Cranston Police Retirees Action Comm. v. City of Cranston

• Decision Date: 03 June 2019
• Docket Number: No. 2017-36-Appeal (KC 13-1059) (formerly PC 13-3212),2017-36-Appeal (KC 13-1059) (formerly PC 13-3212)
• Parties: CRANSTON POLICE RETIREES ACTION COMMITTEE v. The CITY OF CRANSTON, BY AND THROUGH its Finance Director Robert STROM and its City Treasurer David Capuano, et al.
• Court: Rhode Island Supreme Court

208 A.3d 557

CRANSTON POLICE RETIREES ACTION COMMITTEE

v.The CITY OF CRANSTON, BY AND THROUGH its Finance Director Robert STROM and its City Treasurer David Capuano, et al.

No. 2017-36-Appeal (KC 13-1059) (formerly PC 13-3212)

Supreme Court of Rhode Island.

June 3, 2019

Chief Justice Suttell, for the Court.

This appeal concerns two 2013 Cranston city ordinances that promulgated a ten-year suspension of the cost-of-living-adjustment (COLA) benefit for retirees of the Cranston Police Department and Cranston Fire Department who were enrolled in the City of Cranston's pension plan. The plaintiff, Cranston Police Retirees Action Committee (CPRAC or plaintiff), initiated this litigation against the City of Cranston (the City), Mayor Allan Fung, and the members of the Cranston City Council (collectively, defendants), alleging a litany of claims ranging from constitutional violations to statutory infringements. A Superior Court justice, sitting without a jury in a trial held over six days in November 2015, found in favor of the defendants on all counts. The plaintiff now raises several issues for our consideration related to the trial justice's rulings on an assortment of motions and her findings of fact and conclusions of law. For the reasons set forth in this opinion, we affirm the judgment of the Superior Court.

IFacts

In 1937, the City established a pension fund for members of its police and fire departments. By the mid-1980s, the pension fund had become a significant financial concern. In the early 1990s, Mayor Michael Traficante met with police and firefighter union leaders in an attempt to address the problem. Ultimately, in 1996, the City passed two ordinances based on an agreement reached with the unions, creating a two-tiered pension system (the 1996 ordinances). The 1996 ordinances, No. 96-54 for firefighters and No. 96-56 for police officers, provided that all members of the police and fire departments hired after July 1, 1995, would be enrolled in the state's pension system. Additionally, those members with five or fewer years of service could elect to stay in the City's pension plan or enroll in the state's pension system. For the members remaining in the City's pension plan, the 1996 ordinances provided for a minimum 3 percent compounded COLA, or, alternatively, a percentage equal to that of a contractual increase for active members. The unions bargained for this COLA to match the benefits that were being offered under the state's pension plan.

The fiscal issues related to the City's pension plan did not subside with the passage of the 1996 ordinances. By July 1, 1999, the unfunded accrued liability of the City's pension plan exceeded more than $ 169 million. The City's pension liability remained an issue throughout the early 2000s. Mayor John O'Leary, who succeeded Mayor Traficante, borrowed against the pension fund in his final year in office to pay the then-retirees' health care costs and base pensions.¹

When Mayor Fung took office in 2009, the City was in "dire" fiscal condition. At that time, Cranston faced a severe economic recession that was affecting all parts of the country. As such, the City experienced high unemployment rates and over $ 1 billion in decreased property values. Moreover, state aid decreased substantially between 2007 and 2011, and two devastating floods in the spring of 2010 also inflicted a financial toll on the City. In order to improve its financial situation, the City made cuts to personnel, eliminated city vehicles, and increased health care co-shares for its employees.

In 2011, the General Assembly passed the Rhode Island Retirement Security Act (RIRSA), G.L. 1956 chapter 65 of title 45, legislation focused on promoting the sustainability of municipal pension systems. See § 45-65-2. Pursuant to § 45-65-4, a municipality's pension plan would be in "critical status" if "as determined by its actuary, as of the beginning of the plan year, a plan's funded percentage for such plan year is less than sixty percent (60%)." A municipality administering a plan in "critical status" is required, under RIRSA, (1) to give notice of such status to plan participants and other listed individuals and entities and (2) to submit a funding improvement plan detailing the municipality's strategy for emerging from that status. Section 45-65-6. A commission within the Department of Revenue that had been set up under the statute established guidelines for the funding improvement plans, suggesting that, "[g]enerally, the funding improvement period should not exceed 20 years with the plan emerging from critical status within that timeframe." Municipalities not in compliance with the statute faced a reduction in state aid. Section 45-65-7.

Mayor Fung's administration analyzed the health of the City's pension system during his first term. By June 30, 2011, the unfunded accrued liability of the pension plans had risen to $ 256 million.² In 2012, the pension system was funded at only 16.9 percent, meeting the definition for "critical status" pursuant to § 45-65-4. In accordance with § 45-65-6, Mayor Fung sent a letter to all pensioners enrolled in the City's pension system informing them of the "critical status." The City next put together an "alternative funding improvement plan consistent with the [requirements of § 45-65-6]." In doing so, the City considered a number of options, including raising taxes, cutting more personnel, and eliminating city services. Additionally, in September 2012, Mayor Fung met with City pensioners to keep them apprised of the pension situation and also to propose a ten-year COLA suspension as the preferred method of raising the plan from critical status. Thereafter, Mayor Fung presented the COLA suspension plan to the City Council in two proposed ordinances in October 2012.

Shortly after, Mayor Fung withdrew the proposed ordinances in favor of negotiations with the plan participants, and, in the months that followed, he met with the police and firefighter unions and persons who represented the City's police and firefighter retirees. After meeting with the unions and retirees, the City's actuaries ran twenty to thirty additional scenarios for plans to lift the pension system from critical status. Ultimately, however, the City enacted two ordinances on April 23, 2013 (the 2013 ordinances)—No. 2013-5, governing police retirees, and No. 2013-6, governing fire retirees—suspending the minimum 3 percent COLA for ten years, beginning July 1, 2013.

Following the passage of the 2013 ordinances, The Cranston Police Department Retirees Association, Inc., and Local 1363 Retirees Association filed suit against the City on behalf of retirees enrolled in the City's pension plan, alleging that the 2013 ordinances violated the United States and Rhode Island Constitutions. The parties reached a settlement agreement, and a final consent judgment was entered in December 2013. The agreement provided for a COLA suspension in alternating years for ten years, and a 1.5 percent COLA payment in years eleven and twelve. Each retiree was given the opportunity to opt out of the settlement agreement and to retain the right to pursue civil claims against the City. The members of CPRAC are retirees enrolled in the City's pension system who opted out of the settlement agreement.

IIProcedural History

APretrial Motions

On June 28, 2013, plaintiff filed an eight-count complaint in Superior Court against the City, Mayor Fung, and the members of the Cranston City Council.³ The complaint included allegations of violations of the United States and Rhode Island Constitutions, a state statute, and breach of contract.⁴ The defendants filed a motion to dismiss six of the eight counts, as well as an answer to the complaint. The trial justice granted defendants' motion to dismiss in part, dismissing counts VI and VIII of the complaint. During the course of discovery, defendants filed a motion for a protective order to prevent plaintiff from deposing city councilmember John Lanni, Jr. On September 15, 2015, the trial justice granted defendants' motion on the basis that Lanni enjoyed the privilege of legislative immunity, and that the topics about which plaintiff sought to question Lanni were related to his position as a legislator.

In the month prior to trial, the parties filed several motions for summary judgment. On October 9, 2015, the Non-City defendants filed a motion for summary judgment on all remaining counts. One week later, the City filed a motion for summary judgment as to plaintiff's Takings Clause claim. The plaintiff filed its own motion for summary judgment on October 19, 2015, seeking summary judgment on its claims based on res judicata and on the violation of the Rhode Island Open Meetings Act, G.L. 1956 chapter 46 of title 42 (the OMA). The City also filed a cross-motion for summary judgment as to the res judicata and OMA counts.

The trial justice heard arguments on all four summary judgment motions at a hearing held on November 2, 2015. On that same day, the trial justice issued a decision from the bench, granting summary judgment in favor of the Non-City defendants on all counts, and in favor of the City as to res judicata and the Takings Clause claim. The trial justice reserved judgment on the OMA claim until November 6, 2015, when she rendered a bench decision granting summary judgment in favor of the City.

The City had also filed a motion in limine to determine the appropriate burden of proof for the Contract Clause claim. The trial justice heard arguments on this motion at the November 2, 2015 hearing, and rendered a bench decision on November 6, 2015. The trial justice relayed that she would employ a burden-shifting analysis on part of the Contract Clause analysis, with specific burdens of production on each party at each stage of the analysis.

Three days before trial, the City sought leave to amend its answer to the complaint to specifically deny some of plaintiff's allegations and to formally add an...