Plaintiffs Who Sued AT&T Over Annuity Provider Selection Face Dismissal Recommendation on All Counts

The U.S. Magistrate Judge presiding over the consolidated class action complaint in Piercy v. AT&T, Inc., No. 24-cv-10608-NMG (D. Mass.), issued a Report and Recommendation on Motions to Dismiss on August 29, 2025, recommending the court dismiss all the ERISA claims filed against the defendants. This closely watched case was filed by retired employees of AT&T, Inc. against the company, multiple persons and entities affiliated with the company's defined benefit pension plan, and State Street Global Advisors (SSGA) and involves a de-risking transaction that allegedly transferred $8 billion in AT&T's pension plan liabilities to Annuity and Life Company and Athene Annuity & Life Assurance Company of New York (collectively Athene). 

The Magistrate Judge summarized the issues as follows:

[T]he question before the Court is not whether Plaintiffs would be better off with a pension than with an annuity. The question is whether Plaintiffs have adequately alleged justiciable claims that Defendants violated ERISA: Did Defendants breach their fiduciary duties by selecting the annuities offered by Athene, instead of purchasing annuities offered by some other insurer?"

To answer this question, the court first addressed whether the plaintiffs had standing to proceed with their claims and concluded that they did. The court rejected the argument that there was no injury upon which to base standing because no annuity payments had been missed, reasoning that such argument "ignores the fundamental financial concept of counterparty risk." According to the court, "Defendants' argument ignores the reality that substantially-increased risk—not only imminent disaster—represents, in myriad contexts, a material, financially-quantifiable harm" and "there is in this case a justiciable case or controversy based on Plaintiffs' claim that they received less valuable (riskier) annuities than they would have received, but for alleged breaches of fiduciary duty by Defendants.

As to the legal sufficiency of the plaintiffs' ERISA fiduciary breach and prohibited transaction claims, the Magistrate Judge concluded that the allegations in the complaint failed to state plausible claims for relief and recommended dismissal of all ten counts. After concluding that AT&T's decision to conduct a pension risk transfer (PRT) was a settlor decision expressly permitted under ERISA, the court addressed whether the complaint sufficiently alleged a breach of the duty of loyalty. The court found that none of the allegations related to (1) AT&T's alleged financial interest in the PRT, (2) SSGA's role as a paid independent fiduciary, (3) the alleged corporate relationships between and among AT&T, SSGA, and Athene, and (4) SSGA's alleged status as a shareholder in both AT&T and Athene's parent plausibly alleged disloyal or conflicted conduct on the part of the defendants. According to the court, "[t]he facts alleged in the Complaint do no more than recite bare facts that such relationships existed[,]" which is "insufficient to create a plausible inference that any fiduciary acted disloyally because of a conflict."

With respect to the claims alleging a breach of the duty of prudence, which focused on the selection of Athene as the annuity provider for the PRT, the Magistrate Judge analyzed the allegations in the complaint based on the pleading standards for assessing imprudence claims based on circumstantial evidence. Quoting Fifth Third Bancorp v. Dudenhoeffer, 573 U.S. 409, 429-30 (2014), the court stated that "an adequate allegation needs to support an inference that 'a prudent fiduciary in the defendant's position could not have concluded that' the choice that was actually made was appropriate." The court emphasized that allegations must support a reasonable inference of misconduct and that a prudent fiduciary in like circumstances would have acted differently. The court analyzed all the allegations in the complaint focused on why Athene was allegedly too risky an annuity provider for the PRT, and the U.S. Department of Labor's (DOL) Interpretive Bulletin (IB) 95-1 and June 2024 Report on IB 95-1, to conclude that "the mere existence of various warts cannot, by itself, support an inference that 'a prudent fiduciary in the defendant's position could not have concluded that' Athene was an appropriate annuity provider."

With respect to the allegations that AT&T's engagement of SSGA as an independent fiduciary and Athene as an annuity provider were ERISA prohibited transactions, the court said the plaintiffs failed to state viable claims because the complaint failed to allege that SSGA and Athene were parties in interest under ERISA. The court reached this conclusion because there were no allegations that either had previously provided services to the plan, thereby adopting the minority rule that a pre-existing relationship with a plan is necessary for party in interest status. In doing so, the court rejected the plaintiffs' argument that under Cunningham v. Cornell University, ___U.S.___. 145 S. Ct. 1020 (2025), an ERISA prohibited transaction can be pled by simply alleging a transaction between a plan and a service provider and nothing more. The court rejected the self-dealing claims against the defendants as well.

The Magistrate Judge's Report and Recommendation is over 90 pages long and worth a read for those following the law developing around these PRT cases. The district court will now consider the Report and Recommendation and issue a decision and order on the motions to dismiss.

Tri-Agencies Shed Light on STLDI Anticipated Rulemaking as OMB Publishes Spring Regulatory Agenda

Although the Employee Benefits Security Administration's (EBSA) just-released Spring 2025 Regulatory Agenda does not reference Short Term Limited Duration Insurance (STLDI), a recent court filing in litigation challenging the Biden administration's STLDI final rule provides insight into when EBSA and the U.S. Departments of Health and Human Services (HHS) and the Treasury (collectively, the Departments) intend to initiate rulemaking to amend, yet again, the definition of STLDI. According to the government's motion to extend a stay of the pending litigation, initially granted in February 2025 to allow the Departments' new leadership time to evaluate the case and the issues it raises, the Departments "expect to publish a notice of proposed rulemaking no later than the Summer of 2026, and to issue a final rule later that year." They ask the court to stay the litigation through the conclusion of the anticipated rulemaking, a request the plaintiffs who filed the case oppose. In the motion, the Departments reiterate their current enforcement policy that they do not intend to prioritize enforcement actions for violation of the 2024 final rule definition of STLDI and encourage states to adopt a similar enforcement approach. 

According to the Spring 2025 Regulatory Agenda, EBSA will be busy for the foreseeable future on a host of regulatory initiatives. The agenda includes new proposed rules on pharmacy benefit manager (PBM) fee disclosures, Transparency in Coverage, and default electronic disclosures for welfare plans, among other things.

Claim Release Defeats Stable Value Fund Lawsuit 

On August 26, 2025, the court in Gonzalez v. JPMorgan Chase Bank, NA, No. 2:25-cv-01889 (D.N.J.), dismissed a purported class action lawsuit in which the plaintiff alleged JPMorgan Chase Bank (Chase) violated ERISA in its management of the company's 401(k) plan. The plaintiff alleged that Chase breached its fiduciary duty of prudence and failed to monitor fiduciaries in violation of ERISA by including in the plan an allegedly underperforming proprietary Chase stable value fund, when allegedly better performing and comparable stable value funds should have been included instead. In response to the lawsuit, Chase moved to dismiss the lawsuit arguing that the plaintiff lacked standing to bring these claims against Chase and also failed to state a claim.

To support its standing argument, Chase relied on a settlement agreement containing a general release that was entered into by the plaintiff and an affiliate of Chase to resolve employment-related claims. The settlement agreement included a class action waiver and promise not to sue. The court agreed with Chase and dismissed the case, holding that the settlement agreement's inclusion of a "clear and unambiguous" promise by the plaintiff "not to sue Defendants under ERISA" was enough by itself to render the lawsuit moot. In reaching its decision, the court rejected the plaintiff's argument that the settlement agreement was unenforceable under Henry ex rel. BSC Ventures Holdings, Inc. Employee Stock Ownership Plan v. Wilmington Tr. NA, 72 F.4th 499 (3rd Cir. 2023), which voided a class action waiver of an arbitration provision in a plan document because it attempted to prohibit statutorily authorized remedies. The court stated that the waiver and covenant not to sue at issue were enforceable as they were contained in an individual agreement, not a plan document, thereby distinguishing Henry from the case before the court.

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