Free Brief in Opposition to 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, Plaintiff, vs. GANNETT RETIREMENT PLAN, and GANNETT CO., INC., Defendant.

D EFENDANTS ' M EMORANDUM OF L AW O PPOSING M OTION FOR C LASS C ERTIFICATION
Defendants Gannett Retirement Plan and Gannett Co., Inc., through their attorneys, Nixon Peabody LLP and Holland & Hart LLP, hereby respectfully submit this Memorandum of Law Opposing Plaintiff's Motion for Class Certification.

PRELIMINARY STATEMENT
Defendants Gannett Retirement Plan (the "Retirement Plan" or "Plan") 1 and Gannett Co., Inc. ("Gannett"), submit this Memorandum of Law opposing plaintiffs' motion, pursuant to Rule 23 of the Federal Rules of Civil Procedure, for class certification. As discussed below, plaintiffs are not proper representatives of their proposed class and have failed to meet their burden of establishing that the class should be certified. The Court should accordingly deny plaintiffs' motion, or alternatively, substantially narrow the class.
1

A copy of the Plan is attached as Exhibit A to the Declaration of Roxanne Horning, submitted in opposition to plaintiffs' motion.

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BACKGROUND
A. Plaintiffs' Claims. Plaintiffs are employed by KUSA-TV, a division of a second-tier Gannett subsidiary, and currently participate in the Retirement Plan. (Complaint ¶¶ 8-12). 2 On January 1, 1998, the Plan was amended to adopt a new pension formula (the "Pension Equity Formula") for certain plan participants. As part of that change, certain participants had their benefits, accrued under a traditional defined benefit formula, converted under the Pension Equity Formula. In their Complaint, plaintiffs allege that the Plan's Pension Equity Formula does not comply with the accrual rules set forth in § 204(b)(1)(H), 29 U.S.C. §1054(b)(1)(H), of the Employee Income Retirement Security Act of 1974, as amended ("ERISA"). Plaintiffs' First Claim challenges the implementation of the Pension Equity Formula on January 1, 1998. Plaintiffs allege that when the Pension Equity Formula was implemented, the accrual of benefits ceased as of January 1, 1998, and that the incidence with which the accrual of benefits ceased (or the length of time over which the accrual of additional benefits ceased) increased in relation to the participant's age in violation of ERISA § 204(b)(l)(H), 29 U.S.C. §1054(b)(1)(H). Plaintiffs' Second Claim alleges that, under the Pension Equity Formula, their benefits accrue at rates or in amounts that are reduced because of age, also in violation of ERISA § 204(b)(l)(H), 29 U.S.C. §1054(b)(1)(H). 3
2

References to plaintiffs' Amended Complaint, filed on March 17, 2004, are designated "Complaint ¶ [number]." Plaintiffs' Third Claim, alleging that plaintiffs did not receive all the disclosures required under ERISA §1055(c), was dismissed by the Court on March 22, 2005.

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Plaintiffs seek relief under ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3) asserting that they, and other potential class members, are entitled to an Order requiring defendants "to pay all benefits due to participants from January 1, 1998, forward in the amounts required to comply with ERISA." (Complaint, p.7, Wherefore Clause). Plaintiffs now move for certification of a class they define as "all individuals whose Accrued Benefit has been determined pursuant to the Pension Equity Provisions contained in Article VI.A of the Gannett Retirement Plan, as amended effective January 1, 1998, excluding all individuals who first became participants in the Plan after January 1, 2003." Their motion should be denied. B. Pension Equity and Other Hybrid Pension Plans. Pension equity plans are defined benefit plans that include many attractive elements found in defined contribution plans. In a traditional defined benefit plan, a participant is entitled to a fixed benefit payment upon retirement. Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 439 (1999). Benefits are paid to plan participants pursuant to a formula spelled out in the pension plan, and are funded by the employer on an actuarial basis designed to ensure that the plan will have adequate funds to pay plan participants the benefits promised to them when they retire. Eaton v. Onan Corp., 117 F. Supp. 2d 812, 816 (S.D. Ind. 2000). Because a defined benefit plan "consists of a general pool of assets rather than individual dedicated accounts," the employer "bears the entire investment risk and ... must cover any underfunding as the result of a shortfall that may occur from the plan's investments." Hughes, 525 U.S. at 439. If the plan's investment returns do not meet actuarial assumptions, the employer must make additional contributions to make up the shortfall. In a traditional defined

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benefit plan, benefits are typically paid as an annuity upon early or normal retirement (e.g., age 65), and terminated employees cannot access their benefits prior to that date. Id.; Eaton, 117 F. Supp. 2d at 817. By contrast, a defined contribution plan establishes an individual account for each participant, to which the employer makes periodic contributions which are often augmented by contributions of the employee. See Hughes, 525 U.S. at 439; Eaton, 117 F. Supp. 2d at 817. The participant's retirement benefit under a defined contribution plan is based on the amount of contributions and investment earnings that have accumulated in his or her individual account by the time of retirement. Hughes, 525 U.S. at 439. Thus, in a defined contribution plan, the participant bears the investment risk. Id. Benefits from a defined contribution plan are typically paid in a lump sum, and participants can receive their benefits when they leave their employment without waiting for retirement (e.g., participants can rollover their benefits to an IRA or other qualified plan). Id. Pension equity plans, like cash balance plans, are hybrid plans. They are types of defined benefit plans that resemble defined contribution plans. See I.R.S. Notice 96-8, 1996-1 C.B. 359 (Feb. 5, 1996). Similar to a defined contribution plan, the benefits in a hybrid plan are defined for each participant by reference to a lump sum amount. A pension equity plan expresses a participant's benefit as a current lump sum value equal to a percentage of the participant's final average earnings. Each year a participant earns an additional percentage based on the participant's service, and those percentages accumulate throughout the participant's career. When the participant's employment ends (even prior to retirement), the participant can take a lump sum distribution equal to the accumulated percentages multiplied by the participant's final

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average earnings. 4 See, L. Bernard Green, What is a Pension Equity Plan?, U.S. Department of Labor Bureau of Labor Statistics, http://stats.bls.gov/opub/cwc/cm20031016ar01p1.htm. Alternatively, participants can elect to receive their benefits in the form of an annuity. Pension equity plans are therefore attractive to a mobile workforce. In a hybrid plan, if the plan's actual investment performance falls below the plan's actuarial investment return assumption, the employer is obligated to make up the difference. Because the employer bears all of the investment risk in a hybrid plan, the Internal Revenue Service and the courts have determined that hybrid plans are a type of defined benefit plan. I.R.S. Notice 96-8; Register v. PNC Financial Services Inc., 2005 U.S. Dist. LEXIS 29678 (E.D. Pa. 2005); Eaton, 117 F. Supp. 2d at 817. Advocates of hybrid pension plans such as pension equity plans point to several advantages that these plans provide employees. Esden v. Bank of Boston, 229 F.3d 154, 158 n.5 (2d Cir. 2000). See also Eaton, 117 F. Supp. 2d at 818; L. Bernard Green, What is a Pension Equity Plan?, U.S. Department of Labor Bureau of Labor Statistics, http://stats.bls.gov/opub/cwc/cm20031016ar01p1.htm. Because benefits are expressed as an immediate lump sum amount, employees find pension equity plans easier to understand than traditional pension plans, under which (prior to retirement) employees can envision benefits only by reference to an annuity payable sometime in the future. See Esden, 229 F. 3d at 158 n.5. The

4

For example, suppose a pension equity plan calculates a participant's benefit under a formula where the participant earns annual percentages of 5% for his first 10 years of benefit service and annual percentages of 7% for years after 10 years of benefit service. If a participant has 20 years of benefit service and his final average earnings are $30,000, the current value of the accumulated percentage of the participant's final average compensation would be $36,000 (i.e., (50% + 70%) x $30,000).

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use of hypothetical individual lump sum amounts helps participants better understand the current value of retirement benefits being earned. In addition, the availability of lump sum distributions upon a pre-retirement separation from service makes the benefits in a pension equity plan more portable than the benefits in a traditional defined benefit pension plan. This portability is preferred by employees since it allows them to roll over their benefits to an IRA or qualified plan of their new employer rather than have their benefits stuck in their old employer's plan. Another attractive feature of pension equity plans is that a participant's pension benefit increases with salary increases. Hybrid plans also provide advantages to employers. Esden, 229 F.3d at 158 at n.5. Because employees better understand the value of their benefit rights, "the employer's fringe benefit dollar has greater impact." Id. Hybrid plans make it easier for an employer to communicate the value of its defined benefit plan to employees in a way that can be compared meaningfully to the benefits of other employer offerings, such as 401(k) plans. Thus, hybrid plans can offer employees, as well as employers, the best of both the defined benefit and defined contribution pension characteristics. Id. The transition from a traditional defined benefit formula to a hybrid formula has sparked a series of lawsuits. With one exception currently on appeal to the Seventh Circuit, Cooper v. IBM Pers. Pension Plan, 274 F. Supp. 2d 1010 (S.D. Ill. 2003), the courts have uniformly found that the design of the hybrid plan itself does not result in a reduction in the rate of benefit accrual based upon age, in violation of ERISA § 204(b)(1)(H), as is alleged by plaintiffs in their Second Claim in this case. Register v. PNC Fin. Services Group, Inc., 2005 U.S. Dist. Lexis at 29678; Tootle v. ARINC, Inc., 222 F.R.D. 88 (D. Md. June 10, 2004); Engers v. AT&T Corp., 2000 U.S.

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Dist. LEXIS 10937 (D. N.J. 2000); Eaton v. Onan Corp., 117 F. Supp. 2d 812 (S.D. Ind. 2000). See also Campbell v. BankBoston, N. A., 327 F.3d 1, 9 (1st Cir. 2003). C. Gannett's 1998 Plan Amendment. Prior to January 1, 1998, Gannett offered its eligible employees a traditional defined benefit pension plan, under which the participant's benefit was expressed as an annuity (commencing at the participant's normal retirement age) that took into account the participant's final average earnings, years of credited service and certain other factors. In general, no lump sum payment options were available. Effective January 1, 1998, Gannett amended the Plan to include a Pension Equity Formula for certain of its covered employees. Under the Pension Equity Formula, a participant's Basic Retirement Amount at any time is calculated based on the participant's final average earnings and the percentages that the employee has earned based on his/her years of credited service. Under the Pension Equity Formula 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 years 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 Basic Retirement Amount equal to 85% of his final average earnings (i.e., 10 years of service times 5%, plus 5 years of service times 7%). Under the Pension Equity Formula, participants can receive their benefits as a lump sum amount that is paid immediately after the participant terminates service with Gannett. Accordingly, if the above participant left Gannett after 15 years of service when his or her final
5

Participants are credited with supplemental percentages if their final average earnings exceed the Social Security wage base. See Plan §§ 6A.02(b), 6A.03(e).

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average earnings were $40,000, the participant could receive the benefit in the form of a lump sum amount equal to $34,000. Under the Pension Equity Formula at issue in this case, employees with the same length of service and same final average earnings accrue the same benefits each year regardless of the employees' ages. For example, assume that Employee A begins working at age 30, works for 10 years and has final average earnings of $40,000. Assume further that Employee B begins working at age 50, works for 10 years and has final average earnings of $40,000. If Employee A and Employee B both leave Gannett after providing the same number of years of service, they will have the right to receive the exact same lump sum benefit. 6 If both Employee A and Employee B leave Gannett after 10 years of service, both employees would be entitled to receive an immediate lump sum amount of $20,000 (i.e., 10 years of service times 5% per year of service times $40,000). In addition, under the new Pension Equity Formula, certain older participants, including plaintiffs Brookins and Wells, received transition percentages which allowed them to receive a higher benefit than a similarly situated younger participant who did not satisfy the requisite age requirement for receiving such percentages. See Plan § 6A.03(d). D. The Transition Provisions. When Gannett amended the Plan to adopt the Pension Equity Formula, the change did not affect participants approaching retirement. For example, vested participants who were either age 55 and older, or whose age plus years of service totaled 75 as of a certain date, were

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Alternatively, the participants can elect to have their benefit paid in the form of an annuity.

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"grandfathered" under the Retirement Plan. See Plan, § 6A.01(b), (c). That is, they continued to accrue benefits under one of the Plan's traditional defined benefit formulas. At the time of the transition to the Pension Equity Formula, the benefit that each nongrandfathered employee had accrued under the Plan's traditional defined benefit formulas was converted to a starting percentage under the new Pension Equity Formula. See Plan §§ 6A.02(a), and 6A.03(b). The starting percentages were calculated by converting the participants' accrued benefit under the traditional formula into a lump sum equivalent, and dividing that amount by the participant's final average earnings as of the date of the conversion. For example, if the lump sum value of a participant's accrued benefit under the traditional formula was $60,000 and the participant's final average earnings were $50,000, the participant's starting percentage would be 120% (i.e., $60,000 divided by $50,000). In addition, a younger participant having the same accrued benefit under the traditional benefit formula and the same final average earnings as an older participant, would have a lower starting percentage as compared to that older participant. This is because the lump sum value of the younger participant's accrued benefit would be lower than the lump sum value of the older participant's accrued benefit. (The lower value is due to the fact than the younger participant's accrued benefit is being discounted over a longer period of time). The lower lump sum value, in turn, results in a lower starting percentage. Additional transition benefits were provided to certain older participants, including plaintiffs Wells and Brookins. Specifically, participants who were at least age 45 with 10 years of service (or were at least age 50) received extra transition percentages to supplement their starting percentage under the Pension Equity Formula. See Plan, §§ 6A.02(a), 6A.03(d). The maximum transition percentages that a participant could earn equaled 4% times the participant's

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credited service. These percentages were generally earned pro rata over the five years following the conversion. For example, a participant who was age 45 and had 10 years of service could earn an additional 40%. A participant who was younger than 45 but also had 10 years of service did not receive any transition percentages. The retirement benefit for each Pension Equity Formula participant takes into account the starting percentage, transition percentages credited to certain older participants, and the normal formula percentages earned after January 1, 1998. See Plan § 6A.02.

ARGUMENT POINT I
PLAINTIFFS' MOTION FOR CLASS CERTIFICATION SHOULD BE DENIED BECAUSE PLAINTIFFS FAILED TO MEET THEIR BURDEN OF PROOF UNDER RULE 23. A. Plaintiffs Have a Heavy Burden To Establish the Required Elements under Rule 23. Class actions are not the norm. Instead, the class action device is an outgrowth of traditional principles and practices in equity and is designed to be an exception to the principle that the litigation is conducted by and on behalf of individual named parties. Gen. Tel. Co. of Southwest v. Falcon, 457 U.S. 147, 155 (1982). The Supreme Court has explained that because the class action exception binds non-participants to the results of litigation purportedly brought in their interest, courts must be aware of the concerns for potential unfairness to the class members bound by the judgment if the framing of the class is overbroad. Thus "a class action may only be certified if the trial court is satisfied, after a rigorous analysis, that the prerequisites [for class action] have been satisfied." Id. at 161(emphasis added); Sprague v. Gen. Motors Corp., 133 F.3d 388, 397 (6th Cir.), cert. denied, 524 U.S. 923 (1998).

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Rule 23 of the Federal Rules sets out a two-step process for determining whether to certify a proposed class. First, the class must satisfy the four prerequisites specified in Rule 23(a). Certification of a proposed class is appropriate only when: (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class. Fed. R. Civ. P. 23(a). Second, if each of those prerequisites is met, the party seeking certification must then demonstrate that the class falls within at least one of the subcategories of Rule 23(b). In seeking class certification, plaintiffs must demonstrate under a "strict burden of proof" that their case "clearly" satisfies each of the procedural prerequisites for class treatment. Reed v. Brown, 849 F.2d 1307, 1309 (10th Cir. 1988); see also City P'ship Co. v. Jones Intercable, Inc., 213 F.R.D. 576, 581 (D. Colo. 2002) ("[T]he party seeking class certification must demonstrate, under a strict burden of proof, that all of the requirements of Fed. R. Civ. P. 23(a) are met."). Accord In re Am. Med. Sys. Inc., 75 F.3d 1069, 1079 (6th Cir. 1996); Harding v. Tambrands, Inc., 165 F.R.D. 623, 626 (D. Kan. 1996). While class certification does not involve a determination of the merits of a claim, the Court must nevertheless assess the merits to the extent necessary to evaluate whether plaintiffs have carried their Rule 23 burden for obtaining class certification. See Gen. Tel. Co. of Southwest, 457 U.S. at 160 ("[T]he class determination generally involves considerations that are `enmeshed in the factual and legal issues comprising the plaintiff's cause of action'") (quoting

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Coopers & Lybrand v. Livesay, 437 U.S. 463, 469 (1978)); Spivak v. Petro-Lewis Corp., 118 F.R.D. 504, 507 (D. Colo. 1987). Finally, Rule 23(a) requires that "a class representative must be part of the class and `possess the same interest and suffer the same injury' as the class members." East Texas Motor Freight Sys. v. Rodriguez, 431 U.S. 395, 403-04 (1977) (plaintiffs lacked qualifications of job and, therefore, "could have suffered no injury as a result of the alleged discriminatory practices, and they were, therefore, simply not eligible to represent a class of persons who did allegedly suffer injury") (quoting Schlesinger v. Reservists Comm. To Stop the War, 418 U.S. 208, 216 (1974)). See also Broussard v. Meineke Disc. Muffler Shops, Inc., 155 F.3d 331, 338 (4th Cir. 1998). The last three Rule 23(a) requirements "`tend to merge,' with commonality and typicality `serving as guideposts for determining whether...maintenance of a class action is economical and whether the named plaintiff's claim and the class claims are so interrelated that the interests of the class members will be fairly and adequately protected in their absence.'" Broussard, 155 F.3d at 337 (quoting Gen. Tel. Co. of Southwest, 457 U.S. at 157). A class action may not be approved simply by "virtue of its designation as such in the pleadings." In re American Med. Sys., Inc., 75 F.3d 1069, 1079 (6th Cir. 1996). Nor may the prospective class representatives simply rely upon "[m]ere repetition of the language of Rule 23(a)" to support their motion. Id.; Doninger v. Pac. Nw. Bell, Inc., 564 F.2d 1304, 1309 (9th Cir. 1977). An adequate basis for each prerequisite must both be pleaded and supported by the facts. Appellate courts have rejected the "when in doubt" approach advocated by the plaintiffs (Pl. Memo p. 6), and have admonished trial courts that a cautious approach to class certification is essential. See Gen. Tel Co. of Southwest Falcon, 457 U.S. at 160.

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B.

Plaintiffs Have Failed to Justify Class Certification. As discussed below, plaintiffs' motion is insufficient to sustain class certification as to

either of their two remaining claims. The named plaintiffs have presented no facts to establish that they meet the requirements of Rule 23. Plaintiffs simply assert without providing supporting evidence that they have cognizable claims under ERISA and that the proposed class members have the same claims. Their "showing" is entirely deficient. 1. Plaintiffs Have Not Established the Numerosity Requirement.

Rule 23(a) requires that the class be so numerous that joinder is impracticable. Plaintiffs must independently establish this requirement for each claim. Plaintiffs' "proof" of numerosity is based upon their allegation that there were 54,573 participants in the Plan at the beginning of 2002 and that Gannett has facilities with plan participants in several states. (Pl. Memo p. 11-12). As they have defined the class, however, it is apparent that plaintiffs are not seeking to represent all participants in the Plan as of 2002. As stated earlier, plaintiffs seek class certification of a class defined as "all individuals whose Accrued Benefit has been determined pursuant to the Pension Equity Provisions contained in Article VI.A of the Gannett Retirement Plan, as amended effective January 1, 1998, excluding all individuals who first became participants in that Plan after January 1, 2003." As is set forth in the declaration of Roxanne Horning, Vice President of Human Resources for Gannett, Gannett does not routinely determine individuals' "Accrued Benefit" as that term is defined under the Plan § 2.01. Generally, Gannett calculates or determines an individual's accrued benefit only when an individual retires (none of the plaintiffs have retired), terminates from employment (all of the plaintiffs are still employed), or specifically requests an

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estimate of benefits. Using plaintiffs' proposed class definition, plaintiffs have submitted no facts upon which the Court, or even the parties themselves, can readily determine the size of the proposed class. Moreover, with respect to the First Claim, plaintiffs allege in their Complaint that, under the Pension Equity Formula, the accrual of additional benefits ceased as of January 1, 1998 "for many participants" (including themselves) in violation of ERISA § 204(b)(1)(H), 29 U.S.C. § 1054(b)(1)(H). (Complaint ¶ 23 (emphasis added)). There are no allegations as to the approximate number of participants whose benefits allegedly ceased accruing as of that date. Plaintiffs also contend that the individuals who allegedly sustained a cessation of benefit accrual because of their age are those "older" employees whose retirement benefits "were converted to the Pension Equity Formula as of December 31, 1997 and whose present value of their protected benefit was higher than younger employees." (Pl. Memo p. 10). Again the Court will search in vain to find proof of numerosity in this regard. Finally, plaintiffs contend that it is "as a result of the Transitional Provisions used by Defendants only a portion of the employee's protected benefit was included in the accrued benefit computed under the [Pension Equity Formula] for pre-amendment participants as of January 1, 1998" and that the remaining portion had to be "earned back." Id. Plaintiffs, however, have not demonstrated any factual basis upon which the Court can determine the number of "older" individuals so affected. Plaintiffs' numerosity showing is, therefore, inadequate as a matter of law. Reese v. Arrow Fin. Services LLC, 202 F.R.D. 83, 90 (D. Conn. 2001) (bare assertions of numerosity are insufficient). See also Valentino v. Howlett, 528 F.2d 975, 978 (7th Cir. 1976) (a conclusory

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allegation that the class is so numerous that joinder is impractical is not sufficient to meet the requirement of Rule 23(a)(1)). 2. Plaintiffs Have Not Demonstrated Commonality.

Commonality looks to whether there are common issues of law or fact among the proposed plaintiffs. See In Re American Med. Sys., Inc., 75 F.3d 1069, 1080-81 (6th Cir. 1996). Courts find commonality lacking where, as here, there are significant factual differences among the potential class members. Id. Plaintiffs claim that there are common issues of law and fact among the proposed class members, including: (a) whether an employee's benefit accrual is reduced under the Pension Equity Formula on account of a participant's age; (b) whether the transition provisions caused certain employees' benefits to cease accruing on account of a participant's age; and (c) what remedies are appropriate to redress defendants' alleged violations of ERISA § 204(b)(1)(H). (Pl. Memo p. 13). However, the commonality element of Rule 23 requires a showing that "those persons sought to be included in the class have all suffered some harm to which common questions of law or fact apply." In re Merrill Lynch Sec.,191 F.R.D. 391, 397 (D. N.J. 1999) (citing State of Illinois v. Ampress Brick Co., Inc., 67 F.R.D. 457, 459 (N.D. Ill. 1975). Contrary to plaintiffs' reflexive assertions as to commonality, there are significant factual differences among the proposed class members and among the plaintiffs themselves. Plaintiffs' proposed class includes individuals who have already retired or who have terminated from the Plan and have elected to receive their benefits in the form of a lump sum. These putative class members have not suffered any injury and would not be entitled to any declaratory or injunctive

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relief under Rule 23(b)(2). See Crosby v. Bowater Inc. Retirement Plan, 382 F.3d 587 (6th Cir. 2004). Moreover, at the time of the conversion to the Pension Equity Formula, both Wells and Brookins received transition percentages which allowed them to receive a higher benefit than a similarly situated younger participant who did not satisfy the requisite age for receiving such percentages. This is a significant factual difference between these two class representatives and the putative class members. Plaintiffs' class definition is also deficient in that it fails to recognize that the Retirement Plan has multiple traditional benefit formulas. 7 The Pension Equity Formula conversion affected participants differently depending on the traditional benefit formula that was used to calculate the participant's December 31, 1997 accrued benefit. 8 For example, two participants who were similarly situated (i.e., same service, age and compensation) except for the fact that their preconversion benefits were calculated under different traditional benefit formulas, would have different December 31, 1997 accrued benefits. Because the starting percentage under the Pension Equity Formula is calculated based on a participant's December 31, 1997 accrued benefit, 9 these participants would also have different starting percentages. Therefore, the conversion to the Pension Equity Formula would impact these two participants differently. Plaintiffs offer no evidence to show that it is appropriate to treat Pension Equity Formula

7 8

See Gannett Retirement Plan Appendix. While the Plan has a number of different traditional benefit formulas that apply to different business units, because all of the named plaintiffs worked in the same business unit, they all accrued benefits under the same formula. See Plan § 6A.03(b).

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participants whose December 31, 1997 accrued benefits were calculated under different formulas as a common class. Plaintiffs themselves acknowledge that many of the putative class members may have been "impacted differently" by the Transition Provisions of the Plan. (Pl. Memo p. 13). Plaintiffs have failed to offer any basis for a determination that that despite these significant factual differences, class certification is warranted. Plaintiffs have failed to meet their burden with respect to commonality among class members, plaintiffs' motion should be denied, or alternatively, the class definition must be narrowed. 3. Plaintiffs' Claims Are Not Typical of their Proposed Class.

Typicality requires that the claims of the class representatives be typical of those of the class and that each class member make similar legal arguments to prove defendant's liability. See Walker v. Asea Brown Boveri, Inc., 214 F.R.D. 58, 63 (D. Conn. 2003); Harding v. Tambrands, Inc., 165 F.R.D. at 628; Dublin v. Miller, 132 F.R.D. 269 (D. Colo. 1990). The typicality requirement assures that the claims of the class representatives are similar enough to the claims of the class so that they will adequately represent them. Harding, 165 F.R.D. at 628. Thus, class representatives must possess the same interest and suffer the same injury. Id. Indeed, plaintiffs' Memorandum acknowledges that this requirement ensures that the interests of the absent class members will be protected. (Pl. Memo p. 15). Plaintiffs tautologically claim that typicality exists merely because each of the proposed class members participated in the Plan both before and after January 1, 1998 and had their "Accrued Benefit computed under the Pension Equity Formula." Id. Yet plaintiffs fail to

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consider that the Pension Equity Formula has a different impact on different groups of participants. In their motion, plaintiffs argue simplistically that an employee who began participation at age 21 years of age will earn 7.64% per year to compute the participant's accrued benefit, whereas an older participant who began participation at age 55 or older would earn 5% per year. (Pl. Memo pp. 8-9). That analysis fails to take into account that certain older participants, such as Brookins and Wells, were credited with transition percentages. As noted above, the maximum transition percentages that a participant could earn equaled 4% times the participant's credited service. For example, a participant who was age 54 and had 10 years of service was credited with an additional 40%. This percentage was in addition to the percentages the participant earned for service after January 1, 1998 (such a participant would earn an additional 7% for each year of service until age 64 and 9% for the subsequent year). Thus, even under plaintiffs' proposed theory for applying § 204(b)(1)(H) -- a theory that defendants reject -- such a participant's average yearly percentage earned for the period from age 55 to 65 would be well in excess of 7.64%, the average percentage earned by a 21 year old participant. Thus, individuals who received transition percentages were affected much differently than other class members. Likewise, under plaintiffs' theory for determining whether the Plan complies with § 204(b)(1)(H), the benefit accrual pattern differs for participants who commenced participation in the Plan before and after January 1, 1998. This is because participants who commenced participation in the Plan before January 1, 1998 had an accrued benefit under the Plan's traditional benefit formula that was converted into the Pension Equity Formula.

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In fact, the example plaintiffs posit on pages 8 and 9 of their Memorandum would only apply to an individual commencing participation after January 1, 1998. This example would not apply to any of the named plaintiffs because each of the named plaintiffs began participating in the Plan before that date. Plaintiffs do not have a representative for the very example they believe supports their case. Further, as previously discussed, even if plaintiffs' theory of injury were correct, many of the proposed class members appear not to have suffered any injury at all. Typicality requires that class representatives be members of the class, have interests co-extensive with and not antagonistic to the class, and have suffered the same injury as the class. General Tel. Co. of the Southwest v. Falcon, 457 U.S. at 156. Consequently, plaintiffs have failed to establish that their claims are typical of the proposed class members. 4. Plaintiffs Cannot Adequately Represent the Interests of the Class.

Rule 23(a)(4) requires representative plaintiffs to "fairly and adequately protect the interests of the class." The fundamental purpose of this requirement is to protect the due process rights of the unrepresented claimants. Dubin v. Miller, 132 F.R.D. at 271. Plaintiffs must prove that they will prosecute the litigation vigorously and fairly for the benefit of the entire class. Id. at 272. The record is once again devoid of any evidence relating to the class representatives; indeed the named plaintiffs do not even provide declarations regarding their involvement in this litigation. Instead, plaintiffs claim that they can adequately represent the interest of the class because they have no conflicts with other class members. (Pl. Memo p. 16). As discussed

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above, conflicts do exist such that the plaintiffs cannot possibly adequately represent the interests of absent class members. The claims of these absent class members should not be placed at risk by the reflexive certification of an overbroad class in this case.

POINT II
PLAINTIFFS CANNOT MEET THE REQUIREMENTS OF RULE 23(B)(2). Only if the prerequisites for class certification under Rule 23(a) are met does the Court need to consider whether the class fits within one of the three categories under Rule 23(b). Lukenas v. Bryce's Mountain Resort, Inc., 538 F.2d 594, 596 (4th Cir. 1976). Plaintiffs assert that their proposed class certification is warranted under Rule 23(b)(2). Even assuming that the Rule 23(a) prerequisites were met, plaintiffs have not adequately demonstrated that Rule 23(b)(2) permits certification in this case. Rule 23(b)(2) permits class actions to be certified where the relief sought is in the form of "appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole." Despite their lip service to the contrary, plaintiffs do not seek equitable relief generally but rather seek an Order "to pay all benefits due to participants from January 1, 1998 forward." (Complaint, p. 7, Wherefore Clause 3). An order to pay money is not injunctive relief. Courts may not certify class actions under Rule 23(b)(2) in situations where the relief sought is monetary relief, such as is the case here. It is well-settled in the Tenth Circuit, as elsewhere, that injunctive or declaratory relief -- as opposed to monetary relief -- must be the primary relief sought for a class to be certified under Rule 23(b)(2). Rich v. Martin Marietta Corp., 522 F.2d 333, 341 (10th Cir. 1975).

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Moreover, plaintiffs are not entitled to monetary relief in an action, like this one, brought pursuant to ERISA §1132(a)(3). Crosby v. Bowater Inc. Retirement Plan, 382 F.3d at 594-597. In Crosby a former cash balance plan participant sued on behalf of himself and others similarly situated to obtain a refund of the difference between the amount they had received and the amount they would have received without the allegedly illegal provision. The district court had initially ruled in favor of the class, and directed the defendants to refund the underpayments. Reversing the district court decision, the Sixth Circuit held that the plan participants' requested remedy--a refund of alleged underpayments -- was a legal remedy and was not authorized by ERISA § 502(a)(3), 29 U.S.C. §1 132(a)(3). Id. This decision comports with Supreme Court authority. The Supreme Court has repeatedly held that "equitable relief" only refers to those categories of relief that were typically available in equity (such as injunction, mandamus, and restitution), and does not include compensatory damages. Mertens v. Hewitt Assocs., 508 U.S. 248, 256 (1993). Almost invariably a suit to compel a defendant to pay a sum of money to a plaintiff, whether by judgment, injunction or declaration, is a suit for money damages as that phrase as been traditionally applied. Great-West Life & Annuity Ins. Co., v. Knudson, 534 U.S. 204, 210 (2002). Accordingly, since the gravamen of plaintiffs' Complaint is an action for monetary relief, this action cannot be certified as a class action under Rule 23(b)(2).

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POINT III
CLASS CERTIFICATION IS INAPPROPRIATE BECAUSE THE CLASS DEFINITION IS OVERBROAD. In addition to its other deficiencies, the class proposed by plaintiffs is too broad to meet the commonality, typicality or adequacy of representation requirements of Rule 23 and therefore should not be certified. See e.g., Lundquist v. Sec. Pac. Auto. Fin. Corp., 993 F.2d 11, 14 (2d Cir. 1993) (district court properly denied certification because the plaintiff "defined the class too broadly to meet the (a)(2) commonality and (a)(3) typicality requirements" of Rule 23). Specifically, the putative class necessarily includes an unspecified number of individuals who are not affected by any of the alleged violations contained in the Complaint. The First Claim is specifically directed at those participants in the Plan as of January 1, 1998 who were converted to the Pension Equity Formula. The proposed class definition, however, includes all new hires after January 1, 1998 (up to January 1, 2003), and includes others who became participants in the Plan for other reasons after January 1, 1998. At a minimum, the proposed class definition as it is to be applied to the First Claim must be narrowed to include only those participants identified in the Complaint as being harmed, i.e., the individuals who had accrued a plan benefit prior to January 1, 1998 that was converted into a benefit under the Pension Equity Formula as of January 1, 1998. The putative class also includes Plan participants who terminated employment or elected to retire and receive their lump sum retirement benefits calculated pursuant to the Pension Equity Formula. Because they already received the benefits to which they are entitled, none of these individuals are entitled to injunctive or declaratory relief (the premise for the relief sought by the plaintiffs in moving to certify the class under Rule 23(b)(2)). Even if these former participants

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wanted to seek additional benefits under the terms of the Plan, defendants would be entitled to assert a number of individualized defenses to such claims, including an absence of any recognizable injury, the absence of illegal cessation or reduction in the rate of benefit accrual with regard to that individual, and so on. See Crosby, 382 F. 3d at 597. Plaintiffs have submitted no evidence that they are in a position to address these issues and protect the interests of these absent putative class members. As a result, the class definition proposed by plaintiffs actually may put the claims of former and present plan participants at risk for no reason. For this reason, and others, it would be improper to force all plan participants to join the suit. As the proposed class definition does not even consider any of these issues, the putative class is overbroad, and class certification should be denied.

CONCLUSION
For the reasons discussed above, defendants respectfully request that the Court deny plaintiffs' motion in its entirety, or alternatively, substantially narrow the class.

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Dated: March 30, 2006 Respectfully submitted,

s/ Margaret A. Clemens Margaret A. Clemens N IXON P EABODY LLP Clinton Square, P.O. box 31051 1300 Clinton Square Rochester, NY 14603-1051 Telephone: (585) 263-1000 Fax: (585) 263-1600 [email protected]

s/ Michael S. Beaver Michael S. Beaver H OLLAND & H ART LLP 8390 East Crescent Parkway Suite 400 Greenwood Village, CO 80111-2800 Phone: (303) 290-1600 Fax: (303) 290-1606 [email protected] A TTORNEYS FOR D EFENDANTS G ANNETT R ETIREMENT P LAN AND G ANNETT C O ., I NC .

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C ERTIFICATE O F S ERVICE
I hereby certify that on March 30, 2006, I electronically filed the foregoing with the Clerk of Court using CM/ECF system which will send notification of such filing to the following e-mail addresses: Robert F. Hill [email protected] John H. Evans [email protected] John F. Walsh III [email protected] Douglas R. Sprong [email protected] and I hereby certify that I have mailed or served the document or paper to the following non CM/ECF participants in the manner (mail, hand-delivery, etc.) indicated by the non-participants name: N/A

s/ Michael S. Beaver Michael S. Beaver Attorney for Defendants Holland & Hart LLP 8390 East Crescent Parkway, Suite 400 Greenwood Village, CO 80111-2800 Telephone: (303) 290-1600 Fax: (303) 290-1606 [email protected]
3536081_1.DOC

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