Class Action Settlement Over Colgate Retirement Benefits Gets Pre-Approval

A New York federal judge has granted preliminary approval to a $45.9 million class action lawsuit settlement between Colgate-Palmolive Co. and employees who allege that the company miscalculated and underpaid their retirement benefits in violation of the Employee Retirement Income Security Act (ERISA).

The class action settlement will resolve numerous lawsuits that charged Colgate with miscalculating the employees’ lump-sum pension benefits they should have been paid according to the company’s retirement plan, violating the “anti-backloading” provisions of the federal law. The first class action lawsuit was filed in Indiana federal court in 2007. The cases were consolidated in October 2008.

The preliminary approval was granted by U.S. District Judge Lorna Schofield on Dec. 16, 2013. About 8,600 Class Members will share in the Colgate-Palmolive ERISA class action settlement, which will pay about $5,330 per person to make up for the money they were not paid as part of their retirement benefits.

The $45.9 million will provide $30 million for the 3,500 individuals who were given lump-sum payments when they left the company, but the amount they were allegedly paid was less than their fully accrued benefits. The remaining $15.9 million will go to approximately 6,000 individuals who will make up the backloading subclass, which is made up of those who still work for the company. Their settlement amount will be deposited into their retirement accounts.

The class action settlement was agreed upon in October by the attorneys representing the plaintiffs and defendant.

In addition to giving her tentative approval to the deal, Judge Schofield also conditionally certified two potential classes — the Backloading Class and the Lump Sum Class.

The Backloading Class includes those “who will receive additional benefit under the Backloading provisions of the Settlement Agreement, and who since July 1, 1989 have accrued benefits under the plan and” own a Personal Retirement Account that was established and maintained. This also includes the account holder’s beneficiaries or estates.

The Lump Sum Class includes those who owned a retirement account “and who received a lump sum distribution from the Plan prior to Aug. 18, 2006” as well as their beneficiaries or estates.

Schofield added that the class action settlement amount “is sufficiently fair, reasonable, and adequate to warrant sending notice of the proposed settlement to the settlement classes.”

During the preliminary stage, Schofield wrote: “those whose claims would be settled, compromised, dismissed, and/or released pursuant to the settlement should be given notice and an opportunity to be heard regarding final approval of the settlement and other matters.”

Such disputes may be brought on April 4, 2014 at the Final Fairness Hearing, in which the federal judge will determine if the settlement is fair, reasonable and adequate and if the case should be dismissed with prejudice, as well as other matters such as the reimbursement of attorneys’ fees.

Class Members will have until March 14, 2014 to file their objection to the proposed Colgate-Palmolive ERISA class action settlement.

The plaintiffs are represented by Edward Ciolko and Mark Gyandoh of Kessler Topaz Meltzer & Check LLP, by Douglas R. Sprong of Korein Tillery LLC; Edgar Paul of the Law Office of Edgar Pauk; and by Eli Gottesdiener of the Gottesdiener Law Firm PLLC.

The Colgate ERISA Class Action Lawsuit Settlement is In re: Colgate-Palmolive Co. ERISA Litigation, Case No. 1:07-cv-09515, in the U.S. District Court for the Southern District of New York.