Ernst v. Roberts
| Citation | 225 F.Supp.2d 781 |
| Decision Date | 30 September 2002 |
| Docket Number | No. CIV.A.01-CV-73738-DT.,CIV.A.01-CV-73738-DT. |
| Parties | J. Richard ERNST, et al., Plaintiffs, v. Douglas B. ROBERTS, et al., Defendants. |
| Court | U.S. District Court — Eastern District of Michigan |
Kenneth A. Flaska, Chester E. Kasiborski, Jr., Kasiborski, Ronayne, Detroit, MI, for Plaintiffs.
Lori M. Silsbury, W. Alan Wilk, Dykema Gossett, David L. Balas, Michigan Department of Attorney General, Assistant Attorney General, Lansing, MI, for Defendants.
This matter is presently before the court on the following motions: (1) defendants' motion to dismiss or, in the alternative, for summary judgment; (2) defendants' motion for abstention or, alternatively, for a stay of proceedings; and (3) plaintiffs' motion to strike affidavit of Daniel A. Norberg. The motions have been fully briefed and the court has heard oral argument. For the reasons stated below, the court shall grant defendants' motion to dismiss plaintiffs' federal claims, decline to exercise supplemental jurisdiction over plaintiffs' state claims, and deny the remaining motions as moot.
The plaintiffs in this case are a Michigan circuit judge, a Michigan probate judge, a Michigan district judge, and a retired Michigan circuit judge. The case has not been certified as a class action, nor have plaintiffs moved yet for class certification. Nonetheless, plaintiffs purport to represent all active and retired Michigan judges who are "similarly situated." The basic allegation in the complaint is that the Judges Retirement Act of 1992 ("JRA"), which created the Judges Retirement System ("JRS"), treats judges of the 36th District Court more favorably than the "non-36th District Court judges." Plaintiffs claim that this disparity violates equal protection because there is no rational basis for providing judges of the 36th District Court more favorable pensions.
The defendants are:
— Mark Murray, the Treasurer of the State of Michigan;
— Christopher DeRose, the Director of the Office of Retirement Systems, which is part of the Michigan Department of Management and Budget. DeRose is also the executive secretary of the Judges Retirement System; and
— George Elworth, Roy Pentilla, Eric Doster, Lyle Van Houten, and Robert Ransom, all of whom are members of the Michigan Judges Retirement Board ("MJRB").
Under the JRA, as amended in 1996, all Michigan judges are covered by one of two pension plans. "Tier 1" is a defined benefit plan; "Tier 2" is a defined contribution plan. Judges who first entered office before March 31, 1997, were in Tier 1. Judges who first entered office thereafter were in Tier 2. The 1996 amendment to the act permitted Tier 1 participants to move to Tier 2, but they had to make this election by a certain date in 1998.
The complaint is presented in ten counts. Count I claims that plaintiffs' rights to equal protection under the Fourteenth Amendment are being violated because:
per the terms of the Act, judges of the 36th District Court have been and are entitled to receive a retirement allowance under the Tier 1 Plan which exceeds that to which Plaintiffs and other members of the class have been or are entitled to receive notwithstanding the fact that the judges of the 36th District Court have contributed and are contributing a smaller percentage of their compensation into the Tier 1 Plan for that greater retirement allowance.
Complaint ¶ 30. Count II asserts the same claim as Count I, but under the equal protection clause of the Michigan Constitution (Article I, section 2).
Count III alleges that plaintiffs' equal protection rights under the Fourteenth Amendment are being violated because:
the Act does not provide for annual percentage increases in the retirement allowance paid under the Tier 1 Plan although certain of the statutes creating the retirement plans of other state and governmental employees provide for annual percentage increases in the retirement allowance paid.
Complaint ¶ 41. Count IV asserts the same claims as Count III, but under the equal protection clause of the Michigan Constitution.
Count V alleges that plaintiffs' equal protection rights under the Fourteenth Amendment are being violated because:
51. For members of the Tier 1 Plan who elected to terminate membership in the Tier 1 Plan and participate in the Tier 2 Plan, an amount equal to the Actuarial Present Value ("APV") of the member's accumulated benefit obligation as of June 30, 1998 was calculated in order that a sum of money in that amount be transferred from reserves of the Tier 1 Plan to the member's account in the Tier 2 Plan.
52. Due to the fact that The Act prescribed only one APV date and due to the manner in which The Act prescribed calculation of the APV, particularly as to the benefit commencement age component of that calculation, is was possible for gross and unjust disparities in APV to come into existence as to Tier 1 Plan members whose ages were but 1 day different and/or whose credited service was but 1 day different.
53. The designation of a single date for calculation of APV: (a) caused certain members of the Tier 1 Plan to decide against making an election to transfer to the Tier 2 Plan and to forego its prospective benefits and advantages since to transfer would have required them to in effect forfeit prospective benefits of the Tier 1 Plan whereas other members of the Tier 1 Plan could elect to transfer to the Tier 2 Plan without suffering such a forfeiture; and (b) resulted in a significantly undervalued APV for certain members of the Tier 1 Plan who elected to transfer to the Tier 2 Plan which resulted in the transfer to their Tier 2 Plan accounts of a substantially smaller sum of money than that transferred to the Tier 2 accounts of others of nearly identical age and length of service.
54. The selection of a single APV date was arbitrary and capricious and created two unequal classes of Tier 1 members: those who could elect transfer to the Tier 2 Plan without any forfeiture of prospective benefits and those who could not.
55. The Tier 1 Plan members and former Tier 1 Plan members who could not elect to transfer to the Tier 2 Plan without the forfeiture of prospective benefits and/or substantial sums of money have been denied the equal protection of the laws in violation of their rights guaranteed by the Fourteenth Amendment.
Count VI asserts the same claims as Count V, but under the equal protection clause of the Michigan Constitution.
Count VII asserts that plaintiffs' equal protection rights under the Fourteenth Amendment are being violated because:
65.... for those who elected to terminate membership in the Tier 1 Plan in order to participate in the Tier 2 Plan the dollar amount transferred from reserves of the Tier 1 Plan to that person's Tier 2 Plan account was the actuarial present value of the Tier 1 Plan's benefit obligation to the member, which amount for judges of the 36th District Court was greater than the amount for circuit, probate and other district court judges of the same age and with the same length of service since The Act affords judges of the 36th District Court a higher retirement allowance under the Tier 1 Plan.
Count VIII asserts the same claims as Count VII, but under the equal protection clause of the Michigan Constitution.
Count IX is entitled "Wasting Trust." This claim alleges that the Tier 1 Plan is overfunded by $109 million. Plaintiffs allege that "the amendment of the Act to prohibit the enrollment in the Tier 1 Plan of persons who became judges on or after March 31, 1997 has caused a termination (or partial termination) of the Tier 1 Plan." Complaint ¶ 79. Plaintiffs further allege that "according to principles of trust law, the excess contributions should be distributed to members, vested former members, retirants and retirement allowance beneficiaries of the Tier 1 Plan." Id. ¶ 82.
Finally, Count X asserts a claim for breach of fiduciary duty. This claim alleges that defendants have breached their fiduciary duty by failing to disclose in their annual report of the Judges Retirement System the amount of court fees received and where they have been deposited, and by making improper transfers of court fees from one fund to another.
For relief, plaintiffs are asking the court to:
1. Certify this action as a class action pursuant to FRCivP 23;
2. Declare that The Act violates the Fourteenth Amendment and Article I, Section 2;
3. Preliminarily and permanently enjoin Defendants from requiring those Plaintiffs and member of The Class who have remained as participants in the Tier 1 Plan to contribute a higher percentage of their compensation for a retirement allowance than judges of the 36th District Court;
4. Order that Defendants forthwith refund to those Plaintiffs and members of The Class who are members, former vested members, retirants, or retirement allowance beneficiaries of the Tier 1 Plan, with interest, that portion of their past contributions into the Tier 1 Plan in excess of the past contributions required of judges of the 36th District Court;
5. Order Defendants to afford to Plaintiffs and The Class members who have remained members of the Tier 1 Plan but have not yet retired a retirement allowance upon their retirements equal to that to which judges of the 36th District Court with the same age and length of service are or will be entitled 6. Order Defendants to forthwith make restitution to Plaintiffs and members of The Class who are retirants or retirement allowance beneficiaries by paying to them, with interest, the difference between the dollar amount of retirement allowance that they have received and the greater amount of retirement allowance that they would have received if they had been judges of the 36th District Court;
7. Order that Defendants forthwith afford to Plaintiffs and members of The Class who are...
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Ernst v. Roberts
...for abstention or for a stay of proceedings; and denying as moot Plaintiffs' motion to strike the Norberg affidavit. Ernst v. Roberts, 225 F.Supp.2d 781, 789 (E.D.Mich.2002). Plaintiffs filed a timely notice of Substantive Facts The district court stated the background facts that gave rise ......