Verizon Communications Inc. pension-plan beneficiaries lost a bid to block the company’s transfer of $7.5 billion in plan obligations to Prudential Insurance Co. of America.
U.S. District Judge Sidney A. Fitzwater in Dallas today denied a request by two retirees who worked for a Verizon predecessor to issue an order stopping the deal, saying they failed to show a “substantial likelihood of success on the merits” of their case.
The transaction, under which the retired managers’ plan would be converted to an annuity, would strip them and about 41,000 other beneficiaries of the protections of federal law and cause irreparable harm, they said in lawsuit filed Nov. 27.
“Plaintiffs have failed to establish a substantial likelihood that Verizon has a specific intent to interfere with their rights,” Fitzwater wrote in his opinion today. “They do not offer a rebuttal to Verizon’s proffered legitimate, nondiscriminatory reasons for defining the group of retirees for the annuity contract.”
Verizon, the second-largest U.S. phone company, said on Oct. 17 that it planned to shift about one-fourth of its pension obligations to Prudential to remove risk from its balance sheet. The New York-based company has said the beneficiaries’ lawsuit is without merit and it may be harmed if the transaction isn’t completed by Dec. 10.
“Verizon’s actions regarding its pensions protect the interests of our retired management employees,” the company said in a Nov. 29 statement. “The monthly pension benefits of the retirees receiving an 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 the plaintiffs’ pensions will remain safe and urged him to reject their request to block the transfer.
“Prudential has paid retiree benefits under group annuity contracts 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).