Judge Grants Class Status to Citgo Retirees in ERISA Suit

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Citgo ERISA Suit
FILE — The Citgo refinery in Lake Charles, La., Sept. 18, 2018. Citgo, a subsidiary of Venezuela’s national oil company, could be splintered into pieces if the South American country’s national oil company fails to make a $913 million bond payment due Oct. 28, 2019. (Todd Spoth/The New York Times)

An Illinois federal judge has granted class status to retired Citgo employees in their lawsuit accusing the company of shortchanging them by using outdated metrics to calculate early retirement payouts. The former employees have effectively narrowed down the class definition in their Citgo ERISA suit.

Citgo ERISA Suit : Class Status Approved

In an order issued Friday, U.S. District Judge Matthew F. Kennelly approved an amended class of Citgo retirees in their Employee Retirement Income Security Act (ERISA) suit against the company, its benefits committee, and its retirement plans. The judge’s decision follows allegations that Citgo used mortality tables from the 1970s to calculate joint and survivor annuity (JSA) benefits, which provide payouts to a retiree’s spouse upon the retiree’s death.

Background of the Citgo ERISA Suit

The Citgo retirees—Leslie Urlaub, Mark Pellegrini, and Mark Ferry—filed their lawsuit in August 2021. They claimed that the outdated metrics led to smaller payouts than they were entitled to. Judge Kennelly had previously granted conditional class certification in May but required the former workers to exclude about 30 individuals whose benefits were not calculated based on the 1971 mortality table and 8% interest rate.

Citgo ERISA Suit : Narrowing the Class Definition

The retirees complied by stating that the class does not include individuals whose benefits were calculated by assumptions other than the 1971 mortality table and 8% interest rate. Citgo sought to further revise this definition to specify individuals receiving a JSA calculated using the 1971 mortality table and 8% interest rate. However, Judge Kennelly found the retirees’ class definition satisfactory, rejecting Citgo’s concerns about overbreadth.

Scope and Implications of the Class

The approved class covers all Citgo plan participants and beneficiaries who began receiving benefits between January 1, 1995, and January 1, 2018, and who received smaller payouts due to the allegedly faulty math. The retirees estimate that at least 1,773 individuals fall within this class, with total underpayments exceeding $31 million.

Citgo ERISA Suit : Legal Proceedings and Arguments

Earlier in May, Judge Kennelly denied Citgo’s motion for summary judgment, paving the way for Urlaub, Pellegrini, and Ferry’s claims to proceed to trial. Citgo had argued that the claims were filed too late, as they should have been brought within four years of the retirees receiving their benefits packets. However, the retirees countered that they were unaware of the shortfall until consulting with their attorneys. Judge Kennelly agreed with this argument, although he did find Pellegrini’s breach of fiduciary duty claim untimely due to ERISA’s six-year statute of limitations.

Subclass Provision

As a result of this ruling, the class definition includes a subclass for individuals who received checks on or after August 3, 2015. Urlaub and Ferry will lead this subclass, as Pellegrini and others who received checks before this date are time-barred from bringing fiduciary duty claims.

Citgo ERISA Suit : Legal Representation

The retirees are represented by Todd F. Jackson and Nina Wasow of Feinberg Jackson Worthman and Wasow LLP, John R. Stokes, Peter K. Stris, Rachana A. Pathak, and Victor A. O’Connell of Stris & Maher LLP, Carol V. Gilden, Ryan Wheeler, and Michelle C. Yau of Cohen Milstein Sellers & Toll PLLC, and Shaun P. Martin of the University of San Diego Law School. Citgo is represented by attorneys from Jones Day, including Edward M. Rossman, Michael J. Gray, Bethany K. Biesenthal, Carly Roessler, Courtney L. Burks, Evan Miller, Kevin R. Noble, Kristin B. Parker, and Kristin M. Simonet.