Nager V. Teachers' Retirement System: Part II

This article is of particular interest to the 14,000 plaintiff class members in Nager v. Teachers' Retirement System, a New York State Supreme Court case involving New York City retired teachers who successfully sued the managers of their pension fund for additional benefits. However, after nearly eight years of litigation, negotiation, and actuarial review, the plaintiffs seem no closer to collecting a penny of the $160 million settlement fund in this matter.

Last August, I wrote a news article on this story. Here, I take off my journalist hat and speak as a plaintiff class member advocate. The following is the text of my complaint to the Departmental Disciplinary Committee of the New York State Supreme Court's First Judicial Department requesting that the plaintiff attorneys in this case be sanctioned for malpractice:

My late father, Eli Ellison, was a retired New York City teacher and a plaintiff class member in Nager v. Teachers' Retirement System. As his only heir, I have inherited his status in this matter. For the reasons set forth below, I urge you to harshly sanction the plaintiff class attorney, David S. Preminger, and his firm, Keller Rohrback LLP.

Nager v. Teachers' Retirement System, File No. 119294/02, is a class action suit which originated in New York County Supreme Court in 2002. It involves 14,000 retired New York City teachers who sued the Teachers' Retirement System for failure to include in their pension payments time they had worked "per session." Teachers assigned to teach after regular school hours worked "per session."

Over two-and-a-half years ago, I received a Nager settlement notice dated March 12, 2007, a copy of which is enclosed. According to the official Nager Web site, www.PerSessionPayCase.com, a settlement agreement was approved by the Court on July 19, 2007. See enclosed copy of "Court Timeline" Web site excerpt dated December 16, 2008.

The settlement involves an extremely complex formula. Even if I had all of my father's pay stubs for the period in question, I would be unable to estimate the amount of money due him. I strongly suspect that the other class members are similarly unenlightened.

Last year, PerSessionPayCase.com reported that there had been a delay in implementing the settlement because a major error in the formula had been discovered. A review by the New York City Actuary's Office was expected to be completed in January 2009. The review was never completed. A copy of the relevant Web site excerpt entitled "Latest News" dated December 11, 2008 is enclosed with this complaint.

Page 2 of the aforementioned settlement notice states in pertinent part:

"...it is in the best interests of all the parties to develop formulas to closely approximate the adjustment of each class member's benefits, rather than to require a full actuarial examination of each class member's benefits record. A full actuarial examination of records would make the process unduly lengthy and delay class members' receipt of benefits under the proposed settlement [emphasis added]."

The imposition of a New York City actuarial review announced on PerSessionPayCase.com is, therefore, unconscionable under the very terms of the settlement notice. The settlement agreement was intended to avoid precisely the outrageous result which has occurred.

The only postal mail communication I have received regarding this matter is the aforementioned settlement notice. That was over two-and-a-half years ago. PerSessionPayCase.com has not been updated in over a year. This constitutes woefully inadequate communication with class members.

In fairness, I must point out that I have exchanged several email messages with Mr. Preminger between March 21, 2007 and October 6, 2009, copies of which are enclosed. I also had one brief telephone conversation with Mr. Preminger prior to March 21, 2007. That said, my communications with Mr. Preminger were instigated entirely by me. None of them would have occurred without my initiative.

The overwhelming majority of class members are elderly, retired individuals. It stands to reason that only a small percentage of them would contact Mr. Preminger. It is, therefore, reasonable to assume that the overwhelming majority of class members have received no information from the plaintiff attorneys other than the aforementioned settlement notice. And given the age of most plaintiff class members, many of them have probably not accessed PerSessionPayCase.com.

While I commend Mr. Preminger for answering me in a timely manner, his responses have been inadequate and disturbing.

In his email message of July 8, 2009, Mr. Preminger states that "we are not sure what the hold-up is." With all due respect, it is his job to know why this matter has been delayed for so long. Toxic tort cases have been resolved in less time. Mr. Preminger's inability to even offer an explanation for the delay is a strong indicator of unsatisfactory legal representation.

In the same message, Mr. Preminger continues, "Until these issues are resolved, no notices will be sent. If we cannot resolve them with defendants, the court will have to decide."

This last statement is even more disturbing than the previous one. After saying that he doesn't know the status of a matter in which he is representing 14,000 people, Mr. Preminger has concluded that, after a five-year court battle, and an additional two years after a settlement agreement was supposedly finalized, this case may be heading back to court.

Mr. Preminger and the defendants seem content to engage in an endless cycle of litigation, negotiation, and actuarial review. This behavior is particularly egregious given the age of the vast majority of class members.

My father retired over 20 years ago and died during this protracted ordeal. Contrary to recent news reports decrying the lavish benefits of retired New York City teachers, my father had very modest means. His last full-year annual pension was approximately $22,000. He could have used the benefits due him.

Given the age of the class members and the length of time this matter has continued, it is reasonable to assume that a significant number of class members have already died---and that many more will die---before Nager is resolved, if it is resolved.

According to PerSessionPayCase.com, it would have taken 14 months to implement the original settlement. Thus, if implementation of the original settlement began tomorrow, it would not be completed until February 2011. There is, however, absolutely no indication as to when implementation will begin because the original settlement agreement has been scrapped.

Like my father, many class members will not get to enjoy benefits due them because Nager v. Teachers' Retirement System has become a twenty-first century Jarndyce v. Jarndyce. That is beyond shameful.

This case raises other troubling questions which have never been answered. Why would the attorneys involved agree to a settlement when the formula was not thoroughly vetted? Why was a major error in the formula discovered over a year after a settlement agreement was approved by the Court?

Once the settlement agreement was approved, the only issue should have been implementation. What prompted this matter to be reopened in late 2008?

The stench of malpractice is unmistakable.

Another troubling issue involves the rate of return on the $160 million settlement fund established under the original settlement agreement. The settlement directs that class members be paid five percent (5%) interest on all monies due them from the time each original pension payment was made-as early as 1996. A five percent interest rate on a safe investment has been extremely difficult, if not impossible, to obtain during the last couple of years due to the nationwide financial crisis. That raises the question of whether the settlement funds have been prudently invested.

Is the real reason for the delay in implementing the Nager settlement incompetence, financial chicanery, or both?

I have brought this matter to the attention of the New York State Attorney General, who has informed me that he cannot intervene because this affair has been subject to court action. A high-ranking representative of the United Federation of Teachers has informed me that the UFT is similarly constrained.

The most offensive aspect of the way in which Nager has been handled is that it fosters disrespect for our judicial system. If all civil litigation was handled in the manner in which Nager has proceeded, our entire civil court system would collapse. Settlement agreements would not be worth the paper they were printed on because they could be upended at any time, even years after they were approved by a court.

The enclosed Web site excerpt dated December 11, 2008 asks class members to be patient while this "complicated" process continues. It has been going on for nearly eight years, and there is no end in sight. The excuse that "it's complicated" is absolutely unacceptable.

I, therefore, respectfully request that you impose the harshest possible sanction upon Mr. Preminger and Keller Rohrback LLP, and order a thorough investigation into the reasons for the outrageous, unconscionable delay in this matter. If you believe that another agency or body is better suited to investigate this matter, please refer this matter to such agency or body. But make no mistake: if you refuse to act, or impose a light sanction, you will be condoning a monumental mockery of New York's civil jurisprudence.

Respectfully Submitted:

Stuart Ellison 12/21/2009