Case Studies

AP&S Defends State of Rhode Island in High-Stakes Pension Litigation

The Challenge:

Since 2010, AP&S has represented Rhode Island’s Governor, General Treasurer and Employees’ Retirement System in defense of constitutional challenges to the state’s pension statutes. Through nine separate cases and a class action lawsuit, various unions, associations and retirees challenged the constitutionality of pension changes made by the Rhode Island General Assembly in 2009, 2010 and 2011, which had reduced retirement benefits for employees of the state – Rhode Island’s largest employer – and employees of various cities and towns.

The Solution:

After a year-long effort to resolve the cases through mediation, the parties engaged in extensive motion practice on complex legal issues. AP&S successfully argued that because the litigation impacted numerous municipal entities that participated in the Municipal Employees Retirement System (“MERS”), including Rhode Island’s 39 cities and towns, those entities should be made parties to the litigation. AP&S also successfully argued that the nine cases should be consolidated and tried to a jury. Finally, in ruling on motions in limine filed by both the plaintiffs and the state defendants, the Superior Court issued a decision addressing the parties’ respective burdens of proof and persuasion, holding that the plaintiffs – not AP&S’ clients – bore the burden of proving the unconstitutionality of the statutes at issue beyond a reasonable doubt, the highest burden available in a civil case. As to the primary claim in the case, for alleged violation of the Contract Clause of Rhode Island’s Constitution, the Court ruled that the plaintiffs bore the burden of proving, beyond a reasonable doubt, that the legislation constitutes a substantial impairment of a contract. The Court further ruled that if the state defendants made a sufficient showing of reasonableness and necessity of the changes, plaintiffs must then prove, beyond a reasonable doubt, that the legislation was not reasonable and necessary.

As the parties prepared for trial, AP&S’ team coordinated an extensive and multifaceted effort to collect and produce more than 4 million pages of electronically stored documents, utilizing computer-assisted search and review technology. AP&S’ team also noticed and took numerous depositions and briefed and argued a number of discovery-related motions.

The Result:

In the months before trial was scheduled to commence, the parties filed responsive motions for summary judgment. While plaintiffs filed three separate motions for summary judgment, AP&S filed six separate motions for summary judgment, which, if successful, would dispose of the nine cases in their entirety. The Superior Court ruled on only one of those motions and granted summary judgment in favor of AP&S’ clients on one claim brought by a number of retirees. Before decisions were issued on the remaining motions, but after the Superior Court had issued the decision on the burden of proof, renewed settlement efforts resulted in a proposed settlement between the state defendants and the parties to most of the lawsuits, which retained approximately 92 percent of the pension savings the state had obtained in the challenged legislation. The Superior Court held a five-day-long class action fairness hearing on the proposed settlement and issued a written decision concluding that the proposed settlement was fair, reasonable and adequate.

In addition to handling these matters before the judiciary, the proposed settlement required the passage of legislation by the Rhode Island General Assembly to be effective. Accordingly, AP&S attorneys appeared before the Rhode Island Senate and the Rhode Island House finance committees and testified concerning the terms of proposed legislation and the corresponding cost to the state.

While the proposed settlement resolved six of the lawsuits, the three cases remain pending before the Superior Court. AP&S continues to defend the Employees’ Retirement System in those cases.

This high-stakes, multibillion-dollar litigation affects virtually all past and present state employees, municipal employees and employers who are participants in MERS, Rhode Island’s 39 cities and towns, and all Rhode Island taxpayers.

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