SAN FRANCISCO, July 8, 2005 (PRIMEZONE) -- This summer, many AOL Time Warner pension plan participants will benefit from a $2.9 million class action settlement negotiated by Ronald S. Kravitz and Kim Zeldin in Spann, et al. v. AOL Time Warner, Inc., et al., 2005 U.S. Dist. LEXIS 10848, No. 02-8238 (S.D.N.Y. June 7, 2005). Representing the class, three former employees alleged the company had underpaid its retirees by failing to annualize partial years of compensation in calculating pension benefits.
To calculate an employee's pension benefits, AOL Time Warner's plan administrators first calculated the employee's average compensation. Although a plan provision existed to take into account compensation during partial years of employment, plan administrators were only applying the provision if the employee had been a plan participant for less than a year. Plaintiffs contended the provision should have been applied to all participants with partial years of employment, and employees whose compensation was highest during their partial year of employment had not received all the benefits they were due.
Judge Denise Cote noted that class counsel had overcome many disadvantages to achieve this positive outcome, including the fact that many class members had signed standard releases required of all employees electing a lump-sum distribution, and the court had denied class certification earlier in the case, before the settlement. Noting the "substantial likelihood that class members would receive no payments at all absent this settlement," the judge praised the settlement as fair.
"Even more significantly, as a result of this litigation, approximately forty-two Plan participants who were eligible to receive pensions were (discovered) and will now be in a position to receive pension benefits for the first time," Judge Cote added. Finally, because the settlement required Defendants to amend the plan language, "the attorneys have bestowed a benefit on the Plans by removing an arguable ambiguity from the governing documents."