McGrath v. Rhode Island Retirement Bd.

• Decision Date: 01 November 1995
• Docket Number: Civ. A. No. 94-0322L.
• Parties: Edward A. McGRATH, Plaintiff, v. RHODE ISLAND RETIREMENT BOARD, By and Through Nancy MAYER, General Treasurer, Defendant.
• Court: U.S. District Court — District of Rhode Island

906 F. Supp. 749

Edward A. McGRATH, Plaintiff, v. RHODE ISLAND RETIREMENT BOARD, By and Through Nancy MAYER, General Treasurer, Defendant.

Civ. A. No. 94-0322L.

United States District Court, D. Rhode Island.

November 1, 1995.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Edward C. Roy, Jr., Roy & Cook, Providence, RI, for Plaintiff.

Claire J.V. Richards, David D. Barricelli, Hinckley, Allen & Snyder, Providence, RI, for Defendant.

DECISION AND ORDER

LAGUEUX, Chief Judge.

This matter is before the Court on cross motions for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure and Local Rule 12.1. Plaintiff Edward A. McGrath ("McGrath"), a former municipal employee of the City of Cranston, challenges the constitutionality of R.I.Gen.Laws § 45-21-16 (1993), as amended in June 1992. In his First Amended Complaint, plaintiff seeks declaratory and monetary relief pursuant to 42 U.S.C. §§ 1983 and 1988. The Retirement Board, by and through Nancy Mayer, in her official capacity as Chairperson and Treasurer of the Retirement Board, asserts that R.I.Gen.Laws § 45-21-16 (1993) is constitutional on its face and as applied by the Retirement Board, and that the Board is entitled to judgment as a matter of law. For the following reasons, plaintiff's motion for summary judgment is denied, and defendant's cross motion is granted.

I. Undisputed Background Facts

The Rhode Island Employees' Retirement System ("Retirement System" or "System") is, in truth, an amalgamation of two pension systems: a program for state employees, governed by R.I.Gen.Laws §§ 36-8-1 to -10-38 (1990), and a second for municipal employees, governed by R.I.Gen.Laws §§ 45-21-1 to -62 (1991 & Supp.1994). While the distinction has little everyday meaning, the interaction of the two systems and their authorizing statutes bears on the 1992 amendment of R.I.Gen.Laws § 45-21-16, and a quick review of the history of the Retirement System is appropriate.

In 1936, Rhode Island established a pension system for state employees. 1936 R.I.Pub.Laws ch. 2334. Today, participants in the System receive retirement, disability, survivor and death benefits. Responsibility for the administration and operation of the Retirement System was and still is vested in the Retirement Board pursuant to R.I.Gen. Laws § 36-8-3. In 1951, Rhode Island established a statewide pension system for municipal employees, 1951 R.I.Pub.Laws ch. 2784, through which participating cities and towns could offer their workers the same retirement benefits granted to state employees. R.I.Gen.Laws § 45-21-4. The Retirement Board assumed responsibility for the municipal employees' system, § 45-21-32, and since that time has run the two systems, in effect, as a single retirement system. Nevertheless, the Retirement Board serves two statutory masters: it is organized and empowered under §§ 36-8-1 to -10-38, though it must run the municipal employees' retirement system in accordance with §§ 45-21-1 to -62.

On April 9, 1986, McGrath went to work for the Department of Senior Services of the City of Cranston as a probationary employee. He was embarking on a second—or even third—career: He had served in the military from February 16, 1951 to May 1, 1953, and had been engaged elsewhere during the intervening decades. Six months later, on November 28, 1986, McGrath became a municipal employee of Cranston and henceforth a municipal member of the Retirement System. Throughout his period of service, which lasted until April 28, 1994, Cranston made contributions to the Retirement System on McGrath's behalf. Additional monies were deducted regularly from McGrath's pay— during the first two and a half years of his membership, from November 1986 through May 1989, he contributed $4,075.41 to the System.

Cranston's Director of Personnel informed the Retirement Board on February 27, 1991, that McGrath wanted to purchase credit in the Retirement System for his two and a half years in the military and for his six months of probationary service. The military service credit was available to McGrath by virtue of R.I.Gen.Laws § 45-21-53 (1991):

Armed service credit.—Any active municipal employee who served on active duty in the armed service of the United States or in the merchant marine service of the United States as defined in section 2 of chapter 1721 of the public laws, 1946, may purchase credit for that service up to a maximum of four (4) years; pursuant to the provisions of § 36-9-31.

R.I.Gen.Laws § 36-9-31 (1990) read:

Armed service credit.—(a) Any active member of the retirement system, who served on active duty in the armed service of the United States or in the merchant marine service of the United States as defined in § 2 of chapter 1721 of the public laws, 1946, may purchase credit for that service up to a maximum of four (4) years; provided that he or she has received an honorable discharge; provided, that any member who served any fraction of a year less than six (6) months shall be allowed to purchase six (6) months of service for each fraction and for any fraction of a year six (6) months or greater shall be permitted to purchase one year of service; provided, further, that any employee on an official leave of absence for illness or injury shall be eligible to purchase military credits as defined herein while on that leave of absence.

(b) Any active member of a retirement system as defined in chapter 16 of title 16, chapters 8, 9, 10 of this title or chapter 21 of title 45 may purchase credits for such military service into any system the person is actively participating in, regardless of whether the member has purchased credits for such military service in any other system.

(c) The cost to purchase these credits shall be ten percent (10%) of the member's first year's earnings as a state employee, teacher, municipal employee, or legislator as defined in chapters 9 of this title, 16 of title 16 and 21 of title 45 multiplied by the number of years and fraction thereof of such armed service up to a maximum of four (4) years.

(d) There will be no interest charge provided the member makes that purchase during his or her first five (5) years of membership in the retirement system, but will be charged regular interest to date of purchase from date of enrollment into membership, if purchased after completing (5) years of membership; provided, however, any member who was in the retirement system prior to July 1, 1980, would not be charged interest whenever he or she purchases the armed services credit.

McGrath's purchase of probationary credit was permitted under R.I.Gen.Laws § 45-21-9(b) (1991), which allowed municipal members to "purchase credit for prior service with the city or town of which the employee is now employed."

On March 20, 1991, the Retirement Board informed McGrath that the cost for two and half years of military credit would be $4,316.09 (10 percent of his first year's salary multiplied by 2.5). The Retirement Board also told McGrath that he could purchase probationary credit for the period of April 9, 1986 to November 2, 1986 (a total of six months and twenty-four days) at a cost of $917.53, including interest. On April 15, 1991, McGrath paid the requested sums and received the military service and probationary credits, collectively known as "purchase credits."

In April 1991, McGrath's eligibility for a retirement pension was determined by R.I.Gen.Laws § 45-21-16 (1991):

Retirement on service allowance. — Retirement of a member on a service retirement allowance shall be made by the retirement board as follows:

Any member may retire upon the member's written application to the retirement board as of the first day of the calendar month in which the application was filed, provided the member was separated from service prior thereto, and provided, further, that if separation from service occurs during the month in which application is filed, the effective date shall be the first day following the separation from service, provided that the member at the time so specified for the member's retirement shall have attained the applicable minimum retirement age and shall have completed at least ten (10) years of total service or who, regardless of age, completed thirty (30) years of total service, and notwithstanding that during the period of notification the member may have separated from service. The minimum ages for service retirement (except for employees completing (30) years of service as above provided) shall be fifty-eight (58) years.

(Emphasis added.) Similarly, R.I.Gen.Laws § 36-10-9 (1990) provided that a member who was over sixty became eligible upon "completion of at least ten (10) years of total service."

(Emphasis added.)

Thus on April 15, 1991, when McGrath bought his military and probationary credits, a municipal employee who met the minimum age requirement needed to accumulate ten years of total service before his pension rights vested and he became eligible for retirement. The computation of his period of total service was accomplished by adding his purchase credits to his years of actual employment. McGrath, after buying three years' worth of credits, needed to work for the City of Cranston for seven years before vesting; he would have been eligible to retire in November 1993.

Shortly thereafter, in June 1991, the Rhode Island General Assembly sought to change the method by which the Retirement Board calculated the minimum years of required service for vesting purposes. The General Assembly appended subsection (c) to § 36-10-9, effective June 16, 1991:

(c) Except as specifically provided in § 36-10-9.1, §§ 36-10-12 through 36-10-15 and §§ 45-21-19 through 45-21-22 of the general laws, no member shall be eligible for pension benefits under this chapter unless the member shall have been a contributing member of the employee's retirement system for at least ten (10) years. Provided, however, a person who has ten (10)

...