LOS ANGELES — The $1.8 billion City of Los Angeles Deferred Compensation Plan's decision to hire Nationwide Retirement Solutions to replace Great-West Retirement Services as plan administrator has gotten contentious.
Supporters of Denver-based Great-West said the firm supplied the services the board wanted at a lower cost than Columbus, Ohio-based Nationwide, while that firm's supporters said Nationwide provided far superior services for a nominal fee increase.
The Los Angeles City Council subsequently vetoed the decision to hire Nationwide, and sent the matter back to the board to reconsider.
Michael Galvin, part of the four-member board majority when it voted on Aug. 17 to hire Nationwide, has filed a lawsuit against the city, claiming the City Council did not have the constitutional authority to veto the board's decision.
Brian Perry is a deputy to City Councilman Dennis Zine, who led the successful veto effort. He said the city attorney "did not believe at the time of our action that there would be any problem with it." He said the city charter gives the City Council the legal right to veto contracts.
While Mr. Galvin was a member of the plan's board when the decision to hire Nationwide was made, he is no longer. The city's unions, which he represented, voted Sept. 24 to replace him with Richard Kraus.
Mr. Galvin is fighting his removal, claiming correct procedures weren't followed. In a letter to Shelley Smith, chairwoman of the board, Mr. Galvin said replacing him with Mr. Kraus is "a serious violation of law." He said the LA City Coalition of Unions that voted to replace him on the board represents only half of the organizations that elected him.
Julie Butcher, general manager of Service Employees' International Union Local 37 of Los Angeles, said there was "an absolutely legally constituted meeting of the unions when he was replaced," and that Mr. Galvin has no legal basis to fight his removal.
Ms. Butcher said Mr. Galvin's vote in favor of Nationwide and the higher fees it proposed to charge for its services was one of the reasons for the decision to replace him.