The settlement details in an Employee Retirement Income Security Act (ERISA) lawsuit known as Cruz v. Raytheon Co. have been filed in the U.S. District Court for the District of Massachusetts.
The settlement agreement and its accompanying documents stretch to nearly 300 pages. In addition to enacting various forms of non-monetary relief, the agreement stipulates that Raytheon will pay approximately $59 million to resolve the lawsuit. The company does not admit any fiduciary wrongdoing in the settlement, which bars any future claims related to the issues and allegations at hand.
Allegations in the underlying lawsuit match those included in an emerging class of cases filed against large employers across the United States. Although each case has its nuances, the basic argument being put forward in the suits is that these employers are failing to pay the full promised value of “alternative benefits,” in that they are failing to ensure different annuity options made available in a retirement plan are “actuarially equivalent” to the plan’s default benefit, as required by ERISA.
In this particular case, during the course of their arm’s-length settlement negotiations, the parties determined that, if the benefits of class members were calculated using the actuarial assumptions endorsed by the plaintiff’s expert in his expert report, these class members would, in the aggregate, receive increased benefits with a net present value of approximately $150 million. According to the settlement documents, the parties agreed to settle the action on the basis that class members would receive an increase in benefits equal to 40% of the increase in benefits that the class member would have received had the class’s monthly benefit amount been calculated using the actuarial assumptions endorsed by the plaintiff’s expert—less the value of the amounts awarded by the court for any attorneys’ fees and certain other costs.
In the end, the parties calculated that the net present value of the proposed settlement is approximately $59 million.
The full text of the settlement agreement and its accompanying exhibitory documents is available here.