What is cash balance pension plan
Fifteenth Update: On November 14, 2011, Plaintiffs filed a Petition for Certiorari asking the Supreme Court to review the Third Circuit’s decision on our ADEA, plan amendment, and Summary Plan Description claims. You can read the Petition here. AT&T’s response is due on December 14, 2011, and the Supreme Court will decide whether to hear our case after the briefing is complete.
Fourteenth Update: On August 1, 2011, the Third Circuit denied the petition for rehearing and rehearing on banc. Our only recourse at this point is a petition for certiorari to the Supreme Court. Statistically, the Supreme Court only hears less than 5% of the petitions it receives.
Thirteenth Update: The three-judge panel of the Third Circuit that heard our case issued an adverse decision on all of the ADEA and ERISA claims against AT&T on June 22, 2011 (available here ). We are preparing a petition for rehearing by the same judges or a rehearing en banc (which means a rehearing before all of the active judges on the Third Circuit Court of Appeals). The petition is due on July 20, 2011. Everyone is disappointed by the Third Circuit's decision, but we believe there are persuasive reasons for a rehearing.
Twelfth Update on the ERISA and ADEA Claims
The oral argument on the appeal in the U.S. Court of Appeals for the Third Circuit was held on Thursday, March 17, 2011. To listen to an audio of the oral argument, click here. The tape is 40 minutes and requires Windows MediaPlayer or RealPlayer. To read a transcript of the oral argument, click here. There is no fixed time period for the Court of Appeals to issue a decision. Generally, decisions are issued two to three months after the oral argument.
Eleventh Update on the ERISA and ADEA Claims
The oral argument on the appeal in the U.S. Court of Appeals for the Third Circuit has been rescheduled for Thursday, March 17, 2011 at the Albert Branson Maris Courtroom, 19th Floor, James A. Byrne U.S. Courthouse, located at 601 Market Street, Philadelphia PA 19106. Oral arguments will begin at 11:00 am and last about 30 minutes per case.
Tenth Update on the ERISA and ADEA Claims
The oral argument on the appeal in the U.S. Court of Appeals for the Third Circuit is currently scheduled for Friday, March 18, 2011 at the James A. Byrne U.S. Courthouse, located at 601 Market Street, Philadelphia PA 19106. Generally, cases scheduled for oral argument on a particular day start at 10 am and last about 30 minutes per case. We will confirm the time of the oral argument and the floor of the Courthouse on which the case will be heard when more details become available.
Ninth Update on the ERISA and ADEA Claims
On November 3, 2010, Plaintiffs filed their brief in support of their appeal on the ERISA and ADEA claims. Briefing will be completed at the end of December after which an oral argument will be scheduled.
Eighth Update on the ADEA and ERISA Claims
Seventh Update on the ADEA and ERISA Claims
On April 5, 2010, AT&T filed a motion for summary judgment on the ADEA and ERISA claims and the employees filed a motion for summary judgment on the ERISA claims. The briefs in opposition and related court papers were all filed on the same date, including 191 exhibits assembled by counsel for the employees, primarily from AT&T's own records. After the Court decides the motions, it will schedule the case for trial (with a jury trial on the ADEA claims). A final pre-trial conference has been set for September 21, 2010 in Federal court in Newark, New Jersey. An article on the case appears in the April 7, 2010 Wall Street Journal ("AT&T Fights Pension Suit: Potential Liability for Retirees' Plan Conversion Is Estimated at $2.3 Billion ").
Sixth Update on the ADEA and ERISA Claims
Plaintiffs have now deposed former CEO’s Robert Allen and C. Michael Armstrong, as well as AT&T consultant Scott Macey, about the cash balance pension changes and internal Excel spreadsheets, Powerpoint presentations, memos and emails showing that older employees would have long periods without additional retirement benefits. Discovery is complete and both parties are filing motions for summary judgment with the Court. Plaintiffs have asked the Court to rule in their favor on their claims under ERISA that many employees did not receive any additional retirement benefits under the cash balance plan and that two unfavorable plan amendments were not actually adopted by AT&T until October 16, 2000 and cannot be retroactively applied. AT&T has asked that the Court rule in its favor on all issues on various grounds.
Summary judgment briefs will be complete by the end of March, after which the Court will decide the motions and, to the extent the ADEA or ERISA claims are not resolved, set a date for the trial to begin.
Fifth Update on the ADEA Claims
On August 31, 2009, the Magistrate Judge ordered that the Plaintiffs are permitted to depose former CEO’s Michael Armstrong and Robert Allen, and Scott Macey, an AT&T consultant, about the cash balance changes. The Magistrate Judge also ordered AT&T to produce documents about a “special frozen annuity” that was offered to Senior Managers.
Fourth Update on the ADEA Claims
Since the beginning of the year, the statistical experts for both parties have been deposed about their findings on age discrimination. Plaintiffs' counsel have also deposed five additional AT&T executives and benefit consultants about the development of AT&T's cash balance pension design and have reviewed thousands of pages of documents. AT&T is still refusing to permit former CEO's Michael Armstrong and Robert Allen, and Scott Macey, a high-ranking consultant who was instrumental in developing these changes, to testify under oath. We have asked the U.S. District Court in Newark to rule on whether AT&T is justified in refusing to allow them to testify.
We are also still seeking information about a "special frozen annuity for executives" that was developed secretly to protect the highest-level Senior Managers from the periods of "crossover" effected by the cash balance changes. Plaintiffs' counsel are also obtaining AT&T's videotapes and other records of meetings at which Mike Armstrong told employees that he personally examined the impact of the cash balance changes when he arrived and believed the changes were "fair."
Six more current and former AT&T employees have agreed to testify on the employees' side at trial and have all been deposed by AT&T's lawyers. This brings the total number of current and former AT&T employees who are prepared to testify at trial for the plaintiffs to sixteen (16). Two former executives who AT&T previously listed as potential witnesses on its side have said in writing that they want to be removed from AT&T's list.
Third Update on the ADEA Claims
See the expert statistical report and the expert actuarial report of the Plaintiffs’ actuarial and statistical experts dated September 22 and 23, 2008 and the rebuttal reports dated December 3 and 9, 2008 that the Plaintiffs' actuarial and statistical experts prepared in response to the reports by AT&T's experts. The expert reports show how AT&T’s cash balance design created periods of “wear-away” during which older employees do not earn any additional retirement benefits for an average of almost 8 years. The expert reports also analyze the additional losses in benefits for employees who lost their jobs and commenced their pension benefits before age 55. NOTE: Depositions of the actuarial experts took place in Newark, NJ on December 22-23, 2008.
Second Update on the ADEA Claims
Pursuant to a subpoena and a scheduling order from the U.S. District Court in New Jersey, AT&T's consultants, Aon (formerly known as ASA) are being required to produce all data and documentation
that they possess related to the cash balance pension plan conversion by August 8, 2008 (for data and technical documentation) and August 15, 2008 (for consulting advice about the changes).
Expert reports from the Plaintiffs' actuarial and statistical experts are due September 22, 2008. In those reports, the experts will show how AT&T's cash balance design produced periods of "wear-away" (with no growth in retirement benefits) that were based on how close AT&T employees were to age 55. Plaintiffs allege that the cash balance design was skewed to produce periods of wear-away based on age.
For example, AT&T and Aon/ASA knew that employees age 47 and up would generally have no growth in their retirement benefits after the cash balance conversion, whereas younger employees in their 20's or 30's would see immediate growth in their benefits.
First Update on the ADEA Claims: On December 27, 2007. Plaintiffs filed 23,938 signed opt-in forms from current and former AT&T employees who elected to join in the age discrimination ("ADEA") claims in this case. On January 17, 2008, the Plaintiffs' lawyers and two former employees met in New York City with a nationally-known mediator and five representatives of AT&T to see if there was a way to resolve this case. Unfortunately, no progress was made and the mediator declared an impasse. The Plaintiffs' experts are now preparing statistical and actuarial reports to show the Court how AT&T's rules about pension "crossover" were a thin-disguise for age discrimination. The trial of the case will take place in Federal court in Newark, New Jersey, but the dates have not yet been set.
To confirm whether we received your opt-in form, please call (toll free) 1-888-952-9104 .
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.
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