What Is Going on with the Pension Lawsuits?

As you know, public employees’ retirement benefits have been and are under attack across the nation. Over the last five years or so, the threats became reality in our state of New Hampshire. SEA/SEIU Local 1984 is fighting back.  Public employees’ retirement benefits are legislated, meaning that NH legislators ultimately hold the power when it comes to your pension. We are fighting recent legislative actions through the only means possible – the legal system. We are currently disputing changes made to the New Hampshire Retirement System (NHRS) that have cost shifted employer contributions to employees (resulting in an effective 2% pay cut for employees), the elimination of a funding source for COLA’s for retirees (resulting in seniors having less to live on each year); changes to the definition of earnable compensation; changes to the length of career – causing employees to work longer before retirement); as well as when an employee is considered vested.  All of this results in decreased retirement security for those who have spent their career providing public service.

We have joined forces with other labor unions whose members are also being affected by these changes to the NHRS System. The group is the NH Retirement Security Coalition.

The legal team has recently expanded by the addition of Attorney Andy Volinsky who has been very successful in cases before the NH Supreme court, including the Claremont school funding cases and the LGC case. He has already begun working with us on our rate case before the NH Supreme Court, and will be leading the fight to make sure that members’ money is returned to them.  He will also work to ensure that members with less than 10 years’ service will receive the pension they were promised when they chose to make their career dedicated to NH service. Additionally, he will lead our charge to return funding for COLAs.

With good reason, many members are wondering why there is still no resolution to these cases. The truth is since first filed in 2009, each individual case has been slowly winding its way through the justice system. If you follow this link, you will see each item in the cases’ respective progression. We share your frustration with the pace of this process, but rest assured, we are fighting tooth and nail for these benefits and remain committed to staying the course. A summary of each case follows.

What Are We Fighting?

AFT, et al v. NHRS, et al

The dismantling of our pension plan took a serious direction in 2008 with the passage of HB1645.  In August of 2009, we filed a suit against the state that challenged the constitutionality of changes that resulted from that bill. In summary, we challenged 1) the change to the definition of earnable compensation; 2) the freezing of COLAs; 3) the manner in which the Special Account was funded under HB 653; and 4) the $250 million transfer from the Special Account to the State Annuity Accumulation Fund contained in HB 1645.

On July 10, 2013, Judge Richard McNamara issued his decision, ruling that members who had completed 10 years of service while “other compensation” (e.g., payments in lieu of health insurance, uniform allowances, etc.) was included in the definition of “earnable compensation.” Judge McNamara did not formally say there was no contractual right to the COLAs, but did say the State presented a “cogent (convincing) argument” that COLA rights were not vested as the granting of COLAs was contingent on funding. “It is irresponsible for the legislature to have removed the vehicle through which our retirees can survive the rising costs of food, medicine, and shelter,” said Diana Lacey, President. “We are committed to continuing this fight.”

On July 18, 2013, the State appealed Judge McNamara’s decision to the N.H. Supreme Court. On July 25, 2013, we filed a motion for reconsideration and clarification in Superior Court, followed by a motion to the Supreme Court to dismiss the State’s appeal as an improper interlocutory appeal.  (An interlocutory appeal is a ruling that is made before the trial itself has concluded).

On July 31, 2013, Judge McNamara dismissed the motion for reconsideration and clarification. But, on September 13, 2013, the Supreme Court granted our motion to dismiss the State’s appeal and sent the case back to Judge McNamara to rule on the motion for reconsideration and clarification regarding a number of issues, including when vesting occurs, the right to a COLA, its relation to the Special Account, and the $250 million transfer.

On November 18, 2013, Judge McNamara issued an order denying our motion for reconsideration, thereby upholding his July 10, 2013, order.

The State filed a notice of appeal with the Supreme Court on December 3, 2013, and we filed a cross appeal on December 19, 2013. To date, the Supreme Court has not issued a briefing schedule for the case.

PFFNH, et al v. State of NH, et al

This suit was filed in June of 2011. This is the suit that challenged the 2% rate increase that most members are now required to contribute to their pension fund. (This is not an increase for those hired between the legislation and the current date.)

In this case, Judge McNamara found that the recently imposed rate increases were substantial and were not justified by any particular public policy requirements.  The rate increases were, thus, improper for any employee vested in the Retirement System under the Contract Clause of the NH Constitution.  The Contract Clause prohibits the state from breaching its contracts.  However, Judge McNamara found that employees do not become vested in the Retirement System until they complete ten (10) years of service.

We appealed because we believe, based on prior case law, that employees become vested upon achieving permanent employment status, not at ten years.  The State appealed because it claims employees do not ever vest or do not vest until they actually retire.  The Retirement System also filed a brief in which they claim not to take any positions, but at the same time they claim that the Retirement System should not be required to refund any monies that become due.  In fact, your hard earned pension contributions are actually paying for the NH Retirement System to fight your money being returned to you. The NH Municipal Association and the NH School Boards Association filed a brief that essentially sides with the state.

At this time, our attorneys are writing our brief for the Supreme Court, which is due on February 21, 2014.

PFFNH, et al v. State of NH, et al – HCSC No. 216-2012-CV-00193 (NH4)

We brought this case forward in February 2012 because HB 2 violates the New Hampshire and U.S. constitutions by substantially impairing vested contract rights, similar to the claims in the HB 1645 lawsuit filed in August 2009 and still pending in Superior Court.

The challenged provisions include: 1) changes to what constitutes earnable compensation for non-vested members; 2) increasing the average final compensation period from 3 to 5 years for non-vested members; 3) a lower limit on the maximum initial pension benefit for non-vested members; 4) an increase in the Group II (Police and Fire) normal retirement age with a corresponding reduced multiplier in determining the pension benefit for non-vested members; and 5) the repeal of the Group II accidental disability retiree exception to the gainful occupation reduction.

Judge Gillian L. Abramson held a hearing on prospective injunctive relief on the impaired contract claim on August 27, 2012. Judge Abramson issued a ruling May 24, 2013, on the pending motions for partial summary judgment filed the previous August. In her ruling she stated that “vesting” of the Plaintiffs’ contract rights occur at the time of employment. The next step was for her to make a determination whether or not there was a substantial impairment of the contract rights of the Plaintiffs. However, on July 18, 2013, the State filed for a stay (put on indefinite pause) of this case, claiming that its appeal to the Supreme Court in the “the rate case” should be decided first because the constitutional questions in the cases are similar. On July 30, 2013, Judge Abramson granted the motion to stay, putting the case on hold. Following a structuring conference in November, Judge Abramson on November 20, 2013, granted the State’s motion to continue the stay pending the outcome of the two related cases already at the Supreme Court. As a result, there is not pending activity in this case.

We will continue to update you about these cases as new developments unfold. Let’s all keep good thoughts that they will soon reach a conclusion in favor of the state’s many public workers who have been promised a secure retirement in exchange for lower wages. Let us hope the courts will uphold the promises made at the time of employment for thousands of NH workers.

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