Luxottica blocked from arbitrating pension plan’s claims over 1971 calculations

The case puts a spotlight on how companies administer their defined benefit pension plans, particularly the assumptions they use to convert different payment options. Under federal retirement law, a joint payment covering both a retiree and spouse must be financially equivalent to a single-life payment covering only the retiree. 

What makes the case unusual is timing. Luxottica updated its mortality assumptions in April 2021 for new retirees but continued using the 1971 tables for anyone who retired earlier, including Duke. She argues this creates ongoing violations of federal pension law and puts the plan’s tax-favored status at risk. 

The company tried to force Duke into private arbitration based on a dispute resolution agreement she signed in 2015. That agreement required individual arbitration of most employment disputes and prohibited class action claims. The district court initially agreed to send her personal benefit claims to arbitration but balked at compelling arbitration of claims she brought on behalf of the pension plan itself. 

The appeals court sided with Duke on the arbitration question. Writing for the panel, Circuit Judge Nathan explained that some pension claims are inherently representative in nature because they seek to fix problems affecting the entire plan, not just one person. Forcing those claims into individual arbitration would effectively eliminate them, the court said. 

The ruling builds on a 2024 Second Circuit decision that protected the right to bring representative pension claims in court. The court rejected arguments from Luxottica that Duke’s case was different because she participates in a traditional defined benefit plan where the employer bears investment risk, rather than a 401(k)-style plan where participants bear that risk.