{"id":595,"date":"2023-06-16T09:52:13","date_gmt":"2023-06-16T13:52:13","guid":{"rendered":"https:\/\/blogs.duanemorris.com\/classactiondefense\/?p=595"},"modified":"2023-06-16T09:52:13","modified_gmt":"2023-06-16T13:52:13","slug":"illinois-federal-court-dissolves-41-year-old-consent-decrees-that-successfully-quelled-the-influence-of-organized-crime-in-the-management-of-pension-funds","status":"publish","type":"post","link":"https:\/\/blogs.duanemorris.com\/classactiondefense\/2023\/06\/16\/illinois-federal-court-dissolves-41-year-old-consent-decrees-that-successfully-quelled-the-influence-of-organized-crime-in-the-management-of-pension-funds\/","title":{"rendered":"Illinois Federal Court Dissolves 41-Year Old Consent Decrees That Successfully Quelled The Influence Of Organized Crime In The Management Of Pension Funds"},"content":{"rendered":"

\"\"<\/a>By Gerald L. Maatman, Jr. and Jeffrey R. Zohn<\/strong><\/p>\n

Duane Morris Takeaways:<\/u><\/em><\/strong> On June 9, 2023, Judge Thomas Durkin of the U.S. District Court for the Northern District of Illinois terminated consolidated cases from the late 1970\u2019s and early 1980\u2019s that sought to thwart Defendants\u2019 efforts to continue to funnel pension funds to organized crime. The litigation – entitled U.S. Department of Labor v. Estate of Fitzsimmons et al., Case Nos. 78 C 00342, 78 C 04075 & 82 C 07951, 2023 WL 3916304 (N.D. Ill. Jun. 9, 2023) \u2013 is one of the oldest pending cases in the American judicial system.\u00a0 The first chapter of these cases concluded in 1982 and 1985, respectively, when the Northern District of Illinois entered two separate Consent Decrees that subjected the funds to Court-appointed monitoring.\u00a0 The final chapter recently concluded \u2013 41 years later \u2013 when Judge Durkin dissolved<\/a> those Consent Decrees over objections from the Department of Labor (\u201cDOL\u201d).\u00a0 Although the language of the Consent Decrees did not explicitly give the Court the right to dissolve both Consent Decrees in this manner, the Court relied on the broad power granted to it under the Federal Rules of Civil Procedure, which allows it to relieve parties from final judgment if the continued application of the judgment is no longer equitable.<\/em><\/p>\n

Case Background<\/u><\/em><\/p>\n

More than 40 years ago, the DOL filed suit against Frank Fitzsimmons, Loran Robbins, Allen Dorfman \u2013 all of whom have since passed away \u2013 and several others alleging that the trustees of the Central States, Southeast and Southwest Areas Pension Fund (the \u201cPension Fund\u201d) and Health & Welfare Fund (the \u201cHealth & Welfare Fund\u201d) had mismanaged assets by providing loans to organized crime.\u00a0 The U.S. District Court for the Northern District of Illinois entered multiple Consent Decrees, which appointed fiduciaries to manage the assets of those Funds.\u00a0 The Consent Decrees have been in place since 1982 and 1985, respectively.<\/p>\n

The Court noted that since then, not once has the DOL found that the Funds have violated the Consent Decrees or any other applicable laws.\u00a0 Judge Durkin opined that \u201c[s]uch a record is almost incredible, given that it has been 41 years since the [first] Consent Decree was entered.\u201d\u00a0 Id. <\/em>at 4.\u00a0 In fact, a government investigation revealed that the Funds were actually outperforming comparable funds.\u00a0 Further, in 2022, the Pension Fund applied for and received $35.8 billion in Special Financial Assistance, as part of the American Rescue Plan Act of 2021.<\/p>\n

On April 4, 2023, the Court-appointed Independent Special Counsel (\u201cISC\u201d) for the Consent Decrees recommended dissolution of the Consent Decrees because they have fully achieved their objectives.\u00a0 The Funds neither advocated for or opposed dissolution.\u00a0 The DOL opposed dissolution so that it could monitor the influx of new money.<\/p>\n

The Court\u2019s <\/u><\/em>Opinion<\/u><\/em><\/p>\n

Judge Durkin determined that the relevant language in the Pension Fund Consent Decree permitted the Court to dissolve the Consent Decree if the Pension Fund makes such a petition.\u00a0 The relevant language in the Health & Welfare Fund Consent Decree permitted the Court to dissolve the Consent Decree sua sponte<\/em> or upon petition from the Health & Welfare Fund.\u00a0 Here, only the ISC petitioned the Court for dissolution.\u00a0 The ISC has no authority under the Consent Decrees and only the Health & Welfare Fund Consent Decree permits the Court to act sua sponte<\/em>.<\/p>\n

Although the Funds took no position on the dissolution of the Consent Decrees, the Court held that it still has equitable power to dissolve the Consent Decrees.\u00a0 In quoting Rule 60(b)(5), the Court explained that it may relieve a party from final judgment if the judgment \u201chas been satisfied, released, or discharged, . . . or applying it prospectively is no longer equitable.\u201d\u00a0 Id.<\/em> at 2.\u00a0 It reasoned that the Court \u201cmay modify a decree of injunctive relief if the legal or factual circumstances have changed since the time of issuance.\u201d\u00a0 Id.<\/em>\u00a0 Consent decrees, in particular, are \u201cnot intended to operate in perpetuity.\u201d\u00a0 Id.<\/em><\/p>\n

In support of its decision to dissolve the Consent Decrees, the Court noted that the circumstances have changed since the issuance of the Consent Decrees.\u00a0 Their purposes have long since been achieved.\u00a0 There is no longer a credible threat of the Funds being used as a front for organized crime, which was the original purpose of the Consent Decrees.<\/p>\n

The Court recognized the DOL\u2019s desire to continue supervising the Funds in light of the $38.5 billion the Pension Fund recently received, noting that the disposition of billions of dollars in taxpayer money is cause for heightened concern.\u00a0 However, this new money is unrelated to the purpose of the Consent Decrees.\u00a0 The DOL and other government agencies still have other avenues to supervise the Funds, such as through the ERISA and the American Rescue Plan Act.<\/p>\n

Implications For Employers<\/u><\/em><\/p>\n

The Fitzsimmons<\/em> ruling is a stark reminder of the potential power of Federal Courts and government.\u00a0 This ruling illustrates both the staying power of an order entered by a District Court judge decades ago and the power to supersede such an order despite the plain language of the original order indicating otherwise.\u00a0 Moreover, the fact that the DOL would not agree to relinquish the power the Court granted it over 40 years ago is another reminder of the importance of handling pension funds appropriately.\u00a0 A finding of mismanagement may enable cumbersome government oversight for an untold period of time.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Gerald L. Maatman, Jr. and Jeffrey R. Zohn Duane Morris Takeaways: On June 9, 2023, Judge Thomas Durkin of the U.S. District Court for the Northern District of Illinois terminated consolidated cases from the late 1970\u2019s and early 1980\u2019s that sought to thwart Defendants\u2019 efforts to continue to funnel pension funds to organized crime. … <\/p>\n

Continue reading “Illinois Federal Court Dissolves 41-Year Old Consent Decrees That Successfully Quelled The Influence Of Organized Crime In The Management Of Pension Funds”<\/span><\/a><\/p>\n","protected":false},"author":583,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"ppma_author":[30],"class_list":["post-595","post","type-post","status-publish","format-standard","hentry","category-general"],"authors":[{"term_id":30,"user_id":583,"is_guest":0,"slug":"classactiondefense","display_name":"Class Action Defense","avatar_url":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-content\/uploads\/sites\/56\/2020\/10\/dmlogo.jpg","0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""}],"_links":{"self":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/posts\/595","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/users\/583"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/comments?post=595"}],"version-history":[{"count":0,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/posts\/595\/revisions"}],"wp:attachment":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/media?parent=595"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/categories?post=595"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/tags?post=595"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/ppma_author?post=595"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}