Verizon Communications Inc. pension-plan beneficiaries lost abid to block the company's transfer of $7.5 billion in planobligations to Prudential Insurance Co. of America.

U.S. District Judge Sidney A. Fitzwater in Dallas today denied arequest by two retirees who worked for a Verizon predecessor toissue an order stopping the deal, saying they failed to show a“substantial likelihood of success on the merits” of theircase.

The transaction, under which the retired managers' plan would beconverted to an annuity, would strip them and about 41,000 otherbeneficiaries of the protections of federal law and causeirreparable harm, they said in lawsuit filed Nov. 27.

“Plaintiffs have failed to establish a substantial likelihoodthat Verizon has a specific intent to interfere with their rights,”Fitzwater wrote in his opinion today. “They do not offer a rebuttalto Verizon's proffered legitimate, nondiscriminatory reasons fordefining the group of retirees for the annuity contract.”

Verizon, the second-largest U.S. phone company, said on Oct. 17that it planned to shift about one-fourth of its pensionobligations to Prudential to remove risk from its balance sheet.The New York-based company has said the beneficiaries' lawsuit iswithout merit and it may be harmed if the transaction isn'tcompleted by Dec. 10.

“Verizon's actions regarding its pensions protect the interestsof our retired management employees,” the company said in a Nov. 29statement. “The monthly pension benefits of the retirees receivingan annuity from Prudential will remain unchanged.”

The unit of Prudential Financial Inc., the second-largest U.S.life insurance company, is also a defendant in the suit. In a Dec.5 filing, the Newark, New Jersey-based company told Fitzwater theplaintiffs' pensions will remain safe and urged him to reject theirrequest to block the transfer.

“Prudential has paid retiree benefits under group annuitycontracts and other arrangements since 1928 without interruption,”according to the filing.

The case is Lee v. Verizon Communications Inc., 12-cv-4834, U.S.District Court, Northern District of Texas (Dallas).

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