A federal appeals court in San Francisco declined to reconsider its pro-participant ruling in an ERISA case involving a unit of AT&T.
A three-judge panel of the 9th U.S. Circuit Court of Appeals on Nov. 8 denied a request to rehear the case decided in August and also denied the request that the full appeals court rehear the case.
In that case, appellate court judges reversed a U.S. District Court ruling that had favored AT&T Services Inc., the administrator of the AT&T Retirement Savings Plan. Participants alleged ERISA violations in the 401(k) plan's self-directed brokerage service and the plan's dealings with its investment adviser.
Plan participants initially sued in November 2017. U.S. District Judge Virginia A. Phillips in Los Angeles dismissed the complaint in 2018, but she gave plaintiffs the opportunity to amend their complaint.
In September 2021, the judge granted summary judgment for the defendants based on the plaintiffs' third amended complaint in the case Bugielski at al. vs. AT&T Services Inc. et al. An original defendant, AT&T Inc., had been dropped through agreement of attorneys for both sides.
A motion for summary judgment is usually filed after the parties have completed discovery, giving a judge the opportunity to review details of a case. A motion to dismiss, usually requested soon after a complaint is filed, argues that the plaintiff has failed to state a claim.
The participants appealed, and the appeals court ruled on Aug. 4, 2023, that the district court judge should reconsider some allegations made by the plaintiffs.
The panel said the defendants violated ERISA's rules on prohibited transactions and on duty of prudence in managing the plan's use of a self-directed brokerage service, BrokerageLink from Fidelity Investment, and its relationship with Edelman Financial Engines, an investment adviser. Neither is a defendant.
The case has attracted considerable attention within the retirement industry. Five organizations – separately or jointly – filed amicus briefs with the appeals court supporting a rehearing. They are the Chamber of Commerce of the United States, ERISA Industry Committee, American Benefits Council, Society of Professional Asset Managers and Recordkeepers, and the Committee on Investment of Employee Benefits Assets Inc.
AT&T Retirement Savings Plan, Dallas, had $37.6 billion in assets as of Dec. 31, 2022, according the the latest Form 5500.
