U.S. Labor Department seeks contempt order against Hewitt over improper distribution of assets from Enron litigation settlement fund

Archived News Release — Caution: Information may be out of date.

Washington — The U.S. Department of Labor today announced that it has asked a federal district court in Houston, Texas, to hold Hewitt Associates LLC in civil contempt for failing to comply with an allocation formula approved by the court when it disbursed court-supervised settlement funds to Enron employees at the end of 2006. The proposed motion for civil contempt must be approved by the U.S. District Court for the Southern District of Texas.

Hewitt caused the settlement fund to have insufficient cash to pay Enron workers, retirees and beneficiaries all amounts due them. The fund holds recoveries obtained by the department and class-action plaintiffs in related lawsuits regarding Enron’s pension plans. Even with other corrective action being undertaken by parties to fix the misallocation, there will be a $9.15 million shortfall in the settlement fund as a result of Hewitt’s noncompliance with the court-approved allocation formula. Hewitt served as the administrator for the settlement fund.

“This department has been relentless in seeking to protect the retirement security of America’s workers and their families,” said U.S. Secretary of Labor Elaine L. Chao. “With this legal action we are seeking to ensure that the pension plan participants receive all the funds they are entitled to.”

Hewitt did not perform the allocation correctly and some participants received too much in settlement proceeds at the expense of the remaining participants — amounting to $22 million being overpaid. The settlement fund now has insufficient funds to pay the correct amounts to participants who were underpaid.

The Labor Department asks the court to require Hewitt to provide funds sufficient to permit the allocation of settlement funds in accordance with the allocation formula approved by the court. The department also asks the court to prohibit Hewitt from collection, repayment and other actions against participants who received overpayments without the court’s permission. The department’s motion is in addition to a separate motion filed by Enron to hold Hewitt 100 percent responsible for an interest-free loan to Enron’s pension plan for the full amount needed to make whole the underpaid participants.

Chao v. Hewitt Associates
Civil Action Number H-03-CV-2257

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Archived News Release — Caution: Information may be out of date.