Young v. Verizon's Bell Atlantic Cash Balance Plan
| Citation | 667 F.Supp.2d 850 |
| Decision Date | 02 November 2009 |
| Docket Number | Case No. 05 C 7314. |
| Parties | Cynthia N. YOUNG, on behalf of herself, and others similarly situated, Plaintiff, v. VERIZON'S BELL ATLANTIC CASH BALANCE PLAN, formerly known as Bell Atlantic Cash Balance Plan, formerly known as Bell Atlantic Management Pension Plan, and Verizon Communications, Inc., as successor in interest to Bell Atlantic Corporation, Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
Matthew Thomas Heffner, Matthew Todd Hurst, Arthur T. Susman, Susman Heffner & Hurst LLP, Chicago, IL, Allen Channon Engerman, Law Offices of Allen C. Engerman, P.A., Boca Raton, FL, Jeffrey C. Engerman, Law Offices of Jeffrey C. Engerman, PC, Los Angeles, CA, for Plaintiff.
James G. Richmond, Greenberg Traurig, LLP, Chicago, IL, Jeffrey Huvelle, Frederick G. Sandstrom, Covington & Burling, Washington, DC, for Defendants.
This ERISA class action presents the issue of whether a billion dollar scrivener's error should be reformed or enforced as written. Plaintiff Cynthia N. Young ("Plaintiff" or "Young") alleges that Defendants Verizon's Bell Atlantic Cash Balance Plan (the "Plan") and Verizon Communications, Inc. ("Verizon") (collectively "Defendants") improperly calculated her pension benefits, and those of similarly situated employees. Plaintiff seeks judicial review of the final decision of the Plan Administrator denying her claims for additional benefits. In their counterclaim, Defendants seek reformation of the Plan to correct an alleged scrivener's error.
This Court previously considered these issues applying a deferential standard of review to the Plan administrators' decisions to deny Plaintiff's claims based upon the administrative record. Young v. Verizon's Bell Atlantic Cash Balance Plan, 575 F.Supp.2d 892 (N.D.Ill.2008). ("Phase I Trial.") Because this case raises novel issues under ERISA and will likely proceed to the Seventh Circuit Court of Appeals, the Court now reviews these issues applying a de novo standard of review, while permitting the parties to introduce additional evidence. It is the Court's intention to decide all issues in such a way that the reviewing court can finally resolve the case without the necessity for a later remand.
The Court conducted a second trial on September 1 and 2, 2009 and heard closing arguments on October 5, 2009. ("Phase II Trial.") The Court has carefully considered the testimony of the two witnesses who testified at the trial, the deposition excerpts of the witnesses included in the parties' exhibits, the parties' trial exhibits the parties' agreed statement of facts, the parties' proposed findings of fact and conclusions of law, the parties' briefs and the closing arguments of counsel.
The following constitute the Court's findings of fact and conclusions of law in accordance with Rule 52(a) of the Federal Rules of Civil Procedure. To the extent certain findings of fact may be deemed conclusions of law, they shall also be considered conclusions of law. Similarly, to the extent matters contained in the conclusions of law may be deemed findings of fact, they shall also be considered findings of fact.
ANSWER: Yes.
ANSWER: Yes.
ANSWER: Yes.
ANSWER: No.
ANSWER: No.
1. Plaintiff Cynthia N. Young is the Class representative for the Class in this action. AG ¶ 1.1 She testified by means of a deposition. (DX 58.)
2. Young worked at Bell Atlantic (or one of its acquired subsidiaries) from 1965 through 1997. During the course of her career, she was a telephone operator, service representative, administrative assistant, communications representative, assistant manager, and manager, and she finished her career as a project manager. AG ¶ 2.
3. Young was a participant in a series of defined benefit pension plans, including the Bell Atlantic Management Pension Plan ("BAMPP"), and then the 1996 and 1997 Bell Atlantic Cash Balance Plan ("Cash Balance Plan"). Young retired in 1997 when the 1997 Bell Atlantic Cash Balance Plan was the operative plan and received a lump-sum payment of her benefit on February 2, 1998, in the amount of $286,094.89. AG ¶ 3.
4. Young later received another payment of $9,558.70 related to her participation in the Cash Balance Plan due to a settlement by the Plan with the Equal Employment Opportunity Commission ("EEOC"). AG ¶ 4.
5. Defendant Verizon Communications, Inc. ("Verizon") is a Delaware corporation with its principal place of business in Basking Ridge, New Jersey. Verizon is the successor-in-interest to Bell Atlantic Corporation ("Bell Atlantic"). Bell Atlantic was one of seven regional telephone operating companies created on January 1, 1984 as a result of the divestiture of AT & T. It represented one of 22 local operating companies that AT & T owned and served the northern Atlantic states. Bell Atlantic was headquartered in Philadelphia and consisted of telephone companies in Pennsylvania, New Jersey, Delaware, Maryland, Virginia, West Virginia and the District of Columbia. An agreement to merge Bell Atlantic and NYNEX, the regional telephone operating company for New York and New England, was announced in April 1996 and became final on August 14, 1997. The combined company took the name of Bell Atlantic, with headquarters in New York City and a workforce of 130,000 employees. On July 27, 1998, Bell Atlantic announced an agreement to merge with GTE, and this merger was effective on June 30, 2000, with the new company taking the name of Verizon Communications, Inc. AG ¶ 5.
6. The merger of Bell Atlantic and NYNEX, and the subsequent merger of Bell Atlantic and GTE, were both large mergers. Bell Atlantic after the first merger and Verizon after the second merger amended their numerous benefit plans, including pension plans and a variety of welfare plans. Bell Atlantic/Verizon implemented these two major mergers and transformed its business from regional telephone operations to a leading provider of national and international wireless telephone and high-speed internet services. AG ¶ 6.
7. Verizon is "both the plan sponsor and the plan's administrator." Young v. Verizon's Bell Atlantic Cash Balance Plan, 575 F.Supp.2d 892, 907 (N.D.Ill. 2008). AG ¶ 6. In 2008, Verizon earned $6.4 billion in profits on revenues of $97.4 billion. (PX 204 and 205.)
8. The parties stipulated to the treatment of this action as a class action. On January 16, 2007, the Court certified a Class pursuant to Rule 23, Fed.R.Civ.P., with two subclasses. AG ¶ 8; Dkt. 61.
9. Subclass 1 is defined as follows:
All participants in the Bell Atlantic Management Pension Plan whose opening balances for the Bell Atlantic Cash Balance Plan were purportedly calculated using section 16.5.1 of the Bell Atlantic Cash Balance Plan and using 120% of the applicable PBGC rate.
10. The class claim associated with Subclass 1 (hereinafter called the "Discount Rate Issue") is defined as follows:
Whether, in determining the benefits afforded by the Bell Atlantic Cash Balance Plan to the plaintiff and the Class, it was improper to use 120% of the applicable PBGC interest rate when calculating the "opening balances," and, if proper, the remedy therefor.
11. Subclass 2 is defined as follows:
All participants in the Bell Atlantic Management Pension Plan whose opening balances for the Bell Atlantic Cash Balance Plan were purportedly calculated using section 16.5.1(a)(2) of the Bell Atlantic Cash Balance Plan.
12. The class claim associated with Subclass 2 (hereinafter called the "Transition Factor Issue") is defined as follows:
Whether, in determining the benefits afforded by the Bell Atlantic Cash Balance Plan to plaintiff and the Class, it was proper to apply the cash balance transition factor found in Table 1 of Section 16 of the Cash Balance Plan once rather than twice when calculating the "opening balances," and if improper, the remedy therefor.
13. Young is the class representative for both Subclasses, which taken together are referred to as the "Class." The Class, consisting of both Subclasses, includes approximately 13,784 former and current management employees of Bell Atlantic and later Verizon. AG ¶ 13.
14. The Verizon Management Pension Plan is the successor plan to Verizon's Bell Atlantic Cash Balance Plan. (PX 206 at VZ432.) Verizon's Bell Atlantic Cash Balance Plan was the successor plan to the Bell Atlantic Cash Balance Plan (the foregoing are hereinafter referred to as the "Cash Balance Plan" or the "Plan"). The Bell Atlantic Cash Balance Plan is the successor plan to the Bell Atlantic Management Pension Plan ("BAMPP"). (DX 18 at VZ 1053). All of these plans are defined benefit pension plans as defined by ERISA. The effective dates of these plans were as follows:
• BAMPP—for decades prior to December 31, 1995
• Bell Atlantic Cash Balance Plan 7/6/96—effective 12/31/95
• Bell Atlantic Cash Balance Plan 9/3/07...
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