James P. Teufel v. The Northern Trust Company, et al.

The Employee Retirement Income Security Act of 1974 (ERISA) requires employers to honor their promises of accrued benefits – a requirement this Court has found to be “crucial” to ERISA’s goal of protecting worker pensions. Central Laborers’ Pension Fund v. Heinz, 541 U.S. 739, 744 (2004). In 2012, petitioner’s employer changed its traditional defined benefit formula for workers who began their employment more than ten years earlier, i.e., prior to June 1, 2001. For those employees, and only them, the company changed the highest average salary component of the existing formula, thereby reducing the value of benefits they had already earned by years of service provided before the amendment was adopted; the amendment also reduced the total compensation of those older workers who had served the company the longest. No similar reductions were imposed on the previouslyaccrued benefits or compensation of newer (and younger) employees. The Seventh Circuit held that such a plan amendment raised no cognizable claims under ERISA or the Age Discrimination in Employment Act (ADEA), and affirmed the dismissal of plaintiff’s complaint under Fed. R. Civ. P. 12(b)(6). The questions presented are: Does an employer violate ERISA’s anti-cutback rule by amending its defined benefit plan in a manner that freezes the promised growth of previously-accrued benefits, and thereby reduces the value of benefits attributable to service its employees have already provided?