Summary of Lawsuit

On behalf of its clients and a class, Cohen Milstein filed a complaint against SBC Communications (now AT&T) concerning the management of and the reduction of benefits provided by the SBC Telephone Concession Plan.  The action, Stoffels v. SBC Communications, Inc., NO. SA-05-CA-0233 (RF) (W.D. Tex.), was filed on March 24, 2005. The case was bifurcated into two Phases.  After a trial, the Court determined that the Telephone Concession provided to Out of Service Area (a/k/a OOR/OOF) retirees was a defined benefit pension plan covered by ERISA; however, after the case was transferred to a new judge in May 2009, Defendant filed a Motion for Reconsideration, which the Court granted on January 14, 2011, entering a final judgment in favor of Defendant. Plaintiffs appealed this decision to the Fifth Circuit Court of Appeals, which affirmed the District Court’s ruling in favor of the Defendant.

Summary of the Claims

This lawsuit alleged that SBC violated nearly every provision of the Employee Retirement Income Security Act ("ERISA") governing defined benefit plans with respect to the SBC Telephone Concession provided to OOR/OOF retirees. By informing employees that they would receive payment or reimbursement of certain personal expenses when they retired with a Service or Disability Pension, the lawsuit alleged that AT&T had established and maintained a “defined pension plan” under ERISA § 3(35) and that AT&T was responsible to have that plan comply with ERISA, but failed to do so.

Class Certification

On October 3, 2006, the Court entered an order certifying this case as a Class Action. The class was defined as follows for claims against SBC: (1) Retirees of an SBC Company, receiving a Telephone Concession Benefit after they retired, anytime from January 1, 2002, to the present and who lived outside the SBC Service Area; (2) Current or former employees of any SBC Participating Company with more than five years of service with an SBC Participating Company as of June 1, 2005, who were eligible or might become eligible to receive an Out-of-Service Telephone Concession after they retired; (3) Members of the immediate family of any person in Group 1 or Group 2, including surviving spouses and the retiree dependents, during the time that SBC had a policy to provide employees of such SBC Participating Companies with a Telephone Concession after retirement.  In addition, the Court certified a class consisting of all participants and beneficiaries of the Plan at any time from January 31, 2003, to October 1, 2005 for the Benefits Claims Pursuant to ERISA §502 (A)(1)(B) against the Plan.

History of the Litigation

The complaint was filed on March 24, 2005. On October 3, 2006, the Court granted Plaintiffs’ motion to certify this case as a Class Action, certifying a class described above. On April 3, 2007, the Court entered an order to bifurcate (or split) the case into two Phases. Phase I of the case was to determine if the Telephone Concession provided to OOR/OOF retirees was a defined benefit pension plan covered by ERISA. Phase II would then determine which portions of ERISA Defendant violated (including and whether the $25 cap imposed in 2003 and the elimination of cash payments in 2005 were illegal), the remedy, and the amount of benefits (both past and future) to which each participant is entitled.

After completion of discovery on Phase I of this litigation, Defendant filed a motion for summary judgment, which the Court denied on November 26, 2007.  Thereafter, on November 26-30, 2007, the Court held a trial on Phase I of this case. 

On May 21, 2008 the Court entered a decision on Phase I of this case, ruling in favor of Plaintiffs and the Class and concluding that the Telephone Concession provided to OOR/OOF is a pension plan under ERISA maintained by Defendant SBC (now AT&T, Inc.).

In May 2009, after the case was transferred to a new judge, Defendant filed a Motion for Reconsideration of the favorable Phase I decision as the case proceeded into Phase II. In February 2010, Plaintiffs filed a Motion for Partial Summary Judgment on Phase II and in March 2010, Defendants filed their Motion for Summary Judgment on Phase II. The case was then stayed pending a decision on the motion for reconsideration. On January 14, 2011 the Court granted Defendant's Motion for Reconsideration and entered judgment in favor of the Defendant.  Plaintiffs appealed this decision to the Fifth Circuit Court of Appeals.  Oral argument was heard on March 7, 2012.  On April 16, 2012, the Fifth Circuit Court issued an opinion affirming the District Court’s ruling in favor of the Defendant.

Whom To Contact For More Information

If you have questions about this case or have a circumstance similar to this case, please contact one of the following persons:

R. Joseph Barton, Esq. jbarton@cohenmilstein.com
Cohen, Milstein, Sellers & Toll, PLLC 
1100 New York Avenue, N.W., Suite 500
Washington, D.C. 20005 
Telephone: 888-240-0775 (Toll Free) or 202-408-4600