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Rhode Island Public Employees Retiree Coalition v. Raimondo

Superior Court of Rhode Island

April 16, 2015

RHODE ISLAND PUBLIC EMPLOYEES RETIREE COALITION, et als.
v.
GINA RAIMONDO, IN HER CAPACITY AS GOVERNOR OF THE STATE OF RHODE ISLAND, et als.

DECISION

TAFT-CARTER, J.

Before this Court for decision are (1) the Plaintiffs' Motion for Class Certification and appointment of class representatives and class counsel pursuant to Super. R. Civ. P. 23 and (2) the Parties' Joint Motion for Preliminary Approval of the Class Settlement and to establish procedures for notice.

I

Facts and Travel

The filing of this case stems from the settlement of several consolidated cases referred to as the pension cases. The pension cases challenged the constitutionality of certain legislative actions reducing the retirement benefits of state employees, public school teachers, and certain municipal employees.

The first of the pension cases, docketed as PC 10-2859, was filed by a number of labor organizations representing state employees and teachers challenging the constitutionality of pension changes enacted in 2009 and 2010. See P.L. 2009, ch. 68, art. 7 (the 2009 Act) and P.L. 2010, ch. 23, art. 16 (the 2010 Act). During the pendency of the 2010 action, the General Assembly enacted the Rhode Island Retirement Security Act of 2011, P.L. 2011, ch. 408 and 409 (RIRSA), which further reduced the retirement benefits of public employees. Following the enactment of the RIRSA, five additional lawsuits were filed by retired or active state employees, public school teachers, and municipal employees challenging the constitutionality of the RIRSA.[1] The 2010 case and the 2012 cases all sought injunctive relief and a declaratory judgment that the 2009 and 2010 Acts and the RIRSA violated the Contract Clause, Takings Clause, and Due Process Clause of the Rhode Island Constitution. These cases were consolidated for discovery purposes.

In 2013, the litigants entered into court-ordered mediation with the Federal Mediation and Conciliation Service (FMCS). In February 2014, after thirteen months of mediation with FMCS, an agreement was reached. The settlement failed because it was not approved by one group. After the settlement failed, a trial date was set by the Court.

Three additional cases were filed after the failed settlement: two by the Cranston Police and Firefighters, in cases docketed as PC 14-4343 and PC 14-4768; and one by a group of individual retirees, in a case docketed as KC 14-345 (the Clifford case)[2]. Each case mounted challenges mirroring those of the Plaintiffs in the initial lawsuits.

Since that time, the parties have engaged in extensive discovery and pre-trial motions in preparation for the scheduled trial date of April 20, 2015. On March 9, 2015, this Court appointed a Special Master to assist the parties in resolving any discovery issues and narrowing or resolving issues for trial. The Special Master submitted his report to the Court, announcing that the parties, with the exception of the Plaintiffs in the case docketed as PC 12-3169 (active police) and the Cranston Police and Firefighters, had reached a settlement which was approved by a majority of the members of the organizations represented in these pension cases. Accordingly, this Court allowed the parties a forty-five-day implementation period.

This action was filed for the purpose of implementing the proposed settlement. The Plaintiffs have filed a Motion for Class Certification and appointment of class representatives and class counsel. The Defendants[3] do not object. In addition, the parties have filed a Joint Motion for Preliminary Approval of the Class Settlement and notice procedures.

In their Motion for Class Certification, the Plaintiffs seek to have this Court certify the following proposed Plaintiff Class:

"All persons (and/or their beneficiaries) who, on or before July 1, 2015, are receiving benefits or are participating in the State Employees, Teachers, or Municipal Employees retirement systems administered by ERSRI and all future employees, excepting only those individuals who on July 1, 2015, are participating in a municipal retirement system administered by ERSRI for municipal police officers in any municipality and/or for fire personnel of the City of Cranston."

The Plaintiffs further seek to have the Court certify the following subclasses:

• State Employees and Teachers: Participants in the Teachers and State Employees Retirement System (ERS) who are employed on or before July 1, 2015, but who have not retired as of June 30, 2015 and all future employees;
• Participants in the Municipal Employees Retirement System (MERS), other than police or fire units: Participants in MERS, other than police or fire units, employed on or before July 1, 2015, but who have not retired as of June 30, 2015 and all future employees;
• Participants in all fire MERS units, except for fire personnel of Cranston: Participants in all fire MERS units, except for fire personnel of Cranston, employed on or before July 1, 2015, but who have not retired as of June 30, 2015 and all future employees;
• Retirees: All retired members and beneficiaries of retired members who retired on or before June 30, 2015, who are receiving a retirement benefit under ERS or any MERS unit.[4]

The Plaintiffs are not seeking class certification for the following: (1) non-retired participants in the City of Cranston's fire MERS pension systems and (2) non-retired participants in a police pension system for any Rhode Island municipality participating in MERS.

The Plaintiffs propose the following individuals to serve as Class Representatives for the Plaintiff Class:

• Retirees: Roger Boudreau, Michael Connolly, and Kevin Schnell;
• Teachers/State Employees: John Lavery, Michael McDonald, Tim Kane, and Amy Mullen;
• Municipal Employees: Susan Verdon;
• Firefighters: Raymond Furtado and James Richards.

In addition to the Plaintiff Class, there is a request to have the following Defendant Class certified: all municipal entities that participate in MERS and all municipal entities that employ teachers who participate in the state employees and teachers' ERS. It is proposed that the following municipal entities serve as Class Representatives for the proposed Defendant Class: The Towns of Barrington, Middletown, and South Kingstown.

In addition to class certification, the parties, by motion, also seek preliminary approval of the proposed settlement agreement and for the Court to approve the notice procedures for the settlement.

The terms of the proposed settlement agreement are attached as Exhibit 1 of the Joint Motion for Preliminary Approval of the Class Settlement. The Court has reviewed the terms of the proposed settlement agreement and summarizes them as follows:

• A one-time COLA payment of 2% applied to the first $25, 000 of the pension benefit and that amount added to the base benefit will be paid to retirees (or their beneficiaries) who participate in a COLA program and who retired on or before June 30, 2012 as soon as administratively reasonable following the passage of the legislation based on the amount of benefit payable on the effective date of the legislation.
• For funds that are not already funded, the settlement shortens the time intervals between suspended COLA payments from once every five years to once every four years. The settlement also improves the COLA limitation for current retirees whose COLA is suspended. The settlement also requires a more favorable indexing of COLA Cap for all current and future retirees. The settlement also changes the COLA calculation to one more likely to produce a positive number and dictates that the COLA formula will be calculated annually, regardless of funding level, and when paid, the COLA will be compounded for all receiving a COLA.
• Current retirees (or their beneficiaries) who have or will have retired on or before June 30, 2015 will receive two payments: (1) a one-time $500.00 stipend (not added to the COLA base) within sixty days of the enactment of the legislation approving the terms of the settlement and (2) a one-time $500 stipend payable one year later.
• For State Workers, Teachers, and General MERS, the settlement (1) adds another calculation to reduce the minimum retirement age; (2) improves the available accrual rate for employees with twenty years or more of service as of June 30, 2012; (3) requires increased contributions by the employer to the Defined Contribution Plan for employees with ten or more years of service (but less than twenty) as of June 30, 2012; (4) waives the administration fee for any employees participating in the Defined Contribution Plan who make $35, 000 or less; and (5) adds another calculation designed to limit the impact of the "anti-spiking" rule imposed by the RIRSA on part-time employees.
• For MERS Firefighters (excluding Cranston Firefighters), the settlement (1) lowers the age and service requirements for retirement; (2) increases the accrual rate for Firefighters who retire at age fifty-seven with thirty years of service.
• For State Correctional Officers, the settlement increases the accrual rate for correctional officers with fewer than twenty-five ...

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