Missouri Supreme Court’s Decision in Neske Appears to Have Confirmed that Public Employees Have Contractual Rights to Their Pensions, and Governmental Units Must Fund Pensions to Conform with Principals of Actuarial Soundness

Introduction

Following the victory in the Missouri Supreme Court, in March, 2007, the Firemen’s Retirement System of St. Louis (“FRS”) and its Board of Trustees recently received $49.4 Million from the City of St. Louis (“City”). This payment related to the underfunding of FRS by the City of St. Louis for Fiscal Years 2004, 2005, 2006 and 2007.

The History of the Case

Prior to the disputed fiscal years, the City of St. Louis had fully paid the amount certified by the Trustees, based upon the calculations of the Pension Plan’s actuary. Relying upon various legal authorities and reacting to an alleged budget crisis, the City underfunded the Pension Plans, and provided funding based upon a percentage of payroll unrelated to the actuary’s calculations (i.e., 401(k)-like contributions were made for this defined benefit plan).

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Public Employee Pension Funds

Firemen’s Retirement System v. St. Louis.

Lead counsel, Dan Tobben, assisted by colleague David R. Bohm, represent the Firemen’s Retirement System of St. Louis (FRS) in several lawsuits against the city of St. Louis and the Board of Estimate and Apportionment concerning the city’s failure to fully fund FRS.

On June 17, 2005, the Honorable David L. Dowd entered judgment in favor of FRS in the amount of $6,834,947 for fiscal year 2004. A declaratory judgment was entered, as part of the same judgment, mandating the city pay an additional $11,710,276 for fiscal year 2005.

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Defense Strategies for Minimizing Plaintiffs’ Damages and Plaintiffs’ Verdicts

The best way for the defendant to keep down the damages is to win on the issue of liability. However, in many cases defense counsel may believe that there is a greater than 50% chance that the plaintiff will win. In some cases, the defendant is clearly at fault, and may be egregiously at fault. In all of these circumstances, a primary goal of defense counsel is to minimize the potential damages that a jury may award to the plaintiff at trial.

In those cases where liability is not clear, part of the strategy of keeping damages down is to present a very good defense on the issue of liability. Even if there is an eventual plaintiff’s verdict, disputed liability will probably keep the damages down. This can be in a direct fashion such as reduction of the verdict based on plaintiff’s comparative fault; or on a jury psychology level. Jurors, who really aren’t sure about defendant’s fault, are less likely to follow the recommendations of plaintiff’s counsel in closing argument to award an amount that is extremely generous to the plaintiff. Doubts about liability can also be a factor in jury room debates, where eventually nine jurors need to agree to the same verdict and the same amount of damages.

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Ethical Challenges for the Personal Injury Practitioner

INTRODUCTION
Both Plaintiffs’ attorneys and Defendants’ attorneys face the potential of significant legal ethics issues arising in their practices. In Missouri, resolution of those issues is primarily governed by Rule 4 of the Supreme Court Rules. The best advice I can give you in the ethics area is to carefully review Rule 4, whenever you are confronted by an issue, which you recognize as posing ethical dilemmas. In order to increase the probability that you will recognize those issues, an annual reading of Rule 4 is recommended.

There are several other very valuable sources of information, which should be considered and consulted when ethics issues are encountered. The Missouri Bar website has significant practice resources relating to different aspects of legal ethics. Go to www.mobar.com and in the left column, click on “Lawyers” This will lead you to a page labeled “Lawyer Resources,” which contains a section called “Practice Resources.” Practice Resources contains a “clickable listing,” which leads to an abundance of valuable information regarding topics such as: fee agreements, fee dispute program information and rules, informal advisory opinions, risk management information, and information about the Office of Chief Disciplinary Counsel (OCDC). This wealth of legal ethics information is just several clicks away from your internet icon.

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