Aubrey v. Ky. Ret. Sys.

• Decision Date: 30 August 2019
• Docket Number: NO. 2018-CA-000622-MR,2018-CA-000622-MR
• Parties: JOHN AUBREY, INDIVIDUALLY AND IN HIS CAPACITY AS SHERIFF OF JEFFERSON COUNTY; MARK MATTHEWS, IN HIS OFFICIAL CAPACITY AS SHERIFF OF BOURBON COUNTY; LEEROY HARDIN, IN HIS OFFICIAL CAPACITY AS SHERIFF OF BOYLE COUNTY; TODD PATE, IN HIS OFFICIAL CAPACITY AS SHERIFF OF BRECKENRIDGE COUNTY; STAN HUDSON, IN HIS OFFICIAL CAPACITY AS SHERIFF OF CALDWELL COUNTY; JERRY COFFMAN, IN HIS OFFICIAL CAPACITY AS SHERIFF OF CASEY COUNTY; LIVY LEAVELL, JR., IN HIS OFFICIAL CAPACITY AS SHERIFF OF CHRISTIAN COUNTY; BERL PERDUE, IN HIS OFFICIAL CAPACITY AS SHERIFF OF CLARK COUNTY; KEITH CAIN, IN HIS OFFICIAL CAPACITY AS SHERIFF OF DAVIESS COUNTY; C.E. DILLS, II, IN HIS OFFICIAL CAPACITY OF SHERIFF OF GRANT COUNTY; ED BRADY, IN HIS OFFICIAL CAPACITY OF SHERIFF OF HENDERSON COUNTY; DANNY CRAVENS, IN HIS OFFICIAL CAPACITY OF SHERIFF OF HENRY COUNTY; KEVIN CORMAN, IN HIS OFFICIAL CAPACITY OF SHERIFF OF JESSAMINE COUNTY; CHUCK KORZENBORN, IN HIS OFFICIAL CAPACITY OF SHERIFF OF KENTON COUNTY; GARRETT ROBERTS, IN HIS OFFICIAL CAPACITY OF SHERIFF OF LAWRENCE COUNTY; DONNIE HOGAN, IN HIS OFFICIAL CAPACITY OF SHERIFF OF LEE COUNTY; CURT FOLGER, IN HIS OFFICIAL CAPACITY OF SHERIFF OF LINCOLN COUNTY; WALLACE WHITTAKER, IN HIS OFFICIAL CAPACITY OF SHERIFF OF LOGAN COUNTY; KENT MURPHY, IN HIS OFFICIAL CAPACITY OF SHERIFF OF LYON COUNTY; KEVIN BYARS, IN HIS OFFICIAL CAPACITY OF SHERIFF OF MARSHALL COUNTY; PATRICK BOGGS, IN HIS OFFICIAL CAPACITY OF SHERIFF OF MASON COUNTY; JON HAYDEN, IN HIS OFFICIAL CAPACITY OF SHERIFF OF MCCRACKEN COUNTY; WILLIAM BUTCH KERRICK, IN HIS OFFICIAL CAPACITY OF SHERIFF OF MEADE COUNTY; RONALD SHIRLEY, IN HIS OFFICIAL CAPACITY OF SHERIFF OF METCALFE COUNTY; FRED SHORTRIDGE, IN HIS OFFICIAL CAPACITY OF SHERIFF OF MONTGOMERY COUNTY; MIKE NEWTON, IN HIS OFFICIAL CAPACITY OF SHERIFF OF NELSON COUNTY; STEVEN SPARROW, IN HIS OFFICIAL CAPACITY OF SHERIFF OF OLDHAM COUNTY; CRAIG PEOPLES, IN HIS OFFICIAL CAPACITY OF SHERIFF OF PENDLETON COUNTY; JOHN BURGETT, IN HIS OFFICIAL CAPACITY OF SHERIFF OF PERRY COUNTY; MICHAEL PETERS, IN HIS OFFICIAL CAPACITY OF SHERIFF OF ROCKCASTLE COUNTY; JERRY GAINES, IN HIS OFFICIAL CAPACITY OF SHERIFF OF WARREN COUNTY; FRANKIE SPRINGFIELD, IN HIS OFFICIAL CAPACITY OF SHERIFF OF WEBSTER COUNTY; FRATERNAL ORDER OF POLICE, DEPUTY SHERIFF'S LODGE 25; KENTUCKY STATE FRATERNAL ORDER OF POLICE; KENTUCKY ASSOCIATION OF FIRE CHIEFS; KENTUCKY FIREFIGHTERS ASSOCIATION; KENTUCKY PROFESSIONAL FIREFIGHTERS; KENTUCKY SHERIFF'S ASSOCIATION; LOUISVILLE PROFESSIONAL FIREFIGHTERS UNION, LOCAL 345; and EUGENIA A. GLOVER APPELLANTS v. KENTUCKY RETIREMENT SYSTEMS APPELLEE
• Court: Kentucky Court of Appeals

JOHN AUBREY, INDIVIDUALLY AND IN HIS CAPACITY AS SHERIFF OF JEFFERSON COUNTY;

MARK MATTHEWS, IN HIS OFFICIAL CAPACITY AS SHERIFF OF BOURBON COUNTY;

LEEROY HARDIN, IN HIS OFFICIAL CAPACITY AS SHERIFF OF BOYLE COUNTY;

TODD PATE, IN HIS OFFICIAL CAPACITY AS SHERIFF OF BRECKENRIDGE COUNTY;

STAN HUDSON, IN HIS OFFICIAL CAPACITY AS SHERIFF OF CALDWELL COUNTY;

JERRY COFFMAN, IN HIS OFFICIAL CAPACITY AS SHERIFF OF CASEY COUNTY;

LIVY LEAVELL, JR., IN HIS OFFICIAL CAPACITY AS SHERIFF OF CHRISTIAN COUNTY;

BERL PERDUE, IN HIS OFFICIAL CAPACITY AS SHERIFF OF CLARK COUNTY;

KEITH CAIN, IN HIS OFFICIAL CAPACITY AS SHERIFF OF DAVIESS COUNTY;

C.E. DILLS, II, IN HIS OFFICIAL CAPACITY OF SHERIFF OF GRANT COUNTY;

ED BRADY, IN HIS OFFICIAL CAPACITY OF SHERIFF OF HENDERSON COUNTY;

DANNY CRAVENS, IN HIS OFFICIAL CAPACITY OF SHERIFF OF HENRY COUNTY;

KEVIN CORMAN, IN HIS OFFICIAL CAPACITY OF SHERIFF OF JESSAMINE COUNTY;

CHUCK KORZENBORN, IN HIS OFFICIAL CAPACITY OF SHERIFF OF KENTON COUNTY;

GARRETT ROBERTS, IN HIS OFFICIAL CAPACITY OF SHERIFF OF LAWRENCE COUNTY;

DONNIE HOGAN, IN HIS OFFICIAL CAPACITY OF SHERIFF OF LEE COUNTY;

CURT FOLGER, IN HIS OFFICIAL CAPACITY OF SHERIFF OF LINCOLN COUNTY;

WALLACE WHITTAKER, IN HIS OFFICIAL CAPACITY OF SHERIFF OF LOGAN COUNTY;

KENT MURPHY, IN HIS OFFICIAL CAPACITY OF SHERIFF OF LYON COUNTY;

KEVIN BYARS, IN HIS OFFICIAL CAPACITY OF SHERIFF OF MARSHALL COUNTY;

PATRICK BOGGS, IN HIS OFFICIAL CAPACITY OF SHERIFF OF MASON COUNTY;

JON HAYDEN, IN HIS OFFICIAL CAPACITY OF SHERIFF OF MCCRACKEN COUNTY;

WILLIAM BUTCH KERRICK, IN HIS OFFICIAL CAPACITY OF SHERIFF OF MEADE COUNTY;

RONALD SHIRLEY, IN HIS OFFICIAL CAPACITY OF SHERIFF OF METCALFE COUNTY;

FRED SHORTRIDGE, IN HIS OFFICIAL CAPACITY OF SHERIFF OF MONTGOMERY COUNTY;

MIKE NEWTON, IN HIS OFFICIAL CAPACITY OF SHERIFF OF NELSON COUNTY;

STEVEN SPARROW, IN HIS OFFICIAL CAPACITY OF SHERIFF OF OLDHAM COUNTY;

CRAIG PEOPLES, IN HIS OFFICIAL CAPACITY OF SHERIFF OF PENDLETON COUNTY;

JOHN BURGETT, IN HIS OFFICIAL CAPACITY OF SHERIFF OF PERRY COUNTY;

MICHAEL PETERS, IN HIS OFFICIAL CAPACITY OF SHERIFF OF ROCKCASTLE COUNTY;

JERRY GAINES, IN HIS OFFICIAL CAPACITY OF SHERIFF OF WARREN COUNTY;

FRANKIE SPRINGFIELD, IN HIS OFFICIAL CAPACITY OF SHERIFF OF WEBSTER COUNTY;

FRATERNAL ORDER OF POLICE, DEPUTY SHERIFF'S LODGE 25; KENTUCKY STATE FRATERNAL ORDER OF POLICE;

KENTUCKY ASSOCIATION OF FIRE CHIEFS; KENTUCKY FIREFIGHTERS ASSOCIATION;

KENTUCKY PROFESSIONAL FIREFIGHTERS; KENTUCKY SHERIFF'S ASSOCIATION;

LOUISVILLE PROFESSIONAL FIREFIGHTERS UNION, LOCAL 345; and EUGENIA A. GLOVER APPELLANTS v. KENTUCKY RETIREMENT SYSTEMS APPELLEE

NO. 2018-CA-000622-MR

Commonwealth of Kentucky Court of Appeals

AUGUST 30, 2019

TO BE PUBLISHED

APPEAL FROM FRANKLIN CIRCUIT COURT

HONORABLE THOMAS D. WINGATE, JUDGE

ACTION NO. 09-CI-00087

OPINION

AFFIRMING

** ** ** ** **

BEFORE: DIXON, KRAMER, AND K. THOMPSON, JUDGES.

KRAMER, JUDGE: The subject of this appeal is an underlying declaratory judgment that addressed the validity of Kentucky Revised Statute (KRS) 61.637(17), as amended in 2008; for various reasons discussed below, the above-captioned appellants (collectively, the "Aubrey Plaintiffs") contested the statute's constitutionality. The Franklin Circuit Court rejected their challenge, upheld the validity of the statute, and accordingly granted summary judgment to the appellee. This appeal followed. Upon review, we affirm.

In its dispositive order of March 29, 2018, the circuit court set forth most of the relevant factual and procedural history of this matter:

On June 27, 2008, the Kentucky General Assembly enacted House Bill 1 (HB 1). In the drafting of that bill, the legislature enhanced KRS 61.637(17). The Court incorporates by reference HB 1's amendment of KRS 61.637(17), as of June 27, 2008, to this Opinion andOrder. The change caused multiple effects on the statutory scheme. First, HB 1 imposed a one month waiting period for hazardous duty employees between retiring from a participating employer and new full or part time employment with another participating employer. The amendment similarly imposed a penalty for violating the waiting period, in which resuming employment before the expiration of the period the member's retirement will void the employer's benefit eligibility and the member will be liable for repaying the benefits received. The statute change requires employees to certify that he or she did not have a prearranged agreement for future reemployment prior to the employee's initial retirement. Finally, HB 1 imposed a penalty on the employee if no certification occurred that a prearranged agreement did not exist.

Eugenia "Toni" Glover served as a police officer at the Louisville Metro Police Department (LMPD). During the summer of 2008, around the time of the enactment of HB 1, Glover was approaching 20 years of service in CERS [County Employee's Retirement System]. Throughout the majority of her employment, no law existed to prohibit a pre-retirement arrangement for returning to work with another participating employer, nor did a penalty exist for having a pre-retirement arrangement, nor did a rule exist that a bona fide separation must occur prior to resuming employment. Glover retired from LMPD on August 1, 2008. However, on June 27, 2008, the same day HB 1 took effect, Glover contacted the Jefferson County Sheriff's Office (JCSO) to inquire about future vacancies and completed an employment application.

On July 9, 2008, Sheriff Aubrey offered Glover employment as a full-time deputy with JCSO. Glover reported for duty at JCSO on September 2, 2008. JCSO notified KRS of Glover's hire. Jennifer Steele of the Kentucky Retirement Systems informed Sheriff Aubrey and Margaret Newton, JCSO's human resourcessupervisor, of HB 1 and the amendments to KRS 61.637(17) precluding a member from having a prearranged agreement to return to employment with another member employer. Steele informed JCSO that if Glover worked on a full-time basis, her retirement would be voided and she would have to repay all benefits received from that employment. On February 5, 2009, Sheriff Aubrey offered Glover a part-time deputy position to work 100 hours per month without health insurance or other benefits. This position complied with KRS 61.637(17).

Thereafter, Glover and the other Aubrey Plaintiffs initiated the instant declaratory action against the above-captioned appellee, challenging the validity and constitutionality of KRS 61.637(17) in its amended form. The opposing parties ultimately filed cross-motions for summary judgment; and in its March 29, 2018 order, the circuit court summarized the bulk of their arguments, stating in relevant part as follows:

The enactment of KRS 61.637(17), according to Plaintiffs, violates the statutory, inviolable contract of employee retirement benefits:

It is hereby declared that in consideration of the contributions by the members and in further consideration of benefits received by the county from the member's employment, KRS 78.510 to 78.852 shall, except as provided in KRS 6.696 effective September 16, 1993 constitute an inviolable contract of the Commonwealth, and the benefits provided therein shall, except as provided in KRS 6.696, not be subject to reduction or impairment by alteration, amendment, or repeal.

Ky. Rev. Stat. 78.852. Petitioners assert that the General Assembly could have made prospective changes to CERS statutes, however any retrospective changes, such as those in KRS 61.637(17), violate the long recognized inviolable contract. See Jones v. Board of Trustees of Kentucky Retirement Systems, 910 S.W.2d 710, 713 (Ky. 1995). The Kentucky Constitution further prevents the impairment of contracts between state agencies and individuals in Kentucky. KY. CONST. § 19(1), Covington v. Sanitation District of Campbell and Kenton Counties, 301 S.W.2d 885 (Ky. 1957). Plaintiffs aver that every employment relationship constitutes a contract and therefore cannot be subject to retrospective impairment. Walker v. Abbott Labs, 340 F.3d 471, 476 (7th Cir. 2003); Union Gas and Oil Company v. Diles, 254 S.W. 205, 207 (Ky. 1923).

Conversely, Defendant argues that KRS 61.637(17) constitutes an integral part of the inviolable contract. The inviolable contract does not include a guarantee of re-employment. Rather, according to Defendant, the inviolable contract is for the benefits provided by the retirement plan in which an employee participates. Jones v. Board of Trustees of Kentucky Retirement Systems, 910 S.W.2d 710 (Ky. 1995). Defendant argues that the unmistakability doctrine does not suggest that KRS 78.852 unmistakably provides CERS members a right to re-employment or precludes the General Assembly from amending the terms of pension upon re-employment. Defendant further argues that the legislature has an obligation to strengthen the Kentucky Retirement pension program so the Commonwealth may sustain all pension payments the inviolable contract demands. The entire statutory scheme outlining the Kentucky Retirement System, Defendant contends, constitutes an employee's inviolable contract. The scheme, which the legislature may alter, contains provisions that may void future retirement benefits if employees do not follow allthe included retirement guidelines. This now includes regulations set out by KRS 61.637(17).

. . . .

Defendants also argue that Plaintiff Glover never experienced a vested interest in her future re-employment because Plaintiff lacked an entitlement to the future retirement benefit from re-employment. Further, the date of HB 1's enactment was over a month prior to Plaintiff Glover's retirement, so she had full notice of the change in retirement policy.

In sum, the Aubrey Plaintiffs primarily argued that the post-2008 version of KRS 61.637 - specifically subsection 17 of the statute - impermissibly and retroactively impaired their contractual rights and violated the impairment of contract clause of the Kentucky Constitution.¹

Upon consideration, the circuit court disagreed, largely for the reasons...