MacLean v. State Board of Retirement

• Decision Date: 02 May 2000
• Citation: 432 Mass. 339,733 NE 2d 1053
• Parties: WILLIAM Q. MACLEAN, JR. v. STATE BOARD OF RETIREMENT & another.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

432 Mass. 339

733 NE 2d 1053

WILLIAM Q. MACLEAN, JR. v. STATE BOARD OF RETIREMENT & another.¹

Supreme Judicial Court of Massachusetts, Suffolk.

May 2, 2000.

August 18, 2000.

Present: MARSHALL, C.J., ABRAMS, GREANEY, IRELAND, & SPINA, JJ.

Philip N. Beauregard (William H. Carey with him) for the plaintiff.

Peter Sacks, Assistant Attorney General, for State Board of Retirement.

IRELAND, J.

This is an action brought by the plaintiff, William Q. MacLean, Jr., in the nature of certiorari under G. L. c. 249, § 4, to review a decision of the District Court upholding a decision of the State Board of Retirement (board). A single justice of this court reserved and reported the case without decision to the full court pursuant to Mass. R. Civ. P. 64 (a), as amended, 423 Mass. 1403 (1996). After the plaintiff pleaded guilty to two violations of the conflict of interest law, G. L. c. 268A, § 7, the board ordered that his pension be forfeited as provided by G. L. c. 32, § 15 (4), and the District Court upheld the board's decision. The plaintiff challenges this ruling, arguing that the language of his settlement agreement with the Attorney General precluded the forfeiture and that his guilty plea was not a "final conviction" that would trigger the pension forfeiture statute. He also contends that the pension forfeiture statute is unconstitutional as applied to him, specifically arguing that the statute violates the contract clause to the United States Constitution, amounts to an excessive fine, and constitutes double jeopardy.² We reject the plaintiff's statutory and constitutional challenges to the pension forfeiture statute and accordingly remand the case to the county court for the entry of a judgment affirming the decision of the District Court. 1. Background. The plaintiff began government employment when he joined the Fairhaven police department as a reserve officer in 1959. Two years later, in 1961, the plaintiff was elected to the General Court, where he was a member until January 5, 1993.³ During this period, the plaintiff contributed five per cent of his regular compensation to the State retirement system. The plaintiff took superannuation retirement pursuant to G. L. c. 32, § 5, on January 5, 1993. At the time of his retirement, the plaintiff's contributions amounted to $36,730.04, and the interest on these contributions was $37,911.67, a total of $74,641. 71. In January, 1993, the plaintiff began receiving monthly payments of approximately $1,916.73. The District Court estimated the total value of the pension to be approximately $400,000, plus retirement benefits.

On February 2, 1993, the plaintiff was indicted for two misdemeanor violations of G. L. c. 268A, § 7, the Massachusetts conflict of interest statute. Ironically, one of these violations arose from the plaintiff's involvement with the marketing of pension plans, life insurance, and other retirement investments to government employees.⁴ After the plaintiff pleaded guilty to the charges, he was sentenced to one year of probation, conditioned on the payment of $512,000 to the Commonwealth to settle a connected civil suit.⁵ The plaintiff's settlement with the Attorney General released him "from any and all other administrative, civil or criminal claims and charges arising under G. L. c. 268A or c. 268B."

On March 25, 1993, approximately six weeks later, the board notified the plaintiff of its intention to review whether his pension should be forfeited under G. L. c. 32, § 15 (4), which provides:

"In no event shall any member [of the State retirement system] after final conviction of a criminal offense involving violation of the laws applicable to his office or position, be entitled to receive a retirement allowance under the provisions of section one to twenty-eight, inclusive, nor shall any beneficiary be entitled to receive any benefits under such provisions on account of such member. The said member or his beneficiary shall receive, unless otherwise prohibited by law, a return of his accumulated total deductions; provided, however, that the rate of regular interest for the purpose of calculating accumulated total deductions shall be zero."

After a limited hearing, the board issued a decision ordering that the plaintiff's retirement allowance be terminated pursuant to the statute. The board ordered the return to the plaintiff of his contributions, less interest and less the amount of retirement allowance he had already received from his date of conviction. The board stated that it lacked the jurisdiction to consider the plaintiff's constitutional claims. The plaintiff then sought review in the District Court, which, after reviewing the applicable statutory and constitutional provisions, ruled that the board's actions were justified.

2. Statutory and common-law arguments. (a) Settlement agreement with the Attorney General. The plaintiff first argues that the settlement agreement with the Attorney General releases him from the application of the pension forfeiture statute. We do not accept this argument, however, for two reasons.

As G. L. c. 32, § 15 (4), is mandatory and occurs by operation of law, the Attorney General did not have the authority to release the plaintiff from the forfeiture statute. Although the Attorney General may bind State administrative agencies in litigation, see Secretary of Admin. & Fin. v. Attorney Gen., 367 Mass. 154, 162-163 (1975), the Attorney General does not have the power to waive the application of the General Laws, and, in particular, G. L. c. 32, § 15 (4). "Officers of governmental agencies have authority to bind their governmental bodies only to the extent conferred by the controlling statute." Boston v. Back Bay Cultural Ass'n, 418 Mass. 175, 184 (1994), quoting White Constr. Co. v. Commonwealth, 11 Mass. App. Ct. 640, 647 (1981), S.C., 385 Mass. 1002 (1982) (municipality's agreement to waive application of statute void). See Daley v. Board of Appeal on Motor Vehicle Liab. Policies & Bonds, 406 Mass. 857, 860 (1990) (agreement with prosecutor waiving statutorily required period of license suspension unenforceable). Therefore, the settlement agreement did not preclude the revocation of the plaintiff's retirement benefits. In addition, the language of the agreement did not waive pension forfeiture. The language of the agreement released the plaintiff from "other ... claims and charges arising under G. L. c. 268A." We conclude that the forfeiture did not "arise under" G. L. c. 268A. Although G. L. c. 268A provided the law governing the predicate convictions, the pension forfeiture "arose under" G. L. c. 32, § 15 (4). Further, pension forfeiture under G. L. c. 32, § 15 (4), is an automatic legal consequence of conviction of certain offenses. Therefore, forfeiture is not a different "charge," but rather a result of the criminal charges to which the plaintiff pleaded guilty.⁶

(b) Final conviction. The plaintiff argues that the pension forfeiture statute was not triggered because, as he only received probation as a result of his guilty pleas, he was not "finally convicted" within the meaning of G. L. c. 32, § 15 (4). This argument was raised neither at the board hearing nor at the District Court, and thus was waived. See Albert v. Municipal Court for the City of Boston, 388 Mass. 491, 493-494 (1983) (party cannot raise arguments on appeal that could have been raised before administrative agency but were not).

In any event, the plaintiff's argument is meritless. Relying on Commonwealth v. Stewart, 422 Mass. 385, 387 (1996), the plaintiff argues that, because probation for a misdemeanor is "not a sentence" for purposes of the witness impeachment statute, G. L. c. 233, § 21, and he was given probation, there is no "final conviction" that would trigger the pension forfeiture statute. However, in Commonwealth v. Stewart, supra, we noted the defendant's conviction when he was sentenced to probation, even though he had not been "sentenced" for purposes of the witness impeachment statute. The Legislature could have specified "imprisonment" as the triggering event for pension forfeiture, but it did not.

3. Constitutional arguments. (a) Contract clause. The plaintiff argues that the addition of G. L. c. 32, § 15 (4), inserted by St. 1987, c. 697, § 47, substantially altered the terms and conditions of his pension benefits from the time when he began State employment.⁷ Therefore, the plaintiff claims that the application of § 15 (4) to him violates the contract clause of the United States Constitution. A statute violates the contract clause if there is an enforceable contract that is "substantially impaired," Massachusetts Community College Council v. Commonwealth, 420 Mass. 126, 131 (1995), and then only if the statute is not "reasonable and necessary to serve an important public purpose." United States Trust Co. v. New Jersey, 431 U.S. 1, 25 (1977). See Energy Reserves Group, Inc. v. Kansas Power & Light Co., 459 U.S. 400, 411 (1983); Massachusetts Community College Council v. Commonwealth, supra at 131-133.

First, we conclude that there is an "enforceable contract" at issue in this case, albeit the type of "relaxed" contract that arises in the context of pension benefit plans. See G. L. c. 32, § 25 (2); Opinion of the Justices, 364 Mass. 847, 861-862 (1973) (rejecting argument that State pension is a "gratuity" or merely form of government largesse, and instead stating: "`Contract' ... should be understood [in the pension benefits context] in a special, somewhat relaxed sense.... When, therefore, the characterization `contract' is used, it is best understood as meaning that the retirement scheme has generated material expectations on the part of employees and those expectations should in substance be respected"); Colo v. Contributory Retirement Appeal Bd., 37 Mass. App. Ct. 185, 188-189 (1994).

Second, in order to determine whether the passage of § 15 (4) "substantially impaired" the contract, it is necessary to...