U S West retirees suing Qwest for death benefit
Litigants concerned successful MCI bid could end program

By Jeff Smith, Rocky Mountain News
Wednesday, March 23, 2005

U S West retirees have sued Qwest Communications in Denver federal court to try to preserve a benefit they fear they will lose if the company succeeds in its bid to buy MCI Inc.

The proposed class-action complaint filed last week by Colorado retirees Edward Kerber and Nelson Phelps seeks to preserve a "death benefit" payable to the surviving spouse when a retiree dies.

Qwest spokesman Robert Toevs said the company doesn't discuss pending litigation.

The benefit is equal to a retiree's 1993 salary or, if the person retired before then, the annual salary at the time of leaving the company.

Qwest moved to eliminate the benefit in fall 2003 but delayed the decision when the Association of U S West retirees opposed it.

The retirees argue in their suit that Qwest's predecessor telephone companies have a history dating from shortly after World War II of promoting the death benefit, which is paid from pension trust fund assets.  Qwest acquired U S West in 2000.

The suit is being filed now because of concerns about what will happen if Qwest prevails in its effort to buy MCI.

Qwest has been touting the cost-savings of the potential merger, already pledging to cut 12,000 to 15,000 jobs from a combined 80,000-worker entity.

"Many are very concerned that, should there be a Qwest-MCI merger, there is the strong possibility that the combined company leadership will look to ways to cut retiree benefits," the retirees' attorney Curtis Kennedy recently wrote to members.

Kennedy said in a letter Tuesday to a Qwest attorney that the concern has only heightened after Qwest increased its offer for MCI to nearly $8.5 billion last week.

He said he hopes the two sides can reach an agreement outside court proceedings that can be incorporated into a possible Qwest-MCI merger arrangement.

The retirees said they resorted to filing the lawsuit after exhausting the administrative procedures to address the issue.

Those included an unsuccessful letter and e-mail campaign by roughly 1,000 retirees requesting that Qwest guarantee the benefit.

In one such letter in September 2003 to Qwest's then-senior vice president of human resources, Phelps wrote that "most spouses are counting on this financial benefit to help them when that difficult financial time arises."