Law firm Jaffe Raitt Heuer & Weiss P.C. is going to have to face a suit over advice that it provided to a private investment firm and its executives over multiemployer pension fund liability.

A report from Bloomberg BNA says that Judge George Caram Steeh of the U.S. District Court for the Eastern District of Michigan has ruled that SSL Assets LLC and its executives may move forward to trial with its suit against the law firm. Both sides had filed cross motions for summary judgment, which the judge denied on June 30 (Cohen v. Jaffe Raitt Heuer & Weiss, P.C. , 2017 BL 227043, E.D. Mich., No. 2:16-cv-11484, 6/30/17).

SSL Assets alleged that the legal advice provided by Jaffe was not only faulty, but ended up making SSL liable for $3.9 million in withdrawal liability under the Employee Retirement Income Security Act, as well as making it invest several millions in supporting a company it had only recently acquired.

An employer participating in a multiemployer pension plan is liable for its share of any underfunded benefits, also known as withdrawal liability, when it withdraws from the plan.

The case revolves around the concept of controlled group liability under ERISA, in which other entities could be responsible for the withdrawal liability of a plan sponsor based on common ownership.

SSL Assets is an affiliate of CoBe Capital LLC; its executives buy and turn around distressed businesses.

According to the report, in 2012, the executives moved to buy LSI Corp., a company that participated in a multiemployer pension plan that at the time was underfunded.

One of the SSL Assets executives went to Jaffe for advice on avoiding exposure to LSI’s $3.9 million liability, and Jaffe said that SSL Assets and its executives had no direct exposure for the liability.

Steeh ruled that there are issues of fact on whether Jaffe failed in its duty of care in providing legal advice; in addition, the judge said there are also issues related to causation and damages.

But in addition to questions over whether there actually was attorney-client privilege between Jaffe and the executives, the judge found that there were issues of fact in dispute that made it impossible for him to render a decision. Steeh’s opinion allows the case to proceed.

Stinson Leaonard Street LLP and Mark S. Baumkel represent SSL Assets and the executives in the case, and Plunkett & Cooney represents Jaffe Raitt.

Instant Insights /

Legal malpractice suit on multiemployer pension fund liability can proceed

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