A loss for plan participants in an ERISA-related lawsuit brought against Verizon has yielded potential clarity — and perhaps a bit of confusion — in what sponsors are required to do in response to participants’ requests for plan information.

In 2009, employees of Verizon brought suit in U.S. District Court for the Northern District of Texas after their pension plans were transferred from Verizon’s plan to Idearc Inc.’s, a company formed when Verizon spun off its information services unit in 2006.

More than 2,000 former Verizon plan participants were moved to Idearc’s plan. Some had been retired as long as 10 years prior to the spinoff.

In response to financial difficulties, Idearc began reducing benefits, ultimately filing before emerging from bankruptcy in 2010 under its new name, SuperMedia.

SuperMedia further reduced benefits after it experienced more financial troubles, affecting the original Verizon employees.

The plaintiffs in Murphy et al v. Verizon Communications challenged the company’s right to transfer the participants from their plan.

Their claim revolved around Verizon’s failure to comply with plan documents, specifically that Verizon did not supply participants with investment plan guidelines, which they claimed was a breach of the company’s fiduciary duty under ERISA.

Section 104(b)(4) of ERISA says sponsors must reply to written requests for plan descriptions, annual reports, termination reports, bargaining agreements, trust and contract agreements, or “other instruments under which the plan is established or operated.”

The plaintiffs argued that the investment guidelines they requested — which were not produced by Verizon — should have been done so under the “other instruments,” or so-called “catch=all” clause of 104(b)(4).

But the Fifth Circuit Court of Appeals upheld the district court’s dismissal of all the plaintiffs’ claims, effectively saying Verizon did nothing wrong when it transferred the pensions to the spun-off company.

In its decision, the appellate court noted that that the majority of Circuit Courts have applied a narrow interpretation to the “catch-all” clause; only formal legal documents related to plan governance are required to be disclosed. The investment guidelines requested by the plaintiffs failed to meet that standard.

But the Fifth Circuit did note that a Department of Labor bulletin has said “statements of investment policy” are a part of “documents and instruments governing the plan,” presumably leaving the door open for further questions about what documents can be considered as “instruments under which the plan is established or operated.”

Instant Insights /

Court addresses disclosure of investment guidelines, sort of

More From HR Executive

Related Stories

Recommended For You