Agreement Reached in AT&T Pension Calculation Lawsuit Reports Cohen, Milstein, Hausfeld & Toll and the Gottesdiener Law Firm.

AT&T Pension Plan Agrees to Pay $16 Million Toward Claim that Plan Miscalculated Enhanced Benefits Offered In 2000 As Part of Early Retirement Window

WASHINGTON -- Attorneys for a class of participants in the AT&T Pension Plan today announced an agreement to settle a class action lawsuit filed in 2003 under which the AT&T Pension Plan will pay a total of $16 million to settle a claim that it miscalculated the pension benefits owed to some non-bargained (management) retirees of certain AT&T companies who retired under a 2000 early retirement window known as the Enhanced Pension and Retirement Program ("EPR").

The federal court lawsuit in Washington, D.C., Wagener, et al. v. SBC Pension Benefit Plan-NonBargained Program, Civ. Action No. 03-00769 (D.D.C.) (RCL), alleged that the Plan (since renamed the AT&T Pension Plan), incorrectly omitted pay earned for work performed during an averaging period used as one component in the calculation of retirees' pensions for retirees entitled to one of several pension options. The Plan denied liability and contended that the omission of the pay in question was authorized and consistent with the terms of the Plan. In 2004, the district court agreed that the Plan's interpretation was reasonable and dismissed Plaintiffs' claims. Plaintiffs appealed and in 2005 the District of Columbia Circuit Court of Appeals reversed the dismissal of the case and reinstated Plaintiffs' claims. See Wagener v. SBC Pension Benefit Plan--Non-Bargained Program, 407 F.3d 395 (D.C. Cir. 2005). Following remand, the district court certified the case as a class action and for over two years, the Parties engaged in substantial discovery, filed and briefed various motions and filed amended pleadings. Near the completion of the discovery process, the Parties reached agreement on the terms of a settlement.

After the deduction of notice costs, and attorneys' fees and compensation for the named plaintiffs in amounts to be determined by the Court, the net settlement benefit will be distributed to the approximately 3,800 plan participant class members and their beneficiaries on a pro rata basis (using the Plan's fall 2001 estimates of participants' benefits compared to the overall amount paid to those participants as a group). The net average additional payment, calculated as a lump sum, that each plan participant class member and his or her beneficiaries is expected to receive is approximately $2,900.00. The vast majority of participants and their beneficiaries will be able to elect to receive a tax-qualified additional lump sum payment. A small number of participants and their beneficiaries, those who originally received tax-qualified annuities, will have the option of taking an increased monthly annuity or a one-time qualified lump sum payment. About 10% of plan participant class members or their beneficiaries will receive a non-tax qualified lump sum.

To become effective, the agreement must be both preliminarily and finally approved by Chief Judge Royce C. Lamberth of the United States District Court for the District of Columbia. As part of the agreement, a second case, pending in the Western District of Texas, Calder, et al. v. AT&T, Inc., et al, 07-cv-00340-XR (W.D. Tex.), brought on behalf of the class raising other claims seeking the same relief, will also be dismissed with prejudice.

Eli Gottesdiener, one of the attorneys for plaintiffs and the class, hailed the settlement as an "excellent result given the very real risk the class could have ended up with no additional benefits had we litigated the case to judgment. Frankly, these are difficult cases to win."

Class members can obtain more information about the settlement from Class Counsel or at the following website: www.EPRClassAction.com.

Plaintiffs and the Class are represented by attorneys Eli Gottesdiener, Gottesdiener Law Firm, PLLC, Washington, D.C. and New York, and Marc I. Machiz, Cohen, Milstein, Hausfeld & Toll, PLLC, Philadelphia, PA.