Embattled Patelco CU, whose former president/CEO was embroiledin a complicated legal dispute with another credit union he hadworked for, announced the appointment Friday of Erin Mendez, as thecredit union's new president/CEO.

Mendez, who served as executive vice president and chiefoperating officer at the $9.7 billion SchoolsFirst Federal CreditUnion Santa Ana, will assume leadership of the $4 billion PatelcoCredit Union in Pleasanton, Calif. by mid-August.

She replaces former Patelco president/CEO Ken Burns who announced his resignationin March to pursue new challenges. Burns said the decision toresign between him and the board was “amicable.”

In April, however, Credit Union Times revealed the $1.7billion Tech CU of San Jose had filed a complaint against Burns,who served as its president/CEO, over circumstances surrounding his2009 transition to the CEO position at Patelco CU.

According to arbitration documents filed with the AmericanArbitration Association Employment Arbitration Tribunal from 2011,Burns was ordered to pay more than $466,000 in damages andadditional $28,000 in legal fees to Tech CU to settle the creditunion's claims against him, which included breach of fiduciary dutyand fraudulent concealment.

The arbitration documents showed that Burns applied for thePatelco job, which he got in 2009, while simultaneously andunbeknownst to the Tech CU board, was spearheading an effort tomerge the two credit unions. The bid failed.

In addition to this legal dispute, Patelco was hit with a class action suit in January thataccused the credit union of misclassifying dozens of assistantbranch managers as exempt employees and failing to compensate themfor overtime and missed meal and rest breaks.

According to an attorney for the plaintiff, former Patelcoassistant branch manager Yuliya Clarke of Martinez, Calif., theplaintiff and other assistant branch managers worked long hours atthe credit union without receiving any overtime pay and were neverpaid premiums for missed meal and rest breaks. The attorney,Oakland, Calif.-based Brian Schwartz, said Clarke also alleges thegroup spent most of their time on the job working onnon-supervisory tasks, including day-to-day customer service andopening new accounts and auto loans.

A Patelco CU spokesperson disputed the lawsuit's claims, arguingthe credit union believes its assistant branch managers werecorrectly classified as exempt employees.

The big California credit union also was one of a handful ofcredit unions hit by well-publicized DDoS attacks earlier this yearthat took down its website temporarily. A new CIO was soon hired, a move the credit union said hadnothing to do with the website attacks.

Despite these issues, Mendez steps into the credit union'scorner office following Patelco's record earnings last year. Thecredit union posted an 11.04% net worth ratio at the end of2012.

“Patelco has long been known as an innovative leader in thefinancial services industry and I am honored to join the ranks ofthe prestigious few who have shaped Patelco into the trusted,growing financial institution it is today,” Mendez said. “I will bea diligent advocate for the safety and betterment of our members'financial lives.”

She has spent more than 25 years in the financial servicesindustry including 10 years at SchoolsFirst FCU. Mendez previouslyserved as senior vice president of retail banking at AmericanSavings Bank, senior vice president of operations and chiefinformation officer for Western Financial Bank, and chieftechnology officer for Health Net Inc.

“Throughout our nationwide search, Erin Mendez stood out as atrusted, seasoned leader with a passion for serving members,” saidPeter Hanelt, Patelco's board chair. “She possesses a balanced mixof leadership experience, proven and tested financial acumen andinnovative thinking that will provide the blend of practical skillsand vision we view as vital to the future of Patelco.”