Joseph Clifford et al.
Gina Raimondo, in her capacity as Governor of the State of Rhode Island, et al. Rhode Island Public Employees' Retiree Coalition et al.
Gina Raimondo, in her capacity as Governor of the State of Rhode Island, et al.
County Superior Court (KC 14-345), Providence County Superior
Court (PC 15-1468), Associate Justice Sarah Taft-Carter.
Plaintiffs: Thomas M. Dickinson, Esq. Edward C. Roy, Jr.,
Esq. Lynette J. Labinger, Esq. Michael B. Forte, Jr., Esq.
Carly Beauvais Iafrate, Esq. Joseph F. Penza, Jr., Esq.
Thomas R. Landry, Esq. Douglas L. Steele, Pro Hac Vice.
Present: Suttell, C.J., Goldberg, Flaherty, and Indeglia, JJ.
Gilbert V. Indeglia Associate Justice.
is the method by which we prepare today to afford the
improvements of tomorrow."
Island, unfortunately, failed to prepare for tomorrow. Its
problems all came to a breaking point in 2009, at the depth
of the recession, at which time government officials realized
they needed to address the depletion of funding in the state
and municipal employee retirement systems. As a result, in
2009 and 2010, the General Assembly amended the statutes
governing the pension system, changing the retirement age and
reducing the cost-of-living adjustment (COLA). See
P.L. 2009, ch. 68, art. 7; P.L. 2010, ch. 23, art. 16;
see also G.L. 1956 chapters 8, 9, 10, and 10.1 of
title 36; G.L. 1956 chapter 21 of title 45. In 2011, the
General Assembly took more drastic action and passed the
Rhode Island Retirement Security Act of 2011 (RIRSA), which
abridged the retirement benefits of state and municipal
employees even further. See P.L. 2011, chs. 408 and
409. In response, a number of lawsuits were filed by various
state and municipal unions on behalf of their affected
these appeals, we are asked to review a class-action
settlement that was approved by a Superior Court trial
justice in 2015. That class action was filed in April 2015
for settlement purposes only by the following parties: the
Rhode Island Public Employees' Retiree Coalition
(RIPERC); the Rhode Island American Federation of
Teachers/Retirees, Local 8037 (AFT/R); Roger Boudreau;
Michael Connolly; Kevin Schnell; the Rhode Island Council 94,
AFSCME, AFL-CIO; the National Education Association-Rhode
Island (NEARI); John Lavery; Michael McDonald; Jason Kane;
Amy Mullen; Susan Verdon; the Rhode Island State Association
of Firefighters; Raymond Furtado; and James Richards
(collectively, the Union plaintiffs). The class action was
filed against both state and municipal defendants. The state
defendants are the following: Gina M. Raimondo, in her
capacity as Governor of the State of Rhode Island; Seth
Magaziner, in his capacity as General Treasurer of the State
of Rhode Island; and the Employees' Retirement System of
the State of Rhode Island, by and through the Rhode Island
Retirement Board, by and through Magaziner, in his capacity
as Chairman of the Retirement Board; and Frank J. Karpinski,
in his capacity as Secretary of the Retirement Board
(collectively, the state defendants). The municipal
defendants are the towns of Barrington, Middletown, and South
Kingstown (collectively, the municipal defendants). While the
Union plaintiffs approved of the settlement, filing briefs in
this appeal in support of the state defendants, two groups of
class-member plaintiffs appealed the trial justice's
approval of the settlement in two separate actions, now
consolidated on appeal. Those opponents are "the
Clifford plaintiffs" and "the Retiree
plaintiffs." For the reasons set forth in this opinion,
we affirm the judgment of the Superior Court.
State Employees' Retirement System
Rhode Island, the state retirement board administers the
state employees' retirement system-the Employees'
Retirement System of Rhode Island (ERSRI)-and the municipal
employees' retirement system-the Municipal Employees
Retirement System (MERS). See G.L. 1956 §§
36-8-2 and 36-8-4(a). MERS, "which includes locally
funded plans[, ]" was established in 1951. Andre S.
Digou, A View of the Rhode Island Pension Landscape:
The Potential Reform of Local Pension Plans Under
the Preemption Doctrine, 19 Roger Williams U. L. Rev.
740, 741 (2014). Rhode Island "pools plan funds for
investment purposes, " and the Rhode Island general
treasurer chairs the retirement board; he or she "is
responsible for the [system's] investment decisions and
setting asset allocation strategies * * *." Id.
2009, the General Assembly enacted legislation that
effectively redefined the service and/or age requirements for
present employees. See P.L. 2009, ch. 68, art. 7.
The following year, the General Assembly made further
amendments, curtailing the COLA to "the first * * * $35,
000 * * * of retirement allowance, " and requiring that
it not "commence [until] the third (3rd) anniversary of
the date of retirement or when the retiree reaches age
sixty-five (65), whichever is later." P.L. 2010, ch. 23,
2011, as part of its legislative findings in passing RIRSA,
the General Assembly explained its reasons for adopting the
act as follows:
"(1) The State of Rhode Island has one of the lowest
funded and most vulnerable statewide pension systems in the
"* * *
"* * *
"(4) The state retirement system's unfunded
liability exceeds $7 billion as measured by well-established
and accepted public accounting standards.
"* * *
"(6) Annual government contributions to ERSRI more than
doubled between fiscal years 2005 and 2011 and those
contributions are estimated to double again in fiscal year
2013 to exceed over $600 million. Without immediate and
comprehensive legislative action future contributions will
continue to grow dramatically and exceed $1 billion * * * in
necessary annual contributions.
"(7) If pension contributions continue to grow at the
current and projected levels, they will be unaffordable and
the pension security of our valued public employees will be
placed in jeopardy." P.L. 2011, ch. 408, § 1.
response to all of these fiscal issues facing the state,
RIRSA included a minimum retirement age for certain employees
and also made changes to the COLAs. P.L. 2011, ch. 408,
§ 7. Specifically, and at issue in this appeal, RIRSA
stopped paying annual COLAs "until the state's
pension plans [were] 80% funded overall[, ]" which, as
expressed by both sets of plaintiffs at oral argument in this
appeal, is indefinite. Christopher D. Hu, Reforming
Public Pensions in Rhode Island, 23 Stan. L.
& Pol'y Rev. 523, 527 (2012).
Filed by Unions and Retiree Associations
the passage of RIRSA, state and municipal employees suffered
a severe diminution of their anticipated retirement benefits.
This led to the filing of a number of lawsuits commencing in
2010 that challenged the enactment of the 2009 and 2010
amendments and RIRSA, which came to be known as "the
first lawsuit was filed in 2010 by a number of unions
representing state employees and teachers, alleging that the
2009 and 2010 amendments violated the Contract, Takings, and
Due Process Clauses of the Rhode Island Constitution. Then,
in 2012, five lawsuits were brought on behalf of various
unions and retirement associations challenging RIRSA,
alleging the same constitutional claims as alleged in the
2013, all parties involved in both the 2010 and 2012 cases
were ordered to attend mediation. After months of mediation,
the parties reached a proposed settlement in February 2014,
subject to approval by all members of the unions. The
parties, however, failed to secure the necessary vote from
the members, and so the litigation continued. In 2014, three
more cases alleging similar claims were filed, one of which
was the so-called "Clifford" case, by a group of
individual retirees. The lawsuits were eventually
parties engaged in extensive discovery-defendants produced
more than 700 gigabytes of electronic documents and over four
million pages of documents. The parties began preparation for
a trial scheduled on April 20, 2015. In March 2015, the trial
justice assigned a special master to oversee any remaining
discovery issues; after the special master had worked with
the parties, he announced that all parties except one group
of plaintiffs had reached a settlement approved by a
majority of the group members.
on April 13, 2015, the parties filed a class-action lawsuit
to implement the settlement, move for class certification,
and appoint class representatives and class counsel. The
parties also sought initial approval of the settlement terms
and approval of notice procedures of the settlement to all
members of the class action.
April 16, 2015, after hearing argument on the motions, the
trial justice issued a written decision granting the Union
plaintiffs' motion for class certification in accordance
with Rule 23(b)(2) of the Superior Court Rules of Civil
Procedure, designating the class representatives and
appointing class counsel for plaintiffs and defendants.
plaintiff class was defined as follows:
"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
the trial justice certified a number of plaintiff subclasses,
described as follows:
"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
trial justice also certified the following defendant class:
"All municipal entities that participate in MERS and all
municipal entities that employ teachers who participate in
the state employees and teachers' ERS."
of her decision, the trial justice summarized the terms of
the proposed settlement 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 years of service as of June 30, 2012.
"The settlement reduces the impact of an early
"The settlement allows Municipalities to
're-amortize'; that is, partially refinance, to be
able to pay for the ...