Save PERA COLA

PERA Retirees Appeal Dismissal of COLA Class Action Lawsuit

The plaintiffs in the civil suit Gary R. Justus et al vs. State of Colorado and Public Employees’ Retirement Association of Colorado et al (Case No.: 2010CV1589) have announced that they will appeal today the June 29th dismissal of their case by Denver District Chief Judge Robert S. Hyatt. The plaintiffs are PERA retirees Gary R. Justus, Kathleen Hopkins, Eugene Halaas and Robert P. Laird. The suit challenged the 2010 action by the Colorado Legislature (Senate Bill 10-001) that eliminated for 2010 the annual benefit increases for retirees (and those eligible to retire) which had been fixed at 3.5% per year (3.25% for Denver School Division), and reduced the increases in future years so that they could be as little as 0% and no more than 2.0%.

In his decision granting defendants their Motion for Summary Judgment, Judge Hyatt distinguished between “a retiree’s contractual right to the base PERA retirement plan benefits” and “a contractual right to a specific or particular COLA.” Hyatt wrote that “there is no contract right to a specific COLA formula frozen at retirement for life.” Hyatt’s ruling effectively permits the legislature to make changes in the COLA at anytime, even reducing it to zero.

Plaintiffs will appeal based on their original claims that settled law by the Colorado Supreme Court clearly determined that COLA is part of a retiree’s contractual right and cannot be reduced. The two major cases plaintiffs cited in this case are:

Police Pension and Relief Bd. of City and County of Denver v. Bills, 148 Colo. 383 (1961)

Police Pension and Relief Bd. of City and County of Denver v. McPhail, 139 Colo. 330 (1959)

Justus explained why this case must go forward. “SB10-001 endangers the economic well being of close to 100,000 retirees.. If this decision stands, then whenever Colorado wants to renege on a contract again, it can now just pass a law changing the terms of that contract. Yet, we can’t renege on our retirements and go back to work for our public employers to make up the difference. Anyone who believes that PERA has secured our vested pension rights is sadly mistaken. PERA is just an instrumentality of the state. If we don’t stop it here, it’s open season on public employees,” he said.

Plaintiffs are represented by Richard Rosenblatt & Associates of Greenwood Village and the Pittsburgh, PA law firm of Stember Feinstein Doyle & Payne.

For more information, visit the website http://www.SavePERACOLA.com where the court filings and numerous comments by retirees may be found. Save PERA COLA is a non-profit Colorado 501(c)4 corporation that supports the lawsuit. Richard H. Allen is president.

June
30, 2011 Update

 Judge Robert S. Hyatt has ruled against all claims of a group of four PERA retirees who challenged Senate Bill 10-001 in a lawsuit.  Plaintiffs sought restoration
of their annual benefit increases (COLA) to the previous law that set them at
3.5% per year (3.25% for DPS Division). SB10-001 reduced the increases to a maximum of 2% per year.  Judge Hyatt granted PERA and the State of Colorado’s Motion
for Summary Judgment, thus dismissing the case.

Plaintiffs and their attorneys are evaluating the decision.  The decision on whether to appeal will be made shortly. Any one (or more) of the named plaintiffs can choose to appeal.

Judge Hyatt wrote as follows:

“The motion for summary judgment is granted as to all of Plaintiffs’ claims. While Plaintiffs unarguably have a contractual right to their PERA pension itself, they do not have a contractual right to the specific COLA formula in place at their respective retirement, for life without change. Plaintiffs’ takings and due process claims likewise are premised on the existence of a constitutional right to an
unchangeable COLA formula and necessarily fail because no such right exists. The 42 U.S.C. § 1983 claims fail because the underlying constitutional claims fail. All material facts are undisputed and found in the public record. The COLA provisions themselves establish that Plaintiffs have no contract right to a COLA frozen at retirement and the latest COLA changes do not impair the parties’ reasonable expectations.

“This Court finds, based upon statutory provisions of the last 40 years, as well as

legislative history and DPS plan language, that the General Assembly’s most recent change to retiree COLA does not alter the fundamental mechanism for payment of pension benefits for PERA retirees. That has always
been and remains to this day, a base benefit set at retirement. There has also been a separately calculated cost of living adjustment based on a formula that has always been fluid and repeatedly changed. For 40 years the COLA formula has been subject to significant change without ever unconstitutionally altering the base pension payment to retirees.”

The full Order may be read at www.SavePERACOLA.com/Resources . A copy of the
Minnesota dismissal decision is also listed there.

We’ll get back to you shortly.

Chief Judge Robert S. Hyatt of the Denver District Court issued yesterday a comprehensive Order that denies various Plaintiffs’ motions to:

a) remove Kathleen Hopkins as a named plaintiff (which was solely at her request);

b) add Meredith Williams, PERA Executive Director, as a named defendant;

c) strike the use of an inadvertently disclosed e-mail by plaintiffs’ attorney to defendants’ attorney;

d) withhold from disclosure certain of plaintiffs’ documents and emails;

e) grant the Plaintiffs’ request for Partial Summary Judgment.

The Defendants’ Motion to Compel Documents Responsive to PERA’s First Request for Production of Documents was granted, (which Plaintiffs had opposed.) As such, all Save PERA COLA (and other third parties) emails and records of contributors will be disclosed to Defendants. Also, each named plaintiff must disclose all requested documents to defendants.

The judge notes at the end of the order that “The Court is aware that Defendants have a pending Motion for Summary Judgment which recently came at issue and that ruling will be provided separately.”

Our comment: While none of these orders by the court went in favor of the plaintiffs, none will prevent the case from going forward to trial on February 6, 2012.  Class certification and discovery are in progress. For a more complete understanding of the Order, you may read the Order in the Court Filings and Resources tab above. When the judge will rule on the Defendants’ Motion for Summary Judgment is not known, but we will send it to you as soon as we receive it.

Both PERA and the State have filed briefs in support of their motions for summary judgment in the lawsuit. PERA’s brief is very long and includes many political arguments, whereas the state’s brief simply references PERA’s arguments and reinforces their legal arguments. Read them under the Court Filings and Resources tab at  www.saveperacola.com/resources.  There is no prognosis for when Judge Hyatt might rule on either plaintiffs’ or defendants’ motions for summary judgment. Also pending is the question of how much of the discovery requested by the parties will be required by the court. Again, the court date is set for
February 6, 2012 for a three week trial. Your efforts to identify other retirees and encourage them to support the lawsuit are most welcome. Also, read the article PERA lawsuit moves forward; court date set by Marianne Goodland in the Colorado Statesman at http://www.coloradostatesman.com/content/992838-pera-lawsuit-moves-forward-court-date-set The link is also under Helpful Links at the right side of the website homepage. Have a nice summer and enjoy the 2.0% annual benefit increase that should occur July 31, just 28 months after the last one March 31, 2009. You will then be only 5.12% behind what was promised under previous law.

1. Attorneys for the defendants PERA and the State of Colorado have demanded disclosure of all of Save PERA COLA’s documents and emails, such that we would have to basically disclose our contacts (i.e., you), emails between you and Save PERA COLA and/or plaintiffs, and donations to SPC you may have made. We have filed a brief to oppose the motion. At this time we have not disclosed, but may be
forced to do so by the court. We have already disclosed the amount of $25,000
that SPC has sent to our attorneys’ escrow account and the basic existence of
our semi-contingency funding agreement between the named plaintiffs and Stember
Feinstein Doyle & Payne, LLC. For more information, read the briefs. Find them by clicking on the Court Filings and Resources tab above.

2. Briefs and counterbriefs from both parties have been filed for Motions for Summary Judgment. These make for quite interesting reading as the legal arguments and relevant court cases are listed and the logic from them is explained in detail. Notably, the Defendants now claim that a Colorado Supreme Court case re Estate of DeWitt, 54 P.3d 849, 853 (Colo. 2002) applies in this case and they chide
the Plaintiffs’ attorneys for their ignorance of it. In Plaintiffs’ reply our attorneys explain why it does not apply. Defendants’ attorneys provide a long summary of COLA changes and a detailed history of the preparation for Senate Bill 10-001, as well as their explanation of PERA’s “actuarial necessity” claim, which was never defined in the law or declared by the legislature.

3. The Second Amended Class Action Complaint filed February 23 lists two new named plaintiffs John C. Fisher and Robert P. Laird, Jr., replacing Kathleen Hopkins, who chose to withdraw, and Lisa Silva-Derou, who was found to not have been eligible to represent the class. Defendants’ names are updated to reflect changes in elected positions in the state and in PERA. The document provides a clear statement of the constitutional issues being used in the challenge to Senate Bill 10-001 by plaintiffs.

4. On March 10, 2011 District Judge Robert S. Hyatt issued a Modified Case Management Order that includes: a trial date of February 6, 2012 for 3 weeks; disclosures occurring through fall of 2011; that the Motion for Class Certification schedule is as follows: a) class discovery occurring now and complete by June 28; b)
Defendants’ opposition due by July 29; c) Plaintiffs’ reply due by August 19.

5. There is an interesting summary of the lawsuit effort from the Friends of PERA website. It’s given from the perspective of one of PERA’s senior staff attorneys Adam
Franklin. Comments were made at the FoP General Meeting, on April 5: Click here to read the report (or paste in the URL box) http://www.friendsofpera.com/0405meeting.pdf.

The staff at the Colorado Legislative Council has posted a new summary paper of SB1 on their website. The description of how retirees’ Annual Benefit Increases (ABI) are affected begins in the middle of page 11, and there is a table on page 13 that compares increases pre- and post- SB1. PERA Executive Director Meredith Williams has publicly estimated a savings to PERA of $9 billion over time due to the ABI cuts. We estimate it as four times that amount. To see the report, click on Colorado PERA 2010 Reform Legislation and Historical Funded Status .

It has been an eventful summer of media coverage for the lawsuit and Save PERA COLA. Most important, the plaintiffs in the lawsuit against PERA and the State of Colorado achieved an early victory when Chief Judge Robert  S. Hyatt refused the defendants’ motion to dismiss five of the eight claims.

The lawsuit: Gary R. Justus et al v. State of Colorado and PERA et al

The plaintiffs and defendants agreed that Claim II should be dismissed, and the defendants had not challenged Claim I or III. The judge also agreed with the plaintiffs and defendants that requests for monetary damages under Claims VI, VII and VIII (but not others) be dismissed. In other words, the plaintiffs won this first round completely and the lawsuit proceeds in excellent condition. The case number is 2010 CV 1589 and is filed in Denver County District Court, 2^nd Judicial District. For a copy of this decision, go to the Court Filings and Resources tab above, then click on the top link. To see the basic document being argued click on 2010 March 18 Plaintiffs’ First Amended Complaint.

Media Coverage

New York Times August 6 (online) and 7 (print)  “Battle Looms Over Huge Costs of Public Pensions.” In his information/opinion column, Ron Lieber provided a decent analysis of the pension issues on a national scale, adequately paraphrased Gary Justus’ comments about Colorado’s cuts of our annual benefit increases, then rudely lectures public retirees. “Consider what it means to be a citizen in a community. And what it means to be civil instead of litigious, coming to the table and making a compromise before politicians shove it down your throat and you feel compelled to challenge them to a courthouse brawl,” Lieber wrote. He missed the parts about our attempts to influence the legislation in legislative committees and the settlement offer we had proffered to PERA General Counsel Greg Smith before Governor Ritter signed the bill. (He refused it.) Article at  http://www.nytimes.com/2010/08/07/your-money/07money.html?_r=1&scp=1&sq=%22battle%20loms%20over%22&st=cse

Wall Street Journal June 12 “Pension Cuts Face Test in Colorado, Minnesota.”   Jeannette Neumann highlights the Colorado lawsuit against PERA and quotes PERA retiree Kathy Ratz about her personal situation and reaction. Kathy is a Save PERA COLA supporter from Golden.

 http://online.wsj.com/article/SB10001424052748704463504575301032631246898.html

National Public Radio program “The Take Away” August 17 “Public Pensions: What Are a State’s Responsibilities?”  This early morning nationally distributed news program provided a fair discussion of the lawsuit and what it means for retirees. Mr. Justus emphasized both the constitutionality questions of Senate Bill 1 and the financial effects on retirees. Stephen Fehr from www.Stateline.org recognized the good chance we have at success. Go to http://www.thetakeaway.org/2010/aug/17/public-pensions-what-are-states-responsibilities/  then click on LISTEN. Runs less than 8 minutes.

Pensions and Investments, October 4 “COLA reduction laws under fire in 3 states.”  Timothy Inklebarger provides a full survey of the three similar lawsuits against cuts in pension increases that are being led by Attorney Stephen Pincus in Colorado, Minnesota and South Dakota. Meredith Williams is paraphrased in the article as saying  “the package of legislation approved by the Colorado General Assembly is expected to save the pension system $9 billion over the next 30 years…” This is much lower than Save PERA COLA estimates of $30-40 billion and it does not appear to count PERA’s investment earnings on the money it saves. One of our SPC supporters, Algernon Moncrief,  has posted a detailed comment below the article. http://www.pionline.com/apps/pbcs.dll/article?AID=/20101004/PRINTSUB/310049980&crit=cola%20reduction%20laws or try http://www.pionline.com/apps/pbcs.dll/article?AID=/20101004/PRINTSUB/310049980/1031/PIIssueAlert01

The Colorado Statesman, August 20  “PERA gets clean audit, but questions remain on Denver Public Schools retiree pensions.”  Marianne Goodland reports on the annual PERA audit before the Legislative Audit Committee. Of note are paragraphs 8, 9, and 10 which refer to the lawsuit as one of the “ “lynchpins” that all affect PERA’s ability to reach full funded status.”  It also cites PERA General Counsel Greg Smith as saying PERA would have to pay the $500,000 insurance deductible for legal fees and insurance should cover anything above that. SPC’s comment: “Our pension contributions at work…” http://coloradostatesman.com/content/992068-pera-gets-clean-audit-questions-remain-denver-public-schools-retiree-pensions .

CBS Evening News August 9  Katie Couric’s Notebook on Pensions.  Ms. Couric references Colorado’s  pension reform bill and Ron Lieber’s NY Times article in this shallow piece. She suggests “something needs to change to protect the futures of the next generation of teachers and firefighters, as well.”  “Most of us have only a 401k, if that…” she adds, without mentioning how large hers is! The NY Times ‘ripple effect’ is in motion here, creating small waves with scant effort or research. http://www.cbsnews.com/8301-500803_162-20013120-500803.html

INDenverTimes, May 13 “PERA responds to retiree lawsuit.”  Todd Engdahl gives a fair review of PERA’s motion to dismiss six of the eight claims. (The judge recently denied the motion to dismiss the claims, except where plaintiffs were in agreement.)  A copy of PERA’s motion to dismiss is appended. http://www.indenvertimes.com/pera-responds-to-retiree-lawsuit/

Colorado Springs Gazette, October 6  “Tancredo, buoyed by recent polls, says he’s in to win.” In a political news article, gubernatorial candidate Tom “Tancredo pledges to save $400 million a year by forcing changes to PERA, the state education retirement program that he says “sucks money out of the general fund.” He backs a seven-year freeze on cost-of-living increases and changes in benefits in order to reach the savings.” While this should be of interest to all PERA members and retirees, SPC does not endorse or advocate for or against any political candidates. Read more: http://www.gazette.com/articles/tancredo-105920-long-colorado.html#ixzz12AT5nt55