(CN) – The U.S. Supreme Court gave a partial victory to Cigna Corp. in a pension fight, setting aside a ruling that required the company to recalculate the benefits for 27,000 workers.
The case stemmed from Cigna’s 1998 conversion of its pension plan – up to that time an annuity based on pre-retirement salary and length of employee service into a so-called cash balance plan with a defined annual contribution from the company.
As generally defined, cash balance plans are hybrids that combine elements of traditional employer-funded defined-benefit plans with the transferable personal accounts that are common to 401(k)-style defined-contribution plans.
In addition, the new plan Cigna initiated translated already-earned benefits under the old plan into an opening amount in the cash balance account.
The respondents sued on behalf of all beneficiaries of Cigna’s pension plan, charging that the company failed to fully explain the changes to the plan, particularly because the notice of those changes obscured the fact that in certain respects it provided them with less generous benefits.
Two lower courts said workers were entitled to additional benefits.
Writing for the court majority, Justice Stephen Breyer set aside those rulings, saying the workers needed to show that they were harmed by Cigna’s violation of a federal employee-benefits law.
But Breyer stopped short of requiring the workers to show that they relied on plan summaries that a trial judge concluded were misleading, holding that it is “not always necessary to meet the more rigorous standard implicit in the words ‘detrimental reliance,’ to show actual harm has been done.
He said under the circumstances, it is appropriate for the District Court to revisit its determination of an appropriate remedy for violations of ERISA it identified.
“Because the District Court has not determined if an appropriate remedy may be imposed under §502(a)(3) [of the Employee Retirement Income Security Act], we must vacate the judgment below and remand this case for further proceedings consistent with this opinion,” he wrote.
He was joined by Chief Justice John Roberts, and Justices Anthony Kennedy, Ruth Bader Ginsburg, Samuel Alito and Elena Kagan. Justice Antonin Scalia wrote a concurring opinion, which was joined by Clarence Thomas. Justice Sonia Sotomayor took no part n the consideration or decision of the case.