Nortel Employees Launch Lawsuit

By Mark Evans | Published: June 24, 2008

A group of Nortel employees has launched a class-action lawsuit action Nortel, alleging the company failed to provide them with reasonable notice about changes made to their pension plans.

The employees also allege Nortel advised plaintiffs that it would not take future salary increases beyond Jan. 1 2008 into account when calculating the value of the member’s pension plan, contrary to the Pension Benefits Act and accepted actuarial practices.

The pension fund changes were introduced in 2006 when Nortel announced plans to convert the pension plan from a defined-benefits plan to a defined-contribution plan as Jan. 1, 2008. of this year. Defined contribution plans are becoming popular with companies because it moves the risk of future inflation to employees.

Nortel also eliminated future retirement health-care benefits for employees younger than 50 and with less than five years of service, effective July 2006.

For more, check out the Ottawa Business Journal and the Ottawa Citizen.

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  • Justice
    Good for the employees for standing up...When you join an organization and you become vested in a perk (in this instance a traditional pension plan) that is part of the contract with that employee. Put the shoe on the other foot, when Mr. Z joined Nortel he got $11M and a generous pension plus bonus plan. How would he react if the board changed their mind and said "Sorry Mike we are going to unilaterally change the terms of your contract and we are taking back what we promised" . Mike would have his lawyers off on running shortly there after.
  • Observer
    The last two days on all markets were nothing less than brutality. We are now in a bear market. Many many business models will simply break because of the price of oil. The world is afire with price inflation and a slowing economy. Batten down the hatches.
  • Another Nortel Watcher
    exnt2 - I bet 100,000 would convince a majority of Canadians to seriously consider the offer. That brings the total cost closer to the cost of being at constant war with the Middle East in order to protect our unfair share of their oil. On top of that, if the 5% of the US GDP that flows to the Middle East for oil stayed in the North American economy and generated industry and jobs, we would all do better.

    On the other hand, the real solution is to shake our dependency on oil and create new industries around new energy alternatives and let the oil industry go the way of the railroads. Our addiction to oil is like Nortel's addiction to CDMA. In both cases it's a serious near term problem and leaders in charge of finding a solution are <censored>.


    </censored>
  • many
    BTW this is not the only lawsuit that has been filed by employees aginst nortel
    http://www.erisafraud.com/Default.aspx?tabid=1083
  • Observer
    Most _good_ companies have a very good cash reserve. There are huge amounts of cash on the sidelines

    Looking at the micro won't help. The Federal Reserve is now in discussions to relax regulations regarding banking ownership rights of Private Equity groups like Carlyle and KKR. These are desperate times at the Fed and banking system. Clearly the companies that need the cash the most don't have it - that's the entire banking system. They still have another $1 trillion in writedowns and no one is riding in on a white horse with that kind of money to rescue the banking system.
  • Observer
    Everyone is underestimating how bad this recession is going to be. Unemployment is going to soar. I am sticking with the call I made in Case for an "L" Shaped Recession.

    http://globaleconomicanalysis.blogspot.com/2008/04/case-for-l-shaped-recession.html


    Mike Shedlock has been dead on with his predictions and analysis since the credit crunch ensued last year. Things are going to be a lot worse than most people think because there was more credit creation in the last 7 years than in the previous 30 years combined.

  • Observer
    I predict a short recession, if at all.

    How are you defining a recession ? If its by GDP, then that is an outdated definition as the NBER defines it now by any significant slowdown in economic activity. History will show that recession started in Q4 of 2007 and will last well into 2009. Equities markets are disconnected from realities on the ground. Using telecommunications will certainly help but even this won't matter as consumer spending is what drives most of the global economy because of imports into the US. Consumer spending here in the US is drying up like a mirage in the desert as most money goes towards rising food and energy prices. No recovery in housing prices in sight either as this has started to spread globally now.

    By the way, if you don't think there is already a slowdown you are sorely out of touch with reality. Earnings and profits peaked a couple of years ago and are headed nowhere but down.
  • Observer
    check this out Canadians....

    http://www.bnn.ca/news/1931.html
  • many
    Oh yea, you should listen to advice from linton "red" wilson. Uh-huh go for it.

    The americans should just *buy* canada. Give every man, woman and child a million (US) dollars and they would all move to florida. Then the US would have a place to test cruse missiles :)
  • hong kong
    your American economy doesnt have enough money to buy anything too busy bailing yourselves out of your mistakes
  • exnt2
    sounds dumb. one little problem. americans dont have enough money. that is 30,000,000,000,000 or 30 trillion. as the second largest exporter of oil, maybe we could acquire the US in a land exchange for oil deal.

    when you do not have an economy what are you going to test cruise missiles for. everybody knows what kind of a hole the US is in right now.
  • Observer
    As I said in an earlier post; the current employee base is *very* POed (especially in light of the executive pay increases coupled with a perceived lack of leadership and significant cronyism). This information has spread amongst the general population of engineering folks in the industry and especially amongst new grads.

    Nortel is going to find itself in a very difficult hiring environment (already has) and is likely going to have to pay a significant premium for talent.
    --

    What world are these people living in ? The North American economy is shrinking and wages are falling. Hardly anyone should have paid a premium for talent since great dot-com bust of 2001. Capital is the lifeblood of any economy and most capital is now flowing to Asia. This will have a significant impact on price inflation in North America for goods but not for wages. Expect layoffs en masse across all industries in North America. Banks are restricting capital even further. Global slowdown ahead.

  • many
    I disagree. There will be a slowdown but companies will adjust. How will they adjust? by using more telecommunications.

    Most _good_ companies have a very good cash reserve. There are huge amounts of cash on the sidelines. I predict a short recession, if at all.
  • Bill_Baker
    Yo Mark,

    Given Shawn (Meehan’s) shameless plug can you please do another “Some Comment Decorum, Please” before we get the (wrong) impression of your blog, yet again. And for info, we ALREADY know you are NOT just another Nortel blog; much too intelligent and multi- faceted to be mistaken for one. However, let’s just make sure no one could get a free add on your informative missive; otherwise I get ideas (you know what I mean?).

    Best,

    bb

    PS—Shawn—You sound more like ‘Flounder than Founder ( see “The Little Mermaid” for further explanation).
  • Bill,

    Thanks for pointing out Shawn's e-mail. I'll have to update the About section to give people a way to contact me directly as opposed to leaving comments.
  • Anonymous
    Shawn,

    If your stuff was so hot, you'd have found a better way of offering Mark a job than posting a comment on a blog...it's tacky and shows how poor your research is that you can't find another venue. Or are you just a spambot that offers jobs to everyone??
  • ex-nt
    The lead plaintiff is Kent Felske, who I remember from the CTO group in Ottawa. He was always involved in some demonstration of new technology. Usually, he was giving some demo where he was pretending to be a doctor, receiving x-ray results wirelessly, then immediately calling back using his MCS VOIP client. "Hi, its Dr Felske, I saw the results, can you please order up some more tests and then send me back a text message..." Pretty hokey. Anyway, I don't get the complaint, this change was announced back in May 2006 so its not like Nortel did not warn folks. Employers can change pension benefits, just like they can change any other compensation feature. As a non-union worker, you can put up with it or quit.
  • many
    Hardly "hyperconnected", the nortel executive blogs seem to have gone dark again.

    I have had a couple of comments pending on Phil Edholm's blog since the 21st. I wonder how many other comments are waiting in the ether

    Maybe it's because the core is slowing down :)
  • puddintane
    Even cheaper than buying/selling green Nortel equipment instead of that ozone-sucking Cisco stuff (= only painted green) is to turn the lights off altogether.

  • Another Nortel Watcher
    I unloaded a speculative Nortel position today at a significant loss. So much for a company with so much potential upside. The GEniuses aren't up to the challenge. Where is the board?

    Thank goodness that Apple and RIM are everything that Nortel is not, or my average would be hurting. Those investments are blue chip right now because i) the leaders know their market, ii) they have category-killer products, and iii) they have clear growth strategies. Nortel used to have all that but can't claim any of these factors anymore - and the GEniuses and the dinosaurs sure as heck aren't going to change that.

    The question becomes, how long will it take before the next regime change, and what form will it take?

  • many
    As I said in an earlier post; the current employee base is *very* POed (especially in light of the executive pay increases coupled with a perceived lack of leadership and significant cronyism). This information has spread amongst the general population of engineering folks in the industry and especially amongst new grads.

    Nortel is going to find itself in a very difficult hiring environment (already has) and is likely going to have to pay a significant premium for talent.
  • ex-nt
    Frank Dunn is running the class action suit. He is being ably assisted by the famous ex-Nortel employee known as the "Corkstown Cat Killer" aka "Zondor the Magnificent". The CAW will also help out by unionizing the engineers in Canada, holding a strike, then complaining when all the jobs are moved to Elbonia.
  • Any details on this class action suit? Who is running it? Details please!

    --C8j
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