September 13, 2011

Victory for the Unions?

Patrick Laverty

This morning, Superior Court Judge Sarah Taft-Carter ruled against a summary judgement for the state and said there is an implied contract between the state and the unions with regard to their pensions. It seems the state was seeking to get a Council 94 lawsuit thrown out, via summary judgement, saying that because the pensions are not collectively bargained, there is no contract and as such, the state can do what it chooses with regard to the pension program. Not so fast says the judge:

Defendants envision an ERSRI [the Employees Retirement System of Rhode Island] under which the State may, with or without justification, significantly alter or completely terminate a public employee’s pension benefits at any time – even just one day – before retirement. In light of the major purposes underlying public pensions, as recognized by our own Supreme Court, such a construction of the ERSRI is untenable. …

The case law does not preclude but rather supports this Court’s holding that Plaintiffs, as ten-year veterans of the State, possess a contractual relationship with the State pertaining to retirement allowances and COLA benefits which are not subject to collective bargaining.

The full 39 page ruling is available thanks to Ted Nesi on his blog. As this ruling just came out in the last hour or so and I haven't read it yet, I'm not going to pretend to know much more about it yet. But this sure sounds like there's another huge hurdle for Gina Raimondo and the General Assembly to clear before they can make any huge changes.
I'm sure more details and discussion will be forthcoming.

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There is no question that there is a contract between the state and the retirees. A highly unethical contract put into place by a corrupted, union-dominated labor board in the 1980's, but a contract nonetheless. It is likely the state was simply going fishing with the summary judgement motion - a common enough occurence.

A separate and more important issue is whether the contract can be altered by the state. Any sane judge would have to agree that doing so is necessary under the circumstances.

What the zealot union members who rage here about broken promises fail to grasp is that restructuring of contracts is completely legal when one party can no longer meet its obligations or the circumstances under which the contract was enacted have significantly changed. Viewing all contracts as ironclad mandates is an idiotic and immoral position. It's unfortunate that the unions can't do the right thing and accept the necessary changes for the greater good without wasting even more public funds defending these lawsuits.

Posted by: Dan at September 13, 2011 1:38 PM

"Victory for the Unions?"

Actually, it's not. It was a narrow ruling that the lawsuit could proceed. There was no decision on any of the specific legal issues involved. Substantively, we are exactly where we were yesterday.

Accordingly, Bob Walsh's call for a "pause" to pension reform is a considerable exaggeration of the significance of this ruling.

Posted by: Monique at September 13, 2011 1:57 PM

There is one question that keeps coming to mind during the whole pension fund fiasco, and that's this....

If the Unions in this state are strong enough to gain a very generous retirement package, where were they when the state/towns weren't properly funding it? They know the game better than anyone (i.e. you can't trust anyone, especially a politician), so where was the union leadership over the last 10 or 20 years when THEY HAD TO KNOW that the fund was being underfunded? Just being lazy or stupid? Or both?

If I make a deal with a party that I don't really trust 100%, I'm going to do my utmost to ENSURE that they are holding up their end (which the state CLEARLY wasn't doing).

From how I see it, the unions struck the deal and then just trusted the GA to uphold their end.

Stupid and/or lazy.

Again, they act like they don't live in the real world. In the real world both sides make sure the other is holding up their end of the bargain.

And that's one of the biggest reasons why I don't feel bad for them, not one bit.

Posted by: stuckhereinri at September 13, 2011 2:02 PM

Stuckinri - I'll let you in on a little secret - union leaders earning $100-200k with fully funded pensions and ironclad job security don't care so much what happens to the braying sheep in their flock. Saying they do is just part of their job, and since RI isn't a right to work state, their members are forced to pay their salaries regardless. You can't fault the rank and file for being gullible, most people are.

Posted by: Dan at September 13, 2011 2:16 PM

" 'Union leaders' don't care so much what happens to the braying sheep in their flock".

To back Dan's point I was once a local union leader in California. The "Grand Lodge" leaders were so out of touch and insulated that they could give a rats a$$ what happened to their membership. Their only concern was that you pay your dues. THEY negotiate pay raises,benefits,etc. no matter your competence level. It is socialism on parade with extortion thrown in for good measure.

Posted by: ANTHONY at September 13, 2011 2:26 PM


I've asked the same question and what I was told is that they did in fact sue to get the pension system properly funded, but the judge ruled that the cities and state do not need to properly fund it, they merely need to properly pay the benefits. The judge basically said that it doesn't matter if you save the money as long as you have it available to pay it later.

Now, I'm not sure why the unions actually trusted the state and towns to be able to properly pay the pensions later, instead of putting the proper savings into the contract itself.

But that's the answer I've been given.

Posted by: Patrick at September 13, 2011 2:27 PM


Not necessarily. Those cities and towns that have contracts with private pension providers often denied unions and their leadership access to funding information. Because the contract was between the municipality and the provider, the providers would only release statements of the employees contributions and what their expected benefit would be at retirement regardless of whether the municipality was underfunding or not. The only protection the employee had was in the bargaining agreement that said they would get a certain benefit at retirement. Recently Raimondo has said that she would not attempt to alter plans that were written into bargaining agreements.

The bottom line is this issue has so many tentacles that she can't handle them all. My guess is the COLAs will be altered, the contributions will be increased, and the state plans will be re-amortized.

Let's also thank the judge who threw out the case against the municipality that was sued by the union for underfunding the pension. My recollection was he said the union had no case until the benefits stopped. Another bright bulb in our judicial system.

Buckle up.

Posted by: Max Diesel at September 13, 2011 3:01 PM

Dan, it's not that union members are "gullible", it's that the membership really doesn't have a say. You can voice your opinion but the union bosses could care less. The union leaders do not speak for most public employees... believe me.

Posted by: Far From Gulible.. at September 13, 2011 4:49 PM

It seems peculiar to me that the legislature would be able to alter the pention system to ADD benefits (as they hsve done in the past), but does not have the power to SUBTRACT benefits.

Posted by: drdave51 at September 13, 2011 5:50 PM

Far - Objectively speaking, I'm sure that some public union members in Rhode Island truly "get it" and want a right-to-work system with accountable union leadership and sustainable pay and benefits for everyone. The problem is that we literally never hear from these people. Why aren't they publicly opposing their grotesquely overpaid and unaccountable leadership? The only people we ever hear from are lapdogs, apologists, and caped crusaders who carry the union propaganda onto the political blogs,, and into public hearings.

What are they afraid of? Retaliation? Well, who wouldn't be when dealing with thugs and gangsters? Just do what I do - make a screen name.

Posted by: Dan at September 13, 2011 5:56 PM

I doubt very much this will stand.
If it does, I feel truly sorry for the future and unvested workers because they will be SCREWED big time. Oh and there is no decision anywhere on the planet that COLA's or free health care are "rights".

Posted by: Tommy Cranston at September 14, 2011 8:28 AM


The unions maybe celebrating but they need to cross one more hurdle before they win. The state needs to prove that it was "reasonable and necessary to fulfill an important public purpose". In other word there was 'no alternative' but to alter the benefit. That being said, if the state comes out on the short end, it may just split apart unions when unvested employees bare the brunt. Its a be careful what you wish for scenario. I've seen half a union membership pay for health care and half not until the half that were not were eventually out numbered. Its not a pretty picture.

Posted by: Max Diesel at September 14, 2011 3:13 PM

Dan, sheep "bleat" and donkeys "bray". Since most of the sheep vote for the donkeys, I can see how you conflated the two.

Posted by: BobN at September 16, 2011 9:12 AM
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