The board of directors for the Girl Scouts of Middle Tennessee wants to spin off its pension plan assets currently managed by the Girl Scouts of the United States of America.
But it needs the help of the federal district court here to do it.
The Washington, D.C.-based national organization has mismanaged — according to the GSMT complaint filed June 5 in Nashville’s District Court — its own pension plan assets, with court documents showing the plan, designed for the benefit of Girl Scout Council employees across the country, now running a $340 million deficit, down from a 2007 surplus of $150 million.
The GSUSA is accused of various breaches of fiduciary duty and financial mismanagement. The local council wants the court here to carve out its portion of assets, concerned that further mismanagement by the GSUSA might lead to increased liability and subsequent costly litigation down the road.
“The debt-free middle Tennessee council has filed a lawsuit to require Girl Scouts of the United States of America, which administers the national plan, to transfer assets and liabilities from the national plan to a new middle Tennessee pension plan that is tax-qualified and independently managed,” states a presser released by the GSMT late Wednesday.
The crux of this dispute is the construction and interpretation of certain provisions of the national Girl Scout council's retirement plan and the rights and obligations of the GSMT and the GSUSA.
“Currently, our financially sound council is tied to a national pension plan in a way that is detrimental to the financial interests of our employees and our organization," said Susan Brown, first vice chair of the board of Girl Scouts of Middle Tennessee. "We believe we are entitled to spin-off from this plan and are seeking the court’s opinion.”
The complaint further states that “….GSMT seeks relief necessary to address unauthorized and improper actions taken by GSUSA as administrator of the National Girl Scout Councils Retirement Plan in breach….of its contractual and fiduciary duty to GSMT…”
One of the alleged wrongs is GSUSA, in its role as plan administrator, unilaterally decreed that large numbers of employees of other councils, historically not plan participants, became plan participants and, according to the complaint, GSUSA amended the plan to add a voluntary retirement feature, a benefit in which GSMT cannot participate. Add to this the general downturn in the nation’s economy negatively affecting the plan’s market value and the result is a deficit of $340 million, a difference of nearly $500 million from the 2007 high of $150 million.
The GSMT contends these liabilities were unnecessary and their acquisition illegal.
If the GSUSA has breached its fiduciary liability, GSMT is liable simply by its participation in the GSUSA plan.
GSMT wants the court to order a declaratory judgment entitling it to withdraw from participation in the plan, forcing GSUSA to spin off plan assets and liabilities attributable to GSMT’s employees and former employees and other requests related. The GSMT also wants an accounting from GSUSA to “explain fully the financial condition of the Plan and reasons for the Plan’s current funding deficit.”
GSMT has also asked for injunctive relief, insulating it from funding requirements typically mandated under such plans.
GSUSA officials were not available for comment Wednesday.
Ames Davis and James Bristol, both attorneys with the Nashville office of Waller Lansden Dortch & Davis LLP, represent GSMT.
Neither attorney could be reached immediately for comment late Wednesday.
POSTDATA: WARRANTY DEEDS