South St. Louis County News

St. Louis Call Newspapers

South St. Louis County News

St. Louis Call Newspapers

South St. Louis County News

St. Louis Call Newspapers

Changes to Mehlville fire district’s employee disability, pension plans on hold

Changes to the Mehlville Fire Protection District’s employee disability and pension plans are on hold — for now.

An attorney representing Local 1889 of the International Association of Fire Fighters has appealed a judge’s order dismissing the union’s lawsuit that challenged the changes to the disability plan and has obtained an injunction prohibiting enactment of the changes to the plan pending the outcome of the appeal.

Local 1889 attorney John Goffstein also has filed a new lawsuit challenging the Board of Directors’ recent decision to change the district’s pension plan from a defined benefit plan to a defined contribution plan.

St. Louis County Circuit Court Judge Thea A. Sherry has issued an order granting a temporary restraining order prohibiting the board from taking any action to change the pension plan from a defined benefit plan to a defined contribution plan.

A hearing on the preliminary injunction has been scheduled for Tuesday, April 11.

Local 1889 first filed suit against the district’s three board members — Chairman Aaron Hilmer, Treasurer Bonnie Stegman and Secretary Dan Ottoline Sr. — in late June, asking the court to prohibit the board from implementing a disability benefit contract with Standard Insurance and eliminating current disability benefits from the district’s existing pension plan.

St. Louis County Circuit Court Judge Barbara Crancer granted a preliminary injunction in early August prohibiting enactment of the proposed changes to the district’s disability plan. Crancer ruled that the Board of Directors did not follow the proper procedures to change retirement benefits under state law and the federal Employee Retirement Income Security Act, or ERISA. She also ruled that the Board of Directors did not violate the state’s Meet and Confer Law or the Open Meetings and Records Law, also called the Sunshine Law.

On Feb. 24, Crancer granted the board’s motion for a summary judgment, dissolving the preliminary injunction and dismissing Local 1889’s suit. In her ruling, Crancer stated, “This court has never questioned the power of the defendants to enact the proposed changes, only the manner in which the proposed changes were sought to be implemented.”

After the ruling, Goffstein’s firm filed motions asking Crancer to set aside her ruling granting the board’s motion for summary judgment.

On March 28, Crancer denied Local 1889’s motion for a new trial. On Saturday, Crancer granted Local 1889’s motion for an injunction prohibiting enactment of the changes to the disability plan pending the outcome of the appeal.

“Her injunction remains in effect throughout the appeal process,” Goffstein told the Call.

In his appeal to the Eastern District of the Missouri Court of Appeals, Goffstein alleges, among other things, that Crancer “refused to admit plaintiffs’ evidence of fiduciary breach in the form of deposition testimony and affidavits. Therefore, the record before the trial court was incomplete and it was (an) error to enter summary judgment on defendants’ behalf.”

About Local 1889’s appeal, Mehlville Fire Protection District attorney Mathew Hoffman told the Call, “Following the filing of plaintiffs’ notice of appeal, this matter will now be in front of the Eastern District of the Court of Appeals. We are confident that Judge Crancer correctly ruled in favor of the district.”

The Board of Directors voted 2-1 March 16 to adopt an amendment and two resolutions changing the district’s pension plan from a defined benefit plan to a defined contribution plan. In three separate votes, Hilmer and Stegman voted in favor of the motions, while Ottoline was opposed.

As proposed, the district will contribute a percentage of an employee’s total compensation to the defined contribution plan.

The fire district’s contribution will be based on years of service. Employees with less than 15 years of service will receive 8 percent; 15 to 19 years, 9 percent; 20 to 24 years, 10 percent; and 25 or more years, 11 percent. Hilmer had urged Pension Committee members March 9 to propose alternatives to the 8-percent to 11-percent contribution rates, but Pension Committee member Dan Rosenthal told the board March 16 they wanted to stay with the existing plan.

The defined benefit plan was to end March 31, and the defined contribution plan was to begin April 1. However, the preliminary injunction granted by Sherry states that the board “shall maintain the current retirement and disability plan in full force and effect, without modification, as relates to the defined benefit plan, while this temporary restraining order remains in effect or until such further time as designated by the court in granting further temporary, preliminary or permanent injunctive relief.”

Among the allegations in Local 1889’s lawsuit are:

• “The conversion to a defined contribution plan will result in a permanent and significant decrease in the pension benefits of the affected employees.”

• “The defendants have commingled the assets of the public pension funds with other funds of the fire district and have failed and continue to refuse to place the correct funds of the plan into a trusteeship or to treat the assets of the plan as deferred wages for the economic security of the plan participants.”

The suit further contends the defendants have violated the fiduciary responsibilities of plan directors. Among the allegations are:

• “Terminating the plan without regard to its voting procedures.”

• “Expending funds in violation of plan documents.”

• “Selecting service providers in violation of fiduciary standards, including their compensation.”

• “Wrongfully paying for legal representation from fund assets without proper identification of client designation or interests.”

• “Retaining service providers and in-vestment counselors without first undertaking background checks or a competitive bidding process in violation of ERISA guidelines.”

Goffstein said he anticipates Local 1889 will prevail in both legal actions.

“Our basic argument is they may have the power to do some of these things, but it’s not an unfettered right … For example, you’ve got to make sure everybody’s got the right fund, and that you can’t be committing fiduciary breaches on a wholesale basis, and then say: ‘And by the way, we’re terminating the plan.’ The voting procedures have got to be right. We found several violations in their procedure …”

But Hoffman said the board has followed both state statutes and pension plan procedures.

“We are hopeful that the court will find that the power to operate the pension is vested in the Board of Directors by statute and the retirement plan itself. The Board of Directors went to great lengths to ensure that the process was proper,” he said.

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