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City of Providence v. Buck Consultants, LLC

United States District Court, D. Rhode Island

November 13, 2015

THE CITY OF PROVIDENCE, Plaintiff,
v.
BUCK CONSULTANTS, LLC, Defendant.

OPINION AND ORDER

WILLIAM E. SMITH CHIEF JUDGE

Before the Court is Defendant Buck Consultants, LLC’s (“Buck”) Motion for Summary Judgment (ECF No. 103) (“Buck’s Motion” or “Def.’s Mot.”). The City of Providence (the “City”) filed an opposition (ECF No. 108-1) (“Pl.’s Opp’n”), and Buck filed a Reply (ECF No. 115-2) (“Def.’s Reply”). The Court conducted a hearing on July 21, 2015, and both the City and Buck submitted post-hearing memoranda (ECF Nos. 134 and 137, respectively). After careful consideration, Buck’s Motion is GRANTED for the reasons set forth below.

I. Background[1]

The City is suing Buck, its longtime pension actuary, for negligence. In short, the City alleges that Buck overestimated the amount the City would save by suspending cost of living adjustments (“COLA’s”) for the City’s pension plans, causing the City to negotiate a settlement with the unions representing police officers and firefighters, as well as the association representing retired police officers and firefighters, that it would not have agreed to had it known of Buck’s error.

In February 2011, a “Municipal Finance Review Panel” convened by Mayor Angel Tavares released a report on the City’s financial condition; it found “that the City would face deficits of $70 million and $110 million in fiscal years 2011 and 2012, respectively” and that “a prime mover of the City’s fiscal crisis was its retirement system.” (Pl.’s Opp’n 3, ECF No. 108-1.) In October 2011, the Providence City Council established a subcommittee to evaluate concerns about the impact of COLA’s on the cost of the City’s pension system. On April 30, 2012, after reviewing the subcommittee’s findings, the City Council enacted an ordinance suspending COLA’s as of January 1, 2013, Chapter 2012-20 Ordinance No. 276 (the “Pension Ordinance”).

In May 2012, the City and the Providence Retired Police and Firefighters’ Association, Inc. (the “Retiree Association”) were ordered into mediation in litigation concerning the constitutionality of another ordinance requiring that retirees switch from their existing healthcare plans to Medicare, Chapter 2011-32 Ordinance No. 422 (the “Medicare Ordinance”). The mediation covered issues related to both the Medicare Ordinance and the Pension Ordinance. In addition to the City and the Retiree Association, the mediation included representatives from Local 799 of the International Association of Firefighters, AFL-CIO, and the Providence Fraternal Order of Police Lodge No. 3 (collectively, the “unions”), to represent the interests of current employees of the City.

In conjunction with the mediation, the City asked Buck to calculate the savings that would result from a ten-year suspension of COLA’s. Buck estimated that a ten-year suspension would yield $180 million in savings. Relying on that estimate, the City entered into Memoranda of Understanding (the “MOUs”) with the Retiree Association and the unions on May 22, 2012.

The City contends that Buck’s estimate negligently overestimated the City’s savings by using the incorrect start date for the COLA suspension (January 2011 instead of January 2013), and that the estimate therefore should have been $170 million instead of $180 million. The City claims that had it “been provided with a proper calculation, it would not have adopted the proposed change and it would have less financial liability.” (Pl.’s Opp’n 1, ECF No. 108-1.) Specifically, the City claims that it would have either demanded at least $10 million more in concessions from the unions, or alternatively, gone forward and enforced the Pension Ordinance, saving $80 million. (See id. at 2, 48-49, 54-55.)

II. Discussion

Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). An issue of fact is only considered “‘genuine’ if it ‘may reasonably be resolved in favor of either party.’” Cadle Co. v. Hayes, 116 F.3d 957, 960 (1st Cir. 1997) (quoting Maldonado-Denis v. Castillo-Rodriguez, 23 F.3d 576, 581 (1st Cir. 1994)). When deciding a motion for summary judgment, the court must “examine[] the entire record ‘in the light most flattering to the nonmovant and indulg[e] all reasonable inferences in that party’s favor.’” Id. at 959 (quoting Maldonado-Denis, 23 F.3d at 581).

In support of its summary judgment argument, Buck points to four allegedly fatal flaws in the City’s case. First, Buck asserts that it is undisputed that Buck actually underestimated, rather than overestimated, the City’s savings. Second, Buck claims that the experts agree that Buck’s method of calculating the City’s savings was reasonable. Third, Buck contends that the City cannot prove that Buck’s alleged miscalculation caused the City any harm.

Finally, Buck argues that the City’s damages theories are inherently speculative. The Court will address each of these arguments in turn; but it is Buck’s fourth argument that carries the day.

A. There Are Questions of Fact In Dispute Concerning Whether Buck Overestimated the City’s Savings

Buck first claims that “the testimony of both Buck’s expert and the City’s expert is that the City saved $199 million. For this reason, the City cannot prevail on its claim that Buck overestimated the savings.” (Def.’s Mot. 1, ECF No. 103 (emphasis in original).) Unsurprisingly, the City tells a different story: “What Buck is attempting to do here should horrify any actuary: Buck asks this Court to evaluate an earlier actuarial valuation based on June 30, 2011 data by comparing it to the results of a later actuarial valuation based on June 30, 2012 data.” (Pl.’s Opp’n 29, ECF No. 108-1.) The City further explains ...


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