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AK Steel paying $51M to retirees

Funds part of a lawsuit involving retirees who received lump sum pension payments.

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By Jessica Heffner, Staff Writer Updated 9:59 PM Monday, November 30, 2009

WEST CHESTER TWP. — More than $51 million is on its way to a group of AK Steel retirees after the U.S. Sixth Circuit Court of Appeals ruled the company’s calculation method violated federal pension laws.

The funds were distributed Nov. 25 as part of an eight-year case involving 965 retirees who elected to be paid a lump sum for their pension, according to attorneys for the retirees. A federal judge decided the company was improperly calculating lump-sum distributions.

On April 1, 2009, AK paid the $51.5 million ordered by the court from the AK Steel Master Pension Trust into an approved account. The payment ended the company’s “liability to the class members pursuant to the judgment in this matter, including with respect to interest which accrues on the judgment,” according to AK Steel’s first quarter 2009 10-Q filing.

Beyond the filing, spokesman Alan McCoy said the company had no further comment on the case.

Workers involved in the case include whose employment ended on or after Jan. 1, 2005 and received their lump-sum payment on or before April 1, 2005, according to court documents.

The judgment is payable to any company retiree from Armco or AK Steel who met the class definition, not just those who worked at Middletown Works, said Bob Gary, an attorney with Gary, Naegele and Theado, the Lorain, Ohio, law firm that handled the case.

The case was threatened by revisions to the Pension Protection Act of 2006, which set guidelines for the calculation of lump-sum pension payments. AK Steel argued that any payment it made would be a distribution made after Aug. 17, 2006, when PPA was signed into law and was therefore subject to the new guidelines.

However, the court upheld that the act is not retroactive, which is what U.S. Sen. Sherrod Brown, D-Ohio, and others maintained during the case, according to a letter written by Brown and several other members of Congress to the Secretary of the Treasury in August 2007.

“The bottom line is we got 100 cents on the dollar for the pensioners even after any fees,” Gary said.

The law firm is litigating a similar pension case involving the local steelmaker, Lintner vs. AK Steel Corp., filed March in the Ohio Southern District Court. Gary said he expects a conclusion soon.

Contact this reporter at (513) 705-2843 or jheffner@coxohio.com.

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