Andrews v. Lombardi
Decision Date | 01 July 2020 |
Docket Number | No. 2017-269-Appeal., No. 2017-263-Appeal.,No. 2017-262-Appeal.,KC 13-1129, No. 2017-264-Appeal.,2017-262-Appeal. |
Citation | 231 A.3d 1108 |
Parties | Manuel ANDREWS, Jr. et al. v. James LOMBARDI, in his capacity as Treasurer of the City of Providence, Rhode Island. |
Court | Rhode Island Supreme Court |
Annual cost-of-living adjustments (COLAs) to the pension benefits for members of the Providence police and fire departments have been the subject of protracted litigation for many years. Such litigation has resulted in several settlement agreements and consent judgments entered in the Providence County Superior Court and opinions issued by this Court resolving legal issues raised by changes to retirement benefits to employees of the City of Providence. Over a decade ago we expressed our fervent hope that we were marking the final chapter in this saga with our opinion in Arena v. City of Providence , 919 A.2d 379 (R.I. 2007).1 Arena , 919 A.2d at 381. Alas, the 21st century has brought several economic challenges and the fiscal condition of the City of Providence (the City) in 2011 necessitated changes in several areas of the City's services and obligations. In 2011, when Angel Taveras took office as Mayor of the City, the realities of the City's pension obligations to its retirees and the condition of its pension fund were soon uncovered and led the City's administration to the conclusion that the system as structured for the then-retirees was unsustainable.
In response, the City enacted an ordinance in 2012 suspending the COLAs for retired members of its police and fire departments until the pension fund achieved a 70 percent funding level. Retiree groups and union groups initiated litigation to bar enforcement of the new ordinance. After engaging in court-ordered mediation, most retirees entered into a settlement which allowed for a ten-year suspension of their COLA benefit. The settlement ripened into a consent judgment after the trial justice determined that the proposed settlement was fair and reasonable. Several dozen individuals opted out of the settlement agreement, however, and instead pursued their civil claims through the litigation process. These claims culminated in a bench trial on the so-called "opt-out" plaintiffs' claims for breach of contract and violation of the Contract Clauses of the United States and Rhode Island Constitutions. The trial justice ultimately found in favor of the City on all of plaintiffs' claims.
The plaintiffs now appeal from the final judgment, arguing that the trial justice erred by finding in favor of the City on plaintiffs' Contract Clause claim and by granting summary judgment prior to trial in favor of the City on plaintiffs' claims for violation of the Takings Clause and for promissory estoppel. For the reasons set forth herein, we affirm the judgment in part and vacate the judgment in part.
In 1988, Buck Consultants, LLC (Buck), the actuarial consulting firm that the City had retained, reported that the retirement system was at a 62 percent funding level, with plan assets valued at $196.46 million and an unfunded actuarial liability of $119.9 million. In 1989, the Providence Retirement Board made changes to its employees' pension benefits, including an increase in the minimum monthly payment and an increase in the compounding COLA to 5 and 6 percent per year. In January 2011, Angel Taveras was sworn in as the City's Mayor. He convened a Municipal Finances Review Panel (MFRP) "to review the City's budget for fiscal years ending June 30, 2011 and June 30, 2012." The five MFRP members included Michael D'Amico, then the City's Director of Administration; Ernest Almonte, former Rhode Island Auditor General; Dennis Hoyle, the Rhode Island Auditor General; Alex Prignano, then Director of Finance for the City; and Kenneth Richardson, certified public accountant.
At the end of February 2011, the MFRP released a report concluding that: (1) 27 percent of the City's retirees were receiving 5 or 6 percent compounding COLAs, (2) the June 2010 actuarial valuation of the City's pension system was 34 percent funded, (3) the fiscal year ending in June 2011 reflected a $69.9 million structural budgetary deficit, and (4) the fiscal year ending in June 2012 reflected a projected $109.9 million structural budgetary deficit. The report also suggested several ways to address the underfunded pension system. In response, Mayor Taveras took several actions to increase revenue and cut costs to the City, "including, but not limited to, the following:
As this Court has recently summarized:
Cranston Police Retirees Action Committee v. City of Cranston , 208 A.3d 557, 566 (R.I. 2019) ( Cranston ) (brackets omitted), cert. denied , ––– U.S. ––––, 140 S. Ct. 652, 205 L.Ed.2d 386 (2019).
In October 2011, the City formed a five-member Subcommittee on Pension Sustainability (SPS). The SPS issued a report and recommendations in April 2012, finding that the Mayor's actions had resulted in a reduction to the City's structural deficit by $70 million. The SPS's seven recommendations included:
On April 30, 2012, the Providence City Council passed an ordinance, amending Chapter 17, Article VI of the Providence Code of Ordinances, "suspend[ing] future COLAs for all retired City employees and any beneficiary of a retired City employee who receives a service or disability pension allowance until the system achieved a seventy (70%) funded level" (the 2012 Pension Ordinance or the ordinance). See City of Providence Ch. 2012-20, Ordinance No. 276 (Apr. 30, 2012). The City's pension fund had not been at a 70 percent funding level since at least 1970 and the system's "unfunded liability was approaching $900 million[.]" The 2012 Pension Ordinance stated, in pertinent part, that:
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