You can find all the major filings at Kentucky Pension Case. The two below are over the most heated current issue: whether the Tier 3 Plaintiffs can move forward. Judge Shepherd said effectively that he needed to see what the attorney general planned to do before he decided that.
Given that the justification for the attorney general repeated extension requests was to wrap his mind around the case, and the Calcaterra report looked like Kentucky Retirement Systems hiring an outside firm to brief the attorney general, the new filing is entirely old hat. It has not only has no new arguments, it is even more openly cribbed from older plaintiff filings that the original attorney general intervention, where his office at least re-wrote a fair bit of the material into white shoe tall building lawyer style. Here, nearly all of the filing is a cut and paste, including the charts.
One noteworthy feature of these filings is that they are regularly shrill, ranging from pissy to screechy (the Attorney General’s filing is a bit different in instead adopting the tone of royalty having to stoop to dismiss an annoying subject).
And the reason for the all too evident frustration among the various opponents is that the legal team targeting the hedge fund abuses was supposed to have gone away by now.
As the Background describes in more detail, they were supposed to be over after their initial case was dismissed by the Kentucky Supreme Court on standing grounds. Recall that the defeat came as a result of rulings in Kentucky and by the US Supreme Court that found that Federal Article 3 standing rules (which Kentucky has adopted but not other states such as California) means that defined benefit plan participants have to have suffered an actual (“particularlized”) loss, as in not be getting benefits or only be receiving reduced benefits, to be able to lodge a claim. Since the Kentucky Retirement System, even at its stunningly depleted 13% funding level, is still anticipated to pay out until 2027 (and we are supposed to believe the State of Kentucky will step up and make good on the pensions until it turns out otherwise), the defined benefit pensioners can take no action until then.
Cameron’s filing was almost entirely dependent on the original plantiffs’ documents. It’s become increasingly evident that Cameron never intended to litigate. The best guess is that Cameron needed a distraction from bad Brionna Taylor headlines, and also saw the Mayberry v. KKR case as an opportunity to engage in a little shakedown by making a potentially explosive case go away via a cost-of-doing-business settlement.
But Cameron appears to have badly underestimated his opponents, led by the formidable attorney Michelle Lerach and her husband, the disbarred but still very much feared Bill Lerach, who acts as a consultant. A quick and cheap settlement can occur only if the defendants can escape what they fear most, discovery. But the latest order from Judge Philip Shepherd shows he is moving forward with the reconfigured case, now involving “Tier 3” beneficiaries in a hybrid plan that does not have a state guarantee. That upsets Cameron’s plans to settle the case before the Tier 3 plaintiffs go going, which would allow his to go lowball based on public information and the limited discovery to date.
A key hearing next week, on February 8, ought to shed some light on how Judge Philip Shepherd intends to deal with Kentucky Attorney General Daniel Cameron, who is showing perilous little respect for the judge’s desire to move the landmark pension case, Mayberry v. KKR, along in a disciplined manner after it has languished for over three years. We’ve embedded Judge Shepherd’s order of December 28, the Attorney General’s request for an extension of time, and the Tier 3 Plaintiffs’ Motion of Opposition to the Attorney General’s extension of time. You can see the other major filings, including the complaint by the Tier 3 members that they hope to get leave to file, here.
We need to cover a lot of background before getting to the elephant in the room, that the timing of the Attorney General’s intervention looks suspect, particularly since he is a protege of Mitch McConnell and the suit he pulled from the jaws of apparent death by his intervention fingers heavyweight Republican donors Steve Schwarzman of Blackstone and Henry Kravis of KKR personally, along with their firms. Political insiders in Kentucky believe that Cameron needed some good headlines after getting considerable criticism in the national press for going easy on the cops that shot Brionna Taylor. One theory was that the revival of this lawsuit was also effectively a shakedown: Cameron would give the private equity firms a “cost of doing business” settlement, with no embarrassing discover, with an expected quid pro quo in dark money payments. Another theory is that Cameron might pursue the case a little but still enter into a cheapie settlement if he can use discovery to damage the Beshears, a Democratic party dynasty that had their fingers all over the Kentucky Retirement System mess.
A short update on the Mayberry v. KKR, a pathbreaking public pension suit targeting customized hedge funds designed for the sitting duck Kentucky Retirement Systems by Blackstone, KKR, and PAACO. The litigation is on track to becoming a Jarndyce v Jarndyce level case study in the (mis)use of procedure to delay a case.
I neglected to add that one reason for trying another amendment as opposed to a new filing would be to assure that Shepherd remained the trial judge. New cases are assigned randomly to judges and the other judge in Frankfort is pro-corporate. However, the Attorney General’s Motion to Intervene was assigned to Shepherd’s colleague, and he bounced it over to Shepherd, so that risk looks to no longer be operative.