The District Court of Minnesota declined to certify a class of pensioners seeking to challenge their plan’s early retirement calculations. ERISA requires early retirement benefits to be actuarially equivalent to what participants would receive at their normal retirement age. For participants collecting retirement benefits before age 65 (known as the “Early Commencement Factor” or “ECF”), the plan required a reduction of their monthly benefit, expressed as a percentage of the normal benefit that the participant would have received had they retired at age 65.

The plaintiffs contended that the ECF resulted in benefits that were not actuarially equivalent to the retirement benefits they would have received at their normal retirement age. The plaintiffs sought a retroactive amendment to the plan which would provide class members with the greater of either an actuarially equivalent benefit to their age-65 ECF or their current benefit. In support, the plaintiffs proposed that the court adopt their expert’s alternative actuarial models.

The court concluded that the plaintiffs’ alternative actuarial models proved “unworkable” under FRCP 23 because not all putative class members would benefit from any single model. In other words, under some of the plaintiffs’ proposed models, some putative class members would receive higher benefits while other class members would receive less. Moreover, the plaintiffs’ expert also conceded that at least 251 class members currently received actuarially equivalent benefits, which meant they were not injured by the plan and therefore lacked standing.

The court held that these inconsistencies meant that plaintiffs’ claims were not amenable to class-wide resolution. The case is Thorne v. U.S. Bancorp, No. 18-cv-3405 (D. Minn. May 18, 2021).

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