Stoffels v. Sbc Communications, Inc., Civil Action No. SA-05-CA-0233-WWJ.
| Decision Date | 21 May 2008 |
| Docket Number | Civil Action No. SA-05-CA-0233-WWJ. |
| Parties | Frank STOFFELS, on behalf of the SBC TELEPHONE CONCESSION PLAN and all other persons similarly situated, Plaintiffs, v. SBC COMMUNICATIONS, INC., and The SBC Telephone Concession Plan, Defendants. |
| Court | U.S. District Court — Western District of Texas |
R. Joseph Barton and Michelle Yau of Cohen Milstein Hausfeld & Toll, P.L.L.C, Washington D.C, Marc I. Machiz of Cohen Milstein Hausfeld & Toll, P.L.L.C, Philadelphia, PA, and M. Renea Hicks Austin, TX, for Plaintiffs.
John L. Carter, Logan E. Johnson and Stacey Vu of Vinson & Elkins, Houston TX, for Defendant.
This is a civil enforcement action brought under sections 502(a)(1)(B), (a)(2), (a)(3), and (c)(3) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132(a)(1)(B), (a)(2), (a)(3), and (c)(3) concerning Defendant SBC Communications, Inc.'s ("SBC") management of an alleged "defined benefit" retirement plan known as "Concession."
Plaintiffs filed their amended complaint July 18, 2005. Defendant filed a Motion to Dismiss (Docket No. 14), which this Court denied. (Docket No. 32.) On April 4, 2007, the Court granted Plaintiffs' Motion to Bifurcate the Case. (Docket No. 108.) Pursuant to the Court's order, Phase 1 of the litigation focuses solely on the question of whether the Telephone Concession is an ERISA pension plan. Plaintiffs contend that the Telephone Concession is an ERISA plan. Defendant denies that Concession is an ERISA plan. After completing discovery, Defendant filed a Motion for Summary Judgment (Docket No. 210), which the Court denied. (Docket No. 284.) On November 26, 2007, the Court empaneled an advisory jury and held a trial on the question of whether the Concession is an "employee benefit plan" within the meaning of ERISA.
The Court presented five questions to the jury: (1) Was the Concession either a plan, fund, or program? (2) Did Defendant maintain the plan, fund, or program? (3) At any time after January 2000, did Defendant act as an employer in maintaining such plan, fund, or program? (4) Was the Concession plan, fund, or program designed with the purpose of providing "retirement income" to any Out-of Region (OOR) retirees who worked at Defendant's subsidiaries? (5) Did the OOR Retiree Concession plan, fund, or program result in the deferral of income by employees?
The jury answered the first three questions in the affirmative and answered the fifth question in the negative. The jury was unable to reach a verdict on the fourth question. Though the Court has the benefit of the advisory verdict, Federal Rule of Civil Procedure 52(a) requires that the Court "find the facts specially and state its conclusions of law separately." See also Sheila's Shine Products, Inc. v. Sheila Shine, Inc., 486 F.2d 114 (5th Cir.1973) (). The Court enters the following findings of fact and conclusions of law.
The named Plaintiffs in this class action lawsuit are all individuals who worked for SBC or an SBC subsidiary. Plaintiff James Belcher is a retiree of Illinois Bell (a subsidiary of Ameritech Corporation), which is now a subsidiary of AT & T. (JS ¶ 1.) Plaintiff Belcher was employed by Illinois Dell from August 1956 through April 1982 and retired with a Service Pension in 1982. Id. Plaintiff Burnie Joe Dunn is a retiree of Southwestern Bell Telephone Co., which is now a subsidiary of AT & T. (JS ¶ 2.) Plaintiff Dunn was an employee of Southwestern Bell Telephone Co. from August 3, 1959 through December 31, 1990 and retired with a Service Pension in 1990. Id. Plaintiff Jack Giuliani is a retiree of Pacific Bell Telephone Co., which is now a subsidiary of AT & T. (JS ¶ 3.) Plaintiff Giuliani was employed by Pacific Bell Telephone Co. from 1962 through 1992 and retired with a Service Pension in 1992. Id. Plaintiff Frank E. Stoffels is a retiree of Pacific Bell Telephone Co., which is now a subsidiary of AT & T. (JS ¶ 5.) Plaintiff Stoffels was an employee of Pacific Bell from 1970 to 1996, and retired in 1996 with a disability pension. Id. Plaintiff Linda Villafane retired from Illinois Bell (a subsidiary of Ameritech Corporation) on January 31, 2001. (JS ¶ 6.) Plaintiff Villafane was employed by Illinois Bell from 1971 until her retirement. Id.
Prior to 1984, American Telephone & Telegraph Co. ("Bell") was the parent corporation of the "Bell System," which through various subsidiaries and affiliated entities controlled over 80% of all U.S. telephones, over 98% of all long distance telephone lines in the United States and manufactured over 90% of all U.S. telephone equipment. (JS ¶ 11.6.) A federal court ordered the divestiture of Bell and its regional operating companies, known as the Regional Bell Operating Companies ("RBOC's"), effective January 1, 1984. (JS ¶ II.7.) The RBOC's were: (1) Ameritech Corporation, (2) Bell Atlantic (now Verizon), (3) BellSouth Corporation, (4) NYNEX (now Verizon), (5) Pacific Telesis Group ("PTG"), (6) Southwestern Bell Telephone ("SWBT"), and (7) U.S. West (now Qwest). Id.
In 1995, SBC Communications, Inc. was established as a holding company for Southwestern Bell Telephone Company, which provides telephone service in Arkansas, Kansas, Missouri, Oklahoma, and Texas. (JS ¶ II.8.) SBC Communications, Inc. acquired the following companies on the following dates: In 1997, SBC acquired Pacific Telesis Group, which was the parent company to Pacific Bell Telephone Company and provides telephone service in California, and Nevada Bell Telephone Company, which provides telephone service in Nevada; in 1998, SBC acquired Southern New England Telecommunications Corporation, which was the parent company to The Southern New England Telephone Company and provides telephone service in Connecticut; and in 1999, SBC acquired Ameritech Corporation, which was the parent company to Illinois Bell Telephone Company and provides telephone service in Illinois, Indiana Bell Telephone Company, which provides telephone service in Indiana, Michigan Bell Telephone Company, which provides telephone service in Michigan, Ohio Bell Telephone Company, which provides telephone service in Ohio, and Wisconsin Bell, Inc., which provides telephone service in Wisconsin. (JS ¶ 9.) In 2005, SBC Communications Inc. acquired Bell and changed its name to AT & T Inc. ("AT & T"). (JS ¶ 10.) Prior to its acquisition of BellSouth Corporation, SBC (n/k/a AT & T) was organized into the following regions, which generally correspond to the following service areas:
West: California and Nevada
East: Connecticut
Southwest: Arkansas, Kansas, Missouri, Oklahoma, and Texas
Midwest: Illinois, Indiana, Michigan, Ohio, and Wisconsin.
(JS ¶ 12.)1 To avoid confusion, the term "Defendant" as used in this memorandum opinion refers to SBC Communications, Inc, n/k/a AT & T. The terms "Telephone Concession" and "Concession" refer to the plan or program of benefits allegedly promised by SBC to its out-of-region retirees.
Concession is a "long-standing employee benefit." (Pl. Ex. 166, Tr. 684 ().) AT & T had, at least as early as July 1963, provided its employees and retirees free and discounted telephone services. (Def. Proposed Findings of Fact ¶ 1.) Concession for Out-Of-Region (OOR) Employees and Retirees, who did not have access to AT & T services, consisted of reimbursements for the cost of purchasing phone service from local carriers. Id. When AT & T divested in 1984, the newly-independent RBOC's agreed that "each eligible pre-divestiture retiree will continue to receive a comparable level of telephone concession that he or she received immediately prior to divestiture." (Pl. Ex. 7, 8, 9.) The RBOC's also agreed to provide Concession to post-divestiture retirees. (See, e.g., Pl. Ex. 172 at SBC 22660-61, Letter from C.L. Wade of Pacific Bell Division Staff to Retirees re: Outline of the New Concession Program, dated April 1984; Pl.Ex. 171 at SBC 23627-28, Letter from Vice President-Personnel of Ohio Bell to Retirees re: Changes Due to Ohio Bell Being Divested from AT & T, dated January 9,1984.)
In the 1990s, each of the RBOC's (before they were acquired by SBC) adopted "grandfathering provisions" that eliminated the OOR telephone concession for new hires but "grandfathered" any existing employees or retirees who were already receiving OOR telephone concession. (See, e.g., Tr. 623, 193-94, 322-23.) After these companies were acquired by SBC, the SBC Companies whose OOR Employees were eligible to receive a Telephone Concession after retirement were referred to as the "Participating Companies." (See Tr. 289-90; Pl. Ex. 47 at SBC 48533-48.) By 2000, the "participating companies and eligible affiliates" from which OOR employees were eligible to receive Concession after retirement were:
Southwest Region: Southwestern Bell Telephone Company; SBC Asset Management, Inc.; SBC Management Services, Inc.; SBC Technology Resources, Inc.; SBC International, Inc.; SBC Operations, Inc.; Southwestern Bell Messaging Services, Inc.; SBC Advanced Solutions, Inc.; SBC Telecom, Inc. (SBCTI-SWBT); SBC Services, Inc.; SBC Board of Directors; Southwestern Bell Telecom/CSI, and SBC Management Services USA, Inc. (JS ¶ 15.)
Pacific Region: Pacific Bell Telephone Company; Nevada Bell Telephone Company; Pacific Bell Directory; Southwestern Bell Video Services, Inc. (d/b/a Pacific Bell Home Entertainment); SBC Advanced Solutions, Inc.; SBC Services, Inc.; Pacific Bell Information Services, Inc. (other than CCO bargained-for employees); Pacific Telesis Group; Pacific...
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