Cypen & Cypen
DECEMBER 17, 2009
Stephen H. Cypen, Esq., Editor
1. EDMONDSON SAYS FLORIDA STATE PENSION OVERSIGHT PROCESS SHOULD BE REFORMED: Florida Public Pension Trustees Association strongly endorses a proposal by Florida's chief financial officer, Alex Sink, to change the structure of the State Board of Administration, which oversees Florida Retirement System. Currently, SBA is a three-member panel consisting of the governor, attorney general and chief financial officer. Sink has suggested the attorney general be removed from SBA and replaced by the state secretary of agriculture, a move that would provide necessary distance between the state's chief prosecutor and any body or any agency the attorney general might be required to investigate. In light of an on-going Securities and Exchange Commission investigation of SBA's management of FRS funds, it is both proper and prudent to eliminate even the potential appearance of conflict of interest for the attorney general's office. At least as importantly, Sink has recommended adding new trustee members who are state retirees to SBA, along with a requirement that all SBA members receive education and professional development in financial management. FPPTA considers this aspect of Sink's proposal a long overdue, common-sense approach that will provide better checks-and-balances regarding pension fund investment decisions, and will strengthen SBA's credibility. Retirees must have a voice in how their funds are managed and invested; and SBA should be required to be thoroughly trained to carry out its fiduciary responsibilities. Participants in FRS should have confidence that the people making decisions about retirement funds have a vested interest in the system, and will be motivated by their obligation to achieve steady and stable returns needed to pay retiree benefits. FPPTA has provided education and training to public trustees statewide for 25 years. FPPTA has developed a certification program designed to ensure that trustees are knowledgeable about state laws and fiduciary obligations and about the financial opportunities that will best deliver a rate of return required fully to fund a pension plan. Sink's proposal is reasonable, achievable, and will immeasurably improve integrity of SBA. Raymond Edmondson, Jr., CEO of Florida Public Pension Trustees Association, wrote this opinion piece for the Gainesville Sun and heraldtribune.com. We have previously written several pieces on SBA’s management structure (see C&C Newsletter for September 3, 2009, Item 12, C&C Newsletter for September 10, 2009, Item 7, C&C Newsletter for September 24, 2009, Item 3 and C&C Newsletter for November 12, 2009, Item 8).
Personal note to Ray: Get well soon.
2. JUSTICE DEPARTMENT SETTLES RETALIATION CASE AGAINST FORT PIERCE: The Justice Department has reached a consent decree with the city of Fort Pierce, Florida, which, if approved by the U.S. District Court, will resolve its lawsuit against the city alleging that it retaliated against a former employee in its Code Enforcement Department, in violation of Title VII of the Civil Rights Act of 1964. Title VII prohibits employment discrimination on basis of race, color, national origin, sex and religion, and also prohibits retaliation against employees for opposing employment practices they reasonably believe are discriminatory under Title VII or for filing a complaint of employment discrimination. The complaint alleged that the city unlawfully retaliated against a former Code Enforcement Officer because she complained of racial discrimination against her and three other African-American Code Enforcement Officers. The consent decree requires the city to provide her with $150,000 ($110,000 in compensatory damages and $40,000 in back pay and lost benefits). The decree also requires the city to provide its employees with training regarding workplace discrimination and retaliation, as well as to review its policies regarding discrimination and retaliation and, where necessary, amend those policies to comply with the law. Understandably, enforcement of Title VII is a priority of the Justice Department's Civil Rights Division.
3. REJECTION OF “CLASS OF ONE” THEORY IN EMPLOYMENT CASES EXTENDS TO OTHER CONTEXTS: Upset that village has extended its water system to other subdivisions in it but not to theirs, allegedly leaving them without adequate pressure for fire protection, subdivision's residents and owners sue under Section 1983, asserting a "class of one" equal protection claim. However, they have failed to show that the other subdivisions are similarly situated to theirs, and that the village lacked a rational basis for its decision. Any rational basis will suffice, even one that was not articulated at the time the disparate treatment occurred. Moreover, the rejection in Engquist v. Oregon Department of Agriculture (see C&C Newsletter for June 12, 2008, Item 2), of the class of one theory in the public employment context applies here, as the village's decision to extend its water mains to some communities and not others was based on subjective and individualized assessments similar to those relating to employees. Srail v. Village of Lisle, Illinois, Case Nos. 08-3206 and 09-1049 (U.S. 7th Cir., December 7, 2009). This summary comes from our colleague, Chuck Carlson.
4. EXECUTIVES ENJOY “SURE THING” RETIREMENT PLANS: Last year, a Wal-Mart Stores Inc. manager lost more than 60% of the 401(k) savings she had built over a decade. In fact, the 1.2 million employees in the retailer's 401(k) retirement plan lost 18% as the market plunged. Top executives at Wal-Mart, however, did not face such risks, thanks to a guaranteed 7.4% return. For example, the Chief Executive had gains of $2.3 Million in a supplemental retirement-savings plan, bringing its total savings to $46.7 Million. One-quarter of top executives at major U.S. companies had gains in their supplemental executive retirement-savings plans in 2008, even as employees had sizable losses in the companies' retirement accounts, according to wsj.com. Gains in executive retirement accounts often stemmed from guaranteed fixed returns on executive-savings plans. The disparity underscores a fact of life in America's corporate-pay scene. It is not just bigger paychecks that have led to a growing wage gap: it is the different levels of risk that executives and rank-and-file employees face in their retirement plans. That difference rarely has been more evident than in the past year, when 50 million employees lost a total of at least $1 Trillion in their 401(k) plans. Although the stock market has rallied in 2009, most employees still have a long way to go to recoup their losses. What’s wrong with this picture?
5. PERC IMPROPERLY STAYED COLLECTIVE BARGAINING/IMPASSE RESOLUTION PROCEEDINGS : Miami-Dade County, Florida, found itself in the midst of a financial crisis. As part of the collective bargaining process, the County proposed wage reductions from all of its unions, including the Transport Worker's Union of America, Local 291. TWU, on the other hand, requested salary increases. The County asserted that it was not in a position to meet such demand, and the parties attempted to resolve their differences. After several months of negotiations, the parties were unable to agree, resulting in an apparent impasse. The County instituted proceedings to resolve such impasse, requesting a hearing before a special master as provided in Section 447.403, Florida Statutes. PERC appointed a general master, but TWU filed an unfair labor practice with PERC, alleging that the County had not bargained sufficiently over compensation issues. Based on that charge, PERC stayed the impasse-resolution proceedings. The County then filed a petition to vacate the stay entered by PERC, which petition was granted by the Third District Court of Appeal. Prompt resolution of the collective bargaining dispute is in everyone's best interest: the County needs to balance its budget; TWU and its members need a bottom line; and County citizens need the security of knowing that services are not interrupted, but are being delivered at costs that can be met under current financial circumstances. To promote prompt resolution, Section 447.403, Florida Statutes, provides for resolution of bargaining impasses. In fact, it is an unfair labor practice to avoid resolution of disputes through the impasse procedure. Here, the impasse procedure was properly invoked by the County, and should not have been stayed by PERC. There is no record support for PERC's finding that immediate resolution of the impasse is not critical. The record shows that maintaining wages at the level of current contract provisions is grossly detrimental to the County's fiscal well-being. The need to resolve the impasse is critical. Negotiations, though ongoing for quite some time, have been unsuccessful. The impasse proceedings were properly invoked, and the stay was erroneously granted. It seems to us as if the court prejudged TWU’s unfair labor practice charge before it could be heard on the merits. Miami-Dade County v. Transport Workers Union of America, Local 291, 34 Fla. L. Weekly D2391 (Fla. 3d DCA, November 18, 2009).
Fund Brochure Says... What It Really Means...
Ultra Leveraged to the Hilt
Global Growth We'll Chase Stocks For You in Whichever Country is Most Overheated Right Now
Clean/ Green A Basket of Government-Subsidized Experiments and Some Shares of GE
Deep Value We Will Invest in Sewing Machine and Typewriter Companies
Premium We Will Pay Up for High-Multiple Stocks/ You Will Pay Up in Fees
Socially Responsible No Such Thing - All Corporations are Evil, Sucker
Diversified We Will Basically Buy the Index and Go Golfing
Enhanced Uses Exotic Derivatives You've Never Heard Of
Balanced We Will Underperform Both the Bond AND the Stock Market. You're Welcome.
Aggressive Growth Collection of Chinese Online Gaming Stocks and New Jersey Biotech Startups
Lifecycle We Can See 20 Years Into the Future, Only Putnam Knows When and How You Will Die
Moderate Allocation Gutless Fund Manager
Quantitative Manager Will Take Credit for Up Years, Blame Computers for Down Years
Endeavor/ Opportunities We Will Throw Darts
Core No Need to Spread it Out, Send Us Everything You Have
The author, who has been reading fund brochures for fourteen years, says feel free to use this chart as a reference guide during your next mutual-, exchange traded- or closed end fund selection.
7. FOR LOVERS OF ENGLISH LANGUAGE: You lovers of the English language might enjoy this one. There is a two-letter word that perhaps has more meanings than any other two-letter word, and that is “UP”. It’s easy to understand UP meaning toward the sky or at the top of the list, but when we awaken in the morning, why do we wake UP? At a meeting, why does a topic come UP? Why do we speak UP and why are the officers UP for election and why is it UP to the secretary to write UP a report? We call UP our friends. And we use it to brighten UP a room, polish UP the silver; we warm UP the leftovers and clean UP the kitchen. We lock UP the house and some guys fix UP the old car. At other times the little word has real special meaning. People stir UP trouble, line UP for tickets, work UP an appetite and think UP excuses. To be dressed is one thing, but to be dressed UP is special. A drain must be opened UP because it is stopped UP. We open UP a store in the morning but we close it UP at night. We seem to be pretty mixed UP about UP! To be knowledgeable about the proper uses of UP, look the word UP in the dictionary. In a desk-sized dictionary, it takes UP almost 1/4th of the page and can add UP to about thirty definitions. If you are UP to it, you might try building UP a list of the many ways UP is used. It will take UP a lot of your time, but if you don’t give UP, you may wind UP with a hundred or more. When it threatens to rain, we say it is clouding UP. When the sun comes out we say it is clearing UP. When it rains, it wets the earth and often messes things UP. When it doesn’t rain for awhile, things dry UP. One could go on and on, but we’ll wrap it UP, for now our time is UP, so..........it is time to shut UP! Now it’s UP to you what you do with this information.
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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.