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Cypen & Cypen
January 23, 2014

Stephen H. Cypen, Esq., Editor

1.  IN DISTRIBUTING ASSETS OF A TERMINATED RETIREMENT PLAN, TRUSTEES ENTITLED TO RELY ON ADVICE OF COUNSEL: When her law firm closed its doors and terminated its retirement plan, Clark had been an attorney there for almost a decade, and participated in the plan. Unfortunately, when the plan was terminated, there were not enough assets to satisfy all of its obligations. Dissatisfied with the amount of money she received, Clark sued, alleging that decisions made by the law firm partners who administered the retirement plan breached their fiduciary duties under the Employee Retirement Income Security Act of 1974. The district court rejected all of Clark’s claims, and the Federal Court of Appeals affirmed. Prior to making distribution, the trustees relied upon the advice of the plan’s lawyer. It is a principle firmly rooted and founded in the common law of trusts that a fiduciary may rely on the advice of counsel when reasonably justified under the circumstances. The propriety of that reliance must be judged based on the circumstances at the time of the challenged decision. The fundamental question is always whether a prudent trustee in those particular circumstances would have acted in reliance on counsel’s advice. Because nothing in ERISA suggests that Congress displaced this common law principle, the court concluded that ERISA’s adoption of the common law’s standard of fiduciary care permits prudent fiduciaries making important decisions to rely on the advice of counsel in appropriate circumstances. Thus, ERISA permits such reliance. Clark v. Feder Semo and Bard, P.C., Case No. 12-7902 (D.C. Cir. January 7, 2014).
2. CLAIM FOR ATTORNEY’S FEES DOES NOT PREVENT MERITS JUDGMENT FROM BECOMING FINAL FOR PURPOSES OF APPEAL: Various union-affiliated benefit funds sued Haluch in Federal District Court to collect benefits contributions required to be paid under federal law. The funds also sought attorney's fees and costs, which were obligations under both a federal statute and the parties' collective bargaining agreement. The District Court issued an order on June 17, 2011, on the merits of the contribution claim and a separate ruling on July 25, 2011 on the funds' motion for fees and costs. The funds appealed both decisions on August 15, 2011. Haluch argued that the June 17, 2011 order was a final decision, and thus the funds' notice of appeal was untimely since it was not filed within the Federal Rules of Appellate Procedure's 30-day deadline. The funds disagreed, arguing that there was no final decision until July 25, 2011. The First Circuit Court of Appeals acknowledged that an unresolved attorney's fees issue generally does not prevent judgment on the merits from being final, but held that no final decision was rendered until July 25, 2011 since the entitlement to fees and costs provided for in the CBA was an element of damages and thus part of the merits. Thus, the First Circuit addressed the appeal with respect to both the unpaid contributions and the fees and costs. On review by certiorari, the United States Supreme Court reversed and remanded. The appeal of June 17, 2011 decision was untimely.  This case has instructive similarities to another U.S. Supreme Court case in which the court held a district court judgment to be a “final decision” for appeal purposes despite an unresolved motion for statutory-based attorney's fees, noting that fee awards do not remedy the injury giving rise to the action, are often available to the defending party, and were, at common law, an element of “costs” awarded to a prevailing party, not part of the merits judgment. Even if laws authorizing fees might sometimes treat them as part of the merits, considerations of “operational consistency and predictability in the overall application of the statute favored a uniform rule”. Ray Haluch Gravel Co. v. Central Pension Fund of International Union of Operating Engineers and Participating Employers, Case No. 12-992 (U.S. January 15, 2014).
3.  CALLAN PERIODIC TABLE OF INVESTMENT RETURNS 1994-2013: Callan’s Periodic Table of Investment Returns depicts annual returns for ten asset classes, ranked from best to worst performance for each calendar year. The asset classes are color-coded to enable easy tracking over time, unless you are color-blind. Callan describes the well-known industry-standard market indexes used as proxies for each asset class in the text that follows:
          RUSSELL 2000 GROWTH                 43.30%
          RUSSELL 2000                                   38.82%
          RUSSELL 2000 VALUE                      34.52%
          S&P 500 GROWTH                            32.75%
          S&P 500                                             32.39%
          S&P 500 VALUE                                31.99%
          MSCI EAFE                                       22.78%
          BARCLAYS CORP HIGH YIELD        7.44%
          BARCLAYS AGG                              -2.02%
          MSCI EMERGING MARKETS          -2.27%
  • Barclays Aggregate Bond Index (formerly Lehman Brothers Aggregate Bond Index), includes U.S. government, corporate, and mortgage-backed securities with maturities of at least one year.  
  • Barclays Corporate High Yield Bond Index measures the market of USD-denominated, non-investment grade, fixed-rate, taxable corporate bonds. 
  • MSCI EAFE is a Morgan Stanley Capital International Index that is designed to measure the performance of the developed stock markets of Europe, Australasia, and the Far East.  
  • MSCI Emerging Markets is a Morgan Stanley Capital International Index that is designed to measure the performance of equity markets in 21 emerging countries around the world.  
  • Russell 2000 measures the performance of small capitalization U.S. stocks. The Russell 2000 is a market-value-weighted index of the 2,000 smallest stocks in the broad-market Russell 3000 Index.  
  • Russell 2000 Value and Russell 2000 Growth measure the performance of the growth and value styles of investing in small cap U.S. stocks.  
  • S&P 500 measures the performance of large capitalization of U.S. stocks. The S&P 500 is a market-value-weighted index of 500 stocks that are traded on the NYSE, AMEX, and NASDAQ. The weightings make each company’s influence on the Index performance directly proportional to that company’s market value.  
  • S&P 500 Growth and S&P 500 Value measure performance of the growth and value styles of investing in large cap U.S. stocks.
4. TOP THINGS DYING PEOPLE SAY THEY REGRET:Entertainment says everyone goes through life experiencing enough mistakes and resulting damage that, by the time they are old enough, they have regrets. They say hindsight is 20/20 and when you look back at your life you will know what moments you should have changed. However, forget hindsight. Here is a list of things that you will definitely regret not having done at the end of your life: 
  • Not traveling when you had the chance. Traveling gets harder as you get older, as more people depend on your presence, it ends up becoming more expensive to bring more people with you.  
  • Not learning another language. You probably took years of another language in high school. You should put it to good use.  
  • Staying in a bad relationship. It may feel hard to get out of a bad relationship, but it is not worse than staying in it and wasting everyone’s time.  
  • Forgoing sunscreen. It may not seem like much, but sun damage adds up over the years, causing wrinkles and discoloration.  
  • Missing the chance to see your favorite musicians. You never truly know when your favorite band might break up, so seize the day.  
  • Being afraid to do things. Fear can paralyze us, but we cannot let it.  
  • Failing to make physical fitness a priority. As you get older you will realize how important it is to take care of your body.  
  • Letting yourself be defined by gender roles. Define yourself, do not let society do it.  
  • Not quitting a terrible job. You may need to pay rent or provide for a family, but you cannot force yourself to be miserable every day.  
  • Not trying harder in school. Grades are important, but what is more important is learning how to apply yourself and be dedicated.  
  • Making stupid lists like this one.  
5.  FPPTA   TRUSTEES   SCHOOL: Florida   Public   Pension   Trustees Association Trustees School will take place on February 2 – February 5, 2014 at the Hyatt Regency Jacksonville Riverfront.  To access information please log on to All board of trustee members, and anyone interested in the administration and operation of the Chapters 112, 175 and 185 pension plans should attend the Trustees School.

6. ENLIGHTENED PERSPECTIVE BY ANDY ROONEY: I have learned... that life is like a roll of toilet paper. The closer it gets to the end, the faster it goes.
7. CLEVER SIGNS: Outside a muffler shop: "No appointment necessary. We hear you coming."
8. TODAY IN HISTORY: In 1950, Israeli Knesset resolves Jerusalem is capital of Israel.

9. KEEP THOSE CARDS AND LETTERS COMING: Several readers regularly supply us with suggestions or tips for newsletter items. Please feel free to send us or point us to matters you think would be of interest to our readers. Subject to editorial discretion, we may print them. Rest assured that we will not publish any names as referring sources.
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Items in this Newsletter may be excerpts or summaries of original or secondary source material, and may have been reorganized for clarity and brevity. This Newsletter is general in nature and is not intended to provide specific legal or other advice.

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