Opinion ID: 197501
Heading Depth: 2
Heading Rank: 4

Heading: Contractual Rights Under the MSRS

Text: 23 Turning to the MSRS, we ask whether the Maine Legislature has unmistakably evinced the intention to create binding contractual rights. See Hoffman, 909 F.2d at 614 (determining whether language and circumstances of Rhode Island benefits statute reveal a legislative intent to create private contractual rights). Specifically, in light of the plaintiffs' claims, we must ask whether Maine has bound itself not to modify or alter, at any time before the employee's retirement, the level of pension benefits an employee would expect to receive. The statutory language is the primary focus of the inquiry. Atchison, Topeka & Santa Fe Ry. Co., 470 U.S. at 466, 105 S.Ct. at 1452. 24 Under the terms of the MSRS, public employees who have met certain service and age requirements are entitled to receive pensions. At the heart of this case is 5 M.R.S.A. § 17801, which reflects the state's intent to reserve the power to amend the amount of pension benefits, as well as, arguably, the state's intent to create private contractual rights. That is, the State's self-imposed limitations on its legislative power through section 17801 may reasonably serve as an indication of its intent to guarantee pension benefits once they are due, as well as an obvious reservation of amendment powers with regard to the amount of benefits that are not due. The parties disagree as to the unmistakable intentions section 17801 represents. 25 Section 17801 states that no amendment ... may cause any reduction in the amount of benefits which would be due a member ... on the date immediately preceding the effective date of the amendment. Much turns on the meaning of due. The plaintiff public school teachers argue that benefits are due from the moment of employment, and that this section merely confirms the applicability of a strict implied-in-fact, unilateral contract approach. The State contends that section 17801 is a reservation of the power to alter benefits until the retirement benefits are literally due to be received. The third alternative, not the basic position of either party, is that benefits are due if a teacher has completed the statute's initial service requirements, although pension benefits are not yet currently payable. 26 The Maine Supreme Judicial Court's Spiller decision, which deserves our  'respectful consideration and great weight,'  Romein, 503 U.S. at 187, 112 S.Ct. at 1110 (quoting Indiana ex rel. Anderson v. Brand, 303 U.S. 95, 100, 58 S.Ct. 443, 446, 82 L.Ed. 685 (1938)), clearly rejects the alternative pressed by the teachers. The court was unpersuaded by the reasoning of those jurisdictions that have discerned in the statutory language the creation at the time of employment of binding contractual rights. Spiller, 627 A.2d at 516. It held that, as to the Spiller plaintiffs, none of whom had satisfied the statute's service requirements at the time of the statutory amendment challenged in Spiller, [n]one of the benefits at issue here were due ... on the effective date of [the] legislation. Id. 27 The question remains, however, whether section 17801 should be read to protect a teacher--and possibly to create contract rights--whenever a teacher satisfies the service requirements even though the teacher is still in active service and no pension is currently payable. Section 17801 does not clearly compel such a reading, since due could easily be read to mean currently payable. And such a reading would also arguably conflict with some of the language in Spiller (although not its holding) and with the dissent's reading of the majority. See Spiller, 627 A.2d at 516 (By implication, the [statutory] language reserves to future legislatures the power to modify prospective service retirement benefits for employees to whom benefits are not then due); id. at 519 (Although the Court does not reach the issue today, its interpretation of section 17801 also undermines the pension benefits of those employees who have met the eligibility conditions for pension benefits but [have not yet retired].) (Wathen, C.J., dissenting). 28 Even if we treat the statute as unclear and conclude that Spiller leaves the issue open, we think that the principle of unmistakability would defeat the teachers' claim that the contract rights are created when service requirements are satisfied. We need not decide whether the statute ever gives rise to a contractual relationship; it is enough to say that it does not clearly do so before a teacher retires, and thus gains an immediate right to the payment of pension benefits. Because there is no attempt here to take away retirees' benefits, there can be no plausible contract clause claim in this case. 29 The district court reasoned that due should be construed as referring to the point at which a member qualifies for retirement benefits. But even if this is a possible reading, we do not think this language could be said to reflect the unmistakable intent of the Maine Legislature, particularly when the legislature could very well have indicated as much. In fact, the MSRS makes no reference to vesting. As the district court points out, and as the plaintiffs have vigorously argued, there is some evidence indicating that certain legislators wanted to protect vested rights; and that the Maine Legislature, in enacting section 17801, responded to a report that recommended the protection of employees' accrued retirement benefits from retroactive reductions. But the language of section 17801 remains at best ambiguous, and we cannot find that the legislature as a whole unmistakably intended to create contract rights at the time that service requirements were satisfied--especially where, as here, it would have been easy to make any such intention crystal clear. 30 We do not decide today whether, in order to satisfy the unmistakability doctrine, a public pension statute must explicitly employ the language of contract. Nor need we decide whether Contract Clause principles would apply if Maine sought to reduce pension benefits already due to present retirees, a step that would in any case appear to require revision of the present section 17801. To resolve this appeal, we need only conclude that there is no unmistakable intent by the Maine Legislature to create an enforceable private contract right against the modification of the plaintiffs' retirement benefits until they are actually receivable. 31 As we indicated in McGrath, public employment contracts operate in a special employment environment requiring recognition of the states' flexibility vis-a-vis the retirement benefits that it offers public employees. 88 F.3d at 19. Whether the amendments here are wise or justified as a matter of political philosophy is not our concern. As Contract Clause challenges arise, we must look to the language of the pension statutes to determine, as a threshold matter, whether the unmistakability doctrine is satisfied. Here, as it relates to Maine's purported obligation not to alter the benefits of its public teacher employees, it is not. Thus, no violation of the Contract Clause may be found. 32 With regard to the teacher-plaintiffs' due process claim on cross-appeal, we affirm the decision of the district court, finding no due process violation, for the reasons given in its opinion, extending that reasoning to all plaintiffs. See 937 F.Supp. at 58.