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Gary Williams and Nancy Meehan v. Rohm and Haas Pension Plan

September 2, 2011


Appeals from the United States District Court for the Southern District of Indiana, New Albany Division. No. 4:04-CV-0078-Sarah Evans Barker, Judge.

The opinion of the court was delivered by: " Kanne, Circuit Judge.

ARGUED MAY 6, 2011

Before BAUER, KANNE, and EVANS , Circuit Judges.

After eight years, the end is near for this dispute between the Rohm and Haas Company

"Circuit Judge Evans died on August 10, 2011, and did not participate in the decision of this case, which is being resolved by a quorum of the panel under 28 U.S.C. § 46(d).

Retirement Plan (the "Plan") and all Plan participants and beneficiaries who took a lump sum distribution after January 1, 1976 (the "Class"). After this court affirmed the district court's grant of summary judgment on liability, the Class and the Plan negotiated a $180 mil-lion settlement, of which Class counsel asked for $43.5 million in attorney's fees. Numerous Class members objected, but the district court approved the settlement and awarded the requested attorney's fees. Some of the objecting Class members appealed, and we now affirm the settlement approval and fee award.


When Cory Williams left Rohm and Haas in 1997, he chose to take a $47,850 lump sum distribution of his Plan pension. He later came to believe that the payment he received should have included the present value of future cost of living adjustments ("COLAs") that would have been included had he chosen to receive his pension as an annuity. In 2002, he filed a class action suit against the Plan in federal district court on behalf of himself and the Class. The district court eventually granted summary judgment on liability in the Class's favor. The Plan made an interlocutory appeal, and we affirmed. See Williams v. Rohm & Haas Pension Plan, 497 F.3d 710 (7th Cir. 2007) (reporting the history of this litigation in greater detail).

Reviewing the grant of summary judgment, we addressed one issue: whether the COLA was an accrued benefit, such that ERISA § 204(c)(3), 29 U.S.C. § 1054(c)(3), would apply. We concluded that a COLA is an accrued benefit, as defined in ERISA § 2(23)(A), 29 U.S.C. § 1002(23)(A), and we remanded for a determination of damages. The Supreme Court denied the Plan's petition for certiorari. Rohm & Haas Pension Plan v. Williams, 552 U.S. 1276 (2008). On remand before the district court, the Plan regrouped and pressed two arguments. First, it argued that some or all of the Class's claims were barred by the appropriate (then-undetermined) statute of limitations. Second-and more relevant to this appeal-it argued that most or all Class members who had taken subsidized early retirement were entitled to no damages.

The Plan based its early retirement argument on the language of ERISA § 204(c)(3), which provides: "[I]f an employee's accrued benefit is to be determined as an amount other than an annual benefit commencing at normal retirement age . . . the employee's accrued benefit . . . shall be the actuarial equivalent of such benefit . . . ." 29 U.S.C. § 1054(c)(3). According to the Plan's interpretation, an early retiree who takes a lump sum is entitled only to a sum that was no less than the actuarial equivalent of a COLA-enhanced annuity based on the normal retirement age. The early retirees had received more (because of the early-retirement subsidy), and the Plan argued the early retirees thus were entitled to no damages.

The Class vehemently contested the Plan's position on the early retirees' damages, basing their argument on 26 C.F.R. § 1.411(a)-11(a)(2). This Treasury Regulation provides that when a plan specifies that an early-retirement lump sum is to be the actuarial equivalent of the early-retirement annuity, the lump sum must include a COLA based on the full lump sum. In response to the Class's § 1.411(a)-11(a)(2) argument, the Plan pointed to McCarter v. Ret. Plan for the Dist. Managers of Am. Family Ins. Grp., where we held that § 1.411(a)-11(c)(2)(I) does not regulate a pension plan's lawfulness, but only its tax-qualified status. 540 F.3d 649, 651 (7th Cir. 2008). The Plan argued that McCarter's reasoning applies to all of § 1.411(a)-11.

Before the district court had ruled on the early retirees' damages, the parties reached a settlement. The proposed settlement provided that each early retiree would receive roughly 3.5% of her original lump sum, unless the COLA on a normal-retirement-age-based annuity outweighed her early-retirement subsidy- a rare situation. Several groups objected to the proposed settlement. One of them, a subset of early retirees whom we call "the Adamski Objectors," argued that early retirees should have received separate counsel and that the settlement was "blatant discrimination" against the early retirees. They also objected to class counsel's request for $43.5 million in fees, which represented 24.17% of the total settlement. One of the other objectors was Mark Jackson, who argued that the settlement improperly released his unrelated claims against the Rohm and Haas disability plan and that he should have been allowed to opt out of the settlement. After briefing and an extensive fairness hearing, the district court approved the proposed settlement and awarded the requested attorney's fees. Jackson was not allowed to opt out. The Adamski Objectors and Jackson appealed the settlement approval, and the Adamski Objectors also appealed the award of attorney's fees.


A. Settlement ...

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