Cohen Milstein Sellers & Toll PLLC
10/04/2024 | Press release | Distributed by Public on 10/04/2024 08:48
Court Preliminarily Approves Citgo “Marriage Penalty” Class Action Settlement
October 4, 2024
Settlement provides $10 million in increased pension payments for Citgo retirees.
Plaintiffs claimed Citgo used outdated mortality tables to underpay class members in violation of ERISA.
CHICAGO - Today, a federal judge granted preliminary approval of a proposed class action settlement that provides $10 million in increased pension benefits to more than 1,700 participants and beneficiaries in two of Citgo Petroleum Corporation's pension plans. The settlement comes shortly after the court gave plaintiffs two back-to-back wins - a class certification ruling on May 16 and a ruling that largely dismissed Citgo's motion for summary judgment on May 6.
The lawsuit against Citgo alleged that the Houston-based gas and energy giant violated the federal Employee Retirement Income Security Act ("ERISA") by failing to properly calculate joint and survivor annuity ("joint pensions") benefits for married retirees and imposing a "marriage penalty" that reduced these joint pensions below the value of pensions paid to retirees who are single. Specifically, plaintiffs claimed that Citgo's pension plans utilized outdated mortality tables (from the 1970s) to determine the value of the joint pensions, resulting in married retirees systematically receiving less than their single counterparts in violation of ERISA. The lawsuit sought to fix the underpayments, and to reform the Citgo plans to fully comply with ERISA.
"We are delighted by the settlement, which provides a significant victory for married retirees who are entitled to receive the full value of their hard-earned pensions," said Michelle C. Yau, chair of Cohen Milstein's Employee Benefits/ERISA practice. "As our claims have asserted, federal law does not allow corporations to shortchange married retirees and their spouses. Today's proposed settlement is a major victory in this legal battle."
In May, the court rejected Citgo's summary judgment arguments that the entire lawsuit should be dismissed based on the statute of limitations, finding that all three plaintiffs could proceed with their actuarial equivalence claims and that two of the three plaintiffs could proceed with their breach of fiduciary duty claim. Further, the court was not persuaded by Citgo's argument that the plaintiffs should have exhausted administrative remedies rather than filing suit in federal court.
The case, Urlaub et al v. Citgo Petroleum Corporation et al., was filed on August 3, 2021 in the United States District Court of the Northern District of Illinois. It was brought on behalf retirees in the Citgo Petroleum Corporation Salaried Employees Pension Plan and the Citgo Petroleum Corporation Hourly Employees Pension Plan who are receiving a joint and survivor annuity.
This is one of six such "marriage penalty" ERSIA class actions Cohen Milstein has filed against some of the largest companies in the United States, including AT&T, IBM, Intel, Luxottica, and Southern Company.
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