In a win
for Verizon Communications Inc., the U.S. Court of Appeals for the Fifth
Circuit held that only formal, governing plan documents must be turned over
upon request to participants in employee benefit plans (Murphy v. Verizon
Commc'ns, Inc.,2014 BL 287183, 5th Cir., No. 13-11117, unpublished10/14/14).
rejected claims that a Verizon spinoff, a company that later became known as
SuperMedia, violated the Employee Retirement Income Security Act by failing to
turn over its pension plan's investment guidelines. Instead, the court found
that these documents weren't binding on the plan and therefore didn't qualify
as formal plan instruments subject to ERISA's mandatory disclosure requirement.
court's ruling specifically left open the possibility that binding investment
guidelines could be subject to mandatory disclosure in another case.
holding, the Fifth Circuit aligned itself with the U.S. courts of Appeals for
the First, Second, Seventh and Eighth circuits, all of which have held that
only formal, legal documents are subject to mandatory disclosure. The Sixth and
Ninth circuits have taken a more expansive view of the types of documents
subject to disclosure, while the Fourth Circuit has required the disclosure of
investment guidelines when they described an employer's obligation to fund the
the court weighed in on the participants' disclosure claims, it paid little
attention to their class action claims, which challenged Verizon's decision to
transfer them to SuperMedia's pension plans following a corporate spinoff. On
those claims, the court affirmed the U.S. District Court for the Northern
District of Texas's ruling, written by Judge A. Joe Fish, in favor of Verizon
“for essentially the reasons expressed” by the district court.
G. Huvelle, senior counsel with Covington & Burling LLP in Washington and
counsel for Verizon, praised the court's decision.
is pleased that the Fifth Circuit agreed with Judge Fish's well-reasoned
decision that Verizon's spinoff complied with ERISA,” Huvelle told Bloomberg
BNA on Oct. 15. He added that the document disclosure claims at issue “related
to SuperMedia, not Verizon.”
for the participants and for SuperMedia didn't respond to Bloomberg BNA's
requests for comments.
action stemmed from Verizon's 2006 spinoff of its information services
division. As part of the spinoff, Verizon reclassified more than 2,000 of its
employees as employees of Idearc Inc. and transferred them to Idearc's pension
plans. After exiting from bankruptcy protection in 2010, Idearc changed its
name to SuperMedia, and the pension plans became SuperMedia plans.
new company ran into financial trouble and began reducing pension benefits, a
group of transferred employees filed a class action against Verizon, SuperMedia
and related entities, bringing multiple ERISA claims.
district court dismissed their disclosure and benefit interference claims and
later granted class certification on their remaining fiduciary breach and
equitable relief claims.
year, the district court ruled for Verizon on the employees' challenge to the
pension plan transfer, reasoning that Verizon wasn't acting as an ERISA fiduciary
when it effected the spinoff and subsequent plan transfer.
On appeal, the Fifth Circuit affirmed this most recent ruling largely without comment, saying that it agreed with the reasoning of the district court.
Excerpted from a story that ran in Pension & Benefits Daily (10/15/2014).
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