Rhode Island Public Employees Retiree Coalition v. Raimondo
| Decision Date | 09 June 2015 |
| Docket Number | C.A. PC 2015-1468 |
| Parties | RHODE ISLAND PUBLIC EMPLOYEES RETIREE COALITION, ET ALS. v. GINA RAIMONDO, IN HER CAPACITY AS GOVERNOR OF THE STATE OF RHODE ISLAND, ET ALS. |
| Court | Rhode Island Superior Court |
Rhode Island Public Employees Retiree Coalition, et al. vs. Gina Raimondo, et al. No. PC 15-1468
DECISION
Pursuant to Super. R. Civ. P. 23(e), the Court is assigned the duty to either approve or reject the class action settlement agreement reached in this class action and in the underlying pension cases. This 2015 Settlement Agreement was vetted at a Fairness Hearing that began on May 20, 2015. The underlying purpose of the Fairness Hearing was to "protect unnamed members of the class from unjust or unfair settlements affecting their rights." In re Syncor ERISA Litig., 516 F.3d 1095, 1100 (9th Cir. 2008).[1] The role of a judge in this regard has been described as serving as a guardian of the absent class members who will be bound by the settlement. See Barbosa v. Cargill Meat Solutions Corp., 297 F.R.D. 431, 445 (E.D. Cal. 2013).
A court must independently determine whether the proposed settlement agreement is "fundamentally fair, adequate, and reasonable" before granting approval. In re Heritage Bond Litig., 546 F.3d 667, 674-75 (9th Cir. 2008); see also Staton v. Boeing Co., 327 F.3d 938, 959 (9th Cir. 2003). In other words, it must eschew any "rubber stamp" approval in favor of an independent review of the settlement. See City of Detroit v. Grinnell Corp., 495 F.2d 448, 462 (2d Cir. 1974) (overruled on other grounds in Goldberger v. Integrated Resources Inc., 209 F.3d 43 (2d Cir. 2000)). In doing so, courts are "restrained by the clear policy in favor of encouraging settlements" to facilitate resolution of controversies and promote judicial economy. Durrett v Hous. Auth. of City of Providence, 896 F.2d 600, 600-04 (1st Cir. 1990) (citing Metro. Hous. Dev. Corp. v Village of Arlington Heights, 616 F.2d 1006, 1014 (7th Cir. 1980)). A court "determines a settlement's fairness by looking at both the settlement's terms and the negotiating process leading to the settlement." Wal–Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 116 (2d Cir. 2005).
In making such a determination of fairness, there "is a strong judicial policy [favoring] settlement [that underlies a court's review], particularly where complex class action litigation is concerned." In re Syncor ERISA Litig., 516 F.3d at 1101 (citing Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992)). The Court's intrusion into what is otherwise a private consensual agreement is limited to the extent necessary to reach a reasoned judgment that the settlement, taken as a whole, is fair, reasonable, and adequate to all concerned. See Officers for Justice v. Civil Service Comm'n of City and Cnty. of San Francisco, 688 F.2d 615, 625 (9th Cir. 1982); see also Clark Equip. Co. v. Int'l Union, Allied Indus. Workers of America, AFL-CIO, 803 F.2d 878, 880 (6th Cir. 1986). The Court remains mindful that "[s]ettlements are private contracts reflecting negotiated compromises." In re Baby Products Antitrust Litig., 708 F.3d 163, 173 (3d Cir. 2013). Accordingly, the Court's role "is not to determine whether the settlement is the fairest possible resolution . . . [but to] determine whether the compromises reflected in the settlement . . . are fair, reasonable, and adequate when considered from the perspective of the class as a whole." Id. at 173-74. An agreement is not properly reviewed by either hypothetical or speculative measures. Officers for Justice, 688 F.2d at 625. In such an evaluation, the Court "'ought not try the case in the settlement hearings, ' and . . . must keep in mind that 'compromise is the essence of a settlement.'" Knight v. Alabama, 469 F.Supp.2d 1016, 1032 (N.D. Ala. 2006) (quoting Cotton v. Hinton, 559 F.2d 1326, 1330 (5th Cir. 1977)). Now, after careful consideration of the proposed 2015 Settlement Agreement, the testimony, and a review of the objections raised by the Class Members, the Court here issues its decision.
The procedural backstory of the pension cases has been well documented in many decisions over the past five years. The final chapter culminated with the filing of this class action in April 2015 by Plaintiffs Rhode Island Public Employees' Retiree Coalition (RIPERC); Rhode Island American Federation of Teachers/Retirees, Local 8037 (AFT/R) Roger Boudreau; Michael Connolly; Kevin Schnell; Rhode Island Council 94, AFSCME, AFL-CIO; National Education Association-Rhode Island (NEARI); John Lavery; Michael McDonald; Jason Kane; Amy Mullen; Susan Verdon; Rhode Island State Association of Firefighters; Raymond Furtado; and James Richards (collectively Plaintiffs) against Gina M. Raimondo, in her capacity as Governor of the State of Rhode Island; Seth Magaziner, in his capacity as General Treasurer of the State of Rhode Island; and the Employees Retirement System of Rhode Island (ERSRI), by and through the Retirement Board, by and through Seth Magaziner, in his capacity as Chairperson of the Retirement Board and Frank J. Karpinski, in his capacity as Secretary of the Retirement Board (collectively the State Defendants) and the Towns of Barrington, Middletown, and South Kingstown (the Towns).[2]
The class action complaint, filed for settlement purposes only, challenges the constitutionality of 2009 Legislation, 2010 Legislation, and the Rhode Island Retirement Security Act of 2011 (RIRSA) (collectively Enactments). Specifically, the complaint alleges violations of the Contract Clause, Due Process Clause, and Takings Clauses of the Rhode Island Constitution. The Plaintiffs seek relief that includes a declaration that the Enactments are unconstitutional, as well as other equitable relief including injunctive relief.
In 2009, the General Assembly passed the first of a trilogy of enactments that modified the statutes governing the retirement system. The passage of the legislation was an attempt to provide more security to the retirement system. Each of these Enactments was separately challenged as being in violation of the Rhode Island Constitution. The first Enactment modified the retirement benefits and rules governing eligibility for retirement for active state employees and teachers not yet eligible to retire. See P.L. 2009, ch. 68, art. 7 (the 2009 Act) (Hr'g Ex. 1). In 2010, the General Assembly passed the second Enactment that reduced the cost of living adjustment (COLA) benefits for active state employees and teachers who were not yet eligible to retire as of June 12, 2010. See P.L. 2010, ch. 23, art. 16 (the 2010 Act) (Hr'g Ex. 2).
The final Enactment, the Rhode Island Retirement Security Act of 2011, P.L. 2011, ch. 408 and 409 (RIRSA), resulted in major changes to the pension system and the retirement benefits for state employees, school teachers, and municipal employees who were not yet eligible to retire as of July 1, 2012. (Hr'g Ex. 3.) For state employees who were eligible to retire but had not yet retired as of July 1, 2012, RIRSA changed the formula by which their retirement allowance would be calculated. For correctional officers, RIRSA also altered the rules governing retirement eligibility and changed the formula for their retirement allowance. For teachers who were not eligible to retire as of July 1, 2012, RIRSA increased the retirement age, changed the formula for calculating the retirement allowance, and changed the employee contribution rate. RIRSA also made changes to the retirement benefits for municipal employees who were members of the Municipal Employees Retirement System (MERS), which is also part of the ERSRI. For all members receiving retirement benefits under the ERSRI, including those employees who had already retired as of June 30, 2012, RIRSA reduced the amount of the annual COLA benefit, limited the COLA to apply only to the first $25, 000 of a member's retirement benefit, and suspended the annual COLA making it payable once every five years until the various pension plans were at least 80% funded. In addition, RIRSA changed the structure of the retirement program from a traditional defined benefit plan to a "hybrid plan" with a smaller defined benefit plan and a supplemental defined contribution plan. For active Police and Firefighters, RIRSA made a number of other changes including increasing the minimum service requirement and adding a minimum retirement age of 55 years.
After the historic reformation of the laws governing the retirement system, a number of unions filed lawsuits challenging the constitutionality of the Enactments. The first lawsuit challenging the 2009 Enactment, was amended to include a challenge to the 2010 Enactment. In that case, the Defendants filed a Motion for Summary Judgment arguing that the ERSRI, as a statutory creation, does not create a contractual relationship between the State and members of the ERSRI. A Decision was rendered on September 13, 2011, denying the motion for summary judgment and concluding that the ERSRI created an implied unilateral contract between the State and ERSRI members. See Rhode Island Council 94 v. Carcieri, 2011 WL 4198506 (R.I. Super. Sept. 13, 2011) (Pension I).
Further litigation emerged after RIRSA was enacted. In 2012, five lawsuits were filed by retired or active state employees public school teachers, and municipal employees challenging the constitutionality of RIRSA.[3] These actions, along with the 2010 action, came to be known as the pension cases. Like the 2010 case, the 2012 cases sought a declaratory judgment-that RIRSA violated the Contract Clause, Takings Clause, and Due Process Clause of the Rhode Island...
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