In a recently filed lawsuit, Baltimore County, Maryland, says Buck Consultants, LLC has a contractual duty to defend, indemnify and hold harmless the county in connection with a lawsuit filed by the Equal Employment Opportunity Commission (EEOC).
The civil action EEOC v. Baltimore County, et. al. was brought in 2007 under the Age Discrimination in Employment Act (ADEA) and alleged unlawful employment practices on the basis of age because older employees were required to pay higher contributions than those paid by younger employees to receive the same benefits from Baltimore County Employees’ Retirement System (ERS). The action sought relief for Wayne A. Lee, Richard J. Bosse, Sr., and a class of similarly-situated aggrieved individuals at least forty years of age.
In its initial 2009 decision, the U.S. District Court for the District of Maryland held that the contribution rates were justified by the time value of money and were not motivated by age. But, the 4th U.S. Circuit Court of Appeals vacated this initial decision and remanded the case to the district court to consider the effect of a 20-year early-retirement option—a bargained for benefit that Buck had approved as compliant with the ADEA—and whether the disparate contribution rates were still supported by “permissible financial considerations,” i.e., the time value of money, in light of the early-retirement option.
On remand, the district court found that the early retirement option decoupled an employee’s age from years until retirement and that at no time were the contribution rates adjusted as they should have been- to take account of the early retirement option. The district court found that as a result of this failure to account for this early retirement option, the ERS was facially discriminatory under the ADEA. The district court therefore granted summary judgment in favor of the EEOC on the issue of liability. The 4th Circuit affirmed the district court’s decision.
In the county’s lawsuit against Buck Consultants, it notes that Buck has been the principal actuarial consulting firm for the ERS since its inception in 1945. Over the course of the 70 years that Buck has been the actuarial consultant for the Baltimore County ERS they have provided advice as to the legality of various aspects of the ERS. When the county agreed to provide the 20-year early-retirement option to correctional officers, the change was specifically reviewed and approved by Buck as in conformance with all applicable laws.
Then, in the early stages of the EEOC litigation the county again asked Buck to review these provisions of the ERS and explain to the EEOC, on the county’s behalf, why the ERS was in compliance with the ADEA. By letter to the county’s director of Budget and Finance dated August 16, 2000, Buck provided that actuarial and legal advice, maintaining its position that these provisions of the ERS were lawful.
Baltimore County says it reasonably relied on this advice, retaining these provisions of the ERS, and maintaining—with Buck’s advice and consent—throughout the pending litigation that the ERS was in all respects in compliance with the ADEA.
According to the lawsuit, the advice provided by Buck was erroneous and the consultant breached its duty to provide competent actuarial and legal advice by failing to use due care when first reviewing and approving the early retirement revisions to the ERS, and then by affirmatively advising the county at the beginning of and throughout the pending litigation that these ERS revisions were in compliance with the ADEA. “As a direct and proximate result of these breaches, the County, through no lack of due care on its part, has been found to be liable and is now subject to civil damages,” the lawsuit states.
Contracts between Baltimore County and Buck stated: “The Contractor shall indemnify and hold harmless the County, its employees, agents and officials from any and all claims, suits, or demands including attorney fees which may be made against the County, its employees, agents or officials resulting from any act or omission committed in the performance of the duties imposed by and performed under the terms of this Agreement by the Contractor or anyone under agreement with the Contractor to perform duties under this Agreement.”
Based on this, the county advised Buck of the EEOC’s threat to sue the county for age discrimination, and asserted that Buck was contractually obligated to defend, indemnify and hold harmless the county in the event suit was filed. However, Buck’s counsel took the position that Buck was not obligated to defend, indemnify, or hold the county harmless in the pending litigation.
The consultant proposed, and the county agreed, that Buck and the county would “work collaboratively with the goal of having the County prevail in the lawsuit.” However, the county did not prevail on the liability issue and the EEOC lawsuit is now in the damages phase. The county once again called upon Buck to defend, indemnify, and hold harmless the county in connection with that damages phase and Buck refused.
Baltimore County is asking that the U.S. District Court of the District of Maryland stay the underlying litigation until the court has made its declaration in the county’s case. It is also asking that the court issue judgement that Buck is obligated to defend, indemnify and hold harmless the county in the underlying litigation, grant the county all costs and attorneys’ fees related to this action, and grant other relief as may be required.
A request for comment from Buck about the lawsuit was not returned.
The complaint in Baltimore County, Maryland v. Buck Consultants, LLC is here.
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