UPDATE 4: Legal Battle
City prevented from implementing new law
St. Louis – In a 34-page ruling on whether or not the City of St. Louis has the right to terminate a fire fighters pension plan and totally replace it with one guaranteeing far less benefits, a circuit judge has conceptually “split the baby” and given both sides the right to claim a temporary victory.
Temporary because the issue must yet go to trial (set for Oct. 22) for a decision that Judge Robert Dierker says will almost certainly be appealed to higher courts.
Regardless, the effort by the City to end the current fire fighters pension plan last Monday as required in Board Bill 12 was halted with the granting of the preliminary injunction holding Board Bill 12 invalid.
Despite this, both sides are claiming victory.
“It’s a win for the fire fighters,” said Firemen’s Retirement System (FRS) attorney Dan Tobben. “The judge ruled the proposed ordinance authorized by Board Bill 12 was illegal on a number of grounds and threw it out.”
The City is claiming victory because the judge did rule that it has the right to enact pension changes without having to obtain enabling legislation from Jefferson City. “If it sticks, it will be a landmark day,” said Jeff Rainford, Mayor Francis Slay’s chief of staff in a Post-Dispatch interview last week.
That’s a big “if” noted Tobben, who reiterated that this was a “total victory” for the fire fighters, pointing out that Judge Dierker ruled that the basic tenants of the City’s new law were all invalid and unconstitutional:
• The City cannot limit payment of benefits to assets in the plan that are not fully guaranteed by the City. This would put all fire fighters at risk because the City is backing off its commitment to guarantee full payment of pension benefits under the original plan.
• The City cannot merge the assets of the existing plan into a new plan. If the City is ultimately allowed to start a new pension plan, it would have to run side-by-side pension plans to cover vested fire fighters, retirees and beneficiaries under the old plan and those not vested and yet to be hired under a new plan.
• The City must fully fund the existing pension plan even if a new plan was ultimately deemed legal and implemented. A previous ruling by the Missouri Supreme Court said the City is required to fully fund the pension plan. Under Board Bill 12, vested firefighters’ rights were impaired, and retirees’ benefits were put at risk by the transfer of $400 million to the proposed new plan. The judge ruled this was an impairment of contract that violated both the Missouri and U.S. Constitution.
• The City cannot cut future benefits for fire fighters who have more than 20 years of service, are now vested, and could retire now under the pension plan’s current rules. Therefore, said the judge, the City must treat them the same as existing retirees, and the City cannot change the rules on them at this stage of their careers, because that is an unconstitutional impairment of their rights.
• The FRS’s trustees have the right to challenge the City’s efforts to kill the old plan and institute a new one. “There can be no doubt that the FRS and its trustees have standing to bring this action,” said the judge.
CITY WINS POINTS TOO
Even though Judge Dierker ruled that the City’s proposed replacement pension plan is defective and thus invalid, Judge Dierker did rule in favor of the City on several of the City’s key arguments:
• The City has the right to replace the pension plan without getting enabling legislation from Jefferson City although the current proposal replacement plan is invalid as it’s written.
• Fire fighters with less than 20 years of service can have their benefits reduced.
“Though we have great respect for Judge Dierker and his legal analytic abilities, we clearly believe the judge is wrong on both of these issues,” Tobben told the Labor Tribune.“
Meanwhile, the judge said, all parties can move forward to develop plans for terminating the existing pension plan and developing plans for a replacement pension system while the entire matter is in court. Nothing of course can be implemented until there is a final ruling, which is expected to ultimately come from the Missouri Supreme Court at some point in the future.
However, as of now, Board Bill 12 has been preliminarily declared unconstitutional, and FRS continues to operate in the same manner that it has for the last 50 years under existing law.