscriptions that are the woof and weave of a
defined benefit plan. If this Court is correct, then the class is
entitled to retroactive relief. There has not been a change in the law.
All that has changed is IBM's clever, but ineffectual, response to law
that it finds too restrictive for its business model. Plaintiffs' motion
to strike (Doc. 231) is GRANTED.
This matter remains set for a hearing on all other pending motions
on Monday, February 23, 2004, at 1:30 p.m.
Finally, as counsel should be aware, this District Court has just
transitioned to a system of electronic filing referred to as "CM/ECF."
CM/ECF requires electronic filing of pleadings (motions,
memoranda, orders, etc.) as of January 20, 2004. Participation in
CM/ECF is mandatory.
Attorneys with questions about CM/ECF should consult the Court's
web-site at www.ilsd.uscourts.gov. which includes the
Electronic Case Filing User's Manual and the Electronic Filing Rules.
Additionally, the web-site explains how attorneys can register as "users"
of the CM/ECF system and provides information regarding training
opportunities on CM/ECF. Depending upon the volume of requests at any
given time, it may take up to three business days to obtain a password.
The Clerk's current procedure of sending paper copies of orders entered
as a courtesy to those attorneys who have yet registered as a CM/ECF user
will terminate on Monday. March 1. 2004.
IT IS SO ORDERED.
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