Abbott v. City of Neb.

• Decision Date: 03 December 2021
• Docket Number: No. S-20-700.,S-20-700.
• Citation: 310 Neb. 496,967 N.W.2d 95
• Parties: Christopher ABBOTT et al., appellants, v. CITY OF BELLEVUE, Nebraska, appellee.
• Court: Nebraska Supreme Court

310 Neb. 496

967 N.W.2d 95

Christopher ABBOTT et al., appellants,

v.CITY OF BELLEVUE, Nebraska, appellee.

No. S-20-700.

Supreme Court of Nebraska.

Filed December 3, 2021

Thomas P. McCarty and Gary L. Young, of Keating, O'Hara, Nedved & Peter, P.C., L.L.O., Lincoln, for appellants.

A. Bree Robbins, Bellevue City Attorney, for appellee.

Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, Papik, and Freudenberg, JJ.

Papik, J.

After the City of Bellevue, Nebraska (City), increased the amount it regularly deducted from its police officers’ paychecks to fund their retirement plan, a group of officers and their union filed suit alleging that this action violated their rights under the U.S. and Nebraska Constitutions. With respect to some officers, the district court found that the City unconstitutionally impaired its contractual obligations. As a remedy, the district court ordered the City to insert certain language into the document governing the retirement plan. Those officers and their union appeal. They contend that the language the district court ordered the City to insert into the retirement plan will actually reduce their retirement benefits. They also argue that the district court erred by finding that they were not "prevailing part[ies]" for purposes of 42 U.S.C. § 1988 (2012) and thus not entitled to attorney fees and costs. We find these arguments have merit. We affirm in part as modified, and in part reverse and remand for further proceedings.

BACKGROUND

Earlier Dispute Over Retirement Benefits.

This is not the first time the City has found itself in litigation with its police officers over retirement benefits. The current dispute arises out of an attempt to resolve prior litigation, and thus, we begin our review of the relevant background there.

In 2009, the Bellevue Police Officers Association/Fraternal Order of Police Lodge No. 59 (BPOA) filed a lawsuit against the City in the Sarpy County District Court. The BPOA sought a declaration that a provision of a collective bargaining agreement between the BPOA and the City regarding retirement benefits was valid and enforceable.

In the provision at issue, the City agreed to provide its police officers retirement benefits that exceeded those described in the Police Officers Retirement Act (Retirement Act). See Neb. Rev. Stat. § 16-1001 et seq. (Reissue 2012 & Cum. Supp. 2020). Then, as now, the Retirement Act required the establishment of a pension plan for police officers of cities of the first class such as the City. See § 16-1001. Both the officers and the City were required to make contributions to the pension plan described in the Retirement Act. See §§ 16-1005(1) and 16-1006. At the time it was enacted, the Retirement Act required officers to contribute 6 percent of their salary to a retirement account and the City to make a matching contribution. § 16-1005(1) (Reissue 1983). See 1983 Neb. Laws L.B. 237, § 5. Upon retirement, the officer would receive the accumulated value of that account. §§ 16-1002(5), 16-1007(1), and 16-1013(1) (Reissue 1983). See 1983 Neb. Laws L.B. 237, §§ 2, 7, and 13.

In the 2009 litigation, the City took the position that the portion of the collective bargaining agreement in which it agreed to provide officers retirement benefits exceeding those provided for in the Retirement Act was unenforceable. The City contended that the Retirement Act did not allow it to provide benefits other than those set forth in the Retirement Act.

The district court granted a motion for summary judgment filed by the BPOA. In its order, it found that the Retirement Act "simply sets forth the minimum benefits that a City of the First Class must provide to its police force. It does not prevent a city from offering additional benefits to officers."

The BPOA and the City then entered into a settlement agreement covering certain officers. Under the settlement agreement, covered officers would contribute 6 percent of their salary to their retirement account and the City would make a matching contribution. To any covered officer who retired after reaching 55 years of age and providing at least 25 years of service, the City agreed to pay either (1) the total sum of the officer's retirement account or (2) a payment based upon a percentage of the officer's compensation in his or her last 5 years preceding retirement, whichever is greater. In this opinion, we will refer to the first type of benefit mentioned above as a "defined contribution payment" and the second as a "defined benefit payment."

In the case of every officer who has retired since the settlement agreement became effective, the value of the defined benefit payment has exceeded the value of the defined contribution payment. It has been the City's practice to provide the defined benefit payment to retiring officers by distributing the officer's retirement account to the officer and then making an additional payment equal to the difference between the value of the retirement account and the value of the defined benefit payment.

Amendments to Retirement Act and City's Response.

After the parties entered into the settlement agreement, the Retirement Act was amended. The amendments increased the required contribution by both officers and cities from 6 percent to 6½ percent effective October 1, 2013, and to 7 percent effective October 1, 2015. See § 16-1005(1) (Reissue 2012).

In response to the amendments to the Retirement Act, the Bellevue City Council adopted amendments to the City's Police Retirement Plan and Trust (Retirement Plan). The amendments increased the contribution rates for both the officers and the City, so that they were the same as those set forth in the amendments to the Retirement Act. After the approval of the amendments to the Retirement Plan, the City increased deductions from officers’ paychecks and its corresponding matching payments as provided in the amendments to the Retirement Plan.

After the City amended the Retirement Plan, when officers covered by the settlement agreement retired, the City continued its practice of paying the defined benefit payment by distributing the officer's retirement account and then making an additional payment equal to the difference between the value of the retirement account and the defined benefit payment.

Current Lawsuit.

In 2017, the BPOA and a number of its officers filed a lawsuit against the City under 42 U.S.C. § 1983 (2012) and Nebraska's Uniform Declaratory Judgments Act, Neb. Rev. Stat. § 25-21,149 et seq. (Reissue 2016). The lawsuit alleged that the City had violated the Contracts Clauses and Takings Clauses of the U.S. and Nebraska Constitutions by increasing the officers’ contribution rates without providing any corresponding benefit. In their operative complaint, the BPOA and its officers sought an order enjoining the City from continuing to make deductions from the officers’ salaries in excess of 6 percent; an order directing the City to disgorge funds it had previously deducted from the officers’ salaries in excess of 6 percent, along with any investment income earned on those funds; and declarations that the City had violated the Contracts and Takings Clauses of the U.S. and Nebraska Constitutions. The operative complaint also asserted that the BPOA and its officers were entitled to be awarded all damages arising out of the City's actions and an award of costs and attorney fees pursuant to § 1988.

District Court's Orders.

The parties eventually filed cross-motions for summary judgment. After a hearing, the district court issued an order in April 2020 in which it found that the motion of the BPOA and the officers should be granted in part. In its order, the district court, relying on prior cases from this court, stated that public employee retirement plans are contracts protected from impairment by the Contracts Clauses of the U.S. and Nebraska Constitutions. See, Calabro v. City of Omaha , 247 Neb. 955, 531 N.W.2d 541 (1995) ; Halpin v. Nebraska State Patrolmen's Retirement System , 211 Neb. 892, 320 N.W.2d 910 (1982). The district court concluded that the officers’ rights under the settlement agreement were impaired by the City's increased deductions from the officers’ salaries. The district court reasoned that after the increase in the officers’ contributions, the defined benefit payment the officers bargained for in the settlement agreement would have the same value, but would come at a higher cost to the officers.

Although the district court's April 2020 order determined that the BPOA and its officers were entitled to some relief, it withheld entry of judgment. Rather than entering specific relief, the district court requested that counsel for the parties provide suggestions as to the relief they believed was appropriate in light of the district court's findings.

In June 2020, after the parties submitted proposals as to appropriate relief, the district court issued another order. This order granted in part and denied in part the parties’ respective motions for summary judgment. It found in favor of the BPOA and the officers based on their Contracts Clause claim and ordered certain language inserted into the Retirement Plan. Without expressly ruling on the Takings Clause claim or the request for attorney fees, the district court ordered all remaining claims denied and dismissed.

The BPOA and the officers filed a timely motion to alter or amend in response to the district court's June 2020 order. Relevant to this appeal, they contended that the language the district court ordered the City to insert into the Retirement Plan contained conflicting descriptions of the City's obligations in the event a current officer elected to receive the defined benefit payment upon retirement and also improperly reduced the amount a current officer would receive if he or she elected to receive the defined contribution payment. The BPOA and its officers also asked that the district court make "express findings" regarding their "claims under 42 U.S.C. § 1983"...