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David v. Goliath- A Feel Good Story from the Archive

October 30, 2013


Here’s a story from my past that should give us all hope (not always a premium in the law office). A few years ago, I was approached by a client with a unique problem. My client had worked in the pharmaceutical industry and one of her past employers had been acquired by another company several years beforehand. After that time, she continued her employment with the purchasing company and her old employer (the acquired company) ended her years of service with regard to her pension rights, sending her a letter confirming that she would receive $900 a month once she retired.

Now, a few years later, the pension plan manager sent her a letter telling her that they had made a mistake and she would be receiving $300 a month. At first blush, this didn’t seem like a tough legal battle. After all, there are contract claims such as reliance and mistake that would make for a winnable claim.

However, after some research I discovered that there were two problems:

1) The company that sponsored the pension plan was a Fortune 500 company. They had hundreds of lawyers on staff and dozens of firms on retainer. I was one man. I didn’t even have a secretary. Talk about David vs. Goliath.

2) Even though the pension manager made a mistake, the law was against us. How?

Pension plans are governed by ERISA- the Employee Retirement Income Security Act. Maybe there was a reason, and maybe it was legislative oversight, but under ERISA only legal contractual claims were allowed, while equitable contractual claims were disqualified.

What does that mean?

United States law is derived from English Law. Hundreds of years ago there were two types of courts in England: Law and Equity. Some types of claims were allowed in Law courts, other in Equity courts. If you brought an equity claim in a Law court, they didn’t allow it (and visa-versa).

Even though US courts were always unified (there never existed a legal/equity distinction) there remains the idea that some claims are equitable (based on fairness) and some are legal (based on technical legal principles).

Because reliance and mistake were historically equitable claims, some of the US Courts of Appeals had decided that this exact claim was barred from being brought under ERISA.

There was one saving grace: Another feature of ERISA. Before bringing a claim to a court, the pension plan member had to present any complaint to an internal plan appeals body. We did this and even though the law was against us…. we won. My client would receive the greater amount of $900 a month after she retired.

So, it wasn’t a case of David slaying Goliath…more like Goliath admitting the error in his ways and being fair. Still, a victory for the little guy!

The moral of the story: Never give up hope, shoot your best shot (or sling your best sling) and sometimes, even against the odds, fairness and equity prevails.

Avrum Aaron, a 1994 graduate of Columbia Law School, is the COO of Legal Outsourcing Partners, LLC. Never much with a sling shot, he did shoot a few jump shots in his time. According to urban legend, the Offspring anthem, Pretty Fly for A White Guy, could have been written about him.


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