Updates to our Terms of Use

We are updating our Terms of Use. Please carefully review the updated Terms before proceeding to our website.

Sunday, May 19, 2024 | Back issues
Courthouse News Service Courthouse News Service

Court Releases Hilton’s Bond in Old ERISA Case

(CN) - Hilton has made enough progress toward the court-ordered reform of its retirement plan to warrant the release of a $75 million bond, a federal judge ruled, a signal that the nearly 17-year-old class action may wind down this month.

After determining that the hotel giant had illegally back-loaded its retirement plan and failed to credit certain years of service, a Washington, D.C., federal judge ordered Hilton in 2011 to fix its plan, increase benefits, and award back payments to some 22,000 current and former employees.

Hilton appealed to the D.C. Circuit, securing a stay of the lower court's order with a $75 million supersedeas bond.

The D.C. Circuit affirmed the ruling in 2012, and a year later awarded class counsel 15 percent of the $140 million judgment.

With her jurisdiction in the case set to end on Feb. 23, U.S. District Judge Colleen Kollar-Kotelly agreed Wednesday that Hilton could release the bond.

Though the plaintiffs objected that Hilton had not done enough to comply with judgment, Hilton noted that about 11,000 class members have received $33 million from it to date.

Roughly 20,000 class members also received a notice of increased benefits, and Hilton has paid class counsel $21.7 million in fees, the hotel giant told the court.

Meanwhile lead plaintiff Jamal Kifafi, a Hilton employee who first noticed problems with the company's retirement plan and inspired the class action in 1998, received a $50,000 incentive award.

While the plaintiffs argued that $33 million was "substantially lower than the $75.8 million in judgment liabilities Hilton estimated it would incur in the first year of implementing the judgment," Judge Kollar-Kotelly declined to measure Hilton's compliance "based on how close defendants have come to paying out $75.8 or $87 million or any other estimated amount in judgment liabilities because these amounts were clearly and simply estimates."

Noting that the "provision of retirement benefits is a constantly evolving process," the judge found no "systemic problems or failures" with Hiton's compliance thus far, and ordered release of the supersedeas bond.

"Defendants are generally taking reasonable steps to ensure that the most class members receive their benefits while also protecting privacy concerns and ensuring that benefits are actually dispersed to the proper payee," Kollar-Kotelly wrote.

Categories / Uncategorized

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.