Former Liberty University President Jerry Falwell Jr. has filed a federal lawsuit claiming the school has “wrongfully denied and withheld benefits” set forth in his retirement plan.
Falwell Jr., the son of LU founder Jerry Falwell Sr. and the school’s president until August 2020, filed the complaint in U.S. District Court last week to recover these retirement benefits in an amount close to $8.6 million.
Falwell brought the action against the university and the executive committee of the board of trustees at LU as the plan administrators for the Supplemental Executive Retirement Plan (SERP).
The SERP provides that Falwell “forfeits the account only in the event that his employment is terminated for cause” or if Falwell engages “in any competitive activity,” according to the lawsuit.
The filing claims that Falwell has met every requirement set forth in the SERP for payment of the benefits, which were due Sept. 1.
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Falwell requests an evidentiary hearing on a claim to recover benefits set forth in the SERP and determine whether he is entitled to his accrued benefits; an award to him of benefits under SERP in the amount of nearly $8.6 million as of June 30, 2022; plus interest and repayment of legal costs related to the suit.
On Sept. 14, Falwell filed a claim in writing with the executive committee demanding payment of the SERP amount, the lawsuit states.
On Dec. 13, a written notice was provided to Falwell denying his SERP benefits and on Dec. 28, Falwell provided written notice of his request for the executive committee to review the denial of the benefits, the lawsuit states.
On Feb. 24, LU responded to this letter, again denying the benefits, according to the complaint.
The lawsuit claims the university is aware and has “admitted repeatedly that the SERP amount was due to Mr. Falwell on September 1, 2022.” The filing also explains that the counsel for Liberty, in a July 6, 2022 email, acknowledged that the SERP amount is eligible for distribution Sept. 1.
In response to the complaint filed, Liberty issued a statement:
“This claim is part of a larger dispute currently pending in state court. The University will defend the new action on the same grounds it has already pled on the record in the state case. Liberty is confident it is not legally required to pay these funds and will file the appropriate responses with the federal court.”
On Aug. 24, 2020, Falwell resigned from Liberty after being engulfed in a string of escalating scandals, after serving as the university’s president since the May 2007 death of his father.
In recognition of Falwell’s contributions and in an effort to compensate him “fairly,” the parties entered into an employment agreement, effective April 1, 2012, which was a term of seven years and three months or until June 30, 2019, the lawsuit states.
By the conclusion of the 2012 employment agreement, Liberty and Falwell began negotiating an “arms-length transaction,” regarding an employment agreement effective July 1, 2019, the lawsuit states.
Between 2007 and 2012, the complaint claims Falwell was instrumental in the college’s net assets increasing from about $100 million to more than $800 million, as well as enrollment increasing from about 9,600 residential students and 27,000 online students to more than 12,000 residential students and more than 75,000 online students, according to court records.
By the time of negotiation in 2019, Liberty enrollment increased to more than 15,000 students in residence and more than 86,000 students studying online, and annual gross revenues were more than $1 billion, the lawsuit states.
The 2019 employment agreement was “substantially similar,” one key distinction being SERP.
Liberty established a supplemental executive retirement account for “the purpose of measuring its obligation to pay [Falwell] supplemental retirement benefits.”
On July 1, 2020, the account was credited with an amount of about $7.6 million and additionally each June 30, the account was credited an investment return at the annual rate of 6%.
As of July 1, 2022, the account and SERP amount totaled about $8.6 million.
The lawsuit states Falwell resigned “without cause and for good reason, as those terms are set forth in the 2019 agreement.”