On January 27, 2011, the United States District Court for the District of Minnesota ruled in favor of our client, Augsburg Fortress Publishers ("AFP"), on an issue that has received national attention and represents a significant victory for church-related organizations around the country. The issue before the Court was the proper scope of the "church plan" exception to the federal Employee Retirement Income and Security Act ("ERISA").
AFP is the publishing arm of the Evangelical Lutheran Church in America. It is a separately-incorporated entity and sponsored its own defined benefit pension plan for AFP employees. AFP decided to terminate its plan after concluding that the plan would likely run out of money within the next five years. The plan did not have sufficient assets to pay participants their full estimated benefits under the plan, and a small group of participants filed a class action lawsuit to recover the difference between their projected, estimated benefits and what was paid to them upon plan termination.
AFP moved to dismiss the plaintiffs' ERISA claims because ERISA does not cover plans that meet the ERISA definition of "church plan." The AFP plan expressly stated that it was a church plan exempt from ERISA, and that is how it had been operated for many years. Plaintiffs argued that the AFP plan did not meet ERISA's definition of "church plan" because it was an independent, free-standing plan and was not administered by a church pension board. AFP disagreed, noting that plaintiffs' argument was not consistent with ERISA's church plan definition, nor was it consistent with how that definition has been interpreted by the DOL, the IRS, and the courts. Judge Michael Davis rejected plaintiffs' novel argument and sided with AFP.
This decision is a significant victory for AFP and thousands of other church-related organizations across the country that currently sponsor single-employer church plans.
AFP is represented by Chuck Knapp, Paul Heiring, and Nicole Truso.