Advocates for Labor and Progressive Institutions

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$300M Victory for Retirees In Second Circuit

March 13, 2023

The United States Court of Appeals for the Second Circuit affirmed a victory on behalf of a class of Colgate-Palmolive Company retirees and former employees whose retirement benefits had been underpaid, finding that the plain language of the governing plan amendment mandated the additional payments. Prior to the amendment in question, Colgate had been violating the Employee Retirement Income Security Act in two distinct ways in calculating lump sum pension payouts for departing employees. Colgate’s contention was that it intended the plan amendment to address only one of the violations and that former employees whose payouts were deficient because of the second violation had no claim under the amendment.

The Court rejected Colgate’s argument that the governing documents had to be read differently in light of their purported purpose, explaining that: “We are faced with a choice between (1) the unambiguous meaning of the Plan's text that may have some peculiar, though not inexplicable, effects, and (2) an interpretation that appears to us to be unreasonable, but that—when viewed in light of extrinsic evidence of purpose—results in outcomes that seem more in line with [Colgate’s] preferences. Under these circumstances, as we read our case law, we have no choice but to adopt what we see as the unambiguous reading.”

Colgate owes these former employees approximately $300 million. Bredhoff & Kaiser was retained to serve as lead counsel in the appeal. The Gottesdiener Law Firm litigated the case in the trial court and was co-counsel in the appeal.