Cranston Firefighters, IAFF Local 1363, AFL-CIO et al v. Raimondo et al
Filing
23
ORDER AND MEMORANDUM GRANTING 7 Motion to Dismiss and GRANTING 13 Motion to Dismiss. Counts I, II, and III of the Complaint are DISMISSED without prejudice. Count IV is DISMISSED with prejudice. So Ordered by Senior Judge Mary M. Lisi on 3/7/2017. (Feeley, Susan)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
CRANSTON FIREFIGHTERS, IAFF
LOCAL 1363, AFL-CIO, on its own behalf
and on behalf of its members, and
INTERNATIONAL BROTHERHOOD OF
POLICE OFFICERS, LOCAL 301,
AFL-CIO, on its own behalf and on behalf
of its members
Plaintiffs,
v.
C.A. No. 16-130-ML
GINA RAIMONDO, in her capacity as
Governor of the State of Rhode Island,
SETH MAGAZINER, in his capacity as
the General Treasurer of the State of Rhode
Island, the EMPLOYEES’ RETIREMENT
SYSTEM OF RHODE ISLAND, by and
through Seth Magaziner, in his capacity
as Chairperson of the Retirement Board,
and Frank J. Karpinski, in his capacity as
Executive Director of the Retirement Board,
and
CITY OF CRANSTON, by and through its
Finance Director, Robert F. Strom, and its
Treasurer, David Capuano,
Defendants.
ORDER AND MEMORANDUM
The plaintiffs in this action, Cranston Firefighters, IAFF
Local
1363,
Brotherhood
Officers,”
AFL-CIO
of
(the
Police
together
“Firefighters”)
Officers,
with
the
Local
and
301-CIO
Firefighters,
the
International
(the
“Police
“Unions”
or
“Plaintiffs”), have brought claims (the “Complaint”) against the
1
State of Rhode Island (the “State”), the Employees’ Retirement
System of Rhode Island (“ERSRI”), and the City of Cranston, (the
“City,” together with the State and ERSRI, “Defendants”), related
to the implementation of the Rhode Island Retirement Security Act
of 2011 (“RIRSA”), as amended by Rhode Island Public Laws Chapter
141, Article 21, “Relating to Pensions” (the “2015 Amendments”).
The matters before the Court are two separate motions to dismiss
the Complaint filed by the State (ECF No. 7) and by the City (ECF
No. 13). After considering the parties’ pleadings and conducting
a hearing on the motions on October 6, 2016, the Court issues the
following order and memorandum.
I.
Factual Background
A. Collective Bargaining Agreements
As set forth in the Complaint, the City and Local 1363 are
parties to a collective bargaining agreement1 (“CBA”), pursuant
to which “employees hired after July 1, 1995 will be enrolled in
the ‘State of Rhode Island Optional Twenty (20) Year Retirement
Service Allowance,’ R.I.G.L. 45-21.2-22.” Complaint ¶18. The CBA
provides, inter alia, that employees enrolled in the pension plan
1
At the time the Complaint was filed, the then current CBA
governed the period July 1, 2013 through June 30, 2016. Complaint
¶16. According to the Complaint, during the period from July 1,
2008 through June 30, 2011, the City and the Union agreed to
provide for a new CBA governing the period from July 1, 2011
through June 30, 2013. Complaint ¶17.
2
will accrue 2.5% per credited year of service, up to 75% for
thirty years of credited service; that the pension payment will
be based on the employee’s weekly salary, longevity pay, and
holiday pay, based on the employee’s highest year of earnings;
and
that
all
retired
employees’
pension
payments
will
automatically escalate by 3%, compounded each year following the
year
of
retirement.
Complaint
¶¶19-21.
Similarly,
Section
2.28.050 of the City of Cranston’s Code of Ordinances provides
for an accrual of 2.5% per credited year of service up to a
maximum of 75%. Complaint ¶25.
The City is also party to a CBA with Cranston Police, which
governs
employment
Cranston police
terms
officers
and
(up
conditions
to,
for
all
and including,
full-time
the
rank
of
Captain). Complaint ¶31. The Police CBA for the period from July
1, 2014 through June 30, 2017 provides for, inter alia, fixed
annual COLAs of 3% for all employees retiring after execution of
the Police CBA. Complaint ¶32. The Police CBA requires that no
changes
may
agreement
be
made
between
to
the
current
City
and
benefits
the
without
IBPO
a
written
[International
Brotherhood of Police Officers]. Id. According to the Complaint,
the Plaintiff Unions have filed grievances against the City for
allegedly violating provisions of the respective CBAs. Complaint
¶¶24,34. Those grievances are either pending or held in abeyance
3
pending the outcome of the instant case. Id.
B. The Cranston Ordinances
The Plaintiffs in this case claim contractual rights to
retirement
benefits
under
two
provisions
of
the
City
of
Cranston’s Code of Ordinances (the “City Ordinances”), Sections
2.28.050 and Section 2.20.05, respectively, which have remained
“substantially the same since 1995”, Complaint ¶¶27, 33. With
respect to retirement benefits, Section 2.20.050 provides, inter
alia, that police officers enrolled in the Rhode Island pension
plan will accrue 2.5% per credited year of service (up to 75%);
the Section also includes a 3% annual COLA. Pension benefits are
calculated on weekly salary, longevity pay, and holiday pay.
Complaint
¶¶35-36.
Similar
provisions
in
Section
2.28.050
(related to the Firefighters) include, inter alia, a 2.5% accrual
per
credited
year
of
service
up
to
75%.
Complaint
¶¶25-26.
Plaintiffs allege that the City is currently in violation of both
City Ordinances. Complaint ¶¶28, 38.
C. The 1996 Special Legislation
According to the Complaint, in 1993, employees of the City’s
Fire
and
Police
Departments
were
participants
in
the
City’s
municipal pension plan. Complaint ¶49. At that time, the City was
suffering from “a severe operating deficit” and the municipal
pension
plan
was
“critically
underfunded.”
4
Complaint
¶50.
In
1995, after
permit
new
negotiating
hires
and
with
the
employees
City, the Unions
with
five
or
agreed
fewer
to
years
of
service to transfer into the State Retirement System (“SRS”).
Complaint ¶¶54, 55. Because the SRS did not provide the same
benefits
as
the
CBAs,
the
Unions,
the
City,
and
SRS
representatives negotiated certain changes that became law by
special legislation in 1996. As a result, Section 45-21.2-14 of
the Rhode Island General Laws was amended to increase employee
contributions
Departments
for
from
members
7%
to
of
the
10%;
Cranston
to
Fire
provide
and
higher
Police
“final
compensation” when calculating their pension benefits; and to
provide them a 3% COLA. Complaint ¶63.
The Cranston City Council also adopted the provisions of
R.I.
Gen.
Laws
§
45-21.2-22,
which
permitted
public
safety
employees to retire after twenty years of service (regardless of
age)
and
included
a
retirement
allowance
of
2.5%
of
final
compensation multiplied by years of service, up to 75% of final
compensation. Complaint ¶¶62, 64. Pursuant to Sections 45-21.217.2 and 45-21.2-17.3, Cranston Firefighters and Police offices
becoming members under the State retirement system waived and
renounced all accrued rights and benefits of any other pension or
retirement system supported wholly or in part by a municipality
if the pension or retirement system was in existence prior to
5
July 1, 1995. Complaint ¶65. The Plaintiffs now take the position
that Section 45-21.2-1 et seq., as amended in 1996, "creates a
contract between the State and Plaintiffs." Complaint ¶66.
D. Rhode Island Retirement Security Act of 2011 (“RIRSA”)
RIRSA was enacted by the Rhode Island General Assembly in
2011
to
address
the
issue
of
unfunded
municipal
pension
liabilities. Id. at ¶¶67, 68. Some of the changes impacting fire
fighters
and
police
officers
within
the
Municipal
Employees’
Retirement System (“MERS”) include the following: it reduced the
factor to calculate an employee’s benefit from 2.5% per year of
service to 2% per year of service after July 1, 2012; it changed
the Final Average Compensation (“FAC”) from the highest year to
the highest five consecutive annual salaries; it increased the
twenty-year minimum service requirement to twenty-five; it added
a
minimum
reduced
or
retirement
delayed
age
the
of
fifty-five;
amount
of
and
COLAs
it
permanently
[cost-of-living
adjustments]. Complaint ¶69 a-j. In sum, RIRSA reduced, on a
prospective basis, the value of benefit plans for certain safety
employees, including Cranston fire fighters and police officers.
As set forth in the statute, in enacting RIRSA, the State
sought to address the "fiscal peril related to the growing and
substantial unfunded pension liabilities," that might lead Rhode
Island communities to file for bankruptcy protection which, in
6
turn,
had
already
been
shown
pensions. Complaint ¶68.
to
jeopardize
public
service
On their part, the Plaintiffs assert,
without further factual support, that "the City of Cranston MERS
[Municipal
police
Employees
officers
Retirement
was,
at
all
System]
relevant
for
firefighters
times,
and
well-funded."
Complaint ¶77. The Plaintiffs now claim that they have suffered
irreparable
injuries
as
a
direct
result
of
RIRSA
and
its
amendments. Complaint ¶1.
E. Litigation Arising from Pension Reform
1. The CPRAC Case
In early 2012, the Plaintiffs, together with several other
municipal employee unions, filed lawsuits2 in Rhode Island state
court against the State and ERSRI [Employees’ Retirement System
of Rhode Island], alleging that RIRSA violates the Contracts
Clause, Takings
Clause,
and
Due
Process
Clause
of
the
Rhode
Island Constitution by reducing the Plaintiffs’ pension benefits
and by substantially impairing their contracts. Complaint ¶78.
In
April
2013,
the
Cranston
Police
Department
Retirees
Association, Inc. and the Local 1363 Retirees Association brought
suit against the City, alleging that 2013 changes to certain
ordinances (the “2013 Ordinances”) of the Cranston City Code —
2
Woonsocket Fire Fighters IAFF Local 732, et al. v. Chafee,
C.A. No. PC-12- __ (ECF No. 7-1) and City of Cranston Police
Officer, et al. v. Chafee, C.A.No. PC-12-3169 (ECF No. 7-2).
7
which, inter alia, suspended the prior 3% compounded COLA for a
period of ten years — violated the Contract Clause of the United
States Constitution and the Rhode Island Constitution. Cranston
Police Retirees Action Committee v. City of Cranston, C.A. No.
KC-13-1059 (ECF No. 17-2) (“CPRAC”). Eventually, the case was
settled,
affording
those
plaintiffs
who
elected
to
exclude
themselves from the settlement agreement an opportunity to sue
the City of Cranston.
CPRAC promptly filed suit against the City, which, after a
thorough
trial.
discovery
Id.
On
period,
July
22,
culminated
2016,
the
in
Rhode
a
six-day
Island
non-jury
state
court
rendered a decision in favor of the City and concluded that (1)
in accordance with the respective CBAs under which they retired,
members of CPRAC had a vested right to 3% compounded COLAs and
that “the 3% compounded COLAs are contractual obligations, the
impairment of which is subject to contract clause scrutiny,”
CPRAC at
24;
(2)
the
2013
Cranston
Ordinances
constituted a
substantial impairment of the contract between members of CPRAC
and the City, id. at 29; (3) the 2013 Ordinances were passed for
a significant and legitimate public purpose, id. at 35; and (4)
the 2013 Ordinances were “reasonable and necessary,” id. at 45.
Accordingly, the state court concluded that the 2013 Ordinances
did not violate the contract clauses of either the Rhode Island
8
or the United States Constitutions. Id. The court also dismissed
CPRAC’s breach of contract claim for lack of standing and denied
CPRAC’s request for injunctive relief. The state court’s decision
is currently on appeal before the Supreme Court of Rhode Island.
2. The Class Action Settlement
In 2014, Plaintiffs filed separate lawsuits3 in Rhode Island
state court against the State and the City of Cranston, again
asserting that RIRSA violates the Rhode Island Constitution’s
Contracts
Clause,
Takings
Clause,
and
Due
Process
Clause.
Plaintiffs' 2014 lawsuits were consolidated with several other
lawsuits challenging RIRSA and/or other changes to retirement
benefits made in 2010 and 2011. After a settlement was reached in
most of the cases, the settling parties filed a class action
complaint for settlement purposes. Rhode Island Public Employees’
Retiree Coalition v. Raimondo, PC-2015-1468.
On April 13, 2015, the State and counsel for several unions
and retiree groups involved in the state court litigation filed a
joint
motion
for
settlement,
in
which
Cranston
Police
and
Cranston Fire did not join. Complaint ¶85. The terms of the
settlement agreement (the "Settlement Agreement") were "nearly
3
Cranston Firefighters, IAFF Local 1363, AFL-CIO v. Chafee and
City of Cranston, C.A. No. PC 14-4343 (ECF No. 7-3); International
Brotherhood of Police Officers, Local 301, AFL-CIO v. Chafee and
City of Cranston, C.A. No. PC 14-4768 (ECF No. 7-4).
9
identical
itself
to
was
the
2015
contingent
Amendments;”
on
the
the
General
amendment to RIRSA. Complaint ¶86.
Settlement
Assembly's
Agreement
passing
an
Pursuant to the Settlement
Agreement, the parties agreed to be bound by the judgment entered
by the state court and to be foreclosed from mounting any further
challenges to RIRSA and/or certain other legislative retirement
changes. Complaint ¶87. In addition, the parties agreed not to
“directly
or
indirectly,
propose,
support,
encourage
and/or
advocate that any other person, firm or entity do anything or
refrain from doing something that a party to this Settlement
Agreement would be prohibited from doing or refraining from doing
hereunder.” The parties also agreed not to “support (financially
or otherwise)” any challenges to RIRSA and related legislative
amendments “pursued by any non-settling party.” Complaint ¶87.
The plaintiff class was defined as
“[a]ll persons (and/or their beneficiaries who, on or
before July 1, 2015, are receiving benefits or are
participating in the State Employees, Teachers or
Municipal Employees’ retirement plans administered by
ERSRI [Employees' Retirement System of Rhode Island]
and
all
future
employees,
excepting
only
those
individuals who on July 1, 2015 are participating in a
municipal retirement system administered by ERSRI for
municipal police officers in any municipality and/or
for fire personnel of the City of Cranston.”
The Plaintiff Subclasses included
“[a]ll retired members and beneficiaries of retired
members who retired on or before June 30, 2015, who are
receiving a retirement benefit under ERS or any MERS
10
unit.” State’s Exhibit G at 1-2 (ECF No.7-7 p. 2).
The plaintiffs’ motion for class certification and notice
was granted and a fairness hearing was held over a five-day
period in May 2015. It is undisputed that retired Cranston police
officers and firefighters elected not to testify at the related
fairness hearing.
Complaint
¶89.
On
June
9,
2015,
the
Rhode
Island state court issued a decision in which it confirmed the
certification
of
the
plaintiff
classes
and
overruled
any
objections to the Settlement Agreement (including an objection to
the
lack
of
an
opportunity
to
opt
out
of
the
settlement).
Complaint ¶95.
On July 8, 2015, after the 2015 Amendment had passed, the
state court issued a final judgment, which became binding on all
class
members.
Complaint
¶97.
Although
Cranston
Fire
and
Cranston Police retirees did not participate in the settlement,
they were included in the plaintiff class and subject to the
benefits of the 2015 Amendments. Subsequently, various retirees4
took an appeal from the judgment, which is currently pending in
the Rhode Island Supreme Court.
4
It appears that, although certain retirees filed an appeal
from the judgment, retired Cranston firefighters and police
officers (who were members of the class and benefitted from the
Settlement Agreement) did not.
11
F. The 2015 RIRSA Amendments
The
2015
Amendments
to
RIRSA,
enacted
by
the
General
Assembly on June 30, 2015, provide, inter alia, a one-time COLA
for certain retirees, a one-time stipend of $500 for retirees, a
more nuanced system of calculating COLAs for pension plans less
than 80% funded, and full retirement benefits for police and
firefighters at age 50 with 25 years of service, or at any age
with 27 years of service. Complaint ¶81. On July 17, 2015, in
light of the 2015 Amendments, which increased pension benefits
for the state court plaintiffs from those originally provided in
RIRSA, the State filed a motion to dismiss the Plaintiffs’ 2014
law
suits
as
moot.
The
Plaintiffs
did
not
object,
having
previously acknowledged that RIRSA no longer existed by virtue of
the 2015 Amendments. The case was dismissed as moot5 on August
21, 2015. Complaint ¶¶82, 83, 84.
II. Procedural History
On March 16, 2016, the Unions filed a four-count complaint
(the “Complaint”), alleging (Count I) that RIRSA and the 2015
Amendments
“substantially
impair
Plaintiffs’
contract
rights”
under the Contracts Clause of the United States Constitution;
(Count II) that RIRSA and the 2015 Amendments deprive them of
their constitutionally protected property and liberty interests
5
As Plaintiffs note, the case was dismissed without prejudice.
12
under the Due Process Clause of the Fourteenth Amendment; and
(Count
III)
that
RIRSA
and
the
2015
Amendment
constitute
a
regulatory taking of the Plaintiffs’ property rights without just
compensation under the Takings Clause of the Fifth Amendment. In
addition, the Plaintiffs seek a declaration from this Court that
RIRSA and the 2015 Amendments are unconstitutional, void, and
unenforceable as applied to Plaintiffs; and (Count IV) that the
2015 Settlement Agreement cannot prohibit or prevent “Retired
Cranston Public Safety Officers from joining active public safety
offers as Plaintiffs, or interested parties, in this action.”
According to the Complaint, “[t]he Unions file this complaint on
behalf of, and with the express permission of, their bargaining
unit members.” Complaint ¶8.
On June 7, 2016, the State filed a motion to dismiss the
Complaint pursuant to Rule 12(b)(1) and Rule 12(b)(6) of the
Federal Rules of Civil Procedure (ECF No. 7).
The City filed its motion to dismiss the Complaint on June
27, 2016 (ECF No. 13), relying on the doctrine of abstention as
stated
in
Texas
v.
Pullman
Co.6
and
Colorado
River
Water
6
Railroad Commission of Texas v. Pullman Co., 312 U.S. 496, 61
S.Ct. 643, 85 L.Ed. 971 (1941).
13
Conservation District v. United States.7 The City requested that
this
Court
either
dismiss
the
Complaint
or
stay
further
proceedings until final adjudication of the ongoing Rhode Island
Superior
Court
litigation
in
Cranston
Police
Retirees
Action
Committee v. City of Cranston, KC-13-1059.
On July 22, 2016, the Plaintiffs filed objections to both
motions to dismiss the Complaint (ECF Nos. 15 and 16), to which
the City responded with a reply on September 2, 2016 (ECF No. 17)
and the State filed a reply on September 2, 2016 (ECF No. 18).
On October 6, 2016, this Court conducted a hearing on the
Defendants’ motions to dismiss the Complaint at which the parties
had an opportunity to make their arguments and answer the Court’s
questions.
III. Standard of Review
A motion to dismiss for lack of subject matter jurisdiction
is governed by Fed. R. Civ. P. 12(b)(1). A motion to dismiss for
failure to state a claim upon which relief may be granted is
governed by Fed. R. Civ. P. 12(b)(6). If a motion is brought
under both 12(b)(1) and 12(b)(6), “a district court, absent good
reason to do otherwise, should ordinarily decide the 12(b)(1)
motion first.” De La Cruz v. Irizarry, 946 F.Supp.2d 244, 249
7
Colorado River Water Conservation District v. United States,
424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976).
14
(D.P.R. April 13, 2013)(quoting Northeast Erectors Ass'n of BTEA
v. Secretary of Labor, Occupational Safety & Health Admin., 62
F.3d 37, 39 (1st Cir.1995) (citing 5A Charles Wright & Arthur
Miller, Federal Practice and Procedure § 1350, at 210 (1990)).
The standard of review accorded a dismissal under either
Rule 12(b)(1) or 12(b)(6) is “similar.” Murphy v. United States,
45 F.3d 520, 522 , the Court must construe the complaint in the
light most favorable to the plaintiff, taking all well-pleaded
facts
as
true,
and
giving
the
plaintiff
the
benefit
of
all
reasonable inferences. Arruda v. Sears, Roebuck & Co., 310 F.3d
18 (1st Cir. 2002). In order to withstand a motion to dismiss, a
claim “must contain sufficient factual matter ... to state a
claim to relief that is plausible on its face.” Katz v. Pershing,
LLC, 672 F.3d 64, 72-73 (1st Cir. 2012)(citations omitted). The
complaining party must include “factual content that allows the
court to draw a reasonable inference” in the pleader’s favor. Id.
“If, under any theory, the allegations are sufficient to state a
cause
of
action
in
accordance
with
the
law,”
the
motion
to
dismiss must be denied. Vartanian v. Monsanto Co., 14 F.3d 697,
700 (1st Cir.1994). The Court ignores, however, “statements in
the complaint that simply offer legal labels and conclusions or
merely
rehash
cause-of-action-elements.”
Schatz
v.
Republican
State Leadership Comm., 669 F.3d 50, 55 (1st Cir. 2012). In
15
addition, “the party invoking the jurisdiction of a federal court
carries the burden of proving its existence.” Johansen v. United
States, 506 F.3d 65, 68 (1st Cir.2007).
Although
the
Court
generally
may
not
consider
documents
outside of the complaint unless it converts the motion to dismiss
pursuant to Rule 12(b)(6) into one for summary judgment, it may
make an exception “for documents the authenticity of which are
not disputed by the parties; for official public records; for
documents central to the plaintiffs’ claim; or for documents
sufficiently referred to in the complaint.” Watterson v. Page,
987 F.2d 1, 3 (1st Cir. 1993). The Court may also consider
materials
outside
the
pleadings
on
a
Rule
12(b)(1)
motion.
Gonzalez v. United States, 284 F.3d 281, 288 (1st Cir. 2002).
IV.
The Parties’ Contentions
A.
The State’s Position
With respect to Count IV, the State asserts that (1) the
Union Plaintiffs lack standing to assert the rights of retirees
who are not members of their respective associations; and (2) the
Plaintiffs’
because
the
claim
issue
is
barred
raised
in
by
the
this
doctrine
litigation
of
res
was
judicata
previously
considered and decided by the Rhode Island state court in the
underlying class action (resulting in a settlement to which the
retirees were parties). In addition, the State argues that Counts
16
I-III
should
establish
be
any
dismissed
contractual
because
right
to
the
“Plaintiffs
pension
benefits
cannot
as
they
existed prior to the enactment of RIRSA.” State’s Mem. at 3 (ECF
No. 7).
B.
The City’s Position
The
City
notes
that
Plaintiffs’
constitutional
claims
against the City are based on the contention that the Plaintiffs
have contractual and otherwise constitutionally protected rights
to certain retirement benefits pursuant to various CBAs, sections
of the Cranston Code of Ordinances, and/or R.I. Gen. Laws §4521.2-1. According to the City, at the time the instant motions to
dismiss the
Complaint
were briefed
by
the
parties,
the same
claims under the same Ordinances and identical CBAs were being
litigated
in
Rhode
Island
state
court.
City’s
Mem.
at
2,
referencing Cranston Police Retirees Action Committee v. City of
Cranston [“CPRAC”], KC-13-1059. (ECF No. 13-1). The Court notes
that on July 22, 2016, the Rhode Island state court issued a
decision in
which
it
determined
that
the
2013
Cranston City
Ordinances at issue in both cases did not violate the Contract
Clauses
of
either
the
Rhode
Island
or
United
States
Constitutions. The Rhode Island state court further determined
that CPRAC lacked standing to bring a breach of contract claim
against the City and it entered judgment in favor of the City on
17
all counts of the complaint. (Previously, the court had granted
summary judgment to the City as to CPRAC’s claims under the
Takings Clause of the U.S. Constitution and of the Rhode Island
Constitution, respectively.) CPRAC appealed the decision, which
is currently pending before the Rhode Island Supreme Court.
C. The Unions’ Position
Plaintiffs acknowledge that “this action also involves the
unconstitutionality
approved
by
the
of
Rhode
a
Class
Island
Action
Superior
Settlement
Court
in
Agreement,
2015,
which
prospectively prohibits bound class members from assisting any
party in bringing future legal challenges to RIRSA and its 2015
Amendments.” Pltfs.’ Mem. at 4 (ECF No. 15). With respect to
Count IV, Plaintiffs maintain that they will be unable to obtain
complete relief because the Cranston retirees are subject to
sanctions if they assist Plaintiffs in prosecuting this action.
Id.
Plaintiffs further assert that Plaintiffs’ claims are not
barred by res judicata because the proceedings in state court
“involve
completely
different
parties
and
separate
causes
of
action.” Id. 5.
With
respect
to
Counts
I
through
III,
the
Plaintiffs
maintain that they have alleged sufficient facts to establish (1)
a contractual right the receipt of pension benefits under the
Contracts Clause, (2) protected property and liberty interests
18
under the Due Process Clause of the Fourteenth Amendment, and (3)
protected rights and privileges under the Takings Clause. Id.
V.
Discussion
A. Count IV.
The threshold question in every case before this Court is
the determination whether the Court has the power to entertain
the suit. Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 45
L.Ed.2d 343 (1975). To establish standing, the Plaintiffs bear
the burden to allege “such a personal stake in the outcome of the
controversy”
as
to
justify
this
jurisdiction
and
the
determination
Court’s
of
an
exercise
actual
of
its
controversy.
Baker v. Carr, 369 U.S. 186, 204, 82 S.Ct. 691, 703,7 L.Ed.2d 663
(1962). Warth v. Seldin, 422 U.S. at 499 (noting that federal
jurisdiction “exists only to redress or otherwise to protect
against injury to the complaining party, even though the court's
judgment may benefit others collaterally” and jurisdiction “can
be invoked only when the plaintiff himself has suffered ‘some
threatened or actual injury resulting from the putatively illegal
action’”.)
Furthermore, it is well established law that “an association
has standing to bring suit on behalf of its members when: (a) its
members would otherwise have standing to sue in their own right;
(b)
the
interests
it
seeks
to
19
protect
are
germane
to
the
organization's purpose; and (c) neither the claim asserted nor
the relief requested requires the participation of individual
members
in
the
lawsuit.”
Hunt
v.
Washington
State
Apple
Advertising Com'n, 432 U.S. 333, 343 97 S.Ct. 2434, 2441, 53
L.Ed.2d
383
Plaintiffs
(1977).
must
In
order
establish
to
that
establish
they
or
their
standing,
the
members
have
suffered an “‘injury in fact’—an invasion of a legally protected
interest
which
is
(a)
concrete
and
particularized...and
(b)
‘actual or imminent, not conjectural or ‘hypothetical.’”•Lujan v.
Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 2136,
119 L.Ed.2d
requires
351
more
requires that
(1992).
than
the
an
However,
injury
party
“the ‘injury
to
seeking
a
cognizable
review
in
fact’
test
interest.
be himself
among
It
the
injured.” 504 U.S at 563, 112 S.Ct. at 2137.
As
stated
explicitly
by
the
Union
Plaintiffs
in
their
Complaint, they commenced this action "on behalf of, and with the
express permission of, their bargaining members." Complaint ¶8.
Upon questioning by the Court at the October 6, 2016 hearing,
Plaintiffs'
counsel
clarified
that
by
bringing
Count
IV,
Plaintiffs sought to establish that Cranston police and fire
fighter
retirees
Although
Plaintiffs
not
now
could
expressly
appear
assist
Plaintiffs
stated
to
in
assert
20
a
the
in
this
litigation.
Complaint,
First
Amendment
the
Union
right
to
associate with the retirees in order to support their members’
claims before this Court. TR 33:14-25. Counsel also candidly
acknowledged
retirees'
through
that
own
III
Plaintiffs
First
were
to
have
Amendment
fail,
no
rights
Count
IV
standing
and
would
to
argue
the
that,
if
Counts
fail
as
well.
I
TR
35:11-16.
Notwithstanding Plaintiffs’ insistence that they only seek
to assert their own rights to associate with the retirees, the
Complaint seeks a declaration from this Court on whether the
"Settlement
Officers
Agreement
from
prevents
joining
Retired Cranston
active
public
safety
Public Safety
officers
as
Plaintiffs, or interested parties, in this action," noting that
under the Settlement Agreement, those retirees could be subject
to sanctions. Complaint ¶¶125, 127. In addition, the Complaint
contains
numerous
allegations
related
only
to
the
retirees,
including that the retirees were not given an opportunity to
remove themselves from the class or opt out of the Settlement
Agreement, as required by due process, Complaint ¶¶112-113. The
Complaint further asserts that the retirees “have a claim for
monetary damages against Defendants resulting from the illegal
and
unconstitutional
changes
to
their
pension
benefits.”
Complaint ¶116.
In addressing the issue of standing, the opposing parties’
21
arguments suffer from a disconnect. The Unions assert standing on
behalf of their active members, based on the contention that
those members have “suffered legal prejudice as a result of the
Settlement Agreement.” Pltfs.’ Mem at 22. The State takes the
position that the Unions, although they may have standing to sue
on
behalf
of
their
active
members,
lack
standing
to
advance
claims on behalf of retirees (a contention which has not been
refuted by the Plaintiffs, who carry the burden of establishing
jurisdiction). The Complaint itself indicates that the Unions are
challenging the validity of the Settlement Agreement to spare the
retirees from possible sanctions, should the retirees decide to
become involved in this litigation (a hypothetical proposition
which has been neither asserted nor established).
The
proper
procedure
to
challenge
the
validity
of
the
Settlement Agreement on part of the retirees would have been to
file a timely appeal in state court. To the extent the Cranston
police and
firefighter
retirees
joined
in
the
appeal
of
the
Settlement Agreement, their challenge is still pending in, and
will be determined by, the Rhode Island Supreme Court. To the
extent
the
retirees
elected
not
to
file
an
appeal
to
the
provisions of the Settlement Agreement, the state court’s final
judgment is binding and this Court has no jurisdiction to conduct
a further review.
22
The Plaintiff Unions, who elected not to participate in the
Class Action, have offered no credible basis on which this Court
could
invalidate
the
provisions
of
a
resulting
Settlement
Agreement to which the Plaintiffs are not parties, and which, as
the
Plaintiffs
acknowledge,
does
not
preclude
the
Plaintiffs
themselves from challenging RIRSA in this or any other court.
Accordingly,
the
standing
seek
to
Court
a
concludes
declaration
that
on
the
Plaintiffs
whether
the
lack
Settlement
Agreement, specifically the possibility of sanctions against the
retirees
under
certain
circumstances,
is
valid.
Count
IV,
therefore, is DISMISSED with prejudice.
B. Counts I through III
1. Plaintiffs’ Claims against the City
The
City
contends
that
this
Court
should
abstain
under
Pullman and/or Colorado River and dismiss the Complaint or stay
further
proceedings
until
the
CPRAC
case
has
been
finally
adjudicated by the Rhode Island Supreme Court. Cranston Mem. at 8
(ECF No. 13-1). As the First Circuit has instructed, “Pullman
abstention
serves
to
state-law
questions
‘avoid
federal-court
antecedent
to
error
federal
in
deciding
constitutional
issues.’”•Casiano-Montanez v. State Ins. Fund Corp., 707 F.3d
124, 128 (1st Cir. 2013)(citing Arizonans for Official English v.
Arizona, 520 U.S. 43, 76, 117 S.Ct. 1055, 137 L.Ed.2d 170 (1997);
23
see R.R. Comm'n of Tex. v. Pullman Co., 312 U.S. 496, 501, 61
S.Ct. 643, 85 L.Ed. 971 (1941)). Federal courts should abstain
under Pullman when “(1) substantial uncertainty exists over the
meaning
of
the
state
law
in
question,
and
(2)
settling
question of state law will or may well obviate
resolve
a
significant
federal
the
the need to
constitutional
question.”
Casiano-Montanez v. State Ins. Fund Corp., 707 F.3d at 128-129
(citing Batterman v. Leahy, 544 F.3d 370, 373 (1st Cir.2008)).
Moreover, if a state proceeding is actually pending, the case for
a
Pullman
abstention
is
strengthened.
Id.
(citing
Rivera–Feliciano v. Acevedo–Vilá, 438 F.3d 50, 61 (1st Cir.2006);
Harris Cnty. Comm'rs Court v. Moore, 420 U.S. 77, 83, 95 S.Ct.
870, 43 L.Ed.2d 32 (1975) (“Where there is an action pending in
state court that will likely resolve the state-law questions
underlying the federal claim, [the Supreme court has] regularly
ordered abstention.”).
With
respect
to
their
claims
against
the
City,
the
Plaintiffs allege that the City is in violation of the CBAs
between the Plaintiff Unions and the City8, as well as two City
Ordinances. Complaint ¶¶24, 28, 34, 38. The Complaint itself
avers that the Defendants have violated the Plaintiffs’ rights
8
As noted by the Plaintiffs, the provisions in the current CBAs
are “substantially the same” as those for the period of 1995
through 2013. Complaint ¶¶23, 33.
24
under
the
Process
Contracts
Clause,
Clause,
based
on
the
the
Takings
Plaintiffs’
Clause
and
asserted
the
Due
rights
to
certain retirement benefits (including 3% COLAs) under the CBAs
at issue as well as under Sections 2.20.050 and 2.28.050 of the
City Ordinance.9
In the CPRAC case currently pending in the Rhode Island
Supreme Court, certain retired Cranston firefighters and police
officers (who had excluded themselves from a settlement agreement
with the City) have asserted that various CBAs, agreements, and
the same sections of the Cranston City Code at issue in this case
have substantially impaired their contractual and constitutional
rights. CPRAC Complaint (ECF 13-2).
Initially, the state court dismissed CPRAC’s claims made
under
42
U.S.C.§
1983
and
as
to
breach
of
fiduciary
duty.
Subsequently, the court dismissed all remaining claims except
CPRAC’s Contract Clause claim in its ruling on the City’s summary
judgment
Motion.
(ECF
No.
13-5).
Following
a
trial
on
the
remaining Contract Clause claim, the state court determined that
Sections
2.20.05
clauses
of
and
either
2.28.05
the
did
Rhode
not
“violate
Island
or
the
United
contract
States
9
At the October 6, 2016 hearing, counsel for the Plaintiffs
clarified the position that the CBAs and City Ordinance are binding
on the City only and that the Plaintiffs’ claims against the State
were based on the contention that RIRSA and the 2015 Amendments
violate the Contracts Clause. TR 53:4-11.
25
Constitutions.”
Although the Plaintiffs now argue that the CPRAC plaintiffs
were
challenging
primarily
the
discontinuation,
delay,
or
reduction of their 3% COLA under the locally administered pension
plan, not the state pension plan, and that the instant case also
involves a number of other challenged provisions, both cases
depend on the respective plaintiffs’ asserted contractual rights
to retirement benefits under the CBAs and the City Ordinances.
And,
although
CPRAC
is
comprised
of
retirees
only
and
the
Plaintiffs in this case are active bargaining unit members, a
final
determination
on
that
question
impacts
both
sets
of
plaintiffs.
In the state court’s final decision, the court did make a
determination that the 1996 City Ordinances confer a contractual
right on the CPRAC plaintiffs and that the 2013 City Ordinances
constitute a substantial impairment on the contract between the
plaintiffs and the City. Those determinations, as well as the
state court’s ultimate conclusion that the 2013 City Ordinances
do
not
violate
the
Contract
Clauses
of
the
United
States
Constitution and that of the Rhode Island Constitution, are now
awaiting
a
final
review
in
the
Rhode
Island
Supreme
Court.
Plaintiffs’ instant claims under the Takings Clause and the Due
Process Clause, although not asserted in the CPRAC case, also
26
depend on a determination of alleged constitutionally protected
property rights, which is the pivotal issue in the CPRAC case as
well. Under those circumstances, the Court is of the opinion that
abstention is warranted and that the Rhode Island Supreme Court
should decide
what,
if
any,
contractual rights
the
CBAs and
Cranston City Ordinances confer on the Plaintiffs. Accordingly,
Counts I through III, as they relate to the City, are DISMISSED
without prejudice.
2. Plaintiffs’ Claims against the State
The Plaintiffs allege that the State’s enactment of RIRSA
and
the
2015
Amendments
deprive
the
Plaintiffs
of
their
contractual rights to retirement benefits as they existed prior
to
RIRSA’s
enactment
and
that
of
the
2015
Amendments10,
in
violation of the United States Constitution.
The Contract Clause provides that “[n]o State shall ... pass
any ... Law impairing the Obligation of Contracts.”• U.S. Const.
art. I, § 10, cl. 1. It is well established that “[a]lthough the
10
The Court notes that, in light of the 2015 Amendments, a
challenge to the constitutionality of RIRSA may be moot, a
determination which the Plaintiffs have previously acknowledged in
the related state court litigation. See, e.g., Boyer v. Bedrosian,
57 A.3d 259, 272 (R.I.2012)(noting that “the passage of a new law
or an amendment to an existing law may moot a case.”)(citing
Midwest Media Property, L.L.C. v. Symmes Township, Ohio, 503 F.3d
456, 460 (6th Cir.2007) (citing Hall v. Beals, 396 U.S. 45, 48, 90
S.Ct. 200, 24 L.Ed.2d 214 (1969)).
27
original intent of this language was to bar retroactive laws
(particularly
debtor
relief
laws)
that
would
impair
private
contractual rights, the clause has long been interpreted to apply
to public contracts as well.” Parella v. Retirement Bd. of Rhode
Island
Employees'
Retirement
System,
173
F.3d
46,
59
(1st
Cir.1999) (citing Fletcher v. Peck, 10 U.S. (6 Cranch) 87, 13739, 3 L.Ed. 162 (1810)).
In
order
to
state a
plausible
claim
under
the
Contract
Clause, the Plaintiffs must assert the “substantial impairment of
a contractual relationship.” General Motors Corp. v. Romein, 503
U.S. 181, 186, 112 S.Ct. 1105, 117 L.Ed.2d 328 (1992) (quoting
Allied Structural Steel Co. v. Spannaus, 438 U.S. 234, 244, 98
S.Ct. 2716, 57 L.Ed.2d 727 (1978)). To establish whether a state
law has resulted in the substantial impairment of a contractual
relationship,
contractual
a
court
must determine
relationship;
(2)
a
whether
change
in
(1)
law
there
impairs
is
a
that
contractual relationship; and (3) the impairment is substantial.
Romein, 503 U.S. at 196, 112 S.Ct. 1105. Only if each of these
questions is answered in the affirmative, does the court proceed
to determine whether “the impairment is nonetheless justified as
‘reasonable and necessary to serve an important public purpose.’”
Parella, 173 F.3d at 59 (citing
United States Trust Co. v. New
Jersey, 431 U.S. 1, 25, 97 S.Ct. 1505, 52 L.Ed.2d 92 (1977)).
28
As already stated herein, the determination of whether the
CBAs
and/or
the
City
Ordinances
confer
contractual
property
rights to certain retirement benefits on the Plaintiffs is a
question that is currently being challenged in the Rhode Island
Supreme
Court.
Although
the
state
trial
court
in
CPRAC
did
conclude that such rights exist and that they were substantially
impaired by the state statute, the court ultimately concluded
that the impairment was justified. All those determinations are
now the subject of the retired Cranston safety officers’ appeal
to the Rhode Island Supreme Court, which may or may not uphold
the state court’s determinations. Because this Court has resolved
to
abstain
from
ruling
on
the
Plaintiffs’
assertion
of
contractual rights under the CBAs and/or the City Ordinances,
Plaintiffs’ Contract Clause claims, as well as those brought
under the
Due
Process
Clause
and
the
Takings
Clause,
cannot
proceed until the Rhode Island Supreme Court makes its ruling.
As
to
the
Plaintiffs’
suggestion
that
their
contractual
rights were created by Rhode Island’s pension statutes, that
contention has previously been rejected by this Court in a case
challenging the state’s statutory retiree health benefit scheme.
Rhode Island Council 94, A.F.S.C.M.E., AFL-CIO v. Rhode Island,
705 F.Supp.2d 165 (D.R.I. April 13, 2010)(holding that change in
Rhode Island statutory retiree health benefit scheme did not
29
create a contractual obligation on part of the state). In order
to establish that a state statute creates a contract, a plaintiff
must
overcome
“the
strong
presumption
against
interpreting
statutes as contractual agreements. Id. at 178 (citing Nat'l
Educ. Ass'n-R.I. v. Ret. Bd. of R.I. Employees' Ret. Sys., 890
F.Supp. 1143, 1153 (D.R.I.1995)).
The First Circuit has concluded that Rhode Island’s general
pension statute does not “‘clearly and unequivocally’•contract[]
for future benefits either by language or—in the circumstances of
this case — through the nature of the relationship.” Nat’l Educ.
Ass’n-Rhode
Island
Island
ex
Employees’
Cir.1999)(noting
that
rel. Scigulinsky
Ret.
Sys.,
“absent
v.
172
some
Ret.
F.3d
clear
Bd.
22,
indication
of Rhode
28
(1st
that
the
legislature intends to bind itself contractually, the presumption
is that ‘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.’ Dodge v. Board of Educ.,
302 U.S. 74, 79, 58 S.Ct. 98, 82 L.Ed. 57 (1937)”). Accordingly,
“[t]he party asserting the creation of a statutory contract must
prove
that
the
legislation
is
‘intended
to
create
private
contractual or vested rights' and not merely declaratory of a
policy to be pursued until the legislature ... ordains otherwise.
Rhode Island Council 94 v. Rhode Island, 705 F.Supp.2d at 178
30
(quoting Nat'l Educ. Ass'n–Rhode Island ex rel. v. Ret. Bd. of
the Rhode Island Employees' Ret. Sys., 172 F.3d 22, 28 (1st
Cir.1999)
quoting Nat'l R.R. Passenger Corp. v. Atchison Topeka
& Santa Fe Ry. Co., 470 U.S. 451, 466, 105 S.Ct. 1441, 84 L.Ed.2d
432 (1985)). Put another way, the statute must be “unmistakably
clear on this point” and “there must be no ambiguity in what the
legislature intends.” Id. at 178.
The Plaintiffs have not pointed to any provisions in the
Rhode
Island
retirement
statutes
that
would
demonstrate
an
unmistakable intent on part of the legislature to establish a
contractual right to pension benefits. Rather, the Plaintiffs
suggest that they may possess implied unilateral contract rights
arising from an implied-in-fact contract between the Plaintiffs
and the State. TR 43:13-44:24. However, as noted by this Court at
the October 6, 2016 hearing, a ruling to that effect by a Rhode
Island
state
argument,
court,
did
therefore,
not
it
Accordingly,
constitutional
has
the
on
which
constitute
no
Court
claims,
the
a
Plaintiffs
ruling
precedential
is
of
insofar
the
as
on
rely
the
in
merits
their
and,
value.
Id.
44:25-45:7.
opinion
that
Plaintiffs’
based
on
they
are
alleged
contractual rights conferred by state statute, are insufficient
to withstand Defendants’ motion to dismiss the Complaint.
IV. Summary
31
After
discovering
that
the
City’s
pension
fund
was
endangered by an ever expanding unfunded pension liability, the
City engaged in a number of steps to address the problem.11 One
of the solutions conceived by the City was to enroll its public
safety employees in the state pension system (or permit employees
with
fewer
than
five
years
of
service
to
transfer
into
the
system). Since the enactment of RIRSA in 2011, the Plaintiffs,
along with other unions and retiree associations, have mounted
several challenges to RIRSA under the Rhode Island Constitution
in state courts. For the most part, that litigation was settled,
although the Plaintiff Unions have continued to challenge the
loss
of
their
members’
benefits
under
RIRSA
and
its
2015
Amendments.
In 2013, the City implemented two City Code ordinances which
have since been challenged in state court and which are also at
issue in the instant case. Although two of the state court cases
resulted in settlements, litigation is being continued by a group
of retired City fire fighters and police officers.
The Plaintiffs, understandably disappointed at the reduction
of generous retirement benefits provided for in various CBAs
11
For a detailed description and analysis of the City’s
budgetary woes, see Cranston Police Retirees Action Committee v.
City of Cranston, No. KC10131059, 2016 WL 4059309 (R.I. Super.,
July 22, 2016).
32
preceding implementation of RIRSA, are now seeking to invalidate
RIRSA and its 2015 Amendments by bringing a case in this Court.
Although the Plaintiffs in this case are not identical to those
participating in previous legal challenges to RIRSA and the legal
arguments vary, the essential claims aim to restore benefits on
behalf of municipal safety officers and/or retirees that were
reduced in order to address a growing shortfall in municipal
pension funds. Currently, a group or retirees is continuing to
challenge the reduction of such benefits, specifically the loss
of a 3% COLA, in state court, see CPRAC. A final determination in
that case would be instructive in the instant case: whether CBAs
and City Ordinances confer constitutionally protected property
rights on Plaintiffs and, if that were to be answered in the
affirmative, whether such rights have been violated by RIRSA, as
amended.
Another
group
of
retirees12
currently
receives
benefits
under a separate Settlement Agreement, from which they do not
appear to have taken an appeal, thus barred by both the terms of
the agreement and by res judicata. Plaintiffs in the instant case
now seek to involve these retirees in the instant litigation
through what amounts to a collateral challenge of the final state
12
It is unstated whether there is any overlap of plaintiffs in
the two cases currently before the Rhode Island Supreme Court.
33
court judgment.
As set forth herein, the Court is of the opinion that, as to
Counts I, II, and III of the Complaint, abstention is warranted
to await the Rhode Island Supreme Court’s final word in CPRAC to
the extent the Plaintiffs rely on the CBAs and/or City Ordinances
to establish a constitutionally protected property right. Insofar
as the Plaintiffs rely on Rhode Island pension statutes to create
such contractual rights, the Court holds that such reliance is
misplaced.
Furthermore,
the
Plaintiffs’
lack
of
standing
to
challenge the provisions of a final Settlement Agreement in state
court, to which only the retiree class members were parties,
warrants the dismissal of Count IV.
Conclusion
For the reasons stated herein, the Defendants’ Motions to
dismiss the Complaint are GRANTED as follows: Counts I, II, and
III of the Complaint are DISMISSED without prejudice. Count IV is
DISMISSED with prejudice.
SO ORDERED.
/s/ Mary M. Lisi
Senior United States District Judge
March 7 , 2017
34
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