This website has been created by the lawyers representing the Class certified in the pension class action known as Osberg v. Foot Locker, Inc., et al., 07-cv-01358 (KBF) (S.D.N.Y.). The lawsuit, filed by Plaintiff Geoffrey Osberg in 2007, seeks additional pension benefits for former and current employees of Foot Locker, Inc. (and its predecessors and subsidiaries) from the Foot Locker Plan and/or Foot Locker. The case was certified as a class action in 2014 and was tried before Federal District Court Judge Katherine Forrest in July 2015 in the United States District Court for the Southern District of New York (the “Court” or the “District Court”).
On October 5, 2015, Judge Forrest issued an 83-page Opinion and Order setting forth her findings of fact and conclusions of law following the July 2015 trial – in essence, the Court’s verdict in the case – finding in favor of the Class on all claims. On the same date, the Court entered Judgment against Foot Locker and granted the relief the Class requested.
On June 8, 2018, following Foot Locker’s unsuccessful appeals to the Second Circuit Court of Appeals and the Supreme Court of the United States, Judge Forrest issued an Amended Final Judgment against Foot Locker, granting the relief the Class requested and granted Class Counsel’s motion for attorneys’ fees and expenses and service awards for Plaintiff Osberg and the 8 other Class members who testified at trial on behalf of the Class.
The Amended Final Judgment orders Foot Locker to pay members of the Class the additional pension benefits from the Foot Locker Retirement Plan calculated under the formula summarized on page 2 of the Court-approved Notice that was previously mailed to Class members on April 10, 2018. As indicated in the Notice, “Details regarding the exact amount, manner, and timing of payment of your increased retirement benefits will be communicated to you separately by the Pension Plan administrator in a benefits election letter.” The Pension Plan administrator is currently collecting and confirming the addresses of the 16,400 members in the Class, and calculating the additional pension benefits due each person, a complicated process that is expected to take several months. The additional payments ordered by the Court will likely be made to Class members this fall.
Class members should return the mailed Address Verification forms directly to the Plan Administrator at Foot Locker, Inc., 330 W. 34th St., New York, NY 10001-2406. You can also contact the Plan Administrator to confirm or update your current mailing address or with any questions you may have about the additional benefits payable to you under the Court order and when you can expect to receive them.
Class members can also contact us (via email or phone, see contact information below) with any questions, including in the event that you believe that you are a Class member but have not yet received a notice in the mail concerning the lawsuit.
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Judge Forrest’s October 5, 2015 Opinion and Order explains in detail its holdings in favor of the Class on both liability and relief:
1. Liability. The Court found that the Class proved that Foot Locker breached its fiduciary duties and violated ERISA’s minimum requirements for summary plan description (“SPD”) standards by issuing false and misleading communications about the plan changes implemented January 1, 1996. Foot Locker knew that virtually every Plan participant’s pension earnings would be cut to zero for several months or years as a result of the “wear-away” effect built-in to the January 1, 1996 Plan amendment, yet issued communications to employees which hid the truth and instead portrayed the changes as a good thing for employees.
2. Relief. The Court also found the Class is entitled to relief for these violations because the Class further proved that:
a. Mistake. As a result of Foot Locker’s false, misleading, and incomplete Plan descriptions, employees reasonably but mistakenly believed that growth in their cash balance benefit equaled growth in their pension benefit.
b. Equitable Fraud/Inequitable Conduct. By causing employees to believe they were continuing to earn additional pension benefits when they were not, Foot Locker sought and obtained an undue advantage over employees, and hence committed equitable fraud and engaged in inequitable conduct.
The Court found that Foot Locker told employees who terminated or retired after the plan modification that they would be entitled to a benefit equal to (A) the amount the employee had earned under the old annuity formula through 1995, which had been “converted” into an initial account balance, plus (B) subsequent growth in the account balance attributable to compensation credits (i.e., a specified percentage of annual pay) and interest credits (applied annually to the total account balance). Foot Locker also explained that certain older long-service employees would receive a “one-time enhancement” added to their account.
But these descriptions of the pension plan were not honest. Foot Locker did not actually “convert” the pension plan’s existing annuity formula to a cash balance formula, with the new formula picking up where the old formula left off and adding benefits from there in an “A plus B” fashion. In reality, Foot Locker added an alternative formula to the Plan – a “cash balance” formula which generated an initial “account” balance that was significantly smaller than the benefit employees had already earned: in many cases, less than half the size. Foot Locker obscured the fact that it was only when, if ever, the employee’s account grew enough to catch up to the benefit she had already earned under the annuity formula that the cash balance account would become relevant as the formula under which the employee’s benefit would be calculated and paid.
To remedy these false and misleading communications, the Court has ordered Foot Locker to pay Class Members an additional amount based on the “A plus B” benefit that the Company’s misrepresentations caused Class members to reasonably expect.
The “A” benefit: This is the 1/1/96 opening account balance, recalculated to reflect the full value of the 12/31/95 benefit a participant had earned under the old annuity formula. Foot Locker calculated the opening balance using a 9% discount rate and an additional pre-retirement mortality reduction, but the Court found that participants must receive a revised initial account balance as of January 1, 1996 equal to the 12/31/95 accrued annuity benefit discounted to present value based on the Plan’s 6% interest-crediting rate, with no further reduction for pre-retirement mortality risk. The Court found that this was the only way for Foot Locker to honor its promise that each participant’s 12/31/95 “accrued benefit” would be fully preserved in the form of an “account balance” under the new cash balance formula.
The “B” benefit: To fulfill Foot Locker’s promise that a participant’s pension benefit would include all of the benefits earned under the cash balance formula, the Court also found that the Plan must add to each participant’s initial account balance (representing Part A) the sum of: (1) any “one-time enhancement” to which the participant is entitled under the terms of the Plan, applying the enhancement formula to the participant’s full-value initial account balance described above; (2) “compensation credits” that the participant was promised; (3) “interest credits” at the annual 6% rate promised under the Plan; and (4) any adjustments required by “federal law and IRS regulations” at the time of payment as described on pages 12 and 14 of the 1996 SPD.
The difference between “A plus B” and the amount the Class Member previously received as a pension benefit constitutes the Class Member’s damages. In addition, to make up for the lost use of that money in the intervening years, Class Members would be entitled to prejudgment interest at a rate of 6% per annum from the date of the original underpayment.
BACKGROUNDThe information below (much of which was posted to this website before the case went to trial) provides further background to the lawsuit.
The Class alleges that, in connection with the conversion of the Foot Locker Plan (the “Plan”) from a traditional defined benefit pension plan to a “cash balance” plan effective January 1, 1996, Foot Locker (formerly known as the Woolworth Corporation), made false and misleading statements to Plan participants as to what the new plan would provide.
The Class alleges that Foot Locker falsely told participants that the retirement annuity benefits they had earned under the old defined benefit plan were converted into initial account balances of equal value and that any subsequent additions to those account balances represented additional benefits. The lawsuit alleges that this was untrue because the benefits represented by the initial account balances in the cash balance plan were less than the benefits already earned under the old plan, and that Foot Locker failed to disclose this to employees.
The Class alleges that by falsely promising participants that the benefits represented by the initial account balances in the cash balance plan were equal to the benefits already earned under the old plan and that the additions to their accounts were new pension earnings based on work performed after December 31, 1995, Foot Locker violated its fiduciary duties under the Employee Retirement Income Security Act of 1974 (“ERISA”) and ERISA’s minimum requirements for summary plan descriptions (“SPDs”). The Class further alleges that the appropriate remedy is that Foot Locker should pay participants what was allegedly promised and what employees reasonably but mistakenly expected based on the participant communications they received. That would be done by reforming the Plan to conform to the alleged promises made to participants, and adding interest to make up for the lost use of that money in the intervening years.
Foot Locker denied the Class’s allegations.
Who is a class member, the effects of certification, and class member rights
You are a class member if you were a Plan participant on December 31, 1995 and earned vested retirement benefits under the Plan at any time between January 1, 1996 and the present. (The beneficiary, estate, or alternate payee under a Qualified Domestic Relations Order of a class member is also a class member.) “Plan participant” includes individuals who may have participated in the Plan when it was known as the Woolworth Retirement Plan or the Venator Retirement Plan. Plan participants may have worked at any Woolworth or Foot Locker-owned subsidiary, including, for example, the San Francisco Music Box Company, Kinney Shoes, Champs Sports, Northern Reflections, and Afterthoughts.
The lawyer representing the class
The Court has appointed Eli Gottesdiener of Gottesdiener Law Firm, PLLC, a plaintiff-side pension class action law firm, to represent class members. The website for class counsel’s firm is www.gottesdienerlaw.com. Class counsel’s contact information is:
Eli GottesdienerThe history of the case
Gottesdiener Law Firm, PLLC
498 7th Street
Brooklyn, NY 11215
Tel: 718.788.1500
Fax: 718.788.1650
info@footlockerpensionclassaction.com
This lawsuit dates back to 2007. In February of that year, Plaintiff Geoffrey Osberg, a former Foot Locker employee, filed a complaint in federal district court in New York, raising the claims described above as well as some others. In September 2009 , in response to Foot Locker’s motion to dismiss the Complaint, the Court upheld the claims still at issue now and dismissed others. In 2012, after a period of discovery, the Court rejected Plaintiff’s remaining claims and found it unnecessary to rule on Plaintiff’s motion for class certification. In February 2014, the United States Court of Appeals for the Second Circuit reinstated Plaintiff’s claim for fiduciary breach and Plan reformation and sent the case back to the Court for further proceedings. In July 2014, the District Court held that Foot Locker had improperly destroyed evidentiary material that would have been favorable to Plaintiff’s case and that he was therefore entitled to the inference that the missing material would have provided evidence that Foot Locker intentionally concealed the long-term benefits freeze that Plaintiff alleges was caused by the conversion to a cash balance plan.
On September 24, 2014, the Court granted Plaintiff’s motion to certify this action as a class action, specifically certifying for class treatment Plaintiff’s breach of fiduciary duty/plan reformation claim. On November 7, 2014, the Court also certified for class treatment Plaintiff’s SPD/plan reformation claim.
Foot Locker petitioned the Court of Appeals to grant immediate review of the District Court’s certification of the case and asked the Court of Appeals to reverse the District Court’s class certification ruling. Plaintiff responded to Foot Locker’s petition, telling the Court of Appeals not to grant the petition and to let Judge Forrest’s class certification orders stand. The Court of Appeals denied Foot Locker’s petition for immediate review, leaving for the District Court all questions regarding class certification until the end of the case, at which time Foot Locker would have the right to challenge those rulings on appeal.
On April 30, 2015, the Court denied both sides’ motions for summary judgment and directed that the case proceed to trial. Trial took place from July 14, 2015 through July 27, 2015 before Katherine Forrest of the Southern District of New York. On October 5, 2015, Judge Forrest issued an 83-page Opinion and Order setting forth her findings of fact and conclusions of law following the July 2015 trial – in essence, the Court’s verdict in the case – finding in favor of the Class on all claims . On the same date, the Court entered Judgment against Foot Locker and granted the relief the Class requested.
Shortly thereafter, Foot Locker filed a notice of appeal in the United States Court of Appeals for the Second Circuit. On January 25, 2017, the Court of Appeals held oral argument.
On July 6, 2017, the Court of Appeals affirmed the District Court’s ruling in favor of the Class on all claims and relief requested by the Class. The Second Circuit rejected all of Foot Locker’s arguments for reversal of Judge Forrest’s post-trial rulings. On July 19, 2017, Foot Locker filed a petition for rehearing with the panel of judges that decided the appeal. On August 11, 2017, the Second Circuit denied Foot Locker’s petition for rehearing.
On November 9, 2017, Foot Locker petitioned the Supreme Court of the United States to review the case. On February 20, 2018, the Supreme Court declined to review the case, making Judge Forrest’s rulings the law of the case.
On June 8, 2018, Judge Forrest issued an Amended Final Judgment granting the relief the Class requested, and granted Class Counsel’s motion for attorneys’ fees and expenses and service awards for Plaintiff Osberg and the 8 other Class members who testified at trial on behalf of the Class.