Maine School Administrative District # 27 v. Maine Public Employees Retirement System

• Decision Date: 19 February 2009
• Docket Number: Civil Action AP-08-39
• Parties: MAINE SCHOOL ADMINISTRATIVE DISTRICT # 27, Petitioner v. MAINE PUBLIC EMPLOYEES RETIREMENT SYSTEM, Respondent
• Court: Maine Superior Court

MAINE SCHOOL ADMINISTRATIVE DISTRICT # 27, Petitioner v. MAINE PUBLIC EMPLOYEES RETIREMENT SYSTEM, Respondent

Civil Action No. AP-08-39

Superior Court of Maine, Kennebec

February 19, 2009

Attorney for Petitioner Jeffrey T. Piampiano, Bar # 9309 Drummond Woodsum & MacMahon

Attorneys for Respondent, Maine Board of Environmental Protection Christopher L. Mann, Bar # 7283 Assistant Attorney General Office of Attorney General

DECISION AND ORDER

Joseph Jabar Justice

Pursuant to M.R. Civ. P. 80C, the petitioner seeks judicial review of the respondent Maine Public Employees Retirement System (the System)'s final agency action. The System assessed back contributions plus interest against the petitioner on behalf of six secretaries employed by the petitioner. (R. at 37.10.) For the following reasons, the decision of the System is affirmed.

FACTS

Between 1973 and 1987, the petitioner hired six employees as school secretaries: Joan Michaud (July 1973); Julie Taylor (April 1982); Ina Mae St. Jean (September 1986); Marilyn Pinette (hired in 1978, began work as a school secretary in March 1980); Marsha Pelletier (hired in 1979, began work as a school secretary in November 1981); and Mary Daigle (hired in 1978, began work as a school secretary in November 1981). (R at 1.4, 1.21.-.23, 1.27, 1.34-.37, 10.4.) Although required by statute at the time, none of the employees were initially enrolled as System members when first placed into a secretarial position, and employee contributions to the System were not withheld from their pay at that time. (See id.) Instead, for varying lengths of time, petitioner withheld and submitted Social Security contributions to the Social Security Administration. (Id. at 1.27, 1.38.) Subsequently, at different points between July 1981 and March 1989, the petitioner discontinued withholding Social Security contributions and began deducting System contributions on behalf of each employee.^[1]

In November of 2000, the System received an inquiry from three of the employees regarding their credible service and the possibility of purchasing service credit for back service with the petitioner, prior to the date they became System members. (Id. at 1.21-.25.) On December 22, 2000, the System requested additional information from the petitioner necessary to process the employees' requests.^[2] (Id. at 1.25.) On June 23, 2003, the System advised that the petitioner owed $34, 752.12 in back contributions and interest for the periods between which employees St. Jean, Taylor, and Michaud were first employed as secretaries and when employee contributions were first deducted and paid to the System on their behalf. (Id. at 1.27.) The petitioner, reserving its right to appeal, paid on July 16, 2003. (Id. at 1.29, 1.40-.41.) On December 11, 2003, the System advised petitioner that $46, 560.97 in back contributions and interest on behalf of employees Daigle, Pinette, and Pelletier was due. (Id. at 1.38-.39.) The petitioner did not pay, and requested review by the Executive Director of the staff decisions regarding the six employees. (Id. at 1.40-.41.) The Executive Director affirmed the staff decisions, and the System's Board of Trustees, on appeal, upheld the decision of the Executive Director, finding that the System was authorized to assess back contributions and interest against the petitioner on behalf of the six employees. (Id. at 37.10.)

STANDARD OF REVIEW

When the decision of an administrative agency is appealed pursuant to M.R. Civ. P. 80C, this court reviews the agency's decision directly for abuse of discretion, errors of law, or findings not supported by the evidence. Centamore v. Dep't of Human Servs., 664 A.2d 369, 370 (Me. 1995). "An administrative decision will be sustained if, on the basis of the entire record before it, the agency could have fairly and reasonably found the facts as it did." Seider v. Bd. of Exam'rs of Psychologists, 2000 ME 206, ¶ 9, 762 A.2d 551, 555 (citing CWCO. Inc. v. Superintendent of Ins., 1997 ME 226, ¶ 6, 703 A.2d 1258, 1261). The court will "not attempt to second-guess the agency on matters falling within its realm of expertise" and judicial review is limited to "determining whether the agency's conclusions are unreasonable, unjust or unlawful in light of the record." Imagineering, Inc. v. Superintendent of Ins., 593 A.2d 1050, 1053 (Me. 1991). "Inconsistent evidence will not render an agency decision unsupported." Seider, 2000 ME 206, ¶ 9, 762 A.2d at 555. The burden of proof rests with the party seeking to overturn the agency's decision, and that party must prove that no competent evidence supports the Board's decision. See Bischoff v. Bd. of Trs., 661 A.2d 167, 170 (Me. 1995).

When reviewing an agency's interpretation of a statute that is both administered by the agency and within the agency's expertise, the first inquiry is whether the statute is ambiguous or unambiguous. Competitive Energy Servs., LLC v. Pub. Ufals. Comm'n, 2003 ME 12, ¶ 15, 818 A.2d 1039, 1046. If the statute is unambiguous, it is interpreted according to its plain language. Arsenault v. Sec'y of State, 2006 ME 111, ¶11, 905 A.2d 285, 288. If, instead, the statute is ambiguous, deference is given to the agency's interpretation if the interpretation is reasonable. Id.

DISCUSSION

The central issue in this case is whether the System had the authority to assess the petitioner for contributions that should have been made on behalf of the six employees. In its decision, the System relied on two statutes, 5 M.R.S §§ 17203^[3] and 1754(9), in concluding that it was authorized to "impose assessments against the [petitioner] for back employee contributions plus interest." (R. at 37.8.) Essentially the same arguments are pressed by the System on appeal. The petitioner counters that: (1) if applicable, these provisions do not authorize shifting employee contribution obligations to the petitioner; (2) these provisions were enacted after the employment periods at issue and are thus inapposite to the instant dispute; and (3) the System's actions are barred under applicable statutes of limitations or the equitable doctrine of laches. (Pef r Br. at 1-2, 4.) Each of the petitioner's arguments will be addressed in turn.

I. Whether 5 M.R.S. 5S 17203 and 17154(9) authorize the System's actions

The first provision upon which the System relied, 5 M.R.S. § 17203, provides, in pertinent part:

1. CERTIFICATION AND DEDUCTION. The board shall certify to the chief administrative officer of each department, school and participating local district and the chief administrative officer shall cause to be deducted from the compensation of each member on each payroll of the department, school or participating local district for each payroll period, the appropriate percentage of earnable compensation to be contributed...

B. Amounts deducted from the compensation of teachers must be paid to the State Employee and Teacher Retirement Program by the chief administrative officer of each school administrative unit monthly in accordance with rules of the board. Delinquent payments due under this paragraph:

1) May be subject to a late fee as directed by the board and interest at a rate, to be set by the board and paid by the school administrative unit, not to exceed regular interest by 5 or more percentage points;

2) May be recovered by action in a court of competent jurisdiction against the school administrative unit; or

3) May, at the request of the retirement system, be deducted from any other money payable to that school administrative unit.

The petitioner argues that this provision extends an employer's payment obligation to those "amounts deducted from the compensation of teachers, ” but says nothing "either explicitly or implicitly, about an employer paying amounts it has never deducted from employee compensation, nor does it authorize the shifting of payment responsibility from employee to employer." (Pef r Br. at 7.) Accordingly, petitioner asserts, because petitioner never deducted employee contributions specifically for payment to the System, the System lacks authority to compel payment by the petitioner. The System counters that section 17203 makes no distinction for the reason for the deduction and thus funds were, in fact, deducted, albeit for Social Security. Moreover, the System maintains that the argument posed by petitioner was addressed and rejected in Biddeford School Department v. Maine State Retirement System and Leslie Puchalski, No. AP-97-052 (Me. Super. Ct, York Cty., June 23, 1998) (Perkins, J.) [hereinafter Puchalski]. The court in Puchalski rejected the Biddeford School Department's argument that because it did not deduct any amounts from an employee's compensation it had no duty to pay un-deducted contributions to the System, reasoning that

[p]ursuant to section 17203 each school administrative unit is, first of all, required to deduct "the appropriate percentage of earnable compensation to be contributed" from the take-home pay of MSRS^[4] members and, secondly, is required to pay over that amount to the MSRS. This construction of the statute is supported by its plain language of section 17203 and, in addition, is the interpretation placed on that statute by the MSRS, the agency charged with administering the statute, and therefore is due considerable deference.

Id. at *2-3.

Nevertheless the petitioner contends that Puchalski was wrongly decided because the decision was founded upon an inaccurate theory that section 17203 creates an independent payment obligation on the part of the employer. (Pefr Br. at 11.) Instead, the petitioner posits that section 17203(1)(A)-(C) is merely a mechanism by which employee-member contributions are "picked up"^[5] by employers, essentially creating the legal fiction that employee...