New Orleans Can Sue Pension Board for Mismanagement, Says High Court

New Orleans

In 2014, New Orleans argued before a circuit court that it shouldn’t have to pay down the debt of its Firefighters’ pension fund, because the shortfall was caused by bad investments.

The circuit court rejected that argument.

But now, the state Supreme Court says the city can indeed sue the pension fund’s board of trustees for mismanagement of the fund.


The high court ruled Friday that Norman Foster, [Mayor] Landrieu’s finance director who also serves as a pension board trustee, can sue his fellow board members for financial mismanagement of the fund. That decision sends the case back to New Orleans’ civil court and allows Foster to draft a new lawsuit. It also tracked closely with the findings of the 4th Circuit Court of Appeal Judge Joy Lobrano, who was the dissenting vote in that 2-1 ruling in September. She had argued that Foster had a responsibility to guard the fund’s finances, and could do so in court.

Several issues, including whether it is too late for a new lawsuit or who should Foster actually sue, will have to be sorted out, said Louis Robein, the pension board’s attorney. The board’s membership has changed since the lawsuit was originally filed, forcing the city to focus on the former board members who oversaw the fund lose a good deal of revenue, including $40.2 million in 2013.

Should Foster follow through, it’s possible his suit could focus on the former board members as those responsible for the fund’s losses, Robein said.

The city is trying to avoid paying a total of $17.5 million to the pension fund.

The court said the shortfall was caused by the city skipping annual contributions, and it ordered the city to pay up. But the city argued that it shouldn’t have to foot the bill because the gap was caused by mismanagement of investments by the board.

U.S. Supreme Court Won’t Hear New Orleans Pension Case

U.S. Supreme Court

New Orleans has failed to pay $17.5 million in required pension contributions to the city’s firefighters’ pension fund since 2010. A state court last year ruled that the city had to repay the fund in full, and an appeals court affirmed the ruling.

But New Orleans tried to appeal the case to the U.S. Supreme Court – the city argued that it shouldn’t have had to shoulder the cost of the pension fund’s failed investments, which led to a decreased funding ratio and required higher payments from the city.

But today, the U.S. Supreme Court said it wouldn’t hear the case. From

The U.S. Supreme Court has decided to stay out of the ongoing legal feud between the Mayor Mitch Landrieu and the New Orleans firefighters’ pension board, leaving the city to cover disputed payments to the firefighters’ collective retirement account over the past four years.

The high court refused on Monday to hear an appeal from Landrieu arguing that state Judge Robin Giarrusso overstepped her authority when in March 2013 she ordered City Hall to immediately pay $17.5 million to the firefighters’ pension fund for shortfalls in 2012. Her ruling was upheld by the state’s 4th Circuit Court of Appeal in December.

The Supreme Court’s decision likely will have little bearing on the case, considering that Landrieu and the pension board have begun work on a compromise. On Friday, the two sides agreed to refinance the city’s debts to the fund, a shift that would considerably lower the city’s monthly payments should Giarrusso agree to it. That $17.5 million bill, for instance, would be lowered to $9.2 million under the proposed arrangement.

The two sides go back to District court on October 21.


Photo by  Mark Fischer via Flickr CC License