| NEW YORK
NEW YORK Dec 7 A federal judge in Texas on
Friday denied Verizon Communications Inc retirees'
attempt to stop the company from transferring $7.5 billion in
pension obligations to insurer Prudential Insurance Co of
The ruling from U.S. District Judge Sidney Fitzwater clears
the way for Verizon to proceed with the move, first announced in
October, in which Verizon would purchase a group annuity
contract where Prudential would be responsible for paying
retirees' pensions. The transfer is scheduled to close December
On Nov. 27, two management retirees affected by the move
filed a lawsuit in Texas federal court, seeking a court order
blocking the transfer.
They argued in court filings that the move would strip them
and approximately 41,000 other affected employees of their
federal legal protections and interfere with their rights under
the retirement plan.
Fitzwater rejected their request for a temporary restraining
order and preliminary injunction. He wrote in a 15-page ruling
that "plaintiffs have failed to carry their burden of showing a
substantial likelihood of success on the merits."
A lawyer for the plaintiffs, Curtis Kennedy, said that the
retirees "should have been allowed a voice and a choice with
respect to the planned change." He said the plaintiffs are
considering an appeal.
A Verizon spokesman said the company was pleased with the
decision. A spokeswoman for Prudential declined to comment.
Also known as pension terminal funding, the concept of the
deal is simple: an employer pays an upfront premium to an
insurance company for an annuity that covers the members of a
The insurer becomes responsible, via the annuity, for all of
the retirees' pensions and the sponsor gets to wash its hands of
General Motors Co completed a similar deal with Prudential
earlier this year.
The case is Lee et al. V. Verizon Communications Inc., in
the U.S. District Court for the Northern District of Texas, no.