Supreme Court to hear gain sharing appeal

Posted 02-May-2013

Litigation over gain sharing and early retirement provisions for members of certain state pension plans will be heard by the Washington State Supreme Court.

Under an order signed May 1 by Chief Justice Barbara Madsen, the court granted the parties’ request to take direct review of trial court rulings in the gain sharing litigation. Oral arguments in the case will be scheduled at some point in the future.

The Supreme Court is also considering a petition for review of a trial court ruling in a separate lawsuit over discontinuation of annual benefit increases for retirees from two of the state’s older pension plans. There is a possibility the court may decide to consider the two cases at the same time, which would likely put off the scheduling of oral arguments in the gain sharing case.

In 2007, the Legislature approved a law which repealed gain sharing provisions for members of certain state retirement plans and replaced them with other pension-related benefits, including options for early retirement. In approving the replacement benefits, the Legislature made them contingent on the successful repeal of gain sharing.

Pension plan members and retirees affected by the repeal brought suit, challenging both the repeal and the contingency provisions. King County Superior Court Judge Richard Eadie ruled that the repeal of gain sharing was invalid, but he also ruled that the state can terminate the replacement benefits if gain sharing is ultimately reinstated.

Under the law, the replacement benefits continue to be available until there is legal certainty regarding all issues of the case. Legal certainty is not reached until all parties have used up their opportunities for appeal.

The other case concerns a 2011 law which discontinued an annual increase provided to retirees and beneficiaries in the Public Employees’ Retirement System Plan 1 (PERS 1) and the Teachers’ Retirement System Plan 1 (TRS 1). Both plans have been closed to new members since 1977.

In November 2012, Thurston County Superior Court Judge Chris Wickham ruled that the Legislature improperly repealed the increases. When the annual increases were approved in 1995, the Legislature specified that they were not a contractual right and that the state reserved the right to amend or repeal them. Wickham ruled, however, that the repeal was a violation of the state constitution.

The state has petitioned the state Supreme Court to take direct review of the trial court’s ruling on annual increases. If the petition for review is accepted, there is a possibility the gain sharing and annual increase cases would be heard together because of the similarity of the legal issues.

What's New: DRS News Articles Home Page