The timetable for a conclusion to the Hall lawsuit – and the related Parker lawsuit impacting PSPRS – is still difficult to estimate.
As advised in mid-December, EORP, the Hall lawsuit defendant, filed a motion to reconsider with the Arizona Supreme Court that will likely extend the timeframe for the implementation of any remedies ordered by the courts.
The motion seeks additional explanation to the court’s conclusion that the 2011 contribution rate changes violated the state constitution but does not amount to an “appeal” of the court’s actual decision. The Hall opinion released by the court in November relied on case law but resisted an analysis based on the state constitution’s contract clause, which is what EORP and the state requested in their motions.
Assuming there are no changes to the court’s conclusion, the Hall litigants still have to return to the trial court to decide how to provide the refund of excess contributions to affected EORP members hired prior to July 2011. The outcome of the lawsuit will also have to be reconciled with Parker v. PSPRS, which presumably would result in excess contribution refunds being made available to impacted public safety employees. There is also the possibility that a court could apply a different remedy to the Parker lawsuit than the contribution refund ordered in the Hall lawsuit by the state supreme court.
PSPRS will continue to provide Hall and Parker lawsuit updates as information becomes available.This has some good information, particularly the last sentence of the third paragraph, though I would say that, if anything, the contract clause strengthens the case law under Yeazell, which held that the pension plan existing when an employee commenced employment was a binding contract that could not be changed unilaterally by the employer (or in this case the Arizona Legislature), unless the change favored the employee. However, the a possible rationale behind the motion to reconsider becomes apparent when we read what Bryan Jeffries, president of the Professional Fire Fighters of Arizona (PFFA) wrote in November 2016 soon after the Hall was decided:
The pension reform approved in Proposition 124 in May includes changes directed at new hires, which are not affected by this decision in Hall v. EORP, since they don’t have a vested interest before employment begins. There is also a change to the COLA for current and future retirees: COLA will be based on the consumer price index for Phoenix, capped at 2 percent, and pre-funded. This provision is not directly affected by the Hall ruling because the Court in Hall based its decision on the pension clause. As you know, Prop 124 specifically excepted the pension clause for purposes of enacting the one-time statutory changes to PSPRS with respect to current and future retirees (attached). Therefore, there is no direct application of Hall to Prop 124. However, Prop 124 could still be subject to a challenge under the contracts clauses and a plaintiff could rely on Hall to argue that actuarial soundness does not justify the breach of contractual rights. It is difficult, if not impossible, to know how a court would decide a contracts clause case and whether the facts surrounding the enactment of Prop 124 are distinguishable enough from the facts in Hall that we could still make a financial soundness argument.I put in boldface a possible explanation as to why EORP and the State may be asking for an analysis based on the contract clause. They may be trying to head off any challenges to Proposition 124 based on the contract clause, a legal concept also included in the US Constitution, by getting a clear decision in advance of any challenge to the PBI/COLA changes implemented by Proposition 124. Depending on how the court rules, this could discourage or encourage lawsuits to nullify Proposition 124.
The Arizona Supreme Court website shows that the plaintiffs (Hall) have until February 3, 2017 to file a "Response to the Motion for Reconsideration." This is where it gets interesting for all of us who are waiting to find out when refunds will be issued to those who are owed back permanent benefit increases (PBI's) or refunds of excess contributions. In a Hall update on December 13, 2016, PSPRS wrote this:
The Supreme Court will issue its mandate within 15 days after the final disposition of any motions for reconsideration. The issuance of the mandate will terminate the appeal process, and return jurisdiction to the Superior Court of Arizona, which only then can address the unresolved issues. These unresolved issues involve determining a method for restoration of excess contributions and unpaid PBI, allocation and amount of fees, and the question of prejudgment interest.This leaves a lot of mystery as to what happens next. It says the "Court will issue a mandate 15 days after the final disposition of any motions for reconsideration," but what constitutes the "final disposition?" I do not take this to mean that on February 18, 2017 the Court will issue a mandate. I take it to mean that a mandate will be issued after they complete the entire process of "reconsideration," which means they could spend some time deliberating over a completely new constitutional facet of the case. Who knows how long this could take. I am not an attorney and do not know what is usual practice in a case like this. They could simply refuse the contract clause analysis and issue a mandate within a few days, or they could take months on the contract clause analysis. I don't know.
While the motion for reconsideration remains up in the air, it appears that there is little that PSPRS can do to inform PSPRS members about a timeline for the final implementation of the remedies in Hall (EORP) and Parker (PSPRS). (Remember that Parker is the actual lawsuit against PSPRS and was stayed until the resolution of Hall, as both contested the same issues about PBI/COLA changes and contribution rate changes. It made no sense to litigate two virtually identical court cases, and the parties in Parker agreed to abide by the Hall decision. This was also done in the Fields (EORP) and Rappleyea (PSPRS), cases that EORP and PSPRS retirees won several years ago.
While it is accurate that PSPRS is unable to move forward with the implementation of remedies while the motions for reconsideration remain unresolved, PSPRS looks to already be making excuses for delays after the final mandate is issued. The Hall update referenced earlier says:
The issuance of the mandate will terminate the appeal process, and return jurisdiction to the Superior Court of Arizona, which only then can address the unresolved issues. These unresolved issues involve determining a method for restoration of excess contributions and unpaid PBI, allocation and amount of fees, and the question of prejudgment interest.Philip Hall's lawsuit against EORP started in the Maricopa County Superior Court. You can read Judge Randall Warner's decision in favor of Mr. Hall here. I find it odd that among the unresolved issues that PSPRS list are fees and prejudgment interest. While Mr. Hall won his case on constitutional grounds, Judge Warner ruled that he was not entitled to attorney's fees or prejudgment interest. However, the Arizona Supreme Court ruled :
. . . we affirm the trial court’s judgment with respect to the unconstitutionality of the two provisions of the Bill at issue, but reverse with respect to the court’s denial of attorneys’ fees, prejudgment interest, and relief against the State.If the Arizona Supreme Court allowed both attorney fees and prejudgment interest, how are these "unresolved issues"? I suppose there could be a question about exactly how prejudgment interest will be calculated, but it is likely that there is precedent and that formulas already exist to calculate it. Regardless, attorneys' fees and prejudgment are no longer on the table.
PSPRS also claims that "determining a method for restoration of excess contributions and unpaid PBI" is an "unresolved issue." Judge Warner wrote in his decision that "The Elected Officials' Retirement Plan, shall within a reasonable time, remedy the above-described constitutional violations." By calling this an "unresolved issue," PSPRS is implying that the Superior Court has some role in determining how to design and implement the refund of excess contributions and the payment of overdue PBI's. As Judge Warner made clear in his decision, PSPRS is solely responsible for making this happen "within a reasonable time." Judge Warner's decision was two years ago. I would say a reasonable time has long since passed, and PSPRS should be ready to make payments the minute they leave court for the final time in this case.
PSPRS is breaking new ground here when it comes to failing its members. They are now making disingenuous, preemptive excuses for their failures. It's a brilliant strategy that combines a can't-do attitude with a buck-stops-somewhere-other-than-here sense of responsibility. This strategy will allow us all to better appreciate all the things PSPRS doesn't do for its members. After all, if you don't expect too much from PSPRS, you won't be disappointed.