Plaintiffs v Retirement Fund Trustees
Detroit Court Approves Class Action Filed Against Retirement Fund Trustees for Losing Approximately $100 Million in Ill-Advised Investments
Wayne County Circuit Court Judge Amy Hathaway certified a class action on behalf of over 9,000 pension plan participants and beneficiaries challenging investment decisions made by several present and former trustees of the Detroit General Retirement pension fund.
The suit alleges that numerous investments in which the pension fund lost over $100 million were "indefensible" and that "Based on even a cursory inspection of the proposed investments, a rational, prudent person would not have invested in the proposals, let alone with entrusted pension funds." The suit also challenges the trustees' expenditure of hundreds of thousands of dollars on exorbitant travel, as well as their destruction of plan documents.
The motion was filed before the Honorable Amy Hathaway and arises out of a complaint filed on May 1, 2009, in which pensioners alleged gross negligence against the Defendant trustees. The Court's ruling appears to be one of the first certified class actions in the country filed by pensioners seeking to hold public pension trustees accountable for egregious investment decisions, which also involved payments to intermediaries.
The Court also denied the Trustees' attempt to dismiss the case on grounds of governmental immunity, holding that there was no immunity under the pleadings filed in this case. The court also held that the loss of tens of millions of dollars of plan money constituted a concrete risk of harm to the pensioners and conferred standing on the employees to maintain their suit.
Mr. Mantese may be reached at:
Mantese and Rossman, P.C.
1361 E. Big Beaver Road
Troy, MI 48083
248-457-9200 (office)
248-515-6419 (cell)
Co-Counsel John J. Conway may be reached at:
John J. Conway, P.C.
645 Griswold St., Ste 3600
Detroit, MI 48226
313-961-6525 (office)
313-574-2148 (cell)
