Trustee, Legal Counsel Retaliated Against DOL Whistle-Blower

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By Carmen Castro-Pagan

July 27 — A trustee and the legal counsel of the Southern California Cement Masons Trust Funds retaliated against a fund employee by placing her on administrative leave following her communications with the Department of Labor in its investigation of the trustee's conduct, the U.S. District Court for the Central District of California ruled ( Perez v. Brain , 2016 BL 239394, C.D. Cal., No. 2:14-cv-03911, 7/25/16 ).

After a five-day bench trial, Judge John A. Kronstadt held July 25 that the DOL established that the trustee and the counsel used their positions and influence to cause the other trustees to vote in favor of placing the employee on leave due to her contact with the DOL. The DOL also showed that the employee's position at the fund was subsequently eliminated and that she was not rehired by a third-party administrator because of her earlier contact with the DOL, Kronstadt held.

The issue at trial was whether Scott Brain and Jaime Briceno, as trustees, and the funds' legal counsel, Melissa Cook, and her law firm were liable for retaliatory conduct and fiduciary breach. The DOL alleged that they took certain adverse employment actions against Cheryle Robbins and two employees of the funds' TPA in violation of the Employee Retirement Income Security Act.

According to court documents, Robbins contacted the DOL about her concerns that Brain was taking actions that interfered with or impeded the funds' efforts to collect contributions from approximately nine contractors.

ERISA ‘But-For' Test

In assessing whether Brain and Cook had retaliated against Robbins, the court noted that neither the U.S. Supreme Court nor the U.S. Court of Appeals for the Ninth Circuit had addressed which causation test should apply in an ERISA retaliation case—the more lenient “motivating factor” or the “but for” test.

The court applied the “but for” test. In doing so, the court concluded that Robbins was placed on administrative leave because of her protected activity. Cook and Brain “set in motion” the trustees' decision to put Robbins on leave, the court said.

The DOL showed that Cook encouraged the trustees to support outsourcing the services that Robbins performed and to eliminate her position, the court said. The agency also showed that Brain and Cook manipulated the TPA relationship to ensure that Robbins wouldn't be rehired.

“But-for the influence” of Brain and Cook, the TPA likely would had hired Robbins, the court concluded.

As to the other trustee, the court held that Briceno didn't retaliate against Robbins because he relied on the advice of counsel in casting his vote to put her on leave.

Brain breached his ERISA fiduciary duties by engaging in retaliatory conduct against Robbins, and Cook knowingly participated in that breach, the court said.

As a result of their conduct, Brain was removed as trustee and Cook was ordered to terminate her legal relationship with the funds. Cook must also pay $61,480 to the funds for the fees she received for work she performed that resulted in retaliatory conduct.

The Office of the Solicitor of the DOL represented the agency. Sheppard Mulin Richer & Hampton LLP and Barnes & Thornburg LLP represented Brain and Briceno. Baker Keener & Nahra LLP represented Cook.

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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