# United Stat es Court of Appeals For the First C ircuit

No. 03-1913

RHODE ISLAND BROTHERHOOD OF CORRECTIONAL OFFICERS,

Plaintiff, Appellant,

v. STATE OF RHODE ISLAND; LINCOLN ALMOND, in his capacity as Chief Executive Officer of the State of Rhode Island; ROBERT L. CARL, JR., in his capacity as Director of the Department of Administration of the State of Rhode Island; PAUL J. TAVARES, in his capacity as General Treasurer of the State of Rhode Island; and Ashbel T. Wall II, in his capacity as the Director of the Department of Corrections

of the State of Rhode Island, Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF RHODE ISLAND [Hon. Ronald R. Lagueux, U.S. Senior District Judge ]

Before Boudin, Chief Judge , Selya, Circuit Judge , and Stahl, Senior Circuit Judge .

Dennis T. Grieco II with whom Gidley, Sarli & Marusak, LLP was on brief for appellant. Thomas A. Palombo , Assistant Attorney General, Department of AttorneyGeneral, with whom Claire Richards , Special Counsel to the Governor, and John L.P. Breguet , Chief Legal Counsel, Department ofAdministration, Offi ce o f Labor Relations, were on brief for

appellee State of Rhode Island. John L.P. Breguet , Chief Legal Counsel, Department of Administration, Office of Labor Relations, with who m Th omas A. Palombo , Assistant Attorney General, Department of Attorney General, and Claire Richards , Special Counsel to the Governor, were on brief for appellee Robert L. Carl, Jr.

January 28, 2004-3- BOUDIN, Chief Judge . This suit involves t he cla ims of the Rhode Island Brotherhood of C orr ectional Officers ("the Brotherhood") against the state of Rhode Island, its governor, and other officials (collectively, "Rhode Island"). Because the case was disposed of on a motion to dismiss, Fed. R. Civ. P. 12(b)(6), we accept for purposes of review the factual allegations (but not necessarilythe ch aracterizations) of the complaint, Rogan v. Menino , 175 F.3d 75, 77 (1st C ir.), cert. denied , 528 U.S. 1062 (1999), which are briefly as follows.

I n 1976 the Rhode Island General Assembly enacte d a n incentive pay statute giving extra payto correctional officers who acquiredspecifiededucational credits, provided that the officers remained employed by the Department of Corrections for designated periods (or paid back some of the extra pay if they left early). 19 76 R.I. Pub. Laws. ch. 290, § 2 (codified at R.I. Gen. Laws §§ 42-56.1-1 to -10 (1976)). The extra pay was fixed as a specified percentage of the officer's base salary, depending upon the number of education al credits obtained. R.I. Gen. Laws § 42-56.1-2 (1976). Over th e y ears after 1976 the state also entered into collective bargaining agreements with the correctional officers containing terms that mirrored the statute's provisions on incentive pay. However, the latest collective bargaining agreement containing such incentive payprovisions expired on June 30, 1996.1 See generally Parella v. Ret. Bd. of R.I. Employees' Ret.

Sys. , 173 F.3d 46 (1st Cir. 1999); National Educ. Association-R.I. ex rel. Scigulinsky v. Ret. Bd. of R.I. Employees' Ret. Sys. , 172 F.3d22 (1st Cir.), cert. denied , 528 U.S. 929 (1999); R.I. Laborers' Dist. Council v. Rhode Island , 145 F.3d 42 (1st Cir. 1998); McGrath v. R .I. Ret. Bd. , 88 F.3d 12 (1st Cir. 1996); Retired Adjunct Professors v. Almond , 690 A.2d 1342 (R.I. 1997). -4- The union alleges that the state required union members to sign individual contracts confirming the state's obligation to provide incentive pay under the terms of the statute; individual forms

re lat ing to incentive pay were signed, but whether they were contracts and if so what obligations they imposed and on whom remains to be discussed.

The Rhode Island legislatu re h as several times enacted generous pay or pension statutes and later reconsidered them. 1 In 1996, the Rhode Island General Assembly amended the 1976 incentive payst atute , effective as of July 1, 1996, to provide that after that date incentiv e pay woul d no longer be a percentage of base salarybut would be a specified flat sum, 1996 R.I. Pub. Laws. ch. 100, § 1 (codified at R.I. Gen. Laws §§ 42-56.1-2 (1997)). According to the union this ge nerall y results in lower incentive pay--hardlya surprise since base salaries tend to rise over time.

On October 2, 2003 , th e Brotherhood brought suit, 42 U.S.C. §§ 1983, 1988 (2000), against Rhode Island, seeking decla ratoryand injunctive relief to maintain the percenta g e formula and also seeking back payments. The claims were based on allegedviolations of the contract clauses of the federal and Rhode-5-

Islandconstitutions, U.S. Const. art. I, § 10, cl. 1; R.I. Const. art. I, § 2; denial of substantive due process, U.S. Const. amend. XIV, § 1; R.I. Const. art. I, § 2; taking of property without just compensation (apparently under U.S. Const. Amend. V); breach of contract; promissory estoppel; and unjust enrichment/quantum meruit. Thereafter, exercising supplemental jurisdiction over the state law claims, 28 U.S.C. § 1367(a) (2000), the district court dismissed all of the claims on the merits, save that it dismissed the claims based on the alleged individual contracts for lack of standing. R.I. Bhd. of Corr. Officers v. Rhode Island , 264 F. Supp. 2d 87 (D.R.I. 2003). The union now appeals. Our review of a decision granting a motion to dismiss on the papers is plenary. Stein v. Royal Bank of Canada , 239 F.3d 389, 392 (1st Cir. 2001).

The contra ct c lause of the federal constitution limits the ability of a state to abrogate rights created by pre-existing contracts, including contractual rights against the state created bylegislation. E.g. , Parella v. Ret. Bd. of Rhode Island Employees' R et. S ys. , 173 F.3d 46, 60 (1st Cir. 1999); Parker v. Wakelin , 123 F.3d 1, 4-5 (1st Cir. 1997 ), cert. denied , 522 U.S. 1106 (1998). But recognizing that legis lati on is ordinarily

s ubject to change, the Supreme Court requires that th e leg isl ature's intent to create such rights against the state be

u nmistakablyclear, see United States v. Winstar Corp. , 51 8 U.S .2 This conclusion also disposes of the counterpart claimunder

the Rhode Isla nd Constitution, because Rhode Island case law construes its contract clause consistently with the federal clause, Retired Adjunct Professors , 690 A.2d at 1345 n.2.

3 Although a litigant seeking to overcome the hurdle of the unmistakability doctrine may rely on "not only the words used [in the statute] but also apparent purpose, context, and any pertinent evidence of actual intent, including legi s lative history," R.I. Laborers' Dist. Council , 145 F.3d at 43, the Brotherhood has not provided any pertinent evidence of this kind. -6- 839, 872 (1996) (plurality opinion); Dodge v. Bd. of Educ. , 302 U.S. 74, 78-79 (1937); Parella , 173 F.3d at 59-60; and even where contractual rights do exist, the l egis lature may abrogate them under certain circumstances. U.S. Trust Co. v. New Jersey , 431 U.S. 1, 25 (1977); Parella , 173 F.3d at 59. Here, inquiry stops at the first stage since we agree with the district court that the 1976 statute did not unmistakably create contractual rights. 2

The 1976 statute merely provides that the incentive pay specifiedwill be afforded if the educational qu alif ications are met by the employee. It does not say that the provision s a re a contractual commitment by the state or will never be changed, nor is there language authorizing the state to ent er into contracts guaranteeing such benefits forever. See Parella , 173 F.3d at 60. The framework is similar to other statutes regularly found not to create private contractual rights. See note 1, above. 3

The Brotherhood's main statutory-language argument to the contraryis that the 1976 provisions make references to writings in two instances: first, the eligibility provision requires that the-7-

empl oyee " agree in writing to remain" in the Department of Corrections for a specified period, R.I. Gen. Laws § 42-56.1-2 (1976); second, the payment provision directs an administrator to supplythe "agreement form" containing the time constraints for completing educational programs, R.I. Gen. Laws § 42-56.1-6 (1976). The provisions explain at least one of the forms relied on by the union as independent contracts.

Whatever the status and mean ing of these two documents (an issue to which we will return), the two references to writings in the statute do not show that the statutory provisions for incentive pay were themselves unmistakably intended to create (or authorize creation of) private cont ra ctual rights against the state. The statute requires a d ocument from the employee acknowledging the statutory commitment of the employee to remain or repaya portion of past incentive pay. The only obligations imposedon the state are to follow the statute–-which has now been amended. It would have been child's play for the Rhode Island legislature to sayexplicitly in 1976 that educational credits once earnedcreated private rights or that incentive pay could never be differentlycalculated for existing employees who had qualified for incent ive pay. True, civil service jobs commonly create expectations that holders will likel y enjo y no reductions in pay (but instead get periodic increases); but expectations alo ne a re4 Justi ce Souter's opinion describes the history of the

unmistakability doctrine as well-settled law. Winstar Corp. , 518 U.S. at 876 & n.21 (Souter J., plurality opinion). Justice Scalia's concurrence says that the doctrine reflect s a "commonsense" inte rpretation of contract law in the context of legislation. Id. at 921 (Scalia, J., concurring in the judgment). The Chief Justice's opinion op pose s any dilution of pre-existing -8- not contracts–-contracts are written to protect expectations. Indeed, legislation constantly creates expectations that are disappointed by later modifications, repeal or lack of funding.

Of course, the em ployees in this case assert not only expectations but reliance. In private ordering ( e.g. , a corporate pension plan), cour ts commonly overlook the lack of an explicit promise where the employee performs in accor danc e with a promulgatedplan and the employer then reduces the benefits. Nat'l Educ. Ass'n-R.I. ex rel. Scigulinsky v. Ret. Bd. of R.I. Employees' Ret. Sys. , 172 F.3d 22, 26 (1st Cir.), cert. denied , 528 U.S. 929 (1999). But for good reason public statutes are not construed in the same fashion as private contrac ts. I d. at 27. This is a disadvantage for public employees (who happen to include judges); yet no shortage of applicants has ensued.

United States v. Winstar Corp. , 518 U.S. 839 (1996), reliedupon in other respects by the Brotherhood, does not support the union's argument that contractual rights spring from the 1976 statute. Virtually all of the opinions assumed that the unmistakabilitydoctrine applies to legislation claimedto provide private contractual rights. 4 The core dispute that divided theunmistakabilitylaw. Id. at 926-27 (Rehnquist, C.J., dissenting). -9- Court three ways concerned the ability of Congress to override what most of the Justices deemed to be promises made in prior agreements between banks and their regulators.

Thus, Winstar did not alter the traditional presumption that state legislation does not ordinarily create private contractual rights. Indeed, since the Winstar decision, this court has regularly followedtha t presumption. E.g. , R.I. Laborers' Dist. Council v. Rhode Island , 145 F.3d42, 44-45 (1st Cir. 1998); Parker , 123 F.3d at 5-6. Any rule allowing one legislature to bind its su ccesso rs by casual implication, Winstar Corp. , 518 U.S. at 874 (Souter J., plurality opinion); Parella , 173 F.3d at 60, would be a far-reaching change in the law endorsed by none of the Winstar opinions. As an altern ativ e basis for its contract clause claim, the union relies on the collective bargaining agreements that mirroredt he pe rcentage pay terms of the 1976 statute. The last such agreement embodying those terms expired on June 30, 1996, one daybefore the statute converting incentive pay to fla t stip ends became effective. The union does not say that percentage based payments required before that date were not paid; its position is that under state labor law the last collective bargaining agreement previouslyin force is continued in force after June 30, 1996, until a new one is negotiated.5 Although the union's complaint does not invoke any claims

under state labor laws, the 1 996 st atute, expressly changing the basis for computing incentive pay, wouldarguably modify any state labor law doctrine that might otherwise independent ly p erpetuate the old formula. -10-

Assuming that state labor law maintains the status quo, the obligation would arise under state labor law and not by contractual obligation protected against impairment by the constitutional contract clause doctrine. Providence Teachers Union

v. Providence Sch. Bd. , 689 A.2d 388 (R.I. 1997), relied on by the Brotherhood, states that although under state labor law the "terms and conditions of employment may be insulated from postexpiration unilateral change in order to protect the statutory right to bargain, such terms and conditions no longer have force by reason of the expired contract." Id. at 393 n.2 (citations omitted). See also Univ. of Haw. Prof'l As semblyv. Cayetano , 125 F. Supp. 2d 1237, 1243 (D. Haw. 2000); Bricklayers Union Local 21 v. Edgar , 922 F. Supp. 100, 105-06 (N.D. Ill. 1996). 5

Finally, as a basis for a contract clause claim, the Brotherhoodpoints to the forms signed by individual employees. These forms, required by the 1976 statute as a condition of receiving incentive pay, appear in at least two versions: one is labeled"notice" and the other "acknowledgment" and both do no more than say that the employee receiving incentive pay understands that the pa yme nt requires that he or she continue to work for the6 Tw o versions of the documents exist, and are entitle d ,

respectively, "Correctional Officer's Education Incentive Pay Notification of Enrollment" and "Acknowledgment of the Provisions of Title 42 Chapter 56.1-1 through 56.1-10 of the General Laws of Rhode Island and in particular Chapter 42-56.1-2." -11- Department of Corrections for a specified period or return part of the extra compensation. 6

The district court held that under Rhode Island law the Brotherhoodhad no authority to sue to enforce individual contracts made by its members. R.I. Bhd. of Corr. Officers , 264 F. Supp. 2d at 100-01. The court conceded that section 1983 claims are governed by federal standing rules, which allow an association to

sue on behalf of its members where the members would have standing to sue themselves, the interests are germane to the association's purpose, and "neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit." Hunt v. Wa. State Apple Advertising Comm'n , 432 U.S. 333, 343 (1977). But the district court found that the last of these three conditions had not been met.

The district court's main concern was that a n y determinat ion as to amounts owed to individual employees as back pay since July 1996 would require individual calculations and the participation of those members in the lawsuit. Yet in this case the union sought for its members a declaration under the contract cl ause that percentage pay has to be provided in the f uture fo r members who had secured their educational credits. Surely such a-12-

declaration would benefit members even if they had to file separate lawsuits to determine individual back pay.

Int'l Union, United Auto., Aerospace & Agric. Implement Workers v. Brock , 477 U.S. 274 (1986), is directly in point. There

a union challenged the Secretary of Labor's interpretatio n o f a trade statute in a manner that meant less unemployment benefits for union member s. Th e Supreme Court concluded that the third requirement under Hunt for associational standing was met:

[T]hough the unique facts of each UAW member's claimwill have to be considered by the proper state authorities before any member will be able to receive the benefits allegedly due him, the UAW can liti g ate this case without the participation of those individual claimants and still ensure that "the remedy, if granted, will inure to the benefit of those members of the association actually injured." Id. at 288 (quoting Warth v. Seldin , 422 U.S. 490, 515 (1975)); see also Playboy Enters., Inc. v. Pub. Serv. Comm'n , 906 F.2d 25, 35-36 (1st Cir.), cert. denied , 498 U.S. 959 (1990).

It follows that federal standing rules permit the union to seek a declaration on behalf of its members as to whether the contract clause protects continuing rights to percentage pay under the alleged individual contracts. And embedded in thi s f ederal claimis the que sti on whether the forms do constitute contracts commit t ing the state to continue to pay percentage-based compensation to those who earned their educational credits before-13-

the statute was amended. We thus turn to the contract question not reached by the district court.

Whether or not the forms constitute contracts--and neither is expressly a contract--they do not purport to create any obligations on the part of the state. Rather, the signing employee merelyacknowledges that by accepting incentive pay, he or she "understands" that the educational program must be completed to qualifyand that if the employee leaves in less than four years, a portion of the payment must be returned a s provided in the 1976 statute. The time period for completing the educational requirements and the duration of required employment for each level of incentive compensation are specified in the two form s. Not a single phrase commits the state to do anything.

The purpose of the forms is patent. Although the employees' obligations are spelled out in the statut e, a p rudent legislature might be concerned that employees receiving incentive paywho did not complete their educational pr ogram, or resigned earlyfrom employment, would balk at paying back anything. Were the state ever to sue to recapture benefits as p rovi ded by the statute, the signed forms would block the employee fro m d enying that he or she understoodfromthe outset the conditions imposed on the receipt of such pay.

O ur discussion thus far also disposes of three m ore o f the claims advanced in the complaint. Because the union h as no t-14-

establisheda violation of any contractual rights, there is no cognizable claim for taking of property without just compensation. Parella , 173 F.3d at 58-59. The lack of any property interest also disposes of the substantive due process claim. R.I. Laborers' Dist. Council , 145 F.3d at 44 n.1. Similarly, absent an extan t contract obligating the state to do anything, the Brotherhood's common law breach of contract claims fail.

The complaint's two remaining claims invoke the doctrines of promissory estoppel and quantum meruit/unjust enr ichment, but the Br otherh ood's brief on appeal addresses these claims in only three sentences, effectively abandoning them. Mass. Sch. of Law at Andover, Inc. v. Am. Bar Ass'n , 142 F.3d 26, 43 (1st Cir. 1998). For completeness, we note that the district court's opinion explains why neither claim can succeed under Rhode Island law. R.I. Bhd. of Corr. Officers , 264 F. Supp. 2d at 104-06.

We have been brief in our treatment because the central contract clause claim has been turned back several times in past

cases coming out of Rhode Island. Nor is the result r emark able:

save in the area of pensions–-and not always there–-governments rarely guarantee that compensation will never be changed. If the Rhode Island legislature wants to promise never to reduce pay for existing workers, it will have to say so unmistakably–-and accept openly the responsibility for its decision.

Affirmed .