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STATE IMMUNITY & EMPLOYEES RETIREMENT SYSTEM OF ALABAMA-DEFINED BENEFIT PLAN - SOUTHERN STATES POLICE BENEVOLENT ASSN., INC. V. BENTLEY

Southern States Police Benevolent Assn., Inc. v. Bentley, [Ms. 1150265, 1150360, Sept. 23, 2016] __ So. 3d __ (Ala. 2016). This per curiam opinion (Stuart, Acting C.J., and Bolin, Parker, Shaw, and Wise, JJ., concur) affirms judgments of the Montgomery Circuit Court, which denied an action by the Southern States Police Benevolent Association, Inc., and three City of Auburn police officer members who collectively sued Governor Bentley, members of the Board of Control of the Employees Retirement System of Alabama, David Bronner, the Chief Executive Officer and Secretary-Treasurer of the Retirement Systems of Alabama, and Thomas White, State Comptroller, in their representative capacities seeking injunctive relief and a judgment declaring that participants in the defined-benefit pension plan operated by the Employees Retirement System could make retirement contributions – and therefore receive increased retirement benefits – based upon a definition of "earnable compensation," which included payments received for overtime worked.

The Court first rejected an assertion of Article I, § 14 state immunity by Governor Bentley, Dr. Bronner, and the other Employees Retirement System officials. The Court construed the action as one seeking a declaratory judgment and therefore as an action falling within the recognized exceptions to § 14 immunity including 1) actions brought to compel state officials to perform their legal duties; 2) actions brought to enjoin state officials from enforcing an unconstitutional law; 3) actions to compel state officials to perform ministerial acts; 4) actions brought under the Declaratory Judgments Act, § 6-6-220, et seq., Ala. Code 1975, seeking construction of a statute and its application in a given situation; 5) valid inverse-condemnation actions; and 6) actions seeking injunctive relief where it is alleged that state officials have acted fraudulently, in bad faith, beyond their authority, or under a mistaken interpretation of the law. Ms. *15-16, citing Ex parte Hampton, 189 So. 3d 14 (Ala. 2015).

The Court next construes § 36-27-1(14) in light of Ala. Op. Atty. Gen. No. 2011-090 (August 22, 2011) and the legislature's 2012 amendment of §36-27-1(14). The Court rejects the contention that the state's employees who participated in the defined-benefit plan had attained fixed and immutable rights in the plan through contributing to the plan for many years based upon overtime paid. While the Court has recognized generally that participants in public pension plans can attain contractually vested rights which could not be abrogated by subsequent legislation (Ms. *20-26), those cases only arose in the context of legislation demonstrating an unmistakable intent by the legislature to bind itself against prospectively changing the definition in the retirement plan benefit statute.

"Having reviewed the relevant statute governing the [Employees Retirement System] plan, [the Court] concludes that there is nothing within the statutes that would indicate that the legislature intended to contractually bind itself to any definition of "earnable compensation" that would include overtime payments. Most notably, until May 2012, the definition of "earnable compensation" in § 36-27-1(14) made no mention of overtime payments and, as explained supra, and in the August 2011 Attorney General's Opinion, the language used in fact indicates that overtime payments were not "earnable compensation."

Ms. *30-31. Because up until 2012, the only thing which changed was the administrative interpretation of § 36-27-1(14), none of the defined-benefit plan participants gained any vested rights in the administration's prior erroneous interpretation as the Retirement Systems "long time erroneous interpretation of § 36-27-1(14) ... fail[ed] to bind the State in any respect." Ms. *33.

Finally, adhering to the rules of construction that the words in the 2012 amendment to § 36-27-1(14) must be given their "plain and ordinary meaning" and that the statute be read as a whole (as required by State Superintendent of Education v. Alabama Education Ass'n, 144 So. 3d 265, 272-73 (Ala. 2003)), the Court concludes the legislature properly intended to allow only limited overtime payments to be included within a member's earnable compensation.

In sum, the Court concludes that before the 2012 amendment of § 36-27-1(14), earnable compensation did not properly include overtime payments regardless of how the Employees Retirement System may have improperly interpreted the statute and that the 2012 amendment to the statute was properly interpreted by the Retirement Systems to allow overtime payments to be included within earnable compensation to a limited extent. Accordingly, the summary judgment entered by the Montgomery Circuit Court in favor of the state defendants is affirmed.

Related Documents: Southern States Police Benevolent Assn v Bentley

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