Chuck Grave's Summary of the Hearing:


Arguing for Appellants were James Malone of Chimicles and Tikellis supported by Alan Sandals of Sandals & Associates; and Victoria Quesada of Quesada and Moore. Arguing for Appellees Lucent was John Pope of Epstein et al.


The core issue is whether Lucent was precluded from terminating the death benefit for retirees by ERISA laws and/or by their pension Plan and predecessor AT&T pension Plan documents. The District Court below ruled (erroneously by any rational standard of document interpretation) that the Lucent Plan documents were “unambiguous” in their language  -and that the Death benefit therefore could be terminated. Further, the Court below held that ERISA defines a death benefit as a welfare benefit, which is a type of benefit that does not have to vest. Since under ERISA the Death Benefit does not vest, Lucent was free to terminate it.


Counsel for Appellants in their extensive briefing and oral arguments gave the Panel numerous reasons to find errors in the District Court’s Opinion. The Panel was very attentive to the arguments and asked probing questions of both sides. The Panel seemed to absorb Appellants’ important point that (contrary to Lucent’s interpretations)  the manner in which the Death benefit was funded by AT&T  over the years cannot be dismissed or overlooked. Funding through tax-deductible contributions to an irrevocable trust, with amounts determined actuarially and accrued to fully fund pension and death benefits when payable on retirement or death of a participant, is the essence of a defined benefit; and these must vest under ERISA.


It is now up to the Panel to weigh the arguments and proofs on each side. Given the complexity of the case and the legal precedents it will set, the Panel is not likely to rule until time has permitted a full consideration.


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