Snitzer et al v. The Board of Trustees of the American Federation of Musicians and Employers' Pension Fund et al

Filing 204

ORDER: IT IS HEREBY ORDERED that the pro se objectors-Ms. Bryant, Mr. Hosticka, and Mr. Stonershall each have five minutes to address the Court. The Court notes for the record that chambers has emailed instructions for appearing via video to Ms. Brya nt, Mr. Hosticka, Mr. Stoner, and all counsel. IT IS FURTHER ORDERED that Mr. Walfish' and Mr. Stoner's additional submissions (attached) are filed on ECF for purposes of maintaining an accurate record. Because they were submitted beyond th e objection deadline, Class Counsel need not respond in writing. Because Mr. Walfish and Mr. Stoner are each appearing at the hearing, they may raise any relevant issues they wish orally, and Class Counsel should be prepared to address them. IT IS FURTHER ORDERED that Class Counsel make this Order available on the settlement website no later than the close of business today, August 24, 2020. SO ORDERED. (Signed by Judge Valerie E. Caproni on 8/24/2020) (ama)

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
ANDREW SNITZER and PAUL LIVANT, individually
and as representatives of a class of similarly situated
persons, on behalf of the American Federation of
Musicians and Employers’ Pension Plan,

USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #:
DATE FILED: 08/24/2020

Plaintiffs,
v.
THE BOARD OF TRUSTEES OF THE AMERICAN
FEDERATION OF MUSICIANS AND EMPLOYERS’
PENSION FUND, THE INVESTMENT COMMITTEE
OF THE BOARD OF TRUSTEES OF THE
AMERICAN FEDERATION OF MUSICIANS AND
EMPLOYERS’ PENSION FUND, RAYMOND M.
HAIR, JR., AUGUSTINO GAGLIARDI, GARY
MATTS, WILLIAM MORIARITY, BRIAN F. ROOD,
LAURA ROSS, VINCE TROMBETTA, PHILLIP E.
YAO, CHRISTOPHER J.G. BROCKMEYER,
MICHAEL DEMARTINI, ELLIOT H. GREENE,
ROBERT W. JOHNSON, ALAN H. RAPHAEL,
JEFFREY RUTHIZER, BILL THOMAS, JOANN
KESSLER, MARION PRESTON,

No. 1:17-cv-5361 (VEC)
ORDER

Defendants.
VALERIE CAPRONI, United States District Judge:
WHEREAS a fairness hearing via Skype and teleconference is currently scheduled for
August 26, 2020, at 10:00 A.M.;
WHEREAS the Court gave individual objectors who previously expressed an interest in
attending the fairness hearing an opportunity to request to be heard via video;
WHEREAS the only objectors who have requested to be heard in response to the Court’s
inquiry are Anne Bryant, Frank Hosticka, and Martin Stoner;
WHEREAS Daniel Walfish, counsel for a group of objectors, will also be heard via
video; and

Case 1:17-cv-05361-VEC Document 204 Filed 08/24/20 Page 2 of 21

WHEREAS Mr. Walfish and Mr. Stoner have each submitted additional objection papers
after the objection deadline;
IT IS HEREBY ORDERED that the pro se objectors—Ms. Bryant, Mr. Hosticka, and
Mr. Stoner—shall each have five minutes to address the Court. The Court notes for the record
that chambers has emailed instructions for appearing via video to Ms. Bryant, Mr. Hosticka, Mr.
Stoner, and all counsel.
IT IS FURTHER ORDERED that Mr. Walfish’s and Mr. Stoner’s additional submissions
(attached) are filed on ECF for purposes of maintaining an accurate record. Because they were
submitted beyond the objection deadline, Class Counsel need not respond in writing. Because
Mr. Walfish and Mr. Stoner are each appearing at the hearing, they may raise any relevant issues
they wish orally, and Class Counsel should be prepared to address them.
IT IS FURTHER ORDERED that Class Counsel make this Order available on the
settlement website no later than the close of business today, August 24, 2020.

SO ORDERED.
_________________________________
VALERIE CAPRONI
United States District Judge

Date: August 24, 2020
New York, New York

2

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August 19, 2020
Via email to Chambers
Hon. Valerie E. Caproni
Thurgood Marshall U.S. Courthouse
40 Foley Square
New York, NY 10007
Re: Snitzer et al. v. Board of Trustees of AFM-EPF, et al., No. 17 Civ. 5361 (VEC)
Dear Judge Caproni:
We represent the Ad Hoc Coalition (“Coalition”) of 68 class members opposed to the settlement in the above-referenced matter. We respectfully submit this letter principally to explain
that the Parties’ submissions in response to our Objection, including the revised Release,1 did not
go far enough, and that the latest revelations only underscore the inadequacy of the proposed settlement.2 Objectors – all musicians (or their beneficiaries) who have been directly and materially
harmed by the Trustee’s deceptive and imprudent behavior3 – firmly believe that this is a case in
which the settlement is unfair, inadequate, and unreasonable. We urge the Court to reject it.
The Release Is Still Too Broad
The parties have responded to the Objection’s argument that the release language was far
broader than Class Counsel had stated to the Court (Objection 21-22) with a proposed final order
modifying the Release. DE 197-3 at 10-11; DE 195-1 ¶ 13; DE 196 at 10-12. The proposal is still
insufficient. Under the parties’ suggestion, there would appear to be two types of claims covered
by the Release: those in certain enumerated subject-matter categories labeled (i) through (iv), for
which the Release is date-limited at September 30, 2017 (we call these the “bucket A” claims);
and all other claims, which have no express date limitation and thus are arguably barred for all
time, regardless of when they arise (“bucket B”).4 DE 195-1 ¶ 13.
1
Undefined capitalized terms have the meanings assigned in the Objection of Ad Hoc Coalition Opposed to the Class
Action Settlement [DE 186 at 3-220] (“Objection”), which we cite using its internal page numbers, as opposed to the
ECF headers, which we use for all other filings, unless otherwise indicated.
2
We do not here revisit every issue raised in our Objection, many of which Class Counsel ignored or caricatured, and
instead respectfully refer the Court to the Objection for a more comprehensive accounting of the settlement’s failings.
3
Class Counsel claims that “many of these very same objectors decided against bringing this very lawsuit in 2017.”
DE 196 at 13. This is not true. Of 68 Coalition members, we are aware of exactly one who considered becoming a
named plaintiff but decided that his/her personal circumstances were such that he/she could not afford the associated
career risks. We are aware of zero Objectors who disagreed with the decision to file this suit.
4
As our Objection explained (at 22), the Release in a future case likely would be read to bar at least some claims
arising after September 30, 2017 and on into the future – or else Agreement § 9.3 would make no sense (because it

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Hon. Valerie E. Caproni
August 19, 2020
Page 2
Right now bucket A is still too narrow. The overriding theory of imprudence in this case
was that the Trustees, separate and apart from any specific asset allocation, adopted unduly aggressive investment return targets (which in turn drove the selection of asset allocations). E.g.,
Prelim. Approval Mot. [DE 138] 16; Witz Report ¶ 57. Unbelievably, the enumerated categories
in bucket A appear not to capture this aspect of the case, raising a very serious risk that a claim
that (for example) the Trustees continued to swing for the fences in 2018 or 2020 or 2022, just as
was alleged in the Amended Complaint for prior years, is forever extinguished, on pain of contempt.5 Instead the Court should insist on a global date-limitation for the Release of September 30,
2017. (There could be narrow exceptions, for example for the Settlement Fiduciary’s role here.6)
Failing that, the Court should ensure that bucket A is sufficiently broad (and bucket B sufficiently
narrow) that class members have recourse to hold the Trustees to account to the extent that the
reckless behavior challenged in this case has continued or recurs after September 30, 2017.
The NIF Needs To Be Given Genuine Authority and a Role in Participant Communications
Last week’s submissions, including the new revelations of Trustee mendacity, make it
clearer than ever before that the proposed relief is inadequate.
Class Counsel is wrong that this settlement is superior to recent settlements in other
cases. (DE 196 at 25). The cases that Class Counsel has cited challenge conduct less consequential
(mostly 401(k) recordkeeping expenses and investment-menu selection) than running a defined
benefit plan into the ground and then lying about it, and anyway a number of the other settlements
do have more impactful relief.7 In addition, Class Counsel incorrectly states that “the most recent
imposes a date cut-off at the Settlement Effective Date, which would be unnecessary if the Release was globally
limited to pre-October 1, 2017 claims). Both sides and the Settlement Fiduciary (itself a beneficiary of the Agreement’s
releases, see §§ 2.21, 2.22.2) have failed to respond to this point.
5
The defense has proffered an interpretation of the original release language that boils down to the idea that one could
never craft an investment-related claim that arises post September 30, 2017 but that relates to the allegations in the
Amended Complaint. DE 189 at 3 (“whatever claims were made in the Complaint relating to Trustee investment
decisions . . . ended as a result of the [October 1, 2017] retention of the OCIO”). We refer to this as the “DE 189
theory.” First, we dispute the premise of the DE 189 theory, as does Class Counsel (see DE 196 at 19). But if the DE
189 theory is valid, no one should have any problem with a release that clearly states, as the revised release does not,
that any and all decisions relating to investments (including the setting of investment-related objectives) are fair game
if they arise after September 30, 2017. Indeed, the Court should rebuff the parties’ suggestion (DE 195-1 ¶ 13) to
incorporate the DE 189 theory into the final judgment. The DE 189 theory rests on self-serving, one-sided, untested,
and contested assertions about the degree to which the Trustees washed their hands of responsibility when they hired
an OCIO. The release language needs to stand on its own, without resort to a defense brief.
6
It is especially important, given defense counsel’s inability to justify their conflicts of interest (see footnote 10 below), that the Release not bar claims based on the Trustees’ decision from 2017 onward to commit millions of dollars
of class members’ retirement money (see Objection Ex. 5) to pay fees to irredeemably conflicted outside plan counsel
who in substance were actually the Trustees’ individual attorneys. The Fund and its beneficiaries were entitled to
receive unconflicted legal advice on such matters as communications concerning the condition of the Fund and the
possibility of benefit cuts. The Court should clarify that this type of claim is not covered by the Release.
7
An example is the Kruger settlement cited by Class Counsel, which included measures designed to ensure “accurate
participant communications” (DE 167 at 17-18; see also No. 14-cv-208 (M.D.N.C.), Dkt. 44-1 § 10.11) – as is badly
needed here.

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Hon. Valerie E. Caproni
August 19, 2020
Page 3
ERISA pension settlement” was Karpik, an Ohio case in which the proposed resolution lacks injunctive relief. DE 196 at 28. In fact, after Karpik and before Class Counsel’s filing last week, an
ERISA pension settlement was submitted in this Court, and, even though it involved allegations
less serious than those here, the proposed relief includes an independent fiduciary with decisionmaking power and an independent consultant with approval rights over plan communications. See
Bhatia v. McKinsey & Co., No. 19-cv-1466 (GHW) (S.D.N.Y. Aug. 10, 2020) (DE 75-1 at 34).8
That type of relief is exactly what is needed here.
The NIF must be a given a vote, or at the very least a meaningful ability to exercise
ERISA’s watchdog powers. It remains wholly unexplained why the NIF is not being given a vote.
See Objection 13. Taft-Hartley, far from foreclosing such relief, expressly contemplates neutral
board members with decision-making power.9 Class Counsel and Mr. Irving instead take comfort
in the co-fiduciary liability provisions of ERISA § 405, with Mr. Irving stating that he “will not
stand by silently or idly in the event I observe acts or omissions that . . . amount to breaches by
other fiduciaries . . . of their fiduciary responsibilities as they relate to investment matters.” DE
198 at 2; DE 196 at 20-21. To the extent that the theory here is that Mr. Irving will be a watchdog,
ERISA’s primary mechanism for fiduciaries to police one another is not ERISA § 405. (Class
Counsel abandoned their own § 405 claims in this very case. See DE 90 at 43; Am. Compl. ¶¶ 18289.) It is rather 29 U.S.C. § 1132(a)(2) & (a)(3), which authorize any fiduciary to initiate suit
against any other fiduciary to remedy any breach or violation. The NIF here is theoretically authorized to bring such a lawsuit in an appropriate circumstance, but has been given no budget or
authority to hire counsel for such a suit. (Nor would it necessarily be easy to find a lawyer to take
his case on contingency, if Class Counsel’s origin story about its own involvement in this case is
to be believed.) By contrast, the regular Trustees, collectively exercising voting power, have the
ability, using Fund assets, to pay for such a suit against any of the Fund’s fiduciaries (theoretically
even including the NIF if relations became sour enough).
While we do not question Mr. Irving’s qualifications or good intentions, the NIF role as
created here is impotent and falls short of what has been done in other cases involving less serious
allegations. Our Objection, contra Class Counsel’s mischaracterizations (DE 196 at 13, 20), never
asked for the Fund to be put into receivership or anything close, just that the NIF have decisionmaking power like Congress contemplated (and that the Chair roles be re-assigned). At a bare
minimum, the settlement should include a discretionary reserve budget for the NIF to vindicate his
29 U.S.C. § 1132(a) rights, since Class Counsel and Mr. Irving state that the NIF will act as a
watchdog over the other fiduciaries.
The NIF also needs to be given express approval rights for minutes. The assurances
from Class Counsel (DE 196 at 21) and even Mr. Irving himself (DE 198 ¶ 5) appear to overlook
how the minutes work for this Fund. Minutes of past meetings are approved at subsequent meetings
8

Class Counsel (DE 196 at 27) also flatly misstates key aspects of the settlement terms in Moreno. We respectfully
refer the Court to our Objection (at 18) or to the Moreno settlement itself for its terms.
9
29 U.S.C. § 186(c)(5) (“employees and employers [must be] equally represented in the administration of [a TaftHartley trust fund], together with such neutral persons as the representatives of the employers and the representatives
of employees may agree upon.”).

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Hon. Valerie E. Caproni
August 19, 2020
Page 4
as official board action (see, e.g., Brockmeyer Dep. 146:15-147:5), in other words by vote of the
Trustees. But the NIF does not have a vote. That is why the Agreement goes out of its way to
provide that the minutes have to include the NIF’s potential dissenting views on selection of OCIO
monitor and that the NIF has the right to review and comment on those minutes. DE 139-1 at 85.
The fact that these rights had to be uniquely spelled out for one specific subject suggests that the
NIF does not have approval rights regarding board minutes on any other subject. And the reality,
as Class Counsel acknowledges (DE 196 at 21-22), is that these Trustees have long “sanitize[ed],”
if not outright gamed, their (lawyer-drafted) minutes (see Objection 15 n.29). It is not so difficult
to imagine the incumbent Trustees using their voting power and the Fund’s (conflicted10) counsel
to prevent official minutes from recording inconvenient views expressed by the NIF. And while
Mr. Irving of course can express his views to other parties “in writing” outside the minutes (DE
198 at 2), such an informal “off-line” communication would be far less accessible to concerned
participants seeking plan records than formal minutes would be. Such a communication, in other
words, would not be a meaningful, as Class Counsel terms it, “litigation trap” (DE 196 at 14).
It is absolutely essential that the NIF be given a role in participant communications.
Counts I and II of the Amended Complaint, which the Court sustained in full (DE 90 at 43, DE
89), asserted claims based not just on investment-related decisions, but also on deceptive communications to plan participants about the condition of the Fund, alleged to breach the duty of loyalty.
Am. Compl. ¶¶ 143-48, 154, 165(a), 168, 177, 180(a); see also Varity Corp. v. Howe, 516 U.S.
489, 506 (1996) (“‘lying is inconsistent with the duty of loyalty owed by all fiduciaries and codified in section 404(a)(1) of ERISA.’”). As if to reinforce our Objection,11 last week Class Counsel
released additional evidence that the Trustees and their advisors knowingly made misrepresentations to plan members about actuarial projections. In late 2016 – when it was no longer possible
for the Trustees to hide the deterioration of the Fund – the Fund’s lead actuary repeatedly commented on a draft communications plan proposing “open, honest communications” as follows:
“Can we say straightforward or direct? Honest sounds like we have been hiding the ball, which we
have but we don’t need to point that out.” DE 200 at 4, 5. Class Counsel also released testimony
of a Trustee who admitted that plan participants were kept in the dark because the Trustees did not
10

Defense counsel’s cursory defense (DE 189 at 2 n.1) to their conflict of interest (Objection 16-17) is meritless. In
brief, the particular New York ethics rule and commentary referred to by counsel are far from an unconditional green
light to simultaneously represent both an organization and its fiduciaries accused of breaching their duties to the organization, especially when, as here, there are allegations (credible enough to survive a motion to dismiss) of breaches
of the duty of loyalty – and the organization counsel’s own advice is in issue. While the defense counsel cite no case
approving their dual roles here, there is a wealth of authority for the disqualification of counsel with comparable (or
lesser) conflicts. See, e.g., McGinn v. DeSoto, Inc., 1990 WL 251753, at *4 (N.D. Ill. Dec. 21, 1990) (disqualifying
same counsel from representing both pension fund and its fiduciaries accused of breach); Frank v. Ducy, 1986 WL
1964, at *1 (N.D. Ill. 1986) (same); Bell Atl. Corp. v. Bolger, 2 F.3d 1304, 1317 (3d Cir. 1993) (in derivative litigation,
“except in patently frivolous cases,” allegations of breach of the duty of loyalty “require separate counsel”) Yablonski
v. United Mine Workers, 448 F.2d 1175, 1177, 1181-82 (D.C. Cir. 1971); Lewis v. Shaffer Stores Co., 218 F. Supp.
238, 239 (S.D.N.Y. 1963); see also Restatement of the Law Governing Lawyers § 131 cmt. g (“In a derivative action,
if the advice of the lawyer acting for the organization was an important factor in the action of the officers and directors
that gave rise to the suit” – as was true here – “it is appropriate for the lawyer to represent, if anyone, the officers and
directors and for the organization to obtain new counsel.”).
11
Objection 12-13 & n.23; id. Ex. 6 (explaining that the Trustees’ annual “plain English” cover letters contained bald
misrepresentations about the Fund’s projected solvency that were belied by the defense’s own expert reports).

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Hon. Valerie E. Caproni
August 19, 2020
Page 5
want the union membership “running towards the exits.”12 The Trustees, of course, were required
to place the participants’ interests ahead of the union’s interest.13
Last week’s disclosures, in other words, make it even more obvious that serious breaches
of the duty of loyalty occurred. And yet substantially the same Trustees are in place, with substantially the same leadership structure, advised by the same conflicted counsel. For the settlement to
be fair and adequate, it needs to contain some kind of measure to prevent future deception about
the condition of the Fund (as opposed to simply requiring additional disclosures regarding investment performance, which is a distinct subject). Objection 12. This settlement troublingly provides
nothing in that regard. Giving the NIF a say in plan communications would solve this problem.
Conclusion
For all the reasons set forth in the Coalition Objection and in this letter, the Court should
decline to approve the Proposed Settlement.
Fee Request
Undersigned counsel respectfully requests an award of reasonable attorneys’ fees. The undersigned and his partner, Rachel Fissell, have thus far spent (including an estimate of future time
to prepare for and attend the upcoming hearing) 197 hours on this matter. Our partners’ regular
hourly rate is $675. Under a hybrid capped/contingent arrangement, one Objector (who then sought
donations from many others to defray the expense) has already paid us a $15,000 retainer for the
first 30 hours of work at the significantly discounted rate of $500/hour. A Miami federal court
recently approved $500 as a discounted rate for our two partners, who are 16 and 15 years out of
law school and handle sophisticated commercial litigation. Metal Group USA LLC v. Seapack,
Inc., 2019 WL 5291183, at *5-*6 (S.D. Fla. Sept. 8, 2019). Given the circumstances, while reserving the right to make a different request if there are additional developments in this matter, we
request to be paid from the fees awarded to Class Counsel $132,975 (equal to $675 x 197 hours),
and, assuming the Court approves an award at this level such that counsel will be reasonably compensated, we request permission to return the $15,000 retainer amount back to the individuals who
donated it.
Respectfully submitted,

Daniel Walfish
cc (via email): Counsel of record

12

DE 197-1, transcript pages 28, 30-32, 37, 42-43, 31-32, 45-46, 50-51, 58, 60-66, 68.
NLRB v. Amax Coal Co., 453 U.S. 322, 329-31, 334 (1981) (Taft-Hartley plan trustee’s “duty to the trust beneficiaries must overcome any loyalty to the interest of the party that appointed him”).

13