The city of Philadelphia can’t claim immunity under Pennsylvania state law from a class action’s gross negligence claim, an attorney argued before the Pennsylvania Supreme Court, in an attempt to revive a $3.76 million judgment in favor of 12,000 city employees who claim that city officials mismanaged their deferred compensation plan.

In a Sept. 13, 2006, decision, the Pennsylvania Commonwealth Court reversed a trial court finding in the McShea v. City of Philadelphia class action that the city had breached the terms of the city employee pretax “Section 457″ savings plan by various acts of mismanagement. The plan provided the city would be held liable if it breached the contract by acts of gross negligence, fraud or willful misconduct, according to court papers.

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