Free Brief in Support of Motion - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 03-CV-02671 RPM JOHNNY WELLS, DONALD J. BROOKINS, and RILEY ANDREW SCHAEFFER, on behalf of themselves and all others similarly situated, Plaintiffs, v. GANNETT RETIREMENT PLAN and GANNETT CO., INC., Defendants. ______________________________________________________________________________ DEFENDANTS' MEMORANDUM OF LAW IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT ______________________________________________________________________________ NIXON PEABODY LLP Margaret A. Clemens, Esq. Robert Bernius, Esq. Clinton Square, P.O. Box 31051 1300 Clinton Square Rochester, NY 14603-1051 Telephone: (585) 263-1000 Fax: (585) 263-1600 [email protected] [email protected]

HOLLAND & HART, LLP Michael S. Beaver, Esq. 8390 E. Crescent Parkway #400 Greenwood Village, CO 80111 Telephone: (303) 290-1600 Fax: (303) 290-1606 hollandhart.com Attorneys for Gannett Retirement Plan and Gannett Co., Inc.

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TABLE OF CONTENTS Page TABLE OF AUTHORITIES .........................................................................................................(i) PRELIMINARY STATEMENT .....................................................................................................1 BACKGROUND ON HYBRID PENSION PLANS.......................................................................3 FACTUAL BACKGROUND..........................................................................................................7 STATEMENT OF FACTS NOT IN GENUINE DISPUTE A. B. How the Traditional Defined Benefit Formula Works ...........................................9 How the Pension Equity Formula Works ................................................................9 1. 2. 3. 4. C. The Basic Retirement Amount ......................................................................9 Starting Percentages ....................................................................................11 "Grandfathering Provisions" .......................................................................12 Transition Percentages.................................................................................12

How Benefits Are Paid Under the Pension Equity Formula..................................13

PROCEDURAL BACKGROUND................................................................................................16 INTRODUCTION: THE LEGAL STANDARDS GOVERNING THIS MOTION.....................17 POINT I PLAINTIFFS' AGE DISCRIMINATION CLAIMS UNDER ERISA § 204(b)(1)(H) FAIL BECAUSE THEIR RATE OF BENEFIT ACCRUAL IS NOT REDUCED ON ACCOUNT OF THEIR AGE.......................18 "Benefit Accrual" Means the Annual Additions to the Participant's Lump Sum Balance ...............................................................................................19 Annual Contributions or Allocations to Plaintiffs' Hypothetical Balances Were Not Reduced Because of Their Age .............................................23 Plaintiffs' Theory is Fundamentally Flawed and Should Be Rejected ..................23 Rules of Statutory Construction Support a Grant of Defendants' Motion.............26 Legislative History of ERISA § 204(b)(1)(H) Supports Defendants' Position ..................................................................................................................27 Treasury Regulations Permit Gannett's PEF .........................................................29 PLAINTIFFS' RATE OF BENEFIT ACCRUAL DID NOT CEASE BECAUSE OF THEIR AGES DURING THE CONVERSION TO THE PEF.......30

A. B. C. D. E. F. POINT II

CONCLUSION..............................................................................................................................34

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-iTABLE OF AUTHORITIES CASES Page Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) ..................................................................18 Barfield v. Commerce Bank, N.A., 484 F.3d 1276 (10th Cir. 2007)..............................................30 Bell Atlantic Corp. v. Twombly, 550 U.S. , 127 S. Ct. 1955 (2007) .............................................7 Bryerton v. Verizon Commc'ns Inc., 2007 U.S. Dist. LEXIS 29488 (S.D.N.Y. 2007)............22, 24 Celotex Corp. v. Catrett, 477 U.S. 317 (1986) ..............................................................................17 In re Citigroup Pension Plan ERISA Litig., 470 F. Supp. 2d 323 (S.D.N.Y. 2006)......................23 Cooper v. IBM, 457 F.3d 636 (7th Cir. 2006)........................................................................ passim County of Concrete v. TWP of Roxbury, 442 F.3d 159 .................................................................17 Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73 (1995) .........................................................3 Drutis v. Quebecor World (USA), 459 F. Supp. 2d 580 (E.D.K.Y. 2006).....................................22 Eaton v. Onan Corp., 117 F. Supp. 2d 812 (S.D. Ind. 2000)...................................................22, 28 Edsen v. Bank of Boston, 229 F.3d 154 (2d Cir. 2001)....................................................................5 Engers v. AT&T Corp., 2001 U.S. Dist. LEXIS 25889 (D.N.J. 2001) ..........................................22 FDIC v. Meyer, 510 U.S. 471 (1994) ............................................................................................19 Finley v. Dun & Bradstreet, 471 F. Supp. 2d 485 (D.N.J. 2007) ......................................17, 22, 24 Hazen Paper Co. v. Biggins, 507 U.S. 604 (1993) ........................................................................25 Hirt v. The Equitable Ret. Plan for Employees, Managers and Agents, 441 F. Supp. 2d 516 (S.D.N.Y. 2006) .......................................................................................................................22 Hughes Aircraft Co. v. Jacobson, 525 U.S. 432 (1999) ..................................................................4 In re J.P. Morgan Chase Cash Balance Litig., 460 F. Supp. 2d 479 (S.D.N.Y. 2006).................23 Laurent v. PriceWaterhouseCoopers LLP, 448 F. Supp. 2d 537 (S.D.N.Y. 2006).................22, 24

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- ii TABLE OF AUTHORITIES CASES

Page

Lockheed Corp. v. Spink, 517 U.S. 882 (1996)................................................................................3 Red Hawk, LLC, v. Schneider, 2007 U.S. App. LEXIS 16204 (10th Cir. 2007) ...........................17 Register v. PNC Fin. Servs. Group, Inc., 477 F.3d 56 (3d Cir. 2007)................................... passim Rice v. Office of Servicemembers' Group Life Ins., 260 F.3d 1240 (10th Cir. 2001) ....................18 Richards v. FleetBoston, 235 F.R.D. 165 ................................................................................23, 31 Richards v. FleetBoston Fin. Corp., 427 F. Supp. 2d 150 (D. Conn. 2006)..................................22 Shaw v. Delta Airlines, Inc., 463 U.S. 85 (1983).............................................................................3 Siemon v. AT&T Corp., 117 F.3d 1173 (10th Cir. 1997)...............................................................18 Sipma v. Mass. Cas. Ins. Co., 256 F.3d 1006 (10th Cir. 2001) .....................................................18 Soliman v. Gonzales, 419 F.3d 276 (4th Cir. 2005).......................................................................27 Sosa v. Alvarez-Machain, 542 U.S. 692 (2004).............................................................................26 Sunder v. U.S. Bank Pension Plan, 2007 U.S. Dist. LEXIS 11331 (E.D. Mo. 2007) .............22, 24 Tafoya v. U. S. Dep't of Justice, 748 F.2d 1389 (10th Cir. 1984)..................................................26 Tomlinson v. El Paso Corp., 2007 U.S. Dist. LEXIS 20766 (D. Colo. 2007)...............................18 Tootle v. ARINC, Inc., 222 F.R.D. 88 (D.Md. 2004) ...............................................................22, 28 STATUTES and MISCELLANEOUS 26 C.F.R. § 1.401(a)(4)-(13)..........................................................................................................31 26 C.F.R. § 1.411 (b)-1(b)(3).........................................................................................................15 26 C.F.R. § 1.410(b)-3(a)(2)(iii)(C)...............................................................................................31 67 Fed. Reg. 76123-76126.............................................................................................................20 29 U.S.C. § 1001..............................................................................................................................1

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- iii TABLE OF AUTHORITIES STATUTES and MISCELLANEOUS Page 29 U.S.C. § 1002(22) .......................................................................................................................5 29 U.S.C. § 1002(23)(A)..................................................................................................................2 29 U.S.C. § 1002(34) .......................................................................................................................4 29 U.S.C. § 1002(35) .......................................................................................................................4 29 U.S.C. § 1002(A)(i) ....................................................................................................................3 29 U.S.C. § 1054(b)(1) ..............................................................................................................1, 15 29 U.S.C. § 1054(b)(1)(C) .............................................................................................................15 29 U.S.C. § 1054(b)(1)(H)..................................................................................................... passim 29 U.S.C. § 1054 (b)(1)(G)............................................................................................................27 29 U.S.C. § 204(b)(2)(A)...............................................................................................................21 ERISA § 204(b)(1)(H) ........................................................................................................... passim ERISA § 204(g), 29 U.S.C. § 1054(g)...........................................................................................30 ERISA § 205(c), 29 U.S.C. § 1055(c) ...........................................................................................16 H.R. Conf. Rep. 99-1012, 1986 U.S.C.C.A.N. 3868, 4026 ...........................................................28 Pub. L. No. 109-280, 120 Stat. 780 (2006)......................................................................................7 Internal Revenue Code § 411(b)(1)(H)..........................................................................................29 Internal Revenue Code § 411(b)(1)(C) ..........................................................................................29 Pension Benefit Guarantee Corp., Pension Insurance Data Book 2005, 61-62 (2006)...................6 Webster's Third New International Dictionary (1993)..................................................................24 "What is a Pension Equity Plan," published on the U.S. Dept. of Labor, Bureau of Statistics website, available at http://stats.bls.gov/opub/cwc/cm20031016ar01p1.htm............................6

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PRELIMINARY STATEMENT Defendants Gannett Retirement Plan (the "Retirement Plan" or "Plan") and Gannett Co., Inc. ("Gannett") submit this Memorandum of Law in support of their motion for summary judgment dismissing this action in its entirety, pursuant to Rule 56 of the Federal Rules of Civil Procedure. Plaintiffs, Johnny Wells, Donald Brookins, and Riley Andrew Schaefer, are employees of KUSA-TV, an affiliate of Gannett, and participate in the Gannett Retirement Plan. Gannett amended its Plan, effective January 1, 1998, to include a new pension equity formula ("PEF"). This new type of formula or pension plan is commonly referred to as a "hybrid" pension plan because it contains attributes and advantages of both a traditional defined benefit plan and a defined contribution plan, two types of pension plans defined and regulated by the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended, 29 U.S.C. § 1001, et. seq. In their Amended Complaint, plaintiffs assert two claims. Plaintiffs allege that the Retirement Plan's new pension equity formula violates ERISA § 204(b)(1)(H), 29 U.S.C. § 1054(b)(1)(H) because: (1) their "rate of benefit accrual" after January 1, 1998 was reduced because of age; and (ii) their "benefit accrual" ceased on January 1, 1998 because of their age. Notably, the Amended Complaint is devoid of any facts whatsoever to support either claim. Section 204(b)(1)(H) provides that a defined benefit plan violates ERISA's age discrimination prohibition "if, under the plan, an employee's benefit accrual is ceased, or the rate of an employee's benefit accrual is reduced, because of the attainment of any age." 29 U.S.C. § 1054(b)(1)(H). ERISA § 204(b)(1)(H) requires no more than equal rates of benefit accrual for similarly situated older and younger employees, as measured on a year to year basis. Gannett's

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-2Plan passes this test because it treats older employees the same as or better than younger employees. The PEF fully complies with ERISA § 204(b)(1)(H) by affording each employee, on an on-going basis, annual points, or percentages, that increase with years of service. Employees, regardless of their age, accrue benefits at the rate of 5% for each year of credited service for their first ten years, 7% for their next ten years of service, and 9% for every year of credited service in excess of 20. 1 Thus, the value of these percentages increases as an employee's final average earnings increase. An employee's aggregate percentage is multiplied by his or her final average earnings to determine the employee's benefit. This pattern of benefit accrual is identical for all similarly situated employees. Thus, under the Plan, in any given year, the "rate of benefit accrual" for similarly situated employees regardless of age will always be the same. This is not a situation in which older employees receive lower pension benefits than younger employees. Nor do older employees, at any time, cease accruing benefits altogether because of their age. Plaintiffs' two ERISA claims hinge on substituting the phrase "accrued benefit," a term defined elsewhere in ERISA, in the place of "the rate of benefit accrual," or "benefit accrual," the words that actually appear in ERISA § 204(b)(1)(H). In comparison, in its definition section, ERISA defines "accrued benefit" to be the "annual benefit commencing at normal retirement age." 29 U.S.C. § 1002(23)(A). The vast majority of courts considering the statutory language have refused to interpret ERISA § 204(b)(1)(H) in the strained manner urged by plaintiffs. The two Courts of Appeal that
1

The Plan also provides for supplemental percentages on pay over the Social Security wage base.

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-3have squarely addressed the question have held that "rate of benefit accrual," as used in ERISA § 204(b)(1)(H) and in the context of hybrid plans, most naturally means the "input" or what the Plan's benefit formula actually indicates is added or "accrued" in any given year, rather than the annual rate of withdrawal, or output, at retirement. Under this proper interpretation of the statutory provision at issue, hybrid plans are not inherently age discriminatory and do not violate ERISA § 204(b)(1)(H). To date, nine district courts agree. The decisions of these courts are well-reasoned and are based upon the statutory language, the legislative history, the mechanics of how benefits are earned under a hybrid pension plan, and fundamental economic principles. Because the Gannett Retirement Plan provides equal "rates of benefit accrual" for younger and older similarly situated employees, and because plaintiffs' "benefit accrual" does not cease because of their age, there is no age discrimination and no violation of ERISA § 204(b)(1)(H). Summary judgment in favor of defendants dismissing the two claims asserted in the Amended Complaint is warranted as a matter of law. BACKGROUND ON HYBRID PENSION PLANS To understand the dispute in this case, some background on hybrid pension plans, like the one at issue in this case, is essential. Enacted in 1974, ERISA generally governs private employee benefit plans, which are defined to include "any plan, fund or program . . . established or maintained by the employer . . . [to provide] retirement income to employees." 29 U.S.C. § 1002(2)(A)(i). ERISA, however, does not mandate that employers provide any particular benefits. Shaw v. Delta Airlines, Inc., 463 U.S. 85, 91 (1983). Further, employers are free, at any time, to adopt, modify or terminate employee benefit plans, including pension plans. See Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 78 (1995); Lockheed Corp. v. Spink, 517

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-4U.S. 882, 890-91 (1996). ERISA provides for two basic types of retirement plans: "defined contribution plans" and "defined benefit plans." 29 U.S.C. § 1002(34) ­ (35). A defined contribution plan is "a pension plan which provides for an individual account for each participant and for benefits based solely upon the amount contributed to the participant's account, and any income, expenses, gains and losses, and any forfeiture of accounts of other participants which may be allocated to such participant's account." 29 U.S.C. § 1002(34). See Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 439 (1999). An employee's account reflects the value of the contributions made to that account, whether by the employer or the employee. The employee is not guaranteed any benefit and the employee bears the risk of the plan's investment performance. Id., 525 U.S. at 439; Register v. PNC Fin. Servs. Group, Inc., 477 F.3d 56, 61 (3d Cir. 2007). A typical, or common, defined contribution account is a 401(k) plan. A defined benefit plan, on the other hand, is any plan which is not a defined contribution plan. 29 U.S.C. § 1002(35). In a defined benefit plan, there is a pool of assets, and no specific assets are set aside for the payment of an individual's benefit. Instead, the individual is promised a specific payment upon retirement, based upon a formula set forth in the pension plan. Register, 477 F.3d at 62. The employer is expected to fund its obligations by making periodic payments to a trust fund, which funds are invested and used to pay the promised benefit. Hughes Aircraft Co., 525 U.S. at 439. Unlike participants in a defined contribution plan, participants in a defined benefit plan do not bear the risk of a plan's potential poor investment performance or negative investment returns. The employer bears that risk. Register, 477 F.3d at 62.

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-5Traditionally, defined benefit plans provide for a benefit that is payable as a single life annuity commencing at age 65 that is a function of an employee's service and/or compensation. This is referred to as the normal retirement benefit. 29 U.S.C. § 1002(22). Many traditional plans provide for early retirement benefits, but typically in such cases, the benefit is reduced to recognize that it will be paid over a longer period of time. To take advantage of the benefits of both a defined benefit plan and a defined contribution plan, many employers have adopted "hybrid" pension plans. Two types of hybrid plans are a cash balance plan and a pension equity plan. 2 Hybrid plans, by law, are a form of defined benefit plan and must comply with the statutory regulations applicable to defined benefit plans. See, e.g., Register, 477 F.3d at 62; Edsen v. Bank of Boston, 229 F.3d 154, 158 (2d Cir. 2001). However, in actuality, a hybrid plan is a cross between a defined contribution plan and a defined benefit plan because it contains attributes of both. Hybrid plans differ from more traditional defined benefit plans because, unlike traditional plans which define an employee's benefit as a monthly annuity to begin at retirement (e.g., $1,000 a month for life commencing at age 65), hybrid plans define a benefit in terms of a hypothetical account or balance (e.g., a $50,000 lump sum amount paid at termination of employment). Hybrid plans, which express a participant's benefit as a lump sum account or balance, do not allocate contributions (or any gains or losses on those contributions) to an actual account. Instead, the employer imputes value to a participant's hypothetical account or balance in the
2

Pension equity plans are a variation on the cash balance design. Both are hybrid plans designed to operate like a defined contribution plan while actually being a defined benefit plan. For example, both types of hybrid plans express a benefit in terms of a lump sum amount.

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-6form of credits. Specifically, in the case of many pension equity plans, like Gannett's, the value credited to the participant's balance over time is driven by two variables: (1) the employee's length of service; and (2) the employee's final average earnings. As is true in the case of traditional defined benefit plans, an employer funding the hybrid plan bears the investment risks associated with the plan. Register, 477 F.3d at 63. Hybrid plans have advantages for both employers and employees. For employers, the costs of hybrid plans are more predictable than that of certain other types of plans. For

employees, these plans are more responsive to a diverse and mobile workforce because the benefit values accrue more evenly over time, as compared to the naturally back-loaded traditional plans. In addition, hybrid plans enable employees to understand and appreciate the value of their benefit at anytime. Typically, they also offer departing employees the opportunity to take a lump sum benefit payout upon termination of employment. This portability allows employees who have several employers in their career to accrue and invest substantial retirement benefits that they can take with them as they move from one job to another. 3 Hybrid plans are an integral part of the country's retirement plans with over 1,700 hybrid plans in existence as of 2004. See Pension Benefit Guarantee Corp., Pension Insurance Data Book 2005, 61-62 (2006). 4 Nearly thirty percent of the total working population (eight million people) covered by defined benefit plans consists of hybrid plan participants. Id.

3

For a detailed discussion of pension equity plans, their hybrid nature and design, and their advantages, see article entitled, "What is a Pension Equity Plan," published on the U.S. Dept. of Labor, Bureau of Statistics website, available at http://stats.bls.gov/opub/cwc/cm20031016ar01p1.htm. A copy is in the Appendix to this Memorandum at A. A copy of the pertinent pages is in the Appendix at B.

4

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-7In 2006, Congress passed the Pension Protection Act of 2006 ("PPA"), Pub. L. No. 109280, 120 Stat. 780 (2006). The PPA created special rules for hybrid plans including provisions that a defined benefit plan with a pension equity formula will not be treated as failing to meet the requirements of ERISA's age discrimination rules if the current value of an employee's accumulated percentage of final average compensation, as determined as of any date under the terms of the plan, would be equal to or greater than that of any similarly situated younger individual. These rules apply to periods beginning on or after June 29, 2005. As a result of PPA, the PEF does not violate ERISA's age discrimination rules after June 29, 2005. The PPA also states that the new rules should not be construed to create any inference as to the legality of hybrid plans before that date. As discussed below, the PEF does not violate ERISA's age discrimination provisions even in absence of the PPA. FACTUAL BACKGROUND Prior to January 1, 1998, Gannett maintained both a defined benefit pension plan, known as the Gannett Retirement Plan, and a defined contribution plan, the 401(k) Savings Plan, for eligible employees. (Horning Decl. ¶ 3-5). These two plans are related in that they collectively provide for retirement benefits for Gannett employees. Id. In 1997, Gannett undertook an initiative to assess the benefit package provided to employees, both in terms of its competitive nature and maximizing its value to employees. (Id.). As a part of that review, Gannett engaged actuarial experts from a consulting firm to analyze these retirement plans and to provide findings and recommendations. (Id. at ¶ 4). As a result of this process, effective January 1, 1998, Gannett amended both plans to provide for a combined

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-8401(k) Plan and Retirement Plan benefit comparable to the sum of the two pre-1998 plan benefits. (Horning Decl. ¶ 7-17). With regard to the 401(k) Plan, Gannett increased its employer matching contributions from 25% on a ceiling of 4% of pay (effectively matching 1% of salary) to 50% on a ceiling of 6% of pay (a match of 3% of pay). (Id. at ¶ 15). This change was made, in part, to encourage employees to participate in the 401(k) Plan and was estimated to cost Gannett $14 million more the first year, increasing to $17.6 million more by the fifth year. (Id). At the same time, Gannett amended its defined benefit plan to change from its traditional defined benefit formula (essentially an annuity at age 65) to a new pension equity formula (a hybrid plan formula). (Id. at ¶ 16). There were several reasons supporting this change, including that the PEF offers employees increased portability and removes penalties for early retirement and termination. Studies also showed that employees appreciated the account or balance design structure over the traditional defined benefit formulas. (Id. at ¶ 11). Amending the Plan to include the PEF was projected to save Gannett approximately $7 million dollars in the first year. This savings, however, when combined with the increased costs of the 401(k) Plan was projected to increase overall costs to Gannett for the combined retirement plans of $6.7 million in the first year. (Id. at ¶ 17). None of the January 1, 1998 changes to the 401(k) Plan and the Retirement Plan had the purpose or intended effect of discriminating against older workers. (Id. ¶ 19).

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-9STATEMENT OF FACTS NOT IN GENUINE DISPUTE A. How the Traditional Defined Benefit Formula Works

There is no dispute as to how the traditional defined benefit formula under the Gannett Retirement Plan worked prior to the January 1, 1998 Plan amendment. Under traditional defined benefit plans, participants generally cannot receive their benefits until attaining a designated early or normal retirement age and must receive their benefit in the form of an annuity. Thus, benefits under the traditional formula were calculated by multiplying participants' final average earnings by a specified percentage and years of credited service to determine a participant's "accrued benefit," that is, the amount payable to that participant as a monthly annuity beginning at age 65. A participant could elect to begin receiving this benefit in the form of an annuity as early as age 55 provided that the participant had five years of vested service. However, if the participant made such an election to begin receiving benefits prior to age 65, the amount of the monthly annuity was reduced to reflect the fact that it would be paid over a longer period of time. (Horning Decl. ¶ 8). B. How the Pension Equity Formula Works 1. The Basic Retirement Amount

Under the Retirement Plan's new PEF, a participant's Basic Retirement Amount, at any time expressed as a current lump sum value, is calculated based upon the participant's final average earnings and the points (or more accurately, the "percentages") that the employee has earned based upon his or her years of credited service. The PEF is age neutral. Generally, under the PEF that became effective January 1, 1998, a participant earns 5% for each of his first 10 years of credited service, 7% for each of his second 10 years of credited service, and 9% for each

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- 10 year of credited service in excess of 20. 5 For example, a participant who commenced

employment on January 1, 1998 and worked for 15 years, would have a lump sum Basic Retirement Amount equal to 85% of his average final earnings (i.e., 10 years of service times 5% plus 5 years of service times 7%). That amount is the same no matter how old the participant is. (See Horning Decl. ¶ 21; and its Exhibit A, the Plan (January 1, 1998); and its Exhibit B, Summary Plan Description (1998)). The SPD, provided to employees, sets out a specific example as to how the PEF works: Here is an example for someone who works for the Company after 25 years (all after Dec. 31, 1997) whose final average earnings are under the Social Security wage base: For: Benefit Percentage Total percentage of final average earnings = = = 50% 70% 45%

First 10 years Second 10 years Additional 5 years

X X X

5% 7% 9%

PERCENTAGE OF FINAL AVERAGE EARNINGS 165%

(Horning Decl., Exhibit B, Summary Plan Description, at 3). In the above example, if the participant had final average earnings of $50,000, he or she

5

The Plan also provides for supplemental percentages on pay over the Social Security wage base at the rate of 2% for each year of the first ten years of service and 3% for subsequent years, multiplied by final average earnings in excess of the Social Security wage base.

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- 11 would be entitled to a lump sum benefit of $82,500 (165% of $50,000) upon leaving the Company after 25 years of service. This same result applies regardless of the age of the participant. An individual age 25 who works for 25 years will earn the same percentages annually as a similarly situated individual who is hired at age 40 and works until he or she is 65. Thus, the basic percentages are independent of age; two employees with the same service and different ages will receive the same basic percentages in any given year. (Sher Decl., Exhibit A, Expert Report, pp. 10, 11). 2. Starting Percentages

For employees who were participants in the Plan prior to the January 1, 1998 effective date of the adoption of the PEF, their prior benefit under the Plan was converted to a "Starting Percentage." The SPD describes how this conversion was done: If you participated in the Plan as of Dec. 31, 1997, the benefit you earned through that date under the prior Plan formula was converted to a starting percentage. Your starting percentage is equal to the value of your benefit as of Dec. 31, 1997, divided by your final averageearnings as of Dec. 31, 1997. Percentages of pay earned for credited service after Dec. 31, 1997 are added to your starting percentage to determine the total lump sum amount of your benefit when you leave the Company. The Plan's independent actuaries, relying on standards outlined in the federal tax code, perform the calculation of your starting percentage. (Horning Decl., Exhibit C, Summary Plan Description, at 3). This method for determining an employee's starting percentage favored older employees; in fact, if two employees had the same accrued benefit (payable as a life annuity at age 65) and the same final average earnings, but one was older, the older employee would have a higher starting percentage. This is because the starting percentage is determined by calculating the lump sum present value of the accrued benefit. The older the employee, the higher the present

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- 12 value of each dollar of an age 65 annuity. (See Sher Decl., Exhibit A, Expert Report, p. 11). Gannett used a favorable interest rate of 5% rather than the statutory rate of 6.11% in effect in 1998 to determine starting credits, which served to benefit all employees. (Horning Decl., ¶ 29; Sher Decl., Exhibit A, Expert Report at fn. 21). 3. "Grandfathering Provisions"

In designing the PEF, Gannett took special precautions to ensure that older participants were treated fairly. (Horning Decl., ¶ 23). To begin with, certain older employees nearest retirement were "grandfathered" under the pre-1998 Plan provisions; i.e., they continued to accrue benefits under the pre-1998 plan formula. These individuals were grandfathered because they were close to retirement age and would not have the same amount of time as would a younger participant to earn benefits by increasing their contributions to the 401(k) Plan. Thus, grandfathered employees were those who were eligible for early retirement (at least age 55 with 5 or more years of service) or those whose age and service when combined totaled 75 or higher. These groups still received the improved 401(k) match. (Horning Decl., ¶ ¶ 29-30; Exhibit A, Plan at 6A.01; Exhibit B, Summary Plan Description, at 4). 4. Transition Percentages

In addition to those employees who were grandfathered under the terms of the Plan, other older employees were given "Transition Percentages" in excess of what was provided to younger employees with less service. (Horning Decl. ¶ 25). The rationale for providing the special transition percentages for these older workers, who were not grandfathered, was that they too may not have had enough employment years to earn future benefits under the new formula (as compared to the prior benefit formula) by contributing to the 401(k) plan and receiving the

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- 13 enhanced matching contributions. (Id. at ¶ ¶ 26- 27). As explained in the SPD, such Transition Percentages were credited as follows: If you were a Plan participant on Dec. 31, 1997, you may also be eligible to receive an additional transition percentage. You receive this transition percentage if as of June 30, 1998: You were at least age 45 with 10 or more years of credited service, or You were at least age 50. The transition percentage is equal to 4% for each year of credited service you had on Dec. 31, 1997. For example, the transition percentage for someone with 10 years of credited service would be 40% (4% x 10 years). (Horning Decl. ¶ 26, Exhibit A, Plan at 6A.03(d); Exhibit B, Summary Plan Description, at 4). The transitional percentages (4% times years of service) are independent of age. In general, two employees with the same service on December 31, 1997 who are different ages receive the same transitional percentages. The only exception is for certain younger employees (those under age 45 and those between 45 and 49 with less than ten years of service). Thus, transitional percentages were either age neutral or favored older employees. (Sher Decl., Exhibit A, Expert Report, p. 12). Plaintiffs Wells and Brookins both received transition credits; Schaefer was not eligible to receive any transition credits as he did not have enough credited service. C. How Benefits Are Paid Under the Pension Equity Formula

Upon separation of service, a vested employee is entitled to receive a total current lump sum ("Basic Retirement Amount") determined as follows: 1) starting percentage, plus total basic percentage, plus transitional percentage, multiplied by final average earnings, plus

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- 14 2) total supplemental percentage (2% for each year of final average earnings for the first ten years of service and 3% for subsequent years), multiplied by final average earnings in excess of the Social Security wage base. The participant's Basic Retirement Amount is paid as a lump sum when the participant terminates employment, or alternatively, a participant may elect to defer receipt of his benefit and/or have it paid in the form of an actuarial equivalent annuity. (Horning Decl. ¶ 16; Exhibit A, Plan at Article VIA; Exhibit B, Summary Plan Description at 5-6). Under the PEF, there are no specific early retirement benefits or reduction from normal retirement to an early retirement benefit. The employee receives a lump sum at termination, regardless as to whether he has attained early or normal retirement age. (Horning Decl. ¶ 16; Exhibit A, Plan at Article VIA; Exhibit B, Summary Plan Description at 5-6). When benefits become payable to a participant, the participant receives the greater of his Basic Retirement Amount or the actuarial equivalent value of his "Accrued Benefit." (Horning Decl. Exhibit A, Plan § 6A.05). The Plan defines the term "Accrued Benefit" in Section 2.01. The Accrued Benefit, at any time, is determined as follows: 1) Project the then current Basic Retirement Amount to age 65 by adding the basic and supplemental percentages credited for potential service until age 65 (and assuming that final average earnings remain unchanged); 2) Convert the projected amount in (1) to a life annuity starting at age 65; 3) Multiplying the resulting annuity in (2) by the ratio of the current service to total projected service at age 65.

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- 15 This definition of a participant's "Accrued Benefit" is included in the Plan solely for technical reasons to demonstrate how the PEF satisfies ERISA's anti-backloading requirements.
6

In virtually all circumstances, the value of the participant's Basic Retirement Amount (the

account balance paid in a lump sum) at termination of employment will equal or exceed the actuarial equivalent value of a participant's "Accrued Benefit," as defined under the Plan. (See Sher Decl.; Exhibit A, Expert Report, Appendix A, pp. 2-3). The value of the Basic Retirement Amount exceeds the "Accrued Benefit" because there is no adjustment to the Basic Retirement Amount after termination of employment. In contrast, the lump sum actuarial equivalent value of the "Accrued Benefit" is determined by discounting for interest from age 65 to the current age using statutory lump sum interest rates. (Sher Decl., Exhibit A, Expert Report, p. 11). Thus, the lump sum present value of the "Accrued Benefit" is far less than the corresponding Basic Retirement Amount. Accordingly, it is the Basic Retirement Amount which is relevant and the best measure of the rates of benefit accrual under ERISA § 204(b)(1)(H). (Id. at 16). Under the PEF, differences between participants' Basic Retirement Amount are a function of a participant's final average earnings and years of service, not age. Employees who terminate employment with Gannett may elect to receive their

6

ERISA contains three alternative anti-backloading formulas, each of which specify how much of the pension benefit must accrue each year. 29 U.S.C. § 1054(b)(1). The Plan's definition of "Accrued Benefit" satisfies the so-called "fractional accrual" rule contained in this statutory provision which employers can use to ensure that plan benefits are not earned disproportionately just before retirement. 29 U.S.C. § 1054(b)(1)(C); 26 C.F.R. § 1.411(b)1(b)(3). Even though the term "Accrued Benefit appears in the Plan, it has little or no practical impact under the Plan. Sher Decl., Exhibit A, p. 16 n. 17.

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- 16 retirement benefits immediately or defer receipt. (Horning Decl. ¶ 16; Exhibit A, Plan at Article VIA; Exhibit B, Summary Plan Description at 5-6). PROCEDURAL BACKGROUND Plaintiffs, Johnny Wells, Donald Brookins and Riley Andrew Schaefer commenced this ERISA action by filing a Summons and Complaint, asserting three claims against defendants. Plaintiffs' alleged that, under the Retirement Plan's new pension equity formula: (1) their rate of benefit accrual after January 1, 1998 was reduced because of age; and (ii) the benefit accrual ceased, on January 1, 1998, because of their age. Plaintiffs contend that both the reduction in the rate of benefit accrual and the cessation of benefit accrual violate ERISA § 204(b)(1)(H), 29 U.S.C. § 1054(b)(1)(H). Plaintiffs' Third Claim for relief alleged that defendants violated

ERISA § 205(c), 29 U.S.C. § 1055(c), by failing to provide participants with certain information and disclosures. Defendants moved to dismiss the action, pursuant to Rule 12(b)(6) of the Fed. R. Civ. Proc., on the grounds that the Court lacked subject matter jurisdiction because: (1) plaintiffs lacked standing to sue for the alleged violations of ERISA § 204(b)(1)(H); and (2) plaintiffs' ERISA § 205(c) claim was not ripe for adjudication. The Court granted the motion, in part, and dismissed the Third Claim, but denied the motion with regard to the First and Second Claims. Plaintiffs subsequently moved for class certification, which motion was granted. The case proceeded through discovery, and both parties exchanged initial disclosures required under the federal rules. Plaintiffs requested documents as well as information on how the PEF worked, which defendants provided. After receiving responses to their requests, plaintiffs stopped pursuing the

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- 17 litigation. They did not depose any witnesses. (Clemens Decl. ¶ ¶ 10-13). They also did not respond at all to defendants' written discovery demands, and they chose not to submit an expert report. (Id.). In contrast, defendants retained the services of an independent actuarial expert, Lawrence Sher ("Sher"), whom they identified, and Sher prepared an expert report which was provided to plaintiffs. (Id at ¶ 14.). At that point, discovery was concluded. Defendants now move for summary judgment dismissing the remaining two claims in the Amended Complaint. INTRODUCTION: THE LEGAL STANDARDS GOVERNING THIS MOTION On its face, the Amended Complaint fails to state a claim for an alleged violation of ERISA § 204(b)(1)(H) because there are no factual allegations to support either of the two claims asserted by plaintiffs. See Red Hawk, LLC, v. Schneider, 2007 U.S. App. LEXIS 160204 (10th Cir. 2007)("a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of a cause of action's elements will not do. Factual allegations must be enough to raise a right to relief above the speculative level")(quoting Bell Atlantic Corp. v. Twombly, 550 U.S. , 127 S. Ct. 1955, 1970 (2007)); Barfield v. Commerce Bank, N.A., 484 F.3d 1276, 1281 (10th Cir. 2007) ("Rule 8 requires more than a statement that the defendant has violated the statute in question"); Finley v. Dun & Bradstreet, 471 F. Supp. 2d at 494 ("to state a claim, the complaint must allege facts supporting [an injury]") (citing County Concrete Corp. v. TWP. Of Roxbury, 442 F.3d 159, 171 (3d Cir. 2006)). Here, factual allegations in the Amended Complaint are so deficient that they do not raise plaintiffs' right to relief under ERISA § 204(b)(1)(H) above the speculative level. Moreover, even if the claims were properly, pled Rule 56(c) of the Federal Rules of Civil Procedure requires summary judgment in favor of the moving party where the evidence

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- 18 demonstrates that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, (1986). Accord Sipma v. Mass. Cas. Ins. Co., 256 F.3d 1006, 1008-1009 (10th Cir. 2001); Rice v. Office of Servicemembers' Group Life Ins., 260 F.3d 1240, 1240 (10th Cir. 2001); Siemon v. AT&T Corp., 117 F.3d 1173, 1175 (10th Cir. 1997). "Summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed to `secure the just, speedy and inexpensive determination of every action.'" Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986). Summary judgment dismissing an ERISA case is warranted where, as here, the plaintiffs have no probative evidence to support their age discrimination challenges to the design of an ERISA governed pension plan. See, e.g., Register v. PNC Fin. Servs. Group., 477 F.3d 56 (3d Cir. 2007) (affirming the district court's dismissal of plaintiffs' claim that the employer's hybrid pension plan violated the age discrimination provisions of ERISA § 204(b)(1)(H), 29 U.S.C. § 1054(b)(1)(H)). Accord Tomlinson v. El Paso Corp., 2007 U.S. Dist. LEXIS 20766 (D. Colo. 2007) (dismissing, inter alia, plaintiffs' claims that the employer's hybrid pension plan violated the age discrimination provisions of ERISA contained in § 204(b)(1)(H)). These well-established standards compel the dismissal of this action. ARGUMENT POINT I PLAINTIFFS' AGE DISCRIMINATION CLAIMS UNDER ERISA § 204(b)(1)(H) FAIL BECAUSE THEIR RATE OF BENEFIT ACCRUAL IS NOT REDUCED ON ACCOUNT OF THEIR AGE ERISA § 204(b)(1)(H) provides, in pertinent part, that "a defined benefit plan shall be treated as not satisfying the requirements of this paragraph if, under the plan, an employee's

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- 19 benefit accrual is ceased, or the rate of an employee's benefit accrual is reduced, because of the attainment of any age." 29 U.S.C. § 1054(b)(1)(H). The critical task for this Court is to apply the phrase "rate of benefit accrual." Because ERISA does not define the term "benefit accrual," under well-established canons of statutory construction, the phrase should be given its ordinary meaning. See FDIC v. Meyer, 510 U.S. 471, 476 (1994). In their Amended Complaint, plaintiffs' Second Claim alleges that, under the PEF, the benefits provided to participants after January 1, 1998, "accrue at rates and/or in amounts that are reduced because of age" (Amended Complaint ¶ 26) in violation of ERISA § 204(b)(1)(H), 29 U.S.C. § 1054(b)(1)(H). The Amended Complaint, however, sets forth no facts upon which

plaintiffs base their Claim, nor do plaintiffs' initial disclosures provide any assistance in this regard. Plaintiffs merely parrot the assertion that the benefit formula adopted by Gannett as of January 1, 1998, "results in a decrease in the rate of benefit accruals." (Clemens Decl., Exhibit A, Pl. Initial Disc. ¶ 3). Indeed, plaintiffs' failure to support their claims with facts has extended throughout the case; they have failed to respond to Gannett's written Interrogatories or Demand for Documents and have not propounded an expert report. (Clemens Decl. and its Exhibit D). As discussed in detail below, this is not surprising since the facts refute their claims. A. "Benefit Accrual" Means the Annual Additions to the Participant's Lump Sum Balance

The term "benefit accrual" or "rate of benefit accrual," as contained in ERISA § 204(b)(1)(H), has properly been interpreted by the Courts of Appeal addressing the issue to mean the additions to the participant's hypothetical account or balance for the plan year. Cooper v. IBM 457 F.3d 636, 639 (7th Cir. 2006). Accord Register, 477 F.3d 69 (the phrase " `benefit

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- 20 accrual' reads most naturally as a reference to what the employer puts in . . ., while the defined phrase `accrued benefit' refers to outputs"). The Circuit Court of Appeals for the Seventh Circuit, in 2006, was the first appeals court to address directly the issue underpinning this motion, i.e., whether the accrual of benefits for employees who have not yet reached normal retirement age under a hybrid plan (in that case, a cash balance plan) violates ERISA § 204(b)(1)(H). Cooper v. IBM, 457 F.3d at 636. In an extensive and well-reasoned opinion, the Seventh Circuit determined that the plan at issue in that case did not violate ERISA § 204(b)(1)(H), reasoning that the statutory provisions at issue do not require the rate of "benefit accrual" to be measured solely in terms of an annuity payable at normal retirement age. As explained by the Court, "benefit accrual" for purposes of § 204(b)(1)(H) refers to the "annual addition to the pot, not to the final payout." Cooper at 641. In reaching this conclusion, the Court relied, in part, on the proposed Treasury regulations, which treat "the rate of benefit accrual" as "the increase in the participant's accrued normal retirement benefit for the year," and in particular, for hybrid plans, define the phrase as "the additions to the participant's hypothetical account for the plan year." Id. at 639 (citing 67 Fed. Reg. 76123-76126). The Court concluded that the Treasury's view, like the Court's own view, "looks at the rate of contribution (what goes into the account) rather than the annual rate of withdrawal at retirement." Id. at 640. Thus, the proper inquiry is "if [the] employee were younger, would the hypothetical balance have grown more this year?" Id. In IBM's case, the answer was no, since each employee's balance was increased monthly by the same percentage of salary and interest credit regardless of whether the employee was age 20 or 50 or 60 or 70. Id.

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- 21 Following the decision rendered by the Seventh Circuit in Cooper, the Third Circuit ruled on the same legal issue in 2007 in Register. The Third Circuit's opinion is instructive. In

Register, the Third Circuit began its analysis of the plaintiffs' claim that the hybrid plan in that case violated ERISA's age discrimination provisions by examining the statute itself. The role of the courts in interpreting a statute is to give effect to Congress' intent. In examining the language contained in ERISA § 204(b)(1)(H), the Third Circuit found that the age discrimination component in a hybrid plan case came down to how to interpret the phrase "benefit accrual" with respect to such plans. Because the defining characteristic of hybrid plans is the credits added to a participant's hypothetical account or balance, the phrase "benefit accrual" should be read to mean the "inputs" under the plan's benefit formula, rather than the annual rate of withdrawal at retirement. Register, 477 F.3d at 68. To do otherwise would "disregard the critical distinction" between a hybrid plan and a traditional defined benefit plan and "thereby unreasonably interfere with employers in the crafting of pension plans." Id. In support of this conclusion, the Third Circuit, like the Seventh Circuit in Cooper, compared the parallel defined benefit plan and defined contribution plan statutory age discrimination provisions. While acknowledging that hybrid plans have to comply with

ERISA's accrual requirements for a defined benefit plan, the Court reasoned that the comparison was of particular relevance because both hybrid plans and defined contribution plans had similar attributes. Id. at 68. The statutory provisions prohibiting age discrimination for the two types of ERISA plans are nearly identical, and both prohibit employers from reducing allocations (or accruals) to the plan on account of age. Specifically, ERISA § 204(b)(2)(A) provides, in

pertinent part, that a defined contribution plan is not age discriminatory if "the rate at which

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- 22 amounts are allocated to the employee's account is not reduced, because of the attainment of any age." 29 U.S.C. § 1054(b)(2)(A). The Court concluded that there was no evidence that Congress, by prohibiting discriminatory "allocations" in one section and "accruals" in another section, intended to provide different metrics for detecting discrimination. As the Court in Register stated, "[s]uch a result would lead to a result that is not sensible." Id. at 68-69. Accord Drutis v. Quebecor, 459 F. Supp. 2d at 588 (following Cooper and finding that "Congressional intent to avoid age discrimination under both types of plan can only be carried out if `benefit accrual' means the same thing as `allocations to the employees' account."). Thus, the Register Court ruled that the PNC plan at issue in that case did not make such a reduction because plan participants earned credits pursuant to a formula that applied regardless of their ages. To date, the vast majority of district courts considering this issue are in agreement. 7 See e.g., Bryerton v. Verizon Commc'ns Inc., 2007 U.S. Dist. LEXIS 29488 (S.D.N.Y. 2007); Sunder v. U.S. Bank Pension Plan, 2007 U.S. Dist. LEXIS 11331 (E.D. Mo. 2007); Finley v. Dun & Bradstreet, 471 F. Supp. 2d 485 (D.N.J. 2007); Laurent v. PriceWaterhouseCoopers LLP, 448 F. Supp. 2d 537 (S.D.N.Y. 2006); Drutis v. Quebecor World (USA), 459 F. Supp. 2d 580 (E.D.K.Y. 2006); Hirt v. The Equitable Ret. Plan for Employees, Managers and Agents, 441 F. Supp. 2d 516 (S.D.N.Y. 2006); Tootle v. ARINC, Inc., 222 F.R.D. 88 (D.Md. 2004); Engers v. AT&T Corp., 2001 U.S. Dist. LEXIS 25889 (D.N.J. 2001); Eaton v. Onan Corp., 117 F. Supp. 2d 812 (S.D. Ind. 2000). In reaching their conclusions that hybrid plans do not discriminate against

7

Most of the decisions have been rendered in connection with Rule 12(b)(6) motions to dismiss.

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- 23 older participants based on age, these courts have relied on the statutory text, the legislative history, the Treasury Department's view that hybrid plans are legal, the nature of how benefits are earned, and fundamental economic principles. Cf., Richards v. FleetBoston Fin. Corp., 427 F. Supp. 2d 150 (D. Conn. 2006); In re J.P. Morgan Chase Cash Balance Litig., 460 F. Supp. 2d 479 (S.D.N.Y. 2006); In re Citigroup Pension Plan ERISA Litig., 470 F. Supp. 2d 323 (S.D.N.Y. 2006). B. Annual Contributions or Allocations to Plaintiffs' Hypothetical Balances Were Not Reduced Because of Their Age

Applying the same rationale or inquiry here as the Courts of Appeal did in Cooper and Register would result in the same answer: the rate at which plaintiffs' accrue pension benefits is not reduced because of their ages; in fact, if plaintiffs were younger, their balances would not have grown any more than they actually did. Under the PEF, an employee's benefit continues to accrue in the same manner before and after the attainment of any given age. Plaintiffs have been credited basic percentages of 5% of their final average pay for each of the first 10 years of service, 7% for each of the next 10 years of service and 9% for all years of service in excess of 20, regardless of their ages. As the employee's number of years of service progresses, benefit credit rates continue to apply at the same or at a higher level. None of the percentages that comprise the Basic Retirement Amount are reduced because of the attainment of any age. C. Plaintiffs' Theory is Fundamentally Flawed and Should Be Rejected

Rather than properly focusing upon the straightforward meaning of the phrase "rate of benefit accrual" (that is, the input to plaintiffs' lump sum balance under the Plan's benefit formula), plaintiffs have contended that the proper inquiry for determining a participant's "rate of benefit accrual" is by reference to the amount of each participant's accrued benefit (that is, the

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- 24 projected benefit payable at normal retirement age). See Clemens Decl., Exhibit B, Pl. Memo at 8-9). Notably, ERISA § 204(b)(1)(H) does not contain such requirement. While "accrued benefit" is a defined term elsewhere in ERISA, it is a term noticeably absent from ERISA § 204(b)(1)(H). There are several flaws with this approach. First, as previously discussed and as

recognized by the courts, the term "benefit accrual" is not equivalent to the term "accrued benefit" for the purpose of ERISA's age discrimination prohibition. See e.g., Register, 477 F.3d at 69 ("`accrued benefit' . . . is simply not the same thing as `benefit accrual.'"); Laurent, 448 F. Supp. 2d at 553 (the term "accrued benefit" is not the equivalent of "benefit accrual" for purpose of ERISA's anti-discrimination provisions); Bryerton, 2007 U.S. Dist. LEXIS 29488 at *13 ("benefit accruals" refers to inputs and "accrued benefits" refers to outputs); Sunder v. U.S. Bank Pension Plan, 2007 U.S. Dist. LEXIS 11331 * 40 ("had Congress intended the term `rate of benefit accrual' to have the same meaning the same as accrued benefit they would have used the same term"). Indeed, plaintiffs' argument that "benefit accrual" and "accrued benefit" are interchangeable is grammatical nonsense and is statutorily incorrect. A close inspection of the terms "accrual" and "accrued" reveal that they are not equivalent: `"accrual" is the action or process of accruing, while "accrued" is the past tense of the verb "accrue," which means to come by way of increase or addition: arise as a growth or result."' Finley v. Dun & Bradstreet, 471 F. Supp. 2d at 491 (quoting Webster's Third New International Dictionary 13 (1993)). Thus, a benefit which is accrued is the result of a process of increase that has already occurred in the past, while the accrual of a benefit occurs in the present during a process of accruing. Id. at 491.

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- 25 A process is not a result. It would violate both language and logic to confuse the two. Id. (citing Cooper, 457 F.3d at 639). Accordingly, "`rate of benefit accrual' as used in ERISA §

204(b)(1)(H) refers to the process of putting in, not the result taken out." Id. at 491. Second, because hybrid benefit plans accrue benefits in a manner different from the traditional defined benefit plans, it is logical that the rate of benefit accrual is not defined by the age 65 annuity but is instead defined by the change in the participant's lump sum balance annually. This is particularly true with respect to Gannett's PEF because in virtually all cases, the current value of a participant's Basic Retirement Amount will exceed the amount of their accrued benefit and is the amount they would receive upon termination or retirement. (Sher Decl., Exhibit A, Expert Report, pp. 10, 11). Third, any perceived differences in an older and a younger employee's "Accrued Benefit," as defined in the Plan itself, is attributable, not to a difference in participants' ages, but to the difference in their lengths of potential service with Gannett. The younger employee would also have to wait many more years to receive their benefit as compared to the older employee. As has been long recognized by the courts, it is essential to separate age discrimination from other characteristics that are correlated with age, but are not age, such as length of service or seniority. Hazen Paper Co. v. Biggins, 507 U.S. 604, 611 (1993). Where, as here, any differences are attributed to non-age related factors, such as length of service, courts have not hesitated to dismiss age discrimination claims based upon the alleged statutory violations. See, e.g., Hazen Paper, 507 U.S. at 611; Cooper v. IBM, 457 F.3d at 642. Finally, any reliance plaintiffs may place on the Plan's own definition of "Accrued Benefit" is misplaced. While the "Accrued Benefit, as defined by the Plan when applied to

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- 26 hypothetical new employees who commence participation after January 1, 1998, shows a tendency to be higher for the otherwise similarly situated younger employees, the present value or lump sum actuarially equivalent amounts of such Accrued Benefits are actually higher for the older employees. (Sher Decl., Exhibit A, Expert Report, p. 16). These lump sum amounts are much lower than the corresponding Basic Retirement Amounts for both older and younger employees. Thus, in the operation of the Plan, the employees' Basic Retirement Amount is the best yardstick for measuring the rates of benefit accrual under ERISA § 204(b)(1)(H) since this is the amount which the employee would actually receive upon termination. (Sher Decl., Exhibit A, Expert Report, p. 16). D. Rules of Statutory Construction Support a Grant of Defendants' Motion

As recognized by the courts, if the term "benefit accrual" and "accrued benefit" are to be read as equivalents then the same terms would have been used in both statutory sections. As reasoned by the Third Circuit in Register, there is "no indication that Congress intended the courts and administrators use these phrases interchangeably." Register, 477 F.3d. at 69. Rather, the phrase "`benefit accrual' reads most naturally as a reference to what the employer puts in . . ., while the defined phrase `accrued benefit' refers to outputs. . . ." Id. (citing Cooper, 457 F.3d at 639). In reaching this conclusion, the Third Circuit noted that it was not rewriting the statute at issue but was instead, "honoring the intent of Congress in reaching [its] result." Register, 477 F.3d at 70. Had Congress wanted to use the term and mandate that the "accrued benefit" ­ meaning the benefit payable at age 65 ­ be the same for all employees, it certainly knew how to do so. References to "accrued benefit" abound in the statute, including in six of seven sub-paragraphs

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- 27 of ERISA § 204(b)(1). In particular, Congress enacted ERISA § 204(b)(1)(G), which states that " a defined benefit plan shall be treated as not satisfying the requirements of this paragraph if the participants' accrued benefit is reduced on account of any increase in his or her age or service." 29 U.S.C. § 1054(b)(1)(G) (emphasis added). Congress, however, did not use the same term, "accrued benefit," to set out an employer's obligation under ERISA § 204(b)(1)(H), the section immediately following ERISA § 204(b)(1)(H). It is well-established that when the legislature uses certain language in one part of a statute and different language in another part, courts assume that a different meaning was intended. Sosa v. Alvarez-Machain, 542 U.S. 692, 712 n.9 (2004); Soliman v. Gonzales, 419 F.3d 276, 283 (4th Cir. 2005) (where "Congress has utilized distinct terms within the same statute, the applicable canons of statutory construction require that an appellate court endeavor to give different meanings to those different terms."); Tafoya v. U. S. Dep't of Justice, 748 F.2d 1389, 1391-92 (10th Cir. 1984) ("We presume that this clear use of different terminology within a body of legislation is evidence of an intentional differentiation"). Thus, Congress' omission of the term "accrued benefit" from ERISA § 204(b)(1)(H) was deliberate and designed to avoid any suggestion that all employees should be guaranteed the same benefit at age 65 regardless as to how long they had to wait until they received such benefit. E. Legislative History of ERISA § 204(b)(1)(H) Supports Defendants' Position

Plaintiffs' purported definition of "benefit accrual" as meaning "accrued benefit" at age 65 is inconsistent with legislative history. Specifically, when Congress enacted ERISA §

204(b)(1)(H), it provided an example in the Conference Report on how the statute should work

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- 28 to ensure that plans were not discriminatory based upon age. See Eaton, 117 F. Supp. 2d at 830 (citing H.R. Conf. Rep. 99-1012, 1986 U.S.C.C.A.N. 3868, 4026). In that example, the benefit plan provided $10 per month for each year of service. If the participant had 10 years of service at the plan's normal retirement age of 65, then the participant would be entitled to $100 a month if he or she retires at age 65. The Conference Report explained that if the participant worked beyond the normal retirement age of 65, "the plan is required to provide an additional benefit of $10 per month for each year of service after age 65." Id. This illustration in the Conference Report is limited to protecting the rate of benefit accrual for employees who work beyond normal retirement age. If plaintiffs' proposed definition of "rate of benefit accrual" is correct, the example in the Conference Report itself would be illegal because the accrual formula it describes ­ when measured in terms of an age-65 annuity ­ actually decreases with age. See Eaton, 117 F. Supp. 2d at 830. Plaintiffs' construction of ERISA § 204(b)(1)(H) would lead to results clearly unintended by Congress. Indeed, the Conference Report accompanying