People who retired from predecessor companies to Windstream have been dealt a blow in their bid to prevent the company from altering their benefits starting in January. U.S. District Judge Warren K. Urbom on Tuesday denied the retirees’ request for a preliminary injunction that would have prevented Windstream from implementing the changes, which include making retirees from Aliant and Lincoln Telephone Co. pay part of their medical insurance premiums for the first time, and termination of an Aliant disability and death benefit. The request for the injunction was part of a class-action lawsuit filed on behalf of the retirees.
David Domina, an attorney for the plaintiffs, said he expects the next step will be Windstream seeking a hearing for summary judgment that the retirees’ case has no merit. After that, his clients would have to decide whether to appeal the ruling, should it go against them, Domina said. Windstream spokesman David Avery said the company was pleased with the ruling but he did not know what the next step would be. Domina said that while he disagreed with Urbom’s ruling, “we respect his thoughtful decision.”
The case centers around about 900 people who retired from Aliant and Lincoln Telephone Co. prior to 2001. Those retirees contend they were promised several times in writing that their benefits would not change, despite changes in ownership of the company. In their suit, the retirees cite a 1999 letter from Frank Hilsabeck, then president and chief executive of Aliant, reassuring retirees, when the Alltel acquisition of Aliant was pending.
“I wanted to let you know that after the merger is completed, ALLTEL will continue to provide these retiree benefits under the same terms and conditions as they are currently provided,” Hilsabeck wrote.
Another document the retirees cited is a 2006 letter from Alltel and Windstream officials reassuring “pensioners” that Windstream’s assumption of their benefits would change nothing. However, in a sworn affidavit dated Sept. 22, Hilsabeck said retirees weren’t given any guarantees that their benefits would never change.
“Aliant (like most companies), always reserved the right to modify or terminate Aliant retiree medical benefits at any time, for any reason,” he said in the affidavit. “... (B)ecause business conditions change, Aliant felt that modifications, and even termination of benefits, must always be discretionary. Otherwise, the costs of supporting such a plan, could endanger the financial condition of the company.”
In arguing for the preliminary injunction, the retirees also cited language in the 1987 Lincoln Telephone employees’ handbook that they said guaranteed them their benefits. Urbom, however, disagreed. In denying the injunction, Urbom said the retirees had shown no evidence that their benefits were vested and therefore could not be changed.
“I have been referred to no plan document that contains an express promise to vest these benefits,” Urbom wrote, “on the contrary, the relevant documents — including the 1987 LT&T Employee Handbook relied upon by the defendants — include reservations of rights to amend or terminate benefits.” Windstream has previously said that retiree health care benefits represent a $227 million liability for the company and Nebraska retirees account for about two-thirds of that amount.
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