ex parte communications did not "violate basic principles of fairness and due process oflaw"
How later courts described this case
- ex parte communications did not "violate basic principles of fairness and due process oflaw"
Written by the judges who cited it.
The opinion
STATE OF MAINE BUSINESS AND CONSUMER COURT
CUMBERLAND, ss Location: Portland
Docket No.: BCD-AP-12-p /
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)
KENNEBEC COUNTY, )
)
Petitioner, )
v.
)
)
/
)
MAINE PUBLIC EMPLOYEES )
RETIREMENT SYSTEM, )
)
Respondent )
)
DECISION AND ORDER
In this appeal of state agency action under Rule 80C of the Maine Rules of Civil
Procedure, Petitioner Kennebec County (the "County"), appeals from a decision of the Maine
Public Employees Retirement System (the "System") Board ofTrustees' (the "Board").
In its November 28, 2011, Decision and Order, the Board affirmed, in part, the January
20, 2011, final decision of the System's Executive Director's Designee ("EDD"). The Board
determined the County had a responsibility to offer System membership to its employees, and
that the County had failed to meet that responsibility with respect to three County employees. 1
The Board concluded the County was responsible for payment of past employer contributions
and interest on both employee and employer contributions for each of the employees should
they elect to enroll in the System.
1 The EDD ultimately concluded the County was responsible for back contributions to the Maine Public
Employees Retirement System for four of its employees, but the Board affirmed as to only three of the four
employees. The fourth employee is not part of this appeal.
1
STATUTORY BACKGROUND
The State of Maine provides retirement benefits to eligible public employees through a
pension plan administered by the System. The Legislature created the retirement program to
attract and retain qualified employees for public service. 5 M.R.S. § 17050 (2012). The System
offers eligible public employees retirement savings plans with favorable tax treatment. 5
M.R.S. § 17053 (2012). The Board is responsible for overseeing the administration and proper
operation ofthe System. 5 M.R.S. §17103(1) (2012).
Municipalities and counties may elect to have their employees participate in the System
by becoming a Participating Local District (PLD). See 5 M.R.S. §§ 17001(19), (27) (2012)
(defining local district and PLD); 5 M.R.S. §§ 18201 & 18804 (2012) (explaining how a local
district becomes a PLD). In 1990, the Legislature established the Consolidated Retirement
Plan for Participating Local Districts (the Plan), see P.L. 1989, Ch. 811, § 3 (effective April 10,
1990) (codified at 5 M.R.S. §§ 18801-06 (2012)), and the County joined the Plan in 1995
(R. 6.74). Employees of PLDs may also be covered by Social Security, and System and Plan
membership is optional for employees in PLDs that also offer Social Security coverage.
5 M.R.S. §§ 18251(3)(D), 18252 (2012).
Section 18252 governs PLDs that also offer Social Security coverage; section 18252-A
governs PLDS that do not offer Social Security coverage. 5 M.R.S. §§ 18252, 18252-A (2012).
The County, however, offers Social Security coverage to its employees and thus is governed by
section 18252. The statute provided, 2 at the relevant time period:
An employee who is or would be covered by the United States Social
Security Act as a result of employment by a participating local district having a
2 There have been numerous amendments to the statutes governing the System in the relevant time period. The
parties agree, however, that section 18252, which is the key statutory provision, did not change substantively
between 1985 and 2000. All further references to section 18252 are to the 2000 version as contained in the 2002
edition of the Maine Revised Statutes Annotated. Also relevant to this appeal is section 18252-A; references to
section 18252-A are to the 2000 version as contained in the 2002 edition of the Maine Revised Statutes Annotated.
The Court otherwise cites to the relevant statutes currently in effect.
2
so-called "Social Security Section 218 agreement" may elect to join, not to join or
to withdraw from the retirement system under the following conditions.
I. New employees. A new employee may join the retirement system at the
beginning of employment or at any time after beginning employment, so long as
he is still an employee of the participating local district and the district continues
to be a participating local district.
5 M.R.S.A. § 18252 (2002).
FACTUAL BACKGROUND
On July 1, 1951, the County became a local district within the System. (R. 14.198.)
County employees have Social Security under a "218 Agreement," (R. 18.1.), and since 1982,
their membership in the System has been optional pursuant to section 18252. The County has
offered a deferred compensation program administered by the Aetna insurance company as an
alternative to participation in the System. (R. 1.56.)
In February 2008, the System conducted a benefits presentation for County employees.
(R. 77 .11; 53.66). After the presentation, four County employees, hired between 1985 and 2000,
sent letters to the System stating the County had not informed them of their membership
eligibility and inquiring into the possibility of purchasing credit for previous service with the
County. (R. 77.11.) In a March 2008 letter, the System informed the County it had received
letters from four County employee claiming they had not been offered membership when hired
and asked the County to confirm whether the four employees had been offered membership
(R. 77.12.) The County responded that it had no specific documentation to demonstrate
whether the employees were told they could join the System when they were hired. (R. 77.12.)
Instead, the County asked the System to review additional, general evidence that all four
employees had been informed of their right to join the System. (R. 1.5.) The County offered
the following evidence:
3
• On August 25, 1995 and again on August 31, 2000, County Commissioners
distributed a memorandum to all department heads describing the retirement
options available to employees. (R. 77.7.)
• On September 9, 1994, during a presentation to County employees, an Aetna case
manager informed County employees that those not enrolled in the System were
eligible to enroll in the Aetna deferred compensation plan on a matching basis. (R.
77.7.)
• On September 12, 1994, the County Commissioners sent a memorandum to all
department heads informing them of amendments made to union contracts. Because
of those amendments, all County employees would have a choice of retirement
options, which included System benefits. (R. 77.7.)
• The County Commissioner sent a letter to the System stating that conversations
with former clerks who were responsible for enrolling employees for membership
revealed that "all employees, including the [four] employees, were offered
membership when they were hired."3 (R. 77.12.)
• Other employees who were hired around the same dates as the four employees at
issue in this case had enrolled in the System, and three of the four employees chose
other retirement plan options. (R. 1.63.)
• Finally, in 2002, the County implemented procedures to document whether an
employee was offered membership. (R. 14.8-14.9).
The Retirement Services Supervisor reviewed the County's evidence and concluded that the
County failed to provide sufficient documentation to support its assertion that the four
employees had been offered System membership.4
In December 2008, the County asked the Executive Director's Designee (EDD) to
review the supervisor's findings. The County argued that neither section 18252 nor section
18252-A required the County to "document either the notification to employees of the existence
of [the System] or to document any choices made by the employees." (R. 1.28.) The County
8 One County clerk served from the 1970s to the late 1980s or early 1990s (R. 77 6.) The current clerk since
2002, testified that the former clerk recalled offering two of the employees membership when they were hired.
The former clerk, however, declined to sign an affidavit, and the two employees testified the clerk had never
informed them of their right to join the System. (R. 77.11.) Another former clerk, who served from 1998 to 2004,
recalled to the current clerk that she offered membership to the employee hired in June 2000. (R. 77.11.)
4 The supervisor relied on 5 M.R.S. § 18251 (2009), and stated that this section "make[sJ clear that employees for
whom membership is optional are to make an election ... [and wJithout documentation of the election, neither the
employee nor the employer can demonstrate that this requirement has been met." (R. 1.35.)
4
further asserted that the question of whether the County was required to offer its employees
System membership had been settled 2002. (R. 1.29.) In 2002, the System requested
information from the County as to whether it had offered System membership to an employee
who was attempting to purchase credit based on past service toward retirement from the
System. (R. 14.87.) The County produced no documentation it had offered or had not offered
membership to the employee; the employee was permitted to purchase credit for past service,
but the System did not then seek back contributions from the County or alert the County that
it was required to offer membership. (R. 14.88 to .92.)
On January 27, 2009, the EDD issued an initial decision. (R. 1.5.) The EDD stated that
the crucial question was whether employees were offered membership. (R. 1.5.) The EDD
concluded the "absence of documentation establishing or even indicating that the employer
complied with its statutory obligation to offer membership to the four employees [was]
nettlesome to the [County's] position." (R. 1.6.) The EDD also addressed the 2002 incident,
stating that the decision was based on the individual facts then before the System and was not
dispositive on the current matter. (R. 1.29.)
The EDD reviewed the County's additional evidence and arguments and rendered a
final decision. (R. 77.2.) He concluded that the County was required to offer membership to
those four employees but failed to do so. (R. 77.2.) Thus the County was required to pay past
employer contributions and interest on both employee and employer contributions for each of
the employees should they elect to enroll in the System. (R. 77.2.)
The County appealed the Executive Director's decision to the Board pursuant to
5 M.R.S. § 1 7 451 ( 20 12 ). On February 22, 2010, the parties appeared before a hearing officer
appointed by the Board. (R. 77.2.) Several county witnesses testified, but the System did not
present witnesses. (R. 77.2.) In her initial decision, the hearing officer recommended that the
5
Board reverse the EDD's decision and find the employees ineligible for retroactive membership
benefits. (R. 21.1.) On July 2, 2010, the hearing officer forwarded her recommendation to the
appeals clerk to distribute for comment. (R. 77.2.)
The appeals clerk asked the Board's counsel whether the four employees affected by the
decision should also receive copies of the recommended decision, as they had not participated in
the hearing. (R. 77.2.) In response, the Board's counsel sent a letter to the hearing officer on
June 8, 2010, expressing his concern that the four employees had not been given an opportunity
to participate in the proceeding. (R. 77.2.) The Board's counsel did not forward a copy of this
letter to the County at the same time he sent it to the hearing officer. (R. 68.1 to .3; see also Pet.
Br. 17.) The County did not learn about the communication between the Board's counsel and
the hearing officer until it read the report dated June 24, 2011. (R. 65.2 to .3; 68.1 to .3.)
On July 16, 2010, the Board notified the four employees of the proceedings and gave
them the case record. (R. 23.11 to .13.) These four became intervenors and the hearing officer
reopened the hearing to allow the four to submit testimony and to allow the County and
System to offer rebuttal evidence. (R. 77.3.) The County objected to the inclusion of the four
employees as parties to the appeal, but the County's objection was overruled. (R. 77.3.) A
second day of hearings was held on December 16, 2010, and the four employees as well as
Terry York, the current Kennebec County Clerk, testified. (R. 77.3.)
On January 20, 2011, the EDD confirmed his original decision to the effect that the
County was required to offer System membership to the four employees and had failed to
establish it had done so, and therefore was responsible for paying employer contributions as
well as interest on employer and employee contributions. (R. 59.1 ).
In June 2011, the hearing officer disseminated a report dated June 24, 2011, for
comment among the parties. (R. 65.1 to .15.) The parties provided their comments (R. 68.1-
6
70.2), and the hearing officer issued her final report on August 8, 2011, along with her response
to the parties' comments (R. 71.1-72.2).
The Board adopted the hearing officer's August 8, 2011 recommended decision on
November 28, 2011, with some changes. (R. 77.2 to .16.) The Board concluded the EDD's
decision was consistent with the established policy of the System, which required the County,
as a Participating Local District, to advise its employees of their eligibility for membership in
the System and provide information on the terms of the Plan. (R. 77.13.) The Board also
concluded that holding the County responsible for back payments was consistent with relevant
federal laws as well as with the System's authority to collect monies and employ means
appropriate to carry out its authority. (R. 77.13.) This appeal followed.
DISCUSSION
I. STANDARD OF REVIEW
In an appeal of a final agency action pursuant to M.R. Civ. P. 80C and 5 M.R.S. § 11007
(2012), the court reviews an agency's decision "for error oflaw, abuse of discretion, or findings
not supported by substantial evidence in the record." Goodrich v. Me Pub. Emps.' Ret. Sys., 2012
ME 95, ~ 6, 48 A.3d 212. The court will "not attempt to second-guess the agency on matters
falling within its realm of expertise" and judicial review is limited to "determining whether the
agency's conclusions are unreasonable, unjust or unlawful in light of the record." Imagineering,
Inc. v. Sup't cifins., 593 A.2d 1050, 1053 (Me. 1991). The party seeking to vacate the agency's
decision has the burden of proving the agency's decision is clearly erroneous. Douglas v. Bd. cif
Trs. cifthe Me. State Ret. Sys., 669 A.2d 177, 179 (Me. 1996).
A court will not overturn the agency's fact-finding unless the party seeking to overturn
the agency's decision demonstrates that the administrative record compels a contrary result "to
the exclusion of any other inference." Id. at 179. The court must affirm findings of fact if, on
7
the basis of the entire record before it, the agency could have fairly and reasonably found the
facts as it did." Seider v. Bd. cifExam'rs cifPsychologists, 2000 ME 206, ~9, 762 A.2d 551, 555. A
court is not entitled to substitute its judgment for that of the agency, "merely because the
evidence could give rise to more than one result." Dodd v. Sec. cif State, 526 A.2d 58S, 584 (Me.
1987); accord 5 M.R.S. § 11007(3). Rather, the court may consider only whether "the agency's
decision is supported by substantial evidence on the whole record." Dodd, 526 A.2d at 584.
Finally, with respect to interpretation, a court will interpret a statute according to its
plain meaning, without examining legislative history or giving deference to the Board's
construction. See Whitney v. Wal-Mart Stores, Inc., 2006 ME S7, ~~22-2S, 895 A.2d S09;
Dombkowski v. Ferland, 2006 ME 24, ~22, 89S A.2d 599 (explaining that the court's ultimate
objective when interpreting a statute is to "effectuate the intent of the Legislature, which is
ordinarily gleaned from the plain language of the statute"). In doing so, a court will consider
the language in the context of the whole statutory scheme and construe the statute to avoid
absurd, illogical, or unreasonable results. See FPL Energy Me. Hydro LLC, 2007 ME 97, ~ 12,
926 A.2d 1197. "When a statute administered by an agency is silent ... on a particular point,"
the court "review[s] whether the agency's interpretation of the statute is reasonable and
[must] uphold its interpretation unless the statute plainly compels a contrary result."
Goodrich, 2012 ME 95, ~ 6, 48 A.sd 212.
II. ANALYSIS
The County first argues that that the System does not have jurisdiction to make
administrative decisions in a dispute relating to an employee's election to become a member of
the System. Second, the County argues that the Board erred when it determined that Kennebec
County was required to offer System membership to employees, a rule which the Board had not
formulated or announced prior to the County's actions in this case. Third, the County argues
8
that the 2002 incident equitably estops the System from assessing back contributions against
the County. Next, the County maintains that it did, in fact, offer System membership to the
three employees and the factual findings are contrary to the record. Finally, the County argues
that the Board's decision should be reversed because the Board, through its counsel, interfered
with the hearing process and violated its own established procedures.
A. System Juris diction and Authority
The County first argues the System, does not have jurisdiction to determine whether
the County adequately apprised its employees of their membership rights or pay back
contributions and interest into the System. (Pet. Br. 8.)
The Board is responsible for overseeing the administration and proper operation of the
System. 5 M.R.S. § 1710S( 1) (2012 ); MSAD 27 v. Me Pub. Emp. Ret. Sys., 2009 ME 108, ~ 26,
98S A2d S91. In MSAD 27, the Law Court stated that the Board "has long been charged with
the general administration and responsibility for the proper operation of the retirement system
and for making [the System laws] effective." Id. (quoting 5 M.R.S.A. § IOS1(a) (Supp. 1972)
and 5 M.R.S.A § 1710S(1) (2008)). Moreover, the Board has broad authority to "in all cases
[to] make the final and determining administrative decision in all matters affecting the rights,
credits and privileges of all members . . . in participating local districts . . . ." 5 M.R.S.
§ 1710S(6) (2012). Finally, the Board has the authority to collect back contributions plus
interest from the County when it improperly applies System statutes and rules. 5 M.R.S.
§ 17154(9) (2012).
In support of its jurisdictional argument, the County points to section 18252-A(2)(C),
which explicitly strips the Board ofjurisdiction "to make final administrative decision[s]" with
regards to matters enumerated in the section. 5 M.R.S.A. § 18252-A(2)(C) (2002). The
problem with the County's argument is that section 18252-A does not apply to it because the
9
County has chosen to offer Social Security to its employees. Any exclusion from the Board's
jurisdiction within section 18252-A has no bearing on the Board's jurisdiction pursuant to
section 18252. Moreover, the fact that the Legislature explicitly stripped the Board of
jurisdiction in certain defined circumstances indicates that the Board would have otherwise had
jurisdiction to hear those matters. The Board was therefore within its jurisdiction to address
the present dispute between the County and its employees based on section 18252 and to order
the County to pay back contributions and interest against the County for its failure to carry out
its responsibilities as a PLD.
B. The Board's Interpretation of 5 M.R.S.A. § 18252
The central issue in this case is whether the County, as a PLD, was required to inform
its employees of their right to membership in the System. Key to this issue is the interpretation
of section 18252, which provides, in relevant part:
A person who is or would be covered by the United States Social Security
Act as a result of employment by a participating local district with Social
Security coverage may elect to join, not to join, to cease contributions to or to
withdraw from the retirement system under the following conditions.
1. New employees. A new employee may join the retirement system at the
beginning of employment or at any time after beginning employment, so long as
he is still an employee of the participating local district and the district continues
to be a participating local district.
5 M.R.S.A. § 18252 (2002). The County also relies on section 18252-A(2) for its arguments,
which parallels section 18252 and provided:
2. District employer responsibilities. Responsibilities of the participating
local district employer are as follows.
B. The participating local district employer is responsible for providing
employees with information as to membership under the Participating
Local District Retirement Program and as to coverage under the plan
provided by the employer under section 18252-B to assist the employee in
making election decisions ....
10
C. The participating local district employer is responsible for providing
procedures by which employees make elections under this section, for
maintaining all records relevant to the election process and each
employee's elections, for informing the retirement system as to employee
elections in accordance with procedures established by the executive
director ....
5 M.R.S.A. § 18252-A(2)(B) & (C) (2002).
The County argues it did not have a duty to offer each employee membership in the
System for three reasons. First, it notes, section 18252, which applies to districts with Social
Security coverage, like the County, does not expressly state the County is required to
communicate information about the System to its employees. (Pet. Br. 8.) Thus, the County
concludes, in the absence of express language in section 18252, it did not have a statutory duty
to offer membership to its employees.
The County further asserts, in contrast to section 18252, the parallel section 18252-A,
applicable to PLDs without Social Security coverage, provides enumerated responsibilities for
employers, including the responsibility to provide information to each employee about their
eligibility and to provide procedures for each employee to make an election. In addition, the
County notes, language in section 18252-A(S)(B) explicitly excludes section 18252 PLDs from
the application of section 18252-A. (Pet. Br. 7.) The County concludes that by reading the two
statutes together, one can derive a clear intent by the Legislature to exempt PLDs with Social
Security coverage from the requirements imposed on those PLDs without Social Security
coverage.
Second, the County asserts, even if section 18252 imposes some obligation on the
County to apprise its employees of the existence of System benefits, this obligation imposes on
the County a much lesser burden than PLDs without Social Security coverage. (Reply Br. 8.)
This lesser burden, the County argues, only requires that the County apprise its employees of
11
the existence of the System, as a group and, therefore, it is not required to offer benefits to each
employee or else to provide written documentation to show that it offered such information.
(Pet. Br. 9.) The County maintains the Board is holding it to the same requirements imposed
on PLDs without Social Security coverage.
Finally, the County contends, the System did not provide advance notice, either by
statute or regulation, to the County that it was required to provide information about System
membership directly to each employee. (Pet. Rep. Br. 10.) Thus, the County contends,
application of the Board's interpretation of section 18252, as requiring the County to provide
information about System membership to each employee it hired between 1985 and 2000,
would be improperly retroactive. (Reply Br. 10-11.) To support this contention the County
cites Tenant's Harbor General Store, LLC v. Department cif Environmental Protection, 2011 ME 6,
10 A.sd 722, for the proposition that the Board is prohibited from applying rule that is not
promulgated by statute or regulation.
In its decision, the Board agreed with the County that section 18252-A is inapplicable to
the County, and instead concluded the County, as a PLD, has a duty to inform its employees of
their right to join the System pursuant to section 18252. The Board determined that the
language of section 18252, which states that employees "may elect to join" the System, implies
that employees have a right to participate in the Plan. (R. 77.12.) That right, the Board
concluded, requires the County, as a PLD, to "adequately apprise its employees ofthe existence
of [the System], their eligibility and the terms of the plan." (R. 77.12.) The Board further
observed that "[a]lthough the County was not required to provide written documentation that
it informed its employees of [their System] eligibility, it was nonetheless, required to provide
the information to employees." (R. 77.12.) The Board explained its decision was consistent
with relevant laws as well as the established policy of the System: "[o]nce a local district
12
achieves PLD status, it must offer MSRS membership to all eligible employees and provide
those employees with information about membership and coverage." (R. 77.4 (quoting Town of
Bethel and Robert Pilgrim, No. 2006-05.'3, Decision at 6 (Me. State Ret. Sys. Bd. ofTrs. Apr. 12,
2007 (interpreting section 18252))); R. 77.13.)
Section 18252 expressly states that employees "may elect to join" the System. While
section 18252 is silent as to whether employees must be advised of their right to elect to join,
this court agrees with the Board's interpretation that notice is implied. The right to elect to
join would be meaningless if the County failed to advise employees, when they were hired, of
their right to make that election. The Board's reading of section 18252, requiring the County
to give timely notice to employees of their right to join the System, is therefore reasonable. See
Goodrich, 2012 ME 95, ~ 6, 48 A.sd 212. The County's arguments based on the language of
section 18252-A, which does not apply, do not render the Board's interpretation of section
18252 any less reasonable.
On its face, section 18252 does not prescribe the detailed obligations that section 18252-
A imposes upon PLDs without Social Security coverage, but that does not mean section 18252
imposes no obligation on the County. Notice required by section 18252 must be sufficient to
permit each employee to make an informed and timely choice to elect or not to elect System
membership. Section 18252 does not require documentation of notice in the way that section
18252-A does, but an employer subject to section 18252 fails to document at its peril.
Nothing in section 18252 renders the Board's interpretation contrary to the legislation's
purpose. See Tenant's Harbor General Store, LLC v. Dept. Envtl. Prot., 2011 ME 6, ~ 16, 10 A.sd
722. Rather, the Board's conclusion is consistent with the overall purpose of the System, which
is "to encourage qualified persons to seek public employment and to continue in public
employment during their productive years." 5 M.R.S. § 17050. Accomplishing this objective
IS
necessarily requires that a PLD provide information to employees about their eligibility for
System membership to enable an employee to make a meaningful choice.
Finally, by holding the County to its responsibility, as a PLD, to provide its employees
with information so they can make a meaningful choice to join the System, the Board was
interpreting an existing statute that was in effect at all relevant times, and not retroactively
applying a new standard. The Law Court has stated:
As part of its adjudicative responsibility, the Board had the obligation to apply
the statute that was at issue in the proceeding. When a party to an agency
adjudicative proceeding raises a question about a statute's meaning or scope and
the statute is one administered by the agency, the agency must interpret it if the
interpretation is necessary to the adjudicative decision. Agencies are not
required to promulgate rules defining every statutory term that might be called
into question. They are expected to apply statutes within their expertise as
cases anse.
Cobb v. Bd. of Counseling Profls Licensure, 2006 ME 48, ~ 24, 896 A.2d 271; accord Fryeburg
Health Care Ctr. v. Dep't ofHuman Servs., 1999 ME 122, ~ 9, 7S4 A.2d 1141.
The County fails to recognize that at all relevant times the employees have always had
the right to receive notice pursuant to section 18252. An interpretation of a statute's plain
meaning is not the announcement of a new rule. See Sears, Roebuck & Co. v. State Tax Assessor,
2012 ME 110, ~~ 11-12, 52 A.sd 941. Moreover, to the extent that the Board clarified
existing rights and obligations of PLDs in Town of Bethel and Robert Pilgrim, No. 2006-053,
(Me. State Ret. Sys. Bd. of Trs. Apr. 12, 2007), such clarification is permissible and not
retroactive in effect. See MSAD 27, 2009 ME 108, ~ 25, 98S A.2d S9 (citing Levy v. Sterling
Holding Co., 544 F.sd 49S, 506 (sd Cir. 2008)) ("[W]here a new rule constitutes a
clarification-rather than a substantive change-of the law as it existed beforehand, the
application of that new rule to pre-promulgation conduct necessarily does not have an
impermissible retroactive effect ... ").
14
C. Equitable Estoppel
The County argues that the issue regarding its responsibility to offer membership to
each employee first arose in 2002. In 2002, the System sent a letter inquiring about the
contributions of an employee unrelated to the present proceedings. The County argues that
this letter and the System's decision to not assess back contributions against the County
established a "course of conduct" and that the System is therefore equitably estopped from
reversing course. (Pet. Br. 15 (citing Berry v. Bd. ifTrs., 1994 Me. Super. LEXIS 176, at *15
(Apr. 28, 1994)).)
To prevail under its equitable estoppel claim, the County must show that it reasonably
relied on the System's statements or conduct; that this reasonable reliance induced the County
to act; and that as a result of such reliance the County suffered harm. Mrs. T.v. Comm'r if the
Dep't if Health & Human Servs., 2012 ME IS, ~ 9, S6 A.sd 888; Dep't ifHealth & Human Servs.
v. Pelletier, 2009 ME 11, ~ 17, 964 A.2d 6SO; City ifAuburn v. Desgrosseilliers, 578 A.2d 712, 714
(Me. 1990). In an equitable estoppel claim, the court considers "the totality of the
circumstances, including the nature of the government official or agency whose actions provide
the basis for the claim and the governmental function being discharged by that official or
agency." Pelletier, 2009 ME 11, ~ 17, 964 A.2d 6SO. The County is not confined to the
administrative record in asserting its equitable estoppel claim, as the agency did not have
jurisdiction to grant equitable relief Berry v. Board ifTrustees, 66S A.2d 14, 18-19 (Me. 1995).
In this case the County has not established that it changed its position or failed to take
certain action in reliance on the System's conduct. For whatever reason, the System decided
not to "press the matter" in 2002 regarding whether the County was required to make back
contributions for the employee who purchased credit. Regarding the questions of notice and
documentation thereof that arise in this case, the County never asked them and the System
15
never answered them. Thus, nothing in the System's acts or omissions in connection with the
2002 matter induced a change of position in justifiable reliance on the part of the County. The
court concludes, based on the totality of the circumstances, the County has not made out its
equitable estoppel claim.
D. The Board's Factual Findings
The County asserts that it provided sufficient notice to the employees' right to join the
System and that the Board's findings on this point are not supported by the evidence. The four
employees all stated they were not offered System membership by the County when they were
hired. Conflicting testimony was offered and the hearing officer commented on the difficulty of
"reconstructing events of sometimes more than two decades ago." (R. 77. 14.) The four
employees were hired at different times and different people dealt with new hires at different
times and different policies were in effect at different times. (R. 77.14.) The Board determined
the County failed to show it had a consistent practice from 1986 to 2000 of offering System
membership to its employees when they began employment. In fact, the County's own
evidence showed that forms and procedures changed over the years. (R. 18.6). While the
County produced evidence to show that other, informed employees actually joined the System,
the evidence also showed that other employees were given no information about their rights to
JOlll. (R.18.6.)
The court's role is not to reevaluate the evidence; the court is only to determine if the
findings are supported by substantial evidence in the record. See Friends ofLincoln Lakes, 2010
ME 18, ~ 14, 989 A.2d 1128. Although the evidence was conflicting, the Board's finding that
the four employees were not offered System membership is supported by substantial evidence
on the record. See Concerned Citizens to Save Roxbury, 2011 ME S9, ~ 24, 15 A.Sd 126.3.
16
E. Ex Parte Communication and Procedural Violations
The County argues the Board's decision should be reversed because the Board's counsel
engaged in ex-parte communication with the hearing officer after the latter had disseminated
her initial decision which recommended overturning the EDD's final decision. (Pet. Br. 17.)
The ex parte communication the County refers to is the letter the Board's counsel wrote to the
hearing officer stating his concern that the recommendation would become final without
recorded participation of the four employees, which may cause them to be "unfairly . . .
precluded from appealing the decision or from otherwise seeking retroactive membership." (R.
21.2.)
The County argues the conduct of the Board's counsel violated 5 M.R.S. § 17106-A(4)
(2012) because the Board's counsel did not also send a copy of the letter to the County when he
sent it to the hearing officer. The County asserts it did not receive a copy of the letter or have
knowledge of its transmittal until it was noted in the hearing officer's second decision, dated
June 24, 2011. (Pet. Br. 17.) The County further contends that the Board violated 5 M.R.S.
§ 17106-A(2) (2012) because the ex parte communication influenced the hearing officer's final
decision, because the hearing officer held a new hearing with the four employees as intervenors,
which ultimately resulted in her finding the County responsible for employer contributions and
employer and employee interest. (Reply Br. 14.)
Title 5 M.R.S. §§ 17106-A(2) and (4) provide:
2. No direct or indirect influence. A party to the appeal, including the
appellant, the board, the executive director or the staff of the board may not
exert direct or indirect influence on a hearing officer with regard to decisions of
the hearing officer or the decision-making process.
4. Discussion of issues before the hearing officers. All parties to an
appeal, including the appellant, the board, the executive director and the
retirement system staff are prohibited from ex parte communication with the
hearing officer. All parties, including the appellant, the board, the executive
17
director and the retirement system staff are prohibited from initiating or
engaging in any discussion with a hearing officer regarding the substance of any
pending case without first making all parties aware of the proposed contact and
without also giving all parties the opportunity to participate in any
communication.
5 M.R.S. § 17106-A (2009)
After the first hearing, the hearing officer forwarded her recommendation to
each of the parties for comment. The counsel's letter to the hearing officer was
consistent with this practice of allowing the parties to comment on the hearing officer's
recommendations. The error was not the counsel's letter to the hearing officer. Rather,
the error resulted from Board counsel's failure to "mak[e] making all parties aware of
the proposed contact and without also giving all parties the opportunity to participate
in any communication, as required by 5 M.R.S. § 17106-A(4 ).
Moreover, the hearing officer should have alerted the County and other parties
immediately to the communication. The, inappropriate ex parte nature of the communication,
coupled with the fact that the County only learned of it months later, fueled legitimate
suspicion by the County as to the fairness of the proceedings.
Although this court does not endorse the failure of the Board's counsel and the hearing
officer to apprise all parties immediately of the communication between them, the County has
not shown how it has been prejudiced by the inappropriate ex parte communication. What the
County lost was the opportunity to object immediately to the employees' participation. That
objection, had it been lodged, would almost certainly have been to no avail. As the County
acknowledged at oral argument, even had the question of the employees' participation been
raised later, at the Board level, as it certainly would have been by the Board's counsel, the
Board would have and, in the court's view, should have allowed the employees to participate.
In that sense, participation by the employees was inevitable, and the fact that it resulted
18
from Board counsel's letter instead of from action by the hearing officer sua sponte or the Board
itself did not prejudice the County in any way.
Moreover, the County was not prejudiced by the manner by which the employees were
allowed to participate as intervenors. The County had ample opportunity to rebut any evidence
presented by the employees at the second hearing. Thus, the court cannot say that the ex parte
communication influenced the decision of the hearing officer in this case and made the ultimate
judgment unfair to any party. See New England Tel. & Tel. Co. v. Pub. Utils. Comm'n, 448 A.2d
272, 280 (Me. 1982) (ex parte communications did not "violate basic principles of fairness and
due process oflaw").
F. The Board's Choice ofRemedy
The Board's choice of remedy-to require the County to pay in to the System the
employer contribution with respect to any of the three of employees who elect to join, along
with interest on the employer and employee contributions-is appropriate. The three
employees may join the System if they pay in the total of the contributions they would have
paid since entering the County's employ, less interest thereon. This is both equitable and
consistent with the System's statutory authority.
CONCLUSION
Based on the entire record, this court affirms the Board's decision. The County had a
responsibility to inform its employees of their membership rights. The County failed to satisfy
the Board that it had informed three employees of their right to become members, and the
Board's determination to that effect was supported by substantial evidence. The County is
responsible for payment of past employer contributions and interest on both employee and
employer contributions for the employees, should they elect to enroll in the System. The
Board's determinations are well within its jurisdiction, because it is responsible for overseeing
19
the administration of the System and has the responsibility to make the final administrative
decision in all matters affecting the rights of all members in participating local districts. 5
M.R.S. § 1710.3(6). Finally, the ex parte communication was harmless because no prejudice
resulted to the County.
IT IS ORDERED: The appeal of Petitioner Kennebec County is denied. Judgment is
hereby awarded to Respondent Maine Public Employees Retirement System, along with any
recoverable costs.
Pursuant to M.R. Civ. P. 79(a), the Clerk shall incorporate this Decision and Order into
the docket by reference.
Dated April 8, 201.3
A.M. Horton
Justice, Maine Business & Consumer Court
~
L( · .l')
Entered on the Docket:
Copies sent via Mail_ Electronically~
20
BCD-AP-12-11
Kennebec County (Petitioner) v. Maine Public Employees Retirement System
(Respondent)
Counsel for Petitioner:
Warren Shay, Esq.
Perkins, Townsend, Shay & Talbot, P.A.
Attorneys at Law
48 Court Street
P.O. Box 467
Skowhegan, ME 04976-0467
Counsel for Respondent:
Walter McKee, Esq.
Walter F. McKee
Attorney at Law
McKee Law, P.A.
133 State Street
Augusta, Maine 04330
James M. Bowie, AAG
Assistant Attorney General
Office of the Maine Attorney General
6 State House Station, Augusta, ME 04333