Brief of Appellants FRS and Local 73

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM
Appeal No. ED100209
IN THE MISSOURI COURT OF APPEALS EASTERN DISTRICT The Firemens Retirement System of St. Louis, et al. Plaintiffs/Appellants, vs. The City of St. Louis Defendant/Respondent ________________________________________________________________________ Appeal from the Circuit Court of City of St. Louis State of Missouri The Honorable Robert H. Dierker Cause No: 1222-CC02916 Consolidated with 1322-CC00006
JOINT BRIEF OF APPPELLANTS
By: /s/ Richard A. Barry Richard A. Barry, Esq., #25592 1750 South Brentwood Blvd., Suite 295 St. Louis, MO 63144 (314) 918-8900 E-mail: rickbarry@rickbarrypc.com ATTORNEY FOR APPELLANTS INTERNATIONAL ASSOCIATION OF FIRE FIGHTERS LOCAL 73, et al.
By: /s/ Kara D. Helmuth DANNA MCKITRICK, P.C. Daniel G. Tobben, #24219 Kara D. Helmuth, #62183 7701 Forsyth Blvd., Suite 800 St. Louis, MO 63105-3907 (314) 726-1000/(314) 725-6592 fax E-Mail: dtobben@dmfirm.com khelmuth@dmfirm.com ATTORNEYS FOR APPELLANTS THE FIREMENS RETIREMENT SYSTEM OF ST. LOUIS
TABLE OF CONTENTS
TABLE OF CONTENTS ............................................................................................................ i TABLE OF AUTHORITIES ..................................................................................................... vii STATEMENT OF FACTS ......................................................................................................... 1 I. Firefighter Membership in FRS and Operation of the Plan ............................................ 1 II. Citys Ordinances, Creation of FRP, and Procedural History of First Trial ................. 4 III. Board Bill 109 and the Dual Plan System .................................................................... 8 III. Trial Courts Judgment ................................................................................................ 12 POINTS RELIED ON............................................................................................................. 19 ARGUMENT ........................................................................................................................ 24 I. The Trial court erred in declaring Board Bill 109 valid and
constitutional, because the Trial Court erroneously concluded that the City could enact a pension plan for its firefighters, without any statutory authorization, based upon its home rule powers, in that a) Article VI 25 of the Missouri Constitution prohibits cities from granting public money to private individuals, except that the general assembly may authorize; b) Article VI, 19(a) of the Missouri Constitution does not grant the City the authority to ignore permissive enabling legislation and enact conflicting ordinances, and c) the provisions of 87.120 R.S.Mo. et seq. demonstrate an intent by the state to pre-empt the City from adopting a pension plan i
except in conformance with its provisions..................................................................... 24 A. B. C. D. Standard of Review ........................................................................................... 25 Article VI, 25 of the Missouri Constitution .................................................... 26 Home Rule Authority........................................................................................ 28 Permissive Nature of Chapter 87.120 R.S.Mo. et seq. and Limitations on the
Citys Authority ......................................................................................................... 33 E. II. Pre-Emption of the Field by the Missouri General Assembly .......................... 37
The Trial Court erred in declaring Board Bill 12 as amended by
Board Bill 109 valid, and that the City had authority to effectively amend Chapter 4.18 RCC (which established and governs FRS) without the General Assembly first amending the enabling statutes, 87.120 R.S.Mo. et seq., because under Article VI 19(a) of the Missouri Constitution the City may not adopt an ordinance in conflict with state statute on the same subject matter and the amendments to Chapter 4.18 by Board Bill 109 fail to conform to the enabling statutes, in that Board Bill 109 a) violates the exclusivity clause contained in 87.130 R.S.Mo. [4.18.020 RCC] with respect to years of service and contributions; b) violates 87.250 R.S.Mo. [4.18.220 RCC], which provides that all firefighters shall receive benefits as provided by sections 87.120 to 87.370; c) improperly amends the definition of average final compensation as set forth in 87.120(3) R.S.Mo. [4.18.010(C) RCC]; d) improperly amends the definition of membership ii
service and creditable service to include a cut-off of accrual as of February 1, 2013 contrary to 87.120(8) and (14) R.S.Mo. [4.18.010(G, M) RCC]; and e) the Trial Courts fiction of the Citys reservation of the right to terminate FRS is not found in Chapter 87.120 R.S.Mo. et seq. at all or even in Chapter 4.18 RCC, which only reserves the right to repeal or amend FRS. ...................................................................................................................... 41 A. B. FRS and the Newly Created FRP .................................................................. 43 Case law is clear that to amend FRS the City must first have enabling legislation
passed by the Missouri General Assembly. ............................................................... 43 C. Conflicts Between Chapter 4.18 RCC and Board Bill 109 or Implicit
Amendments of the Same ........................................................................................ 46 D. The Trial Courts Fiction of Termination is Not Based on Chapter 4.18 RCC
or 87.120 R.S.Mo. et seq. ........................................................................................ 59 III. The Trial Court erred in declaring Board Bill 109 valid and
constitutional because the Trial Courts declaration was based upon the erroneous conclusion that requiring adoption of enabling statutes as a pre-requisite to the City amending or terminating FRS would violate Article VI, 22 of the Missouri Constitution in that: a) such conclusion misconstrues Article VI, 22 and is contrary to governing precedent; and b) 87.120 R.S.Mo. et seq. does not violate Article VI, 22 of the Missouri Constitution as the City was not required by 87.120 R.S.Mo. et seq. to
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enact any pension plan for City firefighters.................................................................. 70 A. Article VI, 22 is not violated by holding that it authorizes the City to enact only
one pension system. ................................................................................................... 71 B. The power of City to be free from state legislative interference is not as great as
the City or Trial Court would like it to be, and the Trial Courts ruling was erroneous on this point. .............................................................................................................. 73 IV. The Trial Court erred in declaring Board Bill 109 valid and
constitutional because Board Bill 109 impairs the contractual rights of all firefighter members of FRS, including those with over twenty years of service as of the effective date of Board Bill 109, and beneficiaries, in contravention of Article I 13 of the Missouri Constitution and Article I 10 of the United States Constitution, in that a) the Trial Courts conclusion that the Contracts Clauses prohibit only impairment of contractual rights of firefighters for services rendered by them prior to the effective date of a change in benefits, such that benefits for all firefighters, even those who are vested under the terms of the plan, could be reduced on a prospective basis is incorrect as a matter of law; b) Board Bill 109 removes the Citys ultimate guarantee for the payment of benefits due to firefighters upon retirement, or to their beneficiaries, as provided under Chapter 4.18 RCC, and instead limits the Citys liability for the payment of benefits to the assets in FRP; c) Board Bill 109 requires a 9%
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nonrefundable contribution to FRP when a firefighter exits the DROP program and resumes regular status for accruing service time; and d) divests firefighters of contractual rights to benefits based upon compensation paid or service rendered after the effective date of an amendment that reduces future benefits. ...................................................................... 75 A. B. Contracts Clause Framework ............................................................................ 77 The terms of Chapter 4.18 constitute a contract between the City and the
Retirees and Members of FRS. .................................................................................. 79 C. Board Bill 109 constitutes a significant impairment of the contractual rights of
FRS Member and Beneficiaries................................................................................. 85 D. Significant and Legitimate Public Purpose and Reasonableness of the
Adjustment................................................................................................................. 90 E. The Trial Courts reasoning that the Contracts Clauses only operate in the past
and not the future is erroneous as a matter of law, and ruling that Board Bill 109 is valid on that basis was in error. ................................................................................. 91 V. The Trial Court erred in declaring Board Bill 109 valid and
constitutional because Board Bill 109 impairs the contractual rights of firefighters with less than twenty years of service, in contravention of Article I 13 of the Missouri Constitution and Article I 10 of the United States Constitution, in that these firefighters have already contributed substantial service to the City at least partially in reliance on the pension v
benefits as provided by Chapter 4.18, and in that Board Bill 109 a) requires firefighters to contribute 9% of their salary on a non-refundable basis to FRP instead of 8% of salary on a refundable basis to FRS and b) applies an actuarial reduction to service rendered after the effective date of Board Bill 109 if the firefighter retires before age 55, as compared to FRS which provides that a firefighter could retire with 20 years of service, regardless of age, without a reduction in benefits. .......................................................................... 96 A. Vesting and Protection of Benefits for Firefighters with Less than 20 Years of
Service ....................................................................................................................... 97 B. C. Trial Courts Reasoning is Erroneous ............................................................. 107 Unreasonable Reduction in Benefits for Those Firefighters with Less than 20
Years of Service....................................................................................................... 110 CONCLUSION .................................................................................................................... 113 CERTIFICATE OF COMPLIANCE ......................................................................................... 115 CERTIFICATE OF SERVICE ................................................................................................ 116
ABBREVIATIONS USED THROUGHOUT THIS APPELLANTS BRIEF A Appendix LF Legal File STr Supplemental Transcript Tr Transcript vi
TABLE OF AUTHORITIES CASES Allied Structural Steel Co. v. Spannaus, 438 U.S. 234 (1978) .................................... 78, 90 Alumax Foils, Inc. v. City of St. Louis, 959 S.W.2d 836 (Mo.App. E.D. 1998)................................................. 35, 36, 37, 38 American Federation of State, County and Municipal Employees v. City of Benton, Arkansas, 513 F.3d 874 (8th Cir. 2008) ............ 77, 78, 79, 90, 91 Atchison v. Retirement Board of the Police Retirement System of Kansas City, 343 S.W.2d 25 (Mo. 1960) ........................................................... 44 Bakenhus v. City of Seattle, 296 P.2d 536 (Wash. banc 1956) ........................................................... 23, 101, 102 Baker v. Retirement Board of Allegheny County, 97 A.2d 231 (Pa. 1953)......................................................................................... 104 Bender v. Anglin, 60 S.E.2d 756 (Ga. 1950) ................................................................... 103 BHA Group Holding, Inc. v. Pendergast, 173 S.W.3d 373 (Mo.App. W.D. 2005) ...................................................................................... 54, 55 Burlington Fire Fighters Assoc. v. City of Burlington, 543 A.2d 686 (Vt. 1988)................................................................................. 82, 103 Cape Motor Lodge, Inc. v. City of Cape Girardeau, 706 S.W.2d 208 (Mo. banc 1986) ........................................................ 30, 38, 65, 66 Chicago, Rock Island & Pacific Ry. Co. v. Swanger, 157 F. 783 (W.D.Mo. 1908) ................................................................................... 93 vii
Citizens Bank and Trust Co. v. Director of Revenue, State of Mo., 639 S.W.2d 833 (Mo. banc 1982) .......................................................................... 55 City of Springfield v. Belt, 307 S.W.3d 649 (Mo. banc 2010) .......................................... 30 City of St. Louis v. State, 382 S.W.3d 905 (Mo. banc 2012) ....................................... 21, 73 Civil Service Commn of City of St. Louis v. Members of Bd. of Aldermen of the City of St. Louis, 92 S.W.3d 785 (Mo. banc 2003) .......................... 21, 71, 73 Cloutier v. State, 42 A.3d 816 (N.H. 2012) .......................................... 23, 82, 101,102, 103 Denbow v. State, 309 S.W.3d 831 (Mo.App. W.D. 2010) .......................................... 55, 56 Educ. Employees Credit Union v. Mutual Guarantee Corp., 50 F.3d 1432 (8th Cir. 1995) .................................................................................. 78 Edwards v. City of Ellisville, 2013 WL 5913628 (Mo.App. E.D. 2013) .................................................. 67, 68, 69 Energy Reserves Group, Inc. v. Kansas Power and Light Co., 459 U.S. 400 (1983) ................................................................................... 77, 78, 90 Ewing v. Miller, 335 S.W.2d 154 (Mo. 1960) ................................................................... 95 Firemens Retirement System of St. Louis v. City of St. Louis, 754 S.W.2d 21 (Mo.App. E.D. 1988)................................................... 20, 36, 44, 46 Firemens Retirement System v. City of St. Louis, Missouri, 789 S.W.2d 484 (Mo. banc 1990) ................................................. 19, 21, 27, 44, 72 Firemen's Retirement System v. City of St. Louis, ED86921, 2006 WL 2403955 (Mo. Ct. App. Aug. 22, 2006).......................... 45, 62
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Fraternal Order of Police v. City of St. Joseph, 8 S.W.3d 257 (Mo.App. W.D. 1999) ................................................... 108, 109, 110 Gates v. City of Springfield, 744 S.W.2d 487 (Mo.App. S.D. 1988) .......................... 66, 67 Gen. Motors Corp. v. Romein, 503 U.S. 181 (1992) ......................................................... 78 George v. Brewer, 62 S.W.3d 106 (Mo.App. S.D. 2001) ................................................. 95 Halpin v. Nebraska State Patrolmens Retirement System, 320 N.W.2d 910 (Neb. 1982) ....................................................................... 101, 103 Hickey v. Pension Bd. of City of Pittsburgh, 106 A.2d 233 (Pa. 1954)....................................................................... 104, 105, 106 Home Builders Association of Greater St. Louis, Inc. v. City of Wildwood, 32 S.W.3d 612 (Mo.App. E.D. 2000) ...................................... 95 In Interest of L.W.R., 818 S.W.2d 727 (Mo.App. 1991) ................................................... 26 Kansas City v. Brouse, 468 S.W.2d 15 (Mo. banc 1971) ...................................... 12, 31, 32 Kemmerer v. ICI Americas Inc., 70 F.3d 281 (3d. Cir. 1995) ......................................... 108 Klamm v. State ex rel. Carlson, 125 N.E.2d 487 (Ind. 1955) ......................................... 100 Levinson v. City of Kansas City, 43 S.W.3d 312 (Mo.App. W.D. 2001) ......................................... 19, 30, 34, 35, 108 Missouri Prosecuting Attorneys v. Barton County, 311 S.W.3d 737 (Mo. banc 2010) .......................................................................... 70 Murphy v. Carron, 536 S.W.2d 30 (Mo. banc 1976) ........................................................ 25 Olson v. Cory, 636 P.2d 532 (Cal. 1980) .................................................................. 82, 103
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Oregon State Police Officers Assn v. State of Oregon, 918 P.2d 765 (Ore. 1996) ..................................................................... 22, 82, 83, 94 Pearson v. Koster, 367 S.W.3d 36 (Mo. banc 2012) ........................................................ 25 Police Pension & Relief Board of City & County of Denver v. Bills, 366 P.2d 581 (Colo. banc 1961) ................................................................... 103, 106 Pyle v. Webb, 489 S.W.2d 796 (Ark. 1973) .................................................................... 105 Rothschild v. State Tax Commission of Missouri, 762 S.W.2d 35 (Mo. banc 1988) ............................................................................ 55 Sanders v. City of St. Louis, 303 S.W.2d 925 (Mo. 1957) ................................................ 32 Singer v. City of Topeka, 607 P.2d 467 (Kan. 1980) ................................. 82, 101, 103, 104 Snow v. Abernathy, 331 So.2d 626 (Ala.1976) ............................................................... 103 Southgate Bank and Trust Co. v. May, 696 S.W.2d 515 (Mo.App. W.D. 1985) ................................................................. 26 Southwestern Bell Yellow Pages, Inc. v. Director of Revenue, 94 S.W.3d 388 (Mo. banc 2002) ............................................................................ 55 Springfield Ry. Co. v. City of Springfield, 85 Mo. 674 (Mo. 1885) .................................. 93 State ex inf. Hanna ex rel. Christ v. City of St. Charles, 676 S.W.2d 508 (Mo. banc 1984) .......................................................................... 30 State ex rel. Breshears v. Missouri State Employees Retirement System, 362 S.W.2d 571 (Mo. banc 1962) .............................................................. 22, 81, 93 State ex rel. Dreer v. Public School Retirement System of the City of St. Louis, 519 S.W.2d 290 (Mo. 1975) ........................................................................... 23, 100 x
State ex rel. Kansas City v. Public Service Commn, 524 S.W.2d 855 (Mo. banc 1975) .......................................................................... 79 State ex rel. Phillip v. Public School Ret. Sys. of City of St. Louis, 262 S.W.2d 569 (Mo. banc 1953) ............................................ 22, 23, 78, 79, 80, 81 .................................................................................................... 93, 98, 99, 108, 109 State ex rel. Sunshine Enterprises of Missouri, Inc. v. Bd. of Adjustment of City of St. Ann, 64 S.W.3d 310 (Mo. banc 2002) ............................................... 25 State v. Miller, 50 Mo. 129 (Mo. 1872)............................................................................. 93 Sylvestre v. State, 214 N.W.2d 658 (Minn. 1973) ................................................... 103, 106 TDV Transp., Inc. v. Keel, 966 S.W.2d 347 (Mo.App. E.D. 1998) .................................. 95 Teson v. Vasquez, 561 S.W.2d 119 (Mo.App. E.D. 1977) ................................................ 26 Trantina v. Bd. of Trs. of the Firemens Ret. Sys., 503 S.W.2d 148 (Mo. App. 1973) .......................... 7, 20, 36, 41, 44, 45, 62, 63, 108 Wagoner v. Gainer, 279 S.E.2d 636 (W.Va. 1981) ................................................ 103, 105 Washington Assn of County Officials v. Washington Public Emp. Ret. Sys. Bd., 575 P.2d 230 (Wash. banc 1978) .......................................... 101 Wehmeier v. Public School Retirement System of Missouri, 631 S.W.2d 893 (Mo.App.E.D. 1982).............................................................. 22, 81 UNITED STATES CONSTITUTION Article I, 10 ................................................................................................................ 75, 77 MISSOURI CONSTITUTION Article I, 13 ................................................................................................................ 75, 77 xi
Article VI, 19 ............................................................................... 20, 28, 29, 32, 60, 62, 66 Article VI, 22 ................................................................................................. 21, 71, 72, 73 Article VI, 25 ....................................................................................................... 19, 26, 72 REVISED STATUTES OF MISSOURI 71.010 ................................................................................................................................ 30 87.170 to 87.175 .................................................................................................................. 2 87.005 ................................................................................................................................ 59 87.006 ................................................................................................................................ 59 87.120 .................................................................................................................... 32, 57, 58 87.125 ............................................................................................ 19, 24, 26, 33, 64, 65, 68 87.130 .................................................................................. 1, 20, 48, 60, 65, 68, 83, 84, 85 87.135 ................................................................................................................................ 58 87.170 .............................................................................................................. 2, 53, 65, 111 87.175 .......................................................................................................................... 65, 88 87.177 .............................................................................................................................. 104 87.182 .................................................................................................................................. 2 87.195 to 87.220 ................................................................................................................ 58 87.250 .................................................................................................................. 84, 86, 110 87.295 .................................................................................................................... 2, 88, 111 87.360 ...................................................................................................................... 2, 85, 87 95.540 ................................................................................................................................ 39 105.691 ............................................................................................................................ 104 xii
169.430 .............................................................................................................................. 80 577.023 .............................................................................................................................. 55 REVISED CITY CODE 4.18.010 ....................................................................................................... 2, 57, 58, 84, 86 4.18.015 ............................................................................................................................... 1 4.18.020 ........................................................................................... 1, 47, 48, 54, 83, 84, 85 4.18.030 ........................................................................................................................... 107 4.18.050 ............................................................................................................................. 58 4.18.055 ............................................................................................................................... 1 4.18.120 ........................................................................................................... 2, 53, 84, 111 4.18.130 ................................................................................................................. 2, 88, 110 4.18.131 ....................................................................................................................... 2, 111 4.18.210 ............................................................................................................................... 2 4.18.220 ................................................................................................... 57, 84, 85, 86, 110 4.18.260 ............................................................................................................. 2, 4, 88, 110 4.18.325 ............................................................................................................. 2, 84, 85, 94 4.18.345 ................................................................................................... 60, 61, 62, 63, 107 4.18.385 ..................................................................................................................... 87, 110 4.18.145 to 4.18.270 .................................................................................................... 58, 86 4.19.010 ............................................................................................................. 9, 12, 29, 52 4.19.020 ..................................................................................................................... 52, 111 4.19.030 ................................................................................................................... 5, 9, 110 xiii
4.19.040 ............................................................................................................................. 52 4.19.060 ................................................................... 5, 9, 52, 76, 88, 89, 107, 110, 111, 112 4.19.070 ....................................................................................................................... 59, 92 4.19.080 ............................................................................................................................... 9 4.19.120 ....................................................................................................................... 11, 87 4.19.140 ............................................................................................................................. 89 4.19.160 ........................................................................................................... 10, 11, 86, 87 4.19.170 ................................................................................................................. 11, 87, 94 BOARD BILL Board Bill 109 1 .................................................................................................... 8, 43, 62 Board Bill 109 2 ........................................................................ 8, 9, 52, 53, 57, 58, 59, 85
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STATEMENT OF FACTS In 1959 the Missouri General Assembly adopted 87.120 R.S.Mo. et seq. authorizing the City of St. Louis (City) to establish a pension system for its firefighters according to the specific provisions and requirements of that enabling legislation. 4.18.015 RCC (A252) In 1960, the City, by ordinance, created the Firemens Retirement System (FRS) pursuant to that enabling legislation, which is codified in Chapter 4.18 of the Revised Code of the City of St. Louis. (RCC) 4.18.015 RCC (A252) Plaintiffs in this case are the Firemens Retirement System of St. Louis (FRS) and its duly appointed Board of Trustees. (LF19) The Board of Trustees consists of two mayoral appointees, the comptroller ex officio, the chief of the fire department ex officio, three active firefighters elected by the membership, and one retired firefighter elected by the retired firemen of the City. 4.18.055 (A253) Plaintiff-Intervenors are the
International Association of Fire Fighters Local 73 (IAFF Local 73), three individual active firefighters and one retired firefighter. (LF538-539) This brief is filed on behalf of all Plaintiffs and Plaintiff-Intervenors. I. Firefighter Membership in FRS and Operation of the Plan Pursuant to the terms of Chapter 4.18 RCC, firefighters must belong to FRS as a condition of their employment with the City. 4.18.020 RCC; 87.130 R.S.Mo. (A252) As part of firefighters orientation, which occurs after they are hired but early in their training, FRS staff or Trustees make presentations to the firefighters, which includes information concerning FRS and the benefits provided to firefighters under it. (Tr.Vol.I, pg. 252, 258-259, 275-276; STr.73-74) Firefighters are given a copy of the enabling legislation and 1
the implementing ordinances, and must sign the registry at FRS confirming their membership and participation in FRS as a condition of their employment. (Ex5, Ex30; Tr.Vol.I, pg. 18, 252, 385, 394-395; S.Tr. 71, 73-74, 83; STr. 73-74) St. Louis firefighters have been required to contribute 8% of their salary on a post-tax basis to FRS throughout their careers as a condition of employment, which helps fund their retirement from FRS. 4.18.260 RCC; 87.295 R.S.Mo. (A268) In the absence of disability, a firefighter must work a minimum of 20 years in order to be vested in the pension benefit provided by FRS. 4.18.120 RCC and 87.170 R.S.Mo. (A256; STr 71) Firefighters who retire with 20 years or more of service receive a pension plus a return of contributions without interest. 4.18.120, 4.18.130 RCC (A256-257); 87.170 - 87.175 R.S.Mo. After 20 years, a firefighter may accrue additional benefits in the DROP plan. 4.18.131 RCC (A257) 87.182 R.S.Mo. Any firefighter who terminates employment prior to 20 years receives a return of his contributions, plus interest, in lieu of receiving any type of annuity benefit under FRS. 4.18.010(A) and 4.18.210 RCC (A251, 267). All benefits under FRS are made obligations of the City. Specifically, 4.18.325 RCC provides that the payment of all benefits granted under the provisions of this chapter are hereby made obligations of the City. 4.18.325 RCC (A270); 87.360 R.S.Mo. Any rights accrued under FRS cannot be transferred to a different retirement plan, even if the firefighter goes to work for another fire department, or in some other job or capacity for the City of St. Louis. (STr 21) Firefighters do not pay into or receive benefits from Social Security for their work for the St. Louis Fire Department. (Ex. 29; Tr. Vol. I, pg. 21; A39) Thus, the pension benefits are the firefighters safety net. ( STr. 72 "So my 2
whole life my whole retirement plans are based on the pension benefits I have been promised when I was employed. My contribution return, my multiplier, DROP plan. I mean that's what's going to make or break me in my retirement."). As noted by firefighter Jeffrey Glorioso, who had previously worked as an EMT in the City (and was a member of the Employees Retirement System), he compared the FRS plan to other municipalities pension plans, and relied on the FRS plan in accepting a job with the St. Louis Fire Department. (STr. 70-71) Firefighter Brian Doane testified that when he first began working at the Department, he was told the pension "was backed by law" and it was implied that the pension benefits were guaranteed. (Tr.Vol.I 276) The firefighters relied on these benefits throughout their employment at the St. Louis Fire Department. (STr. 74-75 "I have considered employment in some of the other surrounding fire departments that have higher pay, but based on calculations of what pension benefits would be at those places compared to where I am now, my decisions were that it was in my best interest to stay with the St. Louis Fire Department in the current pension plan I am in rather than start over elsewhere."). While the Trial Court did not find that any firefighter relied on the existence or continuation of FRS in accepting employment with the City, [t]he Court [did] find that some firefighters have elected to remain in the City service, instead of seeking other employment, in part due to the pension benefits under FRS. (A39)
II. Citys Ordinances, Creation of FRP, and Procedural History of First Trial On May 8, 2012, the City enacted Ordinance 69143 (Board Bill 270) 1 , which purported to conditionally repeal the provisions of all ordinances governing the FRS and to freeze benefits under FRS, upon the adoption of a successor plan. (A39, 69-70) On July 21, 2012 the City enacted Ordinance 69183 (Board Bill 11), which amended 4.18.060 RCC regarding the powers and duties of the FRS Trustees. (A39-40) It stated, the Board of Trustees [of FRS] shall have no duty or authority to contest or challenge actions taken by the City with respect to the establishment, design, amendment or termination of the FRS, or any other action taken by the City in its capacity as settlor of the FRS or employer of plan members; and shall not authorize the expenditure of any assets of the FRS to fund any such contests or challenge. (A76) Board Bill 11 also contained an emergency clause which made it immediately effective upon the signature of the Mayor. (A77) On July 29, 2012, the City enacted Ordinance 69245 (Board Bill 12), which created the Firefighters Retirement Plan (FRP), which purported to be the successor plan referenced in Board Bill 270, and which adopted a comprehensive substitute pension plan for City firefighters. (A40) Board Bill 12 transferred all members of FRS into FRP and required a 9% non-refundable contribution to FRP after the effective date of the ordinance.
Appellants recognize that all Board Bills were enacted as Ordinances. However, the
ordinances were primarily referenced at trial by their corresponding board bill numbers, and Appellants will do the same here.
Board Bill 12, 4.19.030(B) 4.19.060(C) (A90, 97) It also applied an actuarial reduction to benefits for post-effective date service for all firefighters who retired prior to age 55. Board Bill 12, 4.19.060(D) (A97-98) Board Bill 12 provided for the merger of the assets of FRS into FRP, with the same individuals who were trustees of FRS to serve as trustees of FRP. (A40, 84-85) It contained similar language as contained in Board Bill 11 regarding the duties of the FRP Trustees, and made the Trustees liable to the City for any damages to, or expense incurred by, the City as a result of any action by the Board of Trustees in contravention of this paragraph. (A135) The terms of Board Bill 12 were to be codified as Chapter 4.19 RCC. (A40) On June 12, 2012, before Board Bills 11 and 12 were signed into law by the Mayor of the City and became effective, FRS and its Trustees filed suit against the City under cause number 1222-CC02916, seeking an injunction to halt enforcement of the ordinances and a declaration from the Trial Court that Board Bills 270, 11 and 12 were unconstitutional, as the City does not have authority to repeal Chapter 4.18 and enact ordinances conflicting with 87.120 R.S.Mo. et seq.; Board Bills 270 and 12 violate the constitutionally protected contractual rights of firefighters; and Board Bill 11 violated the City Charter, the federal and Missouri Contracts Clauses, and the open courts provision of Article I, 14 of the Missouri Constitution. (LF18-53) On July 6, 2012, the Trial Court granted a preliminary injunction enjoining the enforcement of Board Bill 11 in part. (A40; LF170-174) Specifically, the Trial Court found that FRS and its Board of Trustees must have the ability to seek a declaratory 5
judgment from the court when the duties of the system and its board are altered or materially affected by the action of the City, and the balance of hardships and the public interest favored not placing the Trustees in the Hobsons choice of terminating the litigation or continuing it at their own expense. (A172-173) Therefore, the Trial Court ordered that the City was preliminarily enjoined from enforcing the provisions of Board Bill 11 that would prohibit plaintiffs from proceeding with this action at the expense of the retirement system. (LF174) A hearing was held on FRS and Plaintiff-Intervenors Motion for Temporary Restraining Order on August 21, 22, 24, and 27, 2012 with respect to Board Bill 12 and 270. (Tr.Vol.I) Before Board Bill 12 became effective, a consent temporary restraining order was entered by the parties on August 24, 2012 enjoining the enforcement of Board Bills 12 and 270 until October 1, 2012. (LF567) The Trial Court entered a preliminary injunction with respect to Board Bills 12 and 270 on September 28, 2012. (LF586-615) Parts of this preliminary injunction were later incorporated by reference into the Trial Courts final judgment in this case, and will be more fully set forth below. (A52) Briefly, the Order prohibited the enforcement of Board Bill 12 because the Trial Court found that firefighters with over 20 years of service in FRS on the effective date had a contractual right to their pension benefits, which was substantially impaired by the merger or transfer of assets from FRS to the new plan, without a corresponding unqualified obligation of the City to fund accrued and vested benefits; and the alteration of the deferred retirement option plan (DROP) to the
disadvantage of firefighters with 20 years service who have not attained the age of 55. (A29) In the Citys Post Hearing Brief Regarding the Ending of the Current Firefighters[sic] Pension Plan, the City stated that the reason it did not simply freeze benefits accrued in FRS and enact a new plan for future accruals (the dual plan option), was: The dual plan option, however, would have required the City to only repeal certain sections of the Current Plan, leaving in place those provisions necessary for it to meet its obligations to fund the already accrued benefits and for the plan to be administered with respect to those accrued benefits. Nothing in Chapter 4.18 suggests the Citys right to effect such a partial repeal. Nor do any of the opinions of the Supreme Court of Missouri or the Missouri Court of Appeals construing the Current Plan suggest that partial repeal is a permissible option. This is especially so because a partial repeal could be viewed as an amendment to the Current Plan, not permitted by Chapter 87 R.S.Mo., rather than a repeal of the Current Plan. See, e.g., Trantina v. Bd. of Trs. of the Firemens Ret. Sys., 503 S.W.2d 148, 152-53 (Mo. App. 1973) (noting in dicta that amendments to the Current Plan that change benefits must be in accordance with Chapter 87 R.S.Mo.). (LF571)
After additional evidence was heard by the Trial Court on October 22, 2012 the Trial Court closed the evidence in the case, but stated that the City [would] be permitted to petition to reopen the record if Board Bill 12 [was] amended. (See, STr; LF632) III. Board Bill 109 and the Dual Plan System Relying in part on the Trial Courts preliminary injunction order, the City enacted Ordinance 69353 (Board Bill 109) on September 28, 2012, which amended Board Bill 12 in several significant respects. (Hereinafter Board Bill 12 as amended by Board Bill 109 will collectively be referred to as Board Bill 109; A40) Board Bill 109 repealed the conditional repeal of the FRS ordinances contained in Board Bill 270 and repealed the provisions of Board Bill 12, which provided for the merger of FRS plan assets into FRP. (A41) The City preemptively filed a counterclaim under cause number 1222-CC02916 asking the Trial Court to declare Board Bill 109 valid and constitutional. (LF637-641) Plaintiffs and Plaintiff-Intervenors also filed suit claiming the invalidity of Board Bill 109 on January 2, 2013 under cause number 1322-CC00006. (LF669) The two cases were then consolidated on January 3, 2013. (LF938) Under Board Bill 109, Chapter 4.18 RCC continues in existence, as does FRS. Board Bill 109, 1-2 (A176-178) Board Bill 109 made FRP into a wrap plan, where FRS benefits are frozen as of February 1, 2013, and all benefits due to future service and salary increases will be accrued under FRP. Board Bill 109, 2(A-C) (A176-178) Kim Nicholl, the Citys expert actuary, explained the dual system this way: [t]he benefits that have accrued to date, based on service and salary as of the effective date of Board Bill 109, 8
will be paid from FRS. Any future accruals, including future salary increases on behalf of service already rendered, will be paid from FRP. (Tr. Vol. III, pg. 41-42) Board Bill 109 states that [t]he benefit accrued under this plan is earned only because of years of service after the Effective Date (although vesting, eligibility for retirement, and the rate of accrual for benefits attributable to years of service after the Effective Date is based on total years of service as a firefighter with the City of St. Louis.) Board Bill 109, 4.19.010(B) (A185) Firefighters currently in DROP will continue to accrue their DROP benefit under FRS, and, upon their exit from the DROP program, will become members of FRP. Board Bill 109, 2(C) (A178) Retirees, beneficiaries, widows, and disabled firefighters (i.e., all persons in pay status) remain in FRS. Board Bill 109 4.19.010(U) (A42, 188) Firefighters with at least 20 years of service as of the effective date of Board Bill 109 will contribute 8% of their compensation to FRP, while those firefighters with less than 20 years of service as of the effective date will contribute 9% to FRP. Board Bill 109, 4.19.030(B) (A191) Any firefighter who retires from the department and receives a benefit from FRP, shall receive a refund of his contributions to [FRS] made before the Effective Date without interest; provided that contributions to the Plan made on and after the Effective Date by a Participant who had fewer than twenty full Years of Service as of the Effective Date are not refundable. Board Bill 109, 4.19.060(C) (A198-199) There is no explicit provision in Board Bill 109 that states that contributions made by firefighters with over 20 years of service to FRP are refundable upon retirement. Board Bill 109, 4.19.060(C) (A198-199) compare 4.19.080(B)(5) and 4.19.060(D); Tr.Vol.III, pg. 115-116. Paul Payne, City Budget Director and one of the team involved in drafing Board 9
Bill 109, admitted that there is not an explicit provision regarding post-effective date return of contributions for firefighters with over 20 years of service, but stated it would a be good-faith interpretation of the language. (Tr.Vol.III, 106, 115-116) Board Bill 109 also provides that firefighters coming out of DROP (who have to have over 20 years of service as a condition of entering DROP) will thereafter contribute to FRP at the rate of 9%. Board Bill 109, 4.19.060(E) (A201). Paul Payne testified that this was simply an error in the bill. (Tr. Vol. III, pg. 94-95) Under the terms of Board Bill 109, FRP will indemnify the Board of Trustees against all liabilities and claims other than liability for acting outside the scope of the persons authority, including but not limited to liability for directing payment of benefits that are not made pursuant to a reasonable, good faith interpretation of the explicit terms of the Plan. (A239-240) Paul Payne admitted that FRP cannot grant any benefits that are not explicitly provided for, and if the Board of Trustees of FRP did so it would be at their own risk because they would not be indemnified. (Tr.Vol.III 114) An actuarial reduction of benefits for firefighters who retire or enter DROP before age 55 with less than 20 years of service on the effective date is also to be applied to post-effective date service under FRP. Board Bill 109, 4.19.060(D) (A199) Board Bill 109 does not explicitly state that the actuarial reduction does not apply to firefighters with over 20 years of service. 4.19.060(D) (A199) Paul Payne stated that there is no provision in Board Bill 109 that addresses whether or not there is an actuarial reduction for firefighters with over 20 years of service. (Tr.Vol.III, 117)
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Board Bill 109 also provides, no employee shall have a contractual right to any benefits relating to, based upon service rendered or compensation paid after the effective date of an amendment that reduces future benefits. Board Bill 109 4.19.160 (A243) This provision applies to all firefighters, including those with over 20 years of service. Board Bill 109 4.19.160 (A243) Two separate sections of Board Bill 12 provided that the Citys liability to pay benefits under FRS was limited to plan assets. 4.19.120(C) and 4.19.170(B) (A230, 243) Board Bill 109 revised 4.19.120(C) to provide that [t]he payment of all benefits accrued under this Plan is hereby made an obligation of the City. (A230) However, it did not amend 4.19.170(B), which still provides, [a]ll benefits to be paid to a Participant or his beneficiary under this Plan shall be paid solely out of the Trust Fund, and the City assumes no liability or responsibility therefor. (A243) Board Bill 109 created an immediate, unfunded, accrued actuarial liability in the new FRP plan of over $65 million, according to the calculations of the Citys expert actuary, Kim Nicholl, although Ms. Nicholl testified it would not need to be paid on day one of FRP, as it is based on projected salary increases and service. (Ex. 65; Tr.Vol.III, 21) At the time of trial, no money had been appropriated by the City for FRPs start-up costs. (Tr.Vol.III, 105) Board Bill 109 provides that [t]he provision of this Ordinance shall supersede any other ordinance or part of an ordinance to the extent such other ordinance or part of an ordinance conflicts herewith. Board Bill 109, 4.19.170(E)(A245) It also states that it was enacted by the City pursuant to its authority under the home rule charter provisions of 11
the Constitution of the State of Missouri and the laws of the State of Missouri. 4.19.010(A) (A184) III. Trial Courts Judgment A. Order with Respect to Board Bill 12
With respect to the issue of whether or not the City can enact its own pension plan without enabling legislation, the Trial Court found that Article VI, 19(a) gives constitutional charter cities all powers which the general assembly has authority to confer upon any city. (A11) Therefore, Mo.Const. art. VI, 25 does not operate as a limitation on the authority of a constitutional charter city to enact pension legislation for its employees. On the contrary, 25 is a grant of authority to the General Assembly to in turn authorize cities to create pension systems. Since the General Assembly has this authority to grant cities that power, the plain terms of 19(a) authorize constitutional charter cities to enact pension legislation with or without enabling legislation. (A14-15) One of the seminal cases that the Trial Court relied upon for the proposition that a constitutional charter city can enact its own pension system without enabling legislation was Kansas City v. Brouse, 468 S.W.2d 15 (Mo. banc 1971). (A15) Specifically, the Trial Court found that Brouse shows that charter cities had the power to adopt pension plans even before Article VI, 19(a) of the Missouri Constitution was enacted, and that there was no reason to believe that 19(a) was a restriction on that home rule authority. (A16) On 12
the contrary, 19(a) and 25 construed together give the City plenary legislative authority over municipal pensions unless the General Assembly expressly limits or restricts that authority. (A16) In analyzing whether or not 87.120 R.S.Mo. et seq. limits the Citys authority to enact its own pensions system, the Trial Court found that FRS enabling legislation has been repeatedly held to be permissive. (A16) The Trial Court found that the permissive character of the enabling legislation leads ineluctably to the conclusion that 87.125 does not mandate that the City may adopt only one form of a firefighters pension system, i.e., that authorized by 87.120 et seq. (A17) [N]owhere in the FRS enabling legislation is there a legislative command that if the City chooses to adopt a firefighters pension system, it shall conform to the enabling legislation. The language subject to in 87.125 does not amount to a mandate that the City can adopt one form of a firefighters pension system and no other. Rather, that language means only that if the City chooses to adopt the system contemplated by the enabling legislation then it must do so subject to the statutory standards. It does not preclude action under the Citys constitutional charter authority. (A17) The Trial Court ultimately found that this was not only consistent with the permissive character of the FRS enabling statutes, but also required by Article VI 22 of the Missouri Constitution. (A17) It reasoned that if Chapter 87 R.S.Mo. meant that the City could adopt only one form of a pension ordinance, such legislation would plainly 13
intrude on the powers and duties of the Board of Aldermen of the City with respect to a matter of purely municipal concern. (A18) As such, the Trial Court concluded that if the City chooses to adopt the pension plan authorized by the state statutes, it must conform to the enabling legislation. (A19) However, [i]f the City chooses to adopt its own pension system under authority of article VI, 19(a), it may do so without reference to 87.120 et seq. (A19) Even though the Trial Court found that the City had the right to enact its own pension plan, the Trial Court did not permit the City to merge the assets of FRS into a new plan, because when the City acts within the context of the FRS, it must conform to the enabling legislation insofar as that legislation prescribes the manner of action. (A20-21) In the Courts view, so long as there are vested members of the FRS, the City is not free simply to transfer those members and the assets of the FRS to another plan. Section 87.125 is explicit that the assets of the FRS are to be managed and controlled by the trustees of the FRS, not some other entity. Furthermore, the City is not at liberty to impair the vested rights of the FRS members. (A20) With respect to the contract claims, the Trial Court found that retirees and those firefighters with over 20 years of service had a contractual right entitled to protection. (A27-28) Those rights were substantially impaired by combining the assets of FRS with a new plan which imperiled the ability of the retirees and vested members of FRS to obtain their full benefits, given that Board Bill 12 expressly limits the Citys obligations to pay benefits to the assets in the Plan. (A29) However, the Trial Court found that firefighters
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with less than twenty years of service had no contractual rights, as the City had reserved the right to repeal or amend Chapter 4.18. (A28) B. Judgment on Board Bill 109 After reopening the evidence and having a new trial with respect to Board Bill 109, the Trial Court rendered its Judgment on June 3, 2013, and adopted by reference many of the opinions it expressed with respect to Board Bill 12. (A35) First, the Trial Court recognized that FRS and its Trustees have standing to seek declaratory and injunctive relief regarding the enforceability of ordinances affecting the operation of the FRS, including whether ordinances impair the obligation of contract, given the fiduciary and administrative duties of the FRS trustees owed both to the City of St. Louis and the members of the FRS. (A51) The Trial Court noted that the standing of FRS on the issue of impairment of contract is academic, as some of the FRS trustees themselves and the individual intervenor plaintiffs are subject to the dual plan system and so unquestionably have standing to claim impairment of contract. (A51-52) With respect to the Citys power to adopt its own pension plan subject to local control, the Trial Court adhere[d] to its view that the City has the authority to terminate the FRS and replace it with the FRP. (A52) While the Trial Court acknowledged that the City was still bound by 87.125 R.S.Mo. and could not move the FRS funds to FRP, the Trial Court rejected the argument that once FRS was established under the enabling legislation, it cannot be terminated by the City without amendment of the enabling legislation as inconsistent with the overriding authority of Mo.Const. art. VI, 19(a) and the proper construction of the enabling legislation. (A52-53) 15
The Trial Court also found that the dual plan system was consistent with 87.130.1 R.S.Mo., because [u]nder the dual plan, City firefighters hired before February 1, 2013, receive one pension benefit by reason of years of service for which they are entitled to benefits under the FRS, and another pension benefit for years of service under the FRP. Before February 1, 2013, firefighters made contributions only to FRS. After February 1, 2013, firefighters make contributions only to the FRP. (A54) It concluded that the dual plan system does not prohibit what the enabling legislation permits nor permit what is prohibited. (A55) Instead, the dual plan system supplements the legislation by providing the means whereby the FRS is terminate and the FRP provides pension benefits in the future. (A55) In support of this reasoning, the Trial Court held that pension benefits have been construed as compensation under Article VI of the Missouri Constitution, and if the City could not change FRS without enabling legislation, then 87.120 R.S.Mo. et seq. would violate Article VI 22 of the Missouri Constitution. (A55) As such, the Citys efforts to meld the continued operations of the FRS and the FRP do not constitute impermissible amendment of R.C. Ch. 4.18; rather, they harmonize Ch. 4.19 with Ch. 4.18, and preserve pension benefits for firefighters whose benefits have not otherwise vested. To be sure, the dual plan system does affect how the FRS will operate in the future. But the ordinance provisions that affect the FRS are necessary and proper to secure the orderly termination of the FRS. (A56) 16
The Trial Court adhered to its position that firefighters whose rights had vested under the terms of FRS have a contractual right entitled to protection under the contracts clauses. (A57) However, those rights were not impaired by Board Bill 109, in the Trial Courts view, as the ordinances generously preserve benefits which were not vested as of February 1, 2013, and ensure that benefits vested as of that date are protected and will be paid by FRS. (A58) The scriveners error in not repealing 4.19.170(B) that limits the Citys liability to the assets in the plan was immaterial to the Courts analysis. Whether the City has effectively obligated itself to fund the FRP in the future is not a ripe justiciable question before the Court. The contracts clauses operate in the past, not the future. Only the FRS benefits in existence as of February 1, 2013, are subject to constitutional protection, to the extent they were vested at that time. (A58) The requirement of a 9% contribution when a firefighter with over 20 years of service exits DROP, was also not an impairment of contract in the Trial Courts view, as [t]he Court perceives no impairment of contract insofar as the dual plan system treats contributions to and benefits of the FRP after February 1, 2013 differently than contributions to and benefits of the FRS before February 1, 2013. Thus, the Court perceives no impediment to imposing a 9% contribution rate on all active firefighters for services from and after February 1, 2013. (A60) The Trial Court adhered to its prior position that the Citys reservation of the right to amend or repeal Chapter 4.18 RCC was sufficient to preclude creating a contract with employees who were or are not vested. (A59) There was one exception in the Trial
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Courts view: such firefighters have a right to the refund of contribution to the FRS made prior to February 1, 2013. (A60-61) As such, the Trial Court found that Board Bill 109 was valid and dissolved the preliminary injunction previously granted. (A64) Board Bill 11 was declared invalid and of no force or effect insofar as the plaintiff trustee act to manage FRS. (A64) The City was granted judgment against Plaintiffs and Plaintiff-Intervenors on all claims alleged in the Petitions and Counterclaims in the consolidated cases. Plaintiffs and Plaintiff-Intervenors both sought an injunction pending appeal, and a stay of execution pending appeal. (LF1040-1098) However, both motions were denied by the Trial Court and by this Court. (LF1386-1387) Plaintiffs and Plaintiff-Intervenors both then filed this appeal. (LF1388-1524)
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POINTS RELIED ON I. The Trial court erred in declaring Board Bill 109 valid and constitutional, because the Trial Court erroneously concluded that the City could enact a pension plan for its firefighters, without any statutory authorization, based upon its home rule powers, in that a) Article VI 25 of the Missouri Constitution prohibits cities from granting public money to private individuals, except that the general assembly may authorize; b) Article VI, 19(a) of the Missouri Constitution does not grant the City the authority to ignore permissive enabling legislation and enact conflicting ordinances, and c) the provisions of 87.120 R.S.Mo. et seq. demonstrate an intent by the state to pre-empt the City from adopting a pension plan except in conformance with its provisions. Firemens Ret. Sys. of St. Louis v. City of St. Louis, 789 S.W.2d 484 (Mo. banc 1990) Levinson v. City of Kansas City, 43 S.W.3d 312 (Mo.App. W.D. 2001) Article VI, 25 Missouri Constitution 87.125 R.S.Mo. II. The Trial Court erred in declaring Board Bill 12 as amended by Board Bill 109 valid, and that the City had authority to effectively amend Chapter 4.18 RCC (which established and governs FRS) without the General Assembly first amending the enabling statutes, 87.120 R.S.Mo. et seq., because under Article VI 19(a) of the Missouri Constitution the City may not adopt an ordinance in conflict with state statute on the same subject matter and the amendments to Chapter 4.18 by Board 19
Bill 109 fail to conform to the enabling statutes, in that Board Bill 109 a) violates the exclusivity clause contained in 87.130 R.S.Mo. [4.18.020 RCC] with respect to years of service and contributions; b) violates 87.250 R.S.Mo. [4.18.220 RCC], which provides that all firefighters shall receive benefits as provided by sections 87.120 to 87.370; c) improperly amends the definition of average final compensation as set forth in 87.120(3) R.S.Mo. [4.18.010(C) RCC]; d) improperly amends the definition of membership service and creditable service to include a cut-off of accrual as of February 1, 2013 contrary to 87.120(8) and (14) R.S.Mo. [4.18.010(G, M) RCC]; and e) the Trial Courts fiction of the Citys reservation of the right to terminate FRS is not found in Chapter 87.120 R.S.Mo. et seq. at all or even in Chapter 4.18 RCC, which only reserves the right to repeal or amend FRS. Trantina v. Bd. of Trustees of the Firemens Ret. Sys. of St. Louis, 503 S.W.2d 148 (Mo.App. 1973) Firemens Ret. Sys. of St. Louis v. City of St. Louis, 754 S.W.2d 21 (Mo.App. E.D. 1988) Article VI, 19(a) Missouri Constitution 87.130(1) R.S.Mo. III. The Trial Court erred in declaring Board Bill 109 valid and constitutional because the Trial Courts declaration was based upon the erroneous conclusion that requiring adoption of enabling statutes as a pre-requisite to the City amending or terminating FRS would violate Article VI, 22 of the Missouri Constitution in that: 20
a) such conclusion misconstrues Article VI, 22 and is contrary to governing precedent; and b) 87.120 R.S.Mo. et seq. does not violate Article VI, 22 of the Missouri Constitution as the City was not required by 87.120 R.S.Mo. et seq. to enact any pension plan for City firefighters. Civil Service Comn of City of St. Louis v. Members of Bd. of Aldermen of the City of St. Louis, 92 S.W.3d 785, 788 (Mo. banc 2003) Firemens Ret. Sys. of St. Louis v. City of St. Louis, 789 S.W.2d 484, 487 (Mo. 1990) City of St. Louis v. State, 382 S.W.3d 905 (Mo. banc 2012) Article VI, 22, Missouri Constitution IV. The Trial Court erred in declaring Board Bill 109 valid and constitutional because Board Bill 109 impairs the contractual rights of all firefighter members of FRS, including those with over twenty years of service as of the effective date of Board Bill 109, and beneficiaries, in contravention of Article I 13 of the Missouri Constitution and Article I 10 of the United States Constitution; in that a) the Trial Courts conclusion that the Contracts Clauses prohibit only impairment of contractual rights of firefighters for services rendered by them prior to the effective date of a change in benefits, such that benefits for all firefighters, even those who are vested under the terms of the plan, could be reduced on a prospective basis is incorrect as a matter of law; b) Board Bill 109 removes the Citys ultimate guarantee for the payment of benefits due to firefighters upon retirement, or to their beneficiaries, as provided under Chapter 4.18 RCC, and instead limits the Citys 21
liability for the payment of benefits to the assets in FRP; c) Board Bill 109 requires a 9% nonrefundable contribution to FRP when a firefighter exits the DROP program and resumes regular status for accruing service time; and d) divests firefighters of contractual rights to benefits based upon compensation paid or service rendered after the effective date of an amendment that reduces future benefits. State ex rel. Phillip v. Public School Ret. Sys. of City of St. Louis, 262 S.W.2d 569 (Mo. banc 1953) State ex re. Breshears v. Missouri State Employees Ret. Sys., 362 S.W.2d 571 (Mo. banc 1962) Wehmeier v. Public School Ret. Sys. of Missouri, 631 S.W.2d 893 (Mo.App. E.D. 1982) Oregon State Police Officers Assn v. State of Oregon, 918 P.2d 765 (Ore. 1996) V. The Trial Court erred in declaring Board Bill 109 valid and constitutional because Board Bill 109 impairs the contractual rights of firefighters with less than twenty years of service, in contravention of Article I 13 of the Missouri Constitution and Article I 10 of the United States Constitution; in that these firefighters have already contributed substantial service to the City at least partially in reliance on the pension benefits as provided by Chapter 4.18, and in that Board Bill 109 a) requires firefighters to contribute 9% of their salary on a non-refundable basis to FRP instead of 8% of salary on a refundable basis to FRS and b) applies an actuarial reduction to 22
service rendered after the effective date of Board Bill 109 if the firefighter retires before age 55, as compared to FRS which provides that a firefighter could retire with 20 years of service, regardless of age, without a reduction in benefits. State ex rel. Phillip v. Public School Ret. Sys. of City of St. Louis, 262 S.W.2d 569 (Mo. banc 1953) State ex rel. Dreer v. Public School Ret. Sys. of the City of St. Louis, 519 S.W.2d 290 (Mo. 1971) Bakenhus v. City of Seattle, 296 P.2d 536 (Wash. banc 1956) Cloutier v. State, 42 A.3d 816 (N.H. 2012)
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ARGUMENT I. The Trial court erred in declaring Board Bill 109 valid and constitutional, because the Trial Court erroneously concluded that the City could enact a pension plan for its firefighters, without any statutory authorization, based upon its home rule powers, in that a) Article VI 25 of the Missouri Constitution prohibits cities from granting public money to private individuals, except that the general assembly may authorize; b) Article VI, 19(a) of the Missouri Constitution does not grant the City the authority to ignore permissive enabling legislation and enact conflicting ordinances, and c) the provisions of 87.120 R.S.Mo. et seq. demonstrate an intent by the state to pre-empt the City from adopting a pension plan except in conformance with its provisions. Section 87.120 R.S.Mo. et seq. is the enabling legislation authorizing the creation of FRS, which has been in operation in its present form for over fifty years. These statutes require that every firefighter employed by the City be a member of FRS as a condition of their employment, and sets forth very detailed provisions regarding specific benefits that they are to earn as a result. Section 87.125 R.S.Mo. authorizes the City to enact these provisions through ordinances, and states the City is hereby authorized, subject to the provisions of sections 87.120 to 87.370, to provide by ordinance for the pensioning of members of any such fire department (emphasis added) The Trial Court found this language authorizing the City to take action subject to the statutory provision does not amount to a mandate that the City can adopt one form of a 24
firefighters pension system and no other. Rather, the Trial Court that language means only that if the City chooses to adopt the system contemplated by the enabling legislation then it must do so subject to the statutory standards. (A17; emphasis added) In enacting Board Bill 109, the City completely ignored Chapter 87 R.S.Mo. The Trial Court found the creation of FRP was permissible based upon the Citys status as a constitutional charter city. In effect, the Trial Court held that the City can create a pension system for St. Louis City firefighters, the very topic 87.120 R.S.Mo. et seq. addresses, but that it is completely free from the terms, restrictions, and conditions laid out therein by the General Assembly. Essentially, the Trial Courts ruling has converted Chapter 87 R.S.Mo., and any other permissive enabling legislation that the Missouri General Assembly may adopt, into mere suggestions or guidelines for constitutional charter cities such as the City. The Missouri General Assembly does not waste its time enacting statutes that are merely suggestions. To hold otherwise is a perversion of the meaning of permissive legislation and is contrary to the Missouri Constitution and case law interpreting it. A. Standard of Review The judgment in a court-tried case will be reversed if there is no substantial evidence to support it or it is against the weight of the evidence, or if the trial court erroneously declared or applied the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). Questions of law are reviewed de novo, and no deference is given to the trial courts conclusions on such questions. Pearson v. Koster, 367 S.W.3d 36, 43-44 (Mo. banc 2012). Once the contents of a municipal ordinance have been established, the interpretation of that ordinance is a pure question of law. State ex rel. Sunshine Enterprises 25
of Missouri, Inc. v. Board of Adjustment of City of St. Ann, 64 S.W.3d 310, 312 (Mo. banc 2002). Although an appellate court should give due recognition to the trial courts opinions as to the credibility of witnesses, Teson v. Vasquez, 561 S.W.2d 119, 128 (Mo.App. E.D. 1977), this rule of deference does not apply where the credibility of witnesses is not at issue. In Interest of L.W.R., 818 S.W.2d 727, 732 (Mo.App. 1991). The courts
conclusions as to the legal effect of the facts are entitled to no deference. Southgate Bank and Trust Co. v. May, 696 S.W.2d 515, 519 (Mo.App. W.D. 1985). This standard of review is applicable to all points. B. Article VI, 25 of the Missouri Constitution Article VI, 25 of the Missouri Constitution is the starting point for any analysis on municipal authority to enact a public pension system. It states in part that: No county, city or other political corporation or subdivision of the state shall be authorized to lend its credit or grant public money or property to any private individual, association or corporation except that the general assembly may authorize any county, city or other political corporation or subdivision to provide for the retirement or pensioning of its officers and employees. (emphasis added) This constitutional provision makes clear that no city may enact a public retirement or pension system without authorization from the Missouri General Assembly. With respect to the City, that authorization has been given in 87.125 R.S.Mo., which states: Any city in this state that now has or may hereafter have seven hundred thousand inhabitants or more and that has an organized fire department is 26
hereby authorized, subject to the provisions of sections 87.120 to 87.370, to provide by ordinance for the pensioning of members of any such organized fire department (emphasis added) As such, the City is permitted to enact a pension system for its firefighters, but only subject to the provisions of 87.120 R.S.Mo. et seq. This principle was confirmed and addressed by the Missouri Supreme Court twenty-three years ago in litigation between FRS and the City, Firemens Retirement System v. City of St. Louis, Missouri, 789 S.W.2d 484 (Mo. banc 1990) (FRS 1990). In that decision the Court stated: Article VI, 25, of the Missouri Constitution prohibits charter cities generally from granting public money to any private individual, association or corporation, but specifically provides that the General Assembly may authorize cities to provide for the pensioning of its officers and employees. Section 87.125, enacted pursuant to article VI, 25, of the Missouri Constitution, authorizes cities to provide by ordinance for the pensioning of firemen. The City created FRS under authority of 87.120, et seq., by enacting chapter 4.18 of the City code. St. Louis, Mo., Rev.Code 4.18.015. Id. at 486 (emphasis added). Thus, even though it is a constitutional charter city, the City is subject to the confines of 87.120 R.S.Mo. et seq. Given that Board Bill 109 was enacted without any enabling authority from the Missouri General Assembly, and contradicts 87.120 R.S.Mo. et seq. in many respects, it
27
violates this Missouri constitutional provision. As such, the Trial Court erred in finding that Board Bill 109 was valid and constitutional. C. Home Rule Authority The Trial Court rationalized its opinion by analyzing Article VI, 25 in conjunction with Article VI, 19 of the Missouri Constitution. Specifically the Trial Court found that Article VI, 19(a) gives constitutional charter cities all powers which the general assembly has authority to confer upon any city. (A11) Therefore, the Trial Court concluded, Mo.Const. art. VI, 25 does not operate as a limitation on the authority of a constitutional charter city to enact pension legislation for its employees. On the contrary, 25 is a grant of authority to the General Assembly to in turn authorize cities to create pension systems. Since the General Assembly has this authority to grant cities that power, the plain terms of 19(a) authorize constitutional charter cities to enact pension legislation with or without enabling legislation. (A14-15) However, the Trial Court and the City take this grant of authority beyond permissible bounds. Article VI, 19(a) still states that the Citys authority is limited by city charter and statute. As set forth more fully below, Board Bill 109 conflicts with state statute in numerous respects, specifically Chapter 87.120 R.S.Mo. et seq. Therefore, Board Bill 109 is beyond the power of the City to enact under its constitutional charter authority and is invalid and unconstitutional. 28
1.
Home Rule Charter Authority under Missouri Constitution Art VI, 19
Board Bill 109 explicitly states that the City is establishing the New Plan pursuant to its authority under the home rule charter provisions of the Constitution of the State of Missouri and the laws of the State of Missouri. 4.19.010(A) (A184). However, the City chose those provisions of the Missouri Constitution and statutes that it wanted to follow and those that it wanted to ignore, and its rationale was adopted by the Trial Court. All constitutional charter cities derive their power from Article VI, 19 of the Missouri Constitution, which provides in part that [a]ny city having more than five thousand inhabitants or any other incorporated city as may be provided by law may frame and adopt a charter for its own government. The scope of the Citys charter authority is set forth in Article VI, 19(a), which provides: Limitations on the Powers of Charter Cities: Any city which adopts or has adopted a charter for its own government, shall have all powers which the general assembly of the state of Missouri has authority to confer upon any city, provided such powers are consistent with the constitution of this state and are not limited or denied either by the charter so adopted or by statute. Such a city shall, in addition to its home rule powers, have all powers conferred by law. Mo. Const. Art. VI, 19(a) (emphasis added). These limitations have been further codified in state law, which provides: Any municipal corporation in this state, whether under general or special charter, and having authority to pass ordinances regulating subjects, matters 29
and things upon which there is a general law of the state, shall confine and restrict its jurisdiction and the passage of its ordinances to and in conformity with the state law upon the same subject. 71.010 R.S.Mo. (emphasis added). Consequently, the City is not authorized to enact any ordinance which is inconsistent with or contravenes the limitations set out in the Constitution, statute, or the citys charter itself. City of Springfield v. Belt, 307 S.W.3d 649, 653 (Mo. banc 2010). Under 19(a) a constitutional charter city is prohibited from exercising its home rule power in a manner that is inconsistent with a state statute. State ex inf. Hanna ex rel. Christ v. City of St. Charles, 676 S.W.2d 508, 513 (Mo. banc 1984). Thus, any exercise of power by the City which is inconsistent with state statute, including 87.120 R.S.Mo. et seq., exceeds the powers of the City, and, therefore, is unconstitutional and void. The test for determining if an ordinance conflicts with state law is whether the ordinance permits what the statute prohibits or prohibits what the statute permits. Cape Motor Lodge v. City of Cape Girardeau, 706 S.W.2d 208, 211 (Mo. banc 1986). This rule applies even to permissive enabling legislation. Levinson v. City of Kansas City, 43 S.W.3d 312, 319-320 (Mo.App. W.D. 2001). Even though Chapter 87.120 R.S.Mo. et seq. is permissive state enabling legislation, as will be discussed in Point II, infra, Board Bill 109 conflicts with Chapter 87 in numerous respects and prohibits what is permitted and permits what is prohibited. As such, it is byeond the Citys home rule charter authority and is invalid.
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2.
Kansas City v. Brouse, 468 S.W.2d 15 (Mo. banc 1971) Distinguished
The principal case the Trial Court relied upon for the proposition that a constitutional charter city can enact its own pension system without enabling legislation was Kansas City v. Brouse, 468 S.W.2d 15 (Mo. banc 1971). (A15) The Trial Court determined that Brouse held that charter cities had the power to adopt pension plans even before Article VI, 19(a) of the Missouri Constitution was enacted, and that there was no reason to believe that 19(a) was a restriction on that home rule authority. (A16) While the Court in Brouse did allow a city to enact a pension system where there is a total lack of state legislation relating to pensions for municipal judges, it does not stand for the proposition that enabling legislation from the Missouri General Assembly is a mere suggestion, which can be cavalierly ignored. In Brouse the Kansas City charter had provided since 1925 that the city had the authority to exercise all powers relating to pensions which may be permitted by the constitution and the laws of Missouri. Brouse, 468 S.W.2d at 16. In 1945 the Missouri Constitution was amended to include Art. VI 25, discussed above. Id. On November 8, 1966, the electorate of Kansas City approved an amendment to the city charter, which provided for a system of retirement benefits for the citys municipal judges. Id. at 17. The city, through the director of finance, subsequently refused to make the retirement payments to individual judges at retirement, contending that there was no enabling legislation from the General Assembly for Kansas City to pay retirement benefits. Id. The court
determined that such enabling legislation was not necessary in that circumstance. Id. In so holding the court reasoned that [w]hen matters of this nature are adopted in a charter as 31
prescribed by a Constitution, such charter provisions have the force and effect of a statute of the Legislature and can only be declared invalid for the same reason, namely, if they violate constitutional limitations or prohibitions. Id. (emphasis added). In this case, Board Bill 109 is an ordinance, not a part of the St. Louis City Charter. Therefore, Board Bill 109 does not carry the same weight as the judicial pension system involved in Brouse. Sanders v. City of St. Louis, 303 S.W.2d 925, 928 (Mo. 1957) (The charter is the citys organic law and bears the same relation to its ordinances that the constitution of a state bears to its statutory enactments) The Trial Court failed to recognize this distinction and merely stated that the pension plan at issue in Brouse was created by city ordinance. (A15) More important, however, is the fact that there was no enabling legislation present in Brouse, whereas here there is not only enabling legislation, but legislation that is very specific as to the benefits that are to be provided to St. Louis firefighters. See, 87.120 R.S.Mo. et seq. The Court in Brouse noted that the charter of Kansas City, which is where the amendment adopting the judicial pension was found, had to be consistent with and subject to the laws of the state. 468 S.W.2d at 18 (citing, Mo. Const. Art. VI, 19). However, because there was no enabling legislation, it was not out of harmony with the policy of the state as declared by its laws, was consistent with the constitution, and therefore, the pension system was valid. Id. Even though Brouse permitted Kansas City to adopt a judicial pension through its city charter without state enabling legislation, it recognized that a pension system must be in accordance with state legislation to the extent that it exists. It does not lend support to 32
the proposition that the City can simply ignore the policy established by the Missouri General Assembly in 87.120 R.S.Mo. et seq. and enact an entirely new and inconsistent system under the guise of local control. The Trial Court ignored this difference. D. Permissive Nature of Chapter 87.120 R.S.Mo. et seq. and Limitations on the Citys Authority While the Trial Court erred in first concluding that 19(a) and 25 construed together give the City plenary legislative authority over municipal pensions unless the General Assembly expressly limits or restricts that authority (A16), it also erred in concluding that Chapter 87 R.S.Mo. does not act as a limitation on the Citys authority to enact its own pensions system for City firefighters. In analyzing the issue, the Trial Court first noted that the simplest form of limitation on a constitutional charter citys authority is that created by express statutory language, such as an express mandate that any municipal legislation must conform to the enabling statute by stating that the statute shall be satisfied. (A14) Section 87.125 R.S.Mo. states, that any qualifying city is hereby authorized, subject to the provisions of sections 87.120 to 87.370, to provide by ordinance for the pensioning of members of any such organized fire department (emphasis added) The Trial Court found that this language
authorizing the City to take action subject to the statutory provision does not amount to a mandate that the City can adopt one form of a firefighters pension system and no other. Rather, that language means only that if the City chooses to adopt the system contemplated by the enabling legislation then it must do so subject to the statutory standards. (A17)
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In support of this strained interpretation of the statute, the Trial Court noted that the FRS enabling legislation has consistently been held to be permissive. (A16) From this, it found that [t]he permissive character of the enabling legislation leads ineluctably to the conclusion that 87.125 does not mandate that the City may adopt only one form of a firefighters pension system, i.e., that authorized by 87.120 et seq. (A17) For all intents and purposes, this holding would mean that any permissive enabling legislation could simply be ignored by a constitutional charter city if it chose to do so. In essence, permissive legislation would then become mere guidelines or suggestions. The Missouri General Assembly does not waste its time enacting suggestions, and this is not the meaning of permissive enabling legislation. In Levinson v. City of Kansas City, 43 S.W.3d 312, 315 (Mo.App. W.D. 2001) a permissive state statute authorized the imposition of a convention and tourism tax in the amount of 5%. The statute was amended to permit a tax of 6%, if it was approved by a vote of the people. Id. Before the effective date of the statute, the City Council of Kansas City passed an ordinance which authorized the submission of the tax increase to the voters. Id. The vote approving the increase was also conducted before the effective date of the statute. Id. Kansas City argued that the statute authorizing the tax was permissive due to the use of the word may, and under its home rule charter authority pursuant to Article VI, 19(a), the ordinance authorizing the submission of the tax increase to the voters did not prohibit what the statute permitted, or permit what the statute prohibited. Id. at 319. The court noted that Kansas City was correct that the statute was permissive, so that the City was not 34
required to submit the tax increase to voters, but could do so within its discretion. Id. at 319-320. While Kansas City was not required to submit the tax increase for a vote, once it chose to act it had to comply with the provisions of the enabling statute, and if it did not do so, the ordinance was in conflict with the statute and thereby void. Id. As such, the ordinance authorizing the submission of the tax increase to voters was void ab initio because it conflicted with the permissive statute, despite Kansas Citys status as a home rule charter city. Id. at 320-321. Even more to the point, the Missouri Court of Appeals for the Eastern District of Missouri has held that the City, as a home rule charter city, is still subject to the confines of permissive legislation. In Alumax Foils, Inc. v. City of St. Louis, 959 S.W.2d 836, 837 (Mo.App. E.D. 1998), the City had enacted a tax on natural gas which was purchased outside of the City, but used within the City limits. The City argued that in the absence of statutory authority, it had authority under Article VI, 19(a) of the Missouri Constitution to enact the ordinance. Id. at 839. In analyzing the issue, this Court noted that the state had passed the City Sales Tax Act, which provided any city may impose a city sales tax in accordance with the provisions of sections 94.500 to 94.550; provided, however, that no ordinance enacted pursuant to the authority granted by the provisions of sections 94.500 to 94.550 shall be effective unless the legislative body of the city submits to the voters of the city 94.510 R.S.Mo. (emphasis added); Id. at 839. Even though the City Sales Tax Act was permissive instead of mandatory, in that it stated that any city may impose the tax, this Court reasoned that [b]ecause the sales tax act required that a sales tax be passed in a prescribed manner, the act limited the power of cities to pass ordinances 35
under section 19(a). Id. Inherently any argument that the City could impose the tax based on its home rule charter authority and did not have to comply with the permissive enabling statutes (as argued by the City here), was rejected by this Court. From this analysis it is clear that appellate courts have interpreted the powers of home rule charter cities, including the City, to be subject to the restraints of permissive legislation. Intrinsic in that analysis is the rejection of the idea that the City has the choice between acting subject to or pursuant to permissive legislation or acting subject to or pursuant to the Citys home rule charter authority in a manner inconsistent with the permissive legislation. Therefore, the City must comply with the terms of 87.120 R.S.Mo. et seq. in enacting a retirement system for firefighters employed by it, and its failure to do so in this case renders Board Bill 109 invalid. The Trial Courts reasoning was in fact rejected by this Court in 1988 in Firemens Retirement System of St. Louis v. City of St. Louis, 754 S.W.2d 21, 25 (Mo.App. E.D. 1988) (FRS 1988), wherein this Court stated: [T]he City would have us interpret Trantina as granting the City carte blanche to amend FRSs ordinances because the enabling statute, now 87.125 RSMo (1986), was found to be permissive in that it does not mandate the creation of the FRS and, therefore, the City ought to have a free hand in legislating for it. We disagree Id. (emphasis added). The practical implication of the Trial Courts holding is that a home rule charter city can act in direct contradiction of enabling legislation that it has followed for decades. 36
Since 1971, when Article VI, 19(a) was adopted, many changes to the FRS plan were adopted by the state legislature and then implemented by the City through enactment of ordinances mirroring the enabling legislation. In other words, the Citys own actions indicate that it believed it was required to conform to state enabling legislation. E. Pre-Emption of the Field by the Missouri General Assembly The Trial Court recognized that the scope of power that the General Assembly itself can confer on a charter city must be subject to some limitation, such that a charter city cannot invade the province of general legislation involving the public policy of the state as a whole. Thus, the courts have found constitutional charter city authority may be preempted by comprehensive state legislation on the matter. (A13) When one examines 87.120 R.S.Mo. et seq., it becomes apparent that the Missouri legislature has created a statutory scheme so extensive as to preempt the field, such that the City cannot adopt contrary ordinances with respect to FRS. In Alumax Foils, not only did the Court strike down the ordinance regarding the license fee upon the basis that it exceeded the Citys powers as a constitutional charter city, but also upon the basis that the state had preempted the field, and therefore, the City could not pass ordinances on the topic. 959 S.W.2d at 839. The court found that the license fee the City had imposed was in the nature of a use tax. Id. Missouri also had a comprehensive statutory scheme dealing with sales and use taxes for state purposes, and had also enacted the City Sales Tax Act, which authorized cities to impose sales taxes. Id. Because the City 37
Sales Tax Act required that a sales tax be passed in a prescribed manner, the act limited the power of cities to pass ordinances under 19(a) of the Missouri Constitution. Id. There was no corresponding statute authorizing municipalities to impose municipal use taxes. Id. Thus, the state completely occupied and preempted the field for use taxes, so that the City lacked authority to enact a use tax and the Citys ordinance was invalid. Id. In this case, 87.120 R.S.Mo. et seq. is incredibly extensive. The relevant portions of Chapter 87 consist of sixty-two individual statutory sections that meticulously set out specific rules, requirements and procedures that define the rights and responsibilities of all parties that have any involvement or interest in FRS. Among the topics covered by the enabling statute are the composition and selection of the FRS Board of Trustees, 87.140 R.S.Mo.; the contents and timing of the written notice a member must submit to the Board of Trustees before retiring, 87.170(1) R.S.Mo.; the eligibility requirements, procedures and benefits related to the DROP program, 87.182 R.S.Mo.; the figures used to calculate cost of living increases for members of various ages, 87.207 R.S.Mo.; distribution of death benefits among the deceased firefighters survivors, 87.220.1 R.S.Mo.; procedures and compensation for widows of deceased firefighters who serve as special consultants to the Board, 87.230.1 R.S.Mo.; procedures for and limitations on accrued liability contributions, 87.345 R.S.Mo.; and various other aspects of the operation and administration of FRS. As the Supreme Court stated in Cape Motor Lodge, this statute is so comprehensive and detailed as to indicate a clear intent that it should operate as both authorization and limitation. 706 S.W.2d at 212. Certainly the General Assembly would not have gone 38
to the trouble of enacting such detailed provisions regarding how FRS should operate if it did not intend for the City to follow these instructions. Section 87.120 R.S.Mo. et. seq. is to be contrasted with 95.540 R.S.Mo., which is the enabling legislation for the City Employees Retirement System, which provides, [a]ny city of this state that now has or may hereafter have a population of more than four hundred and fifty thousand inhabitants is hereby authorized to provide by ordinance or otherwise for the pensioning of its employees and officers 95.540.2 R.S.Mo. This type of very broad, non-prescriptive language grants the City broad discretion in the manner in which it creates, maintains, and operates ERS and allows it to establish those parameters. The contrast between FRS and ERS enabling statutes clearly demonstrates the General Assemblys intent to require the City to comply with the FRS statute if it chose to provide pensions to its firefighters. The intent to occupy the field is also demonstrated by the fact that the other provisions of Chapter 87 allowing smaller cities to establish firefighter retirement plans are much less comprehensive and detailed than 87.120 R.S.Mo. et seq. These smaller municipalities are given a great amount of latitude in establishing their firefighter retirement plans. The more comprehensive requirements contained in 87.120 R.S.Mo. et seq. for FRS demonstrate that the legislature wanted to establish firm parameters for the Citys firefighter retirement plan, showing an intent to occupy the field. Given the detailed and extensive provisions of 87.120 R.S.Mo., et seq., the City should not be allowed to adopt contrary ordinances, in that the Missouri legislature has
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occupied the field, just as Alumax held the City was not allowed to impose a use tax without authorization from the Missouri legislature. Not only should this Court find that the Trial Court erred in declaring Board Bill 109 valid as it exceeded the scope of the Citys powers as a constitutional charter city under Article VI, 25 and Article VI, 19(a) of the Missouri Constitution, this Court should find that the Trial Court erred for the further reason that the Missouri General Assembly has pre-empted the field of public pensions for St. Louis firefighters by enacting the comprehensive and detailed statutes found in 87.120 R.S.Mo. et seq.
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II.
The Trial Court erred in declaring Board Bill 12 as amended by Board Bill 109 valid, and that the City had authority to effectively amend Chapter 4.18 RCC (which established and governs FRS) without the General Assembly first amending the enabling statutes, 87.120 R.S.Mo. et seq., because under Article VI 19(a) of the Missouri Constitution the City may not adopt an ordinance in conflict with state statute on the same subject matter and the amendments to Chapter 4.18 by Board Bill 109 fail to conform to the enabling statutes, in that Board Bill 109 a) violates the exclusivity clause contained in 87.130 R.S.Mo. [4.18.020 RCC] with respect to years of service and contributions; b) violates 87.250 R.S.Mo. [4.18.220 RCC], which provides that all firefighters shall receive benefits as provided by sections 87.120 to 87.370; c) improperly amends the definition of average final compensation as set forth in 87.120(3) R.S.Mo. [4.18.010(C) RCC]; d) improperly amends the definition of membership service and creditable service to include a cut-off of accrual as of February 1, 2013 contrary to 87.120(8) and (14) R.S.Mo. [4.18.010(G, M) RCC]; and e) the Trial Courts fiction of the Citys reservation of the right to terminate FRS is not found in Chapter 87.120 R.S.Mo. et seq. at all or even in Chapter 4.18 RCC, which only reserves the right to repeal or amend FRS. As set forth above in Point I, the provisions of 87.120 R.S.Mo. et seq. are more
than mere suggestions to the City, and the Trial Court erred in concluding that the City has the authority to create its own pension plan for St. Louis City firefighters outside the confines and strictures of these provisions. However, even if one were to assume that the 41
City has the authority to create its own pension plan subject only to local control , the method by which it chose to end FRS over time is still impermissible, and this Court should invalidate Board Bill 109 and reverse the judgment of the Trial Court for that reason as well. This defect in Board Bill 109 was practically admitted by the City in briefing before the Trial Court in an attempt to explain why it did not choose the dual plan option when it adopted Board Bill 12. Specifically, the City stated: The dual plan option, however, would have required the City to only repeal certain sections of the Current Plan, leaving in place those provisions necessary for it to meet its obligations to fund the already accrued benefits and for the plan to be administered with respect to those accrued benefits. Nothing in Chapter 4.18 suggests the Citys right to effect such a partial repeal. Nor do any of the opinions of the Supreme Court of Missouri or the Missouri Court of Appeals construing the Current Plan suggest that partial repeal is a permissible option. This is especially so because a partial repeal could be viewed as an amendment to the Current Plan, not permitted by Chapter 87 R.S.Mo., rather than a repeal of the Current Plan. (LF571) (emphasis added). This statement admits that the City cannot legally enact the dual plan system through ordinances, which it later did through Board Bill 109, and which the Trial Court ultimately permitted. This admission should have proved fatal to Board Bill 109, but Judge Dierker chose to ignore it when rendering the final judgment.
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A.
FRS and the Newly Created FRP
The entire premise behind Board Bill 109 is to make FRP into a wrap plan, whereby benefits under FRS are frozen as of the effective date, with the exception that years of service are still allowed to accrue solely for the purposes of vesting under FRS, and all future accruals of benefits based upon years of service and salary increases are to be borne by and paid from FRP. (A146-148) As such, the linchpin to all of Board Bill 109 is the freezing of benefits under FRS, except for accrual of years of service for purposes of vesting. (A146-147) Without this freeze, FRS and FRP would be providing duplicative benefits to firefighters. In order to effectuate such a freeze, Board Bill 109 amends FRS through 2s broad language, which describes in broad terms how the freeze would work, but does not explicitly amend or repeal any sections of Chapter 4.18 RCC, the authority for all of FRS. (A146-147) In fact, Board Bill 109 repeals Board Bill 270s repeal of Chapter 4.18, which was enjoined, thereby reviving Chapter 4.18 RCC in its entirety, as it existed prior to all the Citys pension reform efforts in 2012. Board Bill 109, 1 (A146, 176) As such, either certain provisions of Board Bill 109 conflict with Chapter 4.18 RCC, or portions of Chapter 4.18 RCC have been amended by Board Bill 109. B. Case law is clear that to amend FRS the City must first have enabling legislation passed by the Missouri General Assembly. The fact that City must have enabling legislation to enact any change to FRS has been previously litigated and is clearly established in case law. Trantina v. Bd. of Trustees of Firemens Ret. System of St. Louis, 503 S.W.2d 148 (Mo.App. 1973). In Trantina, the 43
plaintiff sought benefits higher than those that were paid to him by FRS, claiming the statutes provided for greater benefits than provided by Chapter 4.18, and that the statute controlled. Therefore, the plaintiff claimed he was entitled to an increased benefit, even though the City had never adopted the provision of the enabling statute in question. The court examined the enabling statutes, especially 87.125 R.S.Mo, and in referring to FRS, stated: We conclude that the statute is permissive and it is therefore not obligatory for the City of St. Louis to enact implementing legislation, although it has done so in this instance. ... The City may or may not elect to enact such an ordinance. If it does, it must comply with the provisions of the enabling statute which is in effect at the time the ordinance is adopted. Otherwise, the ordinance will be in conflict with the provisions of the statute and thereby void. Id. at 151-152 (emphasis added).2 In support, the Court analyzed the decision in Atchison v. Retirement Board of the Police Retirement System of Kansas City, 343 S.W.2d 25 (Mo. 1960), and stated:
As can be seen by the litany of opinions entitled FRS v. City of St. Louis, these parties
have had a long and litigious history in which Trantina has often by cited, and always with approval. See, Firemens Ret. Sys. v. City of St. Louis, 754 S.W.2d 21 (Mo.App. E.D. 1988): Firemens Ret. Sys. v. City of St. Louis, 789 S.W.2d 484, 487 (Mo. banc 1990);
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We agree that if the City were to amend its pension plan ordinance, it must do so in conformity with the extant enabling statutes. Trantina, at 152. The City also admitted that this is the proper interpretation of Trantina, when it stated that if the City were to amend its ordinance to change pension benefits under the Current Plan [FRS] in the future, that change would have to be consistent with Chapter 87 as it existed at the time of the amendment. (LF571-572, n. 9) This statement was made in the same briefing where the City used this precedent as justification for the actions it took in Board Bill 12. (LF571) The City attempted to utilize a similar argument to what it argued in this case regarding the permissive nature of Chapter 87 R.S.Mo. as far back as 1988, and it was specifically rejected by this Court. [T]he City would have us interpret Trantina as granting the City carte blanche to amend FRSs ordinances because the enabling statute, now 87.125 RSMo (1986), was found to be permissive in that it does not mandate the creation of the FRS and, therefore, the City ought to have a free hand in legislating for it. We disagree .
Firemens Ret. Sys. v. City of St. Louis, ED86921, 2006 WL 2403955 (Mo.Ct.App. Aug. 22, 2006).
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FRS 1988, 754 S.W.2d at 25 (emphasis added). This decision was rendered seventeen years after the addition of the home rule provisions to Article VI, 19(a), which is the linchpin of the Trial Courts reasoning in this case. C. Conflicts Between Chapter 4.18 RCC and Board Bill 109 or Implicit Amendments of the Same As noted above, the City cannot amend FRS without enabling legislation. Nothing in Chapter 4.18 suggests the Citys right to effect such a partial repeal... a partial repeal could be viewed as an amendment to the Current Plan, not permitted by Chapter 87 R.S.Mo. (LF571) (emphasis added) However, not only is the City amending FRS without enabling legislation, it is not even explicitly repealing the specific provisions of Chapter 4.18 RCC, which are in conflict with Board Bill 109.3 As such, Board Bill 109 conflicts with, and implicitly amends, Chapter 4.18 RCC in several respects. While, the Trial Court did not state that Board Bill 109 implicitly amended Chapter 4.18 RCC, it did state that the dual plan system does affect how the FRS will operate in the
As will be discussed in further detail below, infra Point II(D), the first effort at pension
reform, namely Board Bill 12 and Board Bill 270, would have repealed all of Chapter 4.18 RCC. After the two bills were preliminarily enjoined, the City enacted Board Bill 109, which repealed that repeal, so that Chapter 4.18 RCC and FRS were reinstated. As such, Board Bill 109 cannot be reviewed as a repeal of FRS, but instead must be viewed as an amendment.
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future. (A56) How it can be said that Board Bill 109 does not amend Chapter 4.18 RCC, yet will affect how FRS operates in the future, given that the operations of FRS are dictated and governed by Chapter 4.18 RCC, is inconceivable. The only rationalization offered by the Trial Court is that The Citys efforts to meld the continued operations of the FRS and the FRP do not constitute an impermissible amendment of R.C. Ch. 4.18; rather, they harmonize Ch. 4.19 with Ch. 4.18, and preserve pension benefits of firefighters whose benefits have not otherwise vested the ordinance provisions that affect the FRS are necessary and proper to secure the orderly termination of the FRS (A56) Given that the City admitted to the Trial Court that a dual plan system would constitute an impermissible amendment of Chapter 4.18 in prior briefing, the legal justification for this Conclusion of Law is absent and is without citation to any legal authority in the Judgment. 1. Exclusivity Clause
The most obvious and direct conflict between Chapter 4.18 and Chapter 4.19 is with respect to the exclusivity clause. Section 4.18.020 RCC, which is the exclusivity clause applicable to FRS, provides: All persons who are firemen shall be members as a condition of their employment and shall receive no pension or retirement allowance from any other pension or retirement system supported wholly or in part by the City or the state because of years of service for which they are entitled to benefits 47
under this system nor shall they be required to make contributions under any other pension or retirement system of the City or the state, anything to the contrary notwithstanding. 4.18.020 RCC and 87.130(1) R.S.Mo. (emphasis added). In analyzing this issue the Trial Court found that the dual plan system adopted by Board Bill 109 was consistent with this provision because City firefighters hired before February 1, 2013, receive one pension benefit by reason of years of service for which they are entitled to benefits under the FRS, and another pension benefit for years of service under the FRP. Before February 1, 2013, firefighters make contributions only to the FRS. After February 1, 2013, firefighters make contributions only to the FRP. (A54) However, the Trial Courts reasoning is not entirely accurate, because 1) it read into the section language qualifying the prohibition against contributing to any other pension plan other than FRS (the Trial Courts distinction that a firefighter could contribute to a pension plan other than FRS so long as it was not for the same years of service he or she contributed to FRS), which is not found in Chapter 4.18; and 2) because it also reflects a fundamental misunderstanding of how FRS and FRP are to bear the burden of paying pension benefits. a. The Exclusivity Clause is Violated with Respect to Consideration of Years of Service According to the testimony of Kim Nicholl, the Citys actuary in this litigation, [t]he benefits that have accrued to date, based on service and salary as of the effective date of Board Bill 109, will be paid from FRS. Any future accruals, including future salary 48
increases on behalf of service already rendered, will be paid from FRP. (Tr.Vol.III, 41-42) Future salary increases will be applied to all service, even the service rendered under FRS, and therefore, the Trial Courts statement that firefighters will receive one pension benefit by reason of years of service for which they are entitled to benefits under the FRS, and another pension benefit for years of service under the FRP is inaccurate. (A54) This violation of the exclusivity clause, even under the Trial Courts own reasoning, is most easily reflected by graphical representations of how service and salary will be paid for by FRS and FRP, with years of service on the x axis and salary on the y axis. As of the effective date of Board Bill 109, February 1, 2013, service and salary will be frozen under FRS. (Tr.Vol.III, 41-42) Assuming a firefighter has fifteen years of service as of the effective date, the amount that FRS would be responsible for is reflected in Figure 1 below.
If one assumes that that same firefighter worked another five years after the effective date of Board Bill 109, yet received no increase in salary, the respective payments from FRS and FRP are reflected in Figure 2.
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In this instance, the Trial Courts distinction between benefits earned due to service rendered before the effective date of February 1, 2013 only being paid from FRS, and all benefits due to service rendered after February 1, 2013 would be correct. However, it is likely that a firefighter who works additional years of service will also earn an accompanying salary increase after the effective date, and the salary increase will be applied to service already rendered under FRS. (Tr.Vol.III, 42; Any future accruals, including future salary increases on behalf of service already rendered, will be paid from FRP.) This breakdown of payments is reflected in Figure 3 below.
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The flaw in the Trial Courts logic is reflected by the portion of FRPs payment that is for the exact same years of service as FRS is making payment, but which are due to salary increases earned after the February 1, 2013 effective date. This problematic portion is reflected in Figure 4, below, as the black box in FRPs payment.
The fact that the white and the black boxes are stacked one on top of the other, demonstrating a payment from both FRS and FRP for the same years of service, is where the Trial Courts logic breaks down. Even if the Trial Court were correct in its
interpretation of the exclusivity clause contained in 4.18.020 RCC and 87.130(1) R.S.Mo., and a firefighter can be a member of two separate pension plans at the same time so long as they do not get paid a benefit for the same years of service from both plans, this provision would still be violated by Board Bill 109 due to the fact that future salary increases are applied to prior years of service under FRS and paid for by FRP. The prohibition of receiving a benefit under two different retirement plans for the same years of service is also violated by the fact that years of service under FRS are factored in to the benefit under FRP for purposes of vesting and determining the final
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multiplier for benefits. See, 4.19.010(B) and 4.19.060(A) (A148, 152-153) respectively. Taking the above hypothetical firefighter who had fifteen years of service as of the Effective Date of Board Bill 109, who then accrues five years of service under FRP and then retires, this firefighter will receive a monthly retirement benefit equal to forty percent of his or her Average Final Compensation. 4.19.060(C) (A198) (2% per year for all 20 years) The inclusion of years of service under FRS into the calculation of years of service under FRP allows the firefighter to receive a benefit from FRP, as 20 years of service is required before a benefit can be received for all Grandfathered Participants. 4.19.020(L) and (M) and 4.19.060(C) (A187). Similarly, years of service under FRS are also considered for purposes of determining the rate of accrual of benefits under FRP. 4.19.040(B), 4.19.060(A) and (B) (A193, 197). If the hypothetical firefighter worked an additional fifteen years after the effective date of Board Bill 109, instead of only an additional five, the firefighter would not only accrue a benefit at 2% a year for the first 25 years of service as a firefighter (including the first 15 years under FRS), but the multiplier for benefits under FRP for years 25-30 would increase from 2% per year to 5% per year. 4.19.060(C) (A198). Without the inclusion of the FRS years of service for purposes of determining the benefit under FRP, the firefighter would not be entitled to receive any benefit under FRP, let alone the increase in the rate of accrual from 2% to 5% for the last five years of service. Conversely, FRS is amended so that the five years of service the hypothetical firefighter worked under FRP accrue for purposes of vesting under the terms of FRS, although those five years do not accrue for purposes of benefits under FRS. Board Bill 109, 52
2(B) (A177-178). Therefore, while the unamended terms of Chapter 4.18 RCC governing FRS would provide that a firefighter with only fifteen years of service would not receive any benefit (4.18.120 RCC and 87.170 R.S.Mo.), with the implicit amendment of FRS by Board Bill 109, this firefighter would receive 15/20th of the benefit, at his frozen salary, that he would have received upon attaining 20 years of service under the unamended Chapter 4.18 RCC. See, Board Bill 109, 2(B) and example provided therein (A177-178). While it is expected that the City will argue that the exclusivity clause does not apply to vesting or the determination of the multiplier of benefits, there is no such language present in Chapter 4.18 RCC. Section 4.18.020 RCC prohibits a firefighter from receiving a pension or retirement allowance from any other retirement system supported by the City because of years of service for which they are entitled to benefits under this system. (A252) Given that the years of service under FRS are considered in determining both whether the firefighter is vested and entitled to a benefit at all under FRP, and in determining the amount of that benefit as a result of the counting of the years of service for the rate of accrual of the benefit, it is hard to argue that counting the FRS service for these purposes is not receiving a pension or retirement allowance for years of service for which they are entitled to benefits under [FRS]. As such, the exclusivity clause of 4.18.020 RCC and 87.130(1) R.S.Mo. is violated and/or implicitly amended by Board Bill109, and for that reason, the Trial Court erred in declaring Board Bill 109 valid.
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b.
The Exclusivity Clause is Violated with Respect to Contributions
Under the plain language of 4.18.020 RCC, firefighters may not be required to make any contributions whatsoever to any plan other than FRS. (A252) The use of the conjunctions and and nor, coupled with the repeated use of the modal verb shall, neatly divides 4.18.020 RCC into three clauses: All persons who are firefighters [1] shall be members as a condition of their employment [2] and shall receive no pension or retirement allowance from any other pension or retirement system supported wholly or in part by the city or the state of Missouri because of years of service for which they are entitled to benefits under this system [3] nor shall they be required to make contributions under any other pension or retirement system of the city or the state of Missouri, anything to the contrary notwithstanding. 4.18.020 RCC (emphasis added) While the second clause arguably provides that the restriction on benefits applies only for years of service for which [firefighters] are entitled to benefits under [FRS], this restriction is conspicuously absent from the third clause, which unequivocally restricts contributions to plans other than FRS. When different language appears in different subsections of a statute, it is presumed that the different subsections were intended to operate differently. BHA Group Holding, Inc. v. Pendergast, 173 S.W.3d 373, 378 (Mo.App. W.D. 2005). Courts do not interpret 54
statutes to include limitations or qualifications when such an interpretation would add words to the statute. Id.; see also, Southwestern Bell Yellow Pages, Inc. v. Director of Revenue, 94 S.W.3d 388, 390 (Mo. banc 2002) (Courts cannot add words to a statute under the auspice of statutory construction.). Since the third clause, which relates to contributions, does not contain language limiting that clause to years for which contributions are also made to FRS, that clause must apply to any FRS member, regardless of whether the member has been required to make contributions to two plans in the same year. See also Rothschild v. State Tax Commission of Missouri, 762 S.W.2d 35, 37 (Mo. banc 1988) (under last antecedent rule, relative and qualifying words, phrases or clauses are to be applied to the words or phrase immediately preceding and are not to be construed as extending to or including others more remote.) (quoting Citizens Bank and Trust Co. v. Director of Revenue, State of Mo., 639 S.W.2d 833, 835 (Mo. banc 1982)). A nearly identical problem of statutory interpretation was analyzed in Denbow v. State, 309 S.W.3d 831 (Mo.App. W.D. 2010). In that case, the court analyzed a previous version of 577.023.16 R.S.Mo., a statute relating to sentences for repeat drunk driving offenders, which read as follows: A conviction of a violation of a municipal or county ordinance in a county or municipal court for driving while intoxicated or a conviction or a plea of guilty or a finding of guilty followed by a suspended imposition of sentence, suspended execution of sentence, probation or parole or any combination thereof in a state court shall be treated as a prior conviction.
55
Denbow, 309 S.W.3d at 833 (emphasis added). The conjunction or divided the statute into two implicit clauses, one relating to municipal violations in municipal courts and one relating to convictions in state court. See id. at 834. However, only the first of these two clauses contained language limiting its application to charges of driving while intoxicated. Id. at 834. Citing to the last antecedent rule, the court held that the limitation to charges of driving while intoxicated applied only to the first clause regarding ordinance violations, not to the second clause regarding convictions in state court. Id. at 835. Applying this reasoning to 4.18.020 RCC leads inescapably to the conclusion that the years of service for which they are entitled to benefits under [FRS] limitation applies only to receiving a pension benefit for the same years of service from two plans, not to the third clause of the ordinance and statute regarding contributions to other pension plans. Therefore, 87.130.1 R.S.Mo. and 4.18.020 RCC prohibit the Board of Aldermen from requiring an FRS member to contribute to any other plan other than FRS, even for years in which the member does not contribute to FRS. This clause in the ordinance and state statute are therefore, violated by Board Bill 109, and the Trial Courts reasoning that the ordinance and statute permit a firefighter who has contributed to FRS to also contribute to another plan, so long as it is not for the same years of service, is without merit. The Trial Court stated that this section is the linchpin of plaintiffs argument with respect to how the City is terminating FRS, and the Trial Court rested its holding upon its conclusion that this ordinance and enabling statute were not violated by the dual plan system. (A54) Given that this provision is clearly violated by Board Bill 109s creation of a frozen FRS and a concurrently operating FRP, the Trial 56
Courts own reasoning for the validity of Board Bill 109 fails, and this Court should reverse the ruling of the Trial Court on that basis alone. 2. Other Conflicts and Implicit Amendments
There is a litany of other conflicts and implicit amendments to Chapter 4.18 RCC by Board Bill 109 that the City made without enabling legislation in order to effectuate the freeze of FRS and creation of FRP as a wrap plan. While they will not all be set forth in this brief, a few of the key changes and conflicts between Chapter 4.18 RCC (as enabled by 87.120 R.S.Mo. et seq.) and Board Bill 109 are listed below. Section 4.18.220 RCC [87.250 R.S.Mo.] provides that [a]ll members who are firemen on or after January 1, 1960 and their beneficiaries shall receive benefits as provided by this chapter While Board Bill 109 does not explicitly amend this section, there is a glaring conflict between it and Board Bill 109, as the whole point of the board bill is to freeze FRS and create a new plan subject to local control. Therefore, no firefighter who is still employed by the City after February 1, 2013 shall receive benefits as provided by [Chapter 4.18]. 4.18.220 RCC (A267) Another conflict between Board Bill 109 and the enabling statutes and conforming ordinances is the change in definition of average final compensation. Section
4.18.010(C) (87.120(3) R.S.Mo.) defines average final compensation as the average earnable compensation of the member during his last two (2) years of service as a fireman, or if he has less than two (2) years of service, then the average earnable compensation of his entire period of service. (A251, emphasis added) However, Board Bill 109 2
57
implicitly amends this provision so that compensation is frozen as of February 1, 2013 for benefit calculation purposes under FRS in violation of 87.120(3) R.S.Mo. (A176) The definition of membership service is also implicitly amended, as 4.18.010(M) RCC [87.120(14) R.S.Mo.] defines the term as service as a firemen rendered since last becoming a member. (A252) Given that there is no end date, and any service performed while working as a fireman for the City should count as membership service under FRS, this provision is directly contradicted by Board Bill 109, which freezes accrual of years of service for benefit calculation purposes, other than for purposes of vesting. Board Bill 109 2(B) (A177) This change would also flow through to the definition of Creditable service which is defined as prior service plus membership service as provided in 4.18.030 through 4.18.050. 4.18.010(G) RCC (A252); 87.120(8) R.S.Mo. This issue also creates a conflict with 4.18.050 RCC [87.135.5 R.S.Mo.], which provides Creditable service Retirement base. Creditable service at retirement on which the retirement allowance of a member shall be based shall consist of creditable membership service rendered by him (A253) Given that there is now an end date to the accrual of service for benefit purposes under FRS, this provision is also amended by or in conflict with Board Bill 109, as it does not limit the retirement allowance of members to creditable service rendered before February 1, 2013 as Board Bill 109 attempts to do. It is also important to note that all of the provisions in Chapter 4.18 RCC and 87.120 R.S.Mo. et seq. regarding disability, death, and survivor benefits (4.18.145-4.18.209 RCC A259-266; 87.195-87.220 R.S.Mo.) are also in conflict with Board Bill 109, which provides that all death, disability, and survivor benefits are now 58
subject to and paid from the FRP plan for any firefighter who dies or is disabled after the effective date. Board Bill 109, 2(A) (A177) Not only does the City ignore the statutes enabling FRS, it also ignores laws applicable to all firemens retirement plans throughout the state. Specifically, 87.005 and 87.006 R.S.Mo. mandate that all firefighter heart and lung related diseases are presumed to have been incurred in the line of duty for disability and retirement purposes, and that this presumption can only be overcome by competent evidence. Because this presumption is a statutory provision applicable to all firefighters in Missouri, it does not appear in Chapter 4.18 RCC. However Board Bill 109, 4.19.070(B)(2) not only lowers the standard to rebut the presumption to any evidence of habitual smoking, which is much lower than competent evidence, but also does not provide any presumption for heart disease, which is contrary to Chapter 87 R.S.Mo. (A209) Given these numerous conflicts between 87.120 R.S.Mo. et seq. and Chapter 4.18 RCC on the one hand, and Board Bill 109 on the other, it becomes clear that Board Bill 109 is implicitly and extensively amending Chapter 4.18 RCC, which the City has admitted it cannot do without enabling legislation. This is another basis for this Court to declare Board Bill 109 invalid. D. The Trial Courts Fiction of Termination is Not Based on Chapter 4.18 RCC or 87.120 R.S.Mo. et seq. In analyzing the issue of whether or not Board Bill 109 improperly amended Chapter 4.18 RCC, the Trial Court started from the proposition that the City had the right to terminate FRS and worked backwards to protect that right, instead of simply analyzing the effects of Board Bill 109 on Chapter 4.18 RCC and the operation of FRS to determine if 59
they were legal. Specifically, the Trial Court stated that the argument of the plaintiffs is that the FRS, once established under the enabling legislation, cannot be terminated by the City without amendment of the enabling legislation. The Court rejects this argument as inconsistent with the overriding authority of Mo. Const. art. VI, 19(a) and the proper construction of the enabling legislation. (A53) However, as set forth more full y above, Article VI, 19(a) is not an escape hatch for the City to utilize to circumvent the supremacy of state statute over municipal ordinance, and should not be permitted by this Court. 1. The Trial Courts Reasoning
In order to rationalize this approach, the City and the Trial Court relied upon the Citys reservation of the right to repeal or amend FRS as contained in 4.18.345 RCC. (A52) However, as will be set forth in more detail below, Board Bill 109 cannot be seen as a repeal of Chapter 4.18 RCC. When properly viewed as an amendment to FRS, Board Bill 109 runs afoul of the holdings of Trantina and its progeny, infra. The City created the fiction of termination of FRS, which appears to be the idea of amending FRS to allow for the eventual closing of the plan many years into the future. (A52, 56) Because the Trial Court started with the proposition that the City had the authority to terminate FRS, the Trial Courts analysis then considered the propriety of the manner in which FRS was terminated. (A54) The Trial Court noted that Plaintiff would have it that the enabling legislation creates a species of catch-22, in which the City has the authority to terminate the FRS, but there is no legal way in which to do so consistent with the enabling legislation. (A54) Instead the Trial Court found that the linchpin of FRSs argument was found in 87.130.1 R.S.Mo., which is the exclusivity clause set forth and 60
analyzed above. Because the Trial Court took an overly simplistic and legally incorrect view of how benefits are to be paid from FRS and FRP, and drew the line in the sand at February 1, 2013, the Trial Court found that this provision was not violated. (A54-55) The Trial Court concluded that the dual plan system does not prohibit what the enabling legislation permits, nor permit what is prohibited, but instead, supplements the legislation by providing the means whereby the FRS is terminated and the FRP provides pension benefits in the future, (A55) and that the Citys efforts to meld the operations of FRS and FRP do not constitute an impermissible amendment of FRS, but instead harmonize Ch. 4.19 with Ch. 4.18, and preserve pension benefits of firefighters whose benefits have not otherwise vested. (A56) While the Trial Court acknowledged that the dual plan system does affect how the FRS will operate in the future the ordinance provisions that affect the FRS are necessary and proper to secure the orderly termination of FRS. (A56) Ultimately, the Trial Court held Board Bill 109 successfully reconciles the Citys right to terminate the FRS with its constitutional duty to preserve vested rights and with its constitutional right to adopt a new, independent pension plan for its firefighters. (A56) 2. The right to terminate FRS is not found in Chapter 4.18 RCC and there is no necessary and proper exception to Trantina Section 4.18.345 RCC states that [t]he City reserves the right to amend or repeal this chapter at any time. First and foremost, this provision is rendered inoperative for the simple reason that it was not authorized by, and is inconsistent with, 87.120 R.S.Mo. et seq. No provision of state law authorized the Citys enactment of this provision. See, e.g., 61
Firemens Retirement System v. City of St. Louis, 2006 WL 2403955, *11 (Mo.App. E.D. 2006) (holding that Chapter 4.18 RCC must comply with the enabling statutes and ordinances to amend the pension plan must conform with the extant enabling statutes). This provision was also enacted in 1960, well before the City became a home rule charter city with the passage of Article VI 19(a) in 1971, and charter cities were granted all powers which the general assembly has authority to confer upon the city. (A11; A271) Even under the Trial Courts interpretation of home rule charter authority, the City, therefore, would have had to have had enabling legislation at the time it passed 4.18.345. (A14-15) Since there was no enabling legislation for this provision when it was passed, it is invalid and cannot become valid simply with the passage of Article VI 19(a). See Levinson, 43 S.W.3d 312. Trantina clearly held the City could not amend FRS without enabling legislation. What remains unresolved is the Citys reservation of the right to repeal Chapter 4.18 as provided in 4.18.345 RCC. 4 However, it cannot be said that the City of St. Louis repealed Chapter 4.18 through the enactment of Board Bill 12 as amended by Board Bill 109. Indeed, Board Bill 109 explicitly repealed the portion of Board Bill 270, which had previously purported to repeal Chapter 4.18 RCC upon the enactment of a successor plan. Board Bill 109, 1 (A69, 146, 176). Far from repealing FRS as contained in Chapter
If the reservation of the right to amend FRS means that the City must still comply with
enabling statutory language, it is logical to assume that the Citys reservation of the right to repeal is also subject to the same limitations.
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4.18 RCC, Board Bill 109 reinstated it. As such, the only other action that the City allegedly reserved the right to do in 4.18.345 RCC is to amend the plan, which the City did in Board Bill 109 without enabling legislation, which runs afoul of Trantina and its progeny. It appears that the Trial Court used the term termination, which the City did not reserve the right to do, as synonymous with the idea of amending FRS but with the ultimate goal of ending its existence. This is clearly set out in Section 2 of Board Bill 109, which describes in general terms how the freeze of benefit accruals is to be handled in FRS on a going forward basis. (A146-148, 176-178) This was implicitly recognized by the Trial Court in its statement that: To be sure, the dual plan system does affect how the FRS will operate in the future. But the ordinance provisions that affect the FRS are necessary and proper to secure the orderly termination of the FRS, a termination that is lawful and not forbidden by the constitution, statutes or charter. (A56) (emphasis added). While changing how FRS operates in the future (i.e., amendment of the plan) may be necessary and proper to enact a dual plan system, the end does not justify the means as there is no necessary and proper exception to the requirement that ordinances amending FRS comply with the enabling statutes as recognized by Trantina. The Trial Courts reasoning in this regard is erroneous, and Board Bill 109 is invalid. Furthermore, there is no legal basis given for distinguishing between amendment and termination for purposes of this analysis. Because the City needs enabling
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legislation to amend FRS if it keeps the system in place, it similarly needs enabling legislation to amend FRS if its ultimate goal is to eventually wind down FRS. 3. Inconsistency in the Trial Courts Reasoning
Even though the Trial Court found that the City could terminate FRS, it also stated that the City does not have absolute discretion in choosing the manner of terminating the FRS. Section 87.125, R.S.Mo., mandates that the pension fund established in conformity to the enabling legislation must remain under the management and control of the FRS trustees. Thus, the City lacked authority to terminate the FRS by merging it into the FRP (A52) Section 87.125 R.S.Mo. states: Any city that has an organized fire department is hereby authorized, subject to the provisions of sections 87.120 to 87.370, to provide by ordinance for the pensioning of members of any such organized fire department The fund shall be under the management of a board of trustees herein described and shall be known as The Firemen's Retirement System of ..... and by such name all of its business shall be transacted, all of its funds invested and all of its cash and securities and other property held. If the City is bound to follow this particular statutory section, which contains the very subject to language that the Trial Court found was not a statutory prohibition against enactment of a different pension plan as described in Point I supra, then why is the City not bound by the remaining requirements of 87.120 R.S.Mo. et seq.? It cannot simply be because of the use of the word shall, because many of the other provisions of 87.120 R.S.Mo. et seq. utilize the word shall and describe the benefits firefighters are to receive. 64
For example, 87.130 R.S.Mo. (All persons who are firefighters shall be members as a condition of their employment and shall receive no pension or retirement allowance from any other pension or retirement system); 87.170 R.S.Mo. (Retirement of a member on a service retirement allowance shall be made if the member has 20 or 25 years of service without regard to age); 87.175 R.S.Mo. (Upon retirement for service, a member shall receive a service retirement allowance which shall be equal to fifty percent of the average final compensation ) and many other provisions which cannot all be set forth herein, also utilize the word shall. To hold that the City is bound by the requirement in 87.125 R.S.Mo. that FRS and its funds remain under the control of its Trustees, but that the rest of Chapter 87 R.S.Mo. is, in essence, optional for the City is extremely inconsistent. Either the City must comply with the terms of 87.120 R.S.Mo. et seq. or not. 4. The Court should not strain a common sense understanding of the terms of statutes in order to reach the conclusion that Board Bill 109 is valid. Section 19(a) does grant broad powers to constitutional charter cities. Before that section was enacted, the courts refused to allow charter cities to act without an express grant of authority in the constitution, statutes or the citys charter. Cape Motor Lodge, Inc. v. City of Cape Girardeau, 706 S.W.2d 208, 210 (Mo. banc 1986). Today, in areas where state statutes and the constitution are silent, a charter city is presumed to have the power to act. Id. However, this principle is subject to two critical limitations. First, under no circumstances does 19(a) grant a city the power to act in a manner that 65
contravenes the state constitution or state statute. Any statute that purports to limit or deny the authority of charter cities in a particular area automatically reduces the breadth of the powers granted by 19(a). See Mo. Const., Art. VI, 19(a) (granting powers to charter cities provided such powers are consistent with the constitution of this state and are not limited or denied either by the charter so adopted or by statute) (emphasis added); Cape Motor Lodge, 706 S.W.2d at 211 (Once a determination of conflict between a constitutional or statutory provision and a charter or ordinance provision is made, the state law provision controls.). Such statutory limitations on the powers granted by 19(a) need not even be explicit. Ordinances will be held invalid where they are out of harmony or
inconsistent with the general law of the state. Gates v. City of Springfield, 744 S.W.2d 487, 489-90 (Mo.App. S.D. 1988). In Gates, the Court of Appeals found a conflict between a statute and a section in the Springfield city charter, both of which related to notice requirements applicable to plaintiffs who wished to pursue personal injury claims against cities. Id. at 487-88. A strict and literal reading of the two provisions revealed no irreconcilable conflict. The statute required written notice to the citys mayor within ninety days of the injury in any case involving defective conditions in bridges, streets and sidewalks. Id. at 488. The ordinance differed in that it required written notice to the city manager, not the mayor, and in that it applied to all claims based on the citys alleged negligence. Id. at 487-88. Technically, a claimant could easily comply with both provisions by giving notice to the city manager in all cases, and giving notice to both the city manager and the mayor in any case relating to a bridge, 66
street or sidewalk. See id. at 489. The court rejected this argument, finding that the state statute established a clear public policy regarding notice requirements for personal injury claims against municipalities, and that 19(a) did not authorize Springfield to hinder, inhibit or interfere with this public policy. See id. at 490. In attempting to reconcile ordinances with applicable statutes, courts do not indulge in strained or contorted readings of ordinances that defy common sense. Ellisville unsuccessfully proposed such a reading of its red light camera ordinance in Edwards v. City of Ellisville, 2013 WL 5913628 (Mo.App. E.D. 2013). Missouri traffic statutes prohibited a vehicle facing a red light from entering the crosswalk on the near side of the intersection, and provided penalties for drivers who violated the statute by running red lights. Id. at *14 (quoting 304.281 R.S.Mo.) (emphasis added). The ordinance differed in two respects: first, its text purported to bar presence in an intersection during a red light as opposed to entering the intersection during a red light, and second, it penalized vehicle owners rather than drivers. Id. at *14-15. As the city argued, the act of being present in an intersection is technically different from the act of entering the intersection, so it was possible to read the two enactments so that neither permits what the other prohibits. See id. at *15. The court rejected this interpretation in favor of a reading grounded in common sense. See id. [D]espite the semantics utilized in drafting the [o]rdinance, the ordinance and the statute were directed at the conduct colloquially known as running a red light. Id. at *14, *17. Under this interpretation, the ordinance did permit what the statute prohibited: prosecution and penalization of persons who are neither drivers nor 67
pedestrians for running a red light. Id. at *16. The citys clever draftsmanship and careful choice of language did not save the ordinance. Since a realistic and practical reading of the legislation indicated that the municipal and state laws were in conflict, the ordinance was declared invalid. In this case, the Trial Court engaged in the same sort of clever semantics that the City of Ellisville attempted to use to justify its red light camera ordinance. The Trial Court held that the City may create FRS as contemplated by 87.120 R.S.Mo. et seq., but that the City is then free to ignore the restrictions contained therein at its discretion. (A14, 17) This view ignores the plain language of the very first sentence of the enabling statute: Any city in this state that now has or may hereafter have seven hundred thousand inhabitants or more and that has an organized fire department is hereby authorized, subject to the provisions of sections 87.120 to 87.370 87.125 R.S.Mo. Unquestionably, the words subject to are words of limitation, meaning that the FRS enabling statute is a binding limitation on the Citys power to create, administer and modify FRS. The Trial Courts construction of the enabling statutes impermissibly renders them a nullity. Such a construction cannot be sustained. Accepting the Trial Courts characterization of the relevant legislation as a supplement to the enabling statute would require this Court to engage in mental gymnastics far beyond the bounds of permissible statutory interpretation. A faithful and direct reading of Board Bill 109 indicates that the bill denies benefits granted by the enabling statutes and violates the exclusivity clause of 87.130.1 R.S.Mo. The Trial Court discarded this simple, common sense understanding of the legislation and instead 68
characterized it as a supplement to state law that is necessary and proper to carry out the Citys right to terminate FRS. (A56) This authority to supplement is found nowhere in the enabling legislation or the City charter. In effect, the Trial Court ignored the plain contradictions between Board Bill 109 and state statutes based on an implication from an extrapolation from the statutory and constitutional text. Edwards held that this sort of interpretive contortion should be rejected in favor of a common sense approach that considers the practical consequences of legislative enactments. The contradictions between the ordinance and the enabling legislation cannot be overlooked. No amount of reframing can take away these inconsistencies. Since the ordinance contravenes the governing state law, the ordinance is invalid.
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III.
The Trial Court erred in declaring Board Bill 109 valid and constitutional because the Trial Courts declaration was based upon the erroneous conclusion that requiring adoption of enabling statutes as a pre-requisite to the City amending or terminating FRS would violate Article VI, 22 of the Missouri Constitution in that: a) such conclusion misconstrues Article VI, 22 and is contrary to governing precedent; and b) 87.120 R.S.Mo. et seq. does not violate Article VI, 22 of the Missouri Constitution as the City was not required by 87.120 R.S.Mo. et seq. to enact any pension plan for City firefighters. In its decision, the Trial Court stated that if the FRS enabling legislation permits the
City to adopt only one specific firefighters pension plan this would violate Article VI, 22 of the Missouri Constitution, which forbids the General Assembly from fixing the compensation of municipal employees. (A55) The Trial Court noted that the Missouri Supreme Court has held with respect to FRS that 87.120 R.S.Mo. et seq. does not violate this constitutional section due to its permissive nature. (A55) However, the Trial Court further noted that in Missouri Prosecuting Attorneys v. Barton County, 311 S.W.3d 737, 744-746 (Mo. banc 2010), the Court held that the term compensation, as used in Article VI, 11 of the Missouri Constitution included pensions. (A55) Therefore, the Trial Court held that if 87.120 R.S.Mo. et seq. was held to limit the Citys powers to adopt a pension plan other than in compliance therewith, it would plainly intrude on the powers and duties of the Board of Aldermen of the City with respect to a matter of purely municipal concern. (A18) 70
This reasoning and ultimate holding flies in the face of governing precedent between these two exact parties holding that pension benefits payable by FRS are not compensation and that 87.120 R.S.Mo. et seq. does not violate Article VI, 22 of the Missouri Constitution. As much as the Trial Court may disagree with these cases and wish that the Missouri General Assembly had less authority regarding the issue, it was error for the Trial Court to disregard those holdings. A. Article VI, 22 is not violated by holding that it authorizes the City to enact only one pension system. Article VI, 22 provides: No law shall be enacted creating or fixing the powers, duties or compensation of any municipal office or employment, for any city framing or adopting its own charter under this or any previous constitution, and all such offices or employments heretofore created shall cease at the end of the terms of any present incumbents. Mo. Const. Article VI, 22 (emphasis added). The Missouri Supreme Court has held that pension benefits from FRS are not in the nature of compensation. In Civil Service Comn of City of St. Louis v. Members of Bd. of Aldermen of the City of St. Louis, 92 S.W.3d 785, 788 (Mo. banc 2003) the Court held that firefighter compensation in St. Louis did not include retirement benefits. As such, the pension benefits of firefighters do not fall within the term compensation as utilized in Article VI 22. 71
Further, the Missouri Supreme Court has already held in a case between FRS and the City, that the enabling statutes are not an improper limitation on the Citys home rule power. Specifically, the Court stated in FRS 1990: The City also contends that 87.120, et seq., is an improper limitation on the City's home rule powers: [quotation from Mo. Const. art. VI, 22 omitted] The City's assertion is without merit. The establishment of a firemen's pension plan is permissive; the statute is directory, not mandatory. 87.125; Trantina v. Board of Trustees of the Firemen's Retirement System, 503 S.W.2d 148, 15152 (Mo.App.1973). The enabling statute does not violate article VI, 22, of the Missouri Constitution. FRS 1990, 789 S.W.2d at 487. (emphasis added). This is the same case that held that Article VI, 25 of the Missouri Constitution operated as a limitation on the ability of even charter cities to grant pensions without authorization from the Missouri General Assembly. Id. at 486. Therefore, pursuant to Supreme Court precedent, so long as the City is given the option to choose to adopt the pension plan set forth in the enabling statutes, or not to adopt any pension plan at all, the statute is not a mandate and does not violate Article VI, 22 of the Missouri Constitution. On this point, both stare decisis and res judicata apply, since it was the direct ruling of the Missouri Supreme Court on an affirmative defense raised by the City in that litigation. It was error for the Trial Court to ignore this precedent.
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B.
The power of City to be free from state legislative interference is not as great as the City or Trial Court would like it to be, and the Trial Courts ruling was erroneous on this point.
While the City and the Trial Court would like the Missouri General Assembly to have less input into municipal matters, the Missouri Supreme Court has recently addressed the issue. In City of St. Louis v. State, 382 S.W.3d 905, 910 (Mo. banc 2012), the City claimed that the States passage of a statute exempting certain municipal employees from municipal residency requirements was a violation of the Citys constitutional authority under Article VI, 22 of the Missouri Constitution. Id. However, the Court found that the Citys argument gave Article VI 22 a far broader reach than permitted, and that [t]he home rule law does not state that it provides charter cities with a broad measure of complete freedom from state legislative control. Id. In so holding, the Court noted that case law cannot expand the constitution, only clarify it, and rejected the Citys argument that case law has expanded the Citys authority under the section to include the sole power to set employment qualifications. Id. Here case law has clarified Article VI 22, and held that FRS pension benefits do not qualify as compensation. Civil Service Comn, 92 S.W.3d at 788. Even charter cities do not have complete freedom from state legislative control over municipal matters, regardless of whether the City or the Trial Court agrees. Therefore, the Trial Court erred in not following Missouri Supreme Court precedent when it concluded Board Bill 109 was valid and constitutional on the basis that to hold that the City was bound to follow the enabling statutes would violate Article VI, 22 of the 73
Missouri Constitution. For that reason, the Trial Court should be reversed, and this Court should declare Board Bill 109 invalid.
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IV.
The Trial Court erred in declaring Board Bill 109 valid and constitutional because Board Bill 109 impairs the contractual rights of all firefighter members of FRS, including those with over twenty years of service as of the effective date of Board Bill 109, and beneficiaries, in contravention of Article I 13 of the Missouri Constitution and Article I 10 of the United States Constitution, in that a) the Trial Courts conclusion that the Contracts Clauses prohibit only impairment of contractual rights of firefighters for services rendered by them prior to the effective date of a change in benefits, such that benefits for all firefighters, even those who are vested under the terms of the plan, could be reduced on a prospective basis is incorrect as a matter of law; b) Board Bill 109 removes the Citys ultimate guarantee for the payment of benefits due to firefighters upon retirement, or to their beneficiaries, as provided under Chapter 4.18 RCC, and instead limits the Citys liability for the payment of benefits to the assets in FRP; c) Board Bill 109 requires a 9% nonrefundable contribution to FRP when a firefighter exits the DROP program and resumes regular status for accruing service time; and d) divests firefighters of contractual rights to benefits based upon compensation paid or service rendered after the effective date of an amendment that reduces future benefits. Both parties and the Trial Court agree that pension benefits can be, and in this case
are, contractual in nature. The issue is when the constitutional protection attaches to those benefits and the extent of that protection. FRS took the position that all firefighters, 75
regardless of whether or not they are vested under the terms of the plan, have a contractual right to their pension benefit from the first day of their employment. The City originally took the position through Board Bill 12, that all firefighters had a protected contractual right to their pension, but only with respect to the benefits that they had earned to date. After the Trial Court granted a preliminary injunction with respect to Board Bill 12, the City enacted Board Bill 109, which adopted the Trial Courts demarcation in its preliminary injunction order of constitutional protection at the point of vesting under the terms of the plan. Under Board Bill 109, the benefits of all firefighters who were vested under the terms of FRS were not reduced, and they were not required to pay more in contributions, even for future service (except for firefighters who exit DROP and continue working). All firefighters who had less than twenty years of service as of the effective date had no protection and their benefits were reduced and contributions dramatically increased. See Board Bill 109, 4.19.060 (A197-200) Ultimately, the Trial Court took an even harsher approach in its Judgment than what the City provided in Board Bill 109. The Trial Court maintained its view that firefighters had no protection or right to their pension benefit until they vested under the terms of the plan, but even those firefighters who were vested on the effective date of Board Bill 109, could have their benefits changed for service rendered on a prospective basis, as [t]he contracts clauses operate in the past, not the future. (LF1031, 1033) No legal authority is cited for this position, nor was it argued by any party in this case. The Trial Courts
decision to adopt a harsher approach than what was contained in the ordinances or argued
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by either party constitutes judicial activism, and creates a dangerous precedent for Missouri. A. Contracts Clause Framework
Article I, 10 of the United States Constitution contains a number of limitations on the power of individual states. In relevant part, it provides that: No state shall pass any Law impairing the Obligation of Contracts. Art. I, 13 of the Missouri Constitution contains a similar prohibition. Specifically, it provides, in relevant part, that: [N]o law impairing the obligation of contracts, or retrospective in its operation can be enacted. While the language of these two provisions is similar, it would appear, as will be discussed below, that the Missouri Constitution is stricter. However, as explained below, the Citys enactment of Board Bill 109 constitutes an unconstitutional impairment of contract under both the federal and state contract clauses. 1. Federal Contracts Clause Test
The Eighth Circuit has enunciated a three-part test that is to be applied in determining whether state action violates the Federal Contracts Clause. American
Federation of State, County and Municipal Employees v. City of Benton, Arkansas, 513 F.3d 874 (8th Cir. 2008). The first element, and threshold inquiry, is whether the state law has, in fact, operated as a substantial impairment of a pre-existing contractual relationship. Id. at 879; citing, Energy Reserves Group, Inc. v. Kansas Power and Light Co., 459 U.S. 400, 411 (1983). This element itself involves another three-part inquiry: [1] whether there is a contractual relationship, [2] whether a change in law impairs that contractual
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relationship, and [3] whether the impairment is substantial. City of Benton, at 879; citing, Gen. Motors Corp. v. Romein, 503 U.S. 181, 186 (1992). If all three elements are met, and therefore a substantial impairment is found to exist, the Court next determine[s] whether the state has a significant and legitimate public purpose behind the regulation. City of Benton, at 879, citing, Educ. Employees Credit Union v. Mut. Guar. Corp., 50 F.3d 1432, 1438 (8th Cir. 1995). In order to constitute a significant and legitimate public purpose justifying an impairment of contract, the purpose must generally remedy a broad and general social or economic problem. Allied
Structural Steel Co. v. Spannaus, 438 U.S. 234, 247 (1978); Energy Reserves Group, 459 U.S. at 412 (1983). If the impairment does not further a significant and legitimate public purpose, then the state law or action is unconstitutional. City of Benton at 879. If the state does identify a significant and legitimate purpose undergirding the state law or action, then the Court is to examine the third element: whether the adjustment of the rights and responsibilities of contracting parties is based upon reasonable conditions and is of a character appropriate to the public purpose justifying the legislations adoption. Id., quoting, Energy Reserves Group, 459 U.S. at 412. 2. Missouri Contracts Clause Test
The Missouri courts have not enunciated a specific test to be applied to determine when a state action constitutes an impairment of contract in violation of Art. I, 13 of the Missouri Constitution. Like the federal courts, Missouri courts faced with a claim of contract impairment have analyzed whether a contract exists and whether it has been substantially impaired by governmental action. State ex rel. Phillip v. Public School 78
Retirement System of St. Louis, 262 S.W.2d 569, 574 (Mo. banc 1953). However, Missouri courts appear to demand a greater level of justification for the impairment of a contract than do their federal counterparts. In particular, the Missouri Supreme Court has stated that: Except where the police power is directly involved the right of the legislature to alter, amend or repeal legislation, is subject to constitutional restrictions and inhibitions, such as the prohibition against the extinguishment of vested rights which have been acquired under the former law, or the impairment of the obligation of contract. Phillip, at 579. It has further held that any impairment of contract is unconstitutional except to the extent necessary to achieve the objective for which the police power is being executed. State ex rel. Kansas City v. Public Service Commn, 524 S.W.2d 855, 864 (Mo. banc 1975). Because of the similarity in the interpretation of the federal and state contracts clauses, this memorandum will utilize the test set forth in City of Benton to analyze the question of whether Board Bill 109 is an unconstitutional impairment of contract. B. The terms of Chapter 4.18 constitute a contract between the City and the Retirees and Members of FRS. The first question when analyzing whether a particular action impairs a contract is whether a contractual relationship exists. City of Benton, 513 F.3d at 879. First, the City itself has implicitly acknowledged that firefighters have contractual rights in FRS benefits, by enactment of Board Bill 109, which recognizes the non-modifiable contract rights of 79
firefighters with over twenty years of service, and the right of firefighters with less than twenty years of service to return of their contributions. Although the Trial Court took a harsher position than that which was contained in the ordinances, or argued by the parties, it also recognized the existence of a contractual relationship between the firefighters and the City. (A57) It is the extent of the contractual rights that is really at issue. The gratuity theory of public pensions has been rejected in Missouri, and courts have instead repeatedly held that the legislative enactments governing the relationship between public employees and their retirement system became a part of the contract of employment as much as if written therein. State ex rel. Phillip, 262 S.W.2d at 575. In that case, the Supreme Court considered substantially similar statutory plan language stating that all persons who became employees after the date the retirement system began operation shall become members as a condition of their employment and shall receive no pension or retirement allowance from any other pension or retirement system. Id. at 574 (quoting 169.430 R.S.Mo. 1949). Noting that it was not here considering the rights under the Act of those members who have heretofore completed all of the necessary steps for the immediate payment of benefits under the Retirement System and whose rights have fully accrued and are now vested, but instead was construing the rights of current employees who are members of the Retirement System (and who are now sought to be excluded) and who have voluntarily accepted the offer of potential benefits under the provisions of the statutes setting up the Retirement System and who have entered upon a compliance of the terms provided, Id. at 577 (emphasis added), the Court concluded that the governing legislation was intended to and did provide for the creation of specific 80
contractual rights in the members of the Retirement System to obtain specific benefits upon compliance with the terms. Id. at 578. Accordingly, it held that the contractual rights to potential benefits came into existence as a result of the voluntary acceptance of the offer provided by the statutes, the beginning of compliance by the employee-members and the payment of consideration in the form of contributions. Id. (emphasis added). Missouri courts have subsequently affirmed the principle that a valid contract is formed with respect to retirement benefits upon commencement of a public employees membership in a retirement system. For instance, in State ex rel. Breshears v. Missouri State Employees Retirement System, 362 S.W.2d 571 (Mo. banc 1962), the Court considered a claim by retirees that they were entitled to additional retirement benefits pursuant to legislative amendments to the pension plan enacted subsequent to their retirement. Significantly, the Court held that the amendments could not be applied to the retirees because to do so would impair the contractual rights of active members by taking a portion of the existing fund to pay the increases to retired members. Id. at 576. Similarly, in Wehmeier v. Public School Retirement System of Missouri, 631 S.W.2d 893 (Mo.App. E.D. 1982), the court reiterated the principle recognized in Phillip by concluding that the public employee pension legislation at issue contains a statutory offer of retirement benefits which is accepted by the employee when he becomes a member of the retirement system and begins compliance with the statutory conditions. Id. at 896 (emphasis added). This view of public pensions is by no means unique to Missouri. The principle that a public pension plan is an offer for a unilateral contract which can be accepted by the 81
tender of part performance by the employee is consistent with the majority of jurisdictions that have considered the issue and also is consistent with the modern view of the nature of pensions. Oregon State Police Officers Assn v. State of Oregon, 918 P.2d 765, 773 (Ore. 1996) (emphasis added); see also Cloutier v. State, 42 A.3d 816, 823 (N.H. 2012) (pension statutes created an implied-in-fact contract between the State and the judges who entered into employment when the statutes were in effect, which vested when they were appointed to be judges subject to attaining the age and service requirements. ); Burlington Fire Fighters Assoc. v. City of Burlington, 543 A.2d 686, 689 (Vt. 1988) (vested contractual right arises upon payment of a contribution to the pension plan); Olson v. Cory, 636 P.2d 532, 537 (Cal. 1980) (vested contractual right arises upon acceptance of employment); Singer v. Topeka, 607 P.2d 467, 475 (Kan. 1980) (vested contractual right arises upon rendering of substantial service). Specifically, the Oregon Supreme Court stated: The state may undertake binding contractual obligations with its employees, including benefits that may accrue in the future for work not yet performed. Moreover, the cases recognize that the PERS pension plan is an offer for a unilateral contract which can be accepted by the tender of part performance by the employee. The Oregon line of cases is consistent with the majority of jurisdictions that have considered the issue and also is consistent with the modern view of the nature of pensions. Most jurisdictions adhering to a contract theory of pensions construe pension rights to vest on acceptance of
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employment or after a probationary period, with vesting encompassing not only work performed but also work that has not yet begun. Oregon State Police Officers Assn, 918 P.2d at 773, (italics in original, underlined emphasis added). The court noted further: a contrary holding would serve notice on any person who might consider embarking on a career in public service that the states promises could well prove to be worthless, even after the employees had given consideration for those promises in the form of partial performance. The most basic purposes of the Contracts Clause, as well as the notions of fundamental fairness that transcend the clause itself, point to these simple principles: the state must keep its promises and it may depart therefrom only for a significant and legitimate public purpose. Id. at 776. Firefighters in St. Louis become members of FRS as a condition of their employment. 87.130 R.S.Mo.; 4.18.020 RCC. (A252) At the time each firefighter was hired, and by virtue of their membership in FRS, each firefighter received as part of their contract of employment with the City, the promise from the City that upon retirement they would receive the pension benefits as established by City ordinances, codified in Chapter 4.18 RCC, and consistent with statutory enabling provisions. By virtue of required membership in FRS, firefighters are prohibited from receiving pension or retirement allowances from any other pension or retirement system supported wholly or in part by the City or State, based on their years of service as a firefighter. 83
87.130 R.S.Mo; 4.18.020 RCC. (A252) Firefighters are not covered by Social Security. (Tr.Vol.I, 21; A39) FRS constitutes firefighters only retirement benefit for their years of service. Moreover, unlike many ERISA plans and public plans for non-public safety officers with short vesting periods, this plan requires 20 years of service before a firefighter is entitled to pension benefits [4.18.120 RCC; A256], except that a member resigning prior to obtaining 20 years of service is entitled to return of his or her contributions to the plan and interest earned on those contributions. 4.18.120 RCC and 4.18.010 RCC (A251-256). In recognition of the importance of this career-long commitment, both the City and the Missouri General Assembly intended to and did grant City firefighters certain contractual pension benefits as a condition of their employment and service to the City of St. Louis. Section 4.18.220 RCC provides that [a]ll members who are firemen on or after January 1, 1960, and their beneficiaries shall receive benefits as provided by this Chapter (emphasis added); see also, 87.250 R.S.Mo. This language makes clear that member firefighters are guaranteed their benefits as of the time that they are hired (provided that they later satisfy the years of service requirement), which is when they become members of FRS. Furthermore, these benefits are not only contractual rights promised to the firefighters; these benefits are guaranteed by, and obligations of, the City. 4.18.325 RCC, provides: The creation and maintenance of reserves in the general reserve fund and the maintenance of benefit reserves as provided for and the payment of all 84 Section
benefits granted under the provisions of this chapter are hereby made obligations of the City. 4.18.325 RCC (A270) (emphasis added). See also 87.360 R.S.Mo. As the foregoing demonstrates, both the case law and the provisions of Chapter 4.18 RCC as enabled by 87.120 R.S.Mo. et seq. exhibit a clear intention on the part of the City of St. Louis to enter into a contract with the firefighters at the time that each was hired. C. Board Bill 109 constitutes a significant impairment of the contractual rights of FRS Member and Beneficiaries Board Bill 109s establishment of FRP to which all of the firefighters will be required to contribute, and which will be responsible for paying all benefits accrued after Board Bill 109s effective date impairs the contractual right to pension benefits created by 4.18.220 RCC, which provides that [a]ll members who are firemen on or after January 1, 1960 and their beneficiaries shall receive benefits as provided by this chapter. (A267) This right is thwarted by Board Bill 109 2, which states that for current members of the FRS, regardless of their years of service, the benefit accrued under the FRS shall be frozen, and that a member whose benefit accrued under the FRS is frozen as of February 1, 2013 and shall not accrue any additional benefits on account of years of service on or after February 1, 2013. (A176)5
Board Bill 109 also violates the exclusivity clauses of 4.18.020 RCC and 87.130(1)
R.S.Mo., which require all firefighters to become members of the FRS as a condition of their employment and prohibits them from receiving any pension or retirement allowance
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Section 4.18.010(M) RCC, defines membership service to mean service as a fireman rendered since last becoming a member, and 4.18.010(G), defines creditable service to mean prior service plus membership service as provided in 4.18.030 through 4.18.050. (A252) Because Board Bill 109 freezes the benefits of current members and provides that these benefits are subject to and paid by FRP, it renders these provisions, as well as Chapter 4.18s provisions regarding disability, death and survivor benefits (4.18.145 through 4.18.207), inoperable with respect to years of service accrued after the effective date of Board Bill 109, thereby impairing these contractual promises. (See A176-178) Board Bill 109 also includes language stating that [n]o employee shall have a contractual right to any benefits relating to, or based upon, service rendered or compensation paid after the effective date of an amendment that reduces future benefits. 4.19.160 RCC (A243, emphasis added) This provision is contrary to 4.18.220 RCC and 87.250 R.S.Mo., which state that [a]ll members shall receive benefits as provided by this chapter [by sections 87.120 to 87.370] The fact that the City specifically disclaims any contractual right on the part of the firefighters is especially troubling, as future
from any other pension or retirement system supported wholly or in part by the City or the state because of their years of service to the City. They also provide that a firefighters is not to contribute to any other plan, which implicitly creates a right in the firefighters to receive benefits as provided by FRS. 4.19.010(B) (A185)
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benefits is undefined. Section 4.19.160 could be interpreted to allow for the reduction of benefits payable in the future for years of service already rendered, which would be contrary even to the position adopted by the City with respect to vested pension rights. Despite the Citys assertions to the contrary, Board Bill 109 also does not fully restore the guarantee language providing that benefit payments under the new plan are City obligations. In its September 28, 2012 Memorandum and Order, the Trial Court
specifically identified as a deficiency in Board Bill 12 its elimination of the Citys ultimate liability for plan benefits in 4.19.170(B), which states: All benefits to be paid to a Participant or to his beneficiary under this Plan shall be paid solely out of the Trust Fund, and the City assumes no liability or responsibility therefore. (A29, 243) (emphasis added) Board Bill 109 leaves this provision untouched, thereby imperiling, and thus impairing, the firefighters constitutional contract rights to their full retirement benefits. Contrast,
87.360 R.S.Mo., 4.18.325 RCC (The creation and maintenance of reserves in the general reserve fund and the maintenance of benefit reserves as provided for and the payment of all benefits granted under the provisions of this chapter are hereby made obligations of the City.)6 Board Bill 109 attempts to minimize, and even eliminate, any liability owed by the City for payment of promised benefits to FRS Members and FRS Beneficiaries, (i.e. whereas the current plan, in Chapter 4.18, as enabled by state law, creates a defined benefit
The City did amend 4.19.020(C) in Board Bill 109 to state that the payment of all
benefits accrued under this Plan is hereby made an obligation of the City.
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plan with benefit payments guaranteed by the City; Board Bill 109 creates a defined benefit plan, where pension benefits were not guaranteed, not contractual, and are perhaps illusory). firefighters. Board Bill 109 also requires those firefighters who elect to come out of DROP to contribute nine percent of their compensation towards their benefits. 4.19.060(E) (A201) This impairs their contractual right to a continued eight percent contribution rate. 4.18.260 RCC (A268); 87.295 R.S.Mo. This is one of the places where the City said there was a scriveners error, but the Court declined the Citys request that the Court rewrite Board Bill 109 for the City. (A26) There is also no explicit provision in Board Bill 109 that specifically guarantees the right to a refund of contributions for firefighters with over 20 years of service on the effective date. (Tr.Vol.III, 106, 115-116) Instead, Paul Payne, who helped draft Board Bill 109 stated it would be a good faith interpretation of 4.19.060(C), which states: A Grandfathered Participant who receives [a normal retirement benefit] shall receive a refund of his contributions to the Prior Plan made before the Effective Date, without interest; provided that contributions to the Plan made on and after the Effective Date by a Participant who had fewer than twenty full Years of Service as of the Effective Date are not refundable. (A198-199) The plain language of this provision would certainly impair the contractual rights of FRS Members with less than twenty years of service to a return of their contributions upon retirement, as currently provided in 4.18.130(B) RCC and 87.175(2) R.S.Mo. Moreover, it is far from clear that this provision preserves even the 88 This certainly constitutes an impairment of the contractual rights of all
right of firefighters with twenty or more years of service to such a refund7, and under the terms of Board Bill 109, FRP will not indemnify the Board of Trustees for paying benefits that are not explicitly provided for under the terms of the plan. (Tr.Vol.III 114) See, 4.19.140 (A239). The same problem arises with respect to whether or not the actuarial reduction applies to firefighters with over 20 years of service. The conferral of early retirement benefits under Board Bill 109 is addressed in 4.19.060(D), which retains Board Bill 12s deferral of monthly retirement benefits for grandfathered participants who retire with twenty or more years of service until they reach age 55. (A199-200) Also like Board Bill 12, it provides the option for an actuarially reduced benefit prior to age 55, but states that this option is for a Participant with fewer than twenty full Years of Service as of the Effective Date. (A199) This actuarial reduction of benefits impairs the contractual pension rights of all FRS Members. Despite the Citys contention, however, neither this provision, nor any other provision in Board Bill 109, clearly states that firefighters with twenty or more years of service as of its effective date may retire prior to age 55 with no actuarial reduction as claimed by the City. (Tr.Vol.III, 117)
Contrast with 4.19.080(B)(5) and 4.19.080(D) (A218-219)
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D.
Significant and Legitimate Public Purpose and Reasonableness of the Adjustment
The remaining two elements of a contracts clause analysis are whether or not there is a significant and legitimate public purpose behind the regulation and if so, whether the adjustment of the rights and responsibilities of contracting parties is based upon reasonable conditions and is of a character appropriate to the public purpose justifying the legislations adoption. City of Benton, at 879. Significantly, when the State is a party to the contract, the court is not to grant the same level of deference it affords to a state legislature when reviewing economic and social regulation. Impairments of a States own contracts face[s] more stringent examination under the Contracts Clause than would laws regulating contractual relationships between private parties. Allied Structural Steel Co. v. Spannaus, 438 U.S. 234, 245 n. 15 (1978). When a State itself enters into a contract, it cannot simply walk away from its financial obligations. Energy Reserves Group, Inc. v. Kansas Power & Light Co., 459 U.S. 400, 413 n.14. Complete deference to a legislative assessment of reasonableness and necessity is not appropriate because the States self-interest is at stake. Id. Though the City is not a state, it is a political subdivision of the state, and is held to the same standards under this analysis. Neither of these two elements were at issue in the Trial Court. The closest that the Trial Court, or the City came to addressing these issues were in discussions of the financial implications to the City if changes were not made to the pension plan. However, as set forth in the City of Benton case, financial concerns are not sufficient to qualify as a significant and legitimate public purpose unless they rise to the level of an 90
unprecedented emergenc[y], such as mass foreclosures caused by the Great Depression. Id. at 882. The City presented no evidence that its financial situation is anywhere near the level of an unprecedented emergency, and therefore, the City cannot satisfy either of these two final elements. Any uncertainty on this issue was put to rest by the Citys counsel, who made it clear in open court that the City did not and [has] not advanced the legal theory that impairment is justified because of pressing public need or public safety reasons. So having not made that point in our briefs, the budget decisions that the City makes, I think the Court has correctly pointed out, are not relevant to the issues. (Tr.Vol.I 120) E. The Trial Courts reasoning that the Contracts Clauses only operate in the past and not the future is erroneous as a matter of law, and ruling that Board Bill 109 is valid on that basis was in error. Even though the Trial Court recognized that active firefighters or their survivors whose rights had vested as of February 1, 2013, under the terms of FRS, have a contractual right subject to protection under the contracts clauses (A57), the Trial Court did not find that any of these changes in pension benefits constituted an impairment of the contractual rights of any firefighter. (A58-60) The reason was that the Trial Court concluded that [t]he contracts clauses operate in the past, not the future. Only benefits in existence as of February 1, 2013 are subject to constitutional protection, to the extent they were vested at that time. (A24, emphasis added) As such, the Trial Court found that the
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Citys limitation of liability for the payment of benefits to the assets of FRP in 4.19.170(B) [A243] did not present a justiciable question. (A58) Similarly, the Trial Court perceived no impairment of contract by requiring firefighters to contribute 9% of their compensation to FRP, even for those firefighters who have over 20 years of service once they come out of DROP. (A60) Even though the City said that this was a scrivenors error that could easily be corrected by the court, the Trial Court declined to do so, and held that there would be no impediment to imposing a 9% contribution rate on all active firefighters for services from and after February 1, 2013. (A60) The reasoning for all of these holdings was the Trial Courts unique view that [t]he contracts clauses operate in the past, not the future. (A58) Not only was this issue not before the Trial Court with respect to Board Bill 109, which by its terms recognized that future accruals of benefits for firefighters with over twenty years of service could not be diminished, it is also unclear how far this holding goes. Does the Trial Court mean that only those benefits that have already been accrued are entitled to protection, such that, the City could reduce the maximum benefit from 75% of average final compensation to 70%, even for firefighters who have attained 20 years of service, so long as those firefighters had not already accrued sufficient service to earn a benefit in excess of 70%, or does it mean that a firefighter only has a right to the benefits already paid by the City and has no rights in the future? The Trial Court cited no case law for this assertion. Appellants believe this is because this interpretation of the Contracts Clause is legally incorrect and flies in the face 92
of basic contract law and cases interpreting the Constitution. Any legislative action that impairs a partys contractual right to receive some ongoing future benefit or be free from some future detriment triggers scrutiny under the Contracts Clause. The Missouri Supreme Court has held at least twice that the Contracts Clause prohibits amendments to public pensions that would deprive non-retired plan members of their contractual rights to future benefits. State ex rel. Breshears v. Missouri State Emp. Retirement System, 362 S.W.2d at 576; State ex rel. Phillip, 262 S.W.2d at 577-78. Earlier Contracts Clause cases have vindicated the claims of plaintiffs whose claims were based not on past violations, but on threatened future violations of their contractual rights. See, e.g., Chicago, Rock Island & Pacific Ry. Co. v. Swanger, 157 F. 783, 793 (W.D.Mo. 1908) (contractual right of foreign corporation to continue conducting business in Missouri); Springfield Ry. Co. v. City of Springfield, 85 Mo. 674, 677 (Mo. 1885) (contractual right to maintain and continue operating street railroad in public square); State v. Miller, 50 Mo. 129, 132-33 (Mo. 1872) (contractual right to continue operating lottery system). The Contracts Clause does
operate as a forward-looking guarantee that the contractual rights of private parties to receive a future benefit will not be unreasonably interfered with by prospective legislation. With respect to the increase in contributions from 8% of compensation on a refundable basis, to 9% of compensation on a non-refundable basis, courts have affirmatively held that an increase in employee contribution rates, even where it applied only to future service, constituted an unconstitutional impairment of contract because it increased the members cost of retirement benefits for services that, absent a lawful separation of employment, they will provide in the future. That consequence, if approved, 93
would permit the state to retain the benefit of plaintiffs labor, but relieve the state of the burden of paying plaintiffs what it promised for that labor. Oregon State Police Officers Assn, supra, at 775. In reaching this conclusion, the court specifically rejected the same argument posed by the City in defense of Board Bill 109 and ultimately adopted by the Trial Court namely, that contractual promises in a pension plan attach only for work already performed and that [it] may modify unilaterally or even eliminate entirely any or all of those terms prospectively for the simple reason that the increase in the employee contribution rate for future employment unilaterally diminishes the value of the employees pension contract. Id. at 769, 776. The Trial Courts position that the question of whether the City has obligated itself to fund the FRP in the future is non-justiciable also contradicts basic principles of contract law and civil procedure. (See, A58) Under FRS, the City is obligated to fund the system, and the payment of benefits is made an obligation of the City, such that a firefighter could seek payment from the City if FRS did not have sufficient funds to pay benefits. 4.18.325 RCC (payment of all benefits granted under the provisions of this chapter are hereby made obligations of the City.) (A270) However, 4.19.170(B), pertaining to FRP provides that [a]ll benefits to be paid to a Participant or his beneficiary under this Plan shall be paid solely out of the Trust Fund, and the City assumes no liability or responsibility therefor. (A243) Surely this is a contract impairment by its terms, and in the unfortunate event that FRP does not have sufficient funds to pay benefits and a firefighter sues the City seeking payment, this provision would almost certainly be cited by the City as grounds for refusing
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to pay benefits, and the City would argue that the firefighter is collaterally estopped from challenging the provision. It has also never been the case that a plaintiff intending to bring a claim for breach of contract must wait until the defendants allotted time for performance has come and gone. If the defendant manifests a firm intention not to perform the contract, the plaintif f may treat the repudiation as a breach and immediately sue for damages. TDV Transp., Inc. v. Keel, 966 S.W.2d 347, 349 (Mo.App. E.D. 1998); Ewing v. Miller, 335 S.W.2d 154, 156-58 (Mo. 1960). By enacting the provision limiting the Citys liability to the assets in FRP, the City has affirmatively rewritten its contract with firefighters and shirked its responsibilities to them. Such members are entitled to challenge this violation of their contractual rights now. Furthermore, a declaratory judgment action is justiciable, even when the plaintiff has yet to suffer an injury, so long as (1) a legally protectable interest is at stake, (2) a substantial controversy exists between the parties, and (3) the dispute is ripe, meaning that the facts are developed sufficiently for the court to resolve the dispute and grant appropriate relief. Home Builders Assn. of Greater St. Louis, Inc. v. City of Wildwood, 32 S.W.3d 612, 614-15 (Mo.App. E.D. 2000); George v. Brewer, 62 S.W.3d 106, 109 (Mo.App. S.D. 2001). The Trial Courts ruling that the Contract Clauses operate in the past and not the future is unsupported, incorrect, and requires the judgment to be reversed.
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V.
The Trial Court erred in declaring Board Bill 109 valid and constitutional because Board Bill 109 impairs the contractual rights of firefighters with less than twenty years of service, in contravention of Article I 13 of the Missouri Constitution and Article I 10 of the United States Constitution, in that these firefighters have already contributed substantial service to the City at least partially in reliance on the pension benefits as provided by Chapter 4.18, and in that Board Bill 109 a) requires firefighters to contribute 9% of their salary on a non-refundable basis to FRP instead of 8% of salary on a refundable basis to FRS and b) applies an actuarial reduction to service rendered after the effective date of Board Bill 109 if the firefighter retires before age 55, as compared to FRS which provides that a firefighter could retire with 20 years of service, regardless of age, without a reduction in benefits. In the Trial Courts Order it recognized that FRS statutes and ordinances create a
contract between the City and its firefighters for the payment of pension benefits. (A57) However, the Trial Court erred in concluding those contractual rights were not entitled to protection under the Contracts Clauses of the Missouri and United States Constitutions until the firefighter is vested under the terms of the plan, after 20 years of service as a City firefighter.8 (A60-61) As will be set forth in more detail below, firefighters with less than
FRS will refer to the concept of vesting in the context of being entitled to immediate
payment of benefits should the employee choose to retire today, as vesting under the
96
20 years of service have a contractual right to their pension benefits, which is impaired by Board Bill 109. A. Vesting and Protection of Benefits for Firefighters with Less than 20 Years of Service There are several ways in which courts have traditionally viewed vesting in the context of employee rights to the continuation of his or her pension benefits under the Contracts Clause of the United States Constitution. Some take the view that the City took with Board Bill 12: that an employee is only vested to the extent of benefits that they have earned to date. A second view, similar to the Trial Courts decision, is that an employee is only vested once they have met the plan requirements which entitle him or her to some benefit payment. A third view is that a firefighter is vested in the continuation of the system from the first day of employment (FRSs position). There is also a fourth view that the employee is vested at some intermediate point in time, between the start of his or her employment and when he or she meets plan requirements for vesting under the terms of the plan. The Trial Courts Order held firefighters with less than 20 years of creditable service are not currently vested in their pension, and therefore, have no contractual rights to their pension. (A59) Under that analysis, a firefighter with 19 years, 11 months and 29 days of service has no contractual right to a pension to which he has contributed for over 19
terms of the plan. Vesting, in the context of whether a contract right is entitled to protection under the contracts clauses, will simply be referred to as a vested right.
97
years and who is only one day short of reaching the 20 year vesting requirement.9 This hypothetical firefighter would have no right to any pension benefit, even to what he has accrued to date, under this analysis, if the City were to terminate the plan entirely and sought to deny him all pension benefits. Even the Citys position in this case, as reflected in Board Bills 12 and 109, is that a firefighter has a vested contractual right to benefits he or she has earned to date. 1. Missouri Case Law
FRS recognizes that originally public pensions were viewed as mere gratuities by the state, and that an employee had no vested right in the continuation of a pension. Supra Point IV(B), pg 80. However, the growing trend has been to not only recognize the contractual nature of public pensions, but also to recognize that a public employee has a protectable interest in his or her pension before the time he or she is eligible to retire and receive a benefit. Id. This is especially true in the case of public safety employees who traditionally are subject to cliff vesting and are not eligible to participate in social security. Moreover, there is ample support in Missouri case law for the proposition that a contractual right, which is entitled to protection, arises before the time that an employee is vested under the terms of the plan (i.e., entitled to receive payment should they choose to retire). While a full analysis of those cases will not be repeated here, FRS points out that in State ex rel. Phillip, 262 S.W.2d at 577, the Missouri Supreme Court specifically stated
Although the Trial Court did recognize such firefighter would have a contractual right to
return of his contributions with interest. (A60-61)
98
that it was not considering the rights of those members whose rights under the terms of the plan had already accrued and vested such that they would be able to receive immediate payment should they retire. Instead, the Court was considering the rights of those employees who were not vested under the terms of the plan, but who had accepted the offer of potential benefits under the provisions of the statutes and who had entered upon compliance with those terms, which effectively provided that if those employees remained in service and members of the plan, made the necessary contributions, and met the other requirements, they would be entitled to the benefits provided thereunder. Id. at 577-578. In analyzing the rights of these non-vested members under the terms of the plan, the Court stated that, contractual rights to potential benefits came into existence as a result of the voluntary acceptance of the offer provided by the statute, the beginning of compliance by the employee-members and the payment of consideration in the form of contributions. Id. at 578. Because the statute impaired these rights in a substantial manner, the Court held that it was unconstitutional and void. Id. at 578. Importantly, the court refused to allow a legislative change that took away potential retirement benefits from certain non-vested members altogether. Notably, the court could have ruled, but did not rule, that the members had to be allowed to remain in the system, but were not entitled to earn any further service credit. Instead, the court found that it would be unjust to deprive the members of their ability to obtain the retirement benefits that they thought were attainable when they began their employment.
99
The Missouri Supreme Court reaffirmed the position that even non-vested members of a retirement system had contractual rights to their pension benefits in State ex rel. Dreer v. Public School Retirement System of the City of St. Louis, 519 S.W.2d 290 (Mo. 1975). 2. There is also ample support in other jurisdictions for the proposition that contractual rights entitled to protection come into existence long before the participant vests under the terms of the plan. While FRS recognizes that out of state case law is not binding precedent on this Court, the analysis contained therein, which illustrates a growing trend to recognize and protect the contractual rights of employees who may not yet be vested under the terms of their plan, is persuasive. This is particularly true due to the similarity of Contracts Clauses in state constitutions, and especially due to the fact that all state courts are bound by the federal Contracts Clause, and United States Supreme Court decisions interpreting it. There are some cases in other jurisdictions which, like the Trial Court, hold that an employees contractual right to his or her pension does not vest until the time that his or her right to receive a pension under the terms of the plan is vested. Klamm v. State ex rel. Carlson, 125 N.E.2d 487 (Ind. 1955). However, other Courts have found that: This view is insupportable. Unless the services are rendered in reliance on an offer, they are consideration for nothing, and any pension received thereafter can only be a gratuity. The promise on which the employee relies is that which is made at the time he enters employment; and the obligation of the employer is based upon this promise.
100
Bakenhus v. City of Seattle, 296 P.2d 536, 539 (Wash. banc 1956) (emphasis added); see also, Washington Assn of County Officials v. Washington Public Emp. Retirement System Bd., 575 P.2d 230, 323 (Wash. banc 1978); Halpin v. Nebraska State Patrolmens Retirement System, 320 N.W.2d 910, 914 (Neb. 1982); Cloutier v. State, 42 A.3d 816 (N.H. 2012). Thus, many courts have taken the more enlightened view that an employees rights to a public pension vests either on the first day of employment or at an intermediate point in time, before he or she fully vests under the terms of the plan. Singer, 607 P.2d at 473; Bakenhus, 296 P.2d at 540; Cloutier, 42 A.3d at 823. In Bakenhus, the Supreme Court of Washington considered whether or not an amendment to a pension system, which capped the amount of monthly pension benefits, was constitutional as applied to a police officer who was employed prior to the time of the amendment, but who had not yet vested under the terms of the plan. 296 P.2d 536, 538 (Wash. 1956). The court, after review of other jurisdictions case law, ultimately held that the officer had a contractual right to his pension benefits, which arose at the time he entered public service. Id. at 539. The court found it unsupportable and not in accordance with reason that a vested right to a pension entitled to protection does not arise until all of the requirements for retirement are met, as the service had to have been rendered in reliance on an offer. Id. Therefore, the promise the employer makes at the time the employee is hired, is the promise upon which the contractual rights are based. Id. Accordingly, the pension benefits could only be reasonably modified prior to retirement. Id. In order to be sustained as reasonable, alteration of employees pension 101
rights must bear some material relation to the theory of a pension system and its successful operation, and changes in a pension plan which result in disadvantage to [an] employee should be accompanied by comparable new advantages. Id. (emphasis added). The court reasoned that [t]his view, while it may not be flawless in a purely legalistic sense, gives effect to the reasonable expectations of the employee and at the same time allows the legislature the freedom necessary to improve the pension system and adapt it to changing economic conditions. Id. at 540. (emphasis added). As a result, the fact that the officers pension benefits were capped without any corresponding benefit to the officer was an unconstitutional impairment of the officers contract with the city. Id. at 541. Similarly, in Cloutier v. State, the New Hampshire Supreme Court recognized that pension benefits are a part of the compensation of an employee to which, under ordinary circumstances, he is as much entitled as he is to the wages paid him for the work he has actually performed. 42 A.3d at 822. These benefits constitute a substantial part of the employees compensation and become vested upon the commencement of permanent employee status. Id. at 823 (emphasis added). The reasoning of this rule is that one of the primary purposes of providing benefits to public employees is to induce competent persons to enter and remain in public employment. Benefits would serve as little
inducement if they could be whisked away at the whim of the public employer. Id. (emphasis in the original, internal quotation omitted). Therefore, the court held that it agree[d] with the weight of authority that these statutes created an implied-in-fact contract between the State and the judges who entered into employment when the statutes were in effect, which vested when they were appointed 102
to be judges subject to attaining the age and service requirements. Id. at 824 (emphasis added). This pension benefit could be modified before retirement, but only if any
detrimental change in benefits was accompanied by a corresponding change of a beneficial nature to the employee. Id. at 825-826. No such corresponding benefit increase is present in Board Bill 109. Instead, Board Bill 109 requires firefighters to contribute more to receive less. For the reasoning of other state supreme courts which have reached the same conclusion, see, Burlington Fire Fighters Assoc. v. City of Burlington, 543 A.2d 686, 689 (Vt. 1988) (a vested contractual right arose upon the employees payment of a contribution to the pension plan) (citing, Snow v. Abernathy, 331 So.2d 626, 631 (Ala.1976) (pension is vested contract right upon acceptance of plan), Olson v. Cory, 636 P.2d 532, 537 (Ca. 1980) (pension plans create vested contract rights accruing upon acceptance of employment), Halpin v. Nebraska State Patrolmen's Retirement System, 320 N.W.2d 910, 914 (Neb. 1982) (public employee pensions are deferred compensation and create reasonable expectations which are protected by the law of contracts'); Sylvestre v. State, 214 N.W.2d 658 (Minn. 1973) (a vested right arose on the first day of employment based upon a unilateral contract with partial performance analysis); Bender v. Anglin, 60 S.E.2d 756 (Ga. 1950); Wagoner v. Gainer, 279 S.E.2d 636, 642 (W.Va. 1981); Police Pension & Relief Bd. of City & County of Denver v. Bills, 366 P.2d 581 (Colo. banc 1961); Singer v. City of
103
Topeka, 607 P.2d 467 (Kan. 1980) (finding a vested contractual right after the employee has rendered some service, but prior to the time of vesting under the plan).10 These cases are in line with the basic premise that it would be fundamentally unfair, in pension systems with long term cliff vesting, if there was no protection of the employees rights until the time of retirement or plan vesting. An often cited case on this topic is one from the Supreme Court of Pennsylvania, Hickey v. Pension Bd. of City of Pittsburgh, 106 A.2d 233 (Pa. 1954).11 In it, the court stated,
10
Section 87.177(1) R.S.Mo., although the City has chosen not to enact it through
conforming ordinance, provides that Any firefighter who terminates employment with five or more years of service but less than twenty years may apply at age sixty-two for a service retirement allowance. 87.177(1) R.S.Mo. (emphasis added). Section
105.691.1(6), R.S.Mo, provides that for purposes of determining eligibility service credit, if the plans chose to allow transfer of the credit, a participant is deemed vested after five years. These laws show the public policy of the State of Missouri regarding rights under FRS, and would support an intermediate position of contract rights being vested after five years.
11
While the facts presented to the Court in Hickey involved an employee who had already
completed the twenty years of service required to receive a pension, but not the age requirement, the Court cited to the holding in Baker v. Retirement Bd. of Allegheny County, 97 A.2d 231 (Pa. 1953) which stated, as of the time he joined the fund, his right to
104
The Legislature may strengthen the actuarial fibers [of a plan] but it cannot break the bonds of contractual obligations. The permissible changes, amendments and alterations provided for by the Legislature can apply only to conditions in the future, and never to the past. According to the cardinal principle of justice and fair dealings between government and man, as well as between man and man, the parties shall know prior to entering into a business relationship the conditions which shall govern that relationship. Ex post facto legislation is abhorred in criminal law because it stigmatizes with criminality an act entirely innocent when committed. The impairment of contractual obligations by the Legislature is equally abhorrent because such impairment changes the blueprint of a bridge construction when the spans are half way across the stream. Id. at 237-238. (emphasis added); Wagoner v. Gainer, 279 S.E.2d at 643; Pyle v. Webb, 489 S.W.2d 796, 798 (Ark. 1973). While those who entered employment after the legislation was passed were on notice of the changes, when Hickey started contributing to the city pension fund in 1915, there appeared on the horizon not the slightest suggestion of a cloud to imperil the pension, toward which he was to faithfully plod for 31 years Whether it be in the field of sports or in the halls of the legislature it is not consonant with American traditions of fairness and
continued membership therein, under the same rules and regulations existing at the time of his employment was complete and vested. Hickey at 304.
105
justice to change the ground rules in the middle of the game. Hickey, 106 A.2d at 238 (emphasis added); Sylvestre, 214 N.W.2d at 665. In reliance on this language from Hickey, the Colorado Supreme Court found, in Police Pension & Relief Bd. of City & County of Denver v. Bills, 366 P.2d 581, 585 (Colo. banc 1961), that, laying aside all legal niceties, it would appear to be grossly unfair and inequitable to take from the plaintiff Bills, for example, his right to have his pension reflect the subsequent raise in pay granted active members of the department, a right conferred on him by the 1947 charter amendment, he having thereafter, on the strength of this solemn promise, contributed to the pension fund 3 1/2% of his salary for many years, and as of April 1, 1956, the effective date of the purported repeal of the escalator clause, had completed 24 years, 10 months and 23 days of active service in the police department and was therefore only 38 days away from the date when he would complete his 25 years of service and be eligible to retire. (emphasis added) The same analysis applies in this case. When the firefighters in the City of St. Louis entered employment with the City, there was nothing on the horizon which indicated that
106
their pension benefits could be changed to their detriment.12 Instead, they were entering into a contract with the City where part of their compensation was a pension plan with benefits guaranteed by the City itself. Now, after many years of faithful service, the City is attempting to abolish the plan as the firefighters know it, in essence raising contribution rates 9% (by not only increasing the contribution rate from 8% to 9%, but also making future contributions non-refundable), and enacting a minimum age requirement, thereby increasing the required years of service if a firefighter does not want his or her benefits reduced. 4.18.030(B), 4.19.060(A-D) (A191, 197-200) This is a dramatic reduction in benefits that is not just changing the rules of the game in the middle of their service, but is changing it to an entirely new game altogether. B. Trial Courts Reasoning is Erroneous
The Trial Court refused to recognize this impairment, holding instead that firefighters with less than 20 years of service had no contractual right to their pension benefits based upon the Citys reservation of the right to repeal or amend FRS pursuant to 4.18.345 RCC. (A59) However, even the Trial Court found one exception to this rule, holding that firefighters with less than 20 years of service have a right to a refund of contributions made to FRS prior to February 1, 2013. (A60-61)
12
The evidence indicated that no firefighters have been hired as new employees in the last
three years, the timeframe in which talks and then action occurred with respect to the pension issues in this case. (Tr.Vol.I 255)
107
As set forth in Point II(D)(4) infra, 4.18.345 was enacted in 1959 without enabling legislation. (LF961; see, Chapter 87 R.S.Mo.) As such, the provision is void under Trantina and its progeny. Even under the Trial Courts reasoning this section would be void, as it was enacted before enactment of Article VI, 19(a) of the Missouri Constitution in 1971 giving home rule powers. See Levinson. It is commonly held that even where a plan reserves to the plan sponsor an explicit right to terminate the plan, acceptance by performance closes that door under unilateral contract principles (unless an explicit right to terminate or amend after the participants performance is reserved). See, Kemmerer v. ICI Americas Inc., 70 F.3d 281, 288 (3d. Cir. 1995), and Phillip at 413 (the Missouri Supreme Court concluded that the right of the legislature to alter, amend or repeal legislation is subject to constitutional restrictions and inhibitions, such as the prohibition against the extinguishment of vested rights which have been acquired under the former law, or the impairment of the obligations of contract. quoting 50 Am.Jur. 62, Statutes, 45). Accordingly, the reservation of rights clause in 4.18.345 RCC, which contains no explicit right to terminate or amend constitutionally protected contractual rights to pension benefits, cannot be applied to divest FRS Members, including those with less than twenty years service, of their contract rights to retirement benefits under the FRS. The Trial Courts reliance on this provision in holding that firefighters with less than 20 years of service as of the effective date of Board Bill 109 have no contract rights was in error, and should be reversed for that reason as well. The Trial Court reasoned that firefighters with less than 20 years of service are in the same position as the police officers in Fraternal Order of Police v. City of St. Joseph, 8 108
S.W.3d 257 (Mo.App. W.D. 1999) (A28) However, the holding of that case is based upon drastically different facts and relies on an outdated view of public pensions. While operating as a first-class city, St. Joseph established the police officers pension fund pursuant to 86.510-577 R.S.Mo., which were applicable to first-class cities. Id. at 261. In 1991 the Pension Board began the practice of including lump sum payments for accrued overtime as salary in the benefits calculation, and in 1994 began counting accrued vacation pay as salary as well, which increased the benefits paid. Id. In 1996, the Pension Board stopped including accrued unpaid overtime and vacation time paid out in a lump sum as salary and instead prorated it over the time which it was earned, which had the effect of reducing pension benefits. Id. The court was then asked to analyze whether or not this change in the Pension Boards practice with respect to unused vacation and overtime pay unconstitutionally impaired the police officers contractual rights. Id. at 264. Ultimately the court held that the police officers did not have a constitutionally protected right in the Boards practice regarding how their pension amounts were calculated. Id. In so holding, the court quoted a portion of Phillip, supra, which stated that the traditional rule is that a public pension is not a contractual obligation but a gratuitous allowance, in which the pensioner has no vested right. Id. quoting Phillip at 576. There was nothing in the ordinances or pension plan which created a right to have a certain method of calculating pension amounts continued, employees had no vested right to the continuation of a certain method of calculating pension amounts. Id.
109
This case is clearly distinguishable, as here the firefighters pension rights are clearly set forth in Chapter 4.18 RCC as authorized by 87.120 R.S.Mo. et seq. This is a far cry from arguing that a contractual right stems or arises from reliance on a mere two-year practice of the Pension Board in calculating retirement benefits which was not contained in any legislation or ordinance. Furthermore, unlike in St. Joseph, where there was no promise regarding how benefits were to be calculated, the firefighters have been promised that they shall receive benefits as provided by sections 87.120 to 87.370, and detailed provisions regarding the formula used to calculate benefits are also set forth. 87.250 R.S.Mo., 4.18.220 RCC, 4.18.130, 4.18.385 (A257, 267, 272) Thus, the Trial Courts reliance on St. Joseph was in error, and this Court should reverse the Trial Courts decision and hold that firefighters with less than 20 years of service have a constitutionally protected contractual right to their pension benefits. C. Unreasonable Reduction in Benefits for Those Firefighters with Less than 20 Years of Service Given that firefighters with less than 20 years of service have a contractual right to their benefits, the next issue becomes whether or not Board Bill 109 impairs those rights. There can be no dispute that Board Bill 109 does impairs those rights as it increases firefighters costs to obtain their pension benefits (9% non-refundable contribution now versus 8% refundable in prior FRS) without providing any corresponding increase in benefits. Board Bill 109, 4.19.030(B) and 4.19.060(C) (A191,199) as compared with 4.18.260, 4.18.130(B) RCC (A257, 268) 110 Because future contributions are
non-refundable, Board Bill 109 effectively imposes a 9% increase in required employee contributions for these firefighters with less than twenty years of service. Board Bill 109 accompanies its increase in employee contributions with a reduction in benefits for these members. For instance, under Board Bill 109, these firefighters will no longer be eligible to retire and receive a full benefit until they reach age 55, even if they have attained twenty years of service. Board Bill 109, 4.19.020(S) RCC (A188, 199) as compared to 4.18.120 RCC and 87.170 R.S.Mo., 4.19.060(D). The retirement benefits of these firefighters who choose to retire before age 55 are actuarially reduced based upon the number of years it will be before they reach age 55, and this applies to benefits accrued after the effective date for grandfathered participants in the new plan. Board Bill 109, 4.19.060(A) & (D) (A197, 199) This actuarial reduction also applies to those FRS Members who elect to participate in the deferred retirement program (DROP) prior to age 55. Board Bill 109, 4.19.060(E) (A201) as compared to 4.18.131 RCC and 87.295 R.S.Mo. (A257-258). An illustration of the severity of the impairment can be seen by the Citys own evidence with respect to Board Bill 12. In preparation of her trial testimony, Kim Nicholl, the Citys actuary, prepared a chart, Exhibit 59, which compared the benefits one individual, David Washington, who had over 20 years of service, would receive if he entered the DROP program one, two or three years after the effective date of Board Bill 12 at the age of 52, 53 or 54 respectively. (STr. 89; Ex59) Exhibit 59 then purports to show the total difference in benefits if Mr. Washington were to stay in the DROP program for five years and then immediately retire. (Ex59) While Board Bill 12 was amended by 111
Board Bill 109 it only did so to protect those firefighters with over 20 years of service. See, Board Bill 109, 4.19.060 (A197-207) Therefore, the financial impact on firefighters with less than 20 years of service under Board Bill 109 would be similar, although financially worse, than the impact on Mr. Washington under Board Bill 12. If Mr. Washington only works one year after the effective date before entering DROP, his annual pension benefit would be reduced by $429 per year for the rest of his life. (Ex59, 3; STr 46) If Mr. Washington choses to wait two years, he would experience a $540 decrease in his annual pension benefit, and if he waits three years, his benefit would decrease by $432 for the remainder of his life. (Ex59, 7, 11) With respect to the lump placed into the DROP account, the difference between Mr. Washingtons DROP account under the old and new plans is $2,054 if he waits only one year to enter the DROP, $2,939 if he waits two years, and $2,376 if he waits three years. (Ex59, 3, 7, 11) These changes would only be magnified for someone who had less than 20 years of service as of the time of the effective date. Those savings have to come from somewhere, which, in this case, are the pockets of each firefighter and his family. This is an
unconstitutional impairment of the contractual rights that each firefighter has with the City of St. Louis and should not be permitted by this Court.
112
CONCLUSION For each and every reason set forth in this Brief, the Trial Courts Judgment must be reversed. The reasons for reversal include the following: 1. Article VI, 25 of the Constitution prohibits the City of St. Louis from enacting by ordinance the FRP without any legislative grant of authority; this is true, despite the Citys asserted powers as a charter city under Article VI, 19(a), as the City cannot ignore the enabling legislation in 87.120 R.S.Mo. et seq. simply because it is permissive. Furthermore, the detailed, complex and interwoven provisions of 87.120 RSMo., et seq., demonstrate an intention by the legislature to pre-empt the field, and thus the City from adopting a different pension plan for St. Louis firefighters. 2. The Trial Courts decision allows the amendment of Chapter 4.18 of the Revised City Code in ways that are contrary to and conflict with 87.120 R.S.Mo. et seq. in direct contradiction of this Courts decision in Trantina, which has been cited on numerous occasions by the Missouri Supreme Court in a favorable manner in litigation between these same parties. 3. Article VI, 22, of the Missouri Constitution is not violated by the enabling legislation in 87 R.S.Mo. et seq., despite the Citys present contention, and this has been clearly articulated and decided by the Missouri Supreme Court in the 1990 decision involving the exact same parties, and thus such claims or defenses are barred by res judicata and stare decisis.
113
4.
The reduction of firefighter benefits, most drastically with respect to those with less than 20 years of service, through dramatically increased contributions, which are no longer refundable upon retirement without interest, combined with the actuarial reduction for early retirement, and the removal of the Citys ultimate guarantee to pay firefighters their benefits on retirement affecting all active firefighters, individually and collectively constitute significant violations of the Contracts Clauses contained in Article I, 13, of the Missouri Constitution and Article I, 10, of the United States Constitution. Other provisions in Chapter 4.19, adopted in Board Bill 109, also violate the contract clauses as described in this brief.
For these reasons and those set forth in the brief in much greater detail, Appellants respectfully pray that the Court reverse the Trial Courts Judgment, declare Ordinances 69149 (Board Bill 270), 69245 (Board Bill 12), and 69353 (Board Bill 109) null and void; order the statutorily enabled FRS system continue to be in existence as the sole provider of firefighter benefits in the City of St. Louis, as required by the exclusivity clauses in 87.130 R.S.Mo. and 4.18.020 RCC. Appellants further pray that the Court order such other actions, including the transfer of appropriate moneys from FRP to FRS as may be necessary to carry out and effectuate the Courts Judgment, and for such other and further relief as this honorable Court deems just and appropriate under the circumstances.
114
CERTIFICATE OF COMPLIANCE By submitting this Brief, the undersigned counsel for Appellants hereby certifies the following: 1. 2. This brief conforms with Missouri Rule of Civil Procedure 55.03; This brief conforms with this Courts Order of October 10, 2013 granting Appellants 31,000 words for their brief; 3. The number of words used in this brief is 30,475.
/s/ Kara D. Helmuth
115
CERTIFICATE OF SERVICE The undersigned does hereby certify that I caused true and correct copies of the foregoing document to be served upon the parties receiving notice through the Courts ECF system by filing with the Courts ECF system at the date and time filed.
/s/ Kara D. Helmuth
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Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Appeal No. ED100209

JOINT BRIEF OF APPPELLANTS

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

The Trial Court erred in declaring Board Bill 12 as amended by

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Home Rule Charter Authority under Missouri Constitution Art VI, 19

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Kansas City v. Brouse, 468 S.W.2d 15 (Mo. banc 1971) Distinguished

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM

Electronically Filed - EASTERN DISTRICT CT OF APPEALS - November 27, 2013 - 12:28 PM