Court Orders Lucent Employee Readmitted to DB Plan

August 26, 2010 ( – A federal judge has ordered Lucent Technologies to readmit to its defined benefit pension plan an employee temporarily laid off, after finding the Lucent benefits committee had incorrectly blocked the employee’s efforts to get back into the program.

U.S. District Judge Graham C. Mullen of the U.S. District Court for the Western District of North Carolina ruled that committee members had ignored a section of the plan documents for the Lucent Retirement Income Plan (LRIP) allowing such re-entry to the service-based DB program if Lucent rehired a temporarily laid-off employee within three years.

The committee had rebuffed plaintiff Lynn M. Vincent’s efforts to be readmitted based on a different plan document section that barred re-entry if the employee’s break in service was greater than six months.  “The Committee repeatedly ignored the plain language of its own plan, inadequately considered the LRIP by ignoring Section 6.6, inconsistently applied Section 4.1(a)(ii)(1), engaged in a poorly reasoned decisionmaking process, and operated under a conflict of interest,” Mullen declared. “The sum of these factors indicates that the Committees decision was unreasonable.”

According to Mullen’s opinion, under the LRIP, a participant accrued benefits under the service-based pension program (SBP) or under an account balance plan formula (ABP). The SBP is Lucent’s traditional defined benefit formula, while the ABP is a separate cash balance retirement program that Lucent introduced in 1999. Employees hired after January 1, 1999, were required to enroll in the ABP.

Vincent worked for Lucent from June 1985 to September 2001, when she was involuntarily transferred to International Business Machines Corp. In July 2002, Vincent was rehired by Lucent and was enrolled in the ABP, but sought to re-enroll in the SBP.

After exhausting the plan’s administrative process, Vincent filed a lawsuit under the Employee Retirement Income Security Act (ERISA).

The case is Vincent v. Lucent Technologies Inc., W.D.N.C., No. 3:07-CV-240.