AT&T Seeks Dismissal From Two Lawsuits Targeting PRT Deal with Athene

The telecommunications company argued that allegations that it failed in its fiduciary duties are misplaced and should fall to its independent fiduciary, SSGA.

AT&T Inc. filed a motion to dismiss two lawsuits against the company Wednesday that accused both AT&T and its independent fiduciary, State Street Global Advisors Trust Co., of selecting a “risky” third-party insurance company—Athene Annuity and Life Company—to conduct its $8.05 billion pension risk transfer in May 2023. 

The retirees who filed the two lawsuits against AT&T claimed that selecting Athene was not a safe annuity choice for ERISA fiduciaries. But the company’s filing argued that AT&T did not make that fiduciary decision, SSGA did.  

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The first lawsuit, Piercy et al v. AT&T Inc. et al, was filed on March 11 in the U.S. District Court for the District of Massachusetts—the plaintiffs are represented by law firm Libby Hoopes Brooks & Mulvey PC. The second lawsuit was filed a week later by three additional former participants of the plan, represented by attorney Jerome Schlichter of Shlichter Bogard LLP. 

The telecommunications company stated in the motion that the Employee Retirement Income Security Act protects the ability of defined benefit pension plan sponsors like AT&T to annuitize pension risk. In addition, the firm argued that the decision to purchase an annuity is a “settlor decision” that is “unassailable under ERISA’s fiduciary requirements.” 

“AT&T’s decision to proceed with annuitization was not a fiduciary decision, and thus AT&T couldn’t have breached any ERISA fiduciary duties in making that decision,” the memorandum stated.  

SSGA—an independent, financial institution with expertise in PRTs—was specifically hired for the purpose of selecting an annuity provider, and AT&T argued that it is not subject to fiduciary liability for a decision it did not make.  

In addition, AT&T argued that the retirees cannot, and do not, allege that they have been denied “even a penny” of their pension benefits to date, or that the terms of the annuities are insufficient to fulfill their pension benefits.  

“While plaintiffs allege that Athene might default on its obligations at some unknown point in the future if it does a poor job of managing its assets, this allegation is far too speculative to give rise to Article III standing,” the memorandum further stated. “To establish a case or controversy under Article III, Plaintiffs must allege an imminent threat of harm, and none of plaintiffs’ allegations, either individually or in the aggregate, comes close to meeting that requirement.” 

Arguing that the retirees’ complaints are “missing the critical ingredients of harm and liability,” the company believes the claims against it should be dismissed. 

SSGA did not immediately respond to request for comment on the memorandum.  

The PRT deal involved AT&T offloading the pensions of 96,000 of its plan participants to Athene.