Northern Trust complaint dismissed in Louisiana firefighter case

Four pension funds filed a class-action lawsuit against Northern Trust, alleging breach of fiduciary duties and breach of contract. The contract dispute centers on a 2009 complaint filed by the Louisiana Firefighters’ Retirement System, which is based in Baton Rouge. The FRS and three other retirement funds are suing Northern Trust for mismanaging funds.

In an attempt to defend against the class action, Northern Trust made its own third-party complaint against the pension funds’ boards of trustees. Northern Trust’s complaint, which was recently dismissed by the court, claimed that the trustees were responsible for the losses incurred by each of the funds.

But according to the court, the complaint was dismissed because Northern Trust is not allowed to pass on liability to the plaintiffs. Northern Trust issued a statement saying that the third-party claim was an attempt to defend against the allegations leveled by the FDS and its co-plaintiffs. While the court dismissed Northern Trust’s complaint, saying it was a defense and not a third-party claim, the company may still raise the content of its argument as an affirmative defense.

The firefighters in the class-action suit are joined by the $499 million Pontiac Michigan General Employees’ Retirement System, the $8.9 billion Chicago Public School Teachers’ Pension and Retirement System, and the $259 million Pontiac Michigan Police and Firemen’s Retirement System.

As this case illustrates, contract disputes can become complicated and time-consuming, and numerous strategies are likely available depending on the specifics of a case. Business owners who are facing contract disputes and other forms of business litigation will want to explore all of the available options to achieve an equitable resolution in or outside of court.

Source: Pensions & Investments, “Northern Trust Loses round in securities lending suit,” Rob Kozlowski, Feb. 29, 2012