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Covington Secures Significant ERISA Victory for Verizon

August 10, 2010

WASHINGTON, DC, August 10, 2010 — The U.S. Court of Appeals for the Seventh Circuit has affirmed a landmark trial court judgment in favor of Verizon Communications in a billion-dollar ERISA class action. Today’s ruling is the first appellate decision to permit reformation of a scrivener's error in the benefit formula of an ERISA-governed plan. Covington & Burling LLP represented Verizon throughout the litigation.

The ERISA lawsuit was filed in 2005 on behalf of nearly 14,000 participants in a cash balance plan sponsored by Verizon’s predecessor, Bell Atlantic. In November 2009, the U.S. District Court for the Northern District of Illinois ruled in favor of Verizon on its counterclaim for reformation of the plan’s opening balance formula. Following a bench trial, the district court found that Bell Atlantic never intended to calculate participants’ benefits as written in the plan, that Bell Atlantic consistently informed participants how it intended to calculate their benefits, and that recognizing plaintiffs' claim would result in a series of perverse windfalls to the plaintiff class.

The Seventh Circuit’s opinion affirmed the district court’s decision in its entirety, holding that “objective, convincing evidence” confirmed that the scrivener’s error was “inconsistent with participants’ expected benefits” under the plan. The court’s 29-page opinion also commended both of the parties for their “fine advocacy” in litigating “this complex ERISA case.”

Jeffrey Huvelle, lead counsel for Verizon and chair of Covington’s ERISA litigation practice, commented that "the complexity of ERISA should not prevent courts from interpreting the statute in a sensible and fair way. Here, the court reached a sensible and fair conclusion, correcting what everyone agreed was a mistake.” Along with Mr. Huvelle, the Washington-based litigation team was led by associate Gus Sandstrom, with assistance from senior counsel John Vine.

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