Appellate court affirms dismissal of union’s pension suit against MFPD board

Union attorney Goffstein ‘would urge’ that ‘cooler heads’ prevail

By MIKE ANTHONY

A lower court’s ruling dismissing a lawsuit filed against the Mehlville Fire Protection District Board of Directors by Local 1889 of the International Association of Fire Fighters has been affirmed by the Eastern District of the Missouri Court of Appeals.

A three-judge panel — Kurt Odenwald, Glenn Norton and Patricia Cohen — of the Eastern District of the Missouri Court of Appeals last week issued a per curiam order affirming an August 2007 ruling by St. Louis County Circuit Court Judge Thea A. Sherry that dismissed the lawsuit filed against the board by Local 1889.

On Dec. 24, 2007, Sherry denied union employees’ motion for a new trial, but granted their motion for an injunction pending appeal that prohibited the board from making any changes to the district’s pension plan. Local 1889 filed the lawsuit in March 2006, just days after the board voted on March 16, 2006, to adopt an amendment and two resolutions changing the pension plan from a defined-benefit plan to a defined-contribution plan.

On March 30, 2006, Sherry issued a ruling granting a temporary restraining order prohibiting the board from taking any action to change the pension plan. The defined-benefit plan was to end March 31, 2006, and the defined-contribution plan was to begin April 1, 2006, as a result of approval of Amendment 5 and the two resolutions.

Oral arguments were conducted Dec. 9 and Board of Directors Chairman Aaron Hilmer told the Call he was “surprised,” but “pleased” the appellate court’s decision was returned so soon.

John Goffstein, an attorney representing Local 1889, told the Call that he was “very disappointed” and “frustrated” by the appellate court decision.

In his appeal, Goffstein contended Sherry had erred in ruling Amendment 5 was valid. He alleged that the board had no authority to terminate the defined-benefit plan with respect to current employees because Amendment 5 did not provide for the payment of earned and accrued benefits for vested employees and other participants. He contended the pension plan’s termination violated Article I, Section 13 of the Missouri Constitution, which prohibits impairment to the obligation of contracts.

In a memorandum supplementing the order affirming Sherry’s ruling, the appellate court noted that Local 1889 heavily relied on the expert testimony of Robert Klausner, a Florida attorney who serves as a consultant on retirement issues to numerous state and local government entities.

“Under the applicable standard of review, the trial court was free to disbelieve all of Klausner’s testimony … We defer to the trial court’s credibility determinations and to the trial court’s judgment even if plaintiffs’ evidence could support another conclusion,” the memo stated. “Moreover, we find that plaintiffs cite no compelling legal authority to support their argument that the fire district’s termination of the defined-benefit plan violates Article 1, Section 13 of the Missouri Constitution or is otherwise legally erroneous …”

Goffstein also had argued that Sherry had erred in ruling that there was no credible evidence that the board breached its fiduciary duties.

The appellate court disagreed, stating, “… As noted in the plaintiffs’ own point relied on, the trial court expressly found that there was no credible evidence that the directors breached their fiduciary duties. The trial court was free to disbelieve the evidence presented by plaintiffs … Plaintiffs have not provided us with any legal precedent that gives this court authority to find error in a trial court’s express credibility determination …”

Hilmer said he was surprised the decision was returned so soon, “but in hindsight, I think that attests to the fact how little of a legal argument they ever had, which is reflected in the Eastern Appellate decision. We’re pleased that they read the law correctly and we’re pleased that our reforms have been upheld.”

Goffstein said, “We felt like the oral argument went very well … One judge indicated clearly that he would have decided the case different at the trial court level …”

The other judges, Goffstein continued, questioned the board’s fiduciary practices and the manner in which the defined-benefit plan was terminated.

“… What they did was decide the case under what is referred to as the standard of review applicable to judge-tried cases where the substantial evidence rule is the determining factor because it limited the ability of the appellate court — it limits their scope of review …,” he said. “So they basically said that the trial court had sufficient evidence to rule the way it did — Judge Sherry — and because she had sufficient evidence even though they might have decided it a different way initially, since she had sufficient evidence that they must leave the decision undisturbed …”

Local 1889 has 15 days from the decision date to file an application to transfer the case to the state Supreme Court.

“I am certain that decision has not been made as of yet, but it has to be made pretty soon … There’s still legal avenues available for them, but I would urge that the cooler heads and the calmer people continue to work on this to try to moot all these issues and do what’s best for everybody …,” Goffstein said.

Hilmer said, “… We don’t look at this as a win — like a win for the board. We never wanted to go here. We wanted to reform a pension plan with something that would be responsible for employees and residents. The employees are the ones who decided they wanted to go down this path. So we had to take up the fight and defend ourselves … But we never wanted to go down this path.”