Stoker v. Milwaukee Cnty.

Decision Date19 December 2014
Docket NumberNo. 2012AP2466.,2012AP2466.
Citation857 N.W.2d 102,359 Wis.2d 347
PartiesSuzanne STOKER and Wisconsin Federation of Nurses and Health Professionals, Local 5001, AFT, AFL–CIO, Plaintiffs–Respondents, v. MILWAUKEE COUNTY, Defendant–Appellant–Petitioner, Milwaukee County Pension Board, Defendant–Co–Appellant–Petitioner.
CourtWisconsin Supreme Court

For the defendant-appellant-petitioner, there were briefs by Alan M. Levy and Lindner & Marsack, S.C., Milwaukee, and oral argument by Alan M. Levy.

For the defendant-co-appellant-petitioner, there were briefs by Beth Ermatinger Hanan and Gass Weber Mullins LLC, Milwaukee, and oral argument by Beth Ermatinger Hanan.

For the plaintiffs-respondents, there was a brief by Jeffrey P. Sweetland and Hawks Quindel, S.C., Milwaukee. Oral argument by Jeffrey P. Sweetland.

Opinion

ANNETTE KINGSLAND ZIEGLER, J.

¶ 1 This is a review of a published decision of the court of appeals1 affirming the Milwaukee County Circuit Court's2 order granting summary judgment and declaratory and injunctive relief to Suzanne Stoker (Stoker)3 and her labor union, the Wisconsin Federation of Nurses and Health Professionals, Local 5001, AFT, AFL–CIO (“the Federation”). The suit was filed against the respondents, Milwaukee County and the Milwaukee County Pension Board (“the Pension Board). We reverse and remand this matter to the circuit court to dismiss the complaint.

¶ 2 Milwaukee County calculates pension payments for its retired employees by multiplying a retiree's final average salary4 by a certain percentage known as a multiplier, and the resulting number is then multiplied by the retiree's total years of county service. When Stoker's county service began, a 1.5% multiplier applied to her service. In 2000 Milwaukee County passed an ordinance that increased the multiplier from 1.5% to 2% for service rendered on and after January 1, 2001. Milwaukee County, Wis. General Ordinance (“M.C.G.O.”) § 201.24(5.15)(1)(a) (2000).5

In 2011, consistent with the terms of a collective bargaining agreement with the Federation, Milwaukee County passed an ordinance that reduced the multiplier from 2% to 1.6% for all county service performed on and after January 1, 2012, the effective date of the ordinance. M.C.G.O. § 201.24(5.1)(2)(f) (2011). The 2% multiplier continued to apply to service rendered by Stoker from 2001 through 2011.

¶ 3 Stoker argues that this reduction of the multiplier is a breach of contract because she had a vested right to have the 2% multiplier apply to her post–2011 county service and because she did not personally consent to the reduction. Milwaukee County and the Pension Board argue that the reduction is authorized because Stoker had no vested right to have the 2% multiplier apply to her post–2011 county service. The Pension Board further argues that even if she had such a right, the Federation lawfully consented to the reduction on Stoker's behalf by ratifying the collective bargaining agreement that agreed to reduce the multiplier from 2% to 1.6% for post–2011 service.

¶ 4 We conclude that Milwaukee County did not breach the contract with Stoker when it amended the pension multiplier from 2% to 1.6%. The amendment did not breach Stoker's contractual right to retirement system benefits earned and vested because it had prospective-only application to future service credits not yet earned, specifically, on and after January 1, 2012. We conclude that the legislature preserved Stoker's rights and benefits already accrued but also gave Milwaukee County home rule authority with the flexibility to enact such prospective-only changes. We conclude that Stoker does not have a vested right to have the 2% multiplier apply to her then-unearned post–2011 service. In other words, Milwaukee County could so amend the formula and apply it prospectively because that prospective application does not “diminish or impair” benefits accrued from service credits already earned. Because we conclude that Milwaukee County did have the ability to make these prospective-only reductions of the multiplier without Stoker's personal consent, we need not address whether the Federation lawfully consented, on Stoker's behalf, to the reduction.

I. FACTUAL BACKGROUND

¶ 5 The relevant facts are not in dispute. In 1937 the legislature required counties with populations of 500,000 or more to develop retirement systems for their employees. Ch. 201, Laws of 1937.6 Pursuant to this law, the Milwaukee County Employees' Retirement System (MCERS) was created on January 1, 1938. On May 14, 1945, the legislature required employee benefits under MCERS to “be assured by benefit contracts.” Ch. 138, Laws of 1945.7 The legislature also provided that “each [MCERS] member and beneficiary having such a benefit contract shall have a vested right to such annuities and other benefits and they shall not be diminished or impaired by subsequent legislation or by any other means without his consent.” Id. The legislature further provided that each MCERS member has a “vested right in the annuities and all other benefits in the amounts and on the terms and conditions and in all other respects as provided in the law under which [MCERS] was established as such law shall have been amended and be in effect at the date of commencement of his membership [in MCERS].” Id.

¶ 6 In 1957 the legislature provided that a member of MCERS has a “vested right ... to all increases in benefits covered by amendments subsequent to the date his membership [in MCERS] is effective.” § 6, ch. 326, Laws of 1957.

¶ 7 In 1965 the legislature granted “home rule” authority to Milwaukee County over MCERS. § 1, ch. 405, Laws of 1965.8 This session law provided that “the future operation of each [county] benefit fund is a matter of local affair and government and shall not be construed to be a matter of state-wide concern.” Id. This law empowered Milwaukee County “to make any changes in [its employee] benefit fund which hereafter may be deemed necessary or desirable for the continued operation of [MCERS].” Id. However, “no such change shall operate to diminish or impair the annuities, benefits or other rights of any person who is a member of [MCERS] prior to the effective date of any such change.” Id.

¶ 8 On or about December 17, 1981, Milwaukee County passed an ordinance that applied a 1.5% pension benefit multiplier to county service performed by an employee whose employment with the County began after January 1, 1982. M.C.G.O. § 201.24(5.1) (1981).9 Thus, under this ordinance, the pension payments for an employee whose employment with the County began after January 1, 1982, were calculated by multiplying 1.5% by the employee's final average salary, and the resulting number was multiplied by the employee's total years of service with Milwaukee County. Id.

¶ 9 On or about April 13, 1982, Stoker began employment with Milwaukee County and thereby became a member of MCERS. Stoker was a Milwaukee County employee and MCERS member continuously since then and still was both when this lawsuit was filed.

¶ 10 On or about November 2, 2000, Milwaukee County increased the pension multiplier to 2% for county employees, effective January 1, 2001. M.C.G.O. § 201.24(5.15) (2000). This 2% multiplier applied to “all pension service credit earned on and after January 1, 2001.” Id. This 2% multiplier also applied retroactively to eight years of service prior to January 1, 2001, for each year of service performed after that date.

¶ 11 In approximately May 2011, the Federation and Milwaukee County negotiated the terms of a collective bargaining agreement for January 1, 2012, through December 1, 2012. Under the terms of the collective bargaining agreement, a pension multiplier of 1.6% would apply to “all pension service credit earned on and after January 1, 2012.” On or about May 23, 2011, the Federation ratified the collective bargaining agreement. On or about June 23, 2011, Milwaukee County approved the collective bargaining agreement. On or about July 28, 2011, Milwaukee County implemented the collective bargaining agreement by adopting an ordinance, which provided that a 1.6% pension multiplier would apply to “service ... rendered on and after January 1, 2012.” M.C.G.O. § 201.24(5.1)(2)(f) (2011). This ordinance is the subject of this lawsuit.

¶ 12 By virtue of the ordinance adopted in 2000, the 2% multiplier applied to all of Stoker's county service through December 31, 2011. The ordinance at issue changed the multiplier to 1.6% only with respect to Stoker's future, unearned service rendered on and after January 1, 2012. To be clear, the ordinance at issue did not affect the 2% multiplier that applied to Stoker's vested retirement benefits earned through December 31, 2011.

II. PROCEDURAL POSTURE

¶ 13 On December 16, 2011, Stoker and the Federation filed suit in circuit court against Milwaukee County and the Pension Board. Stoker sought relief declaring that the 2011 ordinance that reduced the pension multiplier from 2% to 1.6% with respect to post–2011 county service is invalid. Stoker also sought injunctive relief requiring Milwaukee County and the Pension Board to apply the 2% multiplier to Stoker's county service performed on and after January 1, 2012, the effective date of the ordinance. Stoker argued that the 2011 ordinance was a breach of contract.10 Stoker, Milwaukee County, and the Pension Board filed motions for summary judgment.

¶ 14 On July 11, 2012, the circuit court granted Stoker's motion for summary judgment. The circuit court reasoned that, under ch. 138 of the Laws of 1945, Stoker had a vested contractual right to retirement benefits since her employment with Milwaukee County began. According to the circuit court, this right includes the 2% multiplier.

¶ 15 Milwaukee County and the Pension Board appealed. On November 14, 2013, the court of appeals affirmed.

III. STANDARD OF REVIEW

¶ 16 We independently review whether the circuit court correctly granted summary judgment to Stoker. Tatera v. FMC...

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