Federal Court Grants Class Action Status to Verizon Retirees in $8.5 Billion
Sell-Off of 41,000 Pensions
COLD SPRING HARBOR, NY -- (Marketwire) -- 04/01/13 -- A United
States District Court Judge in Dallas has ordered class certification
of claims by management retirees of Verizon Communications Inc.
(NYSE: VZ) in litigation regarding the sell-off of 41,000 ERISA
protected pensions to The Prudential Insurance Company of America
(NYSE: PRU) in exchange for providing Prudential with billions in
Verizon retirees' pension assets.
Attorneys Curtis L. Kennedy of Denver and Robert E. Goodman, Jr., of
Dallas are representing the class of retirees in conjunction with the
support of the 128,000 member non-profit Association of BellTel
Retirees Inc. (www.BellTelRetirees.org). The case is before Chief
Judge Sidney A. Fitzwater (Case No: 3:12-CV-04834-D).
Retirees counsel argue the transaction replaces retirees' pensions
with non-ERISA protected insurance annuities, thus stripping
participants of the protections of federal law and causing
irreparable harm. This case is being closely watched by the employee
benefits industry as a case of first impression, as no other
corporation has transferred already retired persons from an ERISA
protected and Pension Benefit Guaranty Corporation (PBGC) guaranteed
pension plan into a group insurance annuity while keeping the pension
plan on-going for others.
"This case is likely to be closely watched by employee benefits
leaders at thousands of companies across America, with the outcome
impacting the management of trillions of dollars in ERISA protected
pension assets, clarifying plan sponsor and plan fiduciary
obligations, and underscoring the rights of plan participants," said
Attorney Curtis Kennedy.
In October 2012, Verizon surprised 41,000 persons who retired prior
to January 1, 2010 when the corporation formally disclosed it had
agreed to the transaction which ends the retirees' uniform PBGC
protections and places retirement income at risk of creditors'
claims, bankruptcy claims and ends all of retirees' federal rights
they enjoyed since 1974. After the transfer, the on-going Verizon
Management Pension Plan currently has approximately 50,000
participants, including about 6,000 other retirees not transferred to
The Judge class certified a claim made on behalf of the pension
plan's remaining 50,000 plan participants whose pensions were not
transferred to Prudential, which claim contends Verizon improperly
used plan assets to pay excessive costs and expenses that Verizon
should have paid with operating revenues, not pension plan monies.
Retiree association President C. William Jones said, "This
discriminatory asset transfer diminishes 41,000 retirees' pensions by
extracting not only ERISA and PBGC protections, but has given
retirees no choice or voice in the oversight of the pensions they
labored a lifetime to fund. We are pleased the court has acknowledged
the critical importance of this case."
Retirees note that should Prudential or a successor experience a
default or asset shortfall, the previous PBGC protections are
replaced only by a patchwork network of insurance industry controlled
state guaranty associations, many of which are under-funded.
Insurance annuities are backed only by insufficient and varying
coverage - generally determined by state of residence at the time of
impairment -- from $100,000 -- $500,000 (lifetime per person cap).
Guaranty associations in eight states and one U.S. territory limit
total lifetime coverage for annuity holders to a maximum of $100,000;
28 states go up to $250,000 lifetime coverage; 10 states and District
of Columbia use a $300,000 ceiling; and just four offer a ceiling of
Mr. Jones said, "Retirees and their spouses, especially for states
with the lowest protection levels, will be financially impaired and
left with as little as two years pension replacement in case of
default. Verizon's pension spin-off offers Ma-Bell's orphans zero
The case is: William Lee, Joanne McPartlin and Edward Pundt, as Plan
Participants and Beneficiaries of the Verizon Management Pension Plan
vs. Verizon Communications Inc., et al., in the United States
District Court, Northern District of Texas, Dallas Division (Case No:
3:12-CV-04834-D). See court filings, including class certification
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