-: SJC 13568, Susan Hartnett,
the Contributory Retirement Appeal Board et al.
-: Okay, Attorney Reynolds. -: Thank, your Honor.
Good morning.
Assistant Attorney General Maryanne Reynolds
representing the Contributory Retirement Appeal Board and
the Public Employee Retirement Administration Commission.
These agencies, CRAB and PERAC,
have been entrusted by the legislature
with the administration and implementation of Chapter 32,
a notoriously complex statute that applies
to over 100 retirement systems,
and we urge the court to reverse the judgment
of the Superior Court in this case
and to enter judgment for the defendants.
The Superior Court erred by starting
but not ending the analysis under Section 25(5)
that this court established back in 1973
with opinion of justices.
The core of a member's reasonable expectation
is to be honored and has been,
but that expectation is subject to reserve police powers,
and we argue that the Superior Court erred here
by not completing an analysis
under the reserve police powers and,
that had that analysis been conducted,
as is explained in our briefing,
that the results should be
that the reserve police powers come into play here,
such that what's called the anti-spiking provision
should be applied to Ms. Hartnett.
Significantly, Ms. Hartnett does not dispute
that the 2011 statutory reforms in the wake
of the 2008 nearly unprecedented financial crisis
could apply to members; she does not dispute that.
What her dispute is that she
does not want this one particular provision to apply to her.
We say that it should apply to her,
and as to why it applies to her, we do feel that here,
the Superior Court got it right, and we commend
to this court's consideration the Superior Court's decision
and reasoning with respect to the interpretation
of the anti-spiking provision at issue here.
I would just note in particular that,
while statutory interpretation is the duty
of the courts where the statute is interpreted
by the agencies responsible for implementation
of that statute and their interpretation is reasonable,
this court will not substitute its judgment.
-: So can I ask you why 25(5) applies
or doesn't prevent the application
of the other provision to Ms. Hartnett?
-: Yes, so- -: 'Cause it seems
like all you've said so far
is that they got the other provision right.
-: The 25(5) does not prevent application
to Ms. Hartnett because we go through the analysis
and opinion of the justices,
and we start with something that is favorable to her,
which is we do not disagree that a core expectation she had
was that her pension may be based
on three rather than five years,
as ultimately was the case here.
But that is subject to modification
under the reserve police powers,
and we would say that the core pieces that come into play
are the time for a pension benefit, which, of course,
a pension benefit is a legal determination, right?
Neither the agencies nor the member
nor the courts can actually enlarge the benefit
that the legislature intended for a member to have,
and there we have three basic factors.
We have the time served,
we have the contributions made by the employee,
and then we have the public funds that are added.
And so we say that there was a very careful analysis done
on 25(5)'s application very recently by CRAB,
and we commend that decision to the court's attention.
That's a Pereira decision, also, the Stanton decision,
both of which are in my briefing.
And when we look at the Pereira decisions,
we would start with, as I mentioned,
that her expectation of three years was interfered with
by it needing to go to five years.
However, we can't stop there.
We have to continue, and there we see that,
in 2008, there was that financial crisis.
-: Can you interpret the words for us?
The last sentence in particular confuses me.
"Notwithstanding the previous sentence,
if in the five years
of credible service immediately preceding retirement,
the difference in the annual rate of regular compensation
between any two consecutive years exceeds 100%,
the normal yearly amount of retirement shall be based
on the average annual rate of compensation received,"
and this is the part that really confuses me.
"Of five consecutive years preceding retirement."
Was that a drafting error?
Should that be the five credible years precede?
Does that make sense?
-: It would be-
-: Doesn't that have to be five credible years preceding?
-: Yes, yes. -: So that's an error.
That's a problem, right?
We have to try to make sense of something that doesn't work.
-: Not necessarily, your Honor,
because this court has recognized
as the dollar decision set forth is that,
sometimes in statutes, different words are used,
but they are deemed synonymous,
and there's a nice collection of decisions from this court
in the joint record appendix at 133.
I'd mentioned particular the Bulger case
and the Mullally case where this court has not found it
to be a problem if different words are used in a statute
where it's obvious that they're synonyms, and we would-
-: But they're not elsewhere, right?
If you read the sentence before, it's not.
They draw a distinction between consecutive, so I don't-
-: Well, if we may call that the first sentence,
it's long, but it's the first sentence,
and then the anti-spiking provision we're talking
about here= we'll call the second sentence.
In the first sentence, there are two different ways
that something is gonna be determined, right?
It's a solid one period of time
that's a consecutive period of time,
or there's periods of time, plural,
where you're putting together credited service times.
-: But let me be more specific though.
They draw a distinction between consecutive.
In the previous sentence, they're very clear.
Consecutive means consecutive in time, right?
They say whether consecutive or not, you know,
they're very explicit there, right?
-: Yes, and so, I'm sorry. -: No, go ahead.
Help me make sense of it
'cause maybe my colleagues- -: Right,
so that first sentence pre-existed implementation
of the anti-spiking provision we have here,
but that first sentence was also modified
by the same 2011 act.
So it went from three years to five years
through the Section 13 of the 2011 act.
What I would ask you to say is not to get hung up
by the first sentence because what the first sentence means,
I think, is pretty well established.
-: The first sentence is clear.
It's the second sentence that's hard
because notwithstanding,
the beginning of the second sentence,
"If in the five years of credible service immediately,
the difference in any annual rate of regular
between any two consecutive years," right?
The previous sentence describes consecutive years
as clearly being, you know, sequential in time.
But then the last part of the thing says,
"During the period of five consecutive years."
What if the person doesn't have five consecutive years?
I mean, so-
-: We're arguing for an interpretation
of that second sentence that makes sense,
and how it makes sense,
because I think you're just suggesting one way
that an alternate interpretation would not make sense.
So we start with the word notwithstanding.
So we know notwithstanding is a significant word.
It's saying we're not necessarily jammed up
by what happened in the prior,
so not withstanding the previous sentence.
And then it talks about, "If in the five years
of credible service immediately preceding retirement,"
we know what those five years are because,
in order to have a benefit,
you need to have 10 years of credible service.
So we know what those five years are gonna be
when we're calculating anyone's benefit,
and then we say the difference of the annual rate
of regular compensation between any two consecutive years.
Well, that two consecutive years,
well, it has meaning above in a different context
because of the structure of that first sentence.
Here, we have to say,
"Okay, notwithstanding the first sentence,"
and we are talking about five years of credible service,
immediate, et cetera.
So we really have to read two consecutive years
in light of the language of that particular sentence,
and then it plainly applies to Ms. Hartnett.
-: Can I ask a different question?
I wanna understand your argument
about the police powers exception,
and you said that the Superior Court judge
didn't do that part of the analysis.
-: Correct. -: Okay.
So can you walk us through that?
-: Yes.
I'm not sure how much time I have for that,
but let me say that- -: No.
You can answer the question.
You've got time to answer the question for sure.
-: Thank you.
So how I would like to walk you through that,
I think is the best way is to refer you
to the Pereira decision, and there,
we see that there are different reasons
that you want to think about,
about whether or not it was a permissible exercise
of the police powers.
And we would say first,
you have to consider that there
was the global economic downturn that we discussed,
and that was the setting the stage
for this particular provision,
and then we have the second factor is going to be,
well, and obviously that that has to do
with preserving the pension system, right?
Because it's very important
to have a fiscally sound pension system.
-: Let me just stop you 'cause I just
wanna make sure I understand.
Doesn't the whole argument that you're making depend
on how many people this would affect?
-: No. -: Why?
-: We do not know exactly how many people it affects,
and PERAC has said that we're not sure.
We're not talking just about fiscally sound just
as in the impact of this one particular decision.
We are talking about fiscal impact from the point of view
of a variety of factors,
which includes uniform application of Chapter 32
across all of the systems,
not knowing exactly how many other people
are going to come in.
We're talking about the contributions that are made
by the member which go to the fiscal, right?
Everybody makes contributions,
and that's a core part of the system,
and we want a system that's free of abuses.
And so here you have a situation where this legislation
is aimed at more normalizing what the pension
is gonna be based upon what the contributions
from that employee have been together
with the public perception of the system
because the taxpayers matter here, too,
because the taxpayers do need to fund the system
in addition to the employees.
-: Your argument is that those considerations
should outweigh 25(5), which says there's a contract
between Ms. Hartnett and the Commonwealth?
-: 25(5) as interpreted by this court,
it's not a contract in the way
that Ms. Hartnett wants it to sound like, you know,
acceptance, you know, performance acceptance, et cetera.
It's this quote like in Herrick has called it.
It's a special kind of a thing, and so it is not a breach
of a contract for this section to apply to Ms. Hartnett
because she really does not have a core expectation
in receiving a pension benefit in an amount
that is not commiserate with the amount of contributions.
I wanna pause, too, to say that we are not arguing
on this record that there's anything wrong
with how Ms. Hartnett's structured her public service.
We're talking about the overall good of the system
from the financial perspective as well
as the legislative judgment that was made
in making this particular provision applicable
to her and others.
And there I would turn your attention
to Section 63 of the 2011 statute, right?
There were choices that the legislature made
when it enacted this provision,
those choices being whether or not the provisions
were gonna go into effect under the 90-day rule
that normally applies, right?
Or whether it was under Section 63,
it was only gonna apply to new members after a certain date.
Legislature didn't put this particular provision
in either of those categories.
Instead, it put it in the category under Section 64
of making it effective April 2nd, 2012,
and so it was effective at the time that she retired.
In 2006, I don't wanna go into-
-: Yeah, okay. So here's my last question.
If we don't agree with you
that the reserve police powers exception applies,
if we don't agree, then we don't agree with you, right?
We would have to rule for Ms. Hartnett.
-: Yes.
We would ask you to be clear that our interpretation
of the anti-spiking provision is correct
because there is institutional interest in being sure
that that interpretation is nailed down and can be applied
because it is a notoriously complex statute.
And if you were to not agree with us on the 25(5) issue,
we would ask for guidance and real serious consideration
of the Pereira decision and Stanton
but that lays out how CRAB understands
what its role is to be when faced
with these types of questions,
you know, when you have two statutes in tension
where these agencies are charged
with interpreting them and applying them.
-: Okay. Okay, thank you. -: Thank you.
-: Okay, Attorney Thomas.
-: Good morning. May it please the court.
My name is Natacha Thomas,
and I'm general counsel for the Boston Retirement Board,
and making the best use of the five minutes
before this court,
I would like to focus my presentation mostly
on Section 25(5), which would be addressing whether
or not the Superior Court incorrectly determined
that the anti-spiking statute as applied
to Hartnett violated her contractual rights
under Section 25(5).
This is not a case of first impression.
This court has dealt with this
in the opinion of the justices in 1973,
and they again dealt with it in Madden versus CRAB,
and in both of those instances, this court has held
that a contract under Section 25(5)
is not a contract in the traditional sense.
We have to view it in more
of a relaxed version of a contract,
and it wouldn't be practical for us
to view it as a traditional contract
because the pension system is complex.
It has various parts.
It's statutory. -: So what's the test?
I mean, I get it. It's a contract prime, right?
It's a different kind of contract.
-: What is the test for when the state
can use its police powers
to upset the reasonable expectations
of somebody who's retired?
-: Well, the court provided that answer in Madden.
In Madden, the court said-
-: Can you refresh my recollection?
-: In Madden, the court said that a member
who has paid their required contributions
cannot be deprived of their benefits,
but they also clarified
that this does not preclude someone's pension
for modification, and it depends on two factors,
one, whether or not it's reasonable,
and secondly, whether or not there's-
-: The modification is reasonable?
-: Whether or not the modification is reasonable,
and secondly, whether or not the modification
bears some relationship to the overall theory of the concept
of a pension system and its successful operation.
-: Does the timing matter when it comes
to a particular employee?
So in other words, specifically with respect
to reasonableness of the modification?
And I'm only talking about Section 25(5) here.
If, for example, the modification had occurred
before Ms. Hartnett had left her city employment,
would that make a difference for purposes of determining
whether the modification was reasonable with respect
to her contract expectation or quasi-contract expectation?
-: Well, the court, in the opinion of the justices
and as well as Madden said that there
are some justifications that determine
whether or not it's reasonable,
and one of them is the financial ability
to actually pay the pension system, and in 2011,
which is why the board argues that it's reasonable,
it's very clear that we suffered a recession in 2008,
the Great Recession.
The state of Massachusetts was facing $20 billion
in unfunded pension liability,
and so the legislature decided to enact pension reform
in order to preserve the system.
Some states didn't,
and they no longer have a pension system,
but our legislature took certain acts,
and one of them being the anti-spiking statute,
in order to reduce pensioned,
the liability because they weren't being funded.
-: So I take it you're not saying
that Ms. Hartnett did not have an expectation
that qualified for protection under 25(5).
What you're saying is that was then overridden
by these countervailing considerations
that justified making this particular amendment.
-: Yes, that's exactly what I'm saying.
In Madden, we kind of have a similar situation,
which I think the court can apply the same analysis
and the same reasoning.
In Madden, the Teacher's Retirement Board
did not have any authority or law
or regulation really discussing part-time or full-time work,
and so teachers tended to work part time,
and in the last three years of their employment,
they would work full time.
And so they received full credible service,
although they hadn't worked full time
and hadn't contributed what a full-time employee would pay.
And so Madden was working part time,
and then she subsequently worked full time,
and in 1990, she began working before 1990, in 1990,
the TRB, the Teacher's Retirement Board,
created a regulation
which essentially prorated their part-time work.
And so here, the court said that, as it relates to Madden,
we could apply it prospectively but not retroactively,
and the reason why it was found reasonable
is because TRB had an interest
in protecting the viability of the pension system.
Here we have teachers who were benefiting,
and it didn't matter
if they didn't have any nefarious intent,
but they were benefiting because they
were able to work part time their whole career
in the last three years,
which was full-time work with a higher salary
and then get credible service.
But then you had teachers
who had worked full time their entire careers,
and they had contributed based on that full-time work,
and you had teachers who hadn't,
and they were receiving that same pension.
-: So in that case, the rule did apply.
The new rule did apply to the member?
-: It applied prospectively.
So any future work that she did part time,
her part time work from 1990 on,
'cause she was still employed at the time, was prorated,
and anything before there was any rules or laws,
actually a law regulating that part-time work,
she received full-time credit for it.
-: Now she was given inaccurate advice, right?
Did she retire based on the inaccurate advice,
and does that figure into the 25(5) analysis?
-: It doesn't.
I don't believe that it figures into the 25(5) analysis
because, under the general laws,
Chapter 32 has a Section, Section 20(5)(c)(2).
Boards are required to correct an error.
So if you find an error and someone
is receiving a greater benefit than they're entitled to,
the board must recoup that, statutorily required to do so.
-: But does that figure into the expectation analysis?
If you actually talk to the right pension people
and they tell you, "We're gonna do it one way,"
and then you go retire,
doesn't that figure into the 25(5) analysis
that you got the wrong guidance from the agency
that's supposed to give you guidance?
-: The appeals court addressed this issue in cloister,
and that also was the Teacher's Retirement Board,
and it was a teacher who had actually relied
on incorrect information.
He sold his home, he moved to Florida,
and then the pension system eventually determined
that he was not entitled to time
that he had actually purchased back,
and the court held that, under 20(5)(c)(2),
the board was statutorily required to correct that error.
They had an expectation, but an error occurred,
and that took precedent.
-: And that was us or that was the appeals court?
-: That was the appeals court. -: Do you think the expectation
is measured at the date when Hartnett decided
to leave her employment,
the date when she decided to apply
for a pension or some other date?
-: The expectation is actually the date
that they entered the system,
the date they began employment because an analysis,
I believe that Madden also answered that question
and why this is parallel,
because in the case before the court,
Hartnett did enter the system
before the anti-spiking statute,
but the similarity is that there was no section
of Chapter 32 that dealt with an employee
who had doubled their salary before retiring.
-: So entering the system in this case
is the date she comes and works for the city?
-: The city because she refunded from the state,
so she no longer has that
as the start of her membership date.
So when she started, there was no section of Chapter 32
that dealt with a huge spike
in your pay right before you retire.
-: So the statute rule- -: Rule is that you have
contractual expectations prime subject
to the economic ability of the state to pay the pension?
-: Yes, yes, which- -: That's the test
for Section 5 or 25(5). -: Yes, yes.
-: Okay, thank you. -: Yes, and so-
-: Make sure I understand, I didn't read Madden,
but are you saying that they're in the same position,
that Madden and Hartnett would be in the same position?
-: Yes, that's my position,
that they're in the same position
because when she entered the system,
there was no law or legal authority that dictated
what happens if your pension exceeds over 100%, right?
'Cause it's based on your last three.
So if you're making 34
and then you end service with 100,000, what happens?
And so the legislature created this
in order to kind of preserve funding,
preserve the money into the system and lessen-
-: But it doesn't affect Hartnett
because she had an expectation.
-: She did have an expectation, but the statute,
because she didn't retire before the effective date,
it would apply to her.
So similar to Madden, the teacher,
her past service was not prorated,
but she stayed in the system and she worked full time.
So any future work, they would prorate her part-time work.
So it's similar here.
Those who had already retired
or who retired before the effective date,
they spiked, they were able to retire,
and we didn't go back and have
to recalculate anyone's pension.
But effective April 2nd, 2012,
anyone who retired at that date or after came
under the umbrella of the anti-spiking statute.
-: So she had retired in the sense
that she had stopped working.
-: She had stopped working for the public employer.
-: Right. -: But not-
-: But she had not made a claim yet for her pension.
-: Correct. -: So is that
what you're calling retirement?
Because she retired before the amendment came into play.
-: She did not retire before the amendment.
-: I mean, she left employment in 2006.
-: She left employment in 2006.
-: Then the anti-spiking provision was enacted in 2011.
-: Yes. -: And then she
makes her application for retirement benefits in 2016,
if I have the chronology correct.
-: Yes, that is correct.
So she left her money in the system,
and she deferred her retirement, which you can do.
You can leave your money in the system.
She had the age to retire before the effective date,
but she chose not to.
-: So that was her mistake. -: Yes.
-: Okay, so if she had taken her money out,
she would've not had to have dealt
with the anti-spiking provision.
-: Right, if she had retired before the effective date.
-: Making a claim,
retired meaning making a claim and starting over.
-: Yes, retired meaning filing an intent to retire
and receiving her superannuation monthly.
-: Okay. -: And so based on Madden
and based on this court's interpretation of the contract
and its position that the contract
is not a contract in the strict sense,
but it protects a member of the core
of their reasonable expectations,
I would also argue that Hartnett has received,
that she hasn't been deprived of the core
of her reasonable expectations.
So she had public service with the state. It was 34,000.
She left with the city, and it was 100,000,
and so the anti-spiking statute did apply to her,
but she still has a large pension base.
That's not reflective of her prior service in the public,
which was the intent of the legislature.
They created this statute,
and the section does not have any exceptions.
It doesn't look into the subjected state
of the person's mind.
It just focuses on the fact that your pension,
that your salary doubled or increased
over 100% before you retired,
and the goal of the legislature was to kind of get rid
of those loopholes and create a structure
where we have people who are contributing
and their pension is reflective of their salary
while they provided that. -: Okay. Thank you.
All right, Attorney McDonough.
-: Good morning. Sorry.
Good morning, Madam Chief Justice and members of the court.
May it please the court. I'm Gerald McDonough.
I represent the plaintiff appellee here, Susan Hartnett,
and I'm here with my co-counsel, Thomas Gibson.
I first wanna make clear,
unless there are any questions to start off with based
on the arguments from my sister counsel over here,
I just wanna start off by acknowledging
what this is not about.
This is not a challenge to the legislator's authority
to do any kind of change in the system whatsoever,
and we believe that we do not dispute the claim
that this was a difficult time back in 2010 and '11,
difficult time where there was a financial crisis,
and there was a need
to really address some longstanding abuses,
and I mean abuses in the public pension system.
And when you look at Pereira decision and Stanton,
they were dealing with that year for a day provision
where an elected official
who worked one day in a calendar year
could get credible service for the entire year,
and that had long been characterized
as an egregious abuse of the pension system.
In contrast, with breaks in service,
there's no evidence anywhere that that
was on the mind of anyone at the time.
For example, there was a commission set up in 2009
to look at pension reform,
and they came up with a whole lot of different, you know,
aspects of reforms that could be made in the pension system,
and one of those was expanding the years of credible service
for retirement from three years to five years.
Another one, which was in Section 13 of Chapter 176,
which is the last part of the first sentence
of Section 5(2)(a) now,
the other one that they looked at
was what became Section 18 of Chapter 176,
which is now 5(2)(f) of Chapter 32,
which deals with that 10% increase
between two consecutive years of service,
that anti-spiking provision.
There was nothing in there about breaks in service,
and then we had PERAC-
-: I just wanna make sure.
You agree with the Superior Court's ruling, right?
-: I agree with the Superior Court's ruling with regard
to 25(5), your Honor, finding that this statute,
if it's interpreted to cover breaks in service,
which we do not agree with.
That part of the decision we agree with.
-: Okay, can you give me an example
of prohibited anti-spiking? -: Excuse me?
-: Can you give me an example
of prohibited anti-spiking under your definition?
-: Well, the anti-spiking in Section 18 of Chapter 176,
which is now Section 5(2)(f) of Chapter 32,
deals with if any of the years
that your retirement is calculated,
you take the average of two years before one of those years,
and if the increase goes up more than 10%,
anything that goes beyond 10% won't be included
in the calculation of your retirement.
That was what the commission in 2009 recommended.
That was one of the elements of pension reform
that Jim Lamenzo, who was the actuary for PERAC at the time,
did a whole report, cost analysis,
and he looked at that and determined,
"Well, it's not gonna be a lot,
but it would be a good idea to do it, so I support it."
And then there was a final report by a pension commission
which came out and, again, only addressed two things,
increasing three years to five years
for the span of time for calculating retirement
and the other provision that's now in (5)(2)(f)
about the 10% increase.
And not only in that next commission report in 2011,
they actually looked at all the other states
and what they were doing in terms
of anti-spiking legislation.
There's not a single mention of an issue like Section 14
is being characterized as dealing with breaks in service.
It's not mentioned in any of those things.
-: Well, counsel, let let me ask you a question then,
because I'm trying to figure out what the limiting principle
would be if we follow your logic.
So Ms. Hartnett stops working
for the city of Boston in 2006,
and there's no question that,
when she came to work for the city,
she bought back the service that she had from before
when she left the first time around for the state.
-: That's correct. -: So she applies
for retirement benefits in 2011, right?
-: No, she applied for benefits in 2016.
-: '16.
If we were looking at the way you're characterizing it,
how would that make sense under our canons
of statutory construction?
Because if it were not read the way
that the Superior Court judge was interpreting it
to read consecutive and not contiguous,
could it necessarily subsume work
that wasn't for a credible employer?
-: I'm not sure I understand your question, your Honor, but-
-: You're saying that you can't look at breaks, right?
-: Yes. -: In calculating
whether it's three years or five years.
You're saying it's gotta be contiguous, right?
-: According to Section 14, yes.
-: Well, according to your interpretation.
That's what we're here to figure out.
If you don't read it the way the Superior Court judge
interpreted it, couldn't you have a situation
where the three years or the five included work
and salary for an employer that wasn't part
of the state retirement system?
-: Yes.
-: So how would that make sense?
Gerald: Well, your Honor-
-: Or why would that make sense?
-: Your Honor, there are a number of instances
where Section 14 would apply and affect employees
that aren't addressed anywhere in the record here so far.
Someone could leave a position with the state
and go work for another entity in the state,
like go work for Mass Development, which does not have a,
not part of the contributory retirement system,
and then go back and move again
to state service in another position.
If you read this thing the way it is written,
someone could leave work for a variety of different,
people leave work for a variety of different reasons.
A lot of people will leave work
because they have childcare responsibilities.
Costs for childcare are prohibitive in terms of, you know,
paying for childcare and getting a job and whatnot,
and or taking care of sick relatives.
There are a whole variety of reasons
why people leave state service and then come back.
The real question is, did the legislature intend,
in addition to other things, did they intend for people
who were taking legitimate breaks like that to be,
were they trying to change the retirement law for that?
-: Don't we look to what you're asking us to look to,
which is an absence of explicit legislative consideration?
Don't we look to that only
if the language of the statute is ambiguous?
If the language from of the statute is plain,
then we, I believe,
take that as the expressed intention of the legislature.
and we don't go looking beyond it, correct?
-: Yes. -: All right,
so I guess the first step of your argument
is Section 14 is ambiguous, and therefore,
we need to look to other indications of legislative intent,
including the absence of explicit consideration
by the legislature? -: Yes.
-: Okay. -: Your Honor,
simply by including four words in Section 14
that appear twice in the language above,
whether or not consistent.
Simply applying that into Section 14
would've made it quite clear that it
was intended to deal with breaks in service,
but that's not what we see in the language at all.
And if you look at the language, consider this, if you will.
If you look at the language it says,
"Notwithstanding the sentence immediately preceding."
If you look at the sentence immediately preceding,
which talks about going from three years to five years,
for anyone who's hired after April of 2012,
if you read that consistently,
you would have a person who would work,
per say, for example, $100,000 salary for 20 years,
then leave state service, try to do some other things,
and one of the things might be,
"Maybe I'll serve on a school committee or city council,"
as was the case in the Julia Hearn case with her husband.
And what if in those five years of work for,
and it's pensionable,
what if in those five years of service in the last year,
the stipend went up from $5,000 a year to $15,000 a year?
You would then have to calculate that person's retirement,
not on their highest years of credible service
but on the last five years of credible service.
It would go from an average of $100,000 a year
to an average of $7,000 a year.
If you wanna read the language in Section 14
and what it would apply to,
that would certainly be one thing it would apply to.
-: Where is the ambiguity exactly in the sentence,
that last sentence?
Is it in the end of it where they talk
about five consecutive years of preceding retirement?
Where do you see the ambiguity? 'Cause-
-: I see the ambiguity all through-
-: But can you be more particular? Which word?
I mean, notwithstanding seems pretty clear.
-: Well, there's the inclusion of the word consecutive there,
which has to have a meaning, number one.
-: I thought the last statement of consecutive got confusing
because during the period
of five consecutive years preceding
'cause there might not be five consecutive years, right?
Preceding retirement. That to me seemed ambiguous, and-
-: As was the case with Susan Hartnett.
She did not have five consecutive years retirement.
-: Right, so that to me lends support to your view
that it's, you think the Superior Court judge
misinterpreted this, the first part.
You like her second part of her decision.
You don't like her first part of her decision.
-: That is correct, your Honor. -: And CRAB, CRAB,
what, I can't remember.
They're arguing what on the first sentence?
They think she got it right.
I think they think that she got it right.
-: Your Honor, you know,
CRAB as an agency is entitled to a lot of deference
because of its expertise, knowledge, and competence,
but in this case, if what CRAB did exhibits that,
I don't know what it means anymore.
I mean, CRAB initially when they were forced with this,
when we filed our objections with CRAB,
CRAB came back and said, "Well, you're right about,
you know, the definition of consecutive
in the first sentence of 5(2)(a)."
And it is in the same section of the statute,
but that was enacted at a different time.
So we filed a motion for reconsideration,
and we pointed out to CRAB that, even though it was,
you know, that might be accurate,
there was an immediately preceding sentence,
Section 13 of Chapter 1.
-: Yeah, they're entitled to change their position.
I guess, you know, my question is,
why do you see the, along Justice Kafker's question,
where is that ambiguity in that last sentence?
-: Your Honor, I think-
-: It's in the consecutive years?
-: I think- -: The first time it's used?
The second time it's used? Where is that?
-: Both times that consecutive is used,
what is the purpose of consecutive there?
Why did they put consecutive in there?
-: It seems to me it's all- -: The other ambiguity-
-: I'm sorry, I may be misreading this.
I understand there to be a conditional clause
that begins with the word if.
Do you see that? -: Yes.
-: It says, "If in the five years
of credible service immediately preceding retirement,
the difference in the annual rate of regular compensation
between any two consecutive years,"
which I assume to be a reference
to within the five years of credible service exceeds 100%.
That's an initial conditional clause that then is followed
by something that will happen if you're
within that first conditional clause.
I don't understand where the ambiguity could be
except perhaps in the language
that then refers to the period
of five consecutive years preceding retirement.
-: That is an ambiguity as well as the use
of the word immediately with the first clause there.
It doesn't say in the five years
of credible service preceding retirement.
It says in the five years
of credible service immediately preceding retirement.
Either that word is put in there
to mean something or not mean something.
-: Why is that ambiguous? -: Excuse me?
-: I don't understand how that is ambiguous.
-: Well, it is ambiguous. -: It's the five years
of credible service right before retirement.
-: It isn't ambiguous to me, your Honor,
but it's been interpreted a different way
by the appellants in this case,
so I think that creates ambiguity.
-: Well, just because it's their interpretation?
The words are plain. -: Well, the words are plain,
five years of credible service
immediately preceding retirement
would be five years immediately before retirement.
-: No, of the credible service.
-: Credible service. -: Credible service.
-: Yeah, immediately preceding retirement.
-: Right. So that would include the gap.
-: I don't think it should, your Honor.
-: Well you don't think it should, but the words say, right?
-: Yes. -: It says,
"credible service immediately preceding retirement."
So it would subsume the three years with the city
and then the gap and then going all the way back
to the state service. -: And then it goes on to say,
"received by the member during the period
of five consecutive years preceding retirement."
-: You like everything up till that last part, right?
Because it would preclude punishing your client
for that increase during that break.
If the last word were five credible years
of preceding retirement,
if the last sentence end with five credible years,
there's no ambiguity whatsoever in this thing, is there?
-: Or if they had simply added in not with, you know,
notwithstanding, what's that phrase there?
Those four words? -: Whether or not consecutive.
-: Whether consecutive or not, right.
I mean, if that were in there, that would make it clear.
Let me move on to-
-: And do you agree with the position of the appellants
that retirement for these purposes is the date
on which the participant has applied
for the retirement benefits? -: No, I don't, your Honor.
I believe you're able to postpone your retirement
as long as you want.
The court case- -: So what would be
the meaning of retirement as used here?
Is there a statutory definition of the word retirement?
-: Well, you don't retire actually
until you file a retirement application.
-: That's what they said. Okay. -: Yes, yes, yes.
-: Counsel, can I ask you a slightly different question?
Assume for the sake of argument that, again,
you win on the interpretation,
but let's say that of whether it's consecutive,
credible, that first part.
But on the 25, if we go through the analysis
and do the second part of the,
I think you might agree that Judge Cowin
did not do the second part of the 25 analysis.
Assume we do the second part of the 25 analysis
and whether or not there's a reasonable basis
for the interruption of the claimant's expectation,
retirement expectation.
You could still lose.
-: I don't think so, your Honor. Let me explain.
First off, Judge Cowin did not do that analysis
because nothing was presented
to the judge by CRAB regarding that.
They decided not to argue that issue at all.
That issue only came up when they drafted a brief
for the appeals court.
So there's a brand new argument
that we're hearing about in terms of the police powers.
Secondly, your Honor, the police powers are-
-: Isn't the police power issue in the case law?
-: Yes. -: It says that, right?
So that's the test. -: Yes.
-: She only went through one part of the test.
-: Yes, your Honor, you know,
but I think that the police powers here
is really too extensive to take an issue like this
for which there's no knowledge
about any egregious behavior by anyone,
no cost analysis as to what the cost of this would be,
no evidence as to how many people this would affect.
I mean, it seriously affects my client.
It may seriously affect some other people
who have breaks in service,
but we have no idea what that is,
and the itself is so unclear.
To say that this language,
it was designed to deal expressly with breaks in service
when there are other reasons it could be applied.
Somebody could work for a while, a long career work,
and then the last three years,
they get a big job at an authority or someplace else,
and their salary goes up.
Perfect placement for this Section 14.
So we're not saying Section 14 should go away.
We're saying it doesn't apply to my client.
It doesn't apply to breaks in service.
-: Before you leave,
I'm concerned about the inequity to your client,
that she was misled by the people
who were advising her on the pension fund.
Do you wanna address this appeals court decision
where supposedly that's okay?
-: You know, your Honor, I worked in public service.
I understand that people in public service make mistakes
and you can overlook those,
just close to her reasonable expectations.
-: Just the case.
Is the case distinguishable or not,
or is the case right on all fores?
-: I think it's distinguishable,
-: I haven't read the case. -: your Honor.
Not only that, your Honor, in this particular case,
she went to work with this understanding
as to what her benefits would be if she lasted two years
'cause you have to last two years when you go back to work.
She believed that during the course of her employment.
She believed that
when she left her employment with the city.
She went for counseling in the city.
City of Boston Retirement Board never mentioned this to her,
and it's not a mistake, your Honor.
City of Boston never mentioned to her
when she went to retire.
They never mentioned it when they calculated her retirement,
and they went back
and calculated her retirement a second time.
A second time, they went and looked at her retirement
to make sure it was right,
and they adjusted it up a little bit.
It was only years later.
It was, well, a year after, you know,
months after her retirement,
but years after the law went into effect,
-: I get the equation. -: Boston board-
-: Just trying to get you to distinguish the case for us.
How do we distinguish this appeals court case?
-: The Boston Board completely agreed
with our interpretation of the statute until 2017.
The law went into effect in 2012,
and the Boston Board agreed with our position
up until the time that Ms. Hartnett went to retire.
-: [Justice Wendlandt] Okay. Thank you.
-: If there no further questions.