ARLENE VIOLET - Pension case plaintiffs not 'similarly situated' for a class action suit

ARLENE VIOLET - Pension case plaintiffs not 'similarly situated' for a class action suit

Readers of this column know that I am not a fan of the "compromise" hammered out behind closed doors by the trial justice in the R.I. state pension case. Constitutional issues should be decided, not side-stepped. Judges should not be in a position to force the other two branches, i.e. the legislative and executive branches of government, to be subservient to the judiciary. Most importantly, the "solution" doesn't really settle the issue.

One needs only to look at the first group of state workers and retirees who were briefed on the settlement on Feb. 26, 2014. One teacher of 26 years said that she'd rather have her day in court than accept the proposed settlement. Upon examination of the components of the "deal," they all don't apply to everyone and therein lays a major problem. Here's why.

This action initiated by the plaintiffs in Rhode Island is in the nature of a class action. The United States Supreme Court has constricted the certification of a class settlement. Starting with the 2011 case Walmart Stores, Inc. vs Dukes, the high court essentially denied class action certification in this sex discrimination lawsuit. The five conservative justices noted that the class of 1.5 million female employees of the store couldn't be certified as a class because there was no common answer to the crucial question among them as to "Why was I disfavored and fired?" The justices figured that they were not similarly situated when it came to that answer.

How much more so is this true in the pension lawsuit? A retiree is in a different legal posture than, say, somebody in the system who has four years as a public employee and who hasn't vested yet. The retiree probably had a more protected interest, even than those who have been vested but have not retired yet. How can a vote silence the rights of those who want no part of the "deal," even if it passes?

In a true class action, folks can opt out of the settlement. Here, you are presumed to "opt in" if you don't return a vote, which is highly unusual. In a true class action, however, the dissenters are free to initiate their own litigation. I can't see how the plaintiffs here with differing interests can somehow compromise the various statuses of the union members, past and present.

There's also another line of cases that might impact the settlement. The top court also ruled that arbitration clauses cannot be peremptorily set aside. Now, virtually all union contracts require arbitration where there is a material issue involving the contract. In the case of retirees, their contract has already been performed by them. Query what can be changed for them.

The justices in American Express vs Italian Colors Restaurant et al stated that if a contract requires arbitration, the federal arbitration act cannot invalidate a contractual provision. The restaurants were not allowed to sue and were ordered back to arbitration. Do present public workers have to arbitrate first?

Now the present pension lawsuits are all hybrids. There may be an agreed-upon settlement, which may not really bind everybody. The constitutional issue probably supersedes any arbitration requirement, but this suit and the two before, it doesn't settle that question, it merely ignores it.

I see this "settlement" as truly blurring the lines of distinctions that should be recognized in jurisprudence, namely, that the plaintiffs are not all similarly situated re their rights.

Violet is an attorney and former state attorney general.

Comments

The column written by the General is absolutely correct, but there is way to avoid litigation. Follow Chicago by doubling the contribution to the pension fund and start laying off present employees in order to compensate the retirees. The line is clear and not blurred.

This is very evident with respect to retirees who have completed a large number of state service years and have done so under the guidance and counsel of the State of RI Personnel administrator and the Employees Retirement System under the General Treasurer. Their pensions which include the COLA are property, IMHO. Barring bankruptcy on the part of the state, they have what amounts to a bond holders first call interest for payment of that obligation. Add to this the fact that both union and non union folks are retireds and only a portion of the retirees were supposedly represented in the "class" The union, affiliated with the active employees, has another interest, which is to preserve and increase membership; hence they cannot adequately serve retirees interests. This pension problem was excerbated over the past seven years by Federal Reserve policies which gave prudent investments, which pensions ususally use, bad returns. The state needed to have the Congressional delgation appeal these losses in investments for some form of "hold harmless" guarantee. That hasn't happened. hence the Treasurer is employing high risk strategies, effectively using retiree COLA money to try to improve returns. Bad policy. In any event, retirees have been harmed in a more severe and separate way than others affected, including Vested active employees, since they have little options for changing their estates or becoming further employed late in life. Far from the "fairness" cited by a naieve General Treasurer. While we are at it: When federal funded employees of the state retire, why does the state not bill the federal goivernment for the cost of bringing their retirements up to full funded status..same question for the cities and towns? Too much vanilla thinking in the "class" litigation. I strongly support a separate retiree filing at this time. Full disclosure: I am a non union long time state retiree and have not been able to access the litigation, except thru membership in the retiree union, which I did not join, since they do not have a community of interest with me.

If you are a state or teacher retiree and are interested in taking legal action to oppose the Settlement Agreement,please email me at :ersriretireesunited@aol.com