AT&T ERISA Complaint Dismissed by Federal Judge

A federal judge in California dismissed a complaint accusing AT&T Services Inc. of violating the Employee Retirement Income Security Act by using 401(k) plan forfeitures to offset company contributions—a ruling that adds yet another defeat for plaintiffs.

In Luis Hernandez v. AT&T Services Inc. et al., U.S. District Judge Otis Wright II held that plaintiff Luis Hernandez failed to state any viable claim under federal law, concluding that AT&T’s administration of forfeited employer contributions was expressly permitted under the plan’s terms and consistent with decades of regulatory guidance. Wright dismissed the case without leave to amend, meaning the complaint cannot be refiled in the same court.

Wright echoed recent rulings that dismissed similar complaints against Home Depot, Kaiser, JPMorganChase, Siemens, Nordstrom and others. He emphasized that ERISA does not require fiduciaries to maximize participant account balances beyond the benefits promised in the plan and noted that Hernandez did not allege any plan assets were diverted to AT&T or removed from the plan entirely—a necessary element of an anti-inurement claim.

Though AT&T was victorious in this ruling, there remains a highly watched pension risk transfer case against AT&T, after the U.S. District Court for the District of Massachusetts dismissed a case last month but ruled that the plaintiffs did have standing to sue.

The latest ruling in favor of employers follows the Department of Labor’s July amicus brief that signaled support for employers in forfeiture complaints.

The AT&T Retirement Savings Plan had 203,226 participants with more than $43.1 billion in assets at the end of 2024, according to its most recent Form 5500 filing.

Haffner Law PC represented the plaintiffs, while O’Melveny and Myers LLP represented AT&T.