SG Opposes Cert in ERISA Cash Balance Case

Just in from the SCOTUSblog:

The federal government on Tuesday recommended the court deny certiorari in AK Steel v. West (07-663), an ERISA case. The brief, filed in response to an order last June inviting the views of the Solicitor General, is available here. To read previous certiorari stage filings in the case, click here.

As we wrote before, the case concerns:

The issue in this case is the manner in which a participant's benefit is calculated in the event his or her participation in the AK Steel Plan is terminated prior to reaching normal retirement age. Under the AK Steel Plan, such a participant may elect to receive his or net pension benefit in the form of an immediate lump sum disbursement. The amount of the lump sum disbursement is equal to the amount of a participants's hypothetical account balance.

Plaintiffs have brought the current action alleging than the manner in which their lump sum disbursements were calculated under the AK Steel Plan violated ERISA and the I.R.C . . . .

On the cash balance issue, the Sixth Circuit found that each retiree was entitled to have their lump-sum distribution reevaluated using the “whipsaw calculation” as determined by the district court, plus interest because the plan provided that whenever a participant elected lump-sum distribution, the benefit received would be equal to balance of participant's hypothetical account and because the interest credit rate specified in the plan was higher than statutory discount rate. 

It is now less likely that the Court will grant cert. This is somewhat a disappointment as the Court not only could have cleared up "the cash balance/lump sum question, but also [could have] further define[d] the nature of equitable relief under ERISA," since the claim was denied as a Section 502(a)(3) claim below.

I am sure it is even more disappointing to AK Steel as this case will cost them $46 million, not including attorneys fees.

PS