Me. Ass'n of Retirees v. Bd. of Trs. of the Me. Pub. Emps. Ret. Sys.

• Decision Date: 24 June 2013
• Docket Number: No. 1:12–cv–59–GZS.,1:12–cv–59–GZS.
• Parties: MAINE ASSOCIATION OF RETIREES, et al., Plaintiffs, v. BOARD OF TRUSTEES OF the MAINE PUBLIC EMPLOYEES RETIREMENT SYSTEM, et al., Defendants.
• Court: U.S. District Court — District of Maine

954 F.Supp.2d 38

MAINE ASSOCIATION OF RETIREES, et al., Plaintiffs,

v.BOARD OF TRUSTEES OF the MAINE PUBLIC EMPLOYEES RETIREMENT SYSTEM, et al., Defendants.

No. 1:12–cv–59–GZS.

United States District Court,

D. Maine.

June 24, 2013.

James T. Kilbreth, George Royle, V, Drummond Woodsum, Portland, ME, Carol J. Garvan, Jeffrey Neil Young, McTeague, Higbee, Case, Cohen, Whitney & Toker, P.A., Topsham, ME, for Plaintiffs.

Timothy C. Woodcock, Adria Yvonne Larose, Eaton Peabody, Bangor, ME, for Defendants.

ORDER ON MOTION TO DISMISS & FOR SUMMARY JUDGMENT

GEORGE Z. SINGAL, District Judge.

Before the Court is Defendants' Motion to Dismiss and for Summary Judgment (ECF No. 58). After the Motion was fully briefed, the Court held oral argument on May 14, 2013. Having considered all of the parties' written and oral submissions, the Court now GRANTS the Motion for reasons explained herein.

I. LEGAL STANDARD¹

Generally, a party is entitled to summary judgment if, on the record before the Court, it appears “that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). An issue is “genuine” if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. at 248, 106 S.Ct. 2505. A “material fact” is one that has “the potential to affect the outcome of the suit under the applicable law.” Nereida–Gonzalez v. Tirado–Delgado, 990 F.2d 701, 703 (1st Cir.1993) (citing Anderson, 477 U.S. at 248, 106 S.Ct. 2505) (additional citation omitted).

The party moving for summary judgment must demonstrate an absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In determining whether this burden is met, the Court must view the record in the light most favorable to the nonmoving party and give that party the benefit of all reasonable inferences in its favor. Santoni v. Potter, 369 F.3d 594, 598 (1st Cir.2004).

Once the moving party has made this preliminary showing, the nonmoving party must “produce specific facts, in suitable evidentiary form, to establish the presence of a trialworthy issue.” Triangle Trading Co. v. Robroy Indus., Inc., 200 F.3d 1, 2 (1st Cir.1999) (citation and internal punctuation omitted); see alsoFed.R.Civ.P. 56(e). “Mere allegations, or conjecture unsupported in the record, are insufficient.” Barros–Villahermosa v. United States, 642 F.3d 56, 58 (1st Cir.2011) (quoting Rivera–Marcano v. Normeat Royal Dane Quality a/s, 998 F.2d 34, 37 (1st Cir.1993)); see also Wilson v. Moulison N. Corp., 639 F.3d 1, 6 (1st Cir.2011) (“A properly supported summary judgment motion cannot be defeated by conclusory allegations, improbable inferences, periphrastic circumlocutions, or rank speculation.”) (citations omitted). “As to any essential factual element of its claim on which the nonmovant would bear the burden of proof at trial, its failure to come forward with sufficient evidence to generate a trialworthy issue warrants summary judgment to the moving party.” In re Spigel, 260 F.3d 27, 31 (1st Cir.2001) (quoting In re Ralar Distribs., Inc., 4 F.3d 62, 67 (1st Cir.1993)).

II. LEGISLATIVE BACKGROUND

At the center of the pending dispute is the Maine Public Employees Retirement System (“MePERS”), a program established under Maine law for the purpose of providing retirement benefits for state employees and public school teachers, among others. 5 M.R.S.A. § 17101. State employees and public school teachers are “members” of MePERS during their public employment, and required to make mandatory contributions into a pension fund. Id. §§ 17651, 17701 et seq. Membership in MePERS ends when a member leaves employment and withdraws his accumulated contributions, or when he “retires” and becomes a “beneficiary” entitled to receive retirement benefits. Id. § 17654; see also id. § 17001(33) (defining “retirement” as “termination of membership with a retirement allowance granted under this chapter”). Generally, benefits due a retiree are calculated in reference to the retiree's annual compensation as of the date of the retiree's retirement. Id. § 17851.

The dispute in this case focuses on the amount of benefits due to MePERS' beneficiaries presently and in the future as a result of cost of living adjustments that are calculated by the MePERS Board of Trustees pursuant to 5 M.R.S.A. § 17806. However, to provide the necessary context for the current dispute, the Court first summarizes MePERS' lengthy legislative history.

The legislative roots of MePERS, formerly known as the Maine State Retirement System, date back to 1913 when the Maine Legislature passed An Act to Increase the Efficiency of the Public Schools of Maine by Retiring Teachers of Long Service with Pensions, P.L. 1913, ch. 75 (ECF No. 76–1),² and thereby provided for pensions in set amounts to retiring teachers based on the teacher's age and years of service. This initial pension system required no contribution from the salaries earned by individual teachers. In 1923, the Maine Legislature created the Maine Teachers' Retirement System and providedthat teachers then in-service elect between joining this newly created system and the prior pension system. See P.L. 1923, ch. 209, § 22 (ECF No. 65–1 at PageID# 500). Upon joining the Maine Teachers' Retirement System, teachers became “members” of the “Maine teachers' retirement association” and contributed portions of their salary, which were matched by the state. Id. at § 3. Any changes to the Maine Teachers' Retirement System required approval of the membership pursuant to statutory mandate. Id. at § 21.

Maine had a separate pension system for other state employees until approximately 1942. See P.L. 1933, ch. 1, §§ 227–233 (ECF No. 65–1 at PageID # s 503–04). In the 1940s, the Maine Legislature proposed a statewide retirement system for state employees that would be jointly funded by contributions from the state and the employee's salary. See Report on a Proposed Retirement System for State Employees of Maine, dated January 22, 1941 (ECF Nos. 65–1 & 65–2 at Page ID# s 505–532). In recommending this move, the Recess Committee on State Contributory Pension System explained:

Retirement allowances should not be gratuities.... The primary reason for the State operating a retirement system is to benefit the taxpayers.

...

Under a jointly contributory retirement system a young employee entering service is compelled to be thrifty, because he is forced to save part of his compensation during active service. Consequently, when he reaches old age he can be retired from service, and his own savings plus a reasonable allowance from the employer provide an adequate retirement income.

Id. at Page ID# s 510–11. In 1942, the Maine Legislature accepted the Recess Committee's recommendations and established the Employees' Retirement System for the State of Maine, which was to be administered by a board of trustees. See P.L. 1942, ch. 328 (ECF Nos. 65–2–65–4 at Page ID# s 533–554). In adopting this joint contribution system for future retirees, the Maine Legislature explicitly indicated that the pension benefits payable to retirees prior to the establishment of this new retirement system would “be continued and paid.” Id. at § 227–N (Page ID# 550).

By 1947, Maine merged its state employees' retirement system with its retirement system for teachers. See P.L. 1947, ch. 384 (ECF Nos. 65–4–65–6 at Page ID# s 557–583). As it had in enacting the 1942 legislative changes, the 1947 enactments explicitly stated that benefits already being paid to current retirees would “be continued and paid.” Id. at § 15–A (Page ID# 578). In 1955, the Maine Legislature again revised the retirement system and renamed it the “Maine State Retirement System.” P.L. 1955, ch. 417 (ECF No. 65–6–65–7 at Page ID# s 588–610).

In 1965, Maine first adopted legislation that provided cost-of-living adjustments to beneficiaries of the state retirement system. P.L. 1965, ch. 337 (ECF No. 76–2 at Page ID# s 708–710), codified at 5 M.R.S.A § 1128. Then, in the early 1970s, the Maine Legislature once again undertook a comprehensive review of the Maine State Retirement System. The resulting final report was published in January 1975. See Final Report of the Committee on Veterans and Retirement on its Study of the Maine State Retirement System (excerpt provided at ECF Nos. 65–7 at Page ID# s 611–615). In proposing additional changes to the statutes governing the retirement system, this Committee explained that “[a]mendments that remove or modify benefits have been limited in retroactivity in order to insure the continuation of presently vested rights.” Id. at Page ID# 612. A later section of the same report describes the addition of “a subsection to protect the accrued benefits of members from retroactive reduction.” Id. at Page ID# 613–614. As ultimately passed by the Maine Legislature, these 1975 amendments included the following subsection related to the review of future proposed amendments:

Effect on accrued benefits. No amendment to this chapter shall cause any reduction in the amount of benefits which would be due to the member based on creditable service, compensation, employee contributions and the provisions of this chapter on the date immediately preceding the effective date of such amendment.

P.L. 1975, ch. 622, § 6, codified at 5 M.R.S.A. § 1005(3).

In 1977, the Maine Legislature adopted changes to the method for calculating cost-of-living adjustments thereby providing that, after an initial waiting period of six months, all retirees were entitled to annual, compounding...