STEPHEN O'MALLEY & Another v. CONTRIBUTORY RETIREMENT APPEAL BOARD & Another

APPEALS COURT

STEPHEN O'MALLEY & another[1] vs. CONTRIBUTORY RETIREMENT APPEAL BOARD & another[2]

Docket:

23-P-1147

Dates:

June 6, 2024 – October 7, 2024

Present:

Blake, Neyman, & Sacks, JJ.

County:

Suffolk

Keywords:

Contributory Retirement Appeal Board. Division of Administrative Law Appeals. Public Employment, Accidental disability retirement. School and School Committee, Retirement benefits. Labor, Overtime compensation. Administrative Law, Agency's interpretation of statute. Practice, Civil, Judgment on the pleadings.

Civil action commenced in the Superior

Court Department on February 5, 2020.

The case was heard by Paul D. Wilson, J.,

on a motion for judgment on the pleadings.

Praven Shenoy for

the plaintiffs.

Gregory F. Galvin

for retirement board of Brockton.

Andrew Batchelor, Assistant Attorney

General, for Contributory Retirement Appeal Board.

NEYMAN, J.

We consider whether traffic duty pay for work performed by the

plaintiffs, Stephen O'Malley and Thomas Lambert, must be included in the

calculation of the plaintiffs' retirement allowances. This determination hinges on whether traffic

duty pay constitutes "regular compensation" within the meaning of

G. L. c. 32, § 1. We

conclude that the plaintiffs' traffic duty pay does not qualify as

"regular compensation" under the statute. Accordingly, we affirm the judgment.

Background. Stephen O'Malley commenced employment with

the Brockton school department as a school police officer on February 6, 1985,

and in 1990 began working as a school crossing guard in addition to his school

police officer duties. Thomas Lambert

commenced employment with the Brockton school department as a school custodian

on March 11, 2002, and in 2008 began working as a school crossing guard in

addition to his school custodian duties.

Both O'Malley's and Lambert's traffic duty pay "[was] calculated at

time and a half, the same rate for overtime pay." O'Malley and Lambert worked irregular hours

as school crossing guards, and neither of their employment contracts required

that they perform traffic duty.

In 2009 and 2010, O'Malley and Lambert,

respectively, suffered injuries at work and applied for accidental disability

retirement based on those work-related injuries. Their "accidental disability pension[s]

[were] computed according to

[ ]

G. L. c. 32, § 7 (2) (a) (ii)." The Public Employee Retirement Administration

Commission (PERAC) calculated O'Malley's and Lambert's retirement allowances

"based on the amount that the [retirement] [b]oard [of Brockton] had reported

as 'regular compensation,' and excluded traffic duty payments." PERAC made this calculation pursuant to

regulations implemented in June 2010, which provided updated guidance as to

what constitutes "regular compensation" under G. L. c. 32. See 840 Code Mass. Regs.

§ 15.03 (2010).[3]

O'Malley and Lambert filed appeals with

the retirement board of Brockton (board), requesting that it include traffic

duty pay as part of the plaintiffs' regular compensation in the calculation of

their retirement benefits. After the

board denied the plaintiffs' appeals, O'Malley and Lambert appealed to the

Contributory Retirement Appeal Board (CRAB), which assigned their cases to the

Division of Administrative Law Appeals (DALA).

Following a hearing at which both O'Malley and Lambert testified, and

documentary evidence was admitted into the administrative record, DALA issued a

decision upholding the board's exclusion of traffic duty pay from the

calculation of the plaintiffs' retirement benefits. O'Malley and Lambert appealed DALA's decision

to CRAB. CRAB adopted DALA's findings,

ruled that the "traffic duty payments were irregular payments paid on an

hourly basis and are akin to overtime payments," and affirmed DALA's

decision. O'Malley and Lambert then

brought the present action in the Superior Court pursuant to G. L.

c. 30A, § 14, for review of the CRAB decision. Following a hearing, a Superior Court judge

denied the plaintiffs' motion for judgment on the pleadings and ordered the

entry of judgment in favor of the defendants, CRAB and the board. Judgment for the defendants entered, and

O'Malley and Lambert filed a timely notice of appeal.

Discussion. 1.

Standard of review. It is well

established that judicial review of an agency decision pursuant to G. L.

c. 30A is "narrow and deferential." Buchanan v. Contributory Retirement Appeal

Bd., 65 Mass. App. Ct. 244, 246 (2005).

Plaintiffs have the "heavy burden" of demonstrating that the

agency's decision is invalid. Massachusetts

Ass'n of Minority Law Enforcement Officers v. Abban, 434 Mass. 256, 263-264

(2001). On appeal, CRAB's decision must

stand unless it is unsupported by substantial evidence or based on an error of

law. See G. L. c. 30A,

§ 14 (7); Murphy v. Contributory Retirement Appeal Bd., 463 Mass.

333, 344 (2012). "It is not our

province to determine whether the CRAB decision is based on the weight of the

evidence, nor may we substitute our judgment for that of CRAB" (quotations

and citation omitted). Murphy,

supra. We give due weight to the

agency's experience and specialized knowledge, as well to the discretionary

authority conferred upon it. See

G. L. c. 30A, § 14 (7); Murphy, supra at 344-345 . Indeed, "[i]n the notoriously difficult,

sometimes tortuous field of retirement rights and calculations, there is

particular reason for giving deference to the agency's expertness." Evans v. Contributory Retirement Appeal Bd.,

46 Mass. App. Ct. 229, 233 (1999).

"However, in deferring to the administrative body, we do not

abdicate our judicial responsibility."

Water Dep't of Fairhaven v. Department of Envtl. Protection, 455 Mass.

740, 744 (2010).

2.

Regular compensation. The

plaintiffs argue that they had reasonable expectations that their traffic duty

pay constituted regular compensation because prior to the 2010 PERAC

regulations, the board had included traffic duty pay when calculating regular

compensation for other employees, and retirement contributions had been

deducted from plaintiffs' traffic duty pay and forwarded to the board.[4]

We begin our analysis by looking to the

plain language of the statute. See

Plymouth Retirement Bd. v. Contributory Retirement Appeal Bd., 483 Mass. 600 ,

604 (2019). "Regular

compensation" is defined, in relevant part, as "compensation received

exclusively as wages by an employee for services performed in the course of

employment for his employer."

G. L. c. 32, § 1.

"Wages" are "the base salary or other base compensation

of an employee paid to that employee for employment by an employer; provided,

however, that 'wages' shall not include . . . [inter alia,] overtime,

commissions, [or] bonuses other than cost-of-living bonuses." G. L. c. 32, § 1. "As we have held, the 'straightforward

and unambiguous' language of § 1 indicates that 'regular compensation' is

'ordinary, recurrent, or repeated payments not inflated by any

"extraordinary ad hoc" amounts such as bonuses or overtime

pay.'" Public Employee Retirement

Admin. Comm'n v. Contributory Retirement Appeal Bd., 478 Mass. 832, 835 (2018),

quoting Pelonzi v. Retirement Bd. of Beverly, 451 Mass. 475, 479 (2008). "Where the statutory meaning is

unambiguous we are constrained to follow it . . . ." Providence & Worcester R.R. Co. v. Energy

Facilities Siting Bd., 453 Mass. 135, 142 (2009).

As found in the DALA decision, which was

adopted by CRAB and supported by the administrative record, the plaintiffs

could work traffic duty whenever they chose to do so, traffic duty was not a

part of their contractual duties, their hours varied, and compensation for

traffic duty was irregular and akin to overtime pay. In addition, the plaintiffs were paid their

overtime rate for traffic duty. In view

of these findings, we agree that the traffic duty payments lack the

"ordinary" nature required for an employee's regular compensation

under G. L. c. 32, § 1.

Indeed, our precedent supports this conclusion. See Hallett v. Contributory Retirement Appeal

Bd., 431 Mass. 66, 70 (2000) ("In G. L. c. 32, § 1, the definition of

'[r]egular compensation' excludes bonus, overtime, or severance

pay. . . . Hourly

compensation paid on an irregular basis is more akin to overtime payments than

to annual salary").[5] See also

Public Employee Retirement Admin. Comm'n, 478 Mass. at 835 .

Nonetheless, citing Colo v. Contributory

Retirement Appeal Bd., 37 Mass. App. Ct. 185, 188 (1994), the plaintiffs insist

that "the reasonable expectations of a retiree control[], even if PERAC's

interpretation of G. L. c. 32 resulted in denying

benefits." Otherwise stated, the

plaintiffs contend that the board's practice of including traffic duty pay when

calculating regular compensation created a reasonable expectation on which they

both relied. They contend that that

expectation obviates the need to determine whether traffic duty pay is regular

compensation. This argument fails for

various reasons.

First, for the reasons stated above, the

plaintiffs' argument is inconsistent with the language of G. L.

c. 32. Second, as the plaintiffs

acknowledged at oral argument, their claims are not predicated on equitable or

estoppel principles. Indeed, such an

argument would be unavailing, as equitable concerns may not trump a statutory

rule. See Plymouth Retirement Bd., 483

Mass. at 604, quoting Joslyn v. Chang, 445 Mass. 344, 352 (2005) ("[T]he

duty of the court [is] to adhere to the very terms of the statute, and not,

upon imaginary equitable considerations, to escape from the positive

declarations of the text"). Third,

Colo is distinguishable from the present case.

That case involved the application of a 1964 change in the retirement

law itself to the plaintiff who commenced work as a "call fire

fighter" in 1957. Colo, 37 Mass.

App. Ct. at 185-186, 190 . In 1964, the

Legislature amended G. L. c. 32, § 4 (2) (b), which

had the effect of "limit[ing] the authority of a retirement board in

determining how much creditable service to grant call fire fighters, among

others." Colo, supra at

186-187 . When the plaintiff retired

after more than thirty-two years of service, CRAB determined that "he

should be denied creditable service for the period after the effective date of

the [amendment to the] statute in 1964."

Id. at 186 . The court reversed a

Superior Court judgment affirming the CRAB decision because, on the particular

facts of that case, the plaintiff had a reasonable expectation under the

statute as it existed at the time he began his service (and for seven years

thereafter) "that his service as a call fire fighter would continue to

count as creditable service as long as deductions were being taken from his

salary and until his employment terminated." Id. at 191 .

Critical to that outcome, the court grounded its opinion in a statutory

right held by the plaintiff that the Legislature changed during the course of

the plaintiff's service. See id. at

188-189 ("retirement plans for public employees have been treated in

Massachusetts . . . as irrevocable contractual commitments rather

than mere gratuities, and where a retirement plan has generated material

expectations on the part of employees, they should be respected and not be

subject to significant legislative modification" [emphasis added;

quotation and citation omitted]).

In the present case, by contrast, the

plaintiffs never held a statutory right to having their traffic duty payments

count as "regular compensation."

Unlike the call firefighter in Colo whose expectation was based on

statutory authority, the plaintiffs here base their expectation solely on the

board's erroneous practice of deducting retirement contributions from the

plaintiffs' traffic duty pay. Although

there may be a degree of facial appeal to the equitable nature of the

plaintiffs' claim, expectations grounded in an administrative board's error are

not the same as expectations grounded in a statutory right. See Plymouth Retirement Bd., 483 Mass. at

604. Put simply, the board's incorrect

view that traffic duty payments constituted "regular compensation" is

not a tenable basis to ignore the language and meaning of "regular

compensation" under G. L. c. 32.

See Smith v. Commissioner of Transitional Assistance, 431 Mass. 638, 646

(2000) ("An agency regulation that is contrary to the plain language of

the statute and its underlying purpose may be rejected by the

courts").

3.

Substantial evidence. The

plaintiffs also contend that certain findings in the DALA decision, adopted by

CRAB, were not supported by substantial evidence and thus we should set aside

the decision and remand for further proceedings. The argument is unpersuasive.

"In order to be supported by

substantial evidence, an agency conclusion need not be based upon the clear

weight of the evidence . . . or even a preponderance of the evidence,

but rather only upon reasonable evidence, . . . i.e., such evidence

as a reasonable mind might accept as adequate to support a conclusion, after

taking into consideration opposing evidence in the record" (quotations

omitted). Lisbon v Contributory

Retirement Appeal Bd., 41 Mass. App. Ct. 246, 257 (1996), quoting G. L.

c. 30A, § 1 (6).

Here, the plaintiffs contest DALA's

findings that their traffic duty payments were irregular, paid on an hourly

basis, and akin to overtime payments. As

discussed supra, ample evidence in the administrative record supports the

findings that the plaintiffs were paid hourly for their traffic duty work;

their hours were inconsistent and differed at all relevant times; and they were

paid an overtime rate for the work. As

explained in the DALA decision, "the amounts [of the payments made to the

plaintiffs] differed based on how many hours the [plaintiffs] worked, they were

not regular, ordinary, and normal. The

traffic payments were not stipendiary, but changed according to the

[plaintiffs'] choice." Where the

record supports these determinations, we conclude that the DALA decision was

supported by substantial evidence, and judgment properly entered for the

defendants.[6]

Judgment

affirmed.

footnotes

[1] Thomas

Lambert.

[2] Retirement

board of Brockton.

[3] PERAC's June

17, 2010 memorandum concerning the regulations read, in relevant part: "In determining whether payments on or

after July 1, 2009 are 'regular compensation' for purposes of Chapter 32,

Retirement Boards must consider the criteria contained in 840 [Code Mass. Regs.

§] 15.03(3)(b)."

[4] As stated in

the DALA decision, the board has been holding the plaintiffs' "retirement

deductions pending the outcome of the appeals." At oral argument, the defendants confirmed

that those deductions will be returned to the plaintiffs if this appeal is

decided in the defendants' favor.

[5] The

plaintiffs maintain that Hallett, 431 Mass. at 70 , is inapposite because it

concerns "regular compensation" provisions in G. L. c. 32,

§ 1, that are applicable only to schoolteachers. We disagree.

In Hallett, supra, the court analyzed the statutory definition of

"regular compensation," and the legislative intent behind G. L.

c. 32:

"[T]he

statutory intent is clearly to exempt irregular payments of compensation from

the retirement base. (In G. L.

c. 32, § 1, the definition of '[r]egular

compensation'

excludes bonus, overtime, or severance pay.)

Hourly compensation paid on an irregular basis is more akin to overtime

payments than to annual salary."

Moreover, the Supreme Judicial Court has

relied on the reasoning in Hallett in defining "regular compensation"

in disability retirement cases involving employees other than teachers. See Public Employee Retirement Admin. Comm'n,

478 Mass. at 835 (citing Hallett, in case involving public works employee, for

broad proposition that "the statutory intent [behind the definition of

'regular compensation'] is clearly to exempt irregular payments of compensation

from the retirement base"); Rotondi v. Contributory Retirement Appeal Bd.,

463 Mass. 644, 652 (2012) (same, in case involving town moderator).

[6] The

plaintiffs' contention that DALA reviewed the incorrect timeframe when

considering their traffic duty hours is unavailing. As the plaintiffs acknowledged, regardless of

the timeframe considered, the evidence before DALA showed that (a) the

plaintiffs' traffic duty hours were inconsistent and varied, and (b) they could

choose when to work or not work traffic duty at all relevant times.