Class Action

Class Action Defense Cases–In re Lucent Death Benefits: Third Circuit Affirms Dismissal Of ERISA Class Action Agreeing That Pension Benefit Was Unvested And Terminable By Lucent

By Michael J. Hassen

District Court Properly Dismissed ERISA Class Action because Employer’s Termination of Pensioner Death Benefits Underlying Class Action Claims were “an Unvested Welfare Benefit” and ERISA did not Prohibit Termination of the Benefit Third Circuit Holds

Plaintiffs, former employees of AT&T and Lucent Technologies, filed a putative class action against various defendants alleging violations of the Employee Retirement Income Security Act (ERISA); specifically, the class action complaint alleged that defendants violated ERISA in terminating a pensioner death benefit. In re Lucent Death Benefits ERISA Litig., 541 F.3d 250, 252 (3d Cir. 2008). The class action asserted “four claims under ERISA and federal common law on behalf of a putative class of pensioners” and centered on the allegation “that Lucent had terminated the pensioner death benefit unlawfully and sought declaratory and injunctive relief reversing that termination.” Id., at 253. Defense attorneys moved to dismiss the class action on the ground that the benefit underlying the putative class action was “an unvested welfare benefit” and, accordingly, “neither [ERISA], nor unilateral contract principles prohibited its termination.” Id., at 252. The district court dismissed the class action complaint, finding that “the plan documents were not ambiguous and therefore extrinsic evidence was not relevant to construing them” and holding, as argued by defense attorneys, that “the pensioner death benefit was an unvested welfare benefit and that neither ERISA nor unilateral contract principles prohibited its elimination.” Id., at 253. The Third Circuit affirmed.

As the Circuit Court’s opinion centers on the substantive law governing ERISA rather than the class action aspects of the lawsuit, we do not further discuss the case. We quote only the Circuit Court’s conclusion: “The pensioner death benefit, a lump-sum payment made in the event of a pensioner's death, was an unvested welfare benefit that Lucent could terminate without violating ERISA or unilateral contract principles. We thus affirm the decision of the District Court dismissing the pensioners' complaint….” In re Lucent Death Benefits, at 257. Interested readers may find the Third Circuit’s entire opinion here.

Full post as published by Class Action Defense Blog on October 23, 2008 (boomark / email).