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Cypen & Cypen
AUGUST 28, 2008

Stephen H. Cypen, Esq., Editor


Avoiding arbitration for the first time since 1994, New York City’s police officers’ union and the city reached a tentative four-year contract that gives raises of 4% a year and increases starting salaries to nearly $42,000. The union, which represents 23,000 police officers, said that the agreement narrowed the salary gap with suburban police forces, a gap that has made it difficult for the city to recruit new officers. The New York Times reports that the agreement, which was reached at the bargaining table, was unusual because negotiations between the police union and the city have been notoriously nasty, protracted fights traditionally settled only through an arbitration panel. With the economy in a downturn, union officials felt pressured to seek raises through negotiations rather than through a lengthy arbitration process, which might have produced an unfavorable outcome. The annual raises of 4% are higher than the historic average for the city’s municipal contracts; however, the raises lag behind the rapid growth and consumer prices over the last year, a rise of nearly 6%. The agreement will increase starting pay to $41,975 by the end of the new contract, up from $35,881 under the old contract. The agreement also increases base pay to $76,488 after five and a half years on the job, up from $65,382. The new agreement, on which the rank and file will vote over the next several weeks, runs from August 1, 2006 through July 31, 2010. The agreement comes just three months after an arbitration panel awarded police officers a retroactive raise of 9.7% for the period from August 1, 2004 through July 31, 2006, while significantly raising starting pay for that period from $25,100. (Can you imagine being a cop in New York with a starting salary of just over $25,000 a year?)


Despite strides made in communications among local emergency personnel (see C&C Newsletter for August 7, 2008, Item 6), efforts to do the same thing statewide have failed. The New York Times reports that a $2 Billion effort to build a radio network that would connect emergency personnel across New York State has repeatedly performed so poorly in tests that the state should consider dropping the current contractor, according to the State Comptroller. The contractor hired by the state in 2005 to build the network must fix the problems or face losing its contract without receiving any money. After three rounds of failed testing, it is apparent that the system is not ready to move forward. Early planning on the project began more than a decade ago, but inability of first responders to communicate with one another during the World Trade Center attack on September 11, 2001 intensified interest. Thousands of police, fire and medical workers cannot use the state’s current system, and large areas of the state are unreachable. In addition to the $2 Billion in the original 20-year contract, state and local governments would have to spend $790 Million on their own radio equipment to access the system.


The Boston fire chief who recently withdrew his disability application after two witnesses to his workplace injury recanted was declared disabled by the same doctor who deemed firefighter Albert Arroyo permanently disabled (see C&C Newsletter for July 31, 2008, Item 8 and C&C Newsletter for August 14, 2008, Item 2). According to a report from the Boston Globe, when District Chief James Famolare sought a disability pension in 2006, he first went to his regular doctor, who refused to certify that he was permanently disabled. A nurse in the fire department’s medical office referred the chief to Dr. John F. Mahoney, a local neurologist. Mahoney subsequently declared that Famolare was “totally disabled” based on his review of a back injury, which Famolare said he received while moving a box of personnel files at headquarters. Two firefighters who signed a form saying they witnessed Famolare’s injury have now withdrawn their statements. Mahoney’s involvement in a second questionable disability pension application adds fuel to questions raised by city officials that he and other physicians may have been sought out by firefighters “doctor shopping” for favorable disability applications. Since 2001, Mahoney has evaluated 25 firefighters whose injuries he determined to be so severe that the city should award them accidental disability pensions. Of the 25 firefighters, 21 have had their disability pensions approved; 3 more are awaiting final approval; and the last was Chief Famolare’s. Even if none of the others are granted, Mahoney is still batting .840. Not bad -- considering .300 will get you into the Major League Hall of Fame. And by the way, what happened to that nurse who so kindly made the “referral?” Last week she resigned, citing a stressful work environment. Query: Did she apply for disability?


Nagle suffered an open fracture, dislocation and crush injury to his left foot. He continued to experience worsening medical complications, which he claimed were traced to that injury. Over the course of intervening years, Nagle received Workers’ Compensation benefits for treatment associated with these ongoing problems. Eventually, he sought award of permanent total disability benefits. The Wyoming Workers’ Safety and Compensation Division denied his claim for permanent total disability benefits. After Nagle objected to that determination, a hearing was held before the Medical Commission, which denied relief to Nagle. Nagle filed a petition for review in the district court, which affirmed the Medical Commission. On appeal to the Wyoming Supreme Court, Nagle contended that the Medical Commission’s decision was arbitrary, capricious and not supported by standing case law or by substantial evidence presented at the hearing. Finding that the Medical Commission’s determination was not supported by substantial evidence, the Supreme Court reversed and remanded with directions that Nagle be awarded permanent total disability benefits. Nagle was 50 years old, and his educational attainment was a high school diploma. He took one pre-English class because he was not very good at English, but did not follow up. The Supreme Court has long recognized the “odd lot doctrine” with respect to permanent total disability determinations within purview of the Wyoming Workers’ Compensation Act. The “odd lot doctrine” provides that permanent total disability may be found in the case of a worker who, while not altogether incapacitated for work, is so handicapped that he will not be employed regularly in any well known branch of the labor market. An injured workman who comes within the “odd lot doctrine” need not show that he is totally incapable of doing any work at all in order to be entitled to an award for permanent total disability. If the evidence of degree of obvious physical impairment, coupled with other facts such as claimant’s mental capacity, education, training or age, places claimant prima facie in the odd lot category, the burden should be on employer to show that some kind of suitable work is regularly and continuously available to claimant. Certainly in such case it should not be enough to show that claimant is physically capable of performing light work, and then round out the case for noncompensability by adding a presumption that light work is available. Nagle v. State of Wyoming ex rel. Wyoming Workers’ Safety and Compensation Division, Case No. S-07-0222 (WYO August 19, 2008).


A. The City of Charleston, South Carolina, has been funding post-employment benefits on a pay-as-you-go basis, its accounting statements indicating only payments made without reflecting future liability. However, the city has now been required by GASB Statement 45 to reflect such liability. Although GASB 45 allows a governmental entity to pay its annual requirements into an irrevocable trust established to earn a return sufficient to meet all current and future benefit obligations, it does not prescribe the type of investments the trust must make. Accordingly, the city has joined a municipal association trust (South Carolina Other Retirement Benefits Investment Trust), and directed it to include equities in its investments, anticipating a 7.5% annual rate of return, rather than the 4.5% expected return from governmental securities. However, even though a trust has been interposed, equity investments would violate the state constitution’s ban on political subdivisions becoming stockholders and would violate statutory authority, as well. Inasmuch as the trust serves an illegal purpose, it must be dissolved and the paid-in monies returned to its members. O’Brien v. South Carolina ORBIT, Op. No. 26533 (SC August 18, 2008).

B. Police sergeant/Army officer reservist, leaves the county department to serve in Kuwait, receives a discharge “under Honorable Conditions (General)” despite having been charged with making homemade wine in his quarters, and applies for return to the police force. However, delays ensue, as it turns out he failed to mention that he was also accused of giving some wine to an enlisted person. And, upon being rehired, he was assigned desk work and denied permission for off-duty employment. He sues under Uniform Services Employment and Reemployment Rights Act of 1994, and prevails as to the delay and work assignment. The department was not permitted to limit or delay his reemployment by requiring him to comply with its return-to-work process. And failure to place him in his former patrol sergeant position was unlawful as well. Although the ability to engage in off-duty security work is not protected by the USERRA right to reemployment, denial of such benefit may have violated its antidiscrimination provision. Petty v. Metropolitan Government of Nashville-Davidson County, Case No. 07-5649 (U.S. 6th Cir., August 18, 2008).

Again, thanks to Chuck Carlson for providing the germ for the foregoing blurbs.


The attorney for Village of Highland Park has asked the Florida Attorney General for assistance in determining whether it is a violation of the Government in the Sunshine Law for the Village to hold public meetings in a private home. The Attorney General provided the following informal comments in an effort to assist the Village in complying with the Government in the Sunshine Law. The Sunshine Law requires that meetings of a public entity be open to the public. Public entities should take reasonable steps to ensure that facilities where a meeting will be held can accommodate the anticipated turnout. Public access to meetings of public entities is a key element of the Sunshine Law, and public agencies are advised to avoid holding meetings in places not easily accessible to the public. The Attorney General’s Office, therefore, has suggested that public entities avoid use of luncheon meetings at restaurants to conduct business. These meetings may have a “chilling” effect upon the public’s willingness or desire to attend. The Sunshine Law also prohibits public entities from holding their meetings in any facility that discriminates on the basis of sex, age, race, creed, color, origin or economic status. Although the Attorney General has not directly addressed the matter of a public meeting being held in a private home, he did suggest that the concerns expressed above would apply to any space in which the Village of Highland Park chooses to hold its public meetings. Informal AGO Opinion, August 21, 2008.


The following suggestions come from Smart Moves:

  • Be sure there is a real problem and not merely a personality conflict.
  • Triage the problem. If it is serious, take action. If not, do not be pressured into a premature/heavy-handed response.
  • Get the employee’s side of the story.
  • Document. Document. Document.
  • Research how others have been treated for similar behavior.
  • Examine your responsibility for the problem. It may not be “all” employee.
  • Decide on a response and take action.
  • Reduce the chance of a recurrence.
  • Maintain confidentiality.

Sounds right to us.


Our item entitled “Institutional Returns Experience First Negative Year Since March 2003" (see C&C Newsletter for August 21, 2008, Item 4) contained a typographical error: we misplaced a decimal point. (As the eagle-eyed reader who spotted the error said, “what’s a few hundred basis points among friends?”) In any event, in order to preserve context, the entire piece, as corrected, follows:


For the first time since March 2003, the one-year performance of institutional portfolios was negative across the board, with the -6.01% rate of return for Taft-Hartley plans having assets greater than $1 Billion the worst performance for the period ending June 30, 2008, according to the Wilshire Trust Universe Comparison Service. Wilshire TUCS includes nearly 1,300 plans representing $3.04 Trillion in assets. The median performance of all master trusts for the year ended June 30, 2008 was -4.49%, with a quarterly return of -0.74%. The median performance of corporate pension plans was -5.20% for the year and -0.87% for the quarter, while public pension funds median performance was -4.51% for the year and -.93% for the last quarter. Even larger plans with a greater allocation to alternatives were not immune from the impact of worldwide market volatility during the past year. The performance of all sizes and types of plans faltered last year, with asset allocation unable to mitigate overall performance.


Oklahoma officials say a typo resulted in a state employee’s receiving a bonus of $850,000, but it was only temporary. According to Associated Press, Harris was supposed to receive an $850 longevity bonus for working at the Oklahoma Employment Security Commission for seven years. However, a misplaced decimal point turned that into a six-figure windfall. Officials say they caught the error before the $850,000 left state funds. Harris’s original paycheck was cancelled and a new one was issued with the correct bonus. Officials told Harris about the mistake, and asked her to watch her personal bank account. Harris said she would let officials know right away if the extra money entered her account because “I don’t go to jail for anybody.” How about any thing?


The appellate division of the Superior Court of New Jersey recently reviewed two sets of regulations adopted by the Division of Investment of the Department of Treasury. The division is an agency that manages state-employee pension funds in accordance with policies and procedures established by the Securities Investment Council. The director has authority to invest and reinvest monies of pension funds, to acquire assets for or on behalf of pension funds and to sell or exchange any such investments. One set of the new regulations authorizes the director to invest pension funds in alternative investments such as private equity funds and hedge funds. The other set authorizes the director to engage external investment managers to manage pension fund investments. The issue before the court was not the wisdom of either set of regulations, but whether the course adopted by the division was authorized by statute. The appellate court held that the regulations authorizing and governing engagement of external investment managers were invalid. On the other hand, the regulations authorizing investments in private equity funds and hedge funds were valid, subject to the statutory standard of care (that is, the “prudent person” rule). On the first point, the statutes simply do not authorize the director to select external investment managers and authorize those managers to invest pension funds. On the second, the statutes identify a broad range of investments in which the director may invest. The fact that private equity funds and hedge funds are not subject to the Investment Company Act of 1940 does not preclude investment in such vehicles. Communications Workers of America, AFL-CIO v. Rousseau, Docket Nos. A-5198-04T1, A-5378-04T1 and A-6126-04T1 (N.J. App., August 22, 2008). For some reason, the opinion is “not for publication without the approval of the appellate division.” With a decision of this apparent far-reaching significance, we do not understand why the opinion should be unpublished.


Do you check your e-mail in the middle of the night? How about when you are driving? You are definitely not alone according to the Fourth Annual E-Mail Addiction Survey from AOL Mail. Among the findings:

  • 62% of people check work e-mail on the weekends
  • 19% choose vacation spots with access to e-mail
  • 55% of mobile e-mail users upgraded to a new phone just to get e-mail
  • 59% check e-mail from the bathroom (up from 53% last year)

The ten most addicted e-mail cities are:

  1. New York
  2. Houston
  3. Chicago
  4. Detroit
  5. San Francisco
  6. Sacramento
  7. Orlando
  8. Minneapolis-St. Paul (home of the Republican National Convention)
  9. Denver (home of the Democratic National Convention)
  10. Phoenix

By the way, the most annoying e-mail sign-off is “XOXO.” XOXO.


Business conventions are important because they demonstrate how many people a company can operate without.


“When angry, count ten before you speak; if very angry, a hundred.” Thomas Jefferson

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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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