Retired Employees of Business that Transferred Plan to a Spin-Off Have No Standing to Sue

Section 502(a)(1) permits civil lawsuits to be brought by participants or beneficiaries of an employee benefits plan.  The Tenth Circuit Court of Appeals held in Chastain v. AT&T, 558 F.3d 1177 (10th Cir. 2009), that retired employees and beneficiaries of an AT&T employee benefit plan did not have standing to sue AT&T under Section 502(a)(1) for benefits under the plan after AT&T transferred the employee benefit plan to a spin-off entity.  The court found that since the retired employees were no longer participants or benefits any employee benefits plan of AT&T as a result of the transfer of the plan to the spin-off entity, the employees did not have standing to sue AT&T under Section 502(a)(1).

The court articulated the rule that when a business entity creates a spin-off and transfers its employee benefit plans to that spin-off, employees covered under the spin-off plan cannot sue the original business entity under Section 502(a)(1)(B).