FEDERAL COURT FINDS CEMENT MASONS’ TRUSTEE, TRUST COUNSEL VIOLATED ERISA BY RETALIATING AGAINST GOVE
LOS ANGELES – In a victory for employee whistleblowers, the U.S. Department of Labor has secured a decision from the U.S. District Court for the Central District of California in a case against a trustee and attorney for the Cement Masons Southern California Trust Funds.
The court found that trustee and Cement Masons Local 600 business manager Scott Brain and trust counsel Melissa Cook violated sections 510 and 404 of the Employee Retirement Income Security Act when they caused the firing of Cheryle Robbins and Cory Rice. Robbins and Rice, who both served the trust funds, filed an internal complaint regarding wrongdoing by Brain as a trustee and cooperated with a federal criminal investigation.
“The court’s order should send a clear message that the department will not tolerate retaliation against whistleblowers. Law enforcement depends upon witnesses feeling safe and protected to report violations to the government and to internal decision-makers, but also –as in the case of Cheryle Robbins– to be able to answer questions from law enforcement,” said Assistant Secretary for Employee Benefits Security Phyllis C. Borzi. “Here, it must be remembered that Cheryle Robbins was fired for the simple reason that she answered the phone and responded to questions from federal criminal investigators. She did the right thing when law enforcement called, and was wrongly punished for it.”
The decision affirms the secretary of labor’s position that Brain and Cook retaliated against Rice and Robbins. After a five-day trial, the court ruled that Brain, Cook and her firm violated ERISA by suspending and then discharging Robbins, and discharging Rice, because they participated in a complaint against Brain’s unlawful conduct to the General President of the Operative Plasterers’ and Cement Masons’ International Association, and because Robbins participated in a federal criminal investigation of Brain.
The court ordered the permanent removal of Brain as a trustee. It also ordered the permanent barring of Brain, Cook and her law firm from serving the Cement Masons Southern California Trust Funds. In addition, the court ordered Cook and her law firm to repay all attorneys’ fees she billed the trust funds for the actions she took in retaliating against whistleblowers Robbins and Rice.
The case stemmed from the activities of workers who reported on Brain’s interference with collections and contributions from unionized employers. Brain’s conduct unnecessarily diminished revenue for the trust funds and directly affected the interests of fund participants and beneficiaries.
In 2011, Robbins, director of the trust funds’ audit and collections department, responded to a federal criminal investigation into Brain’s activities with contractors. The same year, she and Rice, who worked for third-party administrator to the trust funds (American Benefit Plan Administrators, now, Zenith American Solutions), participated in an effort to complain about Brain’s interference with efforts to collect delinquent contributions from contractors. Within weeks of this conduct, Robbins was suspended. Less than six months later, both Robbins and Rice were fired.
The court’s 71-page decision chronicles Brain and Cook’s coordinated and manipulative retaliatory campaign that led to Robbins’ suspension and firing. With respect to Robbins’ suspension, the court explained that the evidence showed Brain and Cook “were very upset with Robbins due to her contact with the [Department of Labor],” and that Brain and Cook “used their positions and influence to cause the other trustees to vote in favor of” suspending Robbins. To do so, the court explained, Brain and Cook “took the lead at the . . . [b]oard meeting with respect to the discussion of Robbins’ contact with the [Department of Labor]” and “created an environment that was hostile to her,” which “caused the trustees to vote to place her on leave.” The court noted that the two “‘set in motion’ the decision by the Joint Board to put Robbins on leave [.]”
As for Robbins’ firing, the court explained how “Brain and Cook manipulated the Zenith relationship in an effort to ensure that Robbins would not be rehired [.]” Months earlier, the court found, Brain and Cook pressured Zenith into firing Rice for his involvement in efforts to make an internal complaint about Brain.
Dismissing Cook’s argument that she was somehow immunized from her unlawful conduct because she was an attorney to the trust funds, the court noted the “apparent conflict of interest” Cook had in representing the trust funds while being in an undisclosed “romantic relationship” with Brain, which existed as defendants carried out their retaliatory scheme. Reminding lawyers of their ethical duties in California, the court cited California Rule of Professional Conduct 3-310(B), which the court explained “requires that an attorney disclose to a client any personal relationship or interest that he or she knows, or with the exercise of reasonable diligence should know, could substantially affect her his or her professional judgment in advising the client.”
The court held that Brain and Cook’s retaliatory conduct violated section 510 of ERISA, which prohibits retaliation against whistleblowers for complaining of ERISA violations or cooperating with a governmental investigation of such violations. The court also held that the couple’s retaliation against Robbins breached Brain’s fiduciary duties under ERISA to the trust funds and that Cook participated knowingly in that breach.
The court’s decision comes in the wake of the department’s earlier success in obtaining $630,000 in lost wages and damages for Robbins, Rice and another worker victimized by Brain and Cook. The department obtained that judgment in August 2015.
The lawsuit was the result of an investigation by the Employee Benefits Security Administration’s Los Angeles Regional Office. The department’s San Francisco Regional Office of the Solicitor litigated the case.
For help with problems related to private sector retirement and health plans, employers and workers can reach the Delaney Insurance Agency, Inc. at 909-481-7222 or at www.DelaneySolution.com