The papers show that 24,000 current and former AT&T employees want damages of $2.3 billion – the largest amount ever seen in pension litigation, according to the Wall Street Journal. But AT&T is trying to get judges to dismiss the case.
The suit stems from a 1998 change made to AT&T pensions. The company essentially froze the benefits paid to older management workers, but not those of their younger counterparts, the Journal reported. AT&T told the Journal it did nothing wrong in converting to the cash-balance plan.
“We believe our filing speaks for itself in explaining why we have no additional liabilities to these retirees,” spokesman Mark Siegel told the newspaper.
The Journal said the documents disclose for the first time an estimate of the damages sought by plaintiffs. AT&T didn’t share that information until, in May 2009, it was pressured by the Securities and Exchange Commission to do so.
It’s now up to a judge to make the next move. Because the lawsuit contains accusations of age discrimination, it could go to a jury trial. The Journal said that if a jury found in the workers’ favor, AT&T could be forced to pay up to $4.6 billion in punitive damages. If AT&T won, however, there’d be no cash backlash for the $2.3 billion, the Journal noted.
A number of American corporations switched to so-called “cash-balance plans” in the 1990s to save money. For example, IBM Corp. and Xerox Corp. made the same move as AT&T.
Shares of AT&T were trading down by 1.24 percent about 15 minutes before Wall Street’s close on Wednesday.