Labor & Employment Newsletter
Federal Court Ruling Allows National Class Action Lawsuit To Proceed

Kansas City, Kansas – The U. S. District Court for the District of Kansas today issued a 30-page decision allowing retirees to proceed with their national class action lawsuit against Embarq Corporation and Sprint Nextel Corporation and related defendants. The suit charges that the companies violated the federal retirement benefits law, ERISA, as well as federal and state age discrimination laws, by cutting off the right to medical insurance for retirees who are eligible for Medicare and by reducing or eliminating life insurance coverage to some of the oldest retirees.

The class action suit, filed on December 28, 2007 in Kansas City, Kansas, where both Embarq and Sprint Nextel are headquartered, covers an estimated 13,000 retirees around the country. The suit alleges that on July 26, 2007, Embarq informed retirees that it was unilaterally terminating or reducing longstanding company-paid medical, prescription drug, and life insurance benefits and subsidies. On the same day, Embarq reported to shareholders that the cutbacks would reduce its long term post-retirement benefit obligations by $ 301 million. In their   lawsuit, the retirees charge that this reduction in benefits is unlawful under the federal Employee Retirement Income Security Act (ERISA), because it violates the provisions of the benefit plans of Embarq and its predecessors. The retirees claim in the alternative that Embarq and its predecessors broke federal law by systematically misrepresenting that the benefits were secure and would last for the lifetimes of the retirees. By an amendment of the suit this spring, the retirees added claims that the benefit cutbacks also violated federal and state laws against age discrimination.

Today’s decision by Chief Judge Kathryn H. Vratil rules on defendants’ motion to dismiss portions of the lawsuit. The decision allows most of the retirees’ claims to now proceed to discovery and possible trial. The decision denied the motion insofar as the companies argued that the retirees had no legal basis to claim that their benefits were protected. Reciting detailed allegations of the Complaint that the defendants described the benefits as lasting for life (pages 4-7), which must be assumed to be true at this stage of the case, the court ruled that the plaintiffs’ allegations of lifetime benefits were adequate (pages 12-14) and concluded that “defendants have not shown that plaintiffs cannot prevail on their claim that they have a vested right” to the benefits (page 14). It also ruled that the presence of boilerplate “reservation clauses” had to be considered in light of other company statements that the benefits would last until death (page 15). The defendants did not challenge the retirees’ alternative claim that the companies misrepresented the benefits and this claim was not addressed in the ruling. The court did grant the motion to dismiss a claim for declaratory relief under the ERISA law as duplicative of the claim for benefits (pages 16-19).

Regarding the age discrimination claims, the court ruled that new regulations issued by the Equal Employment Opportunity Commission in 2007 were valid and precluded any federal law age discrimination claims about the cut off of medical and drug benefits (pages 23-29), but also held that those regulations did not cover federal age claims about the life insurance benefits and so those claims could proceed (page 22). Finally, the court ruled that the defendants had presented no basis to dismiss state law age discrimination claims under the laws of several states and allowed these claims to proceed (page 29).

The text of the December 2, 2008 Opinion and Order is available.

For more information about the lawsuit, contact:  

 Alan M. Sandals
 Sandals & Associates, P.C.
 One South Broad Street, Suite 1850
 Philadelphia, PA 19107
  215-825-4005 
  215-219-3170  cell

 Stewart W. Fisher
 Glenn, Mills, Fisher & Mahoney, P.A.
 P.O. Drawer 3865
 Durham, NC 27702
  919-683-2135 
  919-623-6555  cell
 
 Richard T. Seymour
 Law Office of Richard T. Seymour, P.L.L.C.
 1150 Connecticut Avenue N.W., Suite 900
 Washington, D.C. 20036-4129
  202-862-4320 
 
 Diane A. Nygaard
 Jason M. Kueser
 The Nygaard Law Firm
 4501 College Boulevard
 Suite 260
 Leawood, KS 66211
  (913) 469-5544 

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