Court Rules AT&T Doesn't Have to Pay Benefit Mistakenly Reported

March 17, 2010 (PLANSPONSOR.com) – A federal court has found AT&T is not bound to provide a lump-sum benefit a service provider mistakenly told a retiree he would receive.

U.S. District Judge Barbara M.G. Lynn noted that William Sullivan signed a waiver upon rehire by AT&T after retiring that indicated he was to be considered a new employee, without any service credit prior to his rehire date of May 7, 2001. Therefore, he could not reasonably expect to receive a lump sum of more than $220,000 calculated based on a hire date of July 20, 1983.      

Lynn said Sullivan’s reliance on benefit estimates provided to him was unreasonable as the information furnished by Fidelity contradicted the plan, which stated that nothing “shall be construed so as to create double-counting of service for any purpose,” and because the estimate statements included prominent disclaimers which stated: “The benefits presented are only an estimate of what you could receive.Your actual benefit will be determined at the time you elect to begin receiving benefits under the Program.”      

Lynn also found that no extraordinary circumstances existed, there was no evidence of bad faith or fraud, nor attempts to actively conceal a significant change in the plan.      

In addition to granting summary judgment to AT&T, Lynn dismissed Sullivan’s claim that AT&T owed him a fiduciary duty to convey complete and accurate information, which it breached when Fidelity provided erroneous benefits statements. According to the court, the claim is not sustainable in light of a 1996 Supreme Court decision which held that “an ERISA [Employee Retirement Income Security Act] plaintiff may bring a private action for breach of fiduciary duty only when no other remedy is available.       

Lynn said that because Sullivan seeks to recover plan benefits under 29 U.S.C. § 1132(a)(1)(B), and additionally claims ERISA estoppel, these claims afford Sullivan an avenue for redress, precluding assertion of his claim for breach of fiduciary duty.      

The case is Sullivan v. AT&T Inc. N.D. Tex., No. 3:08-CV-1089-M, 3/12/10.

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