Federal Judge Dismisses AT&T PRT Case

A federal judge dismissed a pension risk transfer case against AT&T but found that the plaintiffs did have standing to sue.

In Piercy et al. v. AT&T Inc. et al, U.S. District Judge Nathaniel Gorton, presiding in U.S. District Court for the District of Massachusetts, accepted a magistrate judge’s opinion from last month that found the plaintiffs did have standing to sue, but encouraged the court to dismiss the case on other grounds.

Though the case was dismissed, the plaintiffs have filed a motion to amend their complaint, and by asserting that the plaintiffs have standing, the court’s decision is not as clear of a victory for plan sponsors.

“The reason that this is bad news is that the cleanest way to have the PRT cases dismissed is on standing,” says Kent Mason, a partner in Davis & Harman LLP who advises plan sponsor clients on retirement savings issues. “In this case, the court dismissed the case based on the insufficiency of the plaintiffs’ substantive claims. Not many courts do that, so losing on standing is not good [for plan sponsors].”

The complaint dates back to March 2024, when two class action lawsuits were filed against AT&T and State Street, alleging that AT&T’s choice of Athene Annuity and Life Co. as the insurer for an $8.05 billion pension risk transfer jeopardized the financial security of 96,000 retirees. The suits also claimed that State Street, acting as AT&T’s fiduciary adviser, would benefit from the selection.

The first complaint, Piercy et al v. AT&T Inc. et al, was filed by the law firm Libby Hoopes Brook & Mulvey P.C., followed by the second, Schloss et al v. AT&T Inc. et al, four days later, filed by Schlicher Bogard LLP.

Though Gorton ultimately accepted the magistrate judge’s opinion, the judge stated in his opinion that the legal debate concerning whether the plaintiffs had standing was a “close question.”

“As the magistrate judge points out, there would be little question as to whether an annuity recipient is harmed if he or she received a riskier product than was purchased,” Gorton stated. “That the annuities at issue here cannot be resold is not controlling , nor is the fact that they were purchased by a fiduciary. Plaintiffs received an inferior financial benefit than that to which they were entitled, a harm that bears a ‘close relationship’ to harms ‘traditionally recognized’ as giving rise to suit. While a secondary market may provide a basis for measuring that harm, the lack thereof does not automatically foreclose its proof.” 

A spokesperson for Athene, the insurer that assumed the pension risk in this pension risk transfer and in others recently challenged by legal complaints, stated that: “The District Judge adopting the report and recommendation and dismissing all claims challenging AT&T’s pension risk transfer affirms what we have said all along: the claims asserted in these PRT industry cases are frivolous, entirely without merit, and driven by predatory trial lawyers looking for a payday at the expense of retirees.”