Bouchard v. State Emps. Ret. Comm'n

• Decision Date: 02 February 2018
• Docket Number: SC 19754
• Citation: 178 A.3d 1023,328 Conn. 345
• Court: Connecticut Supreme Court
• Parties: Roger J. BOUCHARD et al. v. STATE EMPLOYEES RETIREMENT COMMISSION

328 Conn. 345

178 A.3d 1023

Roger J. BOUCHARD et al.

v.STATE EMPLOYEES RETIREMENT COMMISSION

SC 19754

Supreme Court of Connecticut.

Argued September 13, 2017

Officially released February 2, 2018^**

Michael J. Walsh, for the appellants-appellees (plaintiffs).

Michael J. Rose, with whom was Cindy M. Cieslak, for the appellee-appellant (defendant).

Rogers, C.J., and Palmer, Eveleigh, McDonald, Robinson and Espinosa, Js.^*

McDONALD, J.

In Longley v. State Employees Retirement Commission , 284 Conn. 149, 177–78, 931 A.2d 890 (2007), this court held that the defendant, the State Employees Retirement Commission, had improperly interpreted statutes governing retirement benefits by failing to directly add a retiree's final, prorated longevity payment to the salary earned in the retiree's final year of state employment for the purpose of calculating the retiree's base salary. Although the commission contended in Longley that it had calculated retirement benefits in accordance with its interpretation since the 1960s; id., at 166, 931 A.2d 890 ; this court afforded relief to the two plaintiffs in that case without expressing a view on whether the decision applied retroactively. Id., at 178, 931 A.2d 890. The commission subsequently ordered the recalculation and award of increased retirement benefits, in accordance with Longley , of any person who had retired, or whose benefits were not finalized, on or after October 2, 2001, the six year period preceding the date of the Longley decision. The present case raises the question of whether all state employees, irrespective of when they retired, are entitled to have their benefits recalculated in accordance with Longley .

This question comes to us by way of an unusual procedural posture—a two count complaint bringing (1) an administrative appeal from the commission's decision denying a petition for a declaratory ruling filed by the plaintiffs, retirees Roger J. Bouchard, James J. Malone and James E. Fox, and (2) a declaratory judgment action on behalf of a class, represented by the plaintiffs, of all state employees who retired and began collecting pensions before October 2, 2001. The trial court granted relief to the plaintiffs in the administrative appeal, but denied relief to the class on the ground that the declaratory judgment count was time barred. The plaintiffs appealed from the trial court's judgment insofar as it denied relief for the class. The commission cross appealed from the judgment insofar as it granted relief to the plaintiffs and raised numerous alternative procedural and substantive grounds for affirming the judgment denying relief to the class. We conclude that the plaintiffs' claims for recalculation of benefits were time barred, and, for the reasons supporting that conclusion, neither they nor the class is entitled to relief. Accordingly, we affirm in part and reverse in part the trial court's judgment.

The record reveals the following undisputed facts and procedural history. The three plaintiffs retired after decades of state service—in 1990, 1997, and 2000, respectively. The commission audited and finalized their retirement benefits in April, 1994, May, 1998, and April, 2001, respectively.

On October 2, 2007, this court issued its decision in Longley . At a meeting held a few weeks after that date, the commission discussed the effect of that decision. It voted that, with the exception of the two Longley plaintiffs, calculations including the prorated longevity payments would be made only on a prospective basis for persons retiring on or after the date of that decision.

In December, 2007, Bouchard sent a letter to the commission requesting recalculation of his benefits in accordance with Longley. The commission denied the request, citing its October, 2007 decision. Bouchard delayed further action while a federal class action was pending in which state retirees challenged the application of Longley on a prospective only basis and the commission's multitiered review procedures.

In the interim, the Superior Court issued a decision rejecting the commission's position that Longley applied prospectively only. See Malerba v. State Employees Retirement Commission , Superior Court, judicial district of New Britain, Docket No. HHB–CV–06–4011383 (July 15, 2008) (45 Conn. L. Rptr. 853). The court in Malerba also rejected the commission's argument that the claims in the consolidated administrative appeals before the court were time barred, noting that this defense had not been raised in the administrative proceedings. Id., at 854. The court specifically limited its holding to administrative appeals pending before the court when Longley was decided, expressing no opinion as to its retroactive application to other cases. Id., at 855 n.5.

Thereafter, in April, 2009, the commission adopted a second resolution in order to "fully conform with" the October 2, 2007 Longley decision. It directed the retirement services division of the Office of the State Comptroller to calculate and award increased retirement benefits in accordance with Longley to any person who had retired on or after October 2, 2001, or who had retired before that date but whose retirement was not finalized as of that date.

In August, 2009, after the federal class action was dismissed; see Belanger v. Blum , 628 F.Supp.2d 260, 267 (D. Conn. 2009) ; the plaintiffs followed a series of administrative steps before the commission in an unsuccessful effort to challenge its limited retroactive application of Longley that excluded them and other retirees similarly situated.¹ They filed a petition for a declaratory ruling, which the commission treated as a "claim" for benefits; General Statutes § 5–155a (j) ; an appeal from the final decision denying that claim; see General Statutes § 5–155a (k) ; a request for reconsideration of the denial of the appeal; see General Statutes § 5–155a (k) ; and a second petition for a declaratory ruling as to each plaintiff, which was treated as a separate petition for each plaintiff by the commission. See General Statutes § 4–176.

The commission issued a final decision denying the plaintiffs' petitions, citing four broad conclusions as support. First, it concluded that its decision to adopt a six year limitation on recalculation was reasonable, and thus was not arbitrary or capricious. It explained that, like the approach taken for claims under federal pension law, which also contains no statute of limitations, it had looked to the most suitable time limit to apply in light of the nature of the action and the rights at issue. It found the six year limitation for actions sounding in contract to be the most suitable. See General Statutes § 52–576.

Second, relying on the six year limitation period to establish the scope of "pending" cases, the commission concluded that its decision to limit retroactive relief to pending cases was not arbitrary or capricious. It reasoned that Longley was a new interpretation of the law and that, in the absence of impermissible discrimination, it was reasonable to limit retroactive relief to pending cases.

Third, it concluded that its decision to limit retroactive relief to pending cases also was proper in light of the significant adverse financial effect that unlimited retroactive application would have on the state retirement plan. The commission noted that it had construed and applied the retirement statutes; see General Statutes §§ 5–154 and 5–162 ; so as not to include the final, prorated longevity payment since 1967. The commission estimated that unlimited retroactive application of Longley would cost the retirement fund between approximately $48 million and $157 million, if statutory interest of 5 percent was applied.

Fourth, the commission concluded that the plaintiffs could not avoid the six year time bar in § 52–576 under theories of either a continuing violation of §§ 5–154 and 5–162 or a deliberate concealment of that violation. The commission deemed the continuing violation theory inapplicable as a matter of law because the retirement plan was neutral (i.e., nondiscriminatory) in operation. It rejected the allegation of wrongful concealment as unsupported by any proof and contradicted by the Appellate Court's view in Longley that the construction of § 5–162 raised a question on which there was little precedent to provide guidance. See Longley v. State Employees Retirement Commission , 92 Conn. App. 712, 717, 887 A.2d 904 (2005), rev'd in part, 284 Conn. 149, 931 A.2d 890 (2007).

Finally, the commission made clear that its ruling applied only to the three plaintiffs. It noted that the petitions had sought the recalculation of not only the plaintiffs' benefits but also the pensions of "all retirees." The commission asserted that, to the extent that the plaintiffs were attempting to bootstrap a class action onto their petitions for a declaratory ruling, the Uniform Administrative Procedure Act, General Statutes § 4–166 et seq., does not permit class certification in an administrative proceeding.²

Following the commission's decision, the plaintiffs filed a two count "Administrative Appeal and Class Action Complaint" in the Superior Court. Count one, captioned "Administrative Appeal," alleged that the plaintiffs had been deprived of benefits owed to them by virtue of the commission's arbitrary and capricious application of its 2009 resolution imposing the six year time limitation. Count two, captioned "Declaratory Judgment for Class," incorporated the allegations in count one and alleged that, in addition to bringing their individual administrative appeal, the plaintiffs brought this action as a class action under Practice Book § 9–8. The plaintiffs subsequently filed a motion seeking to certify a mandatory class in the declaratory action (i.e., certification covering all members of the class without a procedure for members to "opt in" or "opt out" of the class).

The commission filed a motion to dismiss and/or strike the second count of the complaint, as well...