Benefits March 17, 2006

San Diego's Aguirre Demands Court Roll Back Pensions

March 17, 2006 (PLANSPONSOR.com) - San Diego City Attorney Michael Aguirre has asked a California judge to invalidate pension benefits granted in 1996 and 2002.
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His latest attempt to fight the pension benefits is the result of an “unprecedented, all-out effort on the part of the city attorney’s office,” Aguirre said, according to a San Diego Daily Transcript news report.

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Since taking office more than a year ago, Aguirre has been trying to force City Council members to repeal the benefits granted as part of Manager’s Proposal I and Manager’s Proposal II. The new court filing included statements by city employees requesting their participation in the program be rescinded (See SD Attorney Aguirre Again Suggests Pension Credit Sellback ).

Aguirre is trying to set aside an estimated $700 million in pension benefits: the DROP (Deferred Retirement Option Plan) program; benefits purchased at a substantial discount; increases voted on in September 2000, which retroactively increased the per year accumulation to 3.5%, retroactive benefits that were created in 1996; and a retroactive increase for the city attorney in 2001.

In the filing, Aguirre claims pension board members along with other city officials entered into a series of agreements in 1996 and 2002 without providing same-year funding sources.

“In each instance,” the complaint states, “one or more officials were financially interested in these contract schemes, under which they agreed to allow the city to underfund its contributions to the retirement system in exchange for increases in their personal pension benefits.”

Compliance March 16, 2006

New York Lawyers Lose Fight for Partner Award Share

March 16, 2006 (PLANSPONSOR.com) - Four New York lawyers have lost their battle for a slice of a $3.2 million class action fee received by their firm after a New York judge ruled they were not equity partners and did not deserve a portion of the money.
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Manhattan Supreme Court Justice Richard Lowe decided that attorneys Joan Harnes, John Harnes, H. Adam Prussin and Gregory Keller had no legitimate call on a share of the award garnered by the firm’s sole equity partner Sidney Silverman. In the absence of a written partnership agreement, their badges of partnership were outweighed by other evidence indicating they were mere employees, Lowe ruled.

“The fact that a person has always been listed in a company’s payroll books as an employee tends to establish that he is not a partner,” Lowe wrote in Silverman v. Keller, 601913/04.

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According to a New York Law Journal news report, the Silverman firm dissolved in 2000, with Harnes and Keller leaving one year earlier to start their own firm. But Keller took over two class action representations the Silverman firm had shared with another lawyer who died in 1999.

Silverman was to have received a percentage of the fees on both cases and he sued in 2004 after the $542,614 he was due on the second case was withheld. The defendants countersued that they were due a share in the $3.2 million fee Silverman received in 2002 on a case begun in 1998.

Lowe also noted the testimony of the firm’s accountant, who said Silverman alone secured firm loans, made capital contributions and otherwise funded the firm’s operations. The accountant also said he generally treated the defendants as employees at tax time, issuing them W-2 forms.

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