Verizon Communications (NYSE: VZ) gained a court victory in its move to transfer $7.4 billion of its pension plan beneficiaries to Prudential as a U.S. District Court in Dallas dismissed a suit filed by a group of the telco's retirees, reports Bloomberg.
The telco announced last October that it would transfer $7.5 billion in pension obligations for 41,000 pre-Jan. 1, 2010 management retirees to insurer Prudential, in a process called pension terminal funding.
Although the U.S. District Judge Sidney A. Fitzwater dismissed the suit, he said that the plaintiff could file an amended complaint within the next month to address issues with the argument he cited in his ruling.
William Lee and Joanne McPartlin, along with plan beneficiaries of the Verizon Management Pension Plan, argued in a lawsuit, filed in November 2012, that the conversion to an annuity would eliminate federal law protections.
In his ruling, Fitzwater said that Verizon did not violate federal law by not disclosing the "possibility of such a transaction" and claims that the telco overpaid for the annuity.
"Despite the size of the alleged additional payment, the court cannot reasonably infer from the allegations of the amended complaint that it was unreasonable to pay Prudential approximately $8.4 billion in total," Fitzwater said.
Ray McConville, a spokesman for Verizon, told Bloomberg they were "pleased with the court's decision."
Curtis L. Kennedy of Denver, which represent the plaintiffs, did not respond to a request for comment.
For more:
- Bloomberg has this article
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