Verizon Pension Buyout Lawsuit Dismissed for Second Time

The case had been remanded back to the appellate court after the Supreme Court's decision in Spokeo, Inc.v. Robins.

By Rebecca Moore | October 14, 2016
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The 5th U.S. Circuit Court of Appeals has reaffirmed its previous dismissal of a class-action lawsuit that arose from the decision by Verizon Communications in October 2012 to purchase a single premium group annuity contract from The Prudential Insurance Company of America to settle approximately $7.4 billion of Verizon’s pension plan liabilities.

The case includes two classes of pension plan participants: those whose benefit liabilities were transferred to Prudential and those whose liabilities remained in the plan. The appellate court agreed with the dismissal of claims of the non-transferee class by a district court because the class did not prove individual harm and, therefore, lacked standing to sue.

Its affirmance was driven, in part, by the determination that plaintiff-appellant Edward Pundt lacked Article III standing to sue for purported fiduciary misconduct pursuant to the Employee Retirement Income Security Act (ERISA). Specifically, the 5th Circuit previously held that “standing for defined-benefit plan participants requires imminent risk of default by the plan, such that the participant's benefits are adversely affected,” and it noted that Pundt failed to “allege the realization of risks which would create a likelihood of direct injury to participants’ benefits” in this case. The court also rejected Pundt’s argument that “he directly suffered constitutionally cognizable injury through invasion of his . . . statutory rights [under ERISA] to proper [p]lan management,” concluding that standing based on invasion of a statutory right must still “aris[e] from de facto injury, which is not alleged by a breach of fiduciary duty.”

Pundt then filed a petition for writ of certiorari in the United States Supreme Court. Subsequently, the Supreme Court decided Spokeo, Inc. v. Robins, which clarified the relationship between concrete harm and statutory violations for purposes of assessing Article III standing. After deciding Spokeo, the Supreme Court granted Pundt’s petition for writ of certiorari, vacated the appellate court’s judgment in the case, and remanded the case for further consideration in light of Spokeo.

NEXT: Reviewing the Verizon case in light of Spokeo