Raytheon Inks First Class Deal in Outdated Pension Data Lawsuits

Raytheon Co. will boost the monthly pensions of more than 10,000 retirees and their surviving spouses, ending a class challenge to its pension calculations in a settlement valued at nearly $60 million dollars, according to papers filed in the U.S. District Court for the District of Massachusetts.

The Feb. 12 settlement provides class members with an average pension increase of about $21 per month, for a total average benefit of $4,737, the parties say. It represents 40% of the amount class members say Raytheon shortchanged their benefits by, minus attorneys’ fees and other expenses, according to the settlement motion.

This is the first class settlement in the recent series of lawsuits challenging the actuarial and interest rate assumptions employers use to calculate certain optional pension formats. Retirees claim that decades-old actuarial tables don’t take into account recent increases in lifespan. This allegedly causes workers who choose certain optional pension formats to be shortchanged, because their pensions aren’t the “actuarial equivalent” of a traditional, single-life pension as required by law.

Rulings in these cases have been mixed. UPS and AT&T won dismissal of the cases against them, while judges have allowed suits to move forward against Huntington Ingalls Industries Inc., U.S. Bancorp, Rockwell Automation Inc., and Partners Healthcare System Inc. Cases against Anheuser-Busch Cos. and PepsiCo were voluntarily dismissed after early rulings, and a case against American Airlines Inc. was resolved by individual settlement.

The case against Raytheon is pending before Chief Judge Patti B. Saris, who declined to dismiss the case last year, saying she needed more information to determine whether Raytheon’s actuarial and interest rate assumptions are reasonable under the Employee Retirement Income Security Act.

The Raytheon retirees are represented by Izard, Kindall & Raabe LLP and Bailey & Glasser LLP. Raytheon is represented by Covington & Burling LLP and Goodwin Procter LLP.

The case is Cruz v. Raytheon Co., D. Mass., No. 1:19-cv-11425, motion for preliminary settlement approval 2/12/21.