Court Opinion

ID: 2964848
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:32:06.484748+00
Date Added: 2024-06-11T11:43:02.516879
License: Public Domain

USCA1 Opinion

	

                           UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT
                                ____________________
          Nos. 96-2225
               96-2226
               96-2227
               96-2228
                             RICHARD M. PARKER, ET AL.,
                      Plaintiffs, Appellees, Cross-Appellants,
                                         v.
                              DAVID S. WAKELIN, ET AL.,
                      Defendants, Appellants, Cross-Appellees.
                                ____________________
                    APPEALS FROM THE UNITED STATES DISTRICT COURT
                              FOR THE DISTRICT OF MAINE
                       [Hon. Gene Carter, U.S. District Judge]
                                ____________________
                                       Before
                               Torruella, Chief Judge,
                          Boudin and Lynch, Circuit Judges.
                                _____________________
               Cabanne Howard, Assistant Attorney General, with whom Andrew
          Ketterer, Attorney General, and 
                                         Thomas D. Warren
                                                         , State Solicitor,
          were on brief for appellants.
               Donald F. Fontaine, with whom Kaighn Smith, Jr. and Fontaine
          & Beal, P.A. were on brief for appellees.
                                ____________________
                                   August 11, 1997
                                ____________________

                    TORRUELLA, Chief Judge.  The question presented by this
          appeal is whether certain legislative amendments to the Maine State
          Retirement System ("MSRS") violate the Contract Clause of the
          United States Constitution as applied to plaintiffs, a class
          comprised of current Maine public school teachers all of whom are
          members of the MSRS. Following a bench trial, the district court
          held that certain amendments violated the Contract Clause as
          applied to those public employees who had satisfied the service
          requirements under the MSRS and whose pension rights had thereby
          "vested." Finding no unmistakable intent on the part of the Maine
          legislature to create private contractual rights against the
          reduction of pension benefits prior to the point at which pension
          benefits may actually be received, we hold that the Maine
          amendments do not violate the Contract Clause with regard to any of
          the plaintiffs. Accordingly, we reverse the district court's
          holding that the amendments violate the Contract Clause as applied
          to "vested" members of the MSRS.
                                     BACKGROUND
                    None of the relevant facts recited below are in dispute.
          I. The Maine State Retirement System (MSRS)  
                    The MSRS operates as a public pension trust pursuant to
          Maine's public employee retirement benefit statute. 
                                                             See 5 M.R.S.A.
          SS 17001-18663 (1989 & Supp. 1996). The MSRS was created in 1942
          to encourage "qualified persons to seek public employment and to
          continue in public employment in their productive years." 5
          M.R.S.A. S 17050 (1989). For all Maine state employees, including
                                         -2-

          the public school teachers comprising the plaintiff class in the
          instant case, membership in the MSRS is mandatory. 5 M.R.S.A.
          SS 17001(14), 17651 (1989). All MSRS members make mandatory
          contributions into a pension fund. The State of Maine also
          contributes annually to maintain the fund's actuarial soundness
          with regard to future benefit obligations. 5 M.R.S.A. SS 17701-A,
          17701-B, 17153(1-A)(B)(Supp. 1996). The MSRS can be classified as
          a "defined benefit system," in that the retirement benefits
          provided for teachers are defined upon employment and financed in
          part by their fixed contributions into the system.
                    The teachers, as members of the system, qualify to
          receive retirement benefits upon (1) reaching the statutory
          retirement age, 
                         and (2) satisfying 
                                            either of the following service
          requirements: (a) at least ten years of creditable service; or (b)
          at least one year of creditable service prior to reaching the
          statutory retirement age while in public service. 5 M.R.S.A.
          S 17851 (1989 & Supp. 1996). Alternatively, a member may be
          entitled to receive retirement benefits when he or she retires
          after performing at least 25 years of creditable service. Id. In
          the district court's decision, the term "vesting" was used to
          describe the satisfaction of the service requirements. See 
                                                                     Parker
          v. 
            Wakelin, 937 F. Supp. 46, 49 n.1 (D. Me. 1996). However, as the
          district court in fact noted, the term "vesting" does not figure in
          the statutory scheme itself, which simply indicates the age and
          service requirements that must be met.   See 5 M.R.S.A. S 17851
                                         -3-

          (1989 & Supp. 1996). Members who terminate their public service
          prior to satisfying the pension eligibility requirements are
          entitled to a return of their contributions, with interest. 5
          M.R.S.A. S 17705(2).
                    An eligible retiree earns a pension in the amount of two
          percent of his or her "average final compensation" multiplied by
          the number of years of total creditable public service (up to 25
          years). 5 M.R.S.A. S 17852 (1989). The legislative amendments at
          issue on this appeal affect, among other things, the process by
          which one computes an employee's "average final compensation" in
          such a manner as to reduce the expected pension benefits of many
          members.
                    The State of Maine concedes that the sole purpose for
          enacting the changes in the terms and conditions of retirement
          benefits ("the 1993 Amendments") was to save money by lowering
          budget allocations by the state to the trust funds of the MSRS;
          their enactment coincided with other responses to a state fiscal
          crisis. The 1993 Amendments may be sorted into two groups: three
          changes apply to the pensions of 
                                         all current teacher-members of the
          MSRS, while three others apply only to those who had not satisfied
          the service requirements under the MSRS as of the effective date of
                              
           Other non-pension benefits under the retirement system, such as
          life insurance and disability retirement benefits, may be received
          without having satisfied any minimum service requirement.
           A slightly different method applies to those retirees whose
          eligibility is based on having completed 25 or more years of
          creditable service.
                                         -4-

          the amendments. None of the amendments affected retirees earning
          pensions as of the effective date. The amendments that affected
          all of the plaintiffs were: (1) an increase in the rate of required
          member contributions from 6.5 percent of their salary to 7.65
          percent; (2) a cap on the salary increase that may be included in
          the course of calculating the level of teachers' retirement
          benefits; and (3) a six-month delay in the first cost-of-living
          adjustment of retirement benefits. See P.L. 1993, ch. 410, pt. L,
          SS 28, 13, 31.   The district court held that these three
          modifications were unconstitutional as applied to those plaintiffs
          who had satisfied the service requirements. The other 1993
          amendments, which only applied to those who had not served 10 years
          as of the effective date of the amendments, were: (1) an increase
          in the regular retirement age from 60 to 62; (2) an increase in the
          early retirement penalty from 2.25 percent to 6 percent of the
          teachers' retirement benefit for each year preceding age 62; and
          (3) the elimination of an inclusion of per diem payment of up to
          thirty days of unused sick or vacation pay in the course of
          calculating teachers' retirement benefits. 
                                                    See P.L. 1993, ch. 410,
          pt. L, SS 33, 35, 37, 12.   It is not disputed that the 1993
          Amendments operate to the disadvantage of MSRS members without
          providing substantive offsetting benefits.
                              
           These provisions are codified as amended at 5 M.R.S.A. SS 17001-
          B, 17701(13)(C), 17806(3).
           These provisions are codified as amended at 5 M.R.S.A. SS 17851
          (1-A) & (2-A), 17852(3-A), 17001(13)(B).
                                         -5-

                    When the MSRS was first adopted in 1942, the legislature
          made no express statement as to its ability to amend or alter the
          pension benefit structure. In 1975, the Maine legislature enacted
          the following provision:
                      No amendment to this chapter shall cause
                      any reduction in the amount of benefits
                      which would be due to the member based on
                      creditable service, compensation, employee
                      contributions and the provisions of this
                      chapter on the date immediately preceding
                      the effective date of such amendment.
          P.L. 1975, ch. 622, S 6, codified at 5 M.R.S.A. S 17801 (1989),
          under the title "Amendment not to cause reduction in benefit."
          II. The Proceedings Below
                    Plaintiffs, the Maine Education Association and a class
          representing public school teachers throughout the State of Maine,
          challenged the constitutionality of the 1993 Amendments under the
          Contract Clause, the Due Process Clause, and the Takings Clause,
          seeking declaratory and injunctive relief to block implementation.
          The district court held that: (1) the 1993 Amendments violated the
          Contract Clause only as applied to MSRS members whose benefits had
          "vested" under the system; and (2) the 1993 Amendments did not
                              
           The current version has a few minor changes in language:
                    No amendment to this Part may cause any
                    reduction in the amount of benefits that would
                    be due to a member based on creditable
                    service, earnable compensation, employee
                    contributions, pick-up contributions and the
                    provisions of this Part on the date
                    immediately preceding the effective date of
                    the amendment.
          5 M.R.S.A. S 17801 (1989).
                                         -6-

          violate any other provision of the constitution. By using the term
          "vested" the district court referred to those MSRS members who had
          satisfied the service requirements under the system -- a service
          requirement is a necessary (but not a sufficient) condition to
          being entitled to actually receive a pension.      See Parker v.
          Wakelin, 937 F. Supp. at 49 n.1.
                    On appeal, the state defendants ask that we hold that the
          1993 Amendments do not violate the Contract Clause as applied to
          any of the plaintiffs. In their cross-appeal, the plaintiffs argue
          that the 1993 Amendments violate the Contract Clause as applied to
          all teacher members of the MSRS prior to the effective date of the
          amendments, and that the 1993 Amendments also violate substantive
          due process.
                                     DISCUSSION
                    The essential facts being undisputed, this appeal turns
          on questions of law over which we exercise  de 
                                                         novo review.   See
          Villafane-Neriz v. FDIC, 75 F.3d 727, 730 (1st Cir. 1996). This
          appeal raises a legal issue of considerable importance, one we
          specifically left unresolved in 
                                         McGrath v. 
                                                    Rhode Island Retirement
          Board, 88 F.3d 12, 19 (1st Cir. 1996). When stated broadly, the
          issue is whether a legislative amendment to a state employee
          retirement pension plan that is detrimental to employees triggers
          further scrutiny under the Contract Clause as applied to state
          employees whose pension rights under the plan have "vested" prior
          to such amendment. In  McGrath, we did not need to resolve this
          issue, because the plaintiff's pension rights had not vested prior
                                         -7-

          to the legislative amendment at issue, and because the legislature
          specifically reserved the power to amend or terminate the plan as
          to nonvested members. 88 F.3d at 19-20. We now conclude that a
          blanket answer to the issue of Contract Clause protection for
          vested employees is not possible, because, as we explain below, a
          detailed examination of the particular provisions of a state
          pension program will be required prior to determining the nature
          and scope of the unmistakable contractual rights, if any, that are
          created by a given state legislature.
          I. General Contract Clause Principles
                    Although the wording of the Contract Clause appears
          uncompromising -- "No state shall . . . pass any . . . Law
          impairing the Obligation of Contracts . . . "
                                                       -- the Supreme Court
          does not interpret it as an absolute bar on the impairment of
          either governmental or private contractual obligations. 
                                                                 See 
                                                                     United
          States 
                 Trust 
                       Co. v.  New 
                                   Jersey, 431 U.S. 1, 21 (1977) ("'[T]he
          prohibition is not an absolute one and is not to be read with
          literal exactness like a mathematical formula.'" (quoting    Home
          Bldg.  
                &  
                   Loan  
                        Ass'n v.  Blaisdell, 290 U.S. 398, 428 (1934))).
          Rather, the Supreme Court has elaborated an analysis under which a
          court must first ascertain whether a change in state law has
          resulted in "'the substantial impairment of a contractual
          relationship.'" General Motors Corp. v. Romein, 503 U.S. 181, 186
          (1992) (quoting Allied Structural Steel Co. v. Spannaus, 438 U.S.
                              
           U.S. Const. art. I, S 10, cl. 1.
                                         -8-

          234, 244 (1978)). Next, the reviewing court must determine whether
          the impairment is nevertheless justified as "reasonable and
          necessary to serve an important public purpose."   United 
                                                                     States
          Trust  
                Co., 431 U.S. at 25-26. Where the contract allegedly
          impaired is one created, or entered into, by the state itself, less
          deference to a legislative determination of reasonableness and
          necessity is required, because "the State's self-interest is at
          stake." Id. at 25; 
                             see also
                                      
                                      McGrath, 88 F.3d at 16 (when the state
          itself is a party, it "must do more than mouth the vocabulary of
          the public weal in order to reach safe harbor.").
                    The first step described above can be further broken down
          into "three components: whether there is a contractual
          relationship, whether a change in law impairs that contractual
          relationship, and whether the impairment is substantial." Romein,
          503 U.S. at 186. In the instant case, we need not reach the issue
          of impairment or substantiality, because the plaintiffs fail to
          demonstrate the existence of a contractual relationship protected
          by the Contract Clause. At the same time that less deference is
          given to state legislatures when it is the state that wishes to
          relieve itself of contractual obligations, a clear showing must be
          made that a state law has created a contractual obligation on the
          part of the state in the first place. See 
                                                    Hoffman v. 
                                                               Warwick, 909
          F.2d 608, 614 (1st Cir. 1990) ("The Contract Clause is applicable
          to contracts into which the state enters, but normally state
          statutory enactments do not of their own force create a contract
          with those whom the statute benefits.").
                                         -9-

          II. The Unmistakability Doctrine
                    In order to deem a state legislative enactment a contract
          for the purposes of the Contract Clause, there must be a clear
          indication that the legislature intends to bind itself in a
          contractual manner. See 
                                  National R.R. Passenger Corp.
                                                               v. 
                                                                  Atchison,
          Topeka & Santa Fe Ry. Co., 470 U.S. 451, 465-66 (1985) ("[A]bsent
          some clear indication that the legislature intends to bind itself
          contractually, the presumption is that 'a law is not intended to
          create private contractual or vested rights but merely declares a
          policy to be pursued until the legislature shall ordain
          otherwise.'" (quoting Dodge v.  Board 
                                                of 
                                                   Educ., 302 U.S. 74, 79
          (1937))); United States Trust Co., 431 U.S. at 17 n.14 (a statute
          may be treated as a binding contract "when the language and the
          circumstances evince a legislative intent to create private rights
          of a contractual nature enforceable against the state.").
                    This threshold requirement for the recognition of public
          contracts has been referred to as the "unmistakability doctrine."
          See McGrath, 88 F.3d at 19 (citing United 
                                                    States v. Winstar, 116
          S. Ct. 2432 (1996)). In   United 
                                           States v.  Winstar, the Supreme
          Court traced the history of the unmistakability doctrine from
          Justice Marshall's opinion in 
                                       Fletcher v. 
                                                   Peck, 10 U.S. (6 Cranch)
          87 (1810), and explained its purpose. Because legislatures should
          not bind future legislatures from employing their sovereign powers
          in the absence of the clearest of intent to create vested rights
          protected under the Contract Clause, courts developed canons of
          construction disfavoring implied governmental contractual
                                        -10-

          obligations. Thus, "'neither the right of taxation, nor any other
          power of sovereignty, will be held . . . to have been surrendered,
          unless such surrender has been expressed in terms too plain to be
          mistaken.'" Winstar, 116 S. Ct. at 2455 (quoting 
                                                           Jefferson Branch
          Bank v.  Skelly, 68 U.S. (1 Black) 436, 446 (1862)). The
          requirement that "the government's obligation unmistakably appear
          thus served the dual purposes of limiting contractual incursions on
          a State's sovereign powers and of avoiding difficult constitutional
          questions about the extent of State authority to limit the
          subsequent exercise of legislative power." Winstar, 116 S. Ct. at
          2455.
                    In its most recent Contract Clause case holding a state
          to its obligations under a public contract, the Supreme Court found
          ample evidence that a promise on the part of the state had been
          made in a contractual setting, in return for a specific bargained-
          for benefit, and found that the statutory scheme clearly employed
          the language of contract. See 
                                        United States Trust Co.
                                                              , 431 U.S. at
          17-18 (involving a legislative covenant between New York and New
          Jersey and future bondholders where the very "purpose of the
          covenant was to invoke the constitutional protection of the
          Contract Clause as security against repeal"). In the instant case,
          we must determine whether the MSRS also evinces a clear intent on
          the part of the Maine legislature to create contractual rights
          against the modification of pension benefits.
          III. Pension Plans as Contractual Obligations
                                        -11-

                    The law governing the rights of members of public
          employee retirement plans varies greatly from state to state, and
          has not been the subject of federal regulation or harmonization.
          There is no modern Supreme Court case that provides guidance as to
          the rights public employees have to their pensions.    Pennie v.
          Reis, 132 U.S. 464 (1889), stands for the proposition that public
          employee pension programs do not create vested rights against
          legislative modifications, and thus are gratuities that a state may
          freely revoke.     See  Pennie, 132 U.S. at 470-71 (holding
          California's adjustment of a pension benefit plan for police
          officers did not constitute deprivation of property without due
          process). Although this "gratuity" approach has been rejected by
          most state courts, 
                            Pennie has never been explicitly overruled. 
                                                                        See
          generally 60A Am. Jur. 2d, Pensions and Retirement Funds, SS 1620-
          29 (discussing the shift away from the gratuity approach toward the
          contract approach).    Pennie has, however, been ignored as a
          precedent, perhaps because its dicta regarding public pension
          benefits arose in the context of a Due Process claim.
                    Although only two other circuits have addressed this
          question, state courts have generally viewed a public pension plan
          as creating implied-in-fact unilateral contracts. See 
                                                                McGrath, 88
          F.3d at 17 (collecting cases). The Ninth Circuit in     State 
                                                                         of
          Nevada Employees Ass'n v. Keating, 903 F.2d 1223 (9th Cir. 1990),
          agreed with the Nevada Supreme Court that the "'better reasoned
          view' recognizes that non-vested employees have contractual rights
          in pension plans 'subject to reasonable modification in order to
                                        -12-

          keep the system flexible to meet changing conditions, and to
          maintain the actuarial soundness of the system.'" 903 F.2d at 1227
          (quoting 
                  Public Employees' Retirement Board
                                                     v. 
                                                        Washoe, 96 Nev. 718
          (1980)). Thus the Ninth Circuit in 
                                            Keating concluded that a Nevada
          law penalizing the withdrawal of pension contributions and thereby
          altering the previous law that contained no such penalty, violated
          the Contract Clause because it did not represent a reasonable
          modification of the pension plan. The court in    Keating noted,
          however, that the state did not dispute that Nevada's statutes
          providing pensions for public employees created contractual
          obligations. See 
                           Keating, 903 F.2d at 1225-26. The Fourth Circuit
          also ignored the gratuity approach in the course of holding that
          legislative amendments to a North Carolina public employee
          disability benefit plan did not violate the Contract Clause
          because, under relevant state law interpretations of the statute,
          rights to benefits under the plan did not vest until retirement.
          See  Kestler v.   Board  of  Trustees  of  North  Carolina  Local
          Governmental Employees' Retirement Sys.
                                                , 48 F.3d 800, 804 (4th Cir.
          1995) (no Contract Clause violation where plaintiff was not vested
          at the time of the effective date of the amendment).
                    These cases reflect the modern trend among state supreme
          courts, which is to protect pension rights on the theory that a
          state's promise of pension benefits represents an offer that can be
          accepted through the employee's performance -- thus, a unilateral,
          implied-in-fact contract is created that is binding on the state.
          See generally
                       Andrew Mackenzie, "
                                          Spiller v. 
                                                    State: Determining the
                                        -13-

          Nature of Public Employees' Rights to Their Pensions," 46 Me. L.
          Rev. 355, 357-59 (1994); Note, John J. Dwyer, "'Til Death Do Us
          Part: Pennsylvania's 'Contract' With Public Employees For Pension
          Benefits," 59 Temp. L.Q. 553 (1986). There is much disagreement on
          the details, however, under this unilateral contract approach. One
          widely held view is that at some point, public employees'
          contractual rights to pension benefits vest; after vesting, the
          state is contractually bound to honor its obligation to provide a
          pension without any further modifications or decreases in overall
          benefit levels.    See, e.g.,  Petras v.  State  
                                                           Bd.  
                                                                of  
                                                                    Pension
          Trustees, 464 A.2d 894, 896 (Del. 1983) (rights vest upon
          completion of minimum service requirement);   Baker v.   Oklahoma
          Firefighters 
                       Pension 
                               & 
                                 Ret. 
                                      Sys., 718 P.2d 348, 353 (Okla. 1986)
          (same); 
                 Leonard v. 
                            City of Seattle
                                           , 503 P.2d 741, 746 (Wash. 1972)
          (en banc) (same); 
                           Sylvestre v. 
                                        State, 214 N.W.2d 658, 666-67 (Minn.
          1973) (rights vest at start of employment); 
                                                     Yeazell v. 
                                                                Copins, 402
          P.2d 541 (Ariz. 1965) (en banc) (same as    Sylvestre). Several
          states have provisions in their constitutions declaring that
          vesting occurs at the moment of public employment and barring any
          legislative modifications that retroactively reduce the accrued
          benefits of public employees.  See, e.g., Alaska Const. art. XII,
          S 7; Haw. Const. art. XVI, S 2; Ill. Const. art. XIII, S 5; Mich.
          Const. art. IX, S 24; N.Y. Const. art. V, S 7. Several states
          follow a modified contract approach, which permits some unilateral
          legislative modifications of pension plans as long as the
          legislature offsets any new disadvantage with comparable new
                                        -14-

          advantages, as seen from the point of view of the public employee.
          See, 
              e.g., 
                    Singer v. 
                              City of Topeka
                                            , 607 P.2d 467, 475 (Kan. 1980);
          Betts v. 
                  Board of Admin. of the Pub. Employees' Ret. Sys.
                                                                 , 582 P.2d
          614, 617 (Cal. 1978) (en banc); 
                                        Opinion of the Justices
                                                               , 303 N.E.2d
          320, 328 (Mass. 1973). At least two state supreme courts,
          including Maine's, have declined to use the language of "vesting"
          in the course of upholding modifications to pension benefits at any
          time during the employment relationship. 
                                                  See 
                                                      Spiller v. 
                                                                 State, 627
          A.2d 513, 516 (Me. 1996); 
                                   Pineman v. 
                                              Oechslin, 488 A.2d 803 (Conn.
          1985). The Connecticut Supreme Court in fact rejected the contract
          model altogether and indicated that public employees have a
          property interest in pension benefits that may not be arbitrarily
          confiscated by the state, under the Due Process Clause.  Pineman,
          488 A.2d at 809-810. 
                    Although we have recognized the diversity of contract
          theories adopted by state courts -- in particular the divergence of
          approaches with regard to when exactly binding rights to a certain
          level of retirement benefits "vest" -- we have never chosen to
          adopt a particular approach to 
                                        public pension rights. See 
                                                                   McGrath,
          88 F.3d at 16-18.
                    In 
                      McGrath, we noted that, as a general matter, pensions
          are viewed as "a species of unilateral contracts," although there
          is considerable disagreement as to when rights in public pension
          plans vest, if at all. Id. at 17. But in the course of analyzing
          a Contract Clause challenge to certain amendments to the Rhode
          Island public employee retirement system, we eschewed participating
                                        -15-

          in abstract contract theory in favor of performing a close analysis
          of the statutory provision at issue. Such an approach is wise,
          because the unmistakability doctrine mandates that we determine
          whether the challenged legislative enactment evinces the clear
          intent of the state to be bound to particular contractual
          obligations. It may well be that the variety of approaches adopted
          by state supreme courts reflect, in part, differences in the
          structure of the various state pension programs, and of the
          intention of the different state legislatures that created them.
          There is a danger, however, in adopting a theory of pension rights
          and subsequently forcing a given program to fit under it. Any
          given theoretical approach will make assumptions regarding the
          intent of legislatures to be bound, as well as the time at which
          vesting should occur, which may be contradicted by particular
          statutory provisions such as, for example, an express reservation
          of the right to revoke pension benefits.     When reviewing a
          particular enactment, therefore, we must suspend judgment and
          "proceed cautiously both in identifying a contract within the
          language of a regulatory statute and in defining the contours of
          any contractual obligation." Atchison, Topeka & Santa Fe Ry. Co.
                                                                          ,
          470 U.S. at 466. The district court's decision protects Maine
          public employees from benefit reduction once employees' rights are
          "vested." Unfortunately, the line it drew between teachers who had
                              
           In  McGrath, we specifically reserved judgment on the question of
          whether such express reservations are valid after the point at
          which pension rights are "vested." 88 F.3d at 19.
                                        -16-

          and had not completed a minimum service requirement, cannot be
          justified on the basis of the Maine statute, which nowhere speaks
          of "vesting" as understood by the district court.
                                        -17-

          IV. Contractual Rights Under the MSRS
                    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.
                    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. S 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. 
                    Section 17801 states that "no amendment . . . may cause
          any reduction in the amount of benefits which would be due a member
                                        -18-

          . . . 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.
                    The Maine Supreme Judicial Court's   Spiller decision,
          which deserves our "'respectful consideration and great weight,'"
          Romein, 503 U.S. at 187 (quoting 
                                         Indiana ex rel. Anderson
                                                                  v. 
                                                                     Brand,
          303 U.S. 95, 100 (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.
                    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
                                        -19-

          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).
                    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.
                    The district court reasoned that "due" should be
          construed as referring to the point at which a member qualifies for
                                        -20-

          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. 
                    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.
                                        -21-

                    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.
                    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. 
                                     CONCLUSION
                    For the reasons stated in this opinion, the decision of
          the district court, to the extent that it found the Maine
          legislative amendments violative of the Contract Clause, is
          reversed in part, and to the extent that it found no constitutional
          violations, is affirmed in part.
                                        -22-