January 28, 2011

CHICAGO – A federal judge dismissed significant claims against the Evangelical Lutheran Church in America (ELCA) and Augsburg Fortress Publishers contained in a lawsuit filed in April 2010. The lawsuit was filed by four plaintiffs in response to the 2009 termination of a defined benefit pension plan of Augsburg Fortress Publishers, a separately incorporated ministry of the ELCA, based in Minneapolis.

Seven of the nine claims against the ELCA were dismissed. Seven of the 12 claims against Augsburg Fortress were dismissed.

Michael J. Davis, chief judge of the U.S. District Court of Minnesota, ruled Jan. 27 that the terminated pension plan is a church plan and is exempt from the 1974 federal Employee Retirement Income Security Act or ERISA. The court dismissed all ERISA claims against the ELCA and Augsburg Fortress Publishers, and it dismissed allegations of consumer fraud against both the ELCA and Augsburg Fortress Publishers.

"The court's ruling is consistent with the statutory ‘church plan' definition and, we believe, correctly reflects the intent of Congress when it revised that definition in 1980," said Ruth S. Marcott, an attorney representing the ELCA in the case. "The ruling is also consistent with 30 years of federal agency determinations that church-affiliated employers, like a publishing agency that is affiliated with a denomination, can maintain a church plan."

However, without making any judgment on the truth or legal sufficiency of the allegations, the district court judge let stand other state law allegations involving breach of contract and other matters against the ELCA and Augsburg Fortress Publishers.

Among those claims, the federal court ruling allowed allegations to go forward that the ELCA is an "alter ego" of Augsburg Fortress, saying that the plaintiffs "asserted sufficient factual allegations" to support such a theory.

In a statement after the ruling was issued, the ELCA churchwide organization said, "This preliminary ruling is likely the first of other procedural matters still to be decided as the case continues forward. The churchwide organization and Augsburg Fortress Publishers will continue to defend against the claims in the lawsuit."

"The ELCA churchwide organization remains concerned for the well-being of the Augsburg Fortress employees and retirees who were affected by the termination of the defined benefit plan," the churchwide organization's statement said. "The church continues to hold in prayer Augsburg Fortress employees and retirees, their families and all who were affected."

In 2005 Augsburg Fortress' board of trustees took action to freeze the defined benefit plan and began offering a 403b defined contribution plan to employees. The publisher terminated its defined benefit plan on Dec. 31, 2009. At the time Beth A. Lewis, president and chief executive officer of Augsburg Fortress, said the defined benefit plan had been underfunded for about nine years. The plaintiffs have asserted that about 500 people were affected by the termination of the pension plan. The pension plan's assets were distributed to participants based in part on how long employees had worked at the company.

Plaintiffs in the lawsuit are Judith Thorkelson, Karen Walhof, Gayle Aldrich and Jean K. Stanley, all participants in the terminated plan. Named as defendants were Augsburg Fortress Publishers, key leaders of the company and the ELCA.

The ELCA is one of the largest Christian denominations in the United States, with approximately 4.5 million members in more than 10,000 congregations across the 50 states and in the Caribbean region. Known as the church of "God's work. Our hands," the ELCA emphasizes the saving grace of God through faith in Jesus Christ, unity among Christians and service in the world. The ELCA's roots are in the writings of the German church reformer, Martin Luther.

ELCA News Service