The Colgate ERISA Settlement & the Future of Benefit-Plan Litigation

Colgate-Palmolive has agreed to a $332 million settlement that resolves a pension underpayment dispute stretching back more than thirty years.

The case, McCutcheon et al. v. Colgate-Palmolive Co. et al., pending in the Southern District of New York, centered on allegations by former employees who claimed their retirement benefits were improperly calculated under the company’s pension plan.

The issue traces to Colgate’s 1989 transition from a traditional defined benefit plan to a cash balance structure. Under the new design, participants accrued benefits through individualized accounts funded by a percentage of annual pay plus interest credits. When the conversion took place, many employees elected to receive their benefits as lump-sum distributions.

In 2005, Colgate introduced a “residual annuity” option for participants who had previously taken lump sums, allowing them to obtain an annuity reflecting benefits they had ostensibly earned but not received. Plaintiffs argued that both the annuity amounts and earlier lump-sum calculations were erroneous, which led to systematic underpayments. Litigation challenging the lump-sum underpayments commenced in 2007. The residual annuity issue was discovered by plaintiffs’ counsel during the settlement of that claim, with the operative complaint filed in 2016 to address these specific calculation errors.

A 2020 district court ruling favored the plaintiffs and set the stage for a recovery estimated at roughly $300 million. The final settlement surpasses that figure. Of the $332 million total, about $232.7 million will go directly to 1,177 plan participants after fees and costs. The settlement received preliminary approval in October 2025, and now awaits final approval with a fairness hearing scheduled for January 2026.

A Unique Case With Broader Lessons

The Colgate matter grew out of a very specific issue: the language contained in the company’s 2005 Residual Annuity Amendment. Plaintiffs counsel identified the problem only because they spent years litigating against the same defendant and recognized the significance of a drafting choice that most practitioners would have overlooked. The residual annuity theory had never been litigated before, and the violations arose from circumstances that don’t appear similarly in most plans.

Even so, the case demonstrates something important: if one major plan carries problems of this magnitude, it is reasonable to believe others do as well. Large plans accumulate decades of amendments, redesigns, freezes, and conversions. Each change creates opportunities for drafting inconsistencies, implementation errors, and interpretation gaps. 

None of this is unusual. 

But what is unusual is that plaintiffs were able to discover these violations in the first place.

That is why the case is best understood not only as a large recovery, but as a proof of concept. With sustained effort, technical expertise, and detailed document review, even highly technical violations can lead to impactful recoveries.

The Significance of the $300 Million Settlement

The Colgate settlement represents more than 97% of the total residual annuity amounts claimed, which is extraordinary. The remaining percentage reflected the risk and delay that would have followed a potential petition to the Supreme Court.

The legal path to get there was equally significant. Plaintiffs defeated multiple attempts at dismissal and survived appellate review. The case shows that the common defense strategy of delay, attrition, and procedural maneuvering does not guarantee protection for large employers when the underlying violations are strong and the record is well developed.

The settlement confirms that complex, data heavy benefit miscalculations can support large scale relief when properly litigated. Errors hidden in actuarial tables, formulas, and implementation notes are not immune from scrutiny.

3 Lessons from the Colgate Case

We can take three important lessons away from this case:

1. Technical, document-specific violations carry meaningful value: This case took nearly 20 years to resolve. Its scale demonstrates that even highly technical errors can generate substantial liability. If one plan contained issues of this magnitude, it is likely that others do as well.

2. Document-specific does not mean rare: Every major plan has been amended many times. Each amendment is an opportunity for ambiguity. In practice, many plans contain provisions that were drafted, interpreted, or implemented inconsistently. These problems are not necessarily unusual, but simply require the right investigative approach.

3. Long duration does not negate viability. The length of the litigation reflects the determination required in this area. It also shows that when the theory is solid and the data are strong, time tends to favor plaintiffs. A well supported claim can withstand years of procedural resistance.

From Expert Analysis to Systematic Detection

One of the clearest lessons from Colgate is the importance of expert analysis in defined benefit cases. Legal theory alone is not enough: the volume and complexity of participant data make deep data analysis and quantitative work imperative.

Both were central to identifying and quantifying underpayments across thousands of participants: plaintiffs invested nearly $2.9 million in expert work over more than a decade. Without that effort, the violations might never have been identified or proven on a classwide basis.

What makes similar problems so elusive is not their rarity, but the way they are embedded in complex structures. Manual review of Form 5500s, inconsistent fund naming across sources, and investments nested in collective trusts or target date funds all create substantial friction, and make it easy for even serious issues to go unnoticed

Darrow’s legal intelligence approach is designed to address these pain points. Rather than reviewing plans one at a time, our team analyzes retirement plan data at scale and surfaces cases that merit closer legal scrutiny.

Using probabilistic matching and anomaly detection, our platform:

• Connects Form 5500 entries to specific investable options in seconds.
• Maps which plans are invested in particular funds.
• Compares fund performance over multi-year periods against appropriate benchmarks.
• Flags persistent underperformance that may indicate an imprudent investment claim.

Our team has over a decade of retirement fund performance data and incorporates legal rules about how long underperformance must persist to support a viable theory. The output is a set of structured case opportunities that already include estimated damages ranges and potential settlement values.

To date, this approach has helped us identify original ERISA cases with an aggregate damages estimate of approximately $7.5 billion.

For firms that want to expand or deepen their ERISA work, Darrow offers an ongoing source of vetted case opportunities rather than one off referrals. Each case package includes:

• A defined theory of liability grounded in plan documents and performance data.
• Benchmark analyses and loss quantification models.
• Preliminary damages and settlement estimates.
• Access to qualified potential plaintiffs.

Our financial model is structured so that we participate in the outcome alongside our partners, which keeps incentives aligned from initial investigation through resolution.

Colgate demonstrates that technical ERISA violations can support very significant recoveries when they are found and litigated effectively. Legal intelligence allows firms to search for those violations in a systematic way, rather than waiting to discover them by chance. This creates an opportunity to bring more of these cases, and to deliver meaningful results for plan participants who have been underpaid for years.

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