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Davis v. Retirement Plan of Phibro Animal Health Corp.

May 14, 2009

CHARLES L. DAVIS, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
RETIREMENT PLAN OF PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES AND AFFILIATES, PHIBRO ANIMAL HEALTH CORPORATION, PRINCE AGRI PRODUCTS, INC., THE PRINCE MANUFACTURING COMPANY, AND PRINCE MINERAL, INC., DEFENDANTS.



The opinion of the court was delivered by: J. Phil Gilbert District Judge

MEMORANDUM AND ORDER

This matter comes before the Court on the Motion to Dismiss filed by Defendants Retirement Plan of Phibro Animal Health Corporation and Subsidiaries and Affiliates, Phibro Animal Health Corporation, Prince Agri Products, Inc., the Prince Manufacturing Company, and Prince Mineral, Inc. (Doc. 15). Plaintiff Charles L. Davis has responded, and Defendants have replied. The Court heard oral arguments on the Motion, and is now prepared to rule.

BACKGROUND

I. Facts as Alleged in Complaint

The Retirement Plan (the Plan) was originally established by Phillip Brothers effective January 1, 1951. Plaintiff Charles L. Davis (Davis) was hired by Prince Manufacturing on September 14, 1971. Phillip Brothers acquired Prince Manufacturing on November 1, 1974. At that time Davis became a participant in the Plan. The Plan back-credited Davis's benefit-related service to September 14, 1971 for purposes of calculating his benefits.

In 1980, Phillip Brothers created Prince Agri as a wholly owned subsidiary. In 1991, Phillip Brothers was preparing to spin-off two divisions then known as C.P. Chemicals and C.P. Organics into a public company. In anticipation of the spin-off, Defendants purchased an annuity for Davis in the amount of $5,611.56 payable as a ten-year certain and continuous annuity, with monthly pay-outs of $467.63 to begin on October 1, 2013.

On September 1, 2003, Phillip Brothers changed its name to Phibro Animal Health Corporation. In late 2003, Phibro sold Prince Manufacturing to Palladium Equity Partners, who changed the name of the company to Prince Minerals, Inc. Davis remained employed by Phibro/Prince Agri and remained a participant in the Plan after the sale of Prince Manufacturing.

The Plan was renamed the Retirement Plan of Phibro Animal Health Corporation and Subsidiaries and Affiliates effective April 15, 2005. Davis left his employment with Phibro on June 30, 2006. Davis received a copy of his final benefit statement and benefit calculation worksheet on November 8, 2006. He was told to contact benefits coordinator Dianne Kappes with any questions.

According to the terms of the current Plan*fn1, effective July 1, 1997, Plaintiff's normal retirement pension is the sum of:

(a). His Accrued Benefit under the Prior Plan, determined as of June 30, 1989, under the terms and conditions of the Prior Plan, plus

(b). His normal retirement pension earned after July 1, 1989 determined based on his age, his average compensation, and his years of service.

The dispute centers on how the accrued benefit in Part (a) was calculated. Davis believes that under the terms of the Prior Plan, his accrued benefit as of June 30, 1989, could not have been calculated until he retired or otherwise left employment with Phibro. Because, until then, the Plan could not calculate his "Average Compensation" which is defined as "your compensation averaged over the five consecutive years during which your pay is highest within the ten-year period before your normal retirement date or the date of your earlier termination of employment." Under the terms of the Prior Plan*fn2, Davis's "normal retirement benefit" was calculated as 3% of the employee's Average Compensation reduced by 66 2/3% of the employee's Social Security Benefits. When Davis did the math, plugging in his "Average Compensation," he came up with a number that is radically different from the number the Plan came up with. He contacted Kappes, a benefits coordinator at Phibro asking how the Plan arrived at its figure. He was told:

The 6/30/1989 accrued benefit is based upon average compensation as of 6/30/1989. We do not have a copy of this original calculation, which was completed approximately June 30, 1989. The 6/30/1989 accrued benefit was calculated for all participants around that time. We do not have copies of the original calculations. However, please note that those amounts are frozen benefit amounts based on pay prior to 6/30/1989. The 6/30/1989 accrued benefit DOES NOT increase as a result of pay increases after 6/30/1989. The benefit earned for service after 6/30/1989 is added to the 6/30/1989 accrued benefit to come up with the total benefit. The 6/30/1989 accrued benefit is NOT adjusted for any pay increases occurring after 6/30/1989.

The parties dispute whether that query and answer constitute an exhaustion of administrative remedies or a concession ...


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