Opinion ID: 6105430
Heading Depth: 1
Heading Rank: 1

Heading: facts

Text: Earlier Dispute Over Retirement Benefits. This is not the first time the City has found itself in litigation with its police officers over retirement benefits. The current dispute arises out of an attempt to resolve prior litigation, and thus, we begin our review of the relevant background there. - 498 - Nebraska Supreme Court Advance Sheets 310 Nebraska Reports ABBOTT v. CITY OF BELLEVUE Cite as 310 Neb. 496 In 2009, the Bellevue Police Officers Association/Fraternal Order of Police Lodge No. 59 (BPOA) filed a lawsuit against the City in the Sarpy County District Court. The BPOA sought a declaration that a provision of a collective bargaining agreement between the BPOA and the City regarding retirement benefits was valid and enforceable. In the provision at issue, the City agreed to provide its police officers retirement benefits that exceeded those described in the Police Officers Retirement Act (Retirement Act). See Neb. Rev. Stat. § 16-1001 et seq. (Reissue 2012 & Cum. Supp. 2020). Then, as now, the Retirement Act required the establishment of a pension plan for police officers of cities of the first class such as the City. See § 16-1001. Both the officers and the City were required to make contributions to the pension plan described in the Retirement Act. See §§ 16-1005(1) and 16-1006. At the time it was enacted, the Retirement Act required officers to contribute 6 percent of their salary to a retirement account and the City to make a matching contribution. § 16-1005(1) (Reissue 1983). See 1983 Neb. Laws L.B. 237, § 5. Upon retirement, the officer would receive the accumulated value of that account. §§ 16-1002(5), 16-1007(1), and 16-1013(1) (Reissue 1983). See 1983 Neb. Laws L.B. 237, §§ 2, 7, and 13. In the 2009 litigation, the City took the position that the portion of the collective bargaining agreement in which it agreed to provide officers retirement benefits exceeding those provided for in the Retirement Act was unenforceable. The City contended that the Retirement Act did not allow it to provide benefits other than those set forth in the Retirement Act. The district court granted a motion for summary judgment filed by the BPOA. In its order, it found that the Retirement Act “simply sets forth the minimum benefits that a City of the First Class must provide to its police force. It does not prevent a city from offering additional benefits to officers.” The BPOA and the City then entered into a settlement agreement covering certain officers. Under the settlement - 499 - Nebraska Supreme Court Advance Sheets 310 Nebraska Reports ABBOTT v. CITY OF BELLEVUE Cite as 310 Neb. 496 agreement, covered officers would contribute 6 percent of their salary to their retirement account and the City would make a matching contribution. To any covered officer who retired after reaching 55 years of age and providing at least 25 years of service, the City agreed to pay either (1) the total sum of the officer’s retirement account or (2) a payment based upon a percentage of the officer’s compensation in his or her last 5 years preceding retirement, whichever is greater. In this opinion, we will refer to the first type of benefit mentioned above as a “defined contribution payment” and the second as a “defined benefit payment.” In the case of every officer who has retired since the settlement agreement became effective, the value of the defined benefit payment has exceeded the value of the defined contribution payment. It has been the City’s practice to provide the defined benefit payment to retiring officers by distributing the officer’s retirement account to the officer and then making an additional payment equal to the difference between the value of the retirement account and the value of the defined bene­ fit payment. Amendments to Retirement Act and City’s Response. After the parties entered into the settlement agreement, the Retirement Act was amended. The amendments increased the required contribution by both officers and cities from 6 percent to 61⁄2 percent effective October 1, 2013, and to 7 percent effective October 1, 2015. See § 16-1005(1) (Reissue 2012). In response to the amendments to the Retirement Act, the Bellevue City Council adopted amendments to the City’s Police Retirement Plan and Trust (Retirement Plan). The amendments increased the contribution rates for both the officers and the City, so that they were the same as those set forth in the amendments to the Retirement Act. After the approval of the amendments to the Retirement Plan, the City increased deductions from officers’ paychecks and its corresponding matching - 500 - Nebraska Supreme Court Advance Sheets 310 Nebraska Reports ABBOTT v. CITY OF BELLEVUE Cite as 310 Neb. 496 payments as provided in the amendments to the Retirement Plan. After the City amended the Retirement Plan, when officers covered by the settlement agreement retired, the City continued its practice of paying the defined benefit payment by distributing the officer’s retirement account and then making an additional payment equal to the difference between the value of the retirement account and the defined benefit payment. Current Lawsuit. In 2017, the BPOA and a number of its officers filed a lawsuit against the City under 42 U.S.C. § 1983 (2012) and Nebraska’s Uniform Declaratory Judgments Act, Neb. Rev. Stat. § 25-21,149 et seq. (Reissue 2016). The lawsuit alleged that the City had violated the Contracts Clauses and Takings Clauses of the U.S. and Nebraska Constitutions by increasing the officers’ contribution rates without providing any corresponding benefit. In their operative complaint, the BPOA and its officers sought an order enjoining the City from continuing to make deductions from the officers’ salaries in excess of 6 percent; an order directing the City to disgorge funds it had previously deducted from the officers’ salaries in excess of 6 percent, along with any investment income earned on those funds; and declarations that the City had violated the Contracts and Takings Clauses of the U.S. and Nebraska Constitutions. The operative complaint also asserted that the BPOA and its officers were entitled to be awarded all damages arising out of the City’s actions and an award of costs and attorney fees pursuant to § 1988. District Court’s Orders. The parties eventually filed cross-motions for summary judgment. After a hearing, the district court issued an order in April 2020 in which it found that the motion of the BPOA and the officers should be granted in part. In its order, the district court, relying on prior cases from this court, stated that public employee retirement plans are contracts protected from - 501 - Nebraska Supreme Court Advance Sheets 310 Nebraska Reports ABBOTT v. CITY OF BELLEVUE Cite as 310 Neb. 496 impairment by the Contracts Clauses of the U.S. and Nebraska Constitutions. See, Calabro v. City of Omaha, 247 Neb. 955, 531 N.W.2d 541 (1995); Halpin v. Nebraska State Patrolmen’s Retirement System, 211 Neb. 892, 320 N.W.2d 910 (1982). The district court concluded that the officers’ rights under the settlement agreement were impaired by the City’s increased deductions from the officers’ salaries. The district court reasoned that after the increase in the officers’ contributions, the defined benefit payment the officers bargained for in the settlement agreement would have the same value, but would come at a higher cost to the officers. Although the district court’s April 2020 order determined that the BPOA and its officers were entitled to some relief, it withheld entry of judgment. Rather than entering specific relief, the district court requested that counsel for the parties provide suggestions as to the relief they believed was appropriate in light of the district court’s findings. In June 2020, after the parties submitted proposals as to appropriate relief, the district court issued another order. This order granted in part and denied in part the parties’ respective motions for summary judgment. It found in favor of the BPOA and the officers based on their Contracts Clause claim and ordered certain language inserted into the Retirement Plan. Without expressly ruling on the Takings Clause claim or the request for attorney fees, the district court ordered all remaining claims denied and dismissed. The BPOA and the officers filed a timely motion to alter or amend in response to the district court’s June 2020 order. Relevant to this appeal, they contended that the language the district court ordered the City to insert into the Retirement Plan contained conflicting descriptions of the City’s obligations in the event a current officer elected to receive the defined benefit payment upon retirement and also improperly reduced the amount a current officer would receive if he or she elected to receive the defined contribution payment. The BPOA and its officers also asked that the district court make “express - 502 - Nebraska Supreme Court Advance Sheets 310 Nebraska Reports ABBOTT v. CITY OF BELLEVUE Cite as 310 Neb. 496 findings” regarding their “claims under 42 U.S.C. § 1983” and award them attorney fees and costs under § 1988. In response to the motion to alter or amend, the district court issued an order in September 2020 that was substantially similar to its June 2020 order in nearly all relevant respects. The district court found that certain officers who had already retired were not entitled to relief. These officers have not appealed the district court’s denial of relief, and so we do not discuss them further. As for the officers who had not yet retired (current officers), the district court, echoing the conclusions expressed in its previous orders, found that the increased deductions from the officers’ salaries impaired their rights under the Contracts Clauses. In the course of discussing the way in which the current officers were harmed by the increased contributions, the district court stated: [I]f the employee were to choose the defined benefit option, the employee is damaged by having paid the higher contributions required under the Retirement Act amendments. The employee’s damages in that instance would be the sum of the higher employee contribution and the associated earnings on those contributions. The employee would be entitled to collect the applicable percentage of pay on retirement (the defined benefit). As contemplated by the agreement, the employee retirement account, less the damages as described in this paragraph, would belong to the City. In a section of the order discussing the relief it would order, the district court stated that current officers who are eligible to receive the defined benefit payment upon retirement should also receive “his or her retirement contribution to the retirement account above 6 [percent] of his or her wages and any earnings associated with those contributions.” To accomplish this result, the district court accepted the City’s suggestion that it should order that certain language be inserted into the Retirement Plan. That language provided for the creation of separate accounts for (1) the current officers’ 6-percent contributions—account - 503 - Nebraska Supreme Court Advance Sheets 310 Nebraska Reports ABBOTT v. CITY OF BELLEVUE Cite as 310 Neb. 496 “EE012,” (2) the City’s 6-percent matching contributions— account “ER012,” (3) the current officers’ contributions in excess of 6 percent—account “EE912,” and (4) the City’s matching contribution in excess of 6 percent—account “ER912.” That language also provided as follows: If a Plaintiff vests in the defined benefit and retires under the Contract, he or she will receive the greater of: 1. His or her defined benefit under the Contract; or 2. The amounts contained within their “EE012” account and the amounts contained in his or her “ER012”. . . . Regardless of whether a Plaintiff elects the defined benefit (#1 above) or the amounts in his or her account (#2 above), he or she will receive 100% of the funds in the “EE912” Account. Where the defined benefit is greater and a Plaintiff retires under the Contract defined benefit, the City shall be liable for the difference between the defined benefit amount and the “EE012 . . . /ER012” accounts. CALCULATION FOR MAY 9, 2011 DEFINED BENEFIT CALCULATION: [Defined Benefit Amount] – [EE012 + ER012] = City Liability In addition, the Plaintiff would also get to keep their “EE912” Account. City receives 100% of their “ER912”Account. (Emphasis and brackets in original.) The September 2020 order included a paragraph regarding the request for attorney fees made by the BPOA and its officers. It observed that no officer that was a party to the case had retired and been deprived of a right under the settlement agreement. The district court then stated, “Given the contingent nature of that future possibility of damage, it is difficult to come to the conclusion that the [BPOA and the current officers] are the prevailing party.” - 504 - Nebraska Supreme Court Advance Sheets 310 Nebraska Reports ABBOTT v. CITY OF BELLEVUE Cite as 310 Neb. 496 Finally, the district court ordered that “all remaining claims are denied and dismissed.” The BPOA and the current officers filed a timely notice of appeal and petition to bypass. We granted the petition to bypass. ASSIGNMENTS OF ERROR The BPOA and the current officers assign 10 errors, but in our view, they can be fairly condensed and restated as follows: The district court erred by (1) ordering a remedy that will reduce the current officers’ defined benefit payments, (2) ordering a remedy that could reduce the current officers’ defined contribution payments below the minimum benefits required by the Retirement Act, (3) denying the request for attorney fees and costs on the grounds that the BPOA and the current officers were not “prevailing parties” under § 1988, (4) failing to find that the City violated § 1983, and (5) dismissing the BPOA and the current officers’ Takings Clause claims.