Scott v. Williams

• Decision Date: 17 January 2013
• Docket Number: No. SC12–520.,SC12–520.
• Citation: 107 So.3d 379
• Parties: Rick SCOTT, et al., Appellants, v. George WILLIAMS, et al., Appellees.
• Court: Florida Supreme Court

107 So.3d 379

Rick SCOTT, et al., Appellants,

v.George WILLIAMS, et al., Appellees.

No. SC12–520.

Supreme Court of Florida.

Jan. 17, 2013.

Pamela Jo Bondi, Attorney General, and Timothy David Osterhaus, Solicitor General, and Louis F. Hubener, III, Chief Deputy Solicitor General, Tallahassee, FL, and Raoul G. Cantero, III and Thomas Neal McAliley of White & Case, LLP, Miami, FL, and H. Douglas Hinson of Alston & Bird, LLP, Atlanta, GA, and David R. Godofsky, and Richard S. Siegel, Washington, DC, for Appellants.

Ronald Gustav Meyer, Jennifer Suzanne Blohm, and Lynn Colby Hearn of Meyer, Brooks, Demma and Blohm, P.A., Tallahassee, FL, Alice O'Brien of the National Education Association, Washington, DC, for Appellees.

Richard Anthony Sicking, Coral Gables, FL, for Appellee Brett Sandlin.

Aaron Martin Nisenson, Sarasota, FL, for Appellees the International Union of Police Associations, AFL–CIO, Jason Cannon, Joseph Paduano, and Gary Penny.

G. Hal Johnson of the Florida Police Benevolent Association, Tallahassee, FL, for Appellees/Intervenors John Park and Randall Haire.

Richard Paul Siwica of Egan, Lev & Siwica, P.A., Orlando, FL, for Intervenor/Appellee Rodney Durbin.

James W. Linn and Glenn E. Thomas of Lewis, Longman & Walker, P.A., and Harry Morrison, Jr. and Kraig A. Conn, Tallahassee, FL, for Amicus Curiae the Florida League of Cities, Inc.

Gregory Thomas Stewart of Nabors, Giblin & Nickerson, P.A., and Virginia Saunders Delegal, Tallahassee, FL, for Amicus Curiae the Florida Association of Counties, Inc.

Craig Arthur Meyer, Thomas Ross McSwain, and Leah L. Marino of the Florida Senate, and George T. Levesque and Donald Jay Rubottom of the Florida House of Representatives, Tallahassee, FL, for Amicus Curiae the Florida Senate and the Florida House of Representatives.

Robert Evans Weissert, Tallahassee, FL, for Amicus Curiae Florida TaxWatch.

Robert David Klausner and Adam Phillip Levinson of Klausner, Kaufman, Jensen & Levinson, Plantation, FL, for Amicus Curiae the National Conference on Public Employee Retirement Systems.

LABARGA, J.

Appellants Governor Rick Scott, Attorney General Pamela Jo Bondi, and Chief Financial Officer Jeff Atwater, in their capacity as the State Board of Administration of Florida, and John Miles, Secretary of the Department of Management Services of Florida, appealed a judgment of the Circuit Court of the Second Judicial Circuit in and for Leon County to the First District Court of Appeal, which certified to this Court that the appeal is one presenting issues of great public importance that require immediate resolution by this Court. We have jurisdiction. Seeart. V, § 3(b)(5), Fla. Const.

In this case, we consider the constitutionality of certain provisions of chapter 2011–68, Laws of Florida, enacting Senate Bill 2100, which as of July 1, 2011, converted the Florida Retirement System (FRS) from noncontributory by employees to contributory, required all current FRS members to contribute 3% of their salaries to the retirement system, and eliminated the retirement cost-of-living adjustment for creditable service after the effective date of the act.¹ The circuit court held that these amendments violated three separate provisions of the Florida Constitution—article I, section 10, which prohibits laws impairing the obligation of contracts; article X, section 6, which provides that no private property shall be taken except for a public purpose and with full compensation paid therefor; and article I, section 6, providing that the right of public employees to bargain collectively shall not be denied or abridged. Based on these rulings, the circuit court held the challenged amendments to be unconstitutional and ordered the appellants to reimburse, with interest, all funds deducted or withheld pursuant to the challenged provisions from the compensation or cost-of-living adjustments of employees who were members of the FRS prior to July 1, 2011.

The appellants and supporting amici (for ease of reference collectively referred to herein as “the State”) contend on appeal, as they did in the circuit court, that the laws are facially constitutional.² For the reasons explained below, we agree with the State and reverse the judgment of the circuit court based on our conclusion that the Legislature did not violate the Florida Constitution in enacting the challenged provisions of chapter 2011–68, Laws of Florida.

BACKGROUND

We begin with an overview of the challenged provisions of chapter 2011–68, Laws of Florida. Since 1975, until the July 1, 2011, effective date of the amendments at issue here, the FRS was noncontributory for most state and local employee members, meaning that the plan was funded entirely by public employer contributions. Further, prior to the 2011 amendments, the FRS plan provided for retired members to receive a cost-of-living adjustment (COLA) equal to 3% of the total monthly benefit, which was calculated once yearly. The plaintiffs and intervenors below challenged two facets of the 2011 pension amendments—the amendments contained in sections 5, 7, 9, 11, 13, 24, 26, 29, 32, 33, 39, and 40 of chapter 2011–68, Laws of Florida, requiring current state and local members of the FRS to pay 3% of their gross compensation into the pension plan, and the amendment contained in section 17 of chapter 2011–68, Laws of Florida, eliminating COLA adjustments for service performed by FRS members after June 30, 2011.³

The circuit court decided the case on cross motions for summary judgment based on a stipulation that there were no material facts in dispute. The facts that the circuit court relied on included the fact that “the FRS has been operating well above the 80% funding ratio recommended by experts” and “according to the State Board of Administration, which is responsible for investing funds deposited in the FRS, the FRS is one of the ‘most well-funded and healthiest public pension funds in the United States.’ ” The court's order also recognized the following undisputed facts: “Florida faced a budget shortfall of $3.6 billion at the start of the 2011 legislative session. The legislature calculated the savings to be achieved from the challenged portions of Senate Bill 2100 to be approximately $861 million. There was also record evidence, unrebutted, that the legislature's appropriations for 2011–2012 left nearly $1.2 billion in general revenue unspent for the year.” The trial court also noted the fact that the amendments significantly reduced the employer contributions to the FRS and that the amendments were not enacted to make the FRS actuarially sound but were intended to respond to the State's projected budget shortfall.

With this factual backdrop, and relying primarily on the language contained in section 121.011(3)(d), Florida Statutes (1974), a provision known as the “preservation of rights” statute, the circuit court held that the rights of the members of the FRS to the noncontributory retirement plan with a COLA, which was in effect prior to the amendments, were contractual in nature, that they were legally enforceable as valid contract rights, and could not be abridged in any way. The preservation of rights section, enacted in 1974 at the same time that the FRS was amended to be noncontributory for most public employees, provided then and continues to provide now as follows:

(3) PRESERVATION OF RIGHTS.—

....

(d) The rights of members of the retirement system established by this chapter shall not be impaired by virtue of the conversion of the Florida Retirement System to an employee noncontributory system. As of July 1, 1974, the rights of members of the retirement system established by this chapter are declared to be of a contractual nature, entered into between the member and the state, and such rights shall be legally enforceable as valid contract rights and shall not be abridged in any way.

See§ 121.011(3)(d), Fla. Stat. (1974); § 121.011(3)(d), Fla. Stat. (2012); ch. 74–302, § 1, at 937, Laws of Fla. The circuit court held that the Legislature substantially breached the employees' contract rights guaranteed by the preservation of rights statute by requiring employee contributions to the FRS and by elimination of the COLA, and further held that this breach was not justified by the existence of a significant budget shortfall where other, reasonable alternatives existed to preserve the State's contract with FRS members.

In so ruling, the circuit court acknowledged this Court's 1981 decision in Florida Sheriffs Ass'n v. Department of Administration, 408 So.2d 1033, 1037 (Fla.1981), in which we held that the preservation of rights statute “vest [ed] all rights and benefits already earned under the present retirement plan” but did not preclude the Legislature from altering benefits prospectively for future state service in the existing noncontributory plan. However, the circuit court concluded that the Florida Sheriffs decision did not allow the Legislature to “completely gut and create a new form of pension plan.” Finally, the circuit court concluded that the challenged portions of chapter 2011–68, Laws of Florida, also effected an unconstitutional taking of private property without full compensation and abridged the rights of public employees to bargain collectively over conditions of employment, to wit, retirement benefits.

Thus, this case turns on the question of whether the challenged provisions of chapter 2011–68, Laws of Florida, violate the contracts clause, the takings clause, or the collective bargaining clause of the Florida Constitution. The State also challenges the refund remedy ordered by the trial court. We turn first to the applicable standards of review.

ANALYSIS

I. Standards of Review

Determination of whether a statute is constitutional is a pure question of law which is reviewed de novo. See Crist v. Ervin, 56 So.3d 745, 747 (Fla.2010). When the question involves both factual and legal issues, the Court will review a trial court's factual findings for...