AT&T pension suit hits the delegation wall again

A Massachusetts magistrate judge has now twice recommended dismissal of the proposed class action over AT&T's $8.05 billion pension annuity deal with Athene Annuity and Life Co., the second time in a report filed Monday in Piercy et al. v. AT&T Inc. et al. Magistrate Judge Paul G. Levenson again concluded that the complaint does not survive the pleadings.

Levenson said the court should grant the motions to dismiss because the plaintiffs lack evidence that AT&T brokered the May 2023 transaction, and he rejected the allegation that the deal put AT&T's 96,000 retirees at financial risk. The reasoning turns on delegation: AT&T chose State Street Global Advisors Trust Co. as its fiduciary adviser, and that choice moved the duty to select an annuity provider out of the sponsor's hands.

"Even if the complaint makes out a plausible claim that someone breached a duty of care — the AT&T defendants cannot be held liable because they delegated to SSGA the fiduciary responsibility to select an annuity provider," Levenson wrote. "The complaint lacks sufficient factual allegations to support a plausible claim against the AT&T defendants."

The case is the consolidated product of two class actions filed in March 2024 in the U.S. District Court for the District of Massachusetts: one by four former pension participants represented by Libby Hoopes Brooks & Mulvey PC, and the other by additional former participants represented by Schlichter Bogard LLP. Levenson's first recommendation, issued in August 2025, said the complaints failed to state a claim of breach of fiduciary duty and lacked evidence that either AT&T or State Street had a conflict of interest with Athene.

A separate federal judge accepted that recommendation last October, dismissed the case, and ruled that the plaintiffs had standing to sue; the plaintiffs then moved to amend the complaint, and AT&T and State Street moved to dismiss again in November. This week's report and recommendation is the next turn in that exchange, still subject to adoption by the district judge.

O'Melveny & Myers LLP and Nutter McClennen & Fish LLP represent AT&T, Goodwin Procter LLP represents State Street, and AT&T did not immediately respond to a request for comment while State Street declined.

The standing ruling is the one piece that has gone the plaintiffs' way, and it explains why the litigation has continued. A dismissal on the pleadings finds only that these allegations do not support a claim under ERISA's fiduciary rules; it does not reach whether the deal was sound, and that distinction leaves room for a better-pleaded complaint.

None of that makes the recommendation final; it still requires a district judge's adoption, and the plaintiffs have already shown they will amend. But the legal question at the center is unlikely to change: if the sponsor delegated the annuity-selection duty to a fiduciary adviser, the complaint has to find fault with the adviser, not the delegator.

The recommendation lands against a different Department of Labor than the one that sat on the case's earlier rounds. Twice this year, the DOL has filed amicus briefs at the federal appeals court level supporting pension sponsors in pension risk transfer cases, part of a litigation strategy under the Trump administration that treats pension risk transfers as lawful and governed by ERISA and pushes back against what the department calls "regulation by litigation."

The AT&T case sits at the trial court, so those briefs do not directly bind it, but they are a useful sign of where the agency's legal weight sits: with sponsors who annuitize benefits and against using litigation to unsettle completed transactions. For a judge weighing a motion to dismiss, the DOL's position does not control the outcome, though it hardly makes the plaintiffs' theory easier to sell.

Across the two recommendations, the reasoning is unchanged: Levenson's first dismissal rested on the absence of a fiduciary breach claim and of conflicts, and the amended complaint has not supplied enough to clear that bar. The obstacle sits in the structure of ERISA delegation rather than the actuarial soundness of the Athene contract—a sponsor that hands annuity selection to a fiduciary adviser is not automatically liable for the adviser's choice. A future complaint would likely need to aim elsewhere: instead of re-litigating AT&T's decision to transfer the pension risk, a plaintiff would have to plead a specific defect in State Street's selection process. The recommendation does not foreclose that theory, but it does put a heavy burden on the pleading.

For sponsors, the conclusion is straightforward: a properly delegated annuity selection remains a defensible transaction, and the DOL is spending its appellate capital to reinforce that position. The next pension risk transfer complaint worth reading will target the adviser's process rather than the sponsor's checkbook.