The state Supreme Court will be asked to review the dismissal of a lawsuit filed by union employees of the Mehlville Fire Protection District against the district’s Board of Directors.
Attorney John Goffstein, who represents Local 1889 of the International Association of Fire Fighters, told the Call Monday he will ask the Missouri Supreme Court to review the dismissal of a lawsuit that sought to prohibit the Board of Directors from implementing a disability-benefit contract with Standard Insurance and eliminating current disability benefits from the district’s existing pension plan.
In June 2005, Local 1889 filed the lawsuit in St. Louis County Circuit Court against the district’s three board members — Chairman Aaron Hilmer, Treasurer Bonnie Stegman and Secretary Dan Ottoline Sr.
Judge Barbara Crancer granted a preliminary injunction in August 2005 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, 2006, Crancer granted the board’s motion for summary judgment, dissolving the preliminary injunction and dismissing Local 1889’s suit. Goffstein ap-pealed Crancer’s ruling, and a three-judge panel of the Eastern District of the Mis-souri Court of Appeals in January issued an order affirming Crancer’s dismissal.
In early February, Goffstein filed a mo-tion for rehearing or in the alternative application to transfer to the Missouri Supreme Court. The Court of Appeals last week denied Goffstein’s motion.
Goffstein said he plans to file a motion to transfer the case to the Missouri Supreme Court to determine if the Court of Appeals “acted correctly.”
“Anytime you ask the court for a motion for reconsideration of their own processes, which is in effect what that was, your chances of success on a motion like that are usually remote or slim,” he said. “But the rules provide for it as a necessity. So you must do it before you go to the next level.”
Local 1889 also filed another lawsuit — still pending — against the Board of Directors in March 2006 after the board voted 2-1 to adopt an amendment and two resolutions changing the district’s pension plan from a defined-benefit plan to a defined-contribution plan. Hilmer and Stegman voted in favor of the motions while Ottoline was opposed.
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. However, a temporary restraining order granted by St. Louis County Circuit Court Judge Thea A. Sherry stated 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.”
On May 25, Sherry granted Local 1889’s request for a preliminary injunction, prohibiting the board from making any changes to the pension plan.
In her judgment, Sherry wrote that after the election of Hilmer and Stegman in April 2005, “the directors set out to terminate the defined-benefit plan, ostensibly to reduce the cost to the (district), but without regard to the effect on the plan participants. The assurances from defendants that there will be no reduction in benefits to the current retirees and vested members were unpersuasive.
“The change in the plan affects future employees, retired employees and current employees, both vested and non-vested,” Sherry wrote. “There is no credible evidence that the aforedescribed Amendment 5 does not adversely affect the protected interest of at least the retired employees and vested current employees.”
A March 22 court date has been set by Sherry on the lawsuit, and Goffstein be-lieves that many of the issues he raised in the first lawsuit also are relevant in the second lawsuit.
“… A lot of those issues are also before the Circuit Court. Definitely, the Supreme Court will take a look at it. But many of the issues remain alive. The Circuit Court has enjoined the attempt to change the disability plan and transfer it from a self-funded to an insured plan, which provided, really, insured benefits with offsets, which is really kind of a waste of money,” he said. “And the Circuit Court has already ruled that these directors acted neither reasonably nor responsibly.”
Goffstein also contended that the actions of Hilmer and Stegman have “damaged” the pension plan.
“Much of the case on the merits of the other issues are still pending before the Circuit Court. So some of the issues are, in fact, the same, and that court has already ruled that Directors Hilmer and Stegman have acted neither reasonably nor responsibly,” he said. “The foremost pension expert in the United States has testified that their fiduciary breaches are widespread, that they have damaged the plan into the multimillions of dollars and really that’s about all I have to say. We’ll see how it unfolds in the courts and kind of take it from there.”
But Mathew Hoffman, legal counsel for the fire district, disagreed with Goffstein’s assertion that Hilmer and Stegman violated their fiduciary responsibilities.
“I am not currently aware of any judge or court that has held the Board of Directors in fiduciary breach of their duties,” Hoffman told the Call.
In her ruling last year granting the board’s motion for summary judgment, Crancer addressed several issues raised by Local 1889. Her ruling noted the remaining issue “is the breach of a fiduciary duty owed to the plaintiffs by the board and its members. The court finds that plaintiffs’ allegations of commingling of assets is serious, but unsubstantiated by any witness or competent evidence in the filings before this court.”