August 2, 2007
Mimi Hull, President
Nelson Phelps, Executive Director
ASSOCIATION OF U S WEST RETIREES
AUSWR Board Members and General Members
This is an update and my final report concerning the Rathbun v. Qwest (Retiree Telephone Concession) case. As you must remember, AUSWR intervened in the case of Rathbun v. Qwest (Retiree Telephone Concession) in order to oppose the Rathbuns' counsel's efforts, because we do not believe it was in the best interest of retirees to pay taxes on the value of the Retiree Telephone Concession received, i.e., pay tax on the value of free local and long distance Qwest telephone concession service. The Rathbuns' and their counsel filed the case contending the Retiree Telephone Concession was an ERISA governed defined employee benefit plan, and that it should be funded and managed just like any other ERISA governed retirement program. If that were the case, all Retiree Telephone Concession fringe benefits would be subject to taxes, meaning each year a tax reporting Form 1099 would be issued showing the total dollar value of the fringe benefits and the retirees would be responsible for reporting that income and paying taxes.
AUSWR strenuously opposed that scheme and the efforts by the Rathbuns and their East Coast legal counsel who worked hard to try and get the case class certified, so as to affect thousands of U S WEST/Qwest Retirees. Denver Federal Court Chief Judge Babcock, after reviewing AUSWR's arguments and contentions, granted AUSWR intervention in the Rathbun case. Several months later, as a direct result of our intervention efforts and efforts to oppose class certification, the Rathbuns (and their legal counsel) abandoned their erstwhile effort to seek class certification of their cases to include all Retirees living within Qwest local service areas. That was a big success on our part. However, the Rathbuns and their legal counsel persisted in their objectives to get a court order declaring the Retiree Telephone Concession to be an ERISA governed program and, hence, subject to taxes. (Of course, if the East Coast counsel had succeeded with the claim filed on behalf of the Rathbuns, the lawyers were looking to recover a pot of attorney's fees as prevailing litigators in an ERISA case. Thus, a major motivation for going forward with the Rathbuns' case was the East Coast attorneys' hope of receiving a substantial attorney's fee payment).
Therefore, AUSWR continued to oppose the ultimate goal by Rathbuns' counsel, because we did not want a court ruling declaring the telephone concession should be treated as an ERISA program and the benefits taxable to retirees, whether it be only a dozen persons or a class of thousands. In October 2006, Judge Babcock issued a ruling and a copy of his ruling can be found at the AUSWR Legal Developments page:
http://www.uswestretiree.org/Docket148-OrderGrantingSJAgainstRathbuns.pdf Judge Babcock's ruling fully opposed the position of the Rathbuns' legal counsel. Both Mrs. Rathbun and her husband's separate cases were fully dismissed. Nevertheless, the Rathbuns' East Coast legal counsel decided to start an appeal. An appeal was started on November 17, 2006.
However, while the case was pending on appeal, and before a decision could be made by the appeals court, the Rathbuns and their counsel were persuaded to end the fight. Everyone, including AUSWR, participated in a stipulation for dismissal and advised the appeals court to enter an order of dismissal. An order dismissing the appeal was entered on June 27, 2007. This week, that dismissal order became final, by automatic mandate. The case is over, the fight is ended.
This concludes another legal matter taken on by AUSWR looking out for the interest of all Retirees, both Management Retirees and Occupational Retirees. While, unfortunately, we cannot recover any legal fees to compensate for my extensive time and efforts, the cause was most worthy and there was no expense, absolutely no cost, charged to AUSWR membership. Certainly, this is another good outcome for all of AUSWR's retirees, as I do not believe any AUSWR member ever wanted to see a federal court ruling that the Retiree Telephone Concession fringe benefit provided by Qwest is taxable income.
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