American Airlines Accused of Using Outdated Pension Formula (1)

Dec. 12, 2018, 5:16 PM; Updated: Dec. 12, 2018, 7:56 PM

American Airlines Inc. shorts the pension benefits of certain married workers by using outdated assumptions about life expectancy, a new lawsuit claims.

The proposed class action, filed Dec. 11 in a Texas federal court, accuses the airline of calculating certain forms of spousal pension benefits by using mortality tables that haven’t been updated for more than 30 years. This is “inherently unreasonable” given improvements in health and lifespan, and it causes workers to “unknowingly forfeit” part of their pensions, the lawsuit claims.

Metropolitan Life Insurance Co. was accused of similar violations in a proposed class action filed earlier this month. Both cases were filed by Izard Kindall & Raabe LLP and Bailey & Glasser LLP.

The lawsuit claims the airline knew its mortality tables were outdated but used them anyway because they saved the company money. The airline uses more recent mortality assumptions when it calculates how much money it must contribute to fund the plans, the lawsuit claims.

The proposed class includes “thousands” of people who receive benefits through the airline’s pension plans, according to the lawsuit.

An American Airlines representative told Bloomberg Law Dec. 12 the company hasn’t received the complaint and can’t comment on it.

Kendall Law Group PLLC also represents the American Airlines workers.

The case is Martinez Torres v. Am. Airlines, Inc., N.D. Tex., No. 4:18-cv-00983-O, complaint 12/11/18.

((Updated to include response from American Airlines))

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bloomberglaw.com

To contact the editors responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com; C. Reilly Larson at rlarson@bloomberglaw.com

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