The class action lawsuit, Thondukolam v. Corteva, Inc., was filed in the United States District Court for the Northern District of California, case number 3:19-cv-03857-SK.

The proposed class includes more than 100,000 people, including retirees and beneficiaries in the pension plan. Edward Stone Law PC is working with Beasley Allen, Kantor & Kantor, and Sinclair Law Firm, to represent the retirees.

In 2015, the 217-year-old DuPont merged with Dow Chemical to create DowDuPont. In 2019, the new corporate entity split into three new companies Corteva, DuPont and Dow. Corteva is a combination of DuPont and Dow agriculture businesses. Through this scheme, DuPont and Dow shifted all liability for the DuPont U.S. pension, which has covered DuPont employees in America since 1904, to the newly created Corteva. The liability of the DuPont U.S. Pension plan is approximately $19 billion.

Plaintiffs argue that Corteva, which solely focuses on agriscience business, understates its liabilities including income fluctuations due to weather, global trade, and other factors beyond the company’s control. Additionally, the agriscience business involves the manufacture of chemicals already subject to large-scale litigation, the liability for which was also transferred to Corteva. Other corporate spin transactions of DuPont have also come under scrutiny. Plaintiffs also contend that under Corteva the pension plan is underfunded and uses overly optimistic estimates. Now that Corteva, Dow, and DuPont are three separate companies, Corteva can file for bankruptcy and discharge its responsibility to fund the promised pensions, leaving retirees to receive pennies on the dollar. Neither DuPont nor Dow will be affected by such a bankruptcy.

“Because of the Defendants’ actions, the plan, which was already in a downward funding spiral, is now left with an empty shell company as a plan sponsor, linked to a newly formed company that is also saddled with all of the environmental and agricultural liabilities of the historical Dow/DuPont companies. This completely separated the new, stable Dow and DuPont companies from any repercussions should the pension fail. The Defendants have attempted to avoid a legally required $6 billion funding obligation to the plan and thereby breached their fiduciary duties to the Plan as well as violated ERISA’s employee protective purpose. This lawsuit will correct this misconduct by the plan sponsors.” said W. Daniel “Dee” Miles, head of Beasley Allen’s Consumer Fraud Section.

Senior financial reporter for the NBC News Investigative Unit, Gretchen Morgenson delved into the issue of pension de-risking in an exposé published on June 14, 2020. Morgenson interviewed Karen Friedman of the Pension Rights Center, and Thomas Gober, a certified fraud examiner who has worked as a consultant to the U.S. Department of Justice, and Joseph Belth, professor emeritus of insurance at Indiana University, and author of The Insurance Forum.  Focusing on Athene Annuity & Life, Morgenson points out that “Athene has acquired $12 billion in corporate pension obligations recently, including those of Bristol-Myers Squibb, Dana Corp. and Lockheed Martin Corp.” Some 178,000 people now rely on Athene for their pension benefits.  In April 2020, Athene was fined by the State of New York for failing to register before engaging in its pension de-risking business in New York.

On February 1, 2021 American International Group, Inc. agreed to pay a $12 Million fine to the State of New York to settle charges by the New York State Department of Financial Services (NYDFS) that it conducted life insurance business in New York without a license. Between 2014 and 2019, AIG entered into four pension risk transfer (a/k/a pension de-risking) transactions without being licensed in New York. As part of the settlement, AIG will transfer those transactions to its New York based subsidiary. NYDFS’s superintendent, Linda Lacewell is quoted in Business Insurance as saying: “A DFS license offers consumers peace of mind through the requirement of compliance with New York laws and regulations, helping to safeguard assets. The department will continue to vigorously enforce the law to protect retirement assets of New Yorkers.”

Midland, Michigan based Dow Inc. transferred $700 million in pension liabilities to Metropolitan Tower Life Insurance Company, a subsidiary of MetLife Inc. in the 4th quarter of 2020. The transfer affected retirees in the Dow Pension Plan who receive $950 or less in monthly benefits, and retirees in the Union Carbide Pension Plan receiving less than $420 per month. Over 12,000 retirees were impacted by this transfer.

Weyerhaeuser transferred $765 million of its pension liabilities in December, 2020. Weyerhaeuser purchased a group annuity contract from Metropolitan Tower Life Insurance Company, a subsidiary of MetLife. This pension de-risking transaction affects 5,200 Weyerhaeuser retirees.

The Kemper Corporation, an insurance holding company based in Chicago, Illinois completed a transfer of $205 million in pension liabilities to Banner Life Insurance Company. Kemper’s pension plan was closed to new hires on January 1, 2006, and benefit accruals have been frozen since June 30, 2016. Kemper also offered to make lump-sum payments to certain inactive, vested plan participants who were not yet in pay status. $117 million in lump-sum payments were distributed.

General Electric (GE) recently announced that it had transferred $1.7 Billion of its pension liabilities to two insurance companies owned by Athene Holding Ltd.  The two insurance companies are Athene Annuity and Life company and Athene Annuity & Life Assurance Company of New York.  The pension risk transfer, or pension de-risking transfer affects approximately 70,000 GE retirees and beneficiaries whose pension benefits were less than $360 per month.   This pension de-risking transfer follows GE’s decision to pre-fund $2.5 Billion of its GE Pension Plan funding requirements for 2021, 2022, and 2023.

Together with attorneys from Zuckerman Spaeder and J.R. Wyatt Law, in a lawsuit filed on August 25, 2020 in federal court in Philadelphia, Edward Stone Law is representing two Black retired NFL players, Kevin Henry and Najeh Davenport, who claim that the NFL deliberately manipulated ex-players’ “cognitive function” test scores in a way that made it less likely that Black ex-players would receive benefits under the landmark 2016 concussion settlement.

Davenport, who played seven years for the Green Bay Packers, Pittsburgh Steelers and Indianapolis Colts, and Henry, who played 8 years for the Pittsburgh Steelers, say that the NFL violated federal law in processing claims under the settlement by using different sets of data for Black and White players. This “race-norming,” which is not required by the NFL-sponsored settlement agreement, has made it much more difficult for Black retirees to receive compensation for cognitive impairment under the settlement – undercutting one of the main purposes of the deal.

The two players have asked the federal court overseeing the settlement to make clear that the NFL cannot use harmful “race-normed” scores when assessing eligibility for retiree benefits. In a separate filing, they have asked that the NFL pay damages to Black ex-players who were subjected to the illegal practice.

“The NFL’s administration of the settlement created a ‘Black’ door and a ‘White’ door for benefits, in which former players with identical test scores get different treatment – solely on the basis of race,” said Cy Smith, a Zuckerman Spaeder LLP partner and lead counsel for the players. “This approach was not required by the settlement and the NFL is fully aware of its discriminatory impact on Black players. The NFL has a choice to make: live up to its word and treat Black players like their lives matter, or continue pushing them aside.”

The NFL’s use of race-norming is explained in the lawsuit: “When being evaluated for the Qualifying Diagnoses of Neurocognitive Impairment, Black former players are automatically assumed (through a statistical manipulation called “race-norming”) to have started with worse cognitive functioning than White former players. As a result, if a Black former player and a White former player receive the exact same scores on a battery of tests designed to measure their current cognitive functioning, the Black player is presumed to have suffered less impairment…The NFL’s actions were designed to, and did, make it far more difficult for Black retirees to receive benefits…”

The lawsuit can be viewed here (pdf), and the motion for relief can be viewed here (pdf).

The retired players are represented by Cy SmithAitan GoelmanSteve HermanDavid ReiserEzra Marcus and Megan McKoy of Zuckerman Spaeder in Baltimore and Washington, D.C., as well as Justin Wyatt of J.R. Wyatt Law and Edward Stone of Edward Stone Law, both in New York.  The existing NFL concussion case is Kevin Turner, et al. v. National Football League, et al., No. 2:12-md-02323-AB (E.D. Pa.), and the new case is Kevin Henry, et al. v. National Football League, et al. (E.D. Pa.).

Here at Edward Stone Law, we get phone calls every day from people who feel they have been taken advantage of by factoring companies when selling their structured settlement payments.

One of the most common things we hear is that sellers have been told it is legal to go to another state and sell their payments. The courts in some states, like New York, Maryland, and Pennsylvania look very carefully at transfer petitions. Factoring companies don’t like this because they make a big profit when they buy a seller’s payments.

This practice of a factoring company moving a seller from one state to another in order to buy their structured settlement payments is called “forum shopping.” Factoring companies are telling sellers it is legal to do this.  It is not.  The transfer petition must be brought in a court in the state in which the seller lives or is domiciled.

Every state except New Hampshire has a Structured Settlement Protection Act that sets forth the requirements a factoring company must follow in filing a transfer petition. The factoring company must comply with those laws, and a Federal statute, 26 U.S.C. Section 5891.  Section 5891 imposes an excise tax on a factoring transaction that does not qualify for exemption under the conditions specified in Section 5891(b).

If you are a seller who was victimized by a factoring company that filed a transfer petition in a state that you did not reside in, please contact Edward Stone Law by email at eddie@edwardstonelaw.com or by phone at (203) 504-8425.

Forum shopping in the transfer of structured settlement payment rights transfer is not legal.

26 U.S.C. Section 5891 imposes a 40% excise tax on any structured settlement transfer that does not qualify for one of the exemptions set forth in Section 5891(b).

In order to qualify for one of the exemptions, a transfer petition must be brought in the state that the seller is domiciled in, if that state has a Structured Settlement Protection Act.  The only state that does not have a Structured Settlement Protection Act is New Hampshire.

The Internal Revenue Service has published an “Excise Tax on Structured Settlement Factoring Transactions Audit Technique Guide” that states “Structured settlement factoring companies may sometimes be trying to avoid an unfavorable SSPA or an unfavorable forum in the payee’s home state. For example, if a factoring company seeks to acquire structured settlement payment rights from a payee domiciled in North Carolina (which limits the discounts and fees that factoring companies can charge), the factoring company may seek to have its transaction approved under the SSPA, and in the courts, of another state. If that occurs, the resulting order is not a qualified order for purposes of section 5891(b), and the factoring company is liable for the excise tax. ”

If you are a seller who was victimized by a factoring company that filed a transfer petition in a state that you did not reside in, please contact Edward Stone Law by email at eddie@edwardstonelaw.com or by phone at (203) 504-8425.

A factoring company may only file a transfer petition in the seller’s state of residence or domicile. If a factoring company causes a transfer petition to be filed in a state other than the state where the seller lives, then the factoring company is not complying with applicable State and Federal laws.

Edward Stone Law has been advised of many situations where a factoring company told a seller that it is legal to file a transfer petition in another state. It is not. Every state except New Hampshire has a Structured Settlement Protection Act that sets forth the requirements a factoring company must follow in filing a transfer petition. The factoring company must comply with those laws, and a Federal statute, 26 U.S.C. Section 5891.  Section 5891 imposes an excise tax on a factoring transaction that does not qualify for exemption under the conditions specified in Section 5891(b).

If you have been a victim of forum shopping, contact us now via email at eddie@edwardstonelaw.com or by phone at (203) 504-8425.