Posted on 12/08/2010 1:10:46 PM PST by SmithL
The legal battle over the demise of Augsburg Fortress Press' pension plan is seven months along, but the case remains hung up on one key question: Was it actually a "church plan?"
About 500 people were part of the plan that was terminated late last year. A federal lawsuit filed last spring by pensioners argues that the plan isn't actually a church pension plan. The pensioners instead say their retirement plan should be governed by the federal Employee Retirement Security Act, or ERISA.
"This is the type of situation that led Congress to enact ERISA in the first place," Ron Kilgard, an attorney for the pension plan participants, argued today.
When the plan was terminated, the participants were given lump sums that represented a fraction of what they would have received had the plan remained solvent. Because "church plans" aren't governed by ERISA, they don't have protection through the Pension Benefit Guaranty Corp., which guarantees certain benefits.
At today's hearing in U.S. District Court in Minneapolis, the defendants - who include Augsburg Fortress and the Evangelical Lutheran Church in America - argued that the case should be dismissed. U.S. District Court Chief Judge Michael Davis took the motion to dismiss under advisement and is expected to rule in coming weeks.
There are massive amounts of case history and IRS rulings on church plans, stretching back 30 years, to show that Augsburg Fortress' pension was indeed a church plan, said Charles Knapp, an attorney for Augsburg Fortress. The Minneapolis-based company is the publishing arm of the ELCA.
"Ruling in favor of the plaintiffs would send shock waves across the country," Knapp told Judge Davis. Knapp also said a "perfect storm" that materialized with the meltdown of the economy and credit markets in 2008 and 2009 contributed to the plan's termination.
The pensioners who brought the suit want Davis to determine that the pension plan was covered by ERISA, and they also are trying to show that the ELCA is liable for the debt owed the plan's participants.
"This wasn't caused by the 'perfect storm' of 2008 and 2009," said Richard Lockridge, an attorney for the plaintiffs. While the economic meltdown aggravated the situation, the pension plan had been underfunded for at least seven years prior, he said.
"The perfect storm is what has happened to our clients," he said. Augsburg Fortress "let these people work year after year," and they didn't know the pension was underfunded, he said.
"That's outrageous and unconscionable," he said.
Ruth Marcott, an attorney for the ELCA, said it's wrong to argue that because it was a church pension plan, the church is liable. The church and Augsburg Fortress are incorporated separately and are not responsible for each other's debts, she said. "We played no role in the (pension) plan," she said.
Attorneys for the pensioners believe that Augsburg Fortress may be failing financially, but say they can't prove that unless they get access to the company's financial records.
More than 40 people attended the hearing in Davis' courtroom, including attorneys and some pension plan participants.
"The fact that it didn't get dismissed, I was happy about that," said Judy Olsen, a retiree from Augsburg Fortress who was at the hearing. "I think it may be a long run," Olsen said, noting that pensioners had been told the court challenge could take three years. The end result, she hopes, will be the restoration of payments for the pensioners.
Was it actually a "church plan?"Maybe the judge should rule whether the ELCA is actually a church.
Augsburg Fortress was running an “affinity” scam on the church pensioners. And the ELCA was totally involved by allowing this company to operate under the auspices of the church organization.
ELCA should pay up and the directors of the Augsburg Fortress should be prosecuted.
>>>Maybe the judge should rule whether the ELCA is actually a church.
Snark!! :)
Again???
Your comment was appropriately snarky in regard to the ELCA. :)
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