Second Circuit Decides Decade-long Dispute Over Colgate-Palmolive’s Calculation of Retirement Benefits

In McCutcheon, et al. v. Colgate-Palmolive Co., et al., No. 24-1419, 2025 WL 1009539 (2d Cir. Apr. 4, 2025) (Before: Sack, Robinson, Pérez, Circuit Judges), the Second Circuit Court of Appeals upheld the district court’s decision affirming Plaintiffs’ ERISA claims regarding Colgate-Palmolive’s improper calculation of retirement benefits. The court held that the company could not apply a pre-retirement mortality discount or use different interest rates for projecting employee contributions when calculating the Residual Annuity. The decision emphasized adherence to established legal doctrines, such as the law-of-the-case, which barred Defendants from re-arguing issues that were or could have been addressed in earlier proceedings.

Plaintiffs, former employees of Colgate-Palmolive, challenged the company’s administration of its employee retirement plan, alleging improper calculations of their retirement benefits. The case revolves around amendments to the retirement plan, including the calculation of annuities under the plan’s “Personal Retirement Account” (PRA) and the introduction of a “Residual Annuity Amendment” intended to correct unlawful benefit forfeitures. The central issue on appeal was the correct calculation of the Residual Annuity and the projection rate applicable to employees.

Defendants contended that they should be allowed to apply a PRMD when reducing a Residual Annuity for members who retired before the normal retirement age of 65. This actuarial adjustment accounts for the possibility of a member’s death before reaching retirement age. However, both the district court and the Second Circuit rejected this argument, affirming that using a PRMD would result in unlawful forfeitures under ERISA. The court emphasized that the issue was settled in prior proceedings and could not be revisited, citing the law-of-the-case doctrine.

Defendants argued for the application of different interest rates for projecting forward the employee’s contributions compared to the PRA balance funded by employer contributions. The district court had ruled that a single interest rate, the 20+1% rate (the interest rate for 20-year Treasury bills, plus 1%), should apply to both components when converting the PRA account into an age 65 annuity. On appeal, Defendants sought to separate these calculations, but the Second Circuit held that they waived this argument by not raising it earlier. The court reiterated that the consistent application of the 20+1% rate was mandated by the plan and upheld by prior rulings, and thus, the district court was correct in refusing to reconsider this issue. Judgment affirmed.