March 19, 2007

The Supreme Court has declined to consider a dispute centered on whether Xerox Corp. improperly calculated pension benefits for several employees who left the company and were later rehired. 

The decision lets stand a ruling by the 9th Circuit Court of Appeals that determined the company's formula for calculating certain pension benefits violated the Employee Retirement Income Security Act, or ERISA. 

Xerox had sought the justices' review because, the company said in court filings, the 9th Circuit's ruling conflicted with an earlier decision by the 2nd Circuit Court of Appeals in a separate case. 

“As a result, a nationwide pension plan covering 40,000 employees is lawful in one circuit and unlawful in another, and the lawfulness of numerous other pension plans is called into question,” the company said. 

The case arose when several current and former Xerox employees sued the company, charging that the method Xerox used to calculate the amount of pension benefits owed to them violated ERISA. 

The three employees – Waldamar Miller, Thomas Sudduth and J. Denton Allen – left the company in 1983 and were later rehired. 

Under Xerox's pension plan, the company reduced the three employees' retirement benefits by the amount they received in cash payments when they first left the company in 1983. The reduction, or “offset,” also assumed that the employees subsequently earned the same rate of return on their cash payments as the company's pension fund received. 

The employees said in court filings that Xerox's method resulted in an “exaggerated offset” that denied them benefits they had accrued. 

Shares of Xerox rose 10 cents to close at $16.85 on the New York Stock Exchange. 

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