Class Action Claims Kinder Morgan Unlawfully Cut Workers’ Retirement Benefits

New to ClassAction.org? Read our Newswire Disclaimer

Two plaintiffs allege participants in the Kinder Morgan retirement plan have had their monthly benefits drastically cut as a result of key plan terms and protections having been “silently dropped, reinterpreted, revised, and cutback” after a series of acquisitions and divestitures involving the energy infrastructure company and its predecessors.

The 69-page lawsuit claims Kinder Morgan, which was founded by former Enron president Richard Kinder; the company’s retirement plan; and the plan’s claims administrator and chairman have violated the federal Employee Retirement Income Security Act (ERISA) by decreasing plan participants’ accrued benefits at retirement and modifying the factors for early retirement.

More specifically, the case alleges Kinder Morgan’s tinkering with its retirement plan has run afoul of ERISA’s “prohibition on ‘backloading’ benefit accruals, its ‘anti-cutback’ protection for age 65 and early retirement benefits, its disclosure rules for benefit restrictions and reductions, and its ‘actuarial equivalent’ requirements.” Further, the lawsuit alleges the defendants have violated retirement plan terms that were to be honored “under the provisions of corporate sales agreements relating to the benefit obligations of acquired companies to their employees.”

The plaintiffs’ allegations are couched on the first page of the complaint as “a case study” in what can happen to employees’ retirement benefits amid significant corporate shuffling.

“Under ERISA, the Kinder Morgan Retirement Plan A is required to preserve all accrued benefits from previous retirement plans,” the suit reads.

According to the suit, the two plaintiffs worked for the American Natural Resources (ANR) Company, a Detroit-based natural gas pipeline owner and operator, since June 1979 and March 1978, respectively. ANR Company was acquired in March 1985 by the Coastal Corporation, and continued to exist as a separate subsidiary, the case explains. In January 2001, the suit says, the Coastal Corporation was acquired by the El Paso Corporation, which then sold the ANR subsidiary to TransCanada American Investments LTD in 2007. In May 2012, the El Paso Corporation was then acquired by defendant Kinder Morgan, Inc., the lawsuit relays.

As the complaint tells it, the ANR Company’s pension plan benefits formula was based on two percent of participants’ final average pay for credited service up to 30 years, and offered early retirement benefits for employees who reached age 55 with 10 years of service with no reduction for retirement at age 62. When the Coastal Corporation acquired ANR, it amended its pension plan to provide for a “grandfather” of the ANR benefits formula and allowed participants in the merged plans to receive the higher of the two benefits formulas, the case explains.

When El Paso acquired Coastal and its ANR subsidiary, the sales agreement provided that El Paso “shall assume and honor the obligations of [Coastal and its subsidiaries] under all existing Company Employee Plans,” and would perform the companies’ obligations “in the same manner and to the same extent” that would have been required previously under the plans, the lawsuit attests.

After Kinder Morgan acquired El Paso, however, a “detailed” calculation of the first plaintiff’s retirement benefits decreased the monthly amount to which he was entitled by almost half, according to the suit. Similarly, the second plaintiff reached age 62 in November 2020 but did not commence retirement benefits given she was told that she was ineligible for “unreduced” retirement benefits at that age, the case says. Per the case, the decreases in the plaintiffs’ retirement benefits are unlawful under ERISA.

Following the first plaintiff’s internal appeal, Kinder Morgan’s fiduciary committee again denied his claims in August 2020, and stated that “his only recourse was to file this lawsuit within one year of that date,” the complaint states.

The lawsuit looks to represent all current or former employees of the ANR Company or the Coastal Corporation who participated in the El Paso Pension Plan after El Paso acquired the Coastal Corporation in 2001.

Get class action lawsuit news sent to your inbox – sign up for ClassAction.org’s newsletter here.