5 Ex-PacTel Employees Awarded $2.1 Million in Pension Plan Lawsuit

An Orange County Superior Court jury in Santa Ana has awarded $2.1 million to five Yellow Pages sales agents who alleged that their employer coerced them into taking early retirement.

Some pension and benefit specialists said the jury’s decision clearly reflects increasing angst over corporate downsizing and the loss of the employee-employer loyalty bond.

The jury found that executives of a Pacific Telesis unit, Pacific Bell Directory, lied to the five salesmen about the terms of the pension plan in order to push them out the door early. “That was clear from the first day,” juror Debbie Ikeda said.

The salesmen’s awards ranged from $250,000 to $800,000 each.

The decision is sure to rock telecommunications giant Pacific Telesis Group, which owns the Yellow Pages directory unit and faces at least four similar suits in federal court in Los Angeles. In addition, dozens of other retirees reportedly have been following the case to determine if the outcome could affect them.

However, Pacific Bell attorney Anthony Delling scoffed at the suggestion that the company might be pressured into settling the other cases. “Each of these cases will be tried on its own merits,” he said.

Pacific Bell had acknowledged that the wrong information was given out, but said it was not intentional.

In all of the court cases, the plaintiffs are former sales agents whose incomes depended largely on commissions. They retired as the economy began slumping in the early 1990s, threatening their incomes. They were told by the company that their pension benefits would be based on their earnings during the last three years with the company.

In fact, Pacific Bell Directory’s pensions were based on the agents’ highest earnings over three consecutive years. But the clause explaining that policy had been omitted from the directory company’s pension literature since the early 1980s.

“They concealed it from us,” said Leland Brown, an Orange resident who retired 1993 at age 53 and was awarded $250,000 in the Orange County case. “None of us would have retired had we known that they couldn’t reduce our pensions if our commissions dropped. These were good, high-paying jobs . . . and they wanted to get rid of us and replace us with younger people who they could pay less.”

The average annual income for a Yellow Pages advertising sales agent when Brown retired was nearly $120,000. Testimony in the trial showed that the average has since dropped to about $82,000 a year, Brown said.

Corporate layoffs weren’t an issue in the case, but were a factor in the jury room, said directory company attorney John Liu. The case “was tried when the issue of corporate downsizing is all the nation is talking about,” he said.

Oakland pension rights attorney Dan Feinberg agrees. Such cases “are happening more often as companies are downsizing and trying to eliminate more senior, more highly compensated employees,” he said.

But pension law specialists, as well as the attorneys in the Orange County case, said that whatever its impact on Pacific Telesis, Tuesday’s verdict isn’t likely to have a broader impact on retirement issues.

“It’s always been wrong for an employer to mislead employees,” said Lawrence Wangler, principal of the Irvine office of human relations consulting firm Towers Perrin.

Brown, who has worked in advertising sales ever since retiring, received the smallest award while Gene Lambert, a former Yorba Linda resident who retired with Brown in 1993 and hasn’t worked since, got $800,000. John Brodrib of Woodland Hills was awarded $375,000, Malcolm Harwood of Sierra Madre got $350,000 and Stanford Magidson of Mission Viejo received $275,000. All five worked from Pacific Bell Directory’s offices in Orange.