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Cooper v. IBM



Sometimes the costs of plaintiff attorney greed ripple well beyond what is measured by studies like the Tillinghast-Towers Perrin model.

In Cooper v. IBM, IBM revised its pension plan. Plaintiffs' attorneys forum-shopped to find one of the most plaintiff-friendly federal judges in the United States, G. Patrick Murphy, and presented a wildly improbable theory of age discrimination based on a twisted reading of federal pension law whereby identical benefits for young and old based on identical time of service were discriminatory because of federally required calculations for imputed interest. (The Judge Easterbrook opinion does a fine job explaining the details.) Murphy agreed, and IBM would have been on the hook for $1.4 billion to "correct" its pension plan. The Seventh Circuit reversed—but the damage was already done. IBM, rather than risk being on the hook for billions more from continuing the controversial pension plan, abolished it entirely, and moved all of its employees to a 401(k) plan. The purported clients were made worse off because of their attorneys' attempt to obtain a windfall of hundreds of millions of dollars.

Update: New York Times coverage, noting that Murphy's opinion threatened to find hundreds of cash-balance pension plans illegal. And AP coverage.

 

 


Isaac Gorodetski
Project Manager,
Center for Legal Policy at the
Manhattan Institute
igorodetski@manhattan-institute.org

Katherine Lazarski
Press Officer,
Manhattan Institute
klazarski@manhattan-institute.org

 

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.