Boos v. At & T Inc

704 F.Supp.2d 600

Donald A. BOOS, Raymond D. Johnson, and Wanda N. Myers, on behalf of themselves and all other persons similarly situated, Plaintiffs,v.AT & T, INC., BellSouth Corporation, and the BellSouth Telephone Concession Plan, Defendants.

Civil Action No. SA-07-CA-727-XR.

United States District Court,

W.D. Texas,

San Antonio Division.

March 18, 2010.

David Weiser, Jeremy D. Wright, Kator, Parks & Weiser, P.L.L.C., Max Renea Hicks, Law Office of Max Renea Hicks, Austin, TX, Marc I. Machiz, Cohen Milstein Sellers & Toll, PLLC, Philadelphia, PA, Michelle C. Yau, Robert Joseph Barton, Cohen, Milstein, Hausfeld & Toll, P.L.L.C., Washington, DC, for Plaintiffs.

Deborah E. Hryb, Patrick W. Shea, Paul, Hastings, Janofsky & Walker LLP, New York, NY, Geoffrey Amsel, AT & T Legal Department, Dallas, TX, for Defendants.

ORDER

XAVIER RODRIGUEZ, District Judge.

On this date, the Court considered Defendants AT & T, Inc.'s and BellSouth Corporation's Motion for Summary Judgment (docket no. 79), Plaintiffs' Motion for Partial Summary Judgment (docket no. 81), and the responses and replies thereto. The issue presented in both motions is whether a benefit known as “telephone concession” provided to BellSouth retirees living outside of Defendants' service area is an ERISA pension plan. After careful consideration, the Court finds that Plaintiffs have failed to conclusively establish that the plan is an ERISA pension plan or to raise a material issue of fact with regard to the issue. The Court will therefore deny Plaintiffs' Motion for Partial Summary Judgment and will grant Defendants' Motion for Summary Judgment.

I. Factual and Procedural Background

A. Telephone Concession

The summary-judgment evidence indicates that telephone concession-the practice of offering free or discounted telephone land-line services and toll reimbursements as a concession to telephone company employees and retirees-has been in use since at least the 1920s. Def. ex. 1. Documents from the 1950s indicate that telephone concession was provided by “Ma Bell” to its employees so that the company could reach supervisors and employees responsible for providing services, to build morale, to allow employees to become familiar with the product in order to promote the product, and to obtain constructive criticism from employees about the product. Def. Ex. 2; Def. Ex. 3. Though there were variations among the local operating companies, Ma Bell generally offered Class A Concession, a100% discount on charges for local exchange services and installation and a reasonable amount of toll service for management and supervisory employees, employees with thirty or more years of service and retirees on a pension, and corporate directors, and Class B Concession, a 50% discount on the charges for local exchange service and installation (with variations on toll reimbursement) for all other employees after six months of service. Def. Ex. 3 at ATTBS0000858. Ma Bell did not consider concession to be taxable income for its employees, and no amount of concession had been treated as compensation to the persons using the service. Def. Ex. 3 ATTBS000855-881.

At least by 1982, before the 1984 court-ordered divestiture, Ma Bell had also extended a reimbursement to certain retirees who resided outside Bell's service area and thus could not receive discounted service. Def. Ex. 4 at ATTBS0001211-16. Also by this time, Ma Bell viewed telephone concession as a benefit for its retirees. Def. Ex. 4 ATTBS0001211; Def. Ex. 4 ATTBS0001215 (processing of concession was handled by the “Employees Benefit Committee.”). The summary-judgment evidence also indicates that Ma Bell and its employees viewed telephone concession as part of employees' compensation.

Court-ordered divestiture of Ma Bell occurred in 1984, and BellSouth Corporation was created as one of seven separate regional Bell operating companies, consisting of the Southern Bell and South Central Bell telephone operating companies. Docket no. 79 at 5. BellSouth implemented a concession program, and concession under BellSouth's plan was considered a benefit to employees and retirees. Def. Ex. 5 ATTBS0001169-79. The evidence shows that BellSouth has had a single policy document governing concession for in and out-of-region employees and retirees.

The 1984 concession plan sets forth the policy of BellSouth “to reimburse its employees retirees and directors (active and retired) for all or a portion of the amounts charged for residence local exchange services and intra-LATA toll service” ¹ and “to provide residence equipment to employees at a discount.” Def. Ex. 5 ATTBS0001169. The 1984 plan stated that “[a]ll nonmanagement employees, entry level management employees and all retirees may be reimbursed for all or a portion of the amounts charged for basic local exchange service ² provided for the benefit of the employee/retiree and his immediate family.” Def. Ex. 5 ATTBS0001170. Entrance level managers and non-management employees with six months but less than thirty years of service were reimbursed for 40% of the amounts charged for all local services; employees with thirty or more years of service, all retirees, and all management employees were reimbursed for 100% of the amount charged for basic local service and 40% of the amounts charged for additional residence exchange services; certain higher level managers were reimbursed for 100% of amounts charged for all reasonable and adequate local service at one location; and active and retired officers and directors would be reimbursed for 100% of amounts charged for all reasonable local service at two locations. Def. Ex. 5 ATTBS0001170. With regard to concession reimbursements for persons residing out of BellSouth's service area, the Plan provided that “[a]ll active employees, retirees, and directors residing in the territory of a telephone company not a part of BellSouth Corporation ... receive the same reimbursements as those described” for in-region employees, retirees, and directors. Def. Ex. 5 ATTBS0001170. Further, “[r]etirees [were] entitled to the same local service reimbursement as they received prior to retirement; however, in no case, anything less than 100% reimbursement for basic local service.” Id. Employees and retirees were also eligible for various intra-LATA toll discounts and equipment discounts. Non-management employees with six months but less than thirty years of service received 20% of an amount up to $25.00 of eligible intra-LATA calls per month; non-management employees with thirty years of service and all non-management retirees were reimbursed 100% of an amount up to $25.00 of eligible intra-LATA calls per month; management employees and retirees were reimbursed for 100% of up to $50.00 of eligible intra-LATA calls per month; and active and retired officers and directors received 100% reimbursement on all reasonable, eligible intra-LATA calls. Id. All retirees could purchase any type of equipment “at the appropriate discount.” Id. ATTBS0001171. To receive concession, employees submitted their telephone bills, and were reimbursed on their paycheck. Def. Ex. 5, ATTBS0001172. Retirees forwarded their bills to the Corporate Benefit Office serving them, where a “Sundry Expense Voucher” would be prepared for reimbursement. Def. Ex. 5 ATTBS0001172.

BellSouth issued a revised policy on telephone concession, effective April 1, 1985. Def. Ex. 7. The 1985 document states that it is the policy of BellSouth “to allow all the employees and retirees ... an appropriate discount on the regular tariff rate for residence local exchange services provided by Southern Bell and South Central Bell, including related non-recurring charges and intra-LATA toll service.” Id. ATTBS0001316. It provided that “[a]ll employees and retirees may be furnished local exchange service at discounted rates for the benefit of the employee/retiree and his immediate family for usual residential purposes at one location.” Def. Ex. 7 ATTBS0001317. All employees with six months but less than thirty years of service received a 40% discount on local services; employees with thirty years of service and those retiring after April 1, 1985 received a 100% discount on “the central office line, one additional listing, touchtone, custom calling features and customer line charge” and a 40% discount on all additional concession-eligible services; post-divestiture retirees (retired between January 1, 1984 and April 1, 1985) received a 100% discount on “the central office line, one additional listing, touchtone, custom calling features and customer line charge”; and pre-divestiture retirees received the same concession for which they were eligible under the plan applicable at divestiture. Id. ATTBS0001317. All employees with thirty years of service and retirees could also receive 100% discount on non-recurring charges associated with concession-eligible services, while other employees received a 40% discount. Id.

Further, the 1985 plan provided that “[a]ll employees, and retirees may be furnished a toll service discount on intra-LATA calls for the benefit of the employee/retiree and his immediate family for the usual residential purposes at one location.” Def. Ex. 7 ATTBS0001318. All employees with six months but less than thirty years of service received an amount up to $25.00 of eligible intra-LATA calls each month; all employees with thirty years of service and all retirees received up to $50.00 of eligible intra-LATA calls each month; and pre-divestiture retirees received a 100% discount on all reasonable, eligible intra-LATA toll service and a 100% discount on all reasonable inter-LATA toll service provided by AT & T.³ Def. Ex. 7 ATTBS0001319. The 1985 plan document applied to all retirees, and did not expressly distinguish between in-region and out-of-region, or specify how the discount was to be provided.

A February 1986 document entitled “Employee and Retiree Telephone Discount Policy” stated that it was the...