The CFO of Acme Brick, among others, is suing Berkshire Hathaway, the parent company of the Fort Worth-based business. They are alleging that the company reduced contributions to their 401(k) retirement plan improperly. They also say that Berkshire Hathaway froze the company’s pension.
This class-action lawsuit was filed in the US District Court in Fort Worth on August 15, and it states that Berkshire Hathaway, owned and operated by multibillionaire Warren Buffett, reneged on a pledge that said they would not reduce benefits when they acquired Acme Brick as part of a purchase in 2000 when they bought Justin Industries.
“Since that time, the employees have stuck with the company through good times and bad, in anticipation that their benefits under the retirement plans would ultimately compensate them fairly,” the lawsuit says. “Now, almost 14 years later, Berkshire Hathaway has broken its promise.”
Judy Hunter, company CFO, who also happens to be a member of the retirement plan committees, came together with a previous retiree and another employee to file the suit following alleged “strong-arm tactics” by the parent company Berkshire Hathaway in order to reduce benefits.
On July 15 of this year, senior management at Acme voted to make changes to retirement plans urged by the CEO of Berkshire Hathaway, Warren Buffett, and the CFO, Mark Hamburg. If these changes weren’t made, “Berkshire Hathaway intended to divest itself from Acme as a subsidiary,” says the lawsuit.
Since the year 2010, Berkshire Hathaway has reduced their Acme 401(k) retirement plan contributions from a 50% match of up to 5% of an employee’s salary to a 25% match, we learned according to the lawsuit. And earlier this month, the lawsuit states that the pension plan was frozen.
The lawsuit claims that the changes made by Berkshire Hathaway are in violation of the federal Employee Retirement Income Security Act, also known as the ERISA. In the lawsuit, they asked the court to declare that the promise made by Berkshire Hathaway not to reduce benefits as an amendment to the retirement plans. This would require Berkshire Hathaway to unfreeze the pension plan, begin fully funding the 401(k) and no longer make any other changes.
As well, the plaintiffs are looking for a certain amount in damages that is undisclosed this time.
Acme Brick currently employs 2242 people. Out of that total, 1558 are part of the pension plan and 1010 are part of the 401(k) plan, we learned according to the lawsuit. Acme sells and manufactures bricks, as well as distributes building products, in 14 states, mostly in the southeastern and southern parts of the United States.
Hamburg, who was reached by telephone, chose not to comment on the lawsuit. But he did issue a statement saying that Berkshire Hathaway never promised to keep the benefits unchanged forever.
“Acme strongly believes this interpretation of the acquisition agreement is clearly wrong and expects that its actions will be upheld by the courts,” added Hamburg’s statement.
A lawyer based out of Arizona, Christopher Graver, is representing the plaintiffs. He declined to answer questions about the lawsuit. He also issued a statement claiming that the changes to the retirement plans violated “an agreement Berkshire Hathaway made when it acquired Justin Industries.”