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Verizon Wins Suit Over $7.4 Billion Pension Transfer Sale
Verizon Communications Inc. (VZ) won dismissal of a lawsuit filed by pension plan beneficiaries challenging the company’s decision to shed $7.4 billion in obligations by buying a single-premium group annuity.
While U.S. District Judge Sidney A. Fitzwater in Dallas today dismissed the lawsuit, he said the suing plan members can file an amended complaint within 30 days that cures deficiencies he identified in his ruling.
The initial complaint was filed last year on behalf of about 41,000 now-former plan members, in an unsuccessful bid to block the telecommunications company’s plan to purchase the annuity. The transaction was completed in December for about $8.4 billion.
Fitzwater rejected the claims of those whose interests were transferred to Prudential that Verizon violated federal law by failing to disclose the possibility of such a transaction in its plan description and other claims.
He also dismissed their claims Verizon overpaid for the annuity, and non-transferree assertions the company improperly used plan assets to pay for the annuity and associated costs.
“Despite the size of the alleged additional payment, the court cannot reasonably infer from the allegations of the amended complaint that it was unreasonable to pay Prudential approximately $8.4 billion in total,” Fitzwater said.
“The transferee class does not specify which aspects of the extra $1 billion in expenditures were unreasonable or how they were unreasonable,” he said.
Those remaining in the plan failed to allege they hadn’t gotten the benefits to which they were entitled, Fitzwater said.
The judge in March granted class action, or group, status to transferee and non-transferee classes, allowing the former group to press their claim New York-based Verizon violated U.S. pension laws while enabling the latter to question how the annuity was paid for.
“We are pleased with the court’s decision,” said Ray McConville, a spokesman for Verizon.
Plaintiffs’ attorney Curtis L. Kennedy of Denver didn’t immediately reply to a voice-mail message seeking comment on the court’s decision.
The case is Lee v. Verizon Communications Inc., 12-cv-4834, U.S. District Court, Northern District of Texas (Dallas).
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