Leheny v. City of Pittsburgh

• Decision Date: 04 May 1999
• Docket Number: Nos. 98-3356,98-3405,98-3364,s. 98-3356
• Citation: 183 F.3d 220
• Parties: (3rd Cir. 1999) THOMAS E. LEHENY; JAMES R. RAMSEY; ARTHUR MARUNICH, for themselves and others similarly situated Thomas E. Leheny, Appellant v. CITY OF PITTSBURGH; POLICEMEN'S RELIEF AND PENSION FUND OF THE CITY OF PITTSBURGH; FRATERNAL ORDER OF POLICE, FORT PITT LODGE NO. 1 City of Pittsburgh, Appellant/3405 , 98-3364, 98-3405 Argued:
• Court: U.S. Court of Appeals — Third Circuit

Page 220

183 F.3d 220 (3rd Cir. 1999)

THOMAS E. LEHENY; JAMES R. RAMSEY; ARTHUR MARUNICH, for themselves and others similarly situated Thomas E. Leheny, Appellant v. CITY OF PITTSBURGH; POLICEMEN'S RELIEF AND PENSION FUND OF THE CITY OF PITTSBURGH; FRATERNAL ORDER OF POLICE, FORT PITT LODGE NO. 1

City of Pittsburgh, Appellant Nos. 98-3356/3405

Nos. 98-3356, 98-3364, 98-3405

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Argued: May 4, 1999

Decided July 7, 1999

On Appeal from the United States District Court for the Western District of Pennsylvania (D.C. No. 94-cv-00866) District Judge: Hon. Maurice B. Cohill, Jr. [Copyrighted Material Omitted] Joseph S. Hornack (argued), Healey, Davidson & Hornack, Fifth Floor Law & Finance Building, Pittsburgh, PA 15219, ATTORNEY FOR APPELLEES/CROSS-APPELLANTS

Brian P. Gabriel (argued), Assistant City Solicitor, City of Pittsburgh Department of Law Firm #046, 313 City-County Building, 414 Grant Street, Pittsburgh, PA 15219, ATTORNEY FOR APPELLANTS/CROSS-APPELLEES

Before: ALDISERT, WEIS and STAPLETON, Circuit Judges,

OPINION OF THE COURT

ALDISERT, Circuit Judge.

These cross-appeals by the City of Pittsburgh and three retired police officers (the "Retirees") require us to decide whether a City policy that offsets pension benefits for disabled retired police officers by worker's compensation benefits violates equal protection and due process rights and constitutes a violation of the Americans with Disabilities Act, 42 U.S.C. S 12101 et seq. ("ADA"). The district court dismissed the Retirees' ADA claim but submitted the constitutional claims to a jury that awarded compensatory damages.

In its appeal from the judgment on the jury verdict, the City contends that the court erred in not granting judgment as a matter of law on the equal protection and due process claims. In their appeal, the Retirees contend that the court erred in dismissing their ADA claim. We have jurisdiction pursuant to 28 U.S.C. S 1291.

We hold that the district court correctly dismissed the Retirees' ADA claim but erred when it failed to grant judgment as a matter of law in the City's favor on the equal protection and due process claims. Accordingly, we will affirm in part and reverse in part.

I.

The Retirees are former police officers for the City of Pittsburgh. Each suffered a work-related injury and received his full rate of salary pursuant to the Heart and Lung Act, 53 P.S. S 637, until approximately December 14, 1992.¹ On December 14, 1992, Thomas E. Leheny and James R. Ramsey signed documents acknowledging their permanent disability, and therefore became ineligible for Heart and Lung Act benefits but eligible to collect worker's compensation and reduced pension benefits. These appeals pertain to the amount of pension benefits for which the Retirees became eligible.

Prior to 1992, police officers who were unable to return to work due to injury remained on the City's active payroll and received 100% of their salary pursuant to the Heart and Lung Act. These payments placed a significant strain on the City's fiscal integrity.

The City's financial concerns were addressed in March 1992, after an impasse had been reached in the collective bargaining process with the Fraternal Order of Police (F.O.P.), when an arbitration award was issued that eventually became a part of a collective bargaining agreement. Officers meeting age and service eligibility requirements could choose to be placed on one of two lists of officers who wished to retire prior to the end of 1995 under an "early retirement incentive plan." List A would consist of all officers seeking immediate retirement. List B would consist of all officers who wished to retire before December 31, 1995, when eligibility for this early retirement incentive would end. Officers on List B could be retired by the City at any time after all officers on List A had been retired, but were guaranteed retirement by December 31, 1995.

Officers selecting to be placed on either list were required to fill out a Retirement Incentive Window Irrevocable Application Form prior to September 1, 1992. See App. at 115 (arbitration award provision), 121 (letter from Fraternal Order of Police to officers describing procedure for early retirement incentive). The Retirees chose to be placed on List B.

Pursuant to the arbitration award, officers on either list who were at least 50 years of age and had at least 25 years of service were given the opportunity to receive an enhanced retirement benefit equal to 75% of their average monthly pay without service increments. App. at 115-116. For disabled officers who were receiving worker's compensation, the award provided that:

An employee who is receiving worker's compensation benefits can receive up to 66 2/3 [%] of pay from worker's compensation and receive 50% of average monthly pay plus service increments under the Police Pension Plan without any offset. . . . However, an employee who is already eligible on retirement for combined benefits in excess of 75% of average monthly pay and who elects to retire pursuant to the retirement incentive shall not be entitled to any additional pension benefit from the retirement incentive provided for in this Award. In the event that such employee's worker's compensation benefits are reduced or eliminated after retirement, the employee shall be entitled to such pension enhancement as is necessary to maintain a benefit, including worker's compensation, if any, which is 75% of average monthly pay at retirement.²

App. at 116. Officers who accepted this enhancement but continued to receive worker's compensation were not deemed "voluntary quits."

The Retirees were requested to sign supplemental agreements acknowledging their permanent disability. By signing these agreements, the Retirees agreed to the termination of their benefits under the Heart and Lung Act, which provided 100% salary payments. In place of these benefits, the Retirees would be eligible to receive worker's compensation benefits, which provide up to 66 2/3% of the worker's salary. The City planned to submit these agreements to an office in Harrisburg to terminate payment of Heart and Lung Act benefits.

The City had retained Sedgwick James, an independent agency retained by the City for disability claims management service, to process these claims. Leheny and Ramsey were shown a letter from Sedgwick James that directed the F.O.P.'s attorney to contact certain officers and have them sign supplemental agreements acknowledging that they were permanently disabled. This letter stated that "[if anyone decides not to sign the agreement, then I [Kelly Ryan, a Sedgwick James employee] will have no recourse but to file a Termination with the Heart and Lung Panel." App. at 954.

Leheny and Ramsey signed the agreements. They testified at trial that they interpreted the letter to mean that they would lose all of their work-related and injury-related benefit payments if they did not sign the supplemental agreement. They contended that they were not informed that Ryan had no authority to terminate or file a termination of Heart and Lung Act benefits, nor were they made aware that they could decline to sign the agreement and then go before an arbitrator if the City filed a termination petition. Retiree Arthur Marunich, however, refused to sign the supplemental agreement, and received a hearing in front of an arbitrator in accordance with the arbitration award's grievance procedure.³

After Leheny and Ramsey signed the supplemental agreements, they applied for the 75% pensions provided for by the arbitration award. In January 1993, the City's Policemen's Relief and Pension Fund (the "Fund") approved Leheny's and Ramsey's applications for retirement benefits. However, instead of awarding the 75% pension, the Fund awarded Leheny and Ramsey the 50% pension in accordance with the provisions of the arbitration award because they were receiving worker's compensation benefits.

After exhausting administrative procedures, the Retirees filed a complaint in the district court, alleging, inter alia, that the City, the F.O.P. and the Fund had violated their rights to equal compensation under the ADA, as well as their equal protection and due process rights.

The Retirees filed a motion for class certification on September 2, 1994. On January 27, 1995, the City moved for summary judgment. The Retirees also filed a motion for partial summary judgment. These motions were assigned to a Magistrate Judge, who conducted a hearing and subsequently issued her report and recommendation from the bench. She recommended that: (1) the Retirees' partial motion for summary judgment be denied; (2) the City's motion for summary judgment be granted as to the Retirees' ADA claim, but be denied in all other respects; and (3) the motion for class certification be denied as moot if the district court agreed that the ADA claim should be dismissed.

The district judge adopted and approved the report and recommendation in toto, and set the matter for trial. Another district judge presided at the trial. At the close of the Retirees' case-in-chief, the City moved for judgment as a matter of law. The district court reserved ruling on the motion. At the close of all evidence, the City renewed its motion for judgment as a matter of law. Once again, the court reserved ruling.

The jury issued special verdicts, finding that: (1) the F.O.P. was not acting under color of state law and therefore could not be held liable on the constitutional violation claims; (2) the City violated Leheny's and Ramsey's due process rights when it forced them to sign the supplemental agreements; (3) Leheny and Ramsey were entitled to compensatory damages in the amounts of $15,000 and $22,000 respectively for the due process violations; and (4) the City deprived the Retirees of their equal protection rights when it determined that the Retirees were only entitled to a 50% pension and 66 2/3%...