Cypen & Cypen
JANUARY 29, 2009
Stephen H. Cypen, Esq., Editor
Miami-Dade County appealed a circuit court order granting a petition for mandamus filed by the Professional Law Enforcement Association. The order required the aviation unit of the county police department to allow the Association to inspect and copy pilots’ personal flight logs as public records under the meaning of Chapter 119, Florida Statutes. The appellate court affirmed the order so far as it relates to personal flight log entries for flights that occurred during the time police department pilots were assigned by the county to the aviation unit, but clarified that the order does not extend to entries of flights before or after such assignment. (The Association’s original request was so limited.) The original flight logs are maintained by, and are personal property of, the individual pilots. The logs record a pilot’s lifetime of training and aeronautical experience necessary to meet certification, rating and experience requirements imposed by the Federal Aviation Administration. Typically, entries would include a pilot’s first solo flight, any military ratings/flights, personal recreational flights and trainer time, in addition to any county police department aviation unit flights. Information logged by a pilot in his personal flight log while assigned to the aviation unit is relevant because the unit’s written operation procedures require each pilot to maintain personal flight logs as part of his administrative duties. Thus, the officers are paid by the county to make log book entries, and the entries are made in connection with transaction of official business of the aviation units. The county argued that inspection of the aviation unit’s separate daily activity reports for unit flights should suffice. That argument is unavailing: the fact that pertinent information may exist in more than one format is not a basis for exemption or denial of a public records request. Miami-Dade County v. Professional Law Enforcement Association, 34 Fla. L. Weekly D156 (Fla. 3d DCA, January 14, 2009).
Center for State and Local Government Excellence has some advice for President Obama when working with state and local governments. The beginning of a new administration is an exciting time. New actors and a new agenda meet complex challenges. Governing in the 21st century will require new skills and approaches to develop solutions to the world’s most significant challenges and opportunities. When asked about quality of the partnership between federal agencies and state and local governments, most state and local officials will grimace. They describe the level of interaction and engagement with federal agencies as paternal, directive, lacking shared goals/strategies, not a partnership, one-way communication and non-organized for serious engagement. The authors present three recommendations on how the Obama administration can work effectively with state and local governments:
The nation has common goals. Too often in recent years, the federal government has looked at state and local governments as a source of revenue rather than talent. In times of scarcity, the feds must tap all of their resources, including state and local governments.
Callan Associates Inc. annually publishes its Table of Investment Returns, showing annual returns for key indices, ranked in order of performance over the past twenty years (see C&C Newsletter for February 7, 2008, Item 5). As might be expected, for 2008 only one category is in positive territory: Barclays Capital Aggregate Bond Index (formerly Lehman Brothers Aggregate Bond Index), representing bonds. Here is the whole list:
Not a pretty picture. (By the way, NAREIT Equity measures performance of Real Estate Investment Trust stocks traded on NYSE, AMEX and NASDAQ.)
The collective bargaining agreement between Maine and a local union, exclusive bargaining agent for certain state employees, requires nonmember employees represented by the union to pay the local a “service fee” equal to the portion of union dues related to ordinary representational activities (like collective bargaining or contract administration activities). The fee does not include nonchargeable union activities such as political, public relations or lobbying activities. The fee does include a charge that represents the “affiliation fee” the local pays to the national union. However, it covers only the part of the affiliation fee that helps pay for the national’s own chargeable activities, which include some litigation activities that directly benefit other locals or the national itself, rather than the local. Nonmembers of the local brought a suit claiming, among other things, that the First Amendment prohibits charging them for any portion of the service fee that represents litigation that does not directly benefit the local (such as “national litigation”). The federal district court found no material facts at issue and upheld such element of the fee. After the U.S. Court of Appeals for the First Circuit affirmed, the United States Supreme Court granted a writ of certiorari. On review, the high court unanimously affirmed. Under the court’s prior precedent, the First Amendment permits a local union to charge nonmembers for national litigation expenses as long as (1) the subject matter of the (extra-local) litigation is of a kind that would be chargeable if the litigation were local (that is, litigation appropriately related to collective bargaining rather than political activities) and (2) the charge is reciprocal in nature (that is, the contributing local reasonably expects other locals to contribute similarly to the national’s resources used for costs of similar litigation on behalf of the contributing local if and when it takes place). Locke v. Karass, Case No. 07-610 (U.S., January 21, 2009).
U.S. retirement funds lost almost $1 Trillion of their value in the year ended September 30, 2008, the worst decline in the thirty years Pensions & Investments has tracked the largest 1,000 plans. Aggregate assets of the 1,000 largest U.S. retirement plans dropped $965 Billion, or 13.1%, to $6.4 Trillion as of September 30, from the prior year. Assets of P&I’s top 200 funds declined 15.9% to $4.7 Trillion as of September 30, also the worst in the past thirty years. The aggregate defined benefit plan assets among the top 200 dropped 16.5% to $3.7 Trillion in the year ended September 30, the worst in the twenty years for which P&I has tracked the breakdown between defined benefit and defined contribution plans. Defined contribution plans of the top 200 also declined, but by a slightly more palatable 13.7%, or $164 Billion. The fourth quarter of 2008 made it worse: P&I estimates assets of the top 1,000 plans fell an additional $754 Billion, or 11.8%. Thus, the total loss for these plans is $1.7 Trillion, or 23.3%, for the fifteen months ended December 31, 2008.
We just learned (about three weeks after the fact) that NASDAQ has introduced its Government Relief Index, which enables investors to track the performance of U.S.-listed securities that are participating in the U.S. government sponsored relief program such as the Troubled Asset Relief Program or other direct government investments. The index consists of companies across multiple industry groups that have received a direct investment from the U.S. government greater than $1 Billion, and, so far, includes fourteen companies. The index is calculated in real-time across the combined exchanges and is disseminated in dollars. The index began calculation with a value of $1,000 on January 5, 2009. At time of this writing, the index was below 700. And what’s next? Why, options trading on the index, of course! They never learn.
The Minnesota Court of Appeals has reversed a lower court order, and determined that a state court does not have subject-matter jurisdiction to decide whether a domestic relations order is a qualified domestic relations order for purposes of the Employee Retirement Income Security Act. Under ERISA, a state court has subject-matter jurisdiction to consider a civil action brought by a participant or beneficiary to recover benefits due to him under terms of his plan, to enforce his rights under terms of the plan or to clarify his right to future benefits under terms of the plan. Otherwise, ERISA grants exclusive federal subject-matter jurisdiction over all other civil actions brought under it by a participant or beneficiary. In interpreting the concurrent-jurisdiction clause, federal courts have clarified that exclusive federal jurisdiction exists only when there is a challenge concerning validity of a pension plan or when construction of ERISA is sought. The clause was obviously designed to cover those situations in which a defendant refuses to pay benefits due under terms of a plan or where, for certain reasons, a plaintiff seeks to clarify his rights to future benefits without actually challenging validity of a portion of the plan or seeking a construction of ERISA. Whether a domestic relations order is a qualified domestic relations order for ERISA purposes involves construction of applicable provisions of ERISA, which is strictly federal. Our readers know that police officer, firefighter and most general employee pension plans in Florida, which have benefit of anti-alienation clauses, are not subject to qualified domestic relations orders. Langston v. Wilson McShane Corporation, Case No. A07-2034 (Minn. App., December 9, 2008).
Effective January 1, 2009, through July 23, 2009, Florida’s minimum wage will be $7.21 per hour for all hours worked in Florida. Effective July 24, 2009, the federal minimum wage will increase to $7.25 an hour. On that date, Florida employers must increase pay to $7.25 per hour for all hours worked in Florida. Employers must pay their employees a wage not less than the amount of the hourly state minimum wage for all hours worked in Florida. For “tipped employees” meeting eligibility requirements for the tipped credit under federal Fair Labor Standards Act, employers must pay a direct hourly wage of $4.19 as of January 1, 2009. The minimum wage for tipped employees will increase to $4.23 per hour on July 24, 2009.
Carras appealed from a judgment of the federal district court granting his former employer’s motion for summary judgment. His suit alleged impermissible discrimination based on age in violation of various federal and state statutes, including the Age Discrimination in Employment Act. In a somewhat unusual summary order (which does not have precedential effect), the court of appeals vacated a judgment and remanded the case for further proceedings. Based upon the record, the appellate court found that Carras satisfied the elements of a prima facie claim under ADEA by showing that (1) he was in his early 60s, and thus within the protected age group; (2) he was qualified to be Chief Financial Officer, a point the parties did not contest; (3) he was terminated; and (4) his termination occurred under circumstances giving rise to an inference of discrimination. Specifically, the 62-year-old Carras was replaced by a person 26 years old, Carras’s co-worker repeatedly complained to the President of the company that Carras was too old and when firing Carras, the President said that he no longer wanted to rebuff or listen to the co-worker’s oft-repeated objections to Carras’s age. The company responded that Carras was fired for cost-cutting reasons, not because of age. (This position was not very tenable because Carras offered to work for a lesser salary than his replacement.) Although the evidence was in dispute, a jury could conclude that Carras was fired because of his age. Carras v. MGS 728 Lex, Inc., Case No. 07-4480 (U.S. 2nd Cir., December 19, 2008) (Summary Order).
The Employee Retirement Income Security Act of 1974 generally obligates administrators to manage ERISA plans in accordance with the documents and instruments governing them. At a more specific level, the Act requires covered pension benefit plans to provide that benefits under the plan may not be assigned or alienated, but this bar does not apply to qualified domestic relations orders. The question recently presented to the United States Supreme Court was whether terms of the limitation on assignment or alienation invalidated the act of a divorced spouse, the designated beneficiary under her ex-husband’s ERISA pension plan, who purported to waive her entitlement by a federal common law waiver embodied in a divorce decree that was not a QDRO. In a unanimous decision, the United States Supreme Court affirmed the Court of Appeals. The high court’s decision resolves a split among the courts of appeals and state supreme courts over a divorced spouse’s ability to waive pension plan benefits through a divorce decree not amounting to a QDRO and whether a beneficiary’s federal common law waiver of plan benefits is effective where that waiver is inconsistent with plan documents. Here, the court concluded that the ex-spouse’s “waiver” was not rendered a nullity, but the plan administrator properly distributed the pension benefits to her in accordance with the plan documents. Remember, Florida pension plans will not ordinarily be concerned with qualified domestic relations orders, which cannot be honored. Kennedy v. Plan Administrator for DuPont Savings and Investment Plan, Case No. 07-636 (U.S., January 26, 2009).
Here is one person’s opinion about 24 things that will become extinct in America:
Interesting and saddening. Let’s all hope and pray that the defined benefit plan does not become number 25.
Until I was thirteen, I thought my name was SHUT UP. - Joe Namath
“If it doesn’t matter who wins
or loses, then why do they keep score?” Vince Lombardi
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