AT&T Litigation – Quite Significant

The Employee Retirement Security Act of 1974 (“ERISA”) has not been kind to retirees in recent years!

As a result, there have been several recent breakthrough litigations that are exceptionally worthy for our fellow retirees to follow and be aware of.

Of particular importance is an actuarial based case for our sisters and brothers who spent their careers working for, and retired from, AT&T.

There is also a second important case involving retirees from PPG Industries, another Fortune 500 company and global supplier of paints, coatings, fiberglass, and chemicals. Some many know this company as the Pittsburgh Plate Glass Company that once had 150 manufacturing locations around the world.

Both of these cases involve major, blue-chip, world-class companies that have the financial wherewithal to dig in for a long fight hiring the best and most expensive attorneys and financial experts, in an attempt to push retirees around. It’s clear the goal is to minimize their companies’ exposure to fulling their promise and commitment to provide quality pensions and benefits in our working years.

Did AT&T Pension Calculations “Shortchange” Retirees Taking Survivorship Option:

This important AT&T retiree’s federal litigation, known as Scott v. AT&T, is known as an “actuarial equivalence” case. It is pending in the Northern District of California, with Judge James Donato of the US District Court presiding.

The heart of the litigation is based on the premise that AT&T deliberately used outdated mortality tables when it calculated joint and survivorship benefits for its retirees, and therefore offered them less than the actuarial equivalent of a single life payout, with no survivorship benefit.

In a nutshell, it suggests that AT&T shortchanged workers who choose pension formats that pay benefits to their surviving spouses after their deaths. The lawsuit claims that this runs counter to ERISA’s requirement that these benefits be actuarially equivalent to traditional, single-life pensions.

AT&T argued the workers lacked a valid claim under Section 502(a)(2) of ERISA, which authorizes claims against plan fiduciaries to recover losses suffered by the plan, because their lawsuit seeks “purely individual relief,” and not relief for the pension plan itself.

Judge Donato disagreed with AT&T, pointing to language in the complaint seeking restoration of plan losses and other remedies aimed at benefiting the plan.

“The time will likely come when the scope of the remedies takes center stage, and no doors are being closed here for a full consideration of the question as the record warrants,” Donato said, according to Bloomberg Law. But for “present purposes,” the complaint “plausibly states a claim for injuries to the Plan,” he said.

To date, the AT&T pensioners have successfully argued that the old mortality tables used by the company did not reflect the fact that people in our modern era were living longer. As a result, workers who chose spousal benefits got less than they would have, if more modern, updated tables had been used by AT&T and its pension fund actuaries.

The AT&T pensioners claim that “table shopping” and the use of flawed data in the pension calculations has resulted in an improper reduction of earned benefits under ERISA.

More than a dozen major corporations have been sued based upon the “table shopping” premise, as the AT&T retirees attorneys claim. In one case, Raytheon Co. agreed to a class action settlement of nearly $60 million to settle claims against it. Back in 2020, AT&T had been successful in defeating another similar claim, but this new case provides a ray of hope to our fellow retirees from AT&T and their families.

Although very little media attention has been focused on this case to date – which we are sure is to the benefit of AT&T – the litigation is very much alive with court hearings expected on class certification motions in the coming months.

The AT&T retirees are being represented by a series of law firms, including: Stris & Maher LLP, Cohen Milstein Sellers & Toll PLLC, Feinberg Jackson Worthman & Wasow LLP, and Shaun P. Martin of San Diego, CA.

PPG Retirees Case- Vesting of Retiree Life Insurance & Reservation of Rights Clause:

According to attorney Edward Stone, special counsel to the Association of BellTel Retirees and Executive Director of the non-profit Retirees for Justice, “The PPG case is more of a mixed bag as it involved a highly specific fact pattern that is unlikely to be replicated in other cases.”

That case is Bellon v. The PPG Emp. Life & Other Benefits Plan.

This important case arises out of a commercial business transaction involving defendant PPG Industries, Inc. merging its commodity chemicals division with Georgia Gulf to create a separate public company named Axiall Corporation.

The retirees (plaintiff) contend that the transaction and subsequent developments violated various ERISA provisions. Further, the retirees allege breach of contract against PPG and violation of fiduciary duty against PPG and its plan administrator.

At stake is the issue of whether terminated retiree life insurance coverage had actually “vested” during a 15-year period from 1969 to 1984. In this fact pattern, it is critical to note that ERISA was enacted in 1974.

The District Court had granted summary judgment in June of 2021 on all claims before ruling on class certification and the plaintiffs appealed to the Fourth Circuit. They claimed that “newly discovered evidence” showed that a reservation of rights clause was adopted in 1969 but then removed that same year, because it “caused doubt in the minds of retirees and the sense of security that retirees look for was absent.”

By taking out the reservation of rights clause, the Fourth Circuit reasoned that PPG “relinquished its previously asserted right to amend the Plan to take away retiree benefits, thereby manifesting its intent to provide retirees with vested life insurance.” The time frame ended in 1984 when PPG reinserted a clear and unambiguous reservation of rights clause in its Plan documents.

Mr. Stone commented, “while this must be considered a victory of sorts, the implication is that it is very difficult to argue that life insurance or any other welfare plan benefits will be deemed to have vested.”

 

This article was first published in the Fall 2022 BellTel Newsletter.