Monday, March 2, 2015

The Meaning of “Diminished or Impaired” in Article XIII, Section 5 of the Illinois Constitution (Pension Protection Clause)

“…Aside from the obvious fact that the possible existence of redundancy in other contexts does not mean that a redundancy was intended here, the defendants' argument overlooks the fact that ‘diminished or impaired’ is phrased in the disjunctive, unlike all of the examples of redundancies that the defendants provide. ‘As used in its ordinary sense, the word 'or' marks an alternative indicating the various members of the sentence which it connects are to be taken separately.’ People v. Frieberg, 147 Ill. 2d 326, 349 (1992)... 

“The defendants' claim that ‘diminishment’ is synonymous with ‘impairment’ also is easily dispelled by reference to the debates at the Constitutional Convention. Delegate Kinney explained that ‘impaired’ and ‘diminished’ were intended to have different meanings. She explained that ‘impaired’ was ‘meant to imply and to intend that if a pension fund would be on the verge of default or imminent bankruptcy, a group action could be taken to show that these rights should be preserved.’ Record of Proceedings, at 2926 (SA 7).

“In contrast, the word ‘diminished,’ she stated, ‘refers to this situation: If a police officer was entitled to retire at two-thirds of his salary after twenty years of service, that could not subsequently be changed to say he was entitled to only one-third of his salary after thirty years of service, or perhaps entitled to nothing.’ Id. at 2929 (SA 10). Accordingly, those terms have distinct meanings, and the defendants' attempt to read the word "diminished" out of the Pension Protection Clause must fail.

“A similar attempt to read ‘diminished’ out of a nearly identical provision of the Arizona Constitution was recently rejected by the Arizona Supreme Court. See Fields v. Elected Officials' Ret. Plan, 234 Ariz. 214, 218-19 (2014). Like the defendants here, the defendants in Fields argued that pension diminishments were subject to a balancing test under the Contract Clause. The Arizona Supreme Court rejected that interpretation because it ‘would render superfluous the latter portion’ of the Arizona Constitution's pension protection clause, which ‘prohibits diminishing or impairing public retirement benefits.’ Id. The correct interpretation, the Fields court ruled, was that the pension protection clause ‘confers additional, independent protection for public retirement benefits separate and distinct from the protection afforded by the Contract Clause.’ Id.

“The defendants attempt to distinguish Fields on the supposed basis that Arizona's pension protection clause is ‘textually distinct’ from Illinois's Pension Protection Clause, apparently because Arizona's pension protection clause contains an express reference to the Contract Clause. (Def. Br. at 35.) See Ariz. Constitution, Art. XXIX, § 1(C) (‘Membership in a public retirement system is a contractual relationship that is subject to article II, section 25, and public retirement system benefits shall not be diminished or impaired’); see also Ariz. Constitution, Art. II, § 25 (contract clause).

“If anything, this distinction cuts against the defendants' position. Fields makes clear that the prohibition against the diminishment or impairment of pension benefits has independent and dispositive significance even in the face of an explicit reference to the Contract Clause.

“In yet another effort to avoid the plain terms of the Pension Protection Clause, the defendants cite a federal bankruptcy court decision interpreting the Michigan Constitution, In re City of Detroit, 504 B.R. 97 (Bankruptcy E.D. Mich. 2013). Their reliance on that case is unavailing for several reasons.

“First, this Court has long recognized that the Michigan Constitution, unlike the Illinois Constitution, contains ‘restrictive language that has permitted modifications in benefits,’ and that to take a similar approach in this State, ‘we would have to ignore the plain language of the Constitution of Illinois.’ Felt v. Bd. of Trustees of Judges Ret. Sys., 107 III. 2d 158, 167-68 (1985).

“The Michigan Constitution protects only ‘accrued’ public pension benefits (see Mich. Constitution, Art. IX, § 24), while the Illinois Pension Protection Clause is written in absolute terms (see Ill. Constitution, Art. XIII, § 5). Moreover, to the extent it deemed ‘diminished’ to be a redundant or meaningless term in the Michigan Constitution, the bankruptcy court erred. As discussed above, no constitutional language should be deemed superfluous.

“Finally, the debates from the Illinois Constitutional Convention establish that ‘diminish’ and ‘impair’ were intended by the drafters to be distinct terms with separate meanings, whereas the bankruptcy court's review of debates from the 1963 Michigan Constitutional Convention revealed no such intent. See City of Detroit, 504 B.R. at 151-52 (quoting debates from Michigan Constitutional Convention).

“In any case, the defendants' argument that ‘diminished’ is a redundancy cannot be squared with this Court's precedent, which makes clear that the terms ‘diminished’ and ‘impaired,’ in the context of the Pension Protection Clause, each have independent significance.

“This Court has recognized that the word ‘impaired’ was intended to authorize a cause of action by pension system members in the event that their pension system is on the verge of default or imminent bankruptcy. See McNamee, 173 III. 2d at 446-47 (quoting Delegate Kinney's remarks). Thus, a pension system member ‘need not wait until benefits are actually diminished to bring suit under the clause.’ People ex rel. Sklodowski v. State, 182 III. 2d 220, 232 (1998) (discussing McNamee). If a beneficiary need not wait until benefits are ‘diminished’ to bring an action for ‘impairment,’ the terms necessarily have distinct meanings…”

from Brief of ISEA RSEA Heaton and Harrison Plaintiffs-Appellees

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