SBC Denial of Benefits case - Wagener v. SBC Pension Benefit Plan-Nonbargained Program, Civ. No. 03-CV-769 (D.D.C.) (pending)

This case is an ERISA claim for benefits under ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B) brought by the Gottesdiener Law Firm, PLLC and another law firm on behalf of some 6,500 retirees who took early retirement from SBC Communications, Inc. (“SBC” or the “Company”) or one of its affiliated companies pursuant to an Enhanced Pension and Retirement Program (“EPR” or “the Program”), a program designed to encourage thousands of SBC employees (or those employed by SBC-related companies) to take early retirement. Plaintiffs allege that Class members have been wrongfully denied several thousand dollars in pension benefits as a result of SBC’s arbitrary exclusion of an entire two weeks of pay that Class members earned while working for the Company from SBC’s calculation of each Class members’ Annual Average Compensation for the purposes of determining the benefits they were and are due under the Plan. Plaintiffs allege that this exclusion of an entire pay period from the Class members’ benefits calculation was and is irrational, was and is without support in the terms of the Plan, and was and is a product of SBC’s desire to save itself tens of millions of dollars which it will otherwise have to contribute the currently underfunded Plan in order to pay the withheld benefits. SBC has claimed the exclusion was justified and has moved to dismiss.

Suit was filed in March 2003. In March 2004, the District Court granted the defense’s motion to dismiss and denied one plaintiff’s motion for summary judgment as to count one of the complaint regarding production of documents. The Plaintiffs appealed the case to the D.C. Circuit where they were were successful in May 2005 in having the district court’s order reversed and their case reinstated. Specifically, on May 17, 2005, the D.C. Circuit held in a 3-0 decision that Plaintiffs were entitled to pursue their claim that the company’s defined benefit pension plan administrative committee discriminated against them by treating them differently than similarly situated plan participants. See Wagener v. SBC Pension Benefit Plan--Non Bargained Program, 407 F.3d 395 (D.C. Cir. 2005). The Court held that Plaintiffs adequately alleged that when calculating benefits, the administrative committee defined “actual base pay” to mean pay actually earned when it calculated benefits for grandfathered participants receiving standard benefits, but the committee defined the term to mean pay actually received when calculating early retirement benefits to be paid to grandfathered participants.