Pineman v. Oechslin

• Decision Date: 12 March 1985
• Citation: 195 Conn. 405,488 A.2d 803
• Court: Connecticut Supreme Court
• Parties: , 6 Employee Benefits Cas. 1443 Karen K. PINEMAN et al. v. William G. OECHSLIN et al.

Page 803

488 A.2d 803

195 Conn. 405, 6 Employee Benefits Cas. 1443

Karen K. PINEMAN et al. v. William G. OECHSLIN et al.

Supreme Court of Connecticut.

Argued Dec. 13, 1984.

Decided March 12, 1985.

[195 Conn. 406] Paul W. Orth, Hartford, with whom was Austin Carey, Jr., Hartford, for appellants-appellees (plaintiffs).

Peter T. Zarella, Hartford, with whom was Richard R. Brown, Hartford, for appellees-appellants (defendants).

Before ARTHUR H. HEALEY, PARSKEY, SHEA, DANNEHY and BIELUCH, JJ.

PARSKEY, Associate Justice.

The principal issue presented by this appeal is whether state employees have contractual interests in the State Employees Retirement Act (act), General Statutes §§ 5-152 through 5-192d. Because we agree with the trial court that the act creates no contractual rights we find no error.

The plaintiffs brought a class action in the United States District Court for the Thereafter the plaintiffs brought an action in the Superior Court seeking, inter alia, a judgment declaring that the "pre-1975 Retirement Act ... created a contractual obligation obliging Connecticut to maintain the pre-1975 retirement ages for female state employees who had not yet begun receiving retirement benefits when such act was revised by the act on June 30, 1975." The individual plaintiffs consisting of three female (Karen Pineman, Judith Narus, Rose Schewe) and three male (Alphonse S. Marotta, Daniel Clifford, Alfred K. Tyll) state employees, sought and were granted an order certifying their right to maintain the action on behalf of all similarly situated state employees. The trial court, after examining the Retirement Act and other statutes which it deemed relevant, concluded that in enacting the Retirement Act the legislature never intended to create contractual rights in state employees. We agree with the trial court's conclusion.

                District of Connecticut against the named defendant, chairman of the state employees retirement commission, Henry E. Parker, state treasurer, and J. Edward Caldwell, state comptroller.   The action sought a declaratory judgment establishing that the State Employees Retirement Act, §§ 5-152 through 5-192d, as amended by No. 75-531 of the 1975 Public Acts, impairs the state's contractual obligations to the plaintiffs in violation of article I, § 10 of the constitution of the United States which provides that "[n]o State shall ... pass any ... Law impairing the Obligation of Contracts...."  The district court, agreeing with the plaintiffs, issued a permanent injunction "requiring the defendants to administer the State Employees Retirement Act in a manner which respects the plaintiffs' contractual rights."  Pineman [195 Conn. 407] v. Oechslin, 494 F.Supp. 525, 554 (D.Conn.1980).   On appeal, the United States Court of Appeals for the Second Circuit vacated the district court's judgment and remanded the case with direction that the district court abstain from adjudicating the federal constitutional claim so as to afford the state court an opportunity to adjudicate the plaintiffs' contract claims as a matter of state law.   Pineman v. Oechslin, 637 F.2d 601 (2d Cir.1981).   The district court thereafter issued an abstention order setting forth the questions which appeared to be undecided, stayed further proceedings of the federal action and retained jurisdiction for such further proceedings as may be appropriate or necessary upon the conclusion of the state court proceedings
                

HISTORICAL BACKGROUND OF THE STATE EMPLOYEES RETIREMENT ACT

The act as initially adopted in 1939 permitted male employees to retire at age fifty-five with twenty-five years of service and female employees to retire at age fifty with twenty-five years of service. General Statutes (Sup.1939) § 67e et seq. This disparate treatment of male and female employees continued into 1974. General Statutes (Rev. to 1975) § 5-162. In that year, the act was held to violate the prohibition against sex-based employment discrimination contained in Title VII of the Civil Rights Act of 1964. Fitzpatrick v. Bitzer, 390 F.Supp. 278 (D.Conn.1974), aff'd in part and rev'd in part on other grounds, 519 F.2d 559 (2d Cir.1975), aff'd in part and rev'd in part on other grounds, 427 U.S. 445, 96 S.Ct. 2666, 49 L.Ed.2d 614 (1976). At the 1975 session of the General Assembly, the act was amended to establish fifty-five years as the retirement age for all state employees with twenty-five years of service. Public Acts 1975, No. 75-531. ¹ It

also provided [195 Conn. 409] that any employee with twenty-five years of state service who attained the age of fifty prior to June 30, 1980, could elect to retire and receive normal retirement benefits.

APPLICABLE RULES OF STATUTORY CONSTRUCTION

Prior to entering a discussion of whether the act creates vested contractual rights in the plaintiff employees, we note the appropriate standard of statutory interpretation traditionally applied to questions such as the one before us. "In determining whether a law tenders a contract to a citizen it is of first importance to examine the language of the statute. If it provides for the execution of a written contract on behalf of the state the case for an obligation binding upon the state is clear. Equally clear is the case where a statute confirms a settlement of disputed rights and defines its terms. On the other hand, an act merely fixing salaries of officers creates no contract in their favor and the compensation named may be altered at the will of the Although the legislature may authorize a contract to be made on behalf of the state; Wilson v. East Bridgeport School District, 36 Conn. 280, 282 (1869); there exists a "well-established presumption" against finding that a statute creates private vested contractual rights absent a clear showing of legislative intent to the contrary. Taliaferro v. Dykstra, 434 F.Supp. 705, 710-11 (E.D.Va.1977). Since the effect of such authorization is to surrender the legislature's governmental power of revision and to restrict the legislative authority of succeeding legislatures, a legislative intent to create contractual rights will not be assumed unless the statutory language expressing such intent is clear and unambiguous. Indiana ex rel. Anderson v. Brand, supra, 303 U.S. at 110, 58 S.Ct. at 450 (Black, J., dissenting).

                legislature.   This is true also of an act fixing the term or tenure of a public officer or an employe of a state agency.   The presumption is that such a law is not intended to create private contractual or vested rights but merely declares a policy to be pursued until the legislature shall ordain otherwise."  (Footnotes omitted.)   Dodge v. Board of Education, 302 U.S. 74, 78-79, 58 S.Ct. 98, 100, 82 L.Ed. 57 (1937).  "The principal function of a legislative body is not to make contracts but to make laws which declare the policy of the state and are subject to repeal when a subsequent legislature shall determine to alter that policy."   Indiana ex rel. Anderson v. Brand, 303 U.S. 95, 100, 58 S.Ct. 443, 446, 82 L.Ed. 685 (1938)
                

APPROACH TO PUBLIC PENSIONS

The specific issue of whether Connecticut's statutory retirement plan for state employees is contractual in nature is a question of first impression before this court. ² To guide us in resolving this issue, we look to the various approaches adopted by other courts that have been confronted with similar questions. See Pineman v. Oechslin, 637 F.2d 601, 604-605 (2d Cir.1981). In a few states, the issue has been removed from the court's domain by the enactment of constitutional or statutory provisions expressly stating that public pension plans give rise to vested contractual rights. Annot., "Vested Right of Pensioner to Pension," 52 A.L.R.2d 437, 441 (1957); see, e.g., N.Y. Const., art. V, § 7; Pineman v. Oechslin, 494 F.Supp. 525, 544 n. 36 (D.Conn.1980). No such provision exists in the statutes or constitution of Connecticut.

Where such an express statement of legislative intent is lacking, the traditional view, still adhered to in many jurisdictions, is that there are no rights, contractual or otherwise, under a pension plan until the state employee satisfies all the eligibility requirements, including age and years of service, for receiving benefits. See Pineman v. Oechslin, 637 F.2d 601, 605 (2d Cir.1981), and cases cited therein. This approach is premised on the view that statutory pension benefits are in the nature of a gratuity, and that public employees have merely an expectancy interest in the pension fund, revocable at the will of the legislature. See Christensen v. Minneapolis Municipal Employees Retirement Board, 331 N.W.2d 740, 745-46 (Minn.1983); Cohn, "Public Employee Retirement Plans--The Nature of the Employees' Rights," 1968 U.Ill.L.F. 32, pp. 34-37 (1968). A simply applied but rigidly doctrinaire analysis developed in which the nature of the employee's rights was classified as contractual or gratuitous, depending upon whether participation in the plan was voluntary or compulsory. Voluntary plans were deemed to create vested rights while compulsory participation meant no vested interest accrued. See annot., 52 A.L.R.2d, supra, pp. 441-43.

This rigid analytic approach, and the gratuity concept generally, have been the subject of increasing criticism and judicial discomfort. As one commentator recently put it: "In the seventh decade of the 20th century it seems somewhat absurd to speak of a pension as in the 'nature of a bounty springing from the appreciation and graciousness of the sovereign.' [ Blough v. Ekstrom, 14 Ill.App.2d 153, 160, 144 N.E.2d 436 (1957).] Medieval notions of the beneficence and graciousness of worldly monarchs have no relevance to modern notions of sovereignty." Cohn, supra, p. 37; see Christensen v. Minneapolis Municipal Employees Retirement Board, supra, 746-47; Spina v. Consolidated Police & Firemen's Pension Fund Commission, 41 N.J. 391, 401, 197 A.2d 169 (1964). We find this criticism valid and persuasive,...