Olfene v. The Board of Trustees

• Decision Date: 04 December 2008
• Docket Number: Civil Action CV-08-155
• Parties: JANE B. OLFENE and GREGORY D. REED, Plaintiffs v. THE BOARD OF TRUSTEES, MAINE PUBLIC EMPLOYEES RETIREMENT SYSTEM, and GAIL DRAKE WRIGHT Defendants
• Court: Maine Superior Court

JANE B. OLFENE and GREGORY D. REED, Plaintiffs v. THE BOARD OF TRUSTEES, MAINE PUBLIC EMPLOYEES RETIREMENT SYSTEM, and GAIL DRAKE WRIGHT Defendants

Civil Action No. CV-08-155

Superior Court of Maine, Kennebec

December 4, 2008

DECISION AND ORDER

Joseph Jabar, Justice

Before the court are two motions. On May 5, 2008, plaintiffs filed a motion for preliminary injunction pursuant to M.R. Civ. P 65(b), seeking to compel the Board of Trustees, Maine Public Employees Retirement System (System) and Gail Wright Executive Director of the System, to cease intercepting plaintiffs' retirement benefit payments. Thereafter, the System filed a motion to dismiss pursuant to M.R. Civ. P 12(b)(6).

FACTS

Plaintiffs Jane Olfene and Gregory Reed are former Maine public school teachers. (Compl. ¶¶ 1-2.) Both are approaching age 60, and have retired under early retirement provisions of the System.

I. Plaintiff Olfene

Plaintiff Olfene retired from teaching on July 1, 2006, after 35 years of teaching in Portland public schools. (Compl. ¶ 5.) Upon completing her tenure as a teacher, plaintiff Olfene applied to the System for retirement benefits and the System approved her application. (Compl. ¶ 7.) Plaintiff Olfene began received monthly benefits^[1] on July 1, 2006, and continued to receive benefits for nearly two years. (Compl. ¶ 7.) On or about March 29, 2008, the Executive Director of the System terminated plaintiff Olfene's monthly benefits. (Compl. ¶ 9.) Plaintiff Olfene was informed this action was taken because she was in violation of a System rule by acting as a substitute teacher for more than sixty days in the academic year 2006-2007. (Compl. ¶ 11.) According to the Executive Director, in order to compensate for the allegedly improper benefit payments, plaintiff Olfene's benefits will continue to be seized by the System until the end of 2008.^[2](Comp.¶¶ 12-13.)

II. Plaintiff Reed

Plaintiff Reed retired from teaching on July 1, 2007. (Compl. ¶ 14.) Upon completing his tenure as a teacher, plaintiff Reed applied to the System for retirement benefits and the System approved his application. (Compl. ¶ 15.) Plaintiff Reed began receiving benefits on July 1, 2007. (Compl. ¶ 16.) On or about January 1, 2008, the Executive Director of the System terminated plaintiff Reeds monthly benefits. (Compl. ¶ 18.) Plaintiff Reed was informed this action was taken because he had returned to work as a part time teacher for a community college within thirty days of retirement, and thus the System did not consider him to be retired. (Compl. ¶ 20.) The Executive Director claims that $17,715.33 in retirement benefits paid to plaintiff Reed must be repaid, and is recoping this amount from his monthly benefits. (Compl. ¶¶ 16, 18.)

Following the System's actions, plaintiffs Olfene and Reed filed a class action complaint alleging a due process violation pursuant to 42 U.S.C. § 1983,^[3] for the System's failure to provide hearings prior to the termination of their retirement benefits and recoupment of allegedly overpaid benefits. (Compl. ¶¶ 22-29.) Pursuant to 14 M.R.S. § 5951, the plaintiffs' sought a declaratory judgment that the System's hearing process violates plaintiffs' due process rights. (Compl. ¶ 30-31.) Subsequently, the plaintiffs filed a motion for preliminary injunction to compel the System to cease intercepting plaintiffs' retirement benefit payments until the System provides the plaintiffs with a due process hearing. The System thereafter filed a motion to dismiss.

DISCUSSION

I. Motion to Dismiss

A motion to dismiss pursuant to M.R. Civ. P. 12(b)(6) tests the legal sufficiency of the complaint. Plimpton v. Gerrard, 668 A.2d 882, 885 (Me. 1995). When reviewing a motion to dismiss, the material allegations of the complaint are accepted as true. Id. In ruling on a motion to dismiss, the court should "consider the material allegations of the complaint as admitted and review the complaint in the light most favorable to the plaintiffs to determine whether it sets forth elements of a cause of action or alleges facts that would entitle the plaintiffs to relief pursuant to some legal theory." Bussell v. City of Portland, 1999 ME 103, ¶ 1, 731 A.2d 862. Dismissal for failure to state a claim is appropriate only where it appears beyond doubt that the plaintiffs are entitled to no relief under any set of facts that might be proven prove in support of their claims. Dutil v. Barns, 674 A.2d 910, 911 (Me. 1996). The legal sufficiency of a complaint is a question of law. Sargent v. Buckley, 1997 ME 159, ¶ 10,697 A.2d 1272,1275.

The System argues that the plaintiffs' lawsuit should be dismissed because: 1) the doctrine of primary jurisdiction requires the administrative process to continue; 2) plaintiffs have failed to exhaust their administrative remedies; 3) the System, as a state agency, is immune; 4) the System is not a "person" within the meaning of 42 U.S.C. § 1983; 5) defendant Wright has personal immunity for her actions; and 6) plaintiffs fail to state a claim upon which relief may be granted. (Def.'s Mem. at 2.)

At the outset, the System's arguments that plaintiffs' claims are barred by the doctrines of primary jurisdiction and exhaustion of administrative remedies are misplaced. See State ex rel. Brennan v. R.D. Realty Corp., 349 A.2d 201, 206 (Me. 1975) (explaining that, although the concepts are somewhat different, that doctrines of "'[p]rimary jurisdiction' and 'exhaustion of administrative remedies' are both closely allied in basic function and concept"). Plaintiffs are not attempting to place before the court the question of whether the System should, or should not, recoup the alleged overpayments from plaintiffs' retirement benefits. Rather, plaintiffs seek to compel the System to provide a hearing before any recoupment is made. Such a request is based upon constitutional due process grounds, which is properly a question for the court. Neither the doctrine of primary jurisdiction nor the doctrine of exhaustion precludes this claim. See Burns v. Town of Lamoine, 43 F.Supp.2d 63, 69 (D. Me. 1999) ("It is well-settled, however, that with only limited exceptions, none of which apply in this case, a plaintiff is not required to exhaust state administrative remedies as a prerequisite to bringing a Section 1983 action.").

Similarly unavailing is the System's argument that the plaintiffs' have failed to show that the System's administrative procedures caused an actionable injury under section 1983. The System, citing a line of cases, including Parratt v. Taylor, 451 U.S. 527 (1981), argues that, "[w]here administrative processes provide an opportunity for full relief, no due process violation may be rightly asserted under section 1983. (Defs. Mem. at 9.). The System contends that plaintiffs must avail themselves of state administrative remedies before bringing a section 1983 claim, or show those remedies are inadequate. The System's argument fails to consider that the Parratt Court recognized

an important difference between a challenge to an established state procedure as lacking in due process—see, e.g., Fuentes v. Shevin, 407 U.S. 67, 32 L.Ed.2d 556, 92 S.Ct. 1983 (1972) (invalidating Florida garnishment procedure requiring a hearing only after the repossession)—and a property damage claim arising out of the alleged misconduct of state officers.

Vicory v. Walton, 721 F.2d 1062,1064 (6th Cir. 1983). While the latter case requires closer scrutiny of a section 1983 claim because state law provides the plaintiff a means of relief, where, as here, the challenge is that the "established state procedure" itself is constitutionally infirm, the Parratt scrutiny suggested by the System does not apply. See Logan v. Zimmerman Brush Co., 455 U.S. 422, 435-36 (1982). The System's cited case law is thus inapposite.

The System also argues that sovereign immunity requires dismissal of plaintiffs' claims. The Eleventh Amendment provides: "The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State." U.S. Const. amend. XL "Although the Eleventh Amendment is not directly applicable to state courts, the doctrine of sovereign immunity similarly protects the states from actions [in] state courts." Moody v. Commissioner, Dept. of Human Servs., 661 A.2d 156, 158 n.3 (Me. 1995); Alden v. State, 1998 ME 200, ¶¶ 7-11, 715 A.2d 172, 174-75, aff'd, 527 U.S. 706 (1999). The general principle of sovereign immunity is that a state or one of its agencies or departments cannot be sued unless the state consents by legislative enactment. See Drake v. Smith, 390 A.2d 541, 543 (Me. 1978). Plaintiffs do not contend that the state has consented to this suit, and this court has found no indication of a legislative waiver of immunity. Instead, the issue here is whether the System is an "arm of the State." See Metcalf & Eddy, Inc. v. Puerto Rico Aqueduct & Sewer Auth., 991 F.2d 935, 939 (1st Cir. 1993) ("[o]nly the state itself and 'arms' of the state receive immunity").^[4]

The Law Court has not specifically determined whether the System is an arm of the state for sovereign immunity purposes.^[5] Although the Eleventh Amendment does not delimit the scope and effect of state sovereign immunity, the Law Court has "looked to the Eleventh Amendment to define the contours of state sovereign immunity." Alden, 1998 ME 200, ¶ 8, 11, 715 A.2d at 174-75; see also Moody, 661 A.2d at 159 (Lipez, J concurring) (agreeing that the Law Court has "relied in the past on federal Eleventh Amendment sovereign immunity jurisprudence to develop our own doctrine of sovereign immunity"). To determine whether an entity enjoys ...