Supreme Court Turns Away Lucent Early Retirement Benefits Appeal

June 28, 2005 ( - The US Supreme Court has rebuffed efforts by Lucent Technologies to overturn a federal appeals court ruling allowing former employees to pursue a fraud claim under state law in an early retirement benefits case.

>The high court  rejected without comment the appeal  o f the October 2004 ruling by the US 10 th Circuit Court of Appeals that the former workers’ fraud allegations were   not preempted by the Employee Retirement Income Security Act (ERISA). The former workers charged the company acted fraudulently by inducing them to accept an early retirement package, which Lucent later beefed up for other workers.

>The 10 th Circuit ruled that ERISA didn’t bar the workers from moving forward with their fraud allegations under Oklahoma laws because the ex-employees were not participants in Lucent’s pension plan when they filed the suit and didn’t have legal standing.

>The appeals court found that the former Lucent workers did not put forward an ERISA claim on which they could proceed in court because they did not allege they were eligible or likely to become eligible for additional benefits under the plan’s terms, but instead alleged they suffered damages as a result of Lucent’s alleged fraud.

>To get ready for the sale of a manufacturing facility in Oklahoma City, Oklahoma, Lucent, in February 2001, signed a memorandum of agreement with the International Brotherhood of Electrical Workers System Council EM-3 under which employees at the Oklahoma City facility would receive certain enhanced early retirement benefits.

>Among the items agreed to, retirement-eligible employees opting for early retirement would do so in exchange for a payment equivalent to 110% of the amount of termination allowance to which the employee would be entitled if the employee was laid off for lack of work, up to a maximum of 32 years’ service. In addition, retirement-eligible employees would receive a “special pension benefit” in the amount of $11,000 each. The agreement also provided that five years of age and five years of service would be added to make certain employees eligible for early retirement.

>According to the employees’ allegations, Lucent represented that the early retirement package would be a one-time, nonnegotiable offer. Over 1,000 eligible employees opted for the early retirement package, according to court documents.

>After the employees retired, Lucent on October 1, 2001, announced that it would pay retirement-eligible employees still on its payroll benefits identically to those paid to the employees who had previously taken the early retirement package, plus an additional “special one-time pension benefit” of $15,000.

>The Tenth Circuit opinion is  here .