King v. N.Y.C. Emps. Ret. Sys. (NYCERS)
| Decision Date | 25 July 2016 |
| Docket Number | 13-CV-4730 |
| Citation | 212 F.Supp.3d 371 |
| Parties | David KING, Plaintiff, v. NEW YORK CITY EMPLOYEES RETIREMENT SYSTEM (NYCERS), Defendant. |
| Court | U.S. District Court — Eastern District of New York |
Edgar Pauk, Brooklyn, NY, John W. Hermina, Hermina Law Group, Laurel, MD, Christopher William Dagg, Sarah E. Dranoff, Gary Steven Stone, Anna C. Tavis, South Brooklyn Legal Services, Brooklyn, NY, for Plaintiff.
Teresita V. Magsino, Ilyse Erin Sisolak, New York City Law Department, 100 Church Street, New York, NY, for Defendant.
AMENDED MEMORANDUM, ORDER & JUDGMENT
The decision by the Court of Appeals for the Second Circuit in this case, requiring the district court to hear a litigation brought by a retiree to an adverse City of New York pension decision—after relevant issues had been raised and rejected in a New York article 78 proceeding—incorporates an undesirable practice. See King v. NYCERS , 595 Fed.Appx. 10 (2d Cir.2014) (summary order). New York should consider how such cases ought to be processed within the state, modifying, as necessary, state substantive law and procedure to avoid appeals to federal courts from New York City Employees' Retirement System ("NYCERS") decisions respecting city pensions.
What is required is a single state cause of action challenging—at the same time—the accuracy of the administrative decision denying a pension claim, a possible due process claim, a possible breach of contract claim, and any other objection. The gravamen, based on one factual-legal dispute, is the same in all such causes of action. The issues should be adjudicated, where practicable, administratively before a final adverse decision is made by NYCERS.
The opportunity that the plaintiff had to challenge the denial of his pension claim was arguably fully treated in his article 78 state proceeding. See infra Part VI.A; Order of the Supreme Court of the State of New York County of Kings, Jan. 23, 2012, ECF No. 1-3 at 9–11 ( ). Plaintiff failed to appeal from the adverse State Supreme Court decision. That should have been the end of the litigation. Nevertheless, plaintiff instituted a separate federal constitutional claim in this court based on the same factual-legal dispute which had been before the article 78 Supreme Court Justice. His claim was dismissed in this court because all of his claims had previously apparently been considered and denied by a State Supreme Court Justice. See Hr'g Tr. 15:14–17, Nov. 25, 2013 ( ) The view of the Court of Appeals for the Second Circuit on remand that there was a federal constitutional independent claim distinct from plaintiff's article 78 claim has revealed an unsatisfactory procedural difficulty in allowing repetitive claims. See infra Part VI.C; King , 595 Fed.Appx. at 11–12.
A second kick down the road at the city administrative error should not be afforded in any efficient modern procedural system—even though there is logic to the federal appellate ruling based on the limitations of the state article 78 proceeding (homogenizing the limited scope of medieval British writs of review). There is a single factual-legal dispute over a claim for an increased pension that should be disposed of in one litigation, in one state court, by one state judge, on the merits. The short four-month statute of limitations, which plaintiff faced in the article 78 proceeding, exacerbates the procedural-substantive problem.
The law of New York City on retirement benefits is arcane. Benefits constantly shift as a result of negotiations for wages and collateral benefits. Pension rights are one of the negotiating vectors. New employees' wages and other benefits are balanced against those of the older workers who are looking forward to higher pensions as opposed to higher wages. The amounts involved are enormous. New York City projects that it will pay direct dollar pensions of $8.582 billion in fiscal year 2015, plus other benefits, such as medical costs. See Office of the New York City Comptroller, Bureau of Fiscal and Budget Studies, Comments on New York City's Preliminary Budget for Fiscal Year 2016 and Financial Plan for Fiscal Years 2015–2019 at 1 (2015), http://comptroller.nyc.gov/wp-content/uploads/documents/3-4-15_CommentsPreliminaryBudget.pdf (last visited July 30, 2015). Wherever possible and practicable, individual pension decisions should be made by state administrative bodies and state courts without intervention by a federal court.
Plaintiff, David King, a former employee of New York City, claims that he is being cheated out of a portion of his city pension. Defendant, NYCERS, maintains that current payments are proper.
The Court of Appeals for the Second Circuit, in its remand reversing the trial court's dismissal of the complaint, indicated that "the district court may wish to consider a number of [bases for dismissal]"; they include res judicata , statute of limitations, and due process. King , 595 Fed.Appx. at 11–12. This suggestion has been followed.
The precise question posed: Is plaintiff's "retirement" status dictated by the date on which he was entitled to start receiving pension benefits (i.e. , his "payability date") under Tier 4 (see infra Part V (facts) and Part IV (discussing Tier 4 pension scheme)), or by the date on which he applied for Tier 1 reinstatement (see infra Part V (facts) and Part IV (discussing tier reinstatement))? The court finds—as detailed below—that plaintiff's "retirement" status is governed by the date on which he filed for reinstatement, so he is entitled to higher Tier 1 benefits retroactively.
Plaintiff has stated a valid claim. Defenses of res judicata and statute of limitations do not apply. Supplementary jurisdiction will be exercised over the state breach of contract claim. See 28 U.S.C § 1367. All other claims are dismissed.
The letter of August 5, 2015 from NYCERS, providing "NYCERS's publications on Vesting for Tier 4 members," does not affect the holding of this memorandum. See Letter from Teresita V. Magsino, Aug. 5, 2015.
The history of plaintiff's work for the city is, in brief: he worked for New York City's Environmental Protection Administration from 1971 to 1977; in 1984, he became a "bridge and tunnel officer" for the New York Triborough Transit and Tunnel Authority ("TBTA"); and he left voluntarily in 2000. The details of his pension journey are set forth in infra Parts V and VI. His age and work history complied with all pension requirements as claimed by plaintiff.
In the United States, public sector pensions are offered at federal, state and local levels of government. A government pension plan is defined as "a savings device wherein government agencies (and sometimes their employees as well) make regular contributions during their employees' careers." Lowell R. Ricketts, State Pension Plans in Peril: The Need for Reform , Liber8 Economic Information Newsletter (2010), https://research.stlouisfed.org/pageoneeconomics/uploads/newsletter/2010/201009.pdf (last visited July 30, 2015). "The collective savings for all employees in a plan are invested in interest-bearing securities." Id.
"Typically, retirees collect a predetermined monthly payment based on length of service and average wage toward the end of their careers." Id. A funding gap, however, "develops if contributions to the plan plus investment earnings are less than the current and future benefits promised to retirees." Id.
Federal court intervention in expensive and complicated state and city pension plans—under severe fiscal and political pressure—should be avoided.
Forty-one states, including New York, protect pensions under contract theory. See Liz Farmer, How are Pension Protected State-by-State (Jan. 28, 2014), http://www.governing.com/finance101/gov-pension-protections-state-by-state.html (last visited July 30, 2015); see infra Part IX.A (discussing breach of contract theory in New York with respect to pension entitlements). Legislators are prohibited from passing laws that impair pension contracts previously entered into, whether public or private. See Farmer, supra....
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