Jaffe Raitt Slapped With $5M Verdict Over Faulty Pension Advice

Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...

By Carmen Castro-Pagan

The law firm Jaffe Raitt Heuer & Weiss PC must pay $4.95 million for providing negligent legal advice to a private investment firm and its executives over multiemployer pension fund liability ( Cohen v. Jaffe Raitt Heuer & Weiss, P.C. , E.D. Mich., No. 2:16-cv-11484, jury verdict 10/3/17 ).

Jaffe’s professional negligence was the proximate cause of the damages to the executives and to SSL Assets LLC, an affiliate of CoBe Capital LLC, a Michigan jury said Oct. 3. The executives’ damages were more than $6 million combined—an amount that was reduced by more than $4.6 million after the jury concluded that they could have minimized their damages through reasonable care and diligence. The jury awarded $3.25 million to SSL Assets.

At issue in the case was whether the Michigan-based law firm failed in its duty of care in providing legal advice. Earlier this year, Judge George Caram Steeh of the U.S. District Court for the Eastern District of Michigan denied the parties’ cross motions for summary judgment, holding that there were factual issues related to causation and damages.

SSL Assets and its executives Neal Cohen and Darren Chaffee are in the business of buying and turning around distressed businesses. In 2012, the executives moved to buy LSI Corp., a company that participated in a multiemployer pension plan that was underfunded at the time. The executives approached Jaffe seeking advice on how to avoid exposure to LSI’s $3.9 million liability. The law firm advised that SSL Assets and its executives had no direct exposure for the liability.

In their lawsuit, Cohen and Chaffee alleged that the law firm’s faulty advice resulted in making SSL Assets liable for $3.9 million in withdrawal liability under the Employee Retirement Income Security Act and in making it invest several millions in supporting a newly acquired company.

Jaffe, founded in 1968, is a full-service business midsize law firm that employs more than 100 attorneys, according to its website. In the past years, the firm has represented the country’s major airlines on personal injury matters, including Southwest Airlines Co., Delta Air Lines Inc., Spirit Airlines Inc., American Airlines Inc., and United Airlines Inc., according to data on Bloomberg Law’s Litigation Analytics.

Stinson Leonard Street LLP and Mark S. Baumkel represent SSL Assets and the executives. Plunkett & Cooney represents Jaffe.

To contact the reporter on this story: Carmen Castro-Pagan in Washington at ccastro-pagan@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com

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