Opt-outs from the Parker Litigation (part 1) IP: 71.180.149.143 Posted on November 15, 2011 at 12:20:57 PM by Sonny Lefstead
RONALD J. COHEN. PA
ATTORNEYS AND COUNSELORS AT LAW
November 10, 2011
Chairman and Members of the Board of Trustees
Of the City Pension Fund for Firefighters and
Police Officers in the City of Tampa
3001 North Boulevard
Tampa, Florida 33603-5516
Re: Opt-outs from the Parker Litigation
Dear Mr. Chairman and Members of the Board of Trustees:
This case was brought as a class action, in which John Parker sought approval to bring the action
on behalf of himself and all other persons similarly situated. Class action lawsuits provide a
procedure whereby a named party can represent the rights of other persons, referred to as class
members. In this case, the court entered its class certification order, allowing this case to
proceed as a class action.
A Notice was directed to all class members and posted on the Board's website, telling them
about the pendency of the Parker litigation, and that they could choose to have their rights
adjudicated in this case, or could decide to opt-out of the case.. Two hundred thirty five (235)
persons chose to opt-out of the case, and this means that their rights have not been adjudicated in
the Parker matter. Now that the Final Judgment has been entered, and there has not been an
appeal of the class action issues, it is appropriate for you to consider a potential resolution with
the opt-outs. I write to provide you with information so that you can decide how to proceed in
connection with the opt-outs.
Background
The Board decided on January 24, 2008 to pay the estimated principal amount of the 13th Check
for fiscal year ending September 30, 2004, and directed that payments be made in the amount of
$5,700 for eligible retirees and $2,850 for eligible surviving spouses. No class was yet certified
and all eligible persons and eligible surviving spouses received the payment. The foregoing was
carried out without opposition of Class Counsel and after notifying the court.
Nevertheless, there was still an outstanding issue concerning whether interest on the principal
amount of the 13th Check should be paid, and, if so, the amount of such interest. There were also
issues concerning the source of the payment of Class Counsel's attorney’s fees and the amount
thereof.
Page 2
The amount of interest that should be paid was resolved pursuant to the Mediated Partial
Settlement Agreement entered into on September 23, 2009. In order to put into effect the
Mediated Partial Settlement Agreement, the parties entered into a Settlement Agreement. The
Settlement Agreement calls for the payment of the "holdback balance." The "holdback balance"
was the remaining principal to be paid, which was $100.00 for eligible retirees and $50.00 for
eligible surviving spouses, A negotiated agreement was also reached concerning the payment of
interest at the statutory legal rate on the estimated principal amount, that ·had already been
disbursed, from July I, 2005 through February 15, 2008 (the date on which the majority of the
principal was paid) and interest at the statutory legal rate on the "holdback balance," through
December 31, 2009. The parties also agreed that the D"ROP members would receive a payment,
consisting of the "holdback balance" and an interest payment based on the Fund's net investment
return during the period these members were in the DROP program.
While the Settlement Agreement is detailed and complicated, in summary, it provided for
payments to be made to class· members in a specified amount which included certain interest
payments. The amounts to be paid were determined as of December 31, 2009. The monies were
to be placed in a "custody account at the Fund's present custodian, Wachovia, and invested in the
Evergreen Institutional US Government Money Market Class I Fund. The earnings on this
account will be paid to class members proportionately after approval of the court after a Fairness
Hearing and determination of the remaining issues, including attorney's fees and costs, entry of
final judgment and conclusion of any appeals. No further or additional interest shall accrue or be
otherwise due to any member of the Settlement Class." Settlement Agreement, pp.8-9. Other
than the current appeal of attorney's fees awarded against the Fund, all other conditions have
been satisfied.
Following the Mediated Partial Settlement Agreement, the Board voted at its meeting of
September 24, 2009 to "direct the attorneys to conduct the necessary review for offering a
settlement with all the opt outs consistent with the amounts in the agreed upon partial mediated
settlement agreement, and if deemed appropriate, offer a settlement contingent upon signing an
appropriate release." Letters were sent to persons informing them of the Board's intent. The
amounts of the proposed payments are attached as an addendum to this letter.
Following this vote, on November 28, 2009 Parker filed a Motion to Modify Class Certification
Order. In it, Parker sought to convert the class into a mandatory class. If this Motion had been
granted, all eligible retirees and their surviving spouses would be required to be members of the
class, even if they had previously indicated a desire to opt-out. It appears to us that the driving
force of this Motion to Modify Class Certification Order was the payment of attorney's fees. In
many class action cases, attorney's fees are paid by the class members out of a common fund,
which is a fund of money created as a result of the litigation. In other words, each class member
pays a portion of the attorney's fees out of his or her recovery.
Page 3
The Motion to Modify Class Certification Order stated "if fees are awarded from the common
fund, they would come from the recovery of the class members. In that event, the class members
who opted out would receive 100% of the benefits of the settlement and would not have to share
in any of the expenses. Those expenses would be paid from the recovery of the remaining class
members who did not opt out. This would produce an inequitable and unfair result." Plaintiff
alleged that the primary motive for many of the opt-outs was to avoid the payment of attorney's
fees, and "the net result of this may be to allow the minority who opted-out to reap 100% of the
benefit of the settlement while shifting the entire financial burden of obtaining those benefits to
their fellow retirees who remained in the class." At the time this motion was filed, the court had
not yet determined who would pay the attorney's fees, the Pension Fund or the common fund
previously described. Essentially, Plaintiff was arguing that a number of people would be "free
riders" in that they would get the benefits of the lawsuit without paying any of the attorney's
fees, which would proportionally increase the share of attorney's fees paid by all class members
(if the fees were ordered to be paid out of the common fund). The Board of Trustees opposed
this motion. Following the court's granting of the motion requiring the Pension Fund to pay
attorney's fees, Parker withdrew his motion to make this a mandatory class.
Thus, at this time, those persons who have chosen to opt-out of the Parker litigation have not had
their rights adjudicated in the Parker lawsuit and are not covered by the Settlement Agreement,
which has now been approved by the Court.
Payment to the Opt-outs
Each month you receive a statement showing the balance in the Evergreen account. As of
September 30, the balance was approximately $2.1 million. The Fund has placed into this
account more than is necessary to pay the class members. It has also placed into this account the
amount of money that was calculated to be necessary to pay the opt-outs.
As you know, the Board of Trustees followed the request of the insurance company and appealed
the Final Judgment of the Court ordering us to pay attorney's fees to Parker. If we prevail in that
appeal, it is likely that the attorney's fees will have to be paid by the class members, under the
common fund legal theory, under which they have benefited from the class action, and should
therefore pay their attorney's fees.
We now know that the amount of attorney's fees that have been ordered to be paid, including
interest through September 20, 2011 is $1,160,972.28.1 If Plaintiff wins on appeal, he will likely
1 Interest will continue to accrue on this amount until paid. From September 20 through September 30, the amount
will earn interest at the rate of 6%. Effective October I, the applicable interest rate is 4.75%. We do not yet know
what the interest rate will be beginning on January I, 2012, and interest is now calculated on a quarterly basis
pursuant to Florida Statues.
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