The Age Discrimination Claims
Plaintiffs’ Claims One and Two allege that AT&T’s cash
balance conversion discriminated against older employees by:
(1) effecting a benefit “freeze” during which older employees
do not earn any additional benefits for a period of years; and
(2) implementing a “greater of” provision in which older employees
do not actually receive any of their cash balance benefits. By contrast,
younger employees earned additional retirement benefits from the cash balance
plan “immediately” and “without contingency.”
Plaintiffs allege that these provisions discriminate against older employees
in violation of Section 4(a) of the Age Discrimination Act (the “ADEA”). Although
Claims One and Two were initially dismissed from the case in June 2000,
the Court reinstated these claims back into the case on December 12,
2006, in light of the Supreme Court’s decision in Smith v.
City of Jackson, 544 U.S. 228 (2005), which allows these types of claims
under the ADEA.
AT&T asked the Court to dismiss these claims from the case yet
again, arguing that the claims could only be brought under a separate
section of the ADEA. On March 29, 2007, the Court denied
AT&T’s motion. On May 5, 2007, the Court also
denied AT&T’s motion to reconsider the decision or to certify
the claims for an immediate appeal to the Third Circuit.
Plaintiffs have asked the Court to conditionally certify Claims One and
Two as a collective action under the ADEA. On May 24, 2007,
the Court granted that motion. As a result, notices were mailed to over
41,000 individuals who fit the collective action definition. The notices
gave those individuals an opportunity to "opt-in" to the collective
action by signing a one-page consent to join form. The notices were mailed
at the end of August 2007. Click to download the
Court's May 24, 2007 decision.
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March 2006 Decision. On March 30, 2006, the District Court issued
a 50-page decision, ruling in favor of AT&T on three claims
about AT&T's disclosures of the impact of the cash balance pension
changes.
(1) The claim that AT&T did not distribute a "Section 204h" notice
of a significant reduction in future benefits. The Court mistakenly found
that there was no reduction in the future benefits available at age 65
and therefore that no notice was required.
(2) The claim that AT&T's Summary Plan Description ("SPD")
about the cash balance changes was inadequate: The Court ruled that employees
have to prove not only that the disclosures in the SPD were inadequate, but
also "extraordinary circumstances." Even though internal documents
show AT&T deliberately "spinning" the cash balance changes
to leave out the "bad parts" and make it appear "more palatable," the
Court did not agree that these are extraordinary circumstances.
(3) The claim that AT&T breached its fiduciary duty to disclose
the impact of the cash balance changes: The Court ruled that the employees
were foreclosed from proceeding with this claim because of the claim
about the Summary Plan Description.
On April 17, 2006, the Plaintiffs asked that the Court reconsider
its rulings on each of these issues. The Court denied the motion
on November
20, 2006.
Separately, the Court's March 2006 decision required the employee class
to refile their motion about the violations of law caused by:
(4) AT&T's "wear-away" of any new benefits earned after
1997 (which caused older employees to not receive any additional retirement
benefits for employment after 1997), and
(5) AT&T's 6% per year reduction for commencing the Special Update
benefits before age 55 (the actuarial expert for the employees has demonstrated
how a 6% per year reduction takes away part of the "present value" of
the Special Update when benefits commence before age 55, and particularly
before age 50).
This motion was refiled on April 10, 2006 and briefing on it was completed
on June 5, 2006. On January 3, 2007, the Court denied Plaintiffs’ motion
for summary judgment on these claims and also denied Defendants’ motion
to dismiss these claims. The judge later denied Defendants’ motion
to reconsider his decision. The judge invited both parties to revisit
these issues later.
Finally, before ruling on the merits of two other claims, the March 2006
decision required the employee class to submit an internal letter appeal
to AT&T to "exhaust" the claims that:
(6) The rules in the AT&T Plan document which resulted in the "wear-away" of
additional retirement benefits were not actually adopted by AT&T until
October 16, 2000, and cannot be applied retroactively, and
(7) The rules which base the "residual" annuity after payment
of one year's pay in cash on the annuity produced by the cash balance formula
instead of the annuity produced by the Special Update were also not actually
adopted by AT&T until October 16, 2000.
Plaintiffs submitted two internal letters of appeal to AT&T, both of
which were denied. On March 2, 2007, Plaintiffs asked the Court
to amend the Complaint to allege exhaustion of AT&T’s administrative
procedures on these claims. The motion is still under advisement.
Class Definition for the AT&T Class Action
The AT&T class action lawsuit centers on the conversion of the AT&T
pension plan, which significantly reduced the value of benefits for long
term older workers. The lawsuit plaintiffs argue that the pension plan conversion
is inconsistent with ERISA and age discrimination laws.
The class definition as adopted by the U.S. District Court on June 6, 2001
and clarified on November 19, 2001, includes all:
"(a) former and current AT&T management employees;
(b) who are currently over age forty; and
(c) who were participants in the AT&T Management Pension Plan on December
31, 1996 and at any time after the July 1, 1997 date on which the Plan was converted to a cash balance design."
If you meet all three (3) criteria above, you are a member of
the class in the Engers v. AT&T class action lawsuit about pension plan
conversion.
Attorneys handling the class action lawsuit
are:
- Stephen R. Bruce, Washington, D.C., lead counsel
- Edgar Pauk, New York, NY
- Jonathan I. Nirenberg, Roseland, NJ
- Maureen S. Binetti, Woodbridge, NJ
