Dodd v. City of Chattanooga
| Decision Date | 18 January 2017 |
| Docket Number | No. 16-5470,16-5470 |
| Citation | 846 F.3d 180 |
| Parties | Bobby DODD, Plaintiff-Appellant, v. CITY OF CHATTANOOGA, TENNESSEE ; Chattanooga Fire and Police Pension Fund, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Sixth Circuit |
ARGUED: William Gerald Tidwell, Jr., TIDWELL, IZELL & RICHARDSON, Chattanooga, Tennessee, for Appellant. Zachary H. Greene, MILLER & MARTIN PLLC, Chattanooga, Tennessee, for Appellee City of Chattanooga. Cameron S. Hill, BAKER DONELSON, BEARMAN, CALDWELL & BERKOWITZ, PC, Chattanooga, Tennessee, for Appellee Chattanooga Fire and Police Pension Fund. ON BRIEF: William Gerald Tidwell, Jr., TIDWELL, IZELL & RICHARDSON, Chattanooga, Tennessee, for Appellant. Zachary H. Greene, W. Scott Parrish, MILLER & MARTIN PLLC, Chattanooga, Tennessee, for Appellee City of Chattanooga. Cameron S. Hill, William E. Robinson, BAKER DONELSON, BEARMAN, CALDWELL & BERKOWITZ, PC, Chattanooga, Tennessee, for Appellee Chattanooga Fire and Police Pension Fund.
Before: NORRIS, GIBBONS, and ROGERS, Circuit Judges.
This case arises out of a 2012 amendment to the law governing Chattanooga's Fire and Police Pension Fund. Before 2013, a Fund member's surviving spouse could receive benefits after the member died without incurring a proportional reduction in the member's lifetime benefits. In 2012, the City of Chattanooga removed this "default death benefit" for members who were not eligible to retire as of January 1, 2013. Bobby Dodd was not eligible to retire on that date and therefore opted for a five-percent reduction in current, lifetime benefits so that his wife could receive an additional benefit upon his death. Because Dodd would not have incurred this five-percent reduction prior to the 2012 amendment, he sued the City and the Fund, asserting claims under the federal Contract Clause, Due Process Clause, and Takings Clause, as well as Tennessee's Law of the Land Clause. Dodd also argued that the 2012 amendment was not validly enacted under local law. The district court granted the City's and the Fund's motions for summary judgment on all claims, which Dodd now appeals. Because Dodd does not have a contract or property right to the default death benefit, his constitutional claims fail. Dodd's challenge to the validity of the amendment's enactment is also without merit.
Chattanooga's fire and police pension plan is codified in §§ 2-400 to 2-425 of the Chattanooga City Code. Under the plan, a member's interest in future pension benefits vests after ten years of active service. Chattanooga, Tenn., Code § 2-415 [hereinafter Code]. At that point, the member has the right to receive either a full refund of his contributions or a deferred vested retirement benefit upon turning fifty-five. Id. Then, after twenty-five years of active service, the member becomes entitled to an annual Service Retirement Pension under § 2-411. The pension benefit is calculated, pursuant to § 2-411(a), based on the member's years of active service and a percentage of his average pay.
Typically, a member's retirement benefit takes the form of a single-life annuity paid out in monthly installments. However, a member may elect a "Joint and Survivor Option," which spreads the annuity out over two lives, as an alternative under § 2-418. There are various alternative options in § 2-418, but only Option D is relevant to this appeal. Under Option D, a member receives "[a] decreased retirement benefit payable ... for life," which continues after the member's death to a surviving beneficiary, who receives fifty percent of what the member received during his lifetime. Code § 2-418(1). When a member selects Option D, he ends up receiving the actuarial equivalent of a single-life annuity. Id. However, the monthly pension payments during the member's lifetime are reduced by five percent to account for the funds paid to the member's beneficiary after the member dies.
In a separate section, the pension plan provides for a "death benefit." Before the 2012 amendment at issue in this case, § 2-411(c) provided:
Upon the death of any member employed on November 3, 1992, who is retired under the provisions of this Section, or upon the death of such member prior to retirement, but eligible for benefits under this Section, there shall be paid to said member's beneficiary a death benefit of $10,000.00, and the benefits under Section 2-418, and the surviving spouse shall be paid the sum of $500.00 per month until death if said spouse is not a beneficiary under one of the options listed in Section 2-418. If the member has not elected any option prior to his or her death, a benefit shall be payable to the deceased's surviving spouse, if any, as though he or she had elected Option D., Section 2-418.
Code § 2-411(c) (2003) (emphasis added). Under this provision, if a member was employed by the City on November 3, 1992, and had elected a Joint and Survivor option, upon the member's death his beneficiary would receive whatever benefits the beneficiary was entitled to under the member's § 2-418 election. Pursuant to the boldfaced text, if the member did not make an election under § 2-418, his surviving spouse, if any, would still receive benefits after the member died as if the member had elected Option D. This is the "default death benefit." As the district court explained, the default death benefit created a "loophole by which a retiree could receive the full amount of his/her pension in the form of a single life annuity, then have his/her spouse receive a generous death benefit paid in monthly installments, rather than electing a Joint and Survivor option," which would have decreased the retiree's lifetime payments.
In response to a substantial financial crisis following the 2008 recession, the City amended the pension plan in 2012 through Ordinance 12674. See Chattanooga, Tenn., Ordinance 12674 (Dec. 11, 2012) [hereinafter Ordinance 12674]. The ordinance eliminated the default death benefit for plan participants who were not eligible to retire as of January 1, 2013, by amending § 2-411(c) to read:
Effective January 1, 2013, upon the death of such member who is eligible for benefits under this Section, there shall be paid to said member's beneficiary a death benefit of $10,000.00, and the benefits, if any, elected by the member under Section 2-418. If the member has not elected any option prior to his or her death, a benefit shall be payable to the deceased's surviving spouse, if any, as though he or she had elected Option D., Section 2-418. Notwithstanding the foregoing, if a member who is employed on November 3, 1992, but is not eligible for benefits under this Section on January 1, 2013, or is employed after November 3, 1992, shall die before retirement and after reaching the conditions to be eligible for benefits under this Section or shall die after retirement, there shall be paid to his or her beneficiary or beneficiaries the benefit of $10,000.00 and such benefits elected under Section 2-418.
Ordinance 12674 (emphasis added). Under the amended § 2-411(c), a member who becomes eligible to retire after January 1, 2013, must select an option under § 2-418 for the member's surviving spouse to receive payments after the member's death. The benefits are no longer automatic; a member cannot receive the death benefits without proportionally reducing her lifetime payments.
Dodd joined the Chattanooga Police Department on June 6, 1986, and retired as Chief of Police on December 31, 2013, after twenty-five-and-a-half years of service. Prior to the 2012 amendment, Dodd was eligible for the default death benefit, as he was employed in the police force on November 3, 1992. After the 2012 amendment, however, Dodd is no longer eligible for the default death benefit, as he was not eligible to retire until June of 2013—after January 1, 2013. Dodd learned of the change on December 20, 2012, while completing his retirement paperwork, and accordingly elected Joint and Survivor Option D. Because the 2012 amendment forced Dodd to elect Option D for his spouse to actually receive benefits upon Dodd's death, his current monthly pension has been reduced by five percent—from $6,695.64 to $6,360.86.
Dodd sued the City and the Fund over Ordinance 12674's elimination of the default death benefit, asserting claims under the Contract Clause, Due Process Clause, and Takings Clause of the U.S. Constitution, as well as the Law of the Land Clause of the Tennessee Constitution. Dodd also claimed that Ordinance 12674 was not validly enacted under Chattanooga law because the City Council passed it after two readings, see Ordinance 12674 p. 5, whereas the pension plan required three. Code § 2-411(d) reads: "The City Council ... may, by ordinance, passed on three separate readings, amend any section of" the pension plan.1 In contrast, Chattanooga's Charter provides that "[n]o ordinance shall be valid unless passed on two (2) separate readings." Chattanooga, Tenn., Charter § 11.2 [hereinafter Charter]. Previously, the Charter provided for three readings, but the City amended the provision to two readings in 2004. See Chattanooga, Tenn., Ordinance 11590 (Aug. 3, 2004) [hereinafter Ordinance 11590]. While amending the Charter from requiring three readings to requiring two, the City also declared "[t]hat all laws constituting the present Charter of the City of Chattanooga, not in conflict with this amendatory home rule ordinance, be and the same are continued in full force and effect, and all laws or parts of laws in conflict therewith are hereby repealed." Id. sec. 2. Despite this declaration, the pension plan still requires—on its face—the City Council to read an ordinance that amends the plan three times before adopting it. When the City passed Ordinance 12674—the law challenged in this case—this three-readings requirement existed side-by-side with the two-readings requirement in the City Charter.2
Below, the City and the Fund argued that, because the ...
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Cryer v. City of Dyersburg
...moment [one's] right to some future benefits vested upon reaching [a certain number of] years of service." Dodd v. City of Chattanooga, Tenn., 846 F.3d 180, 186 (6th Cir. 2017). Therefore, the 2015 amendments were permissible under the 2001 Pension Plan document and Blackwell.B.Vested and A......