U.S. judge rules against Lutheran retirees’ claims

January 31, 2011

In a blow to retirees of a major Luth­eran publishing house, a
federal judge has ruled that the now-dissolved pension plan of Augsburg
Fortress was exempt from federal regulations that would have required it
to meet minimum funding levels.

But the case remains open as
pensioners—who say they're owed as much as $40 million—received a green
light to keep pressing breach-of-contract claims under state law.

The
January 27 ruling by Minnesota's U.S. District Judge Michael Davis
marked a partial victory for the Evangelical Lutheran Church in America
and its publishing arm, Augsburg Fortress.

Davis ruled that
Augsburg Fortress's pension was a "church plan," making it exempt from
regulations that cover other pension programs under the 1974 Em­ployee
Retirement Income Security Act, or ERISA.

"We're very pleased with
the result," said Beth Lewis, president and CEO of Augsburg Fortress.
"It means that we continue to publish fine resources for the church and
focus on our business, which is also a ministry."

The ELCA also welcomed the ruling, which dismissed seven of nine claims against the denomination.

"The
ruling is . . . consistent with 30 years of federal agency
determinations that church-affiliated employers, like a publishing
agency that is affiliated with a denomination, can maintain a church
plan," said Ruth S. Marcott, an attorney representing the ELCA, in a
statement.

Augsburg Fortress terminated its pension plan on
December 31, 2009. Three months later, the publisher distributed the
remaining $8.2 million in lump sum payments, which stakeholders said
were worth a fraction of what they'd expected to receive over their
lifetimes.

After years of underfunding and a financial crisis that
battered investments, Augsburg had no good choices, Lewis argued.
Terminating the program marked a more "equitable" solution, she said,
than letting funds run out within five years and leaving most
stakeholders with nothing.

The plaintiffs' attorney, Richard
Lock­ridge, argued that if the Augsburg plan is in fact a church plan,
then its affiliated church—the ELCA—is obligated to make amends for
Augsburg's broken pension promises. He plans to press for an expedited
trial on behalf of an estimated 500 pensioners.  —RNS