Kathleen Stewart v. AT&T

Case: 09-50892 Document: 00511144988 Page: 1 Date Filed: 06/17/2010

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit

FILED
June 17, 2010

No. 09-50892 Lyle W. Cayce
Clerk

KATHLEEN A. STEWART, Individually and on Behalf of All Others
Similarly Situated,

Plaintiff - Appellant

v.

AT&T, formerly known as SBC Communications Inc; AT&T PENSION
BENEFIT PLAN-NON BARGAINED PROGRAM, formerly known as SBC
Pension Benefit Plan and SBC Pension Benefit Plan-NonBargained Program,

Defendants - Appellees

Appeal from the United States District Court
for the Western District of Texas
USDC No. 5:07-CV-318

Before REAVLEY, WIENER, and SOUTHWICK, Circuit Judges.
PER CURIAM:*
This is an appeal from the district court's order granting summary
judgment. Appellant Kathleen Stewart claims her retirement plan with

*
Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
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No. 09-50892

Appellees violates the Employment Retirement Income Security Act of 1974
("ERISA"), 29 U.S.C. § 1001, et seq. The district court held that the plan
administrator and subsequent review committee did not abuse their discretion
by denying Appellant's ERISA claims. We AFFIRM.
We review a district court's grant of summary judgment in an ERISA case
de novo, applying the same standard as the district court. Schexnayder v.
Hartford Life & Accident Ins. Co., 600 F.3d 465, 468 (5th Cir. 2010). Because the
retirement plan confers discretion on the plan administrator to construe the
plan's terms, we review the administrator's construction of the plan for abuse of
discretion. See Wade v. Hewlett-Packard Dev. Co. LP Short Term Disability
Plan, 493 F.3d 533, 537-38 (5th Cir. 2007) (citation omitted).
Stewart first argues that the district court erred by dismissing her claim
that the 2004 Amendment to the retirement plan violates ERISA's anti-cutback
rule, 29 U.S.C. § 1054(g). Specifically, Stewart argues that prior to 2004, her
retirement plan had entitled her to full benefits for the twenty-five years of
service she provided at Ameritech Services, Inc. However, Stewart argues that
the 2004 Amendment retroactively cut back those benefits by an amount equal
to the lump sum she had received as payment for her retirement benefits at
Ameritech. As proof of this cutback, Stewart points to various communications
from Appellees prior to 2004 which stated that Appellees would recognize her
years at Ameritech.
However, prior to 2004, Stewart's retirement plan contained various rules
which expressly prohibited acknowledging any service at another company
without first accounting for any lump-sum payment that employee received.1

1
Appellant argues these rules are "void for impossibility" because they allow for certain
classes of employees to pay back their lump sum payments but do not allow Stewart to do so.
However, the fact that some employees may pay back their lump sum and others cannot do
not void the rules. The plan administrator interpreted the rules as designed to prevent
employees from seeking double-compensation under the plan, not as a bargained-for procedure

2
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No. 09-50892

Moreover, all communications Stewart points to from Appellees prior to 2004
either provided no calculation of her future benefits or expressly acknowledged
an offset for her earlier lump sum payment. Therefore, we agree with the plan
administrator's interpretation that these communications were consistent with
the anticipated merger of Appellee AT&T and Ameritech, but that they did not
demonstrate that Appellees at any time promised to award Stewart double
compensation for her Ameritech service. As there was no retroactive reduction
of benefits, no illegal cutback occurred.
Stewart next argues that the district court erred in dismissing her claims
that the 2004 Amendment's General Offset and Special Offset violate ERISA's
anti-forfeiture rule, 29 U.S.C.§ 1053(a), and ERISA's actuarial equivalence rule,
id. § 1054(c)(3). We disagree. By its own terms, the Special Offset only becomes
relevant when it provides greater benefits than the General Offset. Meanwhile,
the General Offset does no more than deduct from Stewart's benefits an annuity
amount equivalent to the lump sum she had received as payment for her
Ameritech service.2 This annuity offset is itself reduced if Appellant chooses to
retire before age 65. As the General Offset accounts both for Stewart's prior
lump-sum payment and the potential for her early retirement, we find that the
plan neither forfeits Appellant's right to her normal retirement benefits, nor
does it violate ERISA's actuarial equivalence rule.3
AFFIRMED.

by which all employees may synchronize their retirement benefits into one payment.
Accordingly, whether Appellant can repay her lump sum is irrelevant.
2
Indeed, the offset amount is the same amount that Stewart herself rejected in favor
of an immediate lump-sum payment when she left Ameritech, demonstrating that Stewart
placed greater value on the lump sum than any corresponding future annuity.
3
Appellant also argues that the district court erred by dismissing her motion for class
certification as untimely. However, we do not need to reach this issue. While we agree with
the Appellant's interpretation of the term "pleading," any error by the district court on this
issue is rendered moot by the court's resolution of Appellant's claims on the merits.

3