Worldcom ERISA Litigation

The In re WorldCom, Inc. ERISA Litigation Complaint was filed in the United States District Court for the Southern District of New York on behalf of Plaintiffs and a class (the "Class") of all persons who were participants in or beneficiaries of WorldCom 401(k) Salary Savings Plan ("the Plan") between September 14, 1998 and July 21, 2002 (the "Class Period") for violations of the Employee Retirement Income Security Act of 1974 (also known as ERISA).

On November 21, 2005 the Court gave final approval to three WorldCom ERISA settlements.  These settlements became “final” on December 21, 2005, after the conclusion of the appeal period.

Our firm has been in contact with the Trustee, MCI, and Plan Administrator, Merrill Lynch, regarding the distribution of the settlement monies and has received information that the settlement monies have been distributed. Class members can call Merrill Lynch at 866-401-5624 to obtain individual account information.

Settlements

Three settlement agreements have been reached in this case that address the ERISA claims related to the Plan. The settlement reached in 2004 with WorldCom and certain individual defendants was given final approval by the Court on October 26, 2004. The Court granted final approval to the settlements with Scott Sullivan and Merrill Lynch on November 21, 2005. The net settlement proceeds will be distributed to the Plan for allocation in accordance with the Plan of Allocation approved by the Court.

2004 Partial Settlement and Ebbers Note Satisfaction Agreement

On October 18, 2004, the Court approved a $47.15 million Partial Settlement in the WorldCom ERISA litigation (“2004 Partial Settlement”) that resolved the case against WorldCom, and some of its former employees, officers and board members, including Bernie Ebbers. The 2004 Partial Settlement provided for the payment of $47.15 million in cash from WorldCom/MCI, fiduciary liability insurance policies and Bernard J. Ebbers. In addition, Mr. Ebbers signed a promissory note that requires additional payments of up to $4 million in the future. The ERISA Plaintiffs have now also settled the note owed by Bernie Ebbers under this agreement for an additional payment by Mr. Ebbers of $450,000.

The 2004 Partial Settlement provided for the payment of notice and other Settlement implementation expenses, claims reserves and certain other matters. In connection with the application for final approval of the settlement, ERISA Lead Counsel applied to the Court for an award of attorneys' fees and reimbursement of expenses to be paid from the proceeds. Merrill Lynch appealed the partial settlement.

Settlement with Scott Sullivan

On November 21, 2005, the Court gave final approval to the settlement of the ERISA litigation against Scott Sullivan. Under the settlement agreement, Mr. Sullivan shall pay, for the benefit of the ERISA Class, 10% of the balance in his 401(k) plan and 10% of the net proceeds on the sale of his house in Boca Raton, Florida. These payments to the ERISA Class are expected to total approximately $485,000.

Settlement with Merrill Lynch Trust Company F.S.B.

On November 21, 2005, the Court approved a settlement of the ERISA litigation against Merrill Lynch.Under the settlement agreement, Merrill Lynch will agree to forego payment of up to $200,000 for services it has provided to the Plan in connection with the administration and distribution of the 2004 and 2005 settlements and to dismiss its pending appeal in exchange for the ERISA Plaintiffs agreement to dismiss their pending appeal. Merrill Lynch’s appeal had prevented distribution of the $47.15 million dollar settlement previously approved by the Court, and Merrill Lynch’s dismissal of its pending appeal will allow for the distribution of the settlement funds.

The text of the Settlement Agreements as well as the Notice of Proposed Class Action Settlement are included in the Case Documents below. For more information about the settlements, click here.

These settlements do not resolve claims against WorldCom or other defendants for violations of federal or state securities laws. The securities claims are part of a separate lawsuit. If you owned WorldCom stock, but were not part of the WorldCom 401(k) Salary Savings Plan (or one of its predecessors ) and can get information about the securities case at http://www.worldcomlitigation.com/ or by contacting the Claims Administrator for the In re WorldCom Securities Class Litigation, at 1-866-808-3556.

The Class

United States District Judge Denise Cote certified a class in this action that includes:
All participants and beneficiaries in the WorldCom 401(k) Salary Savings Plan (the “Plan”) and its predecessor plans, including but not limited to, the MCI Communications Corporation ESOP and 401(k) Plan, the IDB Communications Group, Inc. 401(k) Savings and Retirement Plan, the Western Union International, Inc. 401(k) Plan for Collectively Bargained Employees, and the SkyTel Communications, Inc. Section 401(k) Employee Retirement Plan, for whose individual accounts the Plan held shares of WorldCom stock at any time from September 14, 1998 to the present. Excluded from the Class are officers and directors of WorldCom, members of their immediate families, and the heirs, successors or assigns of any of the foregoing.

Case Documents