Ridge v. State Employees' Retirement Bd. of the Com. of Pa.

• Decision Date: 13 March 1997
• Citation: 690 A.2d 1312
• Parties: 71 Empl. Prac. Dec. P 44,868 Joseph H. RIDGE, an individual, Petitioner v. STATE EMPLOYEES' RETIREMENT BOARD OF THE COMMONWEALTH OF PENNSYLVANIA and John Brosius, in his capacity as Executive Secretary of the State Employees' Retirement Board, Respondents.
• Court: Pennsylvania Commonwealth Court

Page 1312

690 A.2d 1312

71 Empl. Prac. Dec. P 44,868

Joseph H. RIDGE, an individual, Petitioner v. STATE EMPLOYEES' RETIREMENT BOARD OF THE COMMONWEALTH OF PENNSYLVANIA and John Brosius, in his capacity as Executive Secretary of the State Employees' Retirement Board Respondents.

Commonwealth Court of Pennsylvania.

Argued Nov. 20, 1996.

Decided March 13, 1997.

Irving M. Green, New Kensington, for petitioner.

Jerome R. Richter and William H. Roberts, Philadelphia, for respondent, SERB.

Before COLINS, President Judge, and McGINLEY, SMITH, PELLEGRINI, FRIEDMAN, KELLEY and LEADBETTER, JJ.

LEADBETTER, Judge.

Joseph H. Ridge (Ridge), a retired judge of the Court of Common Pleas of Allegheny County, filed an action in this Court's original jurisdiction seeking the issuance of a writ of mandamus ordering the State Employees' Retirement Board of the Commonwealth of Pennsylvania (the Board) to recalculate his retirement benefits using gender-neutral actuarial tables and a declaration that the Board's use of gender-based actuarial tables in calculating retirement benefits for credited service prior to August 1, 1983, is unlawful. ¹

In his amended petition, Ridge avers that the Board used gender-based mortality tables in calculating his retirement benefits for credited service which he accrued prior to August 1, 1983. According to Ridge, the use of such tables has resulted in payment of benefits which are approximately five hundred dollars less per month than those which would be paid to a similarly situated female retiree. Ridge also avers that the present value of his annuity account, as of the date of his retirement, is approximately one hundred fifty-five thousand dollars less than it would be if his benefits had been calculated using gender-neutral tables. Finally, Ridge avers that the use of gender-based tables violates Article 1, sections 26 and 28, of the Pennsylvania Constitution. ²

The Board filed an answer and new matter to the amended petition. In its answer, the Board admitted that the calculation of Ridge's optional modification of the maximum single life annuity employed gender-based mortality tables for benefits resulting from service prior to August 1, 1983. The Board further admitted that its use of the tables resulted in an optionally modified benefit which is less than that which would have been available to an identically situated female retiree with the same service prior to August 1, 1983. Finally, the Board averred that it ceased using gender-based mortality tables on August 1, 1983, in accordance with Arizona Governing Comm. for Tax Deferred Annuity & Deferred Compensation Plans v. Norris (Nathalie), 463 U.S. 1073, 103 S.Ct. 3492, 77 L.Ed.2d 1236 (1983) and Florida v. Long, 487 U.S. 223, 108 S.Ct. 2354, 101 L.Ed.2d 206 (1988), disapproved on other grounds by, Yellow Freight Sys., Inc. v. Donnelly, 494 U.S. 820, 110 S.Ct. 1566, 108 L.Ed.2d 834 (1990). ³

In its new matter, the Board averred, inter alia, that: (1) the additional cost, in terms of actuarial present value, of a retroactive application of "topped-up" or female-based mortality tables to Ridge, and all other members of the retirement system who have retired since the enactment of Article I, sections 26 and 28, would exceed seven hundred and fifty million dollars; ⁴ (2) the cost of any retroactive action would be born by the Commonwealth and other employers; and (3) a retroactive remedy would unreasonably burden the Commonwealth and its taxpayers.

Ridge subsequently filed a motion for judgment on the pleadings. The Board filed an answer to Ridge's motion and, thereafter, a motion to amend its new matter to assert a statute of limitations defense. Both these motions are now before this Court for resolution. We first address Ridge's motion for judgment on the pleadings. ⁵

In this motion, Ridge seeks the retroactive payment of additional pension benefits to adjust for the Board's use of gender-distinct actuarial tables in calculating benefits for service credited prior to August 1, 1983, when the Board ceased using the gender based tables. Although the United States Supreme Court has already indicated that retroactive relief in such cases is not appropriate, Norris; Florida v. Long, Ridge seeks such relief under Article I, sections 26 and 28 of the Pennsylvania Constitution. Whether these sections prohibit the use of gender-based mortality tables, as does Title VII of the Civil Rights Act of 1964, is an issue of first impression. However, we need not reach this issue, for even assuming, arguendo, that the use of gender based tables violates the Pennsylvania Constitution, Ridge has failed to establish that such a ruling would be retroactively applied.

As a general rule, a decision which announces a new principle of law is given retroactive application. Blackwell v. State Ethics Comm'n, 527 Pa. 172, 182, 589 A.2d 1094, 1099 (1991). Retroactive application, however, "is a matter of judicial discretion which must be exercised on a case by case basis." Id. Generally, in the area of pension fund liability, retroactive relief has been denied.

In McCue v. State Employes' Retirement Bd., 138 Pa.Cmwlth. 300, 588 A.2d 980 (1991), alloc. denied, 533 Pa. 614, 618 A.2d 404 (1992), this Court addressed the issue of whether a federal court decision which declared section 5304(b) of the State Employees' Retirement Code ⁶ unconstitutional, should be applied retroactively. There, Commonwealth employees (plaintiffs) sought to purchase retirement credit for their prior military service. Pursuant to section 5304(b), their request was denied because they also intended to apply for military reserve benefits. After plaintiffs retired, a federal district court held that section 5304(b) was unconstitutional. See Furgiuele v. Sheffler, No. 83-0039 (M.D.Pa., January 19, 1984), aff'd, 749 F.2d 26 (3d Cir.1984). Based upon Furgiuele, the plaintiffs again sought to purchase service credit; however, they were denied at that time because they were no longer active members of the retirement system.

On appeal to this Court, we held that retroactive application of Furgiuele was inappropriate. We stated as follows:

[I]n Los Angeles Department of Water and Power v. Manhart, 435 U.S. 702, 98 S.Ct. 1370, 55 L.Ed.2d 657 (1978), the U.S. Supreme Court stated that rules applying to pension funds should not be applied retroactively because the liability to a fund could be devastating. The potential claims by retired military personnel if Furgiuele were retroactively applied would be substantial. We recognize the significant effect a change in the legal rules governing pensions could have on the reserves in those funds. Given the complexities of pension funding and the potential for fund instability, we are of the opinion that retroactive application would amount to a penalty on the retirement system (and it members) for not anticipating a court decision.

Id. 588 A.2d at 982 (footnotes omitted). In determining whether Furgiuele should be applied retroactively, the court employed the analysis set forth in Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971):

First, the decision to be applied nonretroactively must establish a new principle of law, either by overruling clear past precedent on which the litigants may have relied, or by deciding an issue of first impression whose resolution was not clearly foreshadowed. Second, it has been stressed that we must ... weigh the merits and demerits in each case by looking to the prior history of the rule in question, its purpose and effect, and whether retrospective operation will further or retard its operation. Finally, we have weighed the inequity imposed by retroactive application, for where a decision ... could produce substantial inequitable results if applied retroactively, there is ample basis in our cases for avoiding the injustice or hardship by a holding of nonretroactivity. (citations omitted)

McCue, 588 A.2d at 981. ⁷ Accord Norris; Florida v. Long. As McCue demonstrates, retroactive remedies against pension funds are not favored by the laws of either this Commonwealth or the United States. ⁸

In the instant case, disputed factual issues lend further support to the probability that retroactive relief will ultimately be denied here. The Board has averred that retroactive relief to Ridge and other similarly situated members of the retirement system could cost the fund in excess of seven hundred and fifty million dollars. Accepting this fact as true for purposes of the instant motion, it is clear that exposing the retirement system to such liability could cause a risk to the fund's stability. It is for this very reason that the policy in this Commonwealth militates against a recalculation of Ridge's benefits. Thus, in light of the defenses set forth in the Board's new matter, Ridge has failed to demonstrate either a clear right to relief, as required in an action in mandamus, or an entitlement to judgment on the pleadings. Accordingly, the motion for judgment on the pleadings is denied.

Next, we address the Board's motion seeking leave to amend its new matter to include the averments that Ridge was aware of all facts pertinent to his cause of action by May, 1990, and that his cause of action is barred by the applicable statute of limitations. Ridge opposes the request for leave to amend, asserting that the request is untimely and merely an attempt by the Board to delay determination of his motion for judgment on the pleadings.

In James A. Mann, Inc. v. Upper Darby Sch. Dist., 99 Pa.Cmwlth. 276, 513 A.2d 528 (1986), we summarized the law applicable to requests for leave to amend pleadings:

Our Supreme Court has held that the right to amend a...