Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
Aug. 15 — A firefighter and a police officer challenging reduced cost-of-living adjustments in their public pension benefits lost their appeal to the U.S. Court of Appeals for the Sixth Circuit ( Puckett v. Lexington-Fayette Urban Cty. Gov't, 6th Cir., No. 15-06097, 8/15/16 ).
The Sixth Circuit on Aug. 15 upheld a Kentucky municipal pension plan's attempt to weather financial difficulties by reducing the annual cost-of-living adjustments (COLAs) received by pensioners. The court issued a similar opinion on Aug. 12, affirming COLA cuts made by the Tennessee Valley Authority Retirement System.
In the Kentucky case, two pensioners claimed that the temporary reduction in their COLA benefits—authorized by emergency legislation passed by the Kentucky General Assembly in 2013—violated the Contract, Due Process and Takings clauses of the U.S. and Kentucky constitutions.
A district judge dismissed their claims in 2014, finding that the pensioners had no contractual right to COLA benefits at specified levels.
The Sixth Circuit agreed and upheld the cuts, noting that pensioners' constitutional arguments presented an issue of first impression in the circuit.
The court found that the Kentucky legislature didn't contractually bind itself to provide COLAs at specified levels, which defeated the pensioners' arguments under the Contract Clause. The Sixth Circuit said it was following the majority position on this question, noting that only in “very limited circumstances” have courts found that state pensioners had a contractual right to specific COLA levels.
Judge Eric L. Clay wrote the opinion, which was joined by Senior Judge Martha Craig Daughtrey and Judge Jane Branstetter Stranch.
Stranch in a concurring opinion emphasized that it could sometimes make “eminently good sense” for a state legislature to contractually guarantee certain COLA levels, even if the Kentucky legislature didn't do so in this case. Daughtrey joined in the concurring opinion.
Green Chesnut & Hughes PLLC represented the pensioners. Frost Brown Todd represented the county government. Kentucky was represented by its attorney general.
To contact the reporter on this story: Jacklyn Wille in Washington at email@example.com
To contact the editor responsible for this story: Jo-el J. Meyer at firstname.lastname@example.org
Text of the decision is at http://www.bloomberglaw.com/public/document/Tommy_Puckett_et_al_v_LexingtonFayette_Urban_Cnty_et_al_Docket_No.
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)