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Johnson v. Duke Energy Retirement Cash Balance Plan

United States District Court, M.D. North Carolina

September 29, 2014

THOMAS JOHNSON, on behalf of himself and on behalf of a class of persons similarly situated, Plaintiff,


WILLIAM L. OSTEEN, Jr., Chief District Judge.

Presently before the court are cross motions for summary judgment. Plaintiff Thomas Johnson ("Plaintiff"), asserting a single claim under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., has filed a partial motion for summary judgment. (Doc. 25.) Defendants Duke Energy Retirement Cash Balance Plan and Duke Energy Corporation (collectively, "Defendants") have responded in opposition (Doc. 34), and Plaintiff has replied (Doc. 35). Defendants have filed a motion for summary judgment. (Doc. 27.) Plaintiff has responded (Doc. 33), and Defendants have replied (Doc. 38). These motions are now ripe for review, and, for the reasons that follow, Defendants' motion will be granted, and Plaintiff's motion will be denied.


The following facts are undisputed. During all times relevant to the present matter, Plaintiff was a participant in the Duke Energy Retirement Cash Balance Plan (the "Plan"). (Complaint ("Compl.") (Doc. 1) ¶ 7.) Each participant in the Plan is given a cash balance account, consisting of bookkeeping entries representing the participant's pension benefit (expressed in dollars and cents). ( Id. ¶ 27.) Pursuant to § 5.04 of the Plan, a participant is entitled to have his or her cash balance account credited with an "Interest Credit" on a monthly basis. ( Id., Ex. A, Duke Energy Retirement Cash Balance Plan ("The Plan") (Doc. 1-1) at 26 (Section 5.04).)[1] "Interest Credits" are calculated by multiplying the cash account balance on the last day of the preceding month with the "Monthly Interest Rate" for that month. (Id.) "Monthly Interest Rate, " in turn, "means... one (1) plus the Interest Factor for such month raised to the one-twelfth (1/12th) power, minus one (1)."[2] ( Id. at 14 (Section 2.41).) As used in the formula, the "Interest Factor" (for benefits accruing prior to January 1, 2013) was equal to the average yield on 30-year United States treasury bonds. ( Id. Section 2.39).) Irrespective of the actual 30-year Treasury bond yield, the Plan set a floor (minimum) interest rate of 4% and a ceiling (maximum) interest rate of 9% for pre-2013 benefits. (Id.) Benefits accruing on or after January 1, 2013, were set at a fixed rate of 4%.[3] (Id.)

Plaintiff does not allege that the Plan Administrator miscalculated the Monthly Interest Rate; rather, Plaintiff argues that Defendants impermissibly rounded the Monthly Interest Rate to the nearest one-thousandth of a percent (0.001%)[4] before multiplying the Monthly Interest Rate by the prior month's cash balance. (Compl. (Doc. 1) at 8-9.)

As an example, in February 2006 the Interest Factor was 4.60% and the cash account balance was $171, 863.05. (See id. (Doc. 1-2) at 1.) The resulting Monthly Interest Rate (rounding to 17 decimal places) would be 0.XXXXXXXXXXXXXXXXX. Rounding to the one-hundredth-thousandth, as was Defendants' practice, results in a Monthly Interest Rate of.00375. Applying these Monthly Interest Rates produces Interest Credits of $645.31 and $644.49, respectively.[5] Plaintiff argues that the rounding discrepancies results in an underpayment of Interest Credits, totaling $41.80 between January 2006 and October 2012.[6] (Compl. (Doc. 1) at 2.)


Plaintiff filed the instant lawsuit with this court before exhausting the formal channels of the Plan's administrative claims process. (Mem. Op. & Order (Doc. 19) at 2-3.) Article XI of the Plan, setting forth the procedures for filing a claim, bars a claimant from bringing suit before exhausting the two-tiered administrative claims process. (The Plan (Doc. 1-1) at 47-49.) Defendants opted to treat the Complaint filed in this case as a written claim for benefits under the Plan. (Mem. Op. & Order (Doc. 19) at 4.) The Plan Administrator's delegate and record-keeper, Aon Hewitt, sent Plaintiff a letter notifying him that his claim had been denied. (Id.) The letter further informed Plaintiff that he had the right to appeal the denial of benefits to the "Duke Energy Claims Committee, " the second and final step in the administrative claims process. While Plaintiff's appeal to the Duke Energy Claims Committee was under consideration, this court granted Defendants' motion to stay, pending final resolution by the appeals committee. ( Id. at 10.) On September 19, 2013, the Duke Energy Claims Committee denied Plaintiff's appeal. (Declaration of Richard P. Jefferies ("Jefferies Decl."), Ex. B (Doc. 29-2).)

Also of procedural relevance in the present matter is Plaintiff's participation in the settlement of George v. Duke Energy Retirement Cash Balance Plan, No. 8:06-cv-00373-JMC, filed in United States District Court for the District of South Carolina. (See Defs.' Mem. of Law in Supp. of Mot. for Summ. J. ("Defs.' Br."), Ex. B, George Settlement (Doc. 28-2).) In the George Complaint, the class action plaintiffs alleged that during 1997-1998, Duke Energy miscalculated the Interest Credits under the Plan by changing the reference date for determining the Interest Factor. ( Id., Ex. A, George Am. Compl. (Doc. 28-1) at 13-15.) In the George settlement, the class, which included Plaintiff, broadly released "fully, finally and forever... all causes of actions... known or unknown... that were asserted or could have been asserted in the Complaint or Amended Complaint regarding the Plan, including the design and adoption of the Plan and the implementation of the Cash Balance Plan Amendment...." ( Id., Ex. B, George Settlement (Doc. 28-2) at 13-15 (Section 1.45).) However, the same settlement carved out from the release:

[A]ny claim for an alleged vested benefit allegedly due under the Plan pursuant to ERISA § 502(a)(1)(B) where such claim is not related to (A) the terms of this Settlement Agreement, or (B) the acts, omissions, facts, matters, transactions, or occurrences that have been or could have been alleged or referred to in the Action.

(Id. at 13 (Section 1.45(d).) Plaintiff received $424.63 from the George settlement. (Jefferies Decl. (Doc. 29) ¶ 23.)


A motion for summary judgment is appropriately denied when an examination of the pleadings, affidavits, and other proper discovery materials before the court demonstrates a genuine issue of material fact exists. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett , 477 U.S. 317, 322-23 (1986). In considering a motion for summary judgment, the court is not to weigh the evidence, but rather must determine whether there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 250 (1986). The court must view the facts in the light most favorable to the nonmovant, drawing inferences favorable to that party if such inferences are reasonable. Id. at 255. However, there must be more than a factual dispute; the fact in question must be material, and the dispute must be genuine. Id. at 248. A dispute is only "genuine" if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id.

"When faced with cross motions for summary judgment, as in this case, the court must consider each motion separately on its own merits to determine whether either of the parties deserves judgment as a matter of law.'" Pediamed Pharm., Inc. v. Breckenridge Pharm., Inc. , 419 F.Supp.2d 715, 723 (D. Md. 2006) (quoting Rossignol v. Voorhaar , 316 F.3d 516, 523 (4th Cir. 2003). "The court must deny both motions if it finds there is a genuine issue of material fact, but if there is no genuine issue and one or ...

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