O.C. Jury Finds Firm Coerced Agents to Retire
A Superior Court jury here has awarded $2.1 million to five Yellow Pages sales agents who claimed their employer coerced them into taking early retirement.
Some pension and benefit specialists say the jury’s decision clearly reflects increasing angst over corporate downsizing and the loss of the employee-employer loyalty bond.
The jury found that officials of a Pacific Telesis unit deliberately 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,” said juror Debbie Ikeda.
The salesmen’s awards ranged from $250,000 to $800,000 each.
The decision is sure to rock telecommunications giant Pacific Telesis, 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, an attorney for Pacific Bell Directory 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,” said Anthony Delling.
The company 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 in 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 regardless of its effect on Pacific Telesis, Tuesday’s verdict isn’t likely to have a broader impact on retirement issues in general.
“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.
The jury deliberated 2 1/2 days after hearing testimony for nearly three weeks.
After the trial, jurors said they split 9 to 3 on the verdict. Juror Barbara Verne voted against the award, but said she wasn’t endorsing Pacific Bell’s actions. “I felt they [company officials] were in the wrong,” she said. “But they tried to correct it by offering the people their jobs back.”
But former sales agent Brown said that the offer was never serious and that the company’s lawyers wouldn’t guarantee the men that they would get their old clients and territories if they came back to work.
In determining the individual awards, the jury considered probable lost wages, then subtracted earnings from jobs that agents have taken since their retirements.
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.
Lawyers for the directory company would not say whether the Orange County decision will be appealed. But the jury’s finding that the directory company intentionally and negligently misled the five could put heavy pressure on the company to settle the other cases, pension law specialists said.
“The fact that the jury found misrepresentation may prevent Pacific Bell from arguing to the contrary in the other cases,” said attorney Ronald Dean, a Pacific Palisades pension law specialist.
Dozens of the company’s retirees have been watching the cases, said Brown. “We have a retirees’ lunch every month in Pasadena and this has been a really big topic there,” the Orange resident said. “I’ve talked to more than 25 people who said they retired under similar circumstances.”
Brown testified that he retired in 1993 at age 53 because his superiors repeatedly warned him that the declining economy could cut his income and affect his pension benefits.
It wasn’t until months later, while visiting a friend who worked for the directory company in Northern California, Brown said, that he learned the company pensions were based on employees’ best three years of earnings instead of their last three years.
Brown said he and the others sued after a union grievance failed to resolve the situation.
