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Philadelphia Orchestra Association vs. American Federation of Musicians

by: Rebel - Havertown, PA
started: 08/11/11 9:33 am | updated: 08/11/11 9:33 am

Lawyers for the Philadelphia Orchestra Association and the pension fund of the American Federation of Musicians were still butting heads in U.S. Bankruptcy Court over the union's demand for deeper layers of documentation relating to the orchestra's $120 million endowment.

Much of the session focused on a line-by-line examination of many of the union's 50 or so requests for information in its effort to prove that portions of the endowment were not restricted by donors to remain nest-egg money in perpetuity.

The union is arguing that parts of the endowment should be used to satisfy an estimated $23 million to $35 million liability owed to the union that would be triggered if the association made good on its threat to withdraw from the pension fund.

Judge Eric L. Frank asked lawyers from both sides to strike a deal, but reserved a hearing date to consider arguments if they cannot.

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Association lawyer Lawrence G. McMichael broached a kind of procedural retaliation, saying the association might request a financial probe of its own into the management of the national union's pension fund.

Judge Eric L. Frank questioned the logic of such a move, and the subject did not come up again during the nearly four-hour hearing.

Much of the session focused on a line-by-line examination of items such as board minutes, endowment pledge forms, and operating statements in its effort to prove that portions of the endowment were not restricted by donors to remain nest-egg money in perpetuity.

When the hearing turned to the union's requests for the association's hard drives in an effort to obtain e-mails and other electronic messages relating to the handling of endowment money, McMichael recited his oft-repeated response: such a production of information would be costly and burdensome.

The union's thinking, he said, was to "run up [the association's] costs, because we don't want them out of our plan."

"We've been told they're going to make this as expensive and painful as possible," orchestra chairman Richard B. Worleysaid during a court recess. "And I can tell you, they're messing with the wrong guy."

On the question of capturing the orchestra's e-mails and other electronic messages and sorting through them - a process McMichael estimated would cost $250,000 in technical and legal fees - the judge, in the end, punted. He asked lawyers from both sides to strike a deal, but reserved a hearing date to consider arguments if they cannot.

Frank also outlined a series of hearings during the next three weeks to further define the scope of the union's probe.

He started out the hearing with admonishments for both sides in the orchestra's Chapter 11 case. He said that each recently had filed documents with the court and requested that they be sealed. But, he said, they contained almost no information to justify keeping them from the public record. He said he was inclined to unseal them.

Noting that one document filed by the union suggested that the association had satisfied a request only at the last minute, he said that the association had satisfied the demand in exactly the manner asked for by the union.

Citing "spin, advocacy, and half-truths," the judge said, "I don't want half-truths going forward."

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