Free Response - District Court of Connecticut - Connecticut

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 1 of 89

UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT -----------------------------------------------------X : JANICE C. AMARA, GISELA : R. BRODERICK, ANNETTE S. GLANZ : individually, and on behalf of others : similarly situated, : : Plaintiffs, : v. : : CIGNA CORP. AND CIGNA : PENSION PLAN, : : Defendants. : : -----------------------------------------------------X

3:01 CV 2361 (MRK)

DEFENDANTS' RESPONSES TO PLAINTIFFS' PROPOSED FINDINGS OF FACT

Dated: June 27, 2006

MORGAN, LEWIS & BOCKIUS LLP By: /s/ Joseph J. Costello Joseph J. Costello Jeremy P. Blumenfeld Jamie M. Kohen Admitted pro hac vice 1701 Market Street Philadelphia, Pennsylvania 19103-2921 (215) 963-5295/5258/5472 (215) 963-5001 (fax) ROBINSON & COLE James A. Wade (CT # 00086) 280 Trumbull Street Hartford, Connecticut 06103 (860) 275-8270 (860) 275-8299 (fax) Attorneys for Defendants CIGNA Corporation and CIGNA Pension Plan

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 2 of 89

Defendants hereby respond to Plaintiffs' proposed findings of fact in accordance with the numbered paragraphs set forth herein. Where facts are denied, some, but not necessarily all, of the grounds for the denial are stated herein. Further, where a finding of fact is not unqualifiedly admitted in its entirety, all of the facts within that finding of fact that are not explicitly admitted are denied. Defendants further direct the Court to their Proposed Findings of Fact, which set forth the facts that Defendants expect will be proven at trial. Defendants reserve the right to raise objections to any of the exhibits, deposition transcripts or other documents upon which Plaintiffs relied to provide the source for these proposed findings. 1. Denied except as otherwise stated herein. Defendants deny the proposed finding

because it is based on inadmissible evidence. Specifically, the quoted article constitutes hearsay. The proposed finding is also irrelevant and unduly prejudicial, as the opinions expressed in news articles or periodicals regarding cash balance plans have no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA has violated Section 204(g) of ERISA. Notwithstanding the foregoing, Defendants admit that the article Plaintiffs cite is accurately quoted, but is only a partial quote. Defendants further admit that traditional defined benefit plans in a non-union environment typically offer benefits based on a percentage of the employee's salary and the number of years of service. 2. Defendants object to the proposed finding because it is based on inadmissible

evidence. Specifically, the quoted article constitutes hearsay. The proposed finding is also irrelevant and unduly prejudicial, as the opinions expressed in news articles or periodicals regarding cash balance plans have no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 3 of 89

requirements, or whether CIGNA has violated Section 204(g) of ERISA. Notwithstanding the foregoing, Defendants admit that Plaintiff's description of a defined contribution plan is generally accurate. 3. Denied except as otherwise stated herein. Defendants deny the proposed finding

because it is based on inadmissible evidence. Specifically, the quoted article constitutes hearsay. The proposed finding is also irrelevant and unduly prejudicial, as the opinions expressed in news articles or periodicals regarding cash balance plans have no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA has violated Section 204(g) of ERISA. 4. Defendants deny the proposed finding except admit that Plaintiffs accurately

quote, in part and with ellipses, the decision of the 7th circuit in Berger v. Xerox, 338 F.3d 755, 758 (7th Cir. 2003). 5. Defendants deny the proposed finding because it is based on inadmissible

evidence. Specifically, the quoted documents constitute hearsay. Notwithstanding the foregoing, Defendants admit the statements in the second and third sentences of the paragraph. 6. Defendants deny the proposed finding because it is based on inadmissible

evidence. Specifically, the quoted article constitutes hearsay. Notwithstanding the foregoing, Defendants admit that Plaintiffs have described how cash balance plans frequently are designed, except that Defendants deny the statements in the last sentence of this paragraph. 7. Denied except as otherwise stated herein. Defendants deny the proposed finding

because it is based on inadmissible evidence. Specifically, the quoted article constitutes hearsay. The proposed finding is also irrelevant and unduly prejudicial, as the opinions expressed in news articles or periodicals regarding cash balance plans have no bearing on whether CIGNA's cash

2

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 4 of 89

balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA has violated Section 204(g) of ERISA. Notwithstanding the foregoing, Defendants admit that the article Plaintiffs cite is accurately quoted, but is only a partial quote. 8. Denied except as otherwise stated herein. Defendants deny the proposed finding

because it is based on inadmissible evidence. Specifically, the quoted article constitutes hearsay. The proposed finding is also irrelevant and unduly prejudicial, as the opinions expressed in news articles, periodicals, or other documents regarding cash balance plans have no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA has violated Section 204(g) of ERISA. Notwithstanding the foregoing, Defendants admit that the article Plaintiffs cite is accurately quoted, but is only a partial quote. 9. Denied except as otherwise stated herein. Defendants admit that a cash balance

account balance is the cumulative total of all of the components of the account, including any opening balance, pay and interest credits, and other transition credits. Defendants further admit that participants' accounts are not individually funded. 10. Denied except as otherwise stated herein. Defendants deny the proposed finding

because it is based on inadmissible evidence. Specifically, the quoted document constitutes hearsay. The proposed finding is also irrelevant and unduly prejudicial, as there is no evidence that this document was ever provided to CIGNA and, even if it had been, advice CIGNA received when it was considering a cash balance conversion has no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA has violated Section 204(g) of ERISA.

3

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 5 of 89

CIGNA's intent is not material to that analysis. Notwithstanding the foregoing, Defendants admit that the portion of this finding of fact that constitutes a quote accurately quotes the cited document, but is only a partial quote. 11. Denied except as otherwise stated herein. Defendants deny the proposed finding

because it is based on inadmissible evidence. Specifically, the quoted article constitutes hearsay. The proposed finding is also irrelevant and unduly prejudicial, as the opinions expressed in news articles or periodicals regarding cash balance plans have no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA has violated Section 204(g) of ERISA. Furthermore, Defendants deny that Plaintiffs have accurately represented the content of this document or that it bears any relationship to the CIGNA Pension Plan. 12. Defendants deny the proposed finding because it is based on inadmissible

evidence. Specifically, the quoted report constitutes hearsay. The proposed finding is also irrelevant and unduly prejudicial, as the opinions expressed in the report, news articles or periodicals regarding cash balance plans have no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA has violated Section 204(g) of ERISA. Notwithstanding the foregoing, Defendants admit that the report Plaintiffs cite is accurately quoted, but is only a partial quote. Defendants further deny that this document bears any relationship to the CIGNA Pension Plan and that the methodology used by the GAO was reasonable or consistent with sound analysis. 13. Defendants deny the proposed finding because it is based on inadmissible

evidence. Specifically, the quoted presentation constitutes hearsay. The proposed finding is also

4

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 6 of 89

irrelevant and unduly prejudicial, as the opinions expressed in the presentation has no bearing on the CIGNA Pension Plan, let alone whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA has violated Section 204(g) of ERISA. Notwithstanding the foregoing, Defendants admit that the presentation Plaintiffs cite is accurately quoted, though it is only a partial quote, taken out of context. 14. Defendants deny the proposed finding except that Defendants admit that the

proposed finding partially describes some limited terms of the CIGNA Pension Plan before 1998, and does not completely describe how the plan worked in its entirety and how benefits were calculated. Defendants admit that New Formula participants were subject to the 1.67% formula and that other participants were subject to a 2% formula. 15. Defendants deny the proposed finding except that Defendants admit that the

proposed finding partially describes some limited terms of the CIGNA Pension Plan before 1998, and does not completely describe how the plan worked in its entirety and how benefits were calculated. Defendants admit that New Formula participants fell under the 1.67% formula 16. Defendants admit that the proposed finding of fact generally describes some terms

of the CIGNA Pension Plan before 1998 and does not completely describe how the plan worked in its entirety and how benefits were calculated. Defendants deny that all Tier 1 participants were entitled to the Preserved Spouse's Benefit. 17. 18. Admitted. Denied except as otherwise stated herein. Defendants admit that effective in

1998, CIGNA amended the CIGNA Pension Plan to a cash balance formula ("Part B") for many

5

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 7 of 89

employees. Older and longer service employees, however, and former employees, remained in the traditional defined benefit plan ("Part A"). 19. Denied except as otherwise stated herein. Defendants admit that employees under

the Tier 1 formula with 45 or more age and service points were grandfathered and remained subject to CIGNA's traditional defined benefit formula. Defendants admit that other employees became subject to the cash balance formula. Participants who were not employees (e.g., former employees) were not subject to the cash balance formula unless and until they were rehired. 20. Defendants admit that the proposed finding of fact partially quotes from the Part

B plan document accurately. 21. Defendants deny the proposed finding because it is based on inadmissible

evidence. Specifically the cited report is irrelevant and unduly prejudicial, as the financial and funding status of the Plan has no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA has violated Section 204(g) of ERISA. Notwithstanding the foregoing, Defendants deny the proposed finding, as the report Plaintiffs cite aggregates all of "CIGNA's domestic and international pension obligations," and is not limited to the CIGNA Pension Plan at issue in this case. 22. Defendants deny the proposed finding because it is based on inadmissible

evidence. Specifically, the quoted document constitutes hearsay. The proposed finding is also irrelevant and unduly prejudicial, as the advice CIGNA received when it was considering a cash balance conversion has no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA has violated Section 204(g) of ERISA. CIGNA's intent is not material to that

6

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 8 of 89

analysis. Notwithstanding the foregoing, Defendants admit that the memo cited by Plaintiffs is quoted accurately, although only in part. 23. 24. Admitted. Denied except as otherwise stated herein. Defendants admit that the initial

retirement accounts established for younger and/or shorter service employees did not include the value of early retirement subsidies. The initial retirement accounts for older and/or longer service employees, i.e., those with 55 or more combined age and service points, however, did include some or all of the subsidized early retirement benefits to which the employee was entitled under the prior plan. Further, the subsidized early retirement benefits were protected by Section 7.3 of the Part B plan document. 25. Denied except as otherwise stated herein. Defendants admit that of the factors in

the calculation of initial retirement accounts was the Applicable Mortality Table, in accordance with the terms of Part B, Section 1.28. 26. Defendants admit that Plaintiffs have accurately set forth the pay credit schedule

under Part B; however, Defendants object to Plaintiffs' characterization of such schedule as a "second generation" pay credit schedule, as such a characterization is based on evidence which Defendants would seek to exclude as inadmissible hearsay (see No. 8, supra). 27. 28. Admitted, except that Part B also has a maximum rate of 9%. Denied except as otherwise stated herein. Defendants deny the proposed finding

because it is irrelevant and unduly prejudicial, as the issue of whether the cash balance conversion resulted in cost savings to CIGNA has no bearing on whether its cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA violated Section 204(g). Notwithstanding the foregoing,

7

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 9 of 89

Defendants admit that the memorandum Plaintiffs cite is accurately quoted, but is only a partial quote. The cited memorandum, however, does not demonstrate or evidence that CIGNA expected to earn more on the plan's investments than the interest crediting rate. 29. Denied except as otherwise stated herein. Defendants admit that Section 1.1

generally defines the accrued benefit in terms of the account balance, subject to the terms of Section 1.1. Defendants deny the remaining statements or opinions in the finding of fact. 30. 31. Denied. Denied except as otherwise stated herein. Defendants deny the proposed finding

because it is based on evidence that is irrelevant and unduly prejudicial. Specifically, whether or not CIGNA expected or realized cost savings in connection with the conversion to its cash balance formula has no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA has violated Section 204(g) of ERISA. Notwithstanding the foregoing, Defendants admit that Plaintiffs have accurately, but partially, quoted the cited documents. By way of further response, the documents do not indicate the specific pay credit and interest credit formula that was being considered at the time and that was the subject of the memos, nor does it address whether CIGNA expected current participants to suffer reductions in their future benefit accruals. 32. Defendants admit that the finding of fact accurately quotes from part of Judge

Squatrito's Order describing what Plaintiffs allege. 33. Defendants admit that the finding of fact accurately quotes from part of Judge

Squatrito's Order describing what Plaintiffs allege.

8

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 10 of 89

34.

Denied except as otherwise stated herein. Defendants admit that Poulin's expert

report draws the conclusions described in the proposed finding, but deny the accuracy or legal sufficiency of his conclusions and deny that Poulin used proper methodology, as documented in Defendants' expert report. Defendants deny that any participants lost any part of their previously earned benefits. (Pls' Ex. 1, Part B, Sections 1.1, 1.32, 7.3). 35. Denied except as otherwise stated herein. Defendants admit that Poulin's expert

report draws the conclusions described in the proposed finding, but deny the accuracy or legal sufficiency of his conclusions and deny that Poulin used proper methodology, as documented in Defendants' expert report. Furthermore, Defendants deny the accuracy and legal sufficiency of the conclusion drawn by Plaintiffs from such report. Defendants deny that any participants lost any part of their previously earned benefits. (Pls' Ex. 1, Part B, Sections 1.1, 1.32, 7.3). 36. Denied except as otherwise stated herein. Defendants admit that Poulin's expert

report draws the conclusions described in the proposed finding, but deny the accuracy or legal sufficiency of his conclusions and deny that Poulin used proper methodology, as documented in Defendants' expert report. Defendants deny that any participants lost any part of their previously earned benefits. (Pls' Ex. 1, Part B, Sections 1.1, 1.32, 7.3). 37. Denied except as otherwise stated herein. Defendants admit that Poulin's expert

report draws the conclusions described in the proposed finding, but deny the accuracy or legal sufficiency of his conclusions and deny that Poulin used proper methodology, as documented in Defendants' expert report. Defendants deny that any participants lost any part of their previously earned benefits. (Pls' Ex. 1, Part B, Sections 1.1, 1.32, 7.3). 38. Denied except as otherwise stated herein. Defendants admit that Poulin's expert

report draws the conclusions described in the proposed finding, but deny the accuracy or legal

9

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 11 of 89

sufficiency of his conclusions and deny that Poulin used proper methodology, as documented in Defendants' expert report. Defendants deny that any participants lost any part of their previously earned benefits. (Pls' Ex. 1, Part B, Sections 1.1, 1.32, 7.3). 39. Denied. This proposed finding of fact is misleading and compares apples and

oranges. Furthermore, the evidence cited does not support the factual assertions made in the finding of fact. Moreover, Plaintiff Amara currently is receiving benefits in accordance with the Part A formula, not Part B's cash balance formula. 40. Denied except as otherwise stated herein. Defendants admit that Amara earned a

subsidized early retirement benefit with social security supplement under the Tier 1 formula starting at age 55, to be reduced pursuant to the Social Security offset once Amara reached age 65. Defendants deny that Amara earned a level benefit of $1,833.65 per month starting at age 55 under the prior plan. 41. Defendants admit that Poulin's expert report draws the conclusions described in

the proposed finding, but deny the accuracy or legal sufficiency of his conclusions and deny that Poulin used proper methodology, as documented in Defendants' expert report. Defendants deny that any participants lost any part of their previously earned benefits. (Pls' Ex. 1, Part B, Sections 1.1, 1.32, 7.3). By way of further response, regardless of her account balance, Amara always was entitled to a benefit under Part B at least as valuable as her age-55 subsidized early retirement benefit under Part A. (Pls' Ex. 1, Part B, Section 7.3). 42. Denied except as otherwise stated herein. Defendants admit that Poulin's expert

report draws the conclusions described in the proposed finding, but deny the accuracy or legal sufficiency of his conclusions and deny that Poulin used proper methodology, as documented in Defendants' expert report. Defendants deny that any participants lost any part of their previously

10

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 12 of 89

earned benefits. (Pls' Ex. 1, Part B, Sections 1.1, 1.32, 7.3). Further, this finding of fact is denied. Amara continued to accrue benefits to her age-65 normal retirement benefit and to her benefits if she elected to receive them in a lump sum. 43. Denied except as otherwise stated herein. Defendants admit that Poulin's expert

report draws the conclusions described in the proposed finding, but deny the accuracy or legal sufficiency of his conclusions and deny that Poulin used proper methodology, as documented in Defendants' expert report. Defendants deny that any participants lost any part of their previously earned benefits. (Pls' Ex. 1, Part B, Sections 1.1, 1.32, 7.3). Further, this finding of fact is denied. Amara continued to accrue benefits to her age-65 normal retirement benefit and to her benefits if she elected to receive them in a lump sum. 44. Denied except as otherwise stated herein. Defendants deny the proposed finding

because it is based on inadmissible evidence. Specifically, the quoted witness statement constitutes hearsay, as Defendants never agreed in advance that the direct testimony of witnesses could be submitted in statement form. Notwithstanding the foregoing, Defendants admit that the witness statement Plaintiffs cite in the proposed finding is accurately quoted. Moreover, this finding of fact is denied. 45. Denied except as otherwise stated herein. Defendants admit that Poulin's expert

report draws the conclusions described in the proposed finding, but deny the accuracy or legal sufficiency of his conclusions and deny that Poulin used proper methodology, as documented in Defendants' expert report. Defendants deny that any participants lost any part of their previously earned benefits. (Pls' Ex. 1, Part B, Sections 1.1, 1.32, 7.3). Further, this finding of fact is denied. Broderick continued to accrue benefits to her age-65 normal retirement benefit and to her benefits if she elected to receive them in a lump sum.

11

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 13 of 89

46.

Denied except as otherwise stated herein. Plaintiffs are purporting to compare

Broderick's subsidized early retirement benefit (with social security supplement) to her account balance that was based on her age-65 normal retirement benefit under the prior formula. This is misleading. 47. Denied except as otherwise stated herein. Defendants deny the proposed finding

because it is based on inadmissible evidence. Specifically, the quoted witness statement constitutes hearsay, as Defendants never agreed in advance that the direct testimony of witnesses could be submitted in statement form. Notwithstanding the foregoing, Defendants admit that the witness statement Plaintiffs cite in the proposed finding is accurately quoted, but deny that the facts stated are correct. Broderick continued to accrue benefits to her age-65 normal retirement benefit and to her benefits if she elected to receive them in a lump sum. 48. 49. Denied. The documents cited do not confirm the factual statements claimed. Denied except as otherwise stated herein. Defendants admit that Poulin's expert

report draws the conclusions described in the proposed finding, but deny the accuracy or legal sufficiency of his conclusions and deny that Poulin used proper methodology, as documented in Defendants' expert report. Further, this finding of fact is denied. Participants frequently continued to accrue benefits to their age-65 normal retirement benefit and to their benefits in the form of a lump sum. 50. Denied except as otherwise stated herein. Defendants do not maintain the

information requested. Defendants admit that Prudential Retirement is the record-keeper for the CIGNA Pension Plan but likewise does not maintain electronic data showing how many participants were subject to the minimum benefit provisions of Part B in any given year.

12

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 14 of 89

51.

Denied except as otherwise stated herein. Defendants admit that Poulin's expert

report draws the conclusions described in the proposed finding, but deny the accuracy or legal sufficiency of his conclusions and deny that Poulin used proper methodology, as documented in Defendants' expert report. Further, this finding of fact is denied. Participants frequently continued to accrue benefits to their age-65 normal retirement benefit and to their benefits in the form of a lump sum. There are no "lost accruals." 52. Defendants deny the proposed finding because it is based on inadmissible

evidence. Specifically, the quoted witness statement constitutes hearsay, as Defendants never agreed in advance that the direct testimony of witnesses could be submitted in statement form. Notwithstanding the foregoing, Defendants admit that the witness statement Plaintiffs cite in the proposed finding is accurately quoted. By way of further response, Ms. Glanz was told on an annual basis that her account balance was growing every year with pay credits and interest. 53. Denied except as otherwise stated herein. Defendants admit that Poulin's expert

report draws the conclusions described in the proposed finding, but deny the accuracy or legal sufficiency of his conclusions and deny that Poulin used proper methodology, as documented in Defendants' expert report. Defendants admit that certain older, longer service participants (i.e., those with 55 or more combined age and service points) had their prior benefits converted to an Initial Retirement Account using a more favorable 5.05% interest rate. 54. Denied except as otherwise stated herein. Defendants deny the proposed finding

because it is based on inadmissible evidence. Specifically, the quoted report and survey constitute hearsay. The proposed finding is also irrelevant and unduly prejudicial, as the opinions expressed in news articles or periodicals regarding cash balance plans have no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section

13

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 15 of 89

204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA has violated Section 204(g) of ERISA. Nevertheless, Defendants admit that where the benefits under the prior plan formula and a new cash balance formula are maintained as two separate benefits, there is no wear-away and participants generally cannot elect to receive their prior benefits in the form of a lump sum (unless the prior plan also offered lump sum benefits). 55. Denied except as otherwise stated herein. Defendants deny the proposed finding

because it is based on inadmissible evidence. Specifically, the quoted survey constitutes hearsay. The proposed finding is also irrelevant and unduly prejudicial, as the opinions expressed in news articles or periodicals regarding cash balance plans have no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA has violated Section 204(g) of ERISA. Notwithstanding the foregoing, Defendants admit that the survey Plaintiffs cite is accurately quoted, but is only a partial quote. 56. Defendants admit that rehires after 2000 did not have their previously earned

benefits converted into an opening account balance. Instead, these rehired employees earned benefits under the cash balance formula starting with an account balance of zero, but they retained the rights to their previously earned benefits under the prior plan formula. 57. Denied. The communications accurately described how opening account balances

were created and how benefits were earned. 58. Denied. By way of further response, the proposed finding is irrelevant as it has

no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA violated Section 204(g).

14

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 16 of 89

59. accrual rule. 60.

Defendants admit that its cash balance formula complies with ERISA's 133 %

Denied except as otherwise stated herein. Defendants admit only that Plaintiffs

have accurately represented the financial numbers contained in the cited exhibits. Defendants deny the accuracy and legal sufficiency of conclusions drawn by Plaintiffs based on such data. The benefit credits and interest credits are not conditional. By way of further response, the proposed finding is irrelevant as it has no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA violated Section 204(g). Plaintiffs are trying to compare benefits in a manner that is irrelevant under ERISA's statutory provisions. 61. Denied except as otherwise stated herein. Defendants admit that Poulin's expert

report draws the conclusions described in the proposed finding, but deny the accuracy or legal sufficiency of his conclusions and deny that Poulin used proper methodology, as documented in Defendants' expert report. This finding of fact also is irrelevant, as it purports to consider previously earned benefits under a prior formula. ERISA's 133 % accrual rule requires that these previously earned benefits be ignored when testing for compliance with this rule. 62. Denied except as otherwise stated herein. Defendants admit that Poulin's expert

report draws the conclusions described in the proposed finding, but deny the accuracy or legal sufficiency of his conclusions and deny that Poulin used proper methodology, as documented in Defendants' expert report. This finding of fact also is irrelevant, as it purports to consider previously earned benefits under a prior formula. ERISA's 133 % accrual rule requires that these previously earned benefits be ignored when testing for compliance with this rule.

15

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 17 of 89

63.

Denied except as otherwise stated herein. Defendants admit that Poulin's expert

report draws the conclusions described in the proposed finding, but deny the accuracy or legal sufficiency of his conclusions and deny that Poulin used proper methodology, as documented in Defendants' expert report. This finding of fact also is irrelevant, as it purports to consider previously earned benefits under a prior formula. ERISA's 133 % accrual rule requires that these previously earned benefits be ignored when testing for compliance with this rule. 64. Denied except as otherwise stated herein. Defendants admit that Poulin's expert

report draws the conclusions described in the proposed finding, but deny the accuracy or legal sufficiency of his conclusions and deny that Poulin used proper methodology, as documented in Defendants' expert report. This finding of fact also is irrelevant, as it purports to consider previously earned benefits under a prior formula. ERISA's 133 % accrual rule requires that these previously earned benefits be ignored when testing for compliance with this rule. 65. Denied. This finding of fact also is irrelevant, as it does not address a plan

amendment that changes a plan from one benefit formula to another benefit formula. 66. responses. 67. Defendants deny the proposed finding because it is irrelevant, misleading and Defendants admit the finding of fact accurately quotes Defendants' interrogatory

unduly prejudicial, as it reflects nothing more than CIGNA's internal deliberations, presented through an incomplete quote, regarding the existence of the "wear-away" issue. These deliberations have no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA violated Section 204(g). Notwithstanding the foregoing, Defendants admit that the memorandum Plaintiffs cite is accurately quoted, but is only a partial quote.

16

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 18 of 89

68.

Defendants deny the proposed finding because it is irrelevant, misleading and

unduly prejudicial, as it reflects nothing more than CIGNA's internal deliberations, presented through an incomplete quote, regarding the existence of the "wear-away" issue. These deliberations have no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA violated Section 204(g). Notwithstanding the foregoing, Defendants admit that the memorandum Plaintiffs cite is accurately quoted, but is only a partial quote. 69. Defendants deny the proposed finding because it is irrelevant, misleading and

based on hearsay. The notes cited are not authored and do not reflect who said what to whom. Moreover, these notes have no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA violated Section 204(g). 70. Defendants admit that the letter Plaintiffs cite is accurately quoted, but is only a

partial quote. Moreover, the letter is referring to early retirement benefits, as is made clear from the paragraphs above the one quoted in the finding of fact. 71. Defendants deny the proposed finding because it is irrelevant, misleading and

based on hearsay. The notes cited are not authored and do not reflect who said what to whom. Moreover, these notes have no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA violated Section 204(g). Notwithstanding the foregoing, Defendants admit that the notes Plaintiffs quote are accurately quoted, but is only a partial quote. 72. Admitted.

17

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 19 of 89

73.

Denied except as otherwise stated herein. Defendants admit that Amara's

subsidized early retirement benefit exceeded the value of her account balance at age 55. Amara's normal retirement benefit and lump sum benefit, however, continued to earn additional benefits and grow. 74. Denied except as otherwise stated herein. Defendants deny the proposed finding

because it is irrelevant and misleading. These statements have no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA violated Section 204(g). Furthermore, to the extent that Plaintiffs make representations based on that portion of the exhibit containing an article from the Wall Street Journal, Defendants deny that portion of the proposed finding as based on inadmissible hearsay. Furthermore, Defendants deny the proposed finding to the extent it suggests that CIGNA deliberately established opening balances below the real value of employee's previously earned benefits. To the contrary, opening balances (Initial Retirement Accounts) were based on the value of employee's normal retirement benefits (or subsidized early retirement benefits for older employees) as of the date of the cash balance conversion using interest rates applicable at the time. Notwithstanding the foregoing, Defendants admit that the finding of fact accurately quotes the cited document. 75. Denied except as otherwise stated herein. Defendants deny the proposed finding

because it is irrelevant, misleading and unduly prejudicial, as it reflects nothing more than CIGNA's internal deliberations, presented through an incomplete quote, regarding the existence of "wear-away." These deliberations have no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA violated Section 204(g). Notwithstanding the foregoing,

18

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 20 of 89

Defendants admit that the documents Plaintiffs cite (Pls' Ex. 47 and 49) are accurately quoted but is only a partial quote. Furthermore, Exhibit 47 does not purport to be a final document presented to the board of directors, but rather was a draft sent for comments. Plaintiffs' characterization of the document is misleading and inaccurate. 76. Denied except as otherwise stated herein. Defendants deny the proposed finding

because it is irrelevant, misleading and unduly prejudicial, as it reflects nothing more than CIGNA's deliberations, presented through an incomplete quote. These deliberations have no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA violated Section 204(g). Furthermore, the testing for compliance with ERISA's accrual rules was conducted before December 31, 1997, the date referenced in the 30(b)(6) Notice of Deposition. CIGNA received guidance regarding its plan design from Mercer and from its outside counsel. 77. Defendants deny the proposed finding because it is based on inadmissible

evidence. Specifically, the quoted witness statement constitutes hearsay. Further, Defendants deny the proposed finding because it is irrelevant, misleading and unduly prejudicial, as it reflects nothing more than CIGNA's deliberations, presented through an incomplete quote. 78. Denied except as otherwise stated herein. Defendants deny the proposed finding

because it is based on inadmissible evidence. Specifically, the quoted memo constitutes hearsay. The proposed finding also is irrelevant and unduly prejudicial, as the discussion and advice contained therein regarding benefit accrual tests have no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA has violated Section 204(g) of ERISA. Notwithstanding the foregoing, Defendants admit that Plaintiffs have accurately quote from one

19

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 21 of 89

portion of the memo, but deny that Plaintiffs' characterization of the memo is accurate. Plaintiffs are taking a quote from one aspect of the memo that is addressing a particular question about "social security wage overrides" out of context. The portion of the memo does not address any of ERISA's accrual rules. 79. Denied. Although Mr. Sher does opine that the 133 % accrual rule can be

conducted without reference to the previously earned benefits (as is common practice whenever a plan amendment causes wearaway), other aspects of his report also address this issue, including his discussion and analysis of how benefits are earned under Part B. 80. Denied. Defendants deny the proposed finding because it is based on

inadmissible evidence. Specifically, the cited audio tape transcript constitutes hearsay. The proposed finding is also irrelevant and unduly prejudicial, as the opinions expressed by unidentified purported "IRS officials" at a seminar regarding cash balance plans have no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA has violated Section 204(g) of ERISA. ERISA's 133 % accrual rule requires that "any amendment to the plan which is in effect for the current year shall be treated as if in effect for all other plan years." 29 U.S.C. § 1054(b)(1)(B). This has been confirmed by at least two cases. See Richards v. FleetBoston Financial Corp., 427 F.Supp.2d 150 (D. Conn. 2006); Register v. PNC Fin. Servs., Group, No. 04-6097, 2005 WL 3120268 (E.D. Pa. Nov. 21, 2005). 81. Denied except as otherwise stated herein. Defendants admit that early retirement

subsidized benefits are more valuable than normal retirement benefits. Because opening account balances are generally based on the value of a participant's normal retirement benefit (except for certain older employees, whose opening account balance is enhanced to include the value of

20

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 22 of 89

some early retirement benefits), wear-away with respect to early retirement benefits is more likely than wear-away with respect to normal retirement benefits. Wear-away with respect to early retirement benefits, however, is irrelevant to ERISA's nonforfeitability rule and ERISA's benefit accrual rule. 82. Denied except as otherwise stated herein. Defendants admit that participants

under Part B are entitled to the greater of their minimum benefit or their account balance. (Pls' Ex. 1, Part B, Sections 1.1(c), 7.3). 83. 84. Denied. See Response to Finding of Fact No. 82. Defendants deny the proposed finding because it is irrelevant and unduly

prejudicial. Specifically, information contained in CIGNA's communications with its shareholders about what Plaintiffs allege has no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA has violated Section 204(g) of ERISA. Notwithstanding the foregoing, Defendants admit that they are aware of the Class' claim against them and filed the Motion to Dismiss cited in the finding of fact. 85. Denied except as otherwise stated herein. Sher opines that participants under Part

B are entitled to the greater of their minimum benefit or their account balance, in accordance with Part B, Sections 1.1(c), 7.3. Furthermore, this is a benefit to participants, not a forfeiture. 86. Denied except as otherwise stated herein. Defendants admit that Poulin's expert

report draws the conclusions described in the proposed finding, but deny the accuracy or legal sufficiency of his conclusions and deny that Poulin used proper methodology, as documented in Defendants' expert report. Furthermore, Mr. Poulin's analysis did not consider, let alone opine upon, rates of benefit accrual after normal retirement age. Notwithstanding the foregoing,

21

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 23 of 89

Defendants admit that the excerpt of Mr. Poulin's report Plaintiffs cite is accurately quoted, but is only a partial quote. 87. Denied except as otherwise stated herein. Defendants admit that Poulin's expert

report draws the conclusions described in the proposed finding, but deny the accuracy or legal sufficiency of his conclusions and deny that Poulin used proper methodology, as documented in Defendants' expert report. In fact, as reflected in the Sher report, when benefit accruals are measured properly under Part B, the rate of benefit accrual increases with age. Notwithstanding the foregoing, Defendants admit that the excerpt of Mr. Poulin's report Plaintiffs cite is accurately quoted, but is only a partial quote. 88. Denied except as otherwise stated herein. Defendants admit that Poulin's expert

report draws the conclusions described in the proposed finding, but deny the accuracy or legal sufficiency of his conclusions and deny that Poulin used proper methodology, as documented in Defendants' expert report. In fact, as reflected in the Sher report, when benefit accruals are measured properly under Part B, the rate of benefit accrual increases with age. Notwithstanding the foregoing, Defendants admit that the excerpt of Mr. Poulin's report Plaintiffs cite is accurately quoted, but is only a partial quote. 89. Denied except as otherwise stated herein. Defendants deny the proposed finding

because it is based on inadmissible evidence. Specifically, the quoted article constitutes hearsay. The proposed finding is also irrelevant and unduly prejudicial, as the opinions expressed in news articles or periodicals regarding cash balance plans have no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA has violated Section 204(g) of ERISA. Notwithstanding the foregoing, Defendants admit that the article Plaintiffs cite is accurately

22

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 24 of 89

quoted, but is only a partial quote. Moreover, as reflected in the Sher report, when benefit accruals are measured properly under Part B, the rate of benefit accrual increases with age. 90. Denied except as otherwise stated herein. Defendants admit that Poulin's expert

report draws the conclusions described in the proposed finding, but deny the accuracy or legal sufficiency of his conclusions and deny that Poulin used proper methodology, as documented in Defendants' expert report. In fact, as reflected in the Sher report, when benefit accruals are measured properly under Part B, the rate of benefit accrual increases with age. Notwithstanding the foregoing, Defendants admit that the excerpt of Mr. Poulin's report Plaintiffs cite is accurately quoted, but is only a partial quote. 91. Denied except as otherwise stated herein. Defendants admit that Poulin's expert

report draws the conclusions described in the proposed finding, but deny the accuracy or legal sufficiency of his conclusions and deny that Poulin used proper methodology, as documented in Defendants' expert report. In fact, as reflected in the Sher report, when benefit accruals are measured properly under Part B, the rate of benefit accrual increases with age. Notwithstanding the foregoing, Defendants admit that the excerpt of Mr. Poulin's report Plaintiffs cite is accurately quoted, but is only a partial quote. 92. Denied except as otherwise stated herein. Defendants admit that Poulin's expert

report draws the conclusions described in the proposed finding, but deny the accuracy or legal sufficiency of his conclusions and deny that Poulin used proper methodology, as documented in Defendants' expert report. In fact, as reflected in the Sher report, when benefit accruals are measured properly under Part B, the rate of benefit accrual increases with age. Notwithstanding the foregoing, Defendants admit that the excerpt of Mr. Poulin's report Plaintiffs cite is accurately quoted, but is only a partial quote.

23

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 25 of 89

93.

Denied except as otherwise stated herein. Defendants admit that Poulin's expert

report draws the conclusions described in the proposed finding, but deny the accuracy or legal sufficiency of his conclusions and deny that Poulin used proper methodology, as documented in Defendants' expert report. Notwithstanding the foregoing, Defendants admit that the excerpt of Mr. Poulin's report Plaintiffs cite is accurately quoted, but is only a partial quote Defendants also admit that early retirement eligibility is a function of age. However, the wear-away period for employees who are 65 will be less than the wearaway period for employees who are younger than 65. 94. Denied. No employees lost benefits under the conversion to the cash balance

formula. Rather, all previously earned benefits were protected and, the day after the conversion, any employee still had all of the same benefit options and benefit amounts available to him as were available the day before the conversion, plus the option to receive their benefits as a lump sum. (Pls' Ex. 1, Part B. Sections 1.1(c), 1.28, 1.32, 7.2(a)(1), 7.3). Moreover, older, longer service employees were grandfathered under the prior formula and were not placed into the cash balance plan. Of the employees who were transferred to the cash balance formula, the older, longer service employees were transferred at more favorable terms than younger employees. (Pls' Ex. 1, Part B, Section 1.28(a)). In addition, some of the documents cited are hearsay and others do not make clear that they refer to the final plan design adopted by CIGNA, as opposed to early proposed plan designs. The proposed finding is also irrelevant and unduly prejudicial, as the opinions expressed in news articles or internal discussions have no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA has violated Section 204(g) of

24

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 26 of 89

ERISA. Notwithstanding the foregoing, Defendants admit that the exhibits Plaintiffs cite are accurately quoted, but are only partial quotes, taken out of context. 95. Denied except as otherwise stated herein. Defendants deny the proposed finding

because it is irrelevant and unduly prejudicial, as the information and advice CIGNA used in considering a cash balance conversion has no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA has violated Section 204(g) of ERISA. CIGNA's intent is not material to that analysis. Notwithstanding the foregoing, Defendants admit that the document Plaintiffs cite is accurately quoted, but is only a partial quote. Defendants deny that the testing method used is the appropriate one for testing for age discrimination in a cash balance plan. To the contrary, the testing conducted and referenced in the document was non-discrimination testing in favor of highly compensated employees pursuant requirements of the Internal Revenue Code different from those regarding age discrimination, and the methodology used to conduct such testing is different from the methodology used to test for age discrimination in a cash balance plan. Indeed, there is a particular regulation cited in the memo ­ Treas. Reg. 1.401(a)(4)-5 ­ that addresses the specific requirements of such testing. It provides in part "This paragraph (a) provides rules for determining whether the timing of a plan amendment or series of amendments has the effect of discriminating significantly in favor of HCEs [Highly Compensated Employees] or former HCEs." There is no similar regulation for testing for age discrimination and the methods for testing are different. Lastly, this document does not address the final plan design adopted in Part B, but rather considers alternative plan designs that were not adopted.

25

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 27 of 89

96.

Denied except as otherwise stated herein. Defendants deny the proposed finding

because it is irrelevant and unduly prejudicial, as the information and advice CIGNA used in considering a cash balance conversion has no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA has violated Section 204(g) of ERISA. CIGNA's intent is not material to that analysis. Furthermore, the spreadsheet was prepared (as indicated) to test and demonstrate that Part B satisfies ERISA's 133 % accrual rule. As explained in Defendants' Trial Brief, ERISA's 133 % accrual rule explicitly requires testing of the accrued benefit payable at normal retirement age. 29 U.S.C. § 1054(b)(1)(B). ERISA's age discrimination provision does not contain the same language and does not require testing under the same methodology, so this document is irrelevant. As explained in the Sher report, when one measures the rate of benefit accrual the way it should be measured, Part B is age favored. Notwithstanding the foregoing, Defendants admit that Plaintiffs have accurately represented the contents of the offered exhibit. Furthermore, Defendants deny that portion of the proposed finding based on inadmissible hearsay in the form of Ex. 9 (Caalim Decl.). 97. Denied except as otherwise stated herein. Defendants deny the proposed finding

because it is based on inadmissible evidence. Specifically, the cited declaration constitutes hearsay. Moreover, the finding is denied for the reasons stated in response to Plaintiffs' proposed finding 96. 98. Denied except as otherwise stated herein. The proposed finding is irrelevant and

unduly prejudicial, as the opinions expressed on Defendant's website about whether older participants may or may not experience a reduction in the future rate at which they earn benefit compared to whatever prior plan formula was in place for that employer has no bearing on

26

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 28 of 89

whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA has violated Section 204(g) of ERISA. Notwithstanding the foregoing, Defendants admit that the exhibits Plaintiffs cite are accurately quoted, but are only partial quotes. By way of further response, whether any participant (older or younger) experienced a reduction in the amount of future benefits to be earned as a result of a plan amendment depends on the terms of the particular plan before and after the amendment. The website Plaintiffs quote in their finding of fact also states that "In order to protect the retirement security of all employees, some grandfathering of benefits is usually needed." In this case, CIGNA not only grandfathered its older, longer service participants, but also provided enhanced benefits to older non-grandfathered participants. 99. Denied except as otherwise stated herein. Defendants deny the proposed finding

because it is irrelevant and unduly prejudicial, as the opinions expressed in internal memoranda regarding general challenges to cash balance plans and whether or not CIGNA's cash balance plan is susceptible to such challenges has no bearing on whether CIGNA's cash balance plan violates ERISA's age discrimination provision. CIGNA's intent is not material to that analysis. Notwithstanding the foregoing, Defendants admit that Plaintiffs have accurately represented the contents of the offered exhibit. This is a draft document submitted for comments and proposed changes. There is no evidence that this document was ever actually presented to the Board of Directors or discussed with the Board of Directors. 100. Denied except as otherwise stated herein. Defendants deny the proposed finding

because it is irrelevant and unduly prejudicial, as the opinions expressed in internal memoranda regarding general challenges to cash balance plans and whether or not CIGNA's cash balance plan is susceptible to such challenges has no bearing on whether CIGNA's cash balance plan

27

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 29 of 89

violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA has violated Section 204(g) of ERISA. CIGNA's intent is not material to that analysis. Notwithstanding the foregoing, Defendants admit that Plaintiffs have accurately represented the contents of the offered exhibit. This is a draft document submitted for comments and proposed changes. There is no evidence that this document was ever actually presented to the Board of Directors or discussed with the Board of Directors. 101. Denied. Plaintiffs have no evidence to support this finding and their citation to

Defendants' privilege logs is misleading and inaccurate. Moreover, Defendants deny the proposed finding because it is irrelevant and unduly prejudicial, as whether or not CIGNA sought legal advice regarding whether cash balance plans are age discriminatory is irrelevant to whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA has violated Section 204(g) of ERISA. 102. Denied except as otherwise stated herein. Defendants deny the proposed finding

because it is based on inadmissible evidence. Specifically, the quoted witness statement constitutes hearsay, as Defendants never agreed in advance that the direct testimony of witnesses could be submitted through deposition. Notwithstanding the foregoing, Defendants admit that Plaintiffs have accurately described the contents of the testimony sections cited in this finding of fact. 103. finding of fact. 104. Defendants deny the proposed finding because it is based on inadmissible Denied. The testimony cited does not support the proposition suggested in the

evidence. Specifically, the quoted document constitutes hearsay. The proposed finding is also

28

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 30 of 89

irrelevant and unduly prejudicial. There is no evidence that it ever was provided to CIGNA. Moreover, the advice CIGNA received when it was considering a cash balance conversion has no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA has violated Section 204(g) of ERISA. CIGNA's intent is not material to that analysis. Notwithstanding the foregoing, Defendants admit that the document Plaintiffs cite is accurately quoted, but is only a partial quote. 105. Defendants deny the proposed finding because it is based on inadmissible

evidence. Specifically, the quoted document constitutes hearsay. The proposed finding is also irrelevant and unduly prejudicial, as the advice CIGNA received when it was considering a cash balance conversion has no bearing on whether CIGNA'S cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA has violated Section 204(g) of ERISA. CIGNA's intent is not material to that analysis. Notwithstanding the foregoing, Defendants admit the accuracy of the quotation used by Plaintiffs, but deny the accuracy of Plaintiffs interpretation of such quotation as it is taken out of context. As explained previously, when the rates of benefit accrual are measured correctly, Part B is age favored. 106. 107. 108. Denied. Mr. Sher's analysis and opinions are not legal arguments. Admitted. Defendants deny the accuracy of Plaintiffs' characterization of the contents of the

deposition testimony cited therein and of the exhibit referenced therein. 109. Defendants deny the accuracy of Plaintiffs' characterization of the contents of the

deposition testimony cited therein.

29

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 31 of 89

110.

Defendants admit that Plaintiffs characterization of the contents of Mr. Sher's

report is accurate. 111. 112. 113. 114. Admitted. Admitted. Denied. Denied except as otherwise stated herein. Defendants admit that the prior plan

formulas provide their highest benefit growth as employees become closer to retirement age. Plaintiffs' expert, however, disagrees with this analysis. Defendants deny the remaining portion of the finding of fact, as the cited document explains why older employees would be grandfathered into the traditional plan, so they can continue to earn their benefits under that plan. 115. Denied. As explained previously, the growth in retirement benefits under Part B

is age and service favored, so an older employee's benefit will grow more quickly than the benefit of a similarly situated younger employee. 116. Denied except as otherwise stated herein. Defendants deny the proposed finding

because it is based on evidence that is irrelevant and unduly prejudicial as an internal memorandum on proposed changes to the "old plan" has no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA has violated Section 204(g) of ERISA. Furthermore, Defendants deny that Plaintiffs quotation from said document, while technically accurate, in any way supports the fact put forth by Plaintiffs in this finding of fact. 117. Denied except as otherwise stated herein. Defendants deny the proposed finding

because it is based on inadmissible evidence. Specifically, the quoted article constitutes hearsay and the quotations within the article constitute hearsay within hearsay. The proposed finding is

30

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 32 of 89

also irrelevant and unduly prejudicial, as the opinions expressed in news articles or periodicals regarding cash balance plans have no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA has violated Section 204(g) of ERISA. Notwithstanding the foregoing, Defendants admit that the article Plaintiffs cite is accurately quoted. 118. Denied except as otherwise stated herein. Defendants deny the proposed finding

because it is based on inadmissible evidence. Specifically, the quoted articles constitute hearsay. The proposed finding is also irrelevant and unduly prejudicial, as the opinions expressed in news articles or periodicals regarding other cash balance plans and disclosures associated with those disclosures have no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA has violated Section 204(g) of ERISA. Notwithstanding the foregoing, Defendants admit that the article Plaintiffs cite is accurately quoted, but is taken out of context. 119. Denied except as otherwise stated herein. Defendants deny the proposed finding

because it is based on evidence that is irrelevant and unduly prejudicial, as the generic opinions expressed have no bearing on whether CIGNA's cash balance plan violates ERISA, whether CIGNA's SPD and Section 204(h) notice satisfy ERISA's disclosure requirements, or whether CIGNA has violated Section 204(g) of ERISA. Notwithstanding the foregoing, Defendants admit that the article Plaintiffs cite is accurately quoted. 120. Defendants admit that Plaintiffs have accurately quoted the cited memorandum,

although the 45% reduction is comparing an early retirement subsidized benefit (under Part A) with the cash balance formula which does not contain any subsidized early retirement benefits beyond those protected as part of the minimum benefit.

31

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 33 of 89

121.

Defendants admit that Mr. Depenbrock's age-55 early retirement benefits

increased substantially when he was returned into Part A and became entitled to a subsidized early retirement benefit under Part A. 122. Denied except as otherwise stated herein. Defendants deny the proposed finding

because it is irrelevant and unduly prejudicial. Plaintiffs' argument regarding CIGNA's compliance with the district court's order in Depenbrock rests on an incorrect reading of that order, which directed only that one individual -- John Depenbrock -- have his benefit recalculated under Part A. The court in Depenbrock did not require the Plan Administrator to recalculate benefits for anyone besides Mr. Depenbrock. Nonetheless, since the issuance of that order, the Plan Administrator has been working to ensure that he administers the CIGNA Pension Plan in a manner that is consistent with the Depenbrock decision. Defendants admit that Amara's age-55 early retirement benefit increased as set forth in the finding of fact when her early retirement subsidized benefit was calculated under Part A. 123. Denied except as otherwise stated herein. Defendants deny the proposed finding

because it is partially based on inadmissible evidence. Specifically, the cited emails constitute hearsay. The proposed finding is also irrelevant and unduly prejudicial. Plaintiffs' argument regarding CIGNA's compliance with the district court's order in Depenbrock rests on an incorrect reading of that order, which directed only that one individual -- John Depenbrock -have his benefit recalculated. The court in Depenbrock did not require the Plan Administrator to recalculate benefits for anyone besides Mr. Depenbrock. Nonetheless, since the issuance of that order, the Plan Administrator has been working to ensure that he administers the CIGNA Pension Plan in a manner that is consistent with the Depenbrock decision.

32

Case 3:01-cv-02361-MRK

Document 179

Filed 06/27/2006

Page 34 of 89

124.

Denied except as otherwise stated herein. Defendants deny the proposed finding

because it is irrelevant and unduly prejudicial. Plaintiffs' argument regarding CIGNA's compliance with the district court's order in Depenbrock rests on an incorrect reading of that order, which directed only that one individual -- John Depenbrock -- have his benefit recalculated.