Preliminary injunction granted in firefighters' lawsuit against board
August 10, 2005 - A judge last week threw out all but two counts of a lawsuit filed against the Mehlville Fire Protection District Board of Directors, but granted a preliminary injunction prohibiting enactment of proposed changes to the district's disability plan.
St. Louis County Circuit Judge Barbara Ann Crancer ruled Aug. 2 that the Board of Directors did not follow the proper procedures to change retirement benefits under state law and the federal Employee Retirement Income Security Act, or ERISA. Crancer also ruled that the Board of Directors did not violate the state's Meet and Confer Law or the Open Meetings and Records Law, also called the Sunshine Law.
The lawsuit, filed by Local 1889 of the International Association of Fire Fighters against the district's three board members, asked the court to prohibit the board from implementing a disability benefit contract with Standard Insurance and eliminating current disability benefits from the district's existing pension plan.
"The court, now being fully informed from the hearing testimony, trial briefs of the parties and oral argument of counsel, now grants a preliminary injunction and finds that plaintiffs have adequately shown that they will suffer immediate and irrepar-able injury, loss or damage if the court does not grant the relief requested," Cran-cer stated in her ruling.
Local 1889 President Chris Francis told the Call, "Hopefully through the trial pro-cess we will be able to keep our disability the way it is and keep our pension intact.''
Board Chairman Aaron Hilmer told the Call, "We were very pleased that we were exonerated on all counts on the original filed petition."
The Board of Directors unanimously approved a disability plan through Stan-dard Insurance at the June 6 board meeting. District employees then were covered by two disability plans — the Standard In-surance plan and the original self-funded disability benefits that were part of the district's pension plan.
At the June 20 meeting, the board voted 2-1, with Secretary Dan Ottoline opposed, to approve an amendment to remove the original disability benefits from the pension plan for injuries that occurred after July 1. Employees then would be covered by the Standard Insurance plan, which ex-tended around-the-clock coverage to em-ployees, but reduced the maximum benefit payments by 15 percent.
Crancer cleared the board members of the allegations raised in the petition filed by Local 1889, but she ruled the board members violated ERISA and state statutes regulating changes to retirement plans — allegations the union raised on the day of the July 29 preliminary hearing.
"The court finds as a matter of law that the fire district board serves in a fiduciary capacity and thus is mandated to act solely in the interest of the plan participants and beneficiaries," Crancer's ruling stated.
ERISA is a federal law that sets standards for pension plans and states that a fiduciary "shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries ..."
The law also states, however, that the provisions do not apply to any employee benefit plan that is a government plan, which the law defines as plan for the "employees by the government of the United States, by the government of any state or political subdivision thereof, or by any agency or instrumentality of any of the foregoing."
The judge ruled the board did not follow proper procedures to change retirement benefits under Chapter 105 of state statutes. The law states that the legislative body or committee before taking final action on any "substantial proposed change" in plan benefits, must have an actuary prepare a statement regarding the cost of such change.
"The court finds that Amendment Four may well result in a 'substantial proposed change' requiring the application of Sec-tion 105.665 RSMo. requiring the board to follow the procedures outlined therein," Crancer's ruling stated.
State law defines a "substantial proposed change" as a "proposed change in future plan benefits which would increase or de-crease the total contribution percent by at least one-quarter of 1 percent of active employee payroll, or would increase or de-crease a plan benefit by 5 percent of more, or would materially affect the actuarial soundness of the plan."
Mathew Hoffman, the fire district's legal counsel, contended no evidence was submitted by the union in the hearing in regard to Chapter 105. He said board members are reviewing their options for what actions they will take.
Hoffman said the board just received the results of an actuarial study that was done on the pension plan. The board hired the actuarial and consulting firm Milliman to perform a study of the pension plan at the June 20 meeting.
"In response to the judge's decision, the comptroller of the Mehlville fire district, Jeff Geisler, filed the appropriate actuarial study on Aug. 3," Hoffman told the Call.
The "substantial proposed change" must be made available to the public for 45 days before the board could adopt the change, according to state law.
John Goffstein, the attorney representing Local 1889, said even without the injunction, the board should not be able to make the change because the board still would violate its fiduciary responsibility.
"It's one thing to make all the correct filings ... You can't possibly fulfill a fiduciary responsibility of the plan and take their benefits away," Goffstein told the Call.
The judge also ruled that board members did not violate the Sunshine Law by moving the disability plan agenda item from the June 20 Pension Committee meeting agenda to the Board of Directors meeting agenda. Crancer ruled that because the board meeting agenda had the item "Life & Disability Insurance Alternatives" and that the notice for the meeting was properly posted and disseminated.
The union also had alleged that board members met in private to discuss the proposed changes, but the judge rejected the union's allegation due to lack of evidence.
Crancer also ruled that board members did not violate the Meet and Confer Law, which requires a public employer to meet and confer with its employees on proposals the employees submit regarding sal-aries and other conditions of employment.
The union had alleged board members violated the law by refusing to meet and confer with union members about the contract with Standard Insurance.
"Testimony at the hearing failed to elicit evidence that plaintiffs presented a counter-proposal to Amendment Four, therefore the statute does not apply," Crancer stated.
Crancer granted a temporary restraining order in July prohibiting enactment of the proposed changes to the district's disability plan. That temporary restraining was ex-tended until the judge released her judgment and granted the preliminary injunction.