SOUTHERN CALIFORNIA SPOTLIGHT : Pac Bell Lied About Pensions, Retirees Say : Lawsuit: Company denies misrepresenting how payments would be figured for Yellow Pages sales agents who retired early.

In what could be a trend-setting case, a group of former Pacific Bell Directory sales agents, who say they retired early after the company lied about the way their pensions would be determined, are set to go to trial today in Orange County Superior Court.

The lawyer handling the case has four similar suits awaiting trial in federal court in Los Angeles. Attorney Jack Smart said the directory company, owned by Pacific Bell, saved hundreds of thousands of dollars because the early retirements reduced the salesmen’s total pension benefits. In all, he is representing 14 former Yellow Page advertising sales agents.

Leland Brown of Orange, a plaintiff in the suit, said there are dozens of other retirees from the directory company’s advertising staff who are watching the suits with an eye to filing their own claims if Brown and the others are successful.

David C. Ganz, regional director of the federal agency that oversees pension plans, said he doesn’t believe claims of coerced early retirement are a big issue. But other pension specialists said these kinds of cases are growing as employers seek to reduce their pension plan liabilities.

There aren’t a lot of so-called coercion claims in the mill yet, “but it is a cutting-edge issue,” said Ronald Dean, a Pacific Palisades lawyer specializing in pension law.

“It is happening more often as companies are downsizing and trying to eliminate their more senior, more highly compensated employees,” said Oakland pension law litigator Dan Feinberg.

Anthony R. Delling, an attorney for San Francisco-based Pacific Bell Directory, said the company denies that it misrepresented the pension plan.

“We don’t think any misrepresentations were made, but if inaccurate information was provided, it was solely by accident, not because of a deliberate scheme to trick people into retiring,” said Delling, a partner in the Los Angeles office of the Pillsbury, Madison & Sutro law firm. “The company had every reason to keep them because they were successful salespeople who made the company a lot of money.”

Brown agreed that he and the four other plaintiffs in the suit--three of them Orange County residents--were successful sales agents before taking an early retirement buyout in 1993.

In their suit, filed in 1993, Brown and the other salesmen allege that they were repeatedly told that their pensions would be computed on a formula based on their compensation for the final 36 months that they were employed. They retired, he said, because the state was in an economic recession, sales and commissions were dropping, and they believed they faced a future of declining earnings and, thus, lower pension benefits.

“They didn’t encourage me to retire early,” Brown said, “but I did inquire whether I could afford to stay longer because, as we understood it, our pensions were dropping. We were told by our supervisor, and by his supervisor, all the way up the line, that we would lose pension money if we stayed around.”

But instead of basing pensions on a “last 36 months” formula, the Pacific Bell Directory pension plan used the employees’ highest 36 consecutive months of pay, even if that peak occurred years before retirement.

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Brown and the others who are suing were paid under the proper formula, but they lost hundreds of thousands of dollars of salaries and received lower benefits by retiring years earlier than they otherwise might have, attorney Smart said.

“Now they are in that group of professionals in their 50s who are overqualified and cannot find proper employment,” he said.

The plaintiffs are seeking unspecified compensation for lost income because of their early retirement, as well as unspecified punitive damages.

Delling said Pacific Bell will argue that the five retired for personal reasons that had nothing to do with fears that their pensions were losing value. He said that Pacific Bell has offered to reinstate all five but they have declined to return to their jobs. Smart, however, said the offers were not legitimate.

In a sixth case, also pending in U.S. District Court in Los Angeles, Pacific Bell has paid several additional years of salary to retiree Carol Segal, who left the company under an early retirement buyout plan in 1992 at age 58.

Segal’s attorney, Taylor Schneider, said her client also was told that her pension would be based on her final three years’ compensation, rather than her highest three years’ pay. Unlike the suits filed by Smart, Segal’s suit doesn’t claim that Segal was misled intentionally, but was misled through “error” and seeks additional compensation for the reduced benefit she receives because of her early retirement.