Government Employees Retiremen v. Government of the Virgin Islan

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_______________________

Nos. 20-1749 and 20-1766

_______________________

GOVERNMENT EMPLOYEES RETIREMENT

SYSTEM OF THE VIRGIN ISLANDS,

Appellant in No. 20-1766

v.

THE GOVERNMENT OF THE VIRGIN ISLANDS;

COMMISSIONER OF FINANCE OF THE

GOVERNMENT OF THE VIRGIN ISLANDS,

Appellants in No. 20-1749

_______________________

On Appeal from the District Court

of the Virgin Islands

(D.C. No. 3:81-cv-00005)

District Judge: The Honorable Curtis V. Gomez

__________________________

Argued December 8, 2020

Before: SMITH, Chief Judge, CHAGARES and MATEY,

Circuit Judges

(Filed: April 9, 2021)

Robert D. Klausner [ARGUED]

KLAUSNER, KAUFMAN, JENSEN & LEVINSON

7080 N. W. 4th Street

Plantation, FL 33317

Cathy M. Smith

GOVERNMENT EMPLOYEES RETIREMENT SYSTEM

3438 Kronprindsens Gade

GERS Complex, Suite 1

St. Thomas, VI 00802

Counsel for Government Employees Retirement System

Brigid F. Cech Samole

Katherine M. Clemente

Elliot H. Scherker [ARGUED]

GREENBERG TRAURIG, LLP

333 Southeast 2nd Avenue

Suite 4400

Miami, FL 33131

Angel Taveras

WOMBLE BOND DICKINSON LLP

Independence Wharf

470 Atlantic Avenue

Suite 600

Boston MA 02110

Carol L. Thomas-Jacobs

OFFICE OF ATTORNEY GENERAL OF VIRGIN ISLANDS

Department of Justice

34-38 Kronprindsens Gade

GERS Complex, 2nd Floor

St. Thomas, VI 00802

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Counsel for Government of the Virgin Islands and

Commissioner of Finance of Government of the Virgin

Islands

Ian H. Gershengorn

JENNER & BLOCK LLP

1099 New York Avenue, N.W.

Suite 900

Washington DC 20001

Counsel for Amicus Appellees

TABLE OF CONTENTS

I. Background and Procedural History _____________ 3

A. Legal Background ____________________________ 3

1. Creation of GERS in 1959 ____________________ 3

2. The 1968 amendments _______________________ 5

3. The 2005 amendments _______________________ 5

B. Procedural History ___________________________ 7

1. The 1981 complaint _________________________ 7

2. The 1984 consent judgment ___________________ 8

3. The 1994 amendment to the consent judgment ____ 8

4. The tangential 2001 action ___________________ 9

5. The 2016 enforcement proceedings ____________ 10

II. Jurisdiction and Standard of Review ____________ 15

III. The GVI’s Appeal____________________________ 16

A. Principal Award to GERS _____________________ 17

1. The historical under-contributions fall within the

consent judgment ___________________________ 17

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2. The GVI’s historical under-contributions were

properly before the District Court ______________ 19

3. Direct contributions to GERS and the true-up process

do not offset the award _______________________ 28

4. The expert reliably calculated the $18.9 million in

principal __________________________________ 31

B. Award of Fees and Interest to GERS ____________ 32

1. The statutes are not intended only for willful

misconduct ________________________________ 33

2. The District Court erred by applying the statutes

retroactively _______________________________ 35

3. GERS’s action was timely ____________________ 42

IV. GERS’s Cross-Appeal ________________________ 51

A. GERS’s Textual Arguments ___________________ 54

B. GERS’s Authorities _________________________ 59

C. The Parties’ Historical Understanding ___________ 62

V. Conclusion __________________________________ 66

‐iv-

__________________________

OPINION OF THE COURT

_________________________

SMITH, Chief Judge.

The promise of a pension is critical to the retirement se-

curity of many of us who work. And retirement security “is

often compared to a three-legged stool supported by Social

Security, employer-provided pension funds, and private

savings.”1 When an employer’s promise of deferred compen-

sation goes unfulfilled, the expectations of many-a-pensioner

are upended. That threat looms for a substantial share of the

citizenry of the U.S. Virgin Islands because of the perilous fi-

nancial condition of its Government Employees Retirement

System (“GERS”).

When a public-pension system reaches the point where

it is actuarially unsound, the blame rarely lies with a single per-

son, political party, or institution. Economic recession, un-

funded legislative mandates, poor investment strategies—all

can conspire to destabilize a pension system. And each bears

responsibility for GERS’s untenable financial state.

But GERS has also faced a unique challenge. Virgin

Islands law seemingly fails to obligate anyone to fund GERS

when employee-compensation-based contributions and associ-

ated investment returns fall short of the assets required, based

1

Former Rep. Sander Levin, Social Security at 75: Don’t Mess

with Success, HUFFPOST (Aug. 16, 2010, 12:00 PM),

http://www.huffpost.com/entry/social-security-at-75-don_b_

683384.

on actuarial assessments, to meet future pension commitments.

For decades, GERS has experienced annual deficits between

its assets and projected liabilities to system participants. Its

aggregate shortfall now stands at about three billion dollars—

leaving the system on the brink of insolvency.

Yet the Government of the Virgin Islands (“GVI”) is it-

self fiscally challenged and has at times failed to remit to

GERS all the employer contributions it is statutorily mandated

to make. GERS has repeatedly sued the GVI for these contri-

butions—first in 1981, resulting in a consent judgment, and

most recently in 2016, when GERS sought to enforce that judg-

ment in court. GERS claimed that, as far back as 1991, the

GVI had contributed tens of millions of dollars less than

required by the statutory percentages of employee compensa-

tion. GERS also sought to compel the GVI to step into the

billion-dollar breach, arguing that—independent of these

fixed-percentage contributions—the GVI must fully fund

GERS to the point of actuarial soundness.

With an appointed expert’s help, the District Court

awarded GERS an amount calculated to reflect the GVI’s his-

torical percentage-based under-contributions. We will affirm

that award of principal. But the Court erred when it enhanced

the award by applying late-arriving interest and penalty stat-

utes retroactively. We will vacate the portion of the judgment

to GERS that includes those enhancements and remand with

instructions for the District Court to reduce its award accord-

ingly. Finally, the Court determined that the consent judgment

does not require the GVI to fund GERS for the delta between

its assets and liabilities. We, too, find no anchor for this sweep-

ing duty GERS seeks to impose on the GVI, so we will affirm

the District Court’s ruling in GERS’s cross-appeal. Even were

we to cut that obligation on a rationale made of whole cloth,

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the system would remain insolvent. The citizens of the United

States Virgin Islands—population 106,4052—simply cannot

pay the necessary billions. The cure for GERS’s chronic

underfunding is not judicial but legislative—if not at the terri-

torial level, then perhaps on Capitol Hill.

I. BACKGROUND AND PROCEDURAL HISTORY

We need not trace the long and winding road across

laws, history, politics, and litigation that has brought the Virgin

Islands’ public-pension system to where it is today. Instead,

we hew to the legal framework relevant to the questions pre-

sented and to the procedural narrative by which this case and

the parties’ arguments have wended their way to us.

A. Legal Background

1. Creation of GERS in 1959. By passing Act 479,

effective October 1, 1959, the unicameral legislature of the

Virgin Islands (“the Legislature”) created GERS as the retire-

ment system for GVI employees. GERS was “established as a

trust, separate and distinct from all other entities”; endowed

with “the powers and privileges of a corporation”; and required

to transact all its business and hold all its assets in its own

name. Act of June 24, 1959, No. 479, §§ 701(c), 715(a), 1959

V.I. Sess. Laws 92, 94, 104. The Legislature vested responsi-

bility for operating GERS in a board of trustees, which has the

power to authorize the purchase or sale of investments, make

2

United States Census Bureau, U.S. Virgin Islands Demo-

graphic Profile Summary File – 2010 Census of Population

and Housing (2013), available at https://www.census.gov/

schools/facts/u.s.%20virgin%20islands.

‐3-

contracts, and “sue and be sued” under the GERS name. Id.

§ 715(b)(3), (6). The system was “established as a part of the

Division of Personnel in the office of the Government Secre-

tary,” with the Director of Personnel acting as both administra-

tor of GERS and secretary of the board. Id. § 715(c).3

Act 479 also purported to fund GERS. It implemented

section 718 of the new Retirement Code, which provided first

that “[t]he various obligations of the system shall be financed

in accordance with actuarial reserve requirements from

contributions by members, contributions by the employer,

interest income, and other income accruing to the system.” Id.

§ 718. Section 718 then required employees to contribute to

GERS via a “deduction from compensation” at a rate of four

percent, with an annual compensation cap. Id. It also set an

annual compensation floor so that the GVI, as employer, would

contribute four percent for an employee “whose minimum rate

in his class of position is $1200 per annum, or less.” Id.

Unlike the specified employee contribution rate, section

718 did not fix the rate for the GVI’s employer contribution.

Instead, Section 718 obligated the GVI to “make [employer]

contributions concurrently with the contributions by members

in an amount which, if paid during such service, and added to

the members’ contributions, together with regular interest, will

be sufficient to provide actuarial reserves” for the payment of

benefits under the system. Id. These concurrent employer con-

tributions were to “be determined by applying a percentage rate

to the aggregate compensation of the members for each regular

3

In 1987, the Legislature amended section 715 to classify

GERS as an “independent and separate agency” of the GVI.

Act of June 24, 1987, No. 5265, § 1303(a), 1987 V.I. Sess.

Laws 92, 97; accord 3 V.I.C. § 715(a).

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payroll period.” Id. Section 718 provided for an annual com-

putation “of the actuarial reserve requirements” of the system

and, in a provision reminiscent of its first sentence, looked for

financing to “contributions by the members as above provided

and by contributions by the employer.” Id.

2. The 1968 amendments. In 1968, the Legislature

passed Act 2098, which amended section 718. Act of February

8, 1968, No. 2098, 1968 V.I. Sess. Laws, Pt. I, 9. Act 2098

divided section 718 into subsections, with its first sentence on

“actuarial reserve requirements” becoming subsection (a). Id.

§ 718(a). Act 2098 retained the four-percent employee contri-

bution rate but changed the compensation caps and minima.

See id. § 718(b), (c). It also slightly modified the provision for

annual computation of the system’s actuarial reserve require-

ments. Id. § 718(e). In a gloss on the original language of

subsection (f), Act 2098 provided that “[t]he employer shall

make contributions which together with the members’

contributions and the income of the system will be sufficient to

provide adequate actuarially determined reserve for the

annuities and benefits herein prescribed.” Id. § 718(f). And

for the first time, the employer’s contribution rate was fixed at

a percentage of employee compensation—on a temporal

gradient from 4.00% for the period before July 1, 1968 to

7.63% for the period after July 1, 1971—by the terms of sub-

section (g). Id. § 718(g). Both employer and employee contri-

butions were to be paid into the system each payroll period. Id.

§ 718(h).

3. The 2005 amendments. Relevant amendments were

later adopted when the Legislature passed the Retirement

System Reform Act of 2005. Act of Nov. 2, 2005, No. 6794,

2005 V.I. Sess. Laws 380.

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First, the bill added new subsections to section 704.

That section now provides that “[r]etirement contributions paid

for a prior period, whether by employer or by member, must

be charged a delinquent fee of 1.5% for each calendar month

or part thereof that paid [sic] contributions should have been

paid.” 3 V.I.C. § 704(q). Such delinquent contributions

“include[] prior period contributions due to incorrect wages

and contributions from an earlier report or wages and

contributions that should have been reported, but were not.”

Id. The 1.5 percent “assessment may not be waived,” id.,

unless the GERS administrator in “exceptional circumstances”

grants a waiver—and then, “only once for an employer during

any one fiscal year.” Id. § 704(r).

Second, the 2005 amendments require the accrual of

interest on delinquent contributions to GERS. Under the new

provision, “[w]henever any agency, department[,] instrumen-

tality, or employer fails to make timely contributions, interest

shall accrue on the amount of the contributions not paid based

on the system’s domestic fixed income investment rate of

return not to exceed the rate of 9%.” Id. § 736(b).

Third, the Legislature amended existing provisions of

section 718 by, among other things, adding that “the Board

may actuarially determine the rate of contribution for members

and employers of the system,” id. § 718(a), and that “[t]he

employer and employee contributions must be paid to the

system within ten days after the closing of each payroll

period,” id. § 718(h). The Board, however, “may not increase

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rates, in addition to rates already in effect, by more than 3.0%

over a five-year period.” Id. § 718(b).4

Finally, the 2005 act codified section 734, under which

“[a]ll payments required by this chapter to be made by the

employer to the retirement fund are continuing obligations of

the Government.” Id. § 734. This provision ensures that

“funds owed to the system by the employer should never be

capable of escaping payment due to a statute of limitations.”

V.I. 26th Legis., Bill No. 26-0071, Bill Summary, Section 21.

B. Procedural History

1. The 1981 complaint. Exercising its “power to sue

and be sued in its own name,” GERS filed a complaint in 1981

against the GVI and its Commissioners of Finance in the Dis-

trict Court of the Virgin Islands. Emps. Ret. Sys. of Gov’t of

V.I. v. Quinn, No. 3:81-cv-5 (D.V.I.), Compl. ¶ 2; JA754.5

GERS alleged that the Commissioners had failed to timely re-

mit several pay periods’ worth of employee contributions to

GERS and commingled these funds with the GVI’s. GERS

also alleged that the GVI had failed to timely remit to GERS

“its matching retirement contribution of 11%,” as required by

4

This constraint on GERS’s rate-setting ability resides in the

subsection of the statute on employee contributions. But

GERS seems to understand that it equally applies to the

employer rate. Indeed, GERS’s inability to unilaterally in-

crease the GVI’s required employer contribution percentage is

arguably what makes GERS’s cross-appeal justiciable. We ex-

press no opinion on the scope of GERS’s authority under

section 718(b).

5

Citations preceded by “JA” are to the parties’ Joint Appendix.

‐7-

statute, to the tune of nearly $500,000. 1981 Compl. ¶ 9; see

also id. ¶ 4 (noting GVI’s responsibility “to contribute 11%”

as “the employer”). GERS requested injunctive relief ordering

the Commissioners and the GVI to timely pay GERS all funds

due and owing, preventing the Commissioners from commin-

gling funds, and restraining the GVI “from future withholding

of matching contributions.” Id. at 3. GERS also sought inter-

est of at least 18 percent annually on all funds due and owing,

as well as attorneys’ fees and costs.

2. The 1984 consent judgment. After written and oral

discovery, the parties entered into a consent judgment in 1984.

The judgment acknowledged that the GVI’s Commissioner of

Finance “receives and releases employee and employer retire-

ment contributions.” JA113. So it obligated “defendant,

Commissioner of Finance, [to], within thirty (30) days of each

payroll period, certify and pay into the Employees’ Retirement

System Fund the total amount due of employee and employer

contributions as defined in Title 3, Section 718.” JA113–14.

The judgment recognized that “[a]t this time, the Court does

not have jurisdiction to compel the payment of the legal rate of

interest by the Commissioner of Finance on deliqneunt [sic]

employee and employer contributions.” JA114. But it also

provided that “if an act is established by the Legislature,

authorizing the payment of interest, this Consent Judgment

shall be amended to reflect such change.” Id. A Virgin Islands

assistant attorney general executed the consent judgment on

behalf of all defendants.

3. The 1994 amendment to the consent judgment. In

March 1994, four members of GERS individually filed a fed-

eral lawsuit against GERS, several of its trustees, and the GVI

alleging chiefly that the GVI had been dilatory in making

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required payments to GERS under the consent judgment. See

Molloy v. Monsanto, Civ. No. 1994-30, 1994 WL 326237, at

*1 (D.V.I. June 9, 1994). Among the motions filed by the

Molloy plaintiffs was a motion to enforce the consent judg-

ment, seeking to require the GVI to remit employee and

employer contributions to GERS within 30 days of each pay-

roll period. Id. That motion, although filed in Molloy, was

“considered as having been filed in the litigation that produced

the consent judgment,” id. at *1 & n.6, and the District Court

denied it without prejudice. Quinn, 1994 WL 326224, at *1

(D.V.I. June 9, 1994) (noting allegation that “the amount of

GERS money in the government’s bank account has increased

more than fifteen fold since December 1984”).

Hoping to remedy these and other issues related to the

consent judgment, GERS and the GVI jointly asked the District

Court to modify it. The modified consent judgment, entered in

April 1994, ordered that a separate interest-bearing bank

account in the name of GERS be created for the Commissioner

to use when depositing employer and employee contributions,

“interest[,] and all other monies received of every kind and

description belonging to the System.” JA316. The parties also

agreed on an auditing process, deposit logistics, and an invest-

ment interest allocation methodology. The provisions of the

1984 consent judgment were otherwise retained. Upon com-

pletion of motions practice, and following conferences with the

District Court, any disagreement between the parties about the

amended consent judgment seemed to have dissipated by late

1994.

4. The tangential 2001 action. In 2001, GERS sued the

Governor of the Virgin Islands, the Legislature, and the GVI

seeking to compel the payment of contributions required under

discrete 1994 legislation that enacted a special early retirement

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incentive program aimed at avoiding layoffs of certain employ-

ees. See, e.g., Gov’t Emps. Ret. Sys. v. Turnbull, 134 F. App’x

498, 500 (3d Cir. May 16, 2005); see also 3 V.I.C. §§ 718c,

718(j). That legislation included a financing mechanism

requiring the GVI to make special quarterly contributions to

GERS to compensate for employee contributions lost because

of the early retirement of incumbent contributors. GERS

alleged that the 1994 legislation and related amendments did

not put in place an adequate financing structure, and thus un-

constitutionally impaired an implied contract between the GVI

and its employees, in violation of Article 1, Section 10 of the

U.S. Constitution.

The District Court in Turnbull dismissed GERS’s com-

plaint, holding that GERS failed to state a cognizable Contracts

Clause claim. Gov’t Emps. Ret. Sys. v. Turnbull, No. 01-cv-69

(D.V.I. Jan. 23, 2004). We affirmed, albeit on ripeness

grounds. We held that GERS “failed to establish a justiciable

case or controversy” because “no GERS members have

suffered any harm” and there was “no evidence in the record

that any GERS members have been denied, or are about to be

denied retirement benefits, or were otherwise injured as a

consequence of the claims alleged.” 134 F. App’x at 501.

5. The 2016 enforcement proceedings. In 2016, GERS

moved to enforce the consent judgment, alleging that the GVI

had violated section 718(f) by failing to fund GERS for the

entire delta between its assets and its liabilities to pensioners.

GERS referred to this supervening obligation, over and above

the fixed-percentage employer contributions spelled out in sec-

tion 718(g), as the GVI’s “actuarially determined employer

contribution” or “ADEC.” JA89–93. Then, in 2017, GERS

moved on an emergency basis to enforce the consent judgment

because, for several months beginning in late 2016, the GVI

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withheld wholesale its employees’ and its own employer fixed-

percentage contributions. GERS filed both enforcement

motions in the 1981 Quinn action, under its case number and

caption. And both motions sought enforcement through a find-

ing that the GVI was in contempt of the consent judgment or,

alternatively, by recourse to the District Court’s “general

equitable powers.” JA293–94; JA515. The GVI ultimately

admitted to the blanket withholding of fixed-percentage

contributions, the District Court found a breach of the consent

judgment, and the GVI then repaid a total of about $36

million—which included principal and interest—by July 2018.

The proceedings next focused on whether what had

occurred was an isolated breach or whether the GVI had failed

to remit fixed-percentage contributions to GERS in any prior

period. GERS’s administrator testified that “missing employer

contributions going back years are still outstanding.” JA1748.

(According to GERS publications, “[t]he issue of prior periods

missing employer contributions” first surfaced with the imple-

mentation of a new computer system in March 2012. JA3055;

JA3082; JA3107.) GERS calculated that the GVI owed over

$72 million in previously missed employer contributions, in-

cluding interest and penalties, through the end of 2017. Based

on a sample population of employees, the GVI claimed that it

owed GERS just a few hundred dollars. Because of the dispar-

ity in the parties’ calculations, the District Court appointed an

independent expert, RSM US LLP (“RSM”), to determine the

extent of the GVI’s arrears for prior periods beginning in 1991

and running through December 31, 2018. The GVI and GERS

each had equal access to RSM’s data and personnel, and equal

obligations to provide records to and cooperate with RSM.

RSM examined all available payroll documents and rec-

ords of contributions to GERS. RSM concluded that the GVI

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had indeed failed to contribute all that was required under the

fixed percentages in force during various payroll periods

dating back as far as 1991.6 Based on detailed records covering

2010–2018, RSM determined that the GVI under-contributed

to GERS during that period by about $4.0–$5.0 million.

According to RSM, these under-contributions stemmed from

clerical, accounting, and processing errors. In a February 5,

2020 order, the District Court adopted RSM’s calculations,

awarded GERS $5.0 million in principal for the GVI’s 2010–

2018 under-contributions, and directed RSM to calculate the

pre-2010 amounts and undertake an interest analysis. The

Court also set a schedule for the parties to brief the appropri-

ateness and amount of interest.

RSM concluded that the under-contributions during the

1991–2009 period were less certain because of gaps in the rel-

evant pay records. The “[m]ost significant[]” impediment to

its obtaining comparable detailed payroll and employment

information for the 1991–2009 calculations was that the GVI

had changed its payroll software at the end of 2009 without

“migrat[ing] detailed historical payroll and employment infor-

mation.” JA4806. Making matters worse, “[t]he [GVI] server

on which [the defunct software’s] data was stored . . . was de-

commissioned and did not receive patching and maintenance

in recent years.” Id. Even so, RSM successfully retrieved

from the decommissioned server annual payroll reports that

included the GVI’s historical determinations of each

employee’s pensionable wages. By subtracting known non-

6

Over the same timeframe, RSM determined—based on data

it characterized as incomplete—that GVI employees also

under-contributed to GERS by some $2.2 million. GERS

elected not to pursue current or former GVI employees to

recover that amount.

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pensionable wages, such as overtime pay, from reported gross

wages, RSM performed its own calculations of pensionable

wages. Applying the statutory contribution percentages to the

GVI’s and to its own pensionable wage determinations yielded

a significant variance between the two as to the GVI’s histori-

cal contribution obligations. Accordingly, RSM went on to

refine its calculations.

RSM began by sampling 20 employees and comparing

the GVI’s and its own calculation of each employee’s pension-

able wages with their salary information as documented in

Notices of Personnel Action (“NOPAs”), which the GVI gen-

erates based on changes in an employee’s pay or employment

status. This comparison led RSM to assume that the GVI had

properly calculated an employee’s pensionable wages when-

ever its calculation was greater than 60 percent of RSM’s own

initial calculation. RSM thus adopted the GVI’s calculations

in every such instance across the entire set of raw pensionable

wage data from 1991–2009, amounting in toto to 83 percent of

the data inputs to RSM’s findings for that period.

But for the remaining 17 percent, RSM’s and the GVI’s

pensionable wage calculations varied more significantly. RSM

analyzed available payroll records for the 97 employees with

the largest variance, requesting historical personnel records,

including information relating to annual salaries, from both the

GVI and GERS. It estimated an expected pensionable wage

amount for these employees by using NOPAs, when available,

and, when those were unavailable, GERS’s annual benefit

summaries. But this methodology accounted for only about 12

percent of the high-variance problem. For the remaining 88

percent of the high-variance data, which “likely erroneously

include[d] certain non-pensionable wage types,” RSM reduced

its own pensionable wage calculations by a ratio derived from

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a sample of 75 employees for whom there was “sufficient sup-

porting documentation”—the average ratio between their

document-supported pensionable wages and RSM’s own ini-

tial pensionable wage calculations. JA4815–16. RSM then

relied on both of its sets of adjusted pensionable wage

calculations.

Using this methodology, RSM determined with 95 per-

cent confidence that the GVI’s 1991–2009 under-contributions

fell within an interval from about $11.6 million to $15.8

million. The District Court chose the statistical midpoint of

this range and, in an April 3, 2020 order, awarded GERS

$13,860,879 (hereinafter rounded to $13.9 million) in

principal.

In calculating interest and fees, RSM applied the 2005

interest and delinquency-fee statutes to the balance of under-

contributions the GVI accumulated before the statutes’

effective date and, alternatively, only to contributions the GVI

missed on or after that date. In its April 3 order, the District

Court adopted the former calculation and awarded GERS

$43,161,354 (hereinafter rounded to $43.1 million) in interest

and penalties on the GVI’s $13.9 million in under-

contributions from 1991–2009. Based on RSM’s calculations,

the Court also awarded GERS $6,121,273 (hereinafter rounded

to $6.1 million) in interest and delinquency fees on the $5

million in principal for the 2010–2018 under-contributions.

The District Court’s award to GERS for all the GVI’s under-

contributions from 1991–2018, inclusive of interest and penal-

ties, totaled about $68 million.

Finally, the District Court granted judgment to the GVI

on GERS’s motion to enforce the consent judgment with

respect to the ADEC obligation. The Court reasoned that the

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consent judgment, which obligated the GVI to make its

employer contributions to GERS within 30 days of each

payroll period, conflicted with GERS’s proffered ADEC

obligation, which would obligate the GVI to fund GERS in

accordance with the annual actuarial analysis ordered by the

Retirement Code.

The GVI appealed the District Court’s award of princi-

pal and interest, and GERS appealed the District Court’s denial

of its motion to enforce the consent judgment as to the alleged

ADEC obligation.

II. JURISDICTION AND STANDARD OF REVIEW

We have jurisdiction to review the District Court’s

February 5, 2020 and April 3, 2020 orders under 28 U.S.C.

§ 1291.7 The District Court had jurisdiction over GERS’s orig-

inal 1981 action under Section 22 of the Virgin Islands Revised

Organic Act of 1954. 48 U.S.C. § 1612. Its jurisdiction to hear

GERS’s motion to enforce stems from United States Public

7

The February 5, 2020 order awarding GERS principal for the

2010–2018 period was not listed in the GVI’s Notice of Ap-

peal. Federal Rule of Appellate Procedure 3(c)(1)(B) requires

that the Notice “designate the judgment, order, or part thereof

being appealed.” That said, we liberally construe the require-

ments of Rule 3(c). Pacitti v. Macy’s, 193 F.3d 766, 776 (3d

Cir. 1999). “[W]hen an appellant gives notice that he is

appealing from a final order, failing to refer specifically to ear-

lier orders disposing of other claims . . . does not preclude us

from reviewing those orders.” Shea v. Smith, 966 F.2d 127,

129 (3d Cir. 1992) (citation omitted). When, as here, there is

a connection between the specified and unspecified orders,

review is appropriate. Pacitti, 193 F.3d at 777.

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Law No. 98-454, 98 Stat. 1732, 1738, sec. 703(b) (codified at

48 U.S.C. § 1612 note (Jurisdiction of District Court Over

Pending Cases)).

We review the District Court’s interpretation and con-

struction of the consent judgment de novo. Holland v. N.J.

Dept. of Corr., 246 F.3d 267, 277–78 (3d Cir. 2001). We also

review statutory constructions de novo. United States v.

Hodge, 948 F.3d 160, 162 (3d Cir. 2020). We review any

mixed questions of fact and law de novo insofar as “the pri-

mary facts are undisputed and only ultimate inferences and

legal consequences are in contention.” U.S. Gypsum Co. v.

Schiavo Bros., Inc., 668 F.2d 172, 176 (3d Cir. 1981). But

when the mixed questions require a district court to make case-

specific factual conclusions, our review is deferential—

examining the record for clear error. See U.S. Bank Nat’l Ass’n

ex rel. CWCapital Asset Mgmt. LLC v. Village at Lakeridge,

LLC, 138 S. Ct. 960, 967–69 (2018).

Interpreting an issue of Virgin Islands law that the Vir-

gin Islands Supreme Court has not ruled on requires us to

“predict how [that court] would decide” the matter. Edwards

v. HOVENSA, LLC, 497 F.3d 355, 361 n.3 (3d Cir. 2007).

III. THE GVI’S APPEAL

The GVI raises a hodgepodge of objections to the Dis-

trict Court’s judgment for GERS on the issue of historical

under-contributions. The challenges can be sorted into attacks

on the District Court’s (A) award of $18.9 million in principal

to GERS and (B) enhancement of that principal with $49.2 mil-

lion in interest and fees. We will affirm the District Court’s

award of $18.9 million in principal to GERS. We will also

affirm its award of $6.1 million in interest and fees for the

‐16-

2010–2018 period. But the District Court erred by applying

the interest and delinquency fee statutes to enhance arrears that

the GVI accumulated before those statutes’ effective date. We

will therefore vacate the $43.1 million enhancement for the

1991–2009 period and remand with instructions.

A. Principal Award to GERS

The GVI contends that (1) its under-contributions to

GERS from 1991–2018 are beyond the scope of the consent

judgment; (2) the issue of whether it under-contributed to

GERS was not properly before the District Court; (3) certain

of its direct contributions to GERS and the process of “truing

up” contributions at the time of an employee’s retirement offset

the $18.9 million award; and (4) the portion of the award cover-

ing the 1991–2009 period rests on unreliable data.

There is no merit to any of the GVI’s arguments.

1. The historical under-contributions fall within the

consent judgment. The GVI argues that the consent judgment

was limited to requiring timely biweekly contributions to

GERS. This was different in kind, the GVI claims, from failing

to remit all funds that have since been determined were

required under the percentages set by statute. But the GVI’s

argument conflicts with the text of the consent judgment and

section 718, both of which require mathematical accuracy.

That the “biweekly contributions were correct when

made and later circumstances may have required an increased

contribution,” Appellants’ Reply Br. 6, is beside the point

because the consent judgment and statute are formulaic. A

consent decree is interpreted as a contract, with its scope “dis-

cerned within its four corners, and not by reference to what

‐17-

might satisfy the purposes of one of the parties to it.”

Firefighters Local Union No. 1784 v. Stotts, 467 U.S. 561, 574

(1984) (quoting United States v. Armour & Co., 402 U.S. 673,

681–82 (1971)). Under the consent judgment, the GVI must

pay GERS “the total amount due of employee and employer

contributions as defined in Title 3, Section 718.” JA113–14

(emphasis added). Section 718 in turn sets forth, first, the

fixed-percentage framework for deducting employee contribu-

tions from paychecks. 3 V.I.C. § 718(b), (d). It then requires

“[t]he employer” to “contribute” to GERS in “an amount paid

upon a percentage of employees[’] compensation” after each

pay date, and specifies certain percentages and dates of

increase. Id. § 718(g); see also id. § 718(h). A straightforward

reading brooks no argument that funds demanded by the statu-

tory percentages are unrecoverable if inadvertently withheld,

whether due to clerical errors or other circumstances. The Re-

tirement Code prohibits both the employer’s intentional

“refusal” and unintentional “failure” to pay. See id. § 736(a)

(“Neither the government nor any agency, department, or

instrumentality may fail or refuse to pay the employer’s con-

tribution required by this chapter within the applicable time

limitation.” (emphases added)); accord id. § 704(s); see also

id. § 704(q) (classifying as “delinquent” and subject to

enhancement “prior period contributions due to incorrect

wages” (emphasis added)).

Granted, a consent decree’s reach is limited by “the gen-

eral scope of the case made by the pleadings.” Sansom Comm.

by Cook v. Lynn, 735 F.2d 1535, 1538 (3d Cir. 1984) (quota-

tion omitted). But GERS’s 1981 complaint made the case that

the GVI had failed to contribute the full amount that was

required of it as employer. See, e.g., 1981 Compl. ¶¶ 4, 9

(alleging that GVI failed to timely remit to GERS “its matching

‐18-

retirement contribution of 11%” as “the employer”). And it

sought an order compelling the GVI to pay all funds due and

owing, including the withheld employer contributions, as well

as restraining the GVI “from future withholding of matching

contributions.” Id. at 3. So the general scope of GERS’s orig-

inal complaint jibes with the dictates of both the consent decree

and section 718. And even assuming some dissonance

between the allegations in the 1981 complaint and the GVI’s

under-contributions here, we are loath to slice and dice them in

order to depart from a plain reading of the consent judgment—

particularly given the vintage of most of the relevant facts. See,

e.g., Harris v. City of Philadelphia, 137 F.3d 209, 212 (3d Cir.

1998) (noting that a court should not “strain the decree’s pre-

cise terms or impose other terms in an attempt to reconcile the

decree with [the court’s] own conception of its purpose”).

We thus conclude that the consent judgment obligated

the GVI to make the under-contributions that were the subject

of the District Court’s award of principal.

2. The GVI’s historical under-contributions were

properly before the District Court. The GVI raises the corol-

lary argument that its liability for historical under-

contributions to GERS was not properly before the District

Court. To be sure, GERS’s enforcement motions that spawned

the District Court’s evidentiary hearings sought first to impose

the so-called ADEC obligation at issue in the cross-appeal, and

then to recover contributions that the GVI had intentionally

refused to pay GERS beginning in late 2016. In the latter

motion, GERS alleged that the GVI stopped timely and fully

paying fixed-percentage contributions in 2016 and into 2017,

and attached a sworn affidavit from the GERS administrator to

support those factual allegations. But GERS did not, in these

motions, claim a systemic “unintentional” breach redolent of

‐19-

the GVI’s legacy under-contributions, nor did it seek fixed-

percentage deficiencies stretching back decades. That said, we

are not troubled by the absence of this issue from either the

enforcement motions or the initial proceedings.

First, we cannot say that the District Court clearly erred

by concluding that the GVI’s historical under-contributions

were systemically intertwined with the breaches GERS

asserted. Based on GERS’s motions, the District Court

received evidence from both sides about the extent of the

GVI’s unpaid liabilities. The District Court then heard testi-

mony about the GVI’s various instances of nonpayment over

the years, amid the backdrop of GERS’s litigation against the

GVI for unpaid contributions in the 1980s, 1990s, and 2000s.

After hearing the GVI’s argument that “the indispensable pred-

icate” to GERS’s recovery of missing prior-period contribu-

tions was “some sort of supplemental pleading” or “motion that

lays [it] out,” the District Court ruled that nothing “precludes a

court from undertaking its own inquiry to determine . . . the

depth and breath [sic] of th[e] breach” that “a party points

out.”8 JA3451–71 (“[A] party certainly doesn’t take the role

8

The award to GERS of the GVI’s contribution deficiencies

for the 1991–2018 period did not come with an express written

conclusion that the GVI breached the consent judgment. The

GVI raises this as part of its argument against expanding the

scope of GERS’s claims to embrace the historical under-

contributions. But the District Court made relevant findings

and a ruling of breach on this specific issue. For example, at a

November 2018 hearing, before instructing the parties to pre-

sent evidence to value the 1991–2018 missing fixed-rate

contributions, the District Court stated:

‐20-

of the Court into its hands when it makes suggestions.”).

Hence the Court’s appointment of RSM, the third-party expert,

to examine the parties’ records and opine on the full range of

the GVI’s arrears. Before RSM released its first report, the

Court concluded that the GVI’s intentional withholding of con-

tributions beginning in late 2016 was only a “snapshot in time”

of a larger “systemic failure to pay what is due and owing,

which systemic failure [has] require[d] the Court to intervene

on one, two, and multiple occasions [in the 1980s and 1990s].”

JA3774–76.

When a district court “takes a raft of case-specific

historical facts, considers them as a whole, balances them one

against another,” and makes a legal conclusion consisting “pri-

marily” of “factual work,” appellate courts should review that

conclusion only for clear error. U.S. Bank Nat’l Ass’n, 138 S.

Right now the evidence that has been largely pre-

sented by the GERS or by the Government of the

Virgin Islands suggests that there is, one, a

breach; and two, there is an amount that needs to

be determined as to the depth and breadth of that

breach. So if the Government wishes the Court

to consider any other evidence that hasn’t al-

ready been provided in the record, then the Gov-

ernment needs to present that sooner rather than

later. I think we’ve covered this issue about the

breach. . . . The breach needs to be closed.

JA1969. To take another example, the Court expressed at a

subsequent hearing that “the government failed to meet its

obligations to make payments on behalf of the employees and

the employers,” a “deficiency [that] needs to be remedied in

short order.” JA2970–71.

‐21-

Ct. at 967–68 (reserving for de novo review situations where

“applying the law involves developing auxiliary legal princi-

ples of use in other cases”). That is precisely what the District

Court did in concluding that the GVI’s under-contributions

stretching back to 1991 were systemically related to the initial

ADEC and 2016 alleged breaches at the heart of GERS’s

enforcement motions.9 We decline to disturb the District

Court’s conclusion, which was based on the consent judgment,

GERS’s allegations, and decades of legal and factual develop-

ment—all of which are memorialized, but only partially, in

6,000-odd pages of appendix that the parties have submitted on

appeal. Simply describing the District Court’s inquiry “indi-

cate[s] where it (primarily) belongs: in the court that has pre-

sided over the presentation of evidence, that has heard all the

witnesses, and that has both the closest and the deepest under-

standing of the record.” Id. at 968; see also Manning v. Energy

Conversion Devices, Inc., 13 F.3d 606, 607 (2d Cir. 1994)

(affirming district court order and rejecting argument that it

“improperly expand[ed] the scope of the settlement agreement

because . . . . district court’s factual finding as to what [was]

meant by the term ‘parties’ was not clearly erroneous”).

Even were we to second-guess the District Court’s con-

clusion that the breach GERS alleged was a snapshot of the

breach later borne out by the evidence, we would still uphold

inclusion of the GVI’s legacy under-contributions in the litiga-

tion. If a claim, though never pleaded, is tried by express or

9

Our reluctance to hold that the District Court could not chart

this course finds support in a district judge’s ability to issue

civil contempt sanctions sua sponte after giving the contemnor

notice and an opportunity to be heard. See, e.g., Carty v.

Turnbull, 144 F. Supp. 2d 395, 396 (D.V.I. 2001).

‐22-

implied consent of the parties, the pleadings may be deemed to

conform even after judgment or on appeal.10 Schultz v. Cally,

528 F.2d 470, 474 (3d Cir. 1975) (citation omitted); see also

Fed. R. Civ. P. 15(b)(2). Determining whether an issue was

litigated by implied consent requires balancing three factors:

whether the parties recognized that the unpleaded issue entered

the case, whether the evidence supporting it was introduced

10

The operative filings animating this round of proceedings

were GERS’s enforcement motions. Those motions are, strict-

ly speaking, not pleadings within the meaning of Federal Rules

of Civil Procedure 7 and 10. But in the context of enforcing

the decades-old consent judgment based on a live complaint,

GERS’s contempt motions setting forth allegations of breach

are, in substance, pleadings. See, e.g., Pleading, BLACK’S LAW

DICTIONARY (11th ed. 2019) (“[a] formal document in which

a party to a legal procedure (esp. a civil lawsuit) sets forth or

responds to allegations”). The parties shared this understand-

ing in the District Court. For example, the GVI in its briefs

referred to “the motion to enforce the Consent Judgment (Doc.

#2)” as “essentially the operative pleading in this litigation.”

JA2463 (also describing what GERS “alleged” therein). And

when counsel for the GVI argued that GERS needed to “plead”

the issue of historical under-contributions, the District Court

asked, “When you say ‘plead,’ do you mean a complaint?”

Counsel responded: “Well, we’re in the motion-to-enforce

stage. But a motion that lays out [the under-contributions].

There certainly is no motion in the court’s file that says any-

thing like that, let us respond, let us take the discovery and

we’ll try it.” JA3454–57. Our holding on this point is limited

to the particular facts of this case and should not be taken to

mean that garden-variety motions are “pleadings” that can be

conformed to evidence via Rule 15.

‐23-

without objection, and whether a finding of consent prejudiced

the opposing party’s opportunity to respond. Douglas v.

Owens, 50 F.3d 1226, 1236 (3d Cir. 1995) (citations omitted).

The prejudice factor is the touchstone for granting leave to

amend under Federal Rule of Civil Procedure 15(b). See

United States v. Hougham, 364 U.S. 310, 316–17 (1960).

It is difficult to imagine how it could have been any

clearer to the parties that a new theory of breach entered the

case by, at the latest, November 2018. The issue of the GVI’s

historical under-contributions was expressly raised for the first

time at a hearing on September 27, 2018, when the Court ques-

tioned the GVI’s counsel for several minutes about this new

variant of the original contempt issue. Then, on November 26,

2018, the Court again inquired about the issue with GVI

counsel before hearing relevant testimony from GERS’s ad-

ministrator, and then instructed the GVI to respond to GERS’s

proffered under-contribution calculations. The Court reiter-

ated in an order several days later that the GVI was to respond

specifically to the witness’s report summarizing these missing

contributions. (The GVI’s legacy under-contributions came to

be called missed “prior-period” contributions, distinguishing

them from the more current deficiencies first adjudicated in the

proceedings.) Thereafter, so many hearings and briefing op-

portunities proliferated that it would be a waste of paper and

ink for us to recount them all here. Evidentiary hearings tar-

geted to this issue occurred in February, March, and May 2019,

after which the Court appointed the third-party expert to deter-

mine the amount of the GVI’s historical under-contributions.

RSM then issued two reports in 2020, one each for 1991–2009

and 2010–2018, with attendant opportunities afforded both

parties to furnish evidence, object to RSM’s methodology,

examine and cross-examine a representative of RSM, and

‐24-

argue related matters of law to the Court. The first factor thus

strongly favors a determination that the parties litigated the

issue of the GVI’s under-contributions by implied consent.11

Nor was there prejudice to the GVI. Though it opposed

introduction of its legacy under-contributions into the case, the

GVI fully litigated the issue in the above-mentioned eviden-

tiary hearings, status conferences, and papers across the span

of nearly two years. The GVI was hardly “denied a fair oppor-

tunity to defend and to offer additional evidence on th[e]

different theory.” Evans Prods. Co. v. W. Am. Ins. Co., 736

F.2d 920, 924 (3d Cir. 1984) (prejudice where “the [new] the-

11

Notwithstanding Rule 15’s ostensible requirement of a

“trial,” pleadings may be deemed amended to conform to the

evidence presented at hearings before a district judge. For ex-

ample, in the context of habeas corpus proceedings, the

Supreme Court of the United States “see[s] no reason why an

evidentiary hearing should not [equate with a trial for Rule

15(b) purposes] so long as the [State] gave any sort of consent

and had a full and fair opportunity to present evidence bearing

on the claim’s resolution.” Banks v. Dretke, 540 U.S. 668,

704–05 (2004) (cleaned up). We, too, see no reason why the

evidentiary hearings preceding the District Court’s entry of

judgment in this matter should not equate with a “trial” under

Rule 15(b). Nor, seemingly, did the GVI. After the District

Court noted that “in an enforcement it’s a breach of a court

order and it’s a little bit different . . . than a trial on the merits,”

counsel for the GVI agreed: “when I say a trial [I mean] an

adversarial proceeding in which after the parties have taken

discovery we can try the questions that Your Honor has identi-

fied.” JA3456–57 (emphasis added). That is what occurred

below, and no party suggests otherwise.

‐25-

ory . . . had not been squarely presented and litigated at any

stage of the proceedings”); see also Douglas, 50 F.3d at 1236

(severe prejudice where implied amendment “allowed the jury

to consider another theory of liability against Griffith without

Griffith having had the opportunity to defend against this new

claim”). We cannot conceive of anything the GVI might have

done differently had its historical missed contributions been lit-

igated in some other fashion.

We also glean from the extensive record before us no

prejudice to the GVI’s ability to assert legal defenses. Though

the GVI could have sought to raise the statute of limitations

against GERS in a separate action, we think it unlikely that any

portion of such a case would have been time-barred. To begin

with, by “continuing” the GVI’s contribution obligations in-

definitely, section 734 of the Retirement Code effectively

defeats any statute-of-limitations defense at least for deficien-

cies incurred on or after its effective date in 2005.12 At all

events, Virgin Islands law prescribes a 20-year statute of limi-

tations on actions to enforce a federal court judgment. 5 V.I.C.

§ 31(1)(B).13 In view of the discovery rule, which we have

12

We express no opinion on whether section 734 was intended

to apply retroactively.

13

Other courts have held that enforcement of consent decrees

is subject only to equitable defenses—not legal defenses such

as the statute of limitations. See, e.g., Bergmann v. Mich. State

Transp. Comm’n, 665 F.3d 681, 683–84 (6th Cir. 2011);

Brennan v. Nassau Cnty., 352 F.3d 60, 62–63 (2d Cir. 2003);

see also Cook v. City of Chicago, 192 F.3d 693, 695 (7th Cir.

1999) (Posner, C.J.) (holding that consent decrees are contracts

‐26-

applied in Virgin Islands cases “when the injury or its cause is

not immediately evident to the victim,” Joseph v. Hess Oil, 867

F.2d 179, 182 (3d Cir. 1989); accord MRL Dev. I, LLC v.

Whitecap Inv. Corp., 823 F.3d 195, 202 (3d Cir. 2016), GERS

could have brought a timely separate action for all the 1991–

2018 under-contributions it recovered in these proceedings.14

The parties agree that GERS did not discover the historical

from interpretive standpoint but equitable decrees from reme-

dial standpoint “and therefore [are] subject to the usual equita-

ble defenses”). We take Virgin Islands law at face value, with-

out deciding whether to follow these other Circuits’ approach.

14

The Legislature exercised its power under the 1984 amend-

ments to the Revised Organic Act of 1954, 48 U.S.C. § 1612,

to vest the territorial courts (now the Virgin Islands Superior

Court) with “original jurisdiction in all [local] civil actions

regardless of the amount in controversy.” 4 V.I.C. § 76(a);

Callwood v. Enos, 230 F.3d 627, 631 (3d Cir. 2000). As the

GVI concedes, the District Court of the Virgin Islands retained

jurisdiction to enforce the consent judgment because the origi-

nal action was “pending before the district court as of October

1, 1991, the effective date of the Virgin Island[s] Legislature’s

implementing legislation.” Isidor Paiewonsky Assocs., Inc. v.

Sharp Props., Inc., 998 F.2d 145, 153 (3d Cir. 1993). Though

we do not believe any of GERS’s claims “go far beyond the

Consent Judgment’s scope,” regardless, it would not have been

“unfair in the extreme to allow GERS to . . . invoke[e] the dis-

trict court’s long-defunct local jurisdiction” over such claims.

Appellants’ Br. 48. The GVI makes no argument that a terri-

torial court would have afforded it more procedural or substan-

tive rights, or reached a different conclusion in applying Virgin

Islands law, than did the District Court.

‐27-

under-contributions until it implemented a new computer

system in March 2012, and the issue was first testified to by a

witness and taken up by the Court in these proceedings in

September 2018. Until that time, it appears that the GVI was

also unaware, and it has not argued that GERS’s failure to

discover the missed contributions sooner was unreasonable.

So even if GERS’s motions did not fairly implicate the GVI’s

legacy under-contributions, conforming the allegations to the

claims litigated would not deprive the GVI of otherwise avail-

able legal defenses.

In sum, the District Court did not clearly err by resolv-

ing factbound mixed questions in favor of adjudicating the

GVI’s historical under-contributions as part of the breach that

GERS alleged in its enforcement motions. Accordingly, the

GVI suffered no prejudice from inclusion of that issue in the

case and, in fact, fully litigated it.

3. Direct contributions to GERS and the true-up

process do not offset the award. Next, the GVI urges that the

District Court’s $18.9 million judgment to GERS should be

offset by the GVI’s “direct contributions to GERS” of some

$24 million since the beginning of 2015. Appellants’ Br. 37–

38. Relatedly, the GVI argues for an offset because the parties

agreed to some sort of “settlement” under which GERS would

reconcile the GVI’s actual and required contributions for each

employee upon the employee’s retirement. See Appellants’

Reply Br. 5–7, 12–13; see also Appellants’ Br. 16–17, 26–27.

These arguments miss the mark.

Evidence the GVI cites as supporting its direct contri-

bution argument shows that amounts are appropriated, in the

sum of $7 million annually beginning in the fiscal year ending

‐28-

September 30, 2013, from the “Internal Revenue Matching

Fund” to GERS. Act of July 5, 2011, No. 7261, § 13, 2011

V.I. Sess. Laws 84, 92; JA3108 (discussing Act 7261). This

annual direct contribution requirement flows from separate

legislation and does not speak of the GVI’s contributions as

employer. Nor does it suggest any relationship to the GVI’s

obligations to GERS under section 718.15 E.g., Act 7261, § 13

(providing for contribution “[n]otwithstanding any law or pro-

vision to the contrary”). The GVI’s partial fulfillment of an

annual fixed-sum contribution requirement does not entitle it

to offset distinct contributions it owes GERS as percentages of

employee compensation.16

Whether the true-up reconciliation process for retiring

employees conceptually ensures no under-contributions, as the

GVI argues, is beside the point. For starters, the “settlement

agreement” to which the GVI attributes the true-up process is

not in the record. All we can surmise is that, after discovering

the under-contributions, the parties agreed to reconcile the

GVI’s actual and required contributions associated with an

employee upon her retirement.17 We see no evidence that this

15

For the same reasons, the District Court’s award is not an

“unlawful sanction,” as the GVI urges. Appellants’ Br. 38–39.

16

GERS reported on August 11, 2020, that it had “received $42

million [of the $56 million due] from the Internal Revenue

Matching Fund under Act No. 7261.” GVI’s Suppl. App. at 5.

17

We have also found oblique references in the record to

GERS’s unsuccessful attempts as of October 2013 to negotiate

a settlement agreement for the prior ten months of missing

‐29-

arrangement was intended to modify the GVI’s obligations

under the consent judgment, which would have required court

approval. See, e.g., United States v. Am. Cyanamid Co., 719

F.2d 558, 565 (2d Cir. 1983). What’s more, the true-up process

is a relatively recent phenomenon that could not cure the GVI’s

under-contributions linked to employees who retired prior to

its implementation. And RSM’s examination of a “test sample

population” led it to conclude that “members who had retired”

under the true-up process “were not part of the GERS Claim

calc[ulation].”18 JA3733. The true ups sampled were all for

“employees [who] were not part of the GERS Claim, which

suggests that they were retired or moved.” JA3752. Nor do

the equities support GERS forgoing contributions and associ-

ated investment returns to which it is entitled until an employee

retires. As the District Court put it, “I don’t think the [1981]

Complaint was just talking about people who were applying to

retire.” JA1914. So the District Court could have reasonably

concluded that none of the funds paid to reconcile contribu-

employer contributions, and to an unexecuted settlement

agreement dealing with missing employer contributions from

October 1, 2010 through December 31, 2012. These settlement

efforts do not support the GVI’s argument and suggest instead

that out-of-court resolution of GERS’s claims has persistently

eluded the parties.

18

In excluding true-up payments, RSM’s 2010–2018 report

noted that “review of [true-up] information provided to date

has seemingly all related to employees outside the scope of the

GERS claim,” though the expert did “not receive[] a complete

record of payments by the GVI to GERS for end-of-

employment GERS settlements.” JA4048.

‐30-

tions associated with employees who retired after institution of

the true-up arrangement should have been deducted from the

award to GERS.

4. The expert reliably calculated the $18.9 million in

principal. The GVI contends that the portion of RSM’s

analysis calculating 1991–2009 under-contributions turned on

unreliable data because NOPAs imperfectly capture total com-

pensation paid to a particular employee. RSM recognized as

much in declining to rely on NOPAs for the 2010–2018

period.19 But it did choose to rely on them in part to calculate

under-contributions from 1991–2009 because of the dearth of

other competent records. The GVI thus seems to contend that

this portion of the expert’s analysis flunked the reliability

prong of Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579

(1993)—yet without citing that landmark precedent.

The GVI made this argument to the District Court, to no

avail. We agree with the Court’s finding that RSM’s 1991–

2009 methodology, described above in Section I.B.5, mitigated

the problems of relying exclusively on NOPAs by benchmark-

ing NOPA data against other sources of information, such as

an employee’s actual gross wages. And based on a sample of

10 employees with both NOPAs and GERS annual benefit

summaries, RSM determined that the salary reported on

GERS’s records was, on average, within four percent of that

reflected in the GVI’s records. Finally, the GVI’s embrace of

19

The expert observed two types of inaccuracies associated

with GERS’s reliance solely on NOPAs to calculate what the

GVI owed in 2010–2018 under-contributions: “a) employees

[sic] actual hours worked may differ from hours contemplated

in NOPAs, and b) employee’s [sic] actual start and end dates

may differ from dates included within NOPAs.” JA4050–51.

‐31-

the true-up process, with its substantial reliance on NOPAs,

undermines its objection. Particularly when a defendant’s poor

recordkeeping confounds data inputs, as was the case here,

“absolute certainty” in expert opinions is not required. Dodge

v. Cotter Corp., 328 F.3d 1212, 1222 (10th Cir. 2003); see also

Klein-Becker USA, LLC v. Englert, 711 F.3d 1153, 1163 (10th

Cir. 2013) (“Although plaintiffs must generally establish dam-

ages with specificity, some estimation is acceptable if necessi-

tated in part by the Defendants’ poor record keeping.” (cleaned

up)); cf. Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680,

687–88 (1946) (articulating FLSA damages burden-shifting

framework “where the employer’s records are inaccurate or

inadequate”); Reich v. Gateway Press, Inc., 13 F.3d 685, 701

(3d Cir. 1994) (“If the employer fails to produce accurate

records about the employee’s wages and hours, the court may

then award damages . . . even though the result may only be

approximate.” (citing Mt. Clemens, 328 U.S. at 687–88)).

We thus have no basis to conclude that the District

Court abused its discretion in admitting the expert testimony.

See In re Paoli R.R. Yard PCB Litig., 35 F.3d 717, 749 (3d Cir.

1994).

* * *

Seeing no merit to any of the GVI’s challenges to the

District Court’s award of principal, we will affirm the judg-

ment insofar as it awards GERS $13.9 million for the 1991–

2009 period and $5 million for the 2010–2018 period.

B. Award of Fees and Interest to GERS

The GVI’s second set of arguments goes to the District

Court’s $49.2 million award of interest and delinquency fees.

‐32-

Although there was no statutory authority in 1984 on which

these enhancements could be based, the consent judgment pro-

vided that it “shall be amended” if Virgin Islands law later

authorized interest on delinquent contributions. JA114. Two

statutes enacted in 2005 did just that: one imposing a 1.5 per-

cent delinquency fee “for each calendar month or part thereof

that paid [sic] contributions should have been paid,” 3 V.I.C.

§ 704(q)–(r), and the other requiring interest “not to exceed the

rate of 9%” on contributions not timely paid to GERS. Id.

§ 736(b). The District Court adopted a set of the expert’s

calculations that applied the two statutes to the GVI’s accumu-

lated arrears as of the statutes’ effective date and to all its

under-contributions after that date.

The GVI contends that the District Court improperly

applied both statutes, and in three ways. First, the GVI argues

that the statutes apply only to the failure to timely make bi-

weekly contributions and not to the failures responsible for its

under-contributions. Second, the GVI contends that the Dis-

trict Court applied them retroactively to contributions missed

before their effective date, without the necessary legislative

intent. Third, the GVI asserts that interest and fees on most of

the under-contributions cannot be recovered due to the statute

of limitations or laches. We address each of these arguments

in turn, and see merit in only the second.

1. The statutes are not intended only for willful miscon-

duct. The GVI maintains that the District Court should not

have enhanced the $18.9 million with interest and delinquency

fees because the GVI “timely made” employer contributions,

which only later turned out to be insufficient, and because its

under-contributions to GERS were not willful. Appellants’ Br.

44, 48–52. But neither statute carries a scienter requirement;

each speaks only of the unmodified failure to contribute. See

‐33-

3 V.I.C. § 704(q) (imposing delinquency fee when “contribu-

tions should have been paid”); id. § 736(b) (triggering interest

when “employer fails to make timely contributions”). In fact,

the delinquency-fee statute seems to embrace non-willful

conduct such as deficient “prior period contributions due to

incorrect wages.” Id. § 704(q) (emphasis added). The

scienter-free focus of the two statutes jibes with other relevant

provisions of the Retirement Code that proscribe both the

“refus[al] to pay,” which suggests an intentional act, and the

mere “fail[ure] . . . to pay.” Id. § 736(a). We typically refrain

from reading into statutes words that plainly aren’t there,

Romag Fasteners, Inc. v. Fossil, Inc., 140 S. Ct. 1492, 1495

(2020), and we refuse to do so here. Nor must a party show

willfulness to enforce a court order. Harley-Davidson, Inc. v.

Morris, 19 F.3d 142, 148 (3d Cir. 1994).

At all events, the District Court lacked authority to

waive the interest and delinquency fees. For its part, the

delinquency-fee statute applies necessarily (“must be

charged”), subject only to the GERS administrator’s granting

a waiver in “exceptional circumstances beyond the employer’s

control.” Id. § 704(q)–(r). Plainly, no waiver was granted

here. The GVI cites no case authorizing a court to substitute

for the GERS administrator in the waiver process, and author-

ity from other contexts weakens that argument. See, e.g.,

United States v. Lauersen, 648 F.3d 115, 116–18 (2d Cir. 2011)

(per curiam) (holding that district court properly interpreted 18

U.S.C. § 3612(h) as authorizing only Attorney General, and not

district courts, to waive all or part of delinquency and default

penalties), cert. denied, 565 U.S. 959 (2011); 18 U.S.C.

§ 3612(h) (“The Attorney General may waive all or part of any

interest or penalty under this section . . . if, as determined by

‐34-

the Attorney General, reasonable efforts to collect the interest

or penalty are not likely to be effective.”).

The interest statute is also mandatory but, unlike the fee

statute, provides no mechanism for waiver. Given the limited

circumstances enumerated for delinquency-fee waivers, the

interest statute’s conspicuous lack of any comparable provision

means that no waiver at all will be allowed. In short, a district

court is not free to waive interest. See Lauersen, 648 F.3d at

116–17 (concluding that Congress did not implicitly grant

waiver authority to district courts when, in other subsections of

statute, it “explicitly detailed the circumstances under

which . . . penalties could be waived”); cf. Elkins v. Moreno,

435 U.S. 647, 665–66 (1978) (characterizing absence of

restriction in one part of statute as “pregnant” when contrasted

with other parts of statute, which included that restriction).

The GVI’s conduct was therefore subject to both

interest and delinquency fees, and the District Court did not err

in refusing to waive them.

2. The District Court erred by applying the statutes

retroactively. The GVI next contends that the District Court

should not have imposed interest and delinquency fees on

under-contributions that the GVI accumulated before the

interest and fee statutes’ effective date: November 2, 2005.20

20

Although in 1984 it could not “compel the payment of the

legal rate of interest . . . on deliqneunt [sic] employee and em-

ployer contributions,” the consent judgment provided that “if

an act is established by the Legislature, authorizing the pay-

ment of interest, this Consent Judgment shall be amended to

reflect such change.” JA114. One might ask whether GERS’s

‐35-

failure to seek modification of the consent judgment in the

wake of the new interest and delinquency-fee statutes fore-

closes its recovery of interest and fees. A cursory Reply brief

mention aside, the GVI developed no argument for why the

“shall be amended” language obligated GERS to file a motion

to modify the consent judgment. The GVI’s lone acknowledg-

ment that “the Consent Judgment never was amended to

include interest,” Appellants’ Reply Br. 10, suggests that the

GVI forfeited this argument. See, e.g., N.J. Dep’t of Env’t

Prot. v. Am. Thermoplastics Corp., 974 F.3d 486, 492 n.2 (3d

Cir. 2020) (holding that “argument . . . vaguely presented with-

out legal or factual support . . . is forfeited”); Barna v. Bd. of

Sch. Dirs., 877 F.3d 136, 146 (3d Cir. 2017) (noting that we

will not “reach arguments raised for the first time in a reply

brief or at oral argument”); In re Wettach, 811 F.3d 99, 115 (3d

Cir. 2016) (“[B]ecause they fail to develop either argument in

their opening brief, the Court holds that the Wettachs have for-

feited these claims.” (citation omitted)). Recall that GERS

sought interest on the GVI’s delinquent contributions in 1981,

and the issuing court, by including the anticipatory provision

about interest, ostensibly sought to impose it in the event and

to the extent that Virgin Islands law later permitted. And after

the District Court found that the GVI breached the consent

judgment by intentionally withholding contributions from

GERS beginning in late 2016, the GVI willingly repaid those

amounts with interest and delinquency fees. So whether GERS

needed to file what seemingly would have been a pro forma

motion is neither an “exceptional circumstance” that favors

reaching this unpreserved issue, Brown v. Philip Morris Inc.,

250 F.3d 789, 799 (3d Cir. 2001), nor a matter of “public

importance” whose non-resolution could lead to a “miscarriage

‐36-

The District Court rejected the GVI’s argument that this would

retroactively enhance its liability, and applied both statutes to

the GVI’s balance of missed contributions as of November 2,

2005—not just to contributions missed on or after that date.

Neither the delinquency-fee provision nor the interest statute

contains any express indication that the legislature intended

retroactive application. And the GVI asserts, with no contrary

indications from GERS, that “[t]here is no legislative history

reflecting legislative intent to apply retroactively 3 V.I.C.

§§ 704 and 736.” GVI’s Nov. 16, 2020 Legis. Hist. Ltr., Dkt.

No. 57, at 2. The District Court also recognized as much. So

the question is whether the statutes increase the GVI’s liability

for past actions. See Landgraf v. USI Film Prods., 511 U.S.

244, 280–81 (1994); Atkinson v. Att’y Gen., 479 F.3d 222, 231

(3d Cir. 2007). If so, they have retroactive effect and cannot

be applied to conduct antedating their effective date.

We agree with the GVI that the statutes have retroactive

effect, and thus that the District Court impermissibly applied

them retroactively. Before November 2, 2005, the GVI’s lia-

bility for all its past under-contributions was fixed at their prin-

cipal amount. By subjecting that principal to interest and fees

under the statutes at issue, the District Court “increase[d] [the

GVI’s] liability for past conduct” and “attache[d] new legal

of justice.” Bagot v. Ashcroft, 398 F.3d 252, 256 (3d Cir. 2005)

(quoting Loretangeli v. Critelli, 853 F.2d 186, 189–190 n.5 (3d

Cir. 1988)). Further, the 1994 modification to the consent

judgment directed the GVI to remit to GERS “interest and all

other monies received of every kind and description belonging

to [GERS].” JA316. This language provides an alternative ba-

sis for allowing GERS to recover interest under the consent

judgment once permitted by Virgin Islands law.

‐37-

consequences to events completed before [their] enactment.”

See Landgraf, 511 U.S. at 266, 269–70, 281.

The District Court looked to an Eleventh Circuit case

that addressed postjudgment interest to support applying the

statutes to the GVI’s pre-existing balance. Yet it is prejudg-

ment interest that provides the better guide. In Shook &

Fletcher Insulation Co. v. Cent. Rigging & Contracting Corp.,

684 F.2d 1383 (11th Cir. 1982), the Eleventh Circuit held that

a new state law increasing the postjudgment interest rate

applied to an unsatisfied judgment secured under a prior ver-

sion of the law that had imposed a lower interest rate. Id. at

1388–89. Here, however, the 1984 consent judgment was not

a money judgment, nor did it in any way determine the amount

of the GVI’s liability. And postjudgment interest does not

relate to the substantive conduct underlying the judgment. By

contrast, the District Court’s application of interest and fees

increased the GVI’s liability for the very same conduct to

which GERS sought to attach liability in the enforcement

proceedings. For that reason and others,21 we look for

guidance to prejudgment interest cases such as F.D.I.C. v.

UMIC, Inc., 136 F.3d 1375 (10th Cir. 1998). In that decision,

21

For one, a judgment represents the fixed starting point of a

judicially determined obligation, one of which the obligor is

actually or constructively aware. Increasing the GVI’s liability

for past conduct of which it was unaware, on amounts that had

not yet been subjected to judicial determination, would work a

significant extension of postjudgment interest doctrine. For

another, the statutes amplify the GVI’s liability for past events

far more than was the case in Shook & Fletcher, because the

GVI’s conduct was previously subject to no interest at all, not

merely a lower rate.

‐38-

the Tenth Circuit held that a federal statute’s prejudgment

interest provision could not be applied to conduct giving rise

to prejudgment interest liability that occurred before its

passage. Id. at 1385–87. “A prejudgment interest award not

only substantially increases monetary liability for proscribed

conduct, but it is also very closely tied to the amount of harm

done by that conduct. It has all the indicia of a substantive rule

that cannot be applied retroactively without an instruction from

Congress . . . .” Id.; see also Trout v. Sec’y of Navy, 317 F.3d

286, 291–92 (D.C. Cir. 2003) (reversing district court’s award

of prejudgment interest on backpay and attorneys’ fees for

periods before effective date of interest statute, based in part

on Landgraf, because “conduct underlying the complaint,

rather than the procedural posture of the litigation, has

significance”). Likewise, application of delinquency fees and

interest is closely tied to the amount of harm for which GERS

sought recovery in court—missed employer contributions and

associated lost investment income—and increases the GVI’s

liability for that conduct.

The facts here do not convince us that these applications

of Landgraf are inapt. First, while the District Court rightly

noted that the GVI’s under-contributions were not “complete”

at the time of the statutes’ enactment, JA40–41 (citing

Landgraf, 511 U.S. at 280), the retroactivity inquiry is more

granular. It requires us to “determine the ‘important event’ to

which the statute allegedly attaches new legal consequences.”

Deweese v. Nat’l R.R. Pass. Corp. (Amtrak), 590 F.3d 239, 251

(3d Cir. 2009) (quoting Atkinson, 479 F.3d at 230) (emphasis

added). The Retirement Code makes clear that this event is the

discrete occurrence of under-contributing to GERS for a par-

ticular payroll period. Even if the GVI’s obligations to GERS

spanned decades and are “continuing,” 3 V.I.C. § 734, the

‐39-

“event” of any single under-contribution was complete—and

the delinquency incurred—once the applicable time after a

payroll period passed without the GVI contributing the full

amount required by the contribution rate in effect for that par-

ticular period.

Second, though our retroactivity analysis is “guided by

considerations” of “reasonable reliance” and “settled expecta-

tions,” Atkinson, 479 F.3d at 231, the GVI’s lack of contempo-

raneous knowledge of the under-contributions—and thus its

lack of actual reliance on the prior state of the law—does not

remove the taint. As we stated in Atkinson, “[i]mpermissible

retroactivity . . . does not require that those affected by the

change in law have relied on the prior state of the law.” Id. at

229 (citation omitted). And consider Landgraf. There, the

Supreme Court “did not base its decision on the specific con-

duct of Landgraf’s employer or on any reliance that either

Landgraf or her employer may have had on the state of the

law.” Id. at 228 (citing Landgraf, 511 U.S. at 282–84). Rather,

the Court “made a general analysis of the impact of the amend-

ment” and found “retroactivity improper because the amend-

ment instituted a legal change that attached a new legal burden

to the proscribed conduct.” Id. Likewise, in Hughes Aircraft

Co. v. Schumer, 520 U.S. 939 (1997), “[i]t was the new legal

burden imposed on events past, rather than the reliance on the

former law by the person affected, which was the basis for

holding” that the amendment at issue should not have been

applied retroactively. Atkinson, 479 F.3d at 228–29 (citing

Schumer, 520 U.S. at 943–45, 948). The GVI’s lack of reliance

might have colored the District Court’s application of the stat-

utes, but it is the new legal burden attached to GERS’s past

conduct that is dispositive.

‐40-

Finally, GERS contends that applying the statutes only

prospectively would frustrate their remedial purpose. But that

is “frequently . . . true” yet “not sufficient to rebut the presump-

tion against retroactivity.” Landgraf, 511 U.S. at 285. Here,

the text of the statutes suggests no remedial purpose—and the

parties agree that there is no relevant legislative history. With-

out more, the fact that, before the statutes’ enactment in 2005,

GERS had unsuccessfully sued the GVI for under-contributing

to a discrete early retirement incentive program does not sug-

gest that the Legislature viewed the unavailability of interest

and fees on all delinquent contributions as “failing [the Retire-

ment Code’s] purpose.” Cf. Silverlight v. Huggins, 488 F.2d

107, 108–10 (3d Cir. 1973) (holding that statute waiving Vir-

gin Islands tort immunity, after prior practice of passing special

waiver legislation on individual basis was held unconstitu-

tional, applied retroactively to causes of action accruing before

its enactment given “sincere[] concern[] that . . . damaged cit-

izens not remain uncompensated” and “reasons given for the

introduction of the bill”). And the facts belie GERS’s assertion

at oral argument that the GVI passed the 2005 statutes to rem-

edy GERS’s lost investment income on then-existing § 718(g)

deficiencies. Neither GERS nor the GVI knew of missing

fixed-percentage contributions until 2012, seven years later.22

Absent a clear statement of retroactive application in the

statutes’ text or discernible express legislative intent to apply

them retroactively, they cannot impose interest and penalties

on contributions that the GVI missed before their effective

22

The consent judgment lacks any suggestion that the GVI

agreed to subject itself to retroactive operation of a statute that

would otherwise only apply prospectively.

‐41-

date. We will vacate that portion of the District Court’s

judgment awarding $43.1 million to GERS in interest and fees

for the 1991–2009 period, and remand with instructions to

reduce those enhancements accordingly.23

3. GERS’s action was timely. Finally, the GVI argues

that the vast majority of its under-contributions are not subject

to interest or fees because the payments were made outside the

two-year statute of limitations applicable to an “action upon a

statute for a forfeiture or penalty.” 5 V.I.C. § 31(5)(B). The

GVI also maintains that GERS is barred by laches from recov-

ering the enhancements awarded by the District Court. We are

unpersuaded and conclude that GERS’s recovery of interest

and fees is timely. Even were we to disagree with the decisions

of other Circuits holding that enforcement of consent decrees

is subject only to equitable defenses, see, e.g., Bergmann, 665

F.3d at 683–84; Brennan, 352 F.3d at 62–63; see also Cook,

192 F.3d at 695, and even assuming GERS’s enforcement

motions are subject to statutes of limitations,24 the applicable

limitations period would not bar GERS’s recovery.

23

In the set of calculations pertinent to the District Court’s

$13.9 million award of principal for the 1991–2009 period,

RSM figured the total amount of interest and fees for under-

contributions on or after November 2, 2005 at $6,804,260:

$5,542,163 in delinquency fees and $1,262,096 in interest.

24

The Virgin Islands’ limitations periods apply to the “[t]ime

for commencement” of new actions. 5 V.I.C. § 31 (“Civil

actions shall only be commenced within the periods prescribed

below.”). GERS’s enforcement motions did not commence a

new action but were filed in an existing one.

‐42-

Contrary to the GVI’s position, the award of interest and

fees to GERS—both in form and substance—did not stem from

an action “upon a statute for a forfeiture or penalty,” but

motions to enforce “a judgment or decree of any court of the

United States . . . or Territory.” 5 V.I.C. § 31(1)(B), (5)(B).

So if any limitations period applies, it would be the 20-year

statute of limitations discussed above rather than the two-year

statute of limitations that the GVI invokes. Id. Just as GERS’s

proceedings to enforce the consent judgment against the GVI’s

under-contributions discovered in 2012 would be timely under

the 20-year statute of limitations, so too its recovery of interest

and fees on those deficiencies.

Nor does laches bar GERS’s recovery here, though the

District Court may have short-circuited some of the analysis by

concluding that GERS is a “sovereign” immune from laches.

JA30–35. We are not convinced that GERS is entitled to sov-

ereign status and, for the reasons set forth below, conclude that

the GVI’s laches defense nevertheless fails on the merits.

A creature of statute, GERS was established as an

“independent and separate agency” of the GVI with the “pow-

ers and privileges of a corporation.” 3 V.I.C. §§ 715(a),

701(c). But unlike “all other semi-autonomous instrumentali-

ties” of the GVI, the V.I. Legislature failed to recognize GERS

as a tax-exempt entity when the system was created. V.I. 26th

Legis., Bill No. 26-0071, Bill Summary, Section 1. Hence the

provision in the 2005 amendments to the Retirement Act grant-

ing tax-exempt status to GERS. See 3 V.I.C. § 701(f).

Endowed by statute with corporate powers and privileges, and

taxed as a corporation rather than treated as an exempt govern-

ment agency, GERS at its inception lacked some of the hall-

marks of a sovereign government unit.

‐43-

Likewise, endowing a government agency with the right

to “sue and be sued” is persuasive evidence that the Legislature

waived the agency’s immunity from timeliness defenses such

as laches and the statute of limitations.25 See, e.g., U.S.V.I.

Econ. Dev. Auth. v. Hypolite, No. ST-16-CV-268, 2019 WL

451370, at *3 (V.I. Super. Ct. Jan. 28, 2019) (collecting Virgin

Islands cases). This the Legislature did, granting the GERS

board the power to “sue and be sued” in the GERS name and

requiring that GERS assets be held in its own name and segre-

gated from those of the GVI. 3 V.I.C. §§ 701(c), 715(b)(6).

Territorial courts have held that a semi-autonomous agency

chartered as a “public corporation,” with its own assets and

legal existence, that could “sue and be sued” lacked sovereign

immunity from the statute of limitations. Hypolite, 2019 WL

451370, at *3. That conclusion may obtain for timeliness

defenses involving GERS as well.

25

Courts analyze immunity from the statute of limitations in

tandem with immunity from equitable timeliness defenses,

such as laches. See, e.g., Guar. Tr. Co. of N.Y. v. United States,

304 U.S. 126, 132 (1938) (discussing purpose of exempting

sovereigns from defense of laches and operation of statutes of

limitations); Dole v. Local 427, Int’l Union of Elec., Radio &

Mach. Workers, AFL-CIO, 894 F.2d 607, 612 (3d Cir. 1990);

In re Hooper’s Estate, 359 F.2d 569, 578 (3d Cir. 1966)

(“[T]he general principle that claims of the sovereign are not

subject to the defenses of laches and the statute of limitations,

is applicable to the Territory [of the Virgin Islands], unless

expressly waived, and is implied in all its enactments.” (citing

Bd. of Cnty. Comm’rs v. United States, 308 U.S. 343, 351

(1939))).

‐44-

What’s more, Virgin Islands law suggests that “public

corporations” generally, and GERS specifically, are subject to

certain statutes of limitations—something inconsistent with the

recognized exclusion of sovereigns from timeliness defenses

where they sue in their own name or for their constituents’ ben-

efit. See, e.g., Hooper’s Estate, 359 F.2d at 578 (“[I]mmunity

is based upon the public policy of protecting the citizens from

damage to or loss of their public rights and property through

the negligence of public officers.” (citing Guar. Trust Co. of

N.Y., 304 U.S. at 132)). For example, ordinary limitations

periods “shall apply to actions brought in the name of any pub-

lic corporation in the Virgin Islands, or for its benefit, in the

same manner as to actions by private parties.” 5 V.I.C. § 34

(emphasis added). And a provision of the Retirement Code

suspends operation of the statute of limitations as against

GERS for certain obligations. See 3 V.I.C. § 740 (“Notwith-

standing title 5 Virgin Islands Code, chapter 3, any payment

due the retirement system for services, repayment of loans or

mortgages, or for the repayment of any amounts due to error or

overpayment are not extinguished by the statute of limita-

tions . . . .”). Such a carve-out suggests that GERS may oth-

erwise remain subject to statutes of limitations and not consti-

tute a “sovereign” immune from timeliness defenses.

We do not decide whether GERS is a private, public, or

quasi-public corporation or, for that matter, whether its status

renders it immune from laches. All we decide in this regard is

that GERS’s immunity is too dubious a basis for rejecting the

GVI’s argument. That said, the GVI’s laches argument fails

on the merits. A party asserting laches as a defense must

establish (1) an inexcusable delay in bringing the action and

(2) prejudice. See, e.g., U.S. Fire Ins. Co. v. Asbestospray, Inc.,

182 F.3d 201, 208 (3d Cir. 1999). The crux of the GVI’s case

‐45-

for laches is that GERS delayed too long “in seeking delin-

quency fees and interest,” which prejudiced the GVI because

the expert had “difficulty in locating and making use of old

records and data entries.” Appellants’ Br. 54. Neither asser-

tion holds water.

First, GERS’s delay in bringing the enforcement pro-

ceedings that led to the award of interest and fees was excusa-

ble. After suing the GVI in 1981 and obtaining the consent

judgment in 1984, GERS was in court to modify it in 1994.

Then, in 2001, GERS sued the GVI for under-contributing to a

separate early retirement incentive program. GERS appealed

dismissal of that suit in 2005, and we affirmed for lack of ripe-

ness because it was too soon to say that “GERS members have

been denied, or are about to be denied retirement benefits.”

Turnbull, 134 F. App’x at 501. Having pursued its rights in

court for decades, and following this defeat, GERS might have

reasonably been wary of instituting further litigation when in

2012 it discovered the GVI’s under-contributions. Instead, it

waited to again sue the GVI until the pension system was just

a few years from the brink. And in the interim, GERS tried to

work with the Virgin Islands governor and the Legislature on

pension funding solutions, even proposing remedial legisla-

tion.26 The length of the delay in absolute terms was fairly

26

The GVI maintains that we cannot consider facts about

GERS’s out-of-court efforts because they lie outside the rec-

ord. But many of them can be found in this case’s extensive

record, and those that cannot are appropriate for judicial notice.

See, e.g., Benak ex rel. Alliance Premier Growth Fund v.

Alliance Capital Mgmt. L.P., 435 F.3d 396, 401 & n.15 (3d Cir.

2006) (judicially noticing a New York Times article on content

of settlement); United States v. Pozsgai, 999 F.2d 719, 731 (3d

‐46-

modest, especially given the Virgin Islands’ 20-year statute of

limitations on enforcement of federal-court judgments and, as

further context, the territory’s six-year statute of limitations on

actions to recover under a contract or “upon a liability created

by statute.” 5 V.I.C. § 31(1)(B), (3)(A)–(B). As noted above,

GERS waited four years after discovering the missing fixed-

percentage contributions to launch the proceedings that yielded

the District Court’s interest and fee award. See, e.g., Evergreen

Safety Council v. RSA Network Inc., 697 F.3d 1221, 1226 (9th

Cir. 2012) (noting that laches clock starts “when the plaintiff

knew (or should have known) of the allegedly infringing con-

duct” and stops when “the lawsuit in which the defendant seeks

to invoke the laches defense” is begun). That’s well within the

realm of reasonable delay, as shown by Marshak v. Treadwell,

595 F.3d 478 (3d Cir. 2009). There, we held that it was not

inordinate delay to wait five years after entry of a judgment or

injunction to initiate contempt proceedings. See id. at 496–97

(distinguishing Univ. of Pitt. v. Champion Prods., Inc., 686

F.2d 1040 (3d Cir. 1982), where plaintiff waited 50 years to

sue and there was no previously imposed injunction).

Second, the GVI’s prejudice argument lacks the neces-

sary predicate showings. The GVI appears to claim that

GERS’s delay exacerbated the lacunae in the pre-2010 records,

which lie at the heart of the GVI’s unsuccessful challenge to

RSM’s methodology. But the GVI does not explain how the

state of those records would have benefitted had GERS sued

nearer to 2012. In fact, according to RSM, the unavailability

of detailed pre-2010 data was chiefly attributable to the GVI’s

institution of new payroll software at the end of 2009 without

migrating the historical records or later performing mainte-

Cir. 1993) (appellate court may take judicial notice of matter

not before district court).

‐47-

nance on the decommissioned server. Even if records some-

how would have been more robust had GERS sued earlier, any

prejudice was shared by both parties. RSM did not structure

its methodology with a thumb on the scale in favor of GERS

because of evidentiary gaps. It examined the existing records

provided by both parties and, with 95 percent confidence,

calculated an interval into which the GVI’s 1991–2009 under-

contributions fell. Nor did the District Court, in adopting the

statistical midpoint of that range, punish the GVI for having

incomplete records. In arguing laches below, the GVI articu-

lated no cognizable prejudice attributable to the passage of

decades since entry of the consent judgment. Its argument here

founders on even shallower shoals.

Finally, even if the requisites for laches were met, we

would balk at applying the doctrine to bar GERS’s recovery of

interest and fees. To begin with, for many months after GERS

began these proceedings in 2016, the GVI intentionally with-

held from GERS all of its employees’, and its own, fixed-

percentage contributions. The GVI has claimed only that it

“fell behind” due to unspecified “exigent circumstances.”27

Appellants’ Reply Br. 12. But the record reveals nothing exi-

gent that would sufficiently excuse this conduct. On the con-

trary, the GVI’s Commissioner of Finance testified that these

27

The parties have attributed much of the interregna in the Dis-

trict Court proceedings to the damage wrought by Hurricane

Irma and Hurricane Maria, both of which occurred in Septem-

ber 2017. But the hurricanes cannot excuse the GVI’s miscon-

duct; the chronology doesn’t fit. The GVI began withholding

fixed-percentage contributions from GERS beginning in late

2016 and for months thereafter. And GERS brought its emer-

gency enforcement motion as to these withheld funds in March

2017.

‐48-

contributions were intentionally withheld because of garden

variety capital concerns that led the GVI to de-prioritize its

commitments to GERS—cash flow problems he could scarcely

differentiate from those faced by the GVI after it resumed con-

tributions. Unconvinced, the District Court held that the GVI’s

conduct breached the consent judgment, and the GVI ulti-

mately handed over some $36 million in principal and

enhancements for these withheld contributions. “Any willful

act concerning the cause of action which rightfully can be said

to transgress equitable standards of conduct is sufficient cause

for” a court to “refus[e] to aid the unclean litigant.” Monsanto

Co. v. Rohm & Haas Co., 456 F.2d 592, 598 (3d Cir. 1972).

The GVI can hardly invoke laches now after intentionally

breaching a court order, rendering its hands unclean with

respect to part of GERS’s action.

Nor need we apply the equitable remedy of laches if

doing so would undermine the public’s interests in resolution

of the affected claim. See, e.g., Virginian Ry. v. Sys.

Federation No. 40, 300 U.S. 515, 550 (1937) (“Courts of

equity may, and frequently do, go much farther both to give

and withhold relief in furtherance of the public interest than

they are accustomed to go when only private interests are

involved.” (citations omitted)); Md.-Nat’l Capital Park &

Planning Comm’n v. U.S. Postal Serv., 487 F.2d 1029, 1042

(D.C. Cir. 1973) (“Equitable remedies depend not only on a

determination of legal rights and wrongs, but on such matters

as laches, good (or bad) faith, and most important an appraisal

of the public interest.” (emphasis added) (citation omitted)).

The economic health of the Virgin Islands rests to a large

degree on the soundness of its public-pension system. It cannot

be over-emphasized that the central government is the Islands’

largest employer. GERS represents about 30 percent of the

‐49-

Islands’ gross domestic product. It “covers approximately

20% of the entire population of the Virgin Islands.” JA3958–

59. At oral argument, GERS estimated that about a third of the

Islands’ population contributes to GERS or depends on it for

income. The system’s receipt of tens of millions of dollars in

interest and fees is of the highest public importance. We would

decline to resolve the weighty issue of GERS’s entitlement to

those funds on grounds of laches even if the defense would

otherwise seem to apply.

We therefore conclude that the GVI’s timeliness

defenses do not bar any component of the District Court’s

award of interest and fees to GERS.

* * *

The consent judgment and applicable law require math-

ematical compliance, so the GVI’s failures to contribute what

was required by statutorily fixed percentages, even if inadvert-

ent, breached the consent judgment. In proceedings that first

centered on the GVI’s failure to remit fixed-percentage contri-

butions beginning in late 2016, the District Court later widened

the lens—assisted by an appointed expert—and found a breach

reaching back as far as 1991, when the GVI began shorting the

percentage contributions to which GERS was entitled. We will

not disturb that approach because the Court’s factbound con-

clusion about the extent of the asserted breaches was not

clearly erroneous and, at all events, because GERS’s original

pleadings and allegations in its enforcement motions may be

deemed amended as necessary to encompass that recovery.

Neither the GVI’s direct contributions to GERS under separate

funding legislation nor its compliance with a recent process

designed to reconcile contributions paid and owed for a retiring

employee demands an offset. And we perceive no abuse of

‐50-

discretion in the District Court’s reliance on the expert’s meth-

odology for calculating the 1991–2009 under-contributions.

We will affirm the District Court’s award to GERS of $18.9

million in principal.

GERS brought enforcement proceedings within about

four years of discovering these under-contributions, so its

recovery of interest and fees on those debts is timely. In fact,

the District Court had no discretion to waive the interest and

fees. But nothing suggests that the Legislature intended to

apply the late-arriving interest and fee statutes retroactively.

We will vacate the District Court’s award to GERS of $43.1

million in enhancements for the GVI’s 1991–2009 arrears and

remand for imposition of a lesser award excluding interest and

fees on contribution deficiencies that the GVI incurred before

the statutes’ effective date. Because there are no retroactivity

problems associated with the District Court’s award of $6.1

million in interest and fees for the 2010–2018 period, we will

affirm that portion of the judgment.

IV. GERS’S CROSS-APPEAL

Even a judgment of tens of millions of dollars only post-

pones GERS’s day of reckoning by a matter of months. So

GERS appeals the District Court’s separate ruling that the con-

sent judgment does not obligate the GVI to contribute billions

to actuarially equalize GERS’s assets and its liabilities to pen-

sioners. GERS derives this sweeping “ADEC” (short for

“actuarially determined employer contribution”) obligation

from section 718(f), which requires the GVI to “make

contributions which together with the members’ contributions

and the income of the system will be sufficient to provide

adequate actuarially determined reserve for the annuities,

benefits and administration of the System herein prescribed.”

‐51-

3 V.I.C. § 718(f). GERS interprets this provision to require the

GVI to make GERS actuarially sound should the fixed-

percentage contributions of the GVI and its employees, along

with GERS’s investment income, fail to do so. For its part, the

GVI maintains that section 718(f) merely announces the Leg-

islature’s intent that the fixed-percentage contributions from

both the GVI and its employees, as well as GERS’s investment

income, together yield an actuarially sound reserve for pension

benefits.28 The District Court rejected GERS’s argument, rea-

soning that the employer contributions contemplated by the

consent judgment and section 718 trace to payroll periods—

something irreconcilable with the proposed ADEC’s depend-

ency on an annual actuarial accounting.

28

At a hearing before the District Court, counsel for the GVI

conceded that “[t]here is an obligation to pay” the ADEC but

argued that it is “an obligation that is not part of this consent

decree.” JA1786–88 (“we’re not disputing that” the GVI is

statutorily obligated “to make the actuarially determined

employer contribution”). Counsel for the GVI sought to walk

back this statement in subsequent briefing and, before us,

maintains that there is no such ADEC obligation. We will not

tether our prediction of how the Virgin Islands Supreme Court

would decide this issue to counsel’s (apparently inadvertent)

oral statement. It is not a binding “judicial admission” because

whether the GVI is obligated under Virgin Islands law to make

the ADEC contribution to GERS is an issue of law, not a fact

susceptible of admission. See, e.g., Swift & Co. v. Hocking

Valley Ry., 243 U.S. 281, 289–90 (1916) (putative admissions

about “legal effect” are “inoperative”); accord New

Amsterdam Cas. Co. v. Waller, 323 F.2d 20, 24 (4th Cir. 1963),

cert. denied, 376 U.S. 963 (1964).

‐52-

We conclude that the Virgin Islands Supreme Court

would refuse to read GERS’s proffered ADEC requirement

into section 718(f). The text of the statute and GERS’s cited

authorities do not support imposing an obligation solely on the

GVI to fund GERS to the point of actuarial soundness. And

although there is scarce legislative history relevant to the

meaning of the provision, testimony of GERS representatives

to the Legislature reveals that the GVI’s employer contribu-

tions under section 718 have been understood for decades as

limited to fixed percentages of employee compensation. The

statutes are best read to require that the fixed-percentage

contributions of employees and employers be calibrated to

account for the changing actuarial needs of the system. But

those same statutes do not provide a mechanism for keeping

GERS actuarially funded if that fixed-rate funding structure

comes up short—whether because of proliferating unfunded

legislative mandates, GERS’s own mismanagement, flawed

actuarial projections, or the like.29 We will therefore affirm the

District Court’s judgment on this issue.

29

In dissent, our colleague attributes to us a reading of section

718(f) that “preclude[s] what Section 718 otherwise requires”

and “bak[es] a funding shortfall into the statute.” Dissenting

Op. at 18. We have trouble understanding the recipe. To begin

with, our dissenting colleague recognizes, as do we, that sec-

tion 718(g) “has never had a [] rate increase cap” comparable

to that on employee contributions. Dissenting Op. at 23. So

his assertion that our reading of section 718 assumes the

Legislature’s “self-sabotage” in erecting “a hard-capped-

contribution system,” Dissenting Op. at 18, does not even sur-

vive to the end of the dissenting opinion. At all events, the

Legislature’s choice of an actuarially calibrated fixed-

‐53-

A. GERS’s Textual Arguments

GERS’s central statutory argument for imposing the

ADEC obligation on the GVI is that not doing so would render

section 718(f) superfluous. If all section 718(f) does, GERS

protests, is announce the Legislature’s sanguine intention that

the schedule of percentages suffice to fund the system, then

section 718(f) has no independent content. But GERS never

explains why it is superfluous, particularly given the statute’s

amendment history, to interpret section 718(f) as requiring that

the employer contribution percentages first spelled out in sub-

section (g) in 1968 not be fixed but dynamic over time in pro-

portion to the evolving actuarial needs of the system. It may

well be that those percentages have not been accurately cali-

brated to the actuarial needs of the system, for whatever reason,

but that provides no justification for a supervening ADEC

obligation that would render superfluous the statute’s percent-

age contribution mechanism.

percentage structure to meet the system’s evolving needs does

not ensure a shortfall. The Retirement Code has often been

amended to, for example, increase the contribution rates,

change how those rates are set, and allocate responsibility for

funding various pension entitlements—such as the costs of the

special early retirement incentive program and the costs of

administering the system, both of which are borne by the

GVI. That fixed-percentage contributions may well have been

meeting the system’s needs until the 1990s makes the charge

of “self-sabotage” sound a bit overstated. See Dissenting Op.

at 18. And, of course, GERS always had—indeed, has availed

itself of—recourse to separate legislation to attempt to address

underfunding, such as the $7 million lump-sum annual pay-

ments from the GVI that it secured. See supra Section III.A.3.

‐54-

To begin with, saddling the GVI alone with the obliga-

tion to fund GERS to the point of actuarial soundness is, at best,

inconsistent with the text of section 718. And, at worst, impos-

ing such an obligation contradicts the import of the statutory

language. While section 718(f) requires the “employer [to]

make contributions” that “will be sufficient to provide

adequate actuarially determined reserve” for benefits to pen-

sioners, the linkage between those phrases is “which together

with the members’ [i.e., employees’] contributions and the

income of the system.” 3 V.I.C. § 718(f). A more natural read-

ing of section 718(f), then, is that actuarial soundness is a func-

tion of all of the following: the GVI’s contributions as

employer, its employees’ contributions, and GERS’s invest-

ment income earned through prudent financial decisions.30

30

Our dissenting colleague tries to wield the last antecedent

rule against our reading of section 718, applying the rule to

section 718(f) to assert that “the limiting phrase ‘shall make

contributions’ modifies the noun it immediately follows:

‘employer.’” Dissenting Op. at 19–22. To start, we doubt that

the last antecedent rule even applies here. The purported lim-

iting language is only preceded by one antecedent: “The

employer shall make contributions.” That means there is no

potential ambiguity for the interpretive canon to resolve, since

the other candidates follow after that so-called limiting lan-

guage. At all events, our point is simply that section 718(f)

lacks the clarity needed to support a supervening obligation

borne solely by the GVI to make GERS actuarially sound. So

we look to, among other related provisions of the Retirement

Code, an earlier subsection. Cf. New Prime Inc. v. Oliveira,

139 S. Ct. 532, 538 (2019) (“We’ve long stressed the signifi-

cance of the statute’s sequencing.” (citations omitted)); Pac.

‐55-

Even if this provision—by naming the GVI first and then, in a

subsidiary clause, mentioning employees and investment

income—could somehow be read to elevate the GVI’s respon-

sibility, a preceding subsection vitiates that reading by equal-

izing the input of all stakeholders to the actuarial soundness of

the system: “The various obligations of the System shall be

financed in accordance with actuarial reserve requirements

from contributions by members, contributions by the

employer, interest income, and other income accruing to the

System.” Id. § 718(a). Granted, the first sentence of subsec-

tion (a) may be redundant of subsection (f). But GERS seeks

to give content to the latter that would seemingly contradict the

former. Such an approach finds no support in canons of statu-

tory construction. See United States v. Bass, 404 U.S. 336, 344

(1971) (recognizing that “courts should interpret a statute with

Emplrs. Ins. Co. v. Global Reinsurance Corp. of Am., 693 F.3d

417, 430 (3d Cir. 2012) (highlighting importance of “a big-

picture look at the [provision’s] place in the [statute’s] overall

structure,” with attention to how “structure” and “sequen[ce]”

“create an obligation”). Section 718(a) independently supplies

that “[t]he various obligations of the System shall be financed

in accordance with actuarial reserve requirements from contri-

butions by members, contributions by the employer, interest

income, and other income accruing to the System,” with the

Board able to periodically “actuarially determine the rate of

contribution for members and employers of the System.” 3

V.I.C. § 718(a) (emphasis added). There is no antecedent con-

fusion here either, just the Legislature’s clear indication that

pension entitlements be financed according to actuarial reserve

requirements from inputs by all stakeholders and that the

GERS Board actuarially determine both employee and

employer contribution rates.

‐56-

an eye to the surrounding statutory landscape and an ear for

harmonizing potentially discordant provisions”).

With the text of the statute offering little or no support

for GERS’s position, we ask why, if the Legislature sought to

impose on the GVI a supervening obligation to fund GERS to

actuarial soundness, it would have promulgated (and routinely

amended) a detailed schedule of employee compensation per-

centages for the GVI to contribute? See 3 V.I.C. § 718(g).

GERS tries to save the fixed-percentage scheme from super-

fluity by characterizing it as the employer’s perennial default

and the ADEC as the conditional obligation, triggered only

when the fixed percentages underserve the system. Set aside

the reality that the so-called conditional would have swallowed

the default in each of the last 30-odd years—and thus that

GERS’s reading, like the GVI’s, still casts the Legislature as

Pollyanna. At bottom, GERS’s conception conflicts with the

statute’s history. Recall that the 1959 legislation creating

GERS established a fixed-percentage employee contribution

but, though using similar actuarial reserve language, did not

attach a percentage to the employer’s contribution. From the

beginning, “[t]he amount of contributions by the employer for

the various purposes of the system shall be determined by

applying a percentage rate to the aggregate compensation of

the members for each regular payroll period.” Act of June 24,

1959, No. 479, § 718, 1959 V.I. Sess. Laws 92, 111 (emphases

added). Unsurprisingly, the Legislature amended the statute to

announce just such a schedule of percentages that the GVI

would need to contribute as employer. Act of Feb. 8, 1968,

No. 2098, § 718(g), 1968 V.I. Sess. Laws, Pt. I, 9, 9 (defining

first employer contribution window as “pay periods starting:

before July 1, 1968”). The historical progression suggests that

the Legislature enacted the fixed-percentage employer contri-

‐57-

butions to instantiate the actuarial soundness requirement.31

Nothing suggests that it ever sought to upend this consistent

structure sub silentio by imposing a second, separate ADEC

obligation.

GERS next argues that the consent judgment and, by

implication, the Legislature could have used words such as

“fixed” if it wished to cabin the employer’s obligation to fixed-

percentage contributions. But the establishment of a detailed

schedule of percentages, without a comparable articulation of

the GVI’s potentially limitless mandate to fully fund GERS,

militates against inferring any legislative intent to create the

ADEC. Legislatures do not hide elephants in mouseholes.

Whitman v. Am. Trucking Assocs., 531 U.S. 457, 468 (2001).

There is no provision for “actuarially determined employer

contributions” in the statute—only sources of contributions

that, “together,” must provide an “actuarially determined

reserve.” See, e.g., Bates v. United States, 522 U.S. 23, 29

(1997) (noting that courts “ordinarily resist reading words or

elements into a statute that do not appear on its face”). In view

of subsection (f) and the surrounding statutory landscape, any

31

Unlike our dissenting colleague, we think it unremarkable

that the Legislature struck from the 1968 version of section 718

the original provision that “the amount of contributions by the

employer for the various purposes of the system shall be deter-

mined by applying a percentage rate to the aggregate compen-

sation of the members.” See Dissenting Op. at 26 &

n.28. After all, in those same 1968 amendments, the Legisla-

ture for the first time fixed the employer’s percentage rate to

be applied to employees’ aggregate compensation. Retaining

the vestigial clause may well have caused confusion, or even

engendered litigation, about whether there was an additional

percentage that the GVI needed to contribute.

‐58-

suggestion that judges or legislators should have added clari-

fying language to exclude reading in an ADEC obligation

strikes us as fanciful.

To support postulating the ADEC, GERS points finally

to section 718a, a provision enacted in 2006 to govern how

GERS informs the GVI of needed appropriations. Section

718a provides for transmittal to the Legislature of the “actuar-

ial valuation and appraisal” required by section 718, along with

an “itemized estimate of the amounts necessary to be appropri-

ated by the government to [GERS].” 3 V.I.C. § 718a(a). But

the lack of an ADEC obligation does not mean that “Section

718a would have no reason to exist in the first place.” Cross-

Appellant’s Reply Br. 8. Even to pay the biweekly contribu-

tions, the GVI needs to know approximately how much to

appropriate annually for its GERS commitments. And missing

from the detailed enumeration of elements required to be

included in the appropriations estimate, see 3 V.I.C. § 718a(a)–

(e), is any clear call for the information most critical to GERS’s

proffered ADEC: its projected commitments to pensioners for

the fiscal year. We think it natural for the Legislature—one

year after authorizing the GERS Board to determine and

(apparently within limits) increase contribution rates—to enact

a statute requiring detailed support for GERS’s appropriations

requests. All the more so given our plain reading of section

718(f), under which all stakeholders must ensure the pension

system’s actuarial soundness and rates must be calibrated to

actuarial needs.

B. GERS’s Authorities

Nor do the cases GERS cites move the needle. Apply-

ing them here would assume the answer to the question pre-

sented: whether GERS’s proffered ADEC obligation flows

‐59-

from the text of section 718 or should somehow be implied

based on the relevant milieu.

Start with GERS’s leading case, Louisiana Municipal

Association v. State, 893 So. 2d 809 (La. 2005). It dealt with

statutes that unequivocally provide for both an employer con-

tribution rate and an actuarially required employer contribu-

tion. See id. at 837–38; La. Stat. Ann. § 11:103(B)(1)–(3). By

contrast, GERS’s appeal requires us to determine whether the

GVI has any such second obligation independent of the fixed-

rate contributions set by statute.

GERS’s other authorities involve pension regimes

under which employees have percentage-based contribution

obligations, but the contributions of the employer (i.e., a state

and its counties) are actuarially determined.32 See, e.g., Hall v.

Elected Officials’ Ret. Plan, 383 P.3d 1107, 1110–11 (Ariz.

2016) (“The employee contribution rate was set by statute ini-

tially at 6%, with the employer being responsible for contrib-

uting the remaining amount necessary to fund a defined benefit

upon retirement.” (citing Ariz. Rev. Stat. Ann. § 38-810(A)

(1985))); Kaho‘ohanohano v. State, 162 P.3d 696, 706 (Haw.

2007) (“Trustees engage an actuary to determine the employ-

ers’ normal cost and accrued liability contributions for each

fiscal year.” (citations omitted)); Haw. Rev. Stat. Ann. § 88-45

(setting forth schedule of fixed-percentage contributions for

employees); Bd. of Trustees of Town of Lake Park Firefighters’

Pension Plan v. Town of Lake Park, 966 So.2d 448, 450 (Fla.

Dist. Ct. App. 2007) (noting “mandatory five percent contribu-

32

These cases, and most others that GERS relies on, decided

constitutional challenges to legislation that effectively reduced

the status quo of pension benefits. The posture of these cases

limits their relevance to GERS’s claim in this appeal.

‐60-

tion or payment by each firefighter” and “a mandatory payment

by the municipality of ‘a sum equal to the normal cost of and

the amount required to fund any actuarial deficiency shown by

an actuarial valuation as provided in part VII of chapter 112’”

(quoting Fla. Stat. § 175.091(1)(g)); see also Wayne Cnty.

Emps. Ret. Sys. v. Wayne Charter Cnty., 859 N.W.2d 678, 679

(Mich. 2014) (“Each year, the county is required by Const.

1963 art. 9, § 24, to make an ‘annual required contribution’

(ARC). An annual actuarial valuation determines the ARC

amount.” (citation omitted)); Mich. Compl. Laws Ann.

§ 38.1140m(1) (“The required employer contribution is the

actuarially determined contribution amount.”). These cases do

not help us reconcile the “together” clause of section 718(f)—

not to mention the first sentence of section 718(a)—with

GERS’s argument that, in fact, the actuarial funding

responsibility lies solely with the GVI.33

Still other cases relate to state statutes that explicitly

place the obligation on the employer to make up any shortfall.

See, e.g., Booth v. Sims, 456 S.E.2d 167 (W. Va. 1994); W. Va.

Code § 5-10-31(b) (“[T]he participating public employers’

33

The statutes at issue in one case that GERS invokes, Hall,

383 P.3d at 1110–11, arguably support our plain reading of

section 718 in which the fixed-percentage contribution rates

are themselves intended to be calibrated for actuarial sound-

ness. See Ariz. Rev. Stat. Ann. § 38-810(C) (“[E]ach employer

shall make contributions on a level percent of compensation

basis for all employees . . . sufficient under the actuarial valu-

ation to meet both the normal cost plus the actuarially deter-

mined amount required to amortize the unfunded accrued

liability over a closed period . . . that is established by the board

taking into account the recommendation of the plan’s actu-

ary . . . .”).

‐61-

contributions . . . shall be a percent of the members’ total

annual compensation . . . . equal to an amount which, if paid

annually by the participating public employers, will be suffi-

cient to provide for the total normal cost of the benefits

expected to become payable to all members and to amortize

any unfunded liability found by application of the actuarial

funding method[.]” (emphasis added)). And ERISA’s “defined

benefit plan” addresses a statutorily defined “asset pool” in

which “the employer typically bears the entire investment risk

and . . . must cover any underfunding as a result of a shortfall

that may occur from the plan’s investments.” Hughes Aircraft

Co. v. Jacobson, 525 U.S. 432, 439–40 (1999).

At best, the cases that GERS relies on take us no closer

to answering whether section 718(f) obligates the GVI to fund

GERS to actuarial soundness. In fact, the specificity with

which the regimes addressed in those cases articulate an

employer’s actuarially determined contribution or shortfall

liability renders problematic the less concrete language in sec-

tion 718(f).

C. The Parties’ Historical Understanding

Though there is no formal legislative history contempo-

raneous with the 1959 or 1968 laws enacting and amending the

Retirement Code, subsequent testimony of GERS representa-

tives to the Legislature undermines GERS’s argument for the

ADEC. In an October 8, 1997 meeting of the Committee on

Government Operations about a bill on allocating GERS’s

administrative expense, a representative of GERS testified to

the Legislature that:

[W]hat would happen in the future is that based

on our requirement in the statute that the funding

‐62-

of the system be computed on the actuarial

reserve basis, we would then need to come back

to the Legislature and report our latest findings

in term[s] of the actuarial report and recommend

that some adjustment be made in the employer

contribution and/or the employee contribution.

That is basically the only way that the system can

begin to address the underfunding. . . . [T]he lat-

est actuarial evaluation . . . determined that an

additional contribution totaling five—approxi-

mately, five and-a-half percent would be needed

to be added to the current contribution rate for-

mula that we have in place.

Oct. 8, 1997 Gov’t Ops. Comm. Hrg. Tr. 128:22–130:2

(emphases added). Increasing the fixed-percentage contribu-

tions of employees and employers was thus understood as “the

only way that the system can begin to address” underfunding.34

Eight years later, in a September 12, 2005 session of the

same committee, then-Acting Administrator and CFO of

GERS, Willis Todmann, testified at a hearing on the 2005

amendments to identify “specific areas . . . where the most

immediate action is needed.” Hrg. Tr. 12:12–14. Also present

34

Legislators appear to have shared this understanding. Trying

to explain how GERS works, in the lead-up to passage of the

2005 bill, Senator Barshinger stated during debate that “[y]ou

pay in and interests [sic] is made on the money you give in, and

in fact the government throws in an additional percentage, and

that creates a pool of money for you.” Sept. 26, 2005 Reg.

Sess. (Part II) Hrg. Tr. 46:2–6 (emphasis added).

‐63-

were a member of GERS’s Board of Trustees and the Assistant

GERS Administrator. Todmann told the Committee:

The System requires full autonomy to incremen-

tally set and adjust the contribution rates for the

employer and employees as may be determined

from the annual actuarial valuations. . . . The

various obligations of the System . . . are required

to be financed in accordance with the actuarial

reserve requirements from the contribution by

members, contributions by the employer, interest

income, and other income accruing to the Sys-

tem, but in reality, this does not occur because

executive and the Legislature randomly deter-

mine when contributions are to be increased and

how much those contributions should be. When-

ever a shortfall occurs in the income from invest-

ments and the contributions from the employer

and employee, the shortfall must be made up by

the Plan Sponsor and member contributions to

keep pace with the actuarial determinations for

the payment of future pension obligations. . . .

Although the statute does not provide for the

proper actuarial funding of the System, the

G.E.R.S. has repeatedly requested that the Leg-

islature enact such corrective measures. . . . The

enabling Act failed to incorporate a proper fund-

ing plan because it was the intention of the Leg-

islature that the income generated from the

investments and the contributions from the

employer and employees will meet the funding

needs to pay the future pension benefit obliga-

tions. . . . [W]hat is most needed to financially

‐64-

reform the System is a corrective funding plan to

provide for the annual actuarial funding of the

shortfall in the cost of the System. . . . The annual

funding of the G.E.R.S. must be made a “statu-

tory debt” through legislation.

Sept. 12, 2005 Gov’t Ops. Comm. Hrg. Tr. 13:14–17, 14:3–18,

15:3–6, 16:3–8, 17:11–20 (emphases added). Todmann’s tes-

timony shows that GERS understood the following: (a) short-

falls “must be made up by” the GVI and employees—rather

than just the GVI via a supervening ADEC obligation; (b) the

language in section 718(f) reflects the Legislature’s “intention”

that the fixed contribution rates would be adjusted to provide

actuarial soundness; and (c) annual, actuarially required fund-

ing of GERS was not a “statutory debt” of the GVI. As Tod-

mann and others advocated, the 2005 amendments recognized

that “[t]he GERS Board of Trustees is the entity best suited to

determine the actuarial level and to fix appropriate contribu-

tion rates, commensurate with the future pension benefit obli-

gations of the system.” V.I. 26th Legis., Bill No. 26-0071, Bill

Summary, Section 14 (emphasis added); see 3 V.I.C. § 718(a).

But the 2005 bill neither altered the scope of the GVI’s

employer contributions in section 718 nor changed any of the

language that GERS now invokes to charge the GVI with the

ADEC obligation. Nor did its reforms address GERS’s

“unfunded liability.” See generally Sept. 22, 2005 Hrg., V.I.

Legislature, Committee on Rules and Judiciary.

Though legislative history contemporaneous with the

public-pension system’s enactment is unavailable, hearing

transcripts from the 1990s and 2000s show that both GERS and

the Legislature understood the GVI’s employer contribution

obligation as limited to fixed percentages of employee com-

pensation. Motivating GERS’s appeals to the Legislature was

‐65-

a recognition that nothing imposed an additional statutory

responsibility on the GVI to assure actuarially sound funding

of GERS.

* * *

Approaching a fiscal cliff, GERS now protests that it

will devolve into a pay-as-you-go system by 2023 unless the

GVI funds it in accordance with the ADEC (or somehow

increases its current contribution rate of 20.5 percent to 68 per-

cent). But these are fiscal policy arguments we cannot enter-

tain. If new pension legislation is needed, as it may well be,

such arguments should be made in an appeal to the Legislature.

There is simply no compelling interpretation of the statute or

any extrinsic evidence that can support reading into Virgin

Islands law GERS’s proffered ADEC obligation. We will thus

affirm the District Court’s entry of judgment to the GVI in

GERS’s cross-appeal.

V. CONCLUSION

Court battles, a consent judgment, settlement efforts,

piecemeal legislative fixes, and entreaties to elected officials

have animated GERS’s 40-year campaign to secure actuarial

soundness. But its successes have been qualified in large part

by the limitations of the territorial law establishing the public-

pension system. And so it goes in this appeal. Our ruling pre-

serves an award of $18.9 million in principal, $6.1 million in

interest and fees, and what will be additional millions in

enhancements for GERS. But we take off the table tens of mil-

lions of dollars in enhancements that were awarded to GERS

under an unsupportable retroactive application of Virgin

Islands law. We have no doubt that GERS needs more—

possibly billions more—to fend off insolvency. But as mem-

‐66-

bers of the Third Branch, we can neither write legislation nor

levy taxes. And we are powerless to re-write imperfect but

unambiguous statutes even if doing so would make them better

serve the needs of their intended beneficiaries.

Respecting the judiciary’s role in our Republic, we in

turn expect the GVI to satisfy the judgment of the District

Court.35 We are optimistic that all stakeholders will cooperate

35

Our colleague, concurring in part, takes care to emphasize

that, in affirming in part the April 3, 2020 order of the District

Court, we hold only “that the GVI is liable for the obligations

in the Consent Judgment” and do not “order[] the GVI to dis-

burse monies from the Virgin Islands’ treasury.” Concurring

Op. at 9. And who would disagree that the Legislature’s power

of the purse is a pillar of the separation of powers and that the

judiciary must respect the Legislature’s chosen mechanisms

for making appropriations? See generally 33 V.I.C. §§ 3101

(prohibiting GVI officers and employees from entering into

contracts and obligations on behalf of GVI without an appro-

priation in advance “unless such contract or obligation is

authorized by law”), 3106(a) (allowing designated officers of

the GVI to exempt certain funds from apportionment); Act of

Sept. 29, 2020, No. 8365 (appropriating $350,000 in fiscal year

2021 for judgments greater than $25,000). Yet we must bear

in mind that the GVI did not challenge the underlying order—

the 1984 consent judgment—as invalid for lack of an appropri-

ation prior to appealing the District Court’s enforcement

order. See United States v. Gov’t of V.I., 363 F.3d 276, 291–

92 (3d Cir. 2004) (affirming in part enforcement order against

GVI, despite argument that district court lacked power to enter

underlying order obligating GVI to pay funds without an

appropriation, because GVI never challenged propriety of

underlying order).

‐67-

in good faith to avert the looming insolvency of GERS. No

opinion of ours could make, or even make easier, the hard

choices that now confront the United States Virgin Islands and

GERS. But our decision definitively underscores the need for

pension reform and adequate funding legislation. Hopefully,

greater accountability in the shared interests of protecting the

deferred compensation of pensioners and the economy of the

Islands will carry the day.

‐68-

Government Employees Retirement System of the Virgin

Islands v. Government of the Virgin Islands, Nos. 20-1749 &

20-1766

MATEY, Circuit Judge, concurring in part and dissenting in

part.

Much about this appeal is a familiar story. Like many of

our institutions, public pensions date to the Roman Empire,

arriving in our new Republic as a comforting promise to

injured patriots fighting in the Revolution.1 Military pensions

paved the way for civilian plans, with Massachusetts creating

the first public employee retirement system in 1911.2 Other

states joined the rush3 and, soon enough, state and local

1

See Robert L. Clark, Lee A. Craig & Jack Wilson, A

History of Public Sector Pensions in the United States, at 1–3

(2003). In 1832, Revolutionary War pensions extended to

those with at least six months of wartime service. See Theodore

J. Crackel, Revolutionary War Pension Records and Patterns

of American Mobility, 1780–1830, 16 Prologue 3 (Fall 1984),

https://www.archives.gov/publications/prologue/1984/fall/pen

sion-mobility.html.

2

Clark et al., supra note 1, at 4.

3

There are currently over 3,400 state and local pension

systems in the United States, covering more than 27 million

members and beneficiaries. U.S. Gov’t Accountability Office,

GAO-12-322, State and Local Government Pension Plans:

Economic Downturn Spurs Efforts to Address Costs and

Sustainability 4 (2012),

https://www.gao.gov/assets/590/589043.pdf.

1

pensions became an entitlement of public service.4 But like

many entitlements, pension promises prove hard to keep as

lessons hard learned in antiquity5 are ignored or, perhaps,

wished away.6 Pensions, of course, are guarantees of future

income. Funding the benefits due tomorrow means taking

prudent fiscal steps today, and every year, for as long as those

generous sums remain due.

4

Clark et al., supra note 1, at 5. See also Terrance

O’Reilly, A Public Pensions Bailout: Economics and Law, 48

U. Mich. J. L. Reform 183, 184 (2014) (“The traditional

compensation for [a career as a public school teacher, police

officer, or firefighter] includes . . . relatively comfortable

retirement benefits.”).

5

See Clark et al., supra note 1, at 1 (observing that “the

fall of the Roman republic and the rise of the empire were

inextricably linked to the payment, or rather nonpayment, of

military pensions”).

6

Thinking dominated by “overoptimistic investment

return assumptions” cannot meet the “the rising cost of state

and local government employee retirement plans.” Andrew

Biggs, Can States Afford Rising Public Pension Debts?, Forbes

(Jul. 28, 2020),

https://www.forbes.com/sites/andrewbiggs/2020/07/28/can-

states-afford-rising-public-pension-debts/?sh=697c744b97ee;

see also Mary Williams Walsh & Danny Hakim, Public

Pensions Faulted for Bets on Rosy Returns, N.Y. Times (May

27, 2012),

https://www.nytimes.com/2012/05/28/nyregion/fragile-

calculus-in-plans-to-fix-pension-systems.html (explaining the

effects of overestimating projected rates of return).

2

But across the country, this has not happened.

Economists glumly estimate that state pensions combined hold

unfunded liabilities between $700 billion and $4.6 trillion.7

Like a game of dominos, substantial benefits8 connect to ever

7

T. Leigh Anenson, Alex Slabaugh & Karen Eilers

Lahey, Reforming Public Pensions, 33 Yale L. & Pol’y Rev. 1,

5 (2014). Underfunding for public school pensions alone tops

$900 billion. Id.

8

James Farrell and Daniel Shoag, Risky Choices:

Simulating Public Funding Stress with Realistic Shocks,

Brookings Inst. (Nov. 30, 2017),

https://www.brookings.edu/research/risky-choices-

simulating-public-pension-funding-stress-with-realistic-

shocks/ (“Another shortcoming with the existing debate is that

models used by both academics and practitioners generally

assume that state and local governments will indeed fund the

promises they make. In practice, of course, governments often

fail to come up with the money they ‘should’ contribute

according to their funding laws.”); Rachel Greszler, Too-

Good-to-be-True Pensions Face Massive Shortfall, Heritage

Found. (May 30, 2017),

https://www.heritage.org/taxes/commentary/too-good-be-

true-pensions-face-massive-shortfall (“For many Americans,

defined benefit pensions have been a dream come true. After a

few decades of labor, they’ve retired in their 50s or early 60s

with a comfortable pension income for life. But that dream

come true is too good to last.”); Andrew G. Biggs, Not So

Modest: Pension Benefits for Full-Career State Government

Employees, Am. Enter. Inst. 3 (Mar. 2014),

https://www.aei.org/wp-content/uploads/2014/03/-aei-

economic-perspective-march-

3

more funding from public coffers already spread too thin on a

host of other priorities.9 So even when hindsight highlights the

obvious dilemma, it is nearly impossible to get back into the

2014_160053300510.pdf?x91208 (“[M]any state retirement

systems produce what might be called ‘pension millionaires’—

that is, employees who will receive more than $1 million in

lifetime retirement benefits.”).

9

Naturally, the pull of pension costs necessarily “can

squeeze out other important parts of state and local budgets.”

Andrew G. Biggs, Have Public Employee Pensions Become

More Generous, or less?, Forbes (Aug. 15, 2018),

https://www.forbes.com/sites/andrewbiggs/2018/08/14/have-

public-employee-pensions-become-more-generous-or-

less/?sh=633e4df11e20.

4

black.10 Small wonder scholars have called the public pension

crisis a “ticking time bomb.”11

10

See Monahan, supra note 7, at 123 (“A plan that has

an unfunded liability must eventually make up that funding

shortfall if it is to pay promised benefits. And the larger a

plan’s unfunded liability the larger its annually required

contributions will be.”); O’Reilly, supra note 4, at 186 (“Once

a pension plan exhausts its reserves, it faces the same dilemma

year after year simply to stay even: attempting to fund current

retiree benefits out of cash flow while still setting aside

adequate funds for the accruing benefits of current

employees.”); see also O. Emre Ergungor, When States

Default: Lessons from Law and History, 2017-16 Economic

Commentary, at 1 (Fed. Reserve Bank of Cleveland, Oct.

2017), https://www.clevelandfed.org/newsroom-and-events

/publications/economic-commentary/2017-economic-

commentaries/ec-201716-pensions-when-states-default.aspx

(“The dire state of public pensions increases the likelihood

that, at some point in the future, retirees may find themselves

competing with other stakeholders for the same tax dollars in

the appropriations process. Bondholders will also insist on

being repaid, and residents will still need roads, sewers, water,

and education.”).

11

Anenson et al., supra note 7, at 11 n.45. Other dire

forecasts warn of the “coming pension implosion” resulting

from pension plans that were “built on a vision of corporate

America where unchanging industries [had] lifetime

employees” and established by laws that “are not only

anachronistic, but unstable.” David John, Rea Hederman &

Tim Kane, Are Pensions the Next Fiscal Crisis?, Heritage

5

All this to say, the facts underlying this case are not

unique. This is not a problem specific to the Virgin Islands and

GERS. Some cite the aspirational qualities of these promises,

questioning how strained governmental budgets can bear

lavish subsidies for retirees.12 Others blame the ballooning

Found. (June 7, 2005), https://www.heritage.org/social-

security/report/are-pensions-the-next-fiscal-crisis. See also

Erick M. Elder & Gary Wagner, Can Public Pensions Fulfill

Their Promises?, at 3 (George Mason Univ. Mercatus Ctr.,

Working Paper, Apr. 2015),

https://www.mercatus.org/system/files/Elder-PA-Public-

Pensions.pdf (referring to the pension funding situation in

Pennsylvania as a “time bomb”); William G. Gale and Aaron

Krupkin, Financing State and Local Pension Obligations:

Issues and Options, Brookings Inst., at 1 (Jul. 2016),

https://www.brookings.edu/wp-

content/uploads/2016/07/Financing-State-and-Local-Pension-

Obligations-Gale-Krupkin-1.pdf (“Many states and

municipalities are struggling to fund defined benefit pension

plans for their employees. . . [A]lmost every state [has]

implemented some combination of lower benefit accruals and

higher employer or employee contributions.”). The

coronavirus pandemic has exacerbated the public pension

crisis. Mary Williams Walsh, Coronavirus is Making the

Public Pension Crisis Even Worse, N.Y. Times (Apr. 2, 2020),

https://www.nytimes.com/2020/04/02/business/coronavirus-

public-pension.html.

12

In 2018, state and local pensions incurred new

liabilities and servicing costs of $345 billion, while receiving

only $151 billion of public funding. Andrew G. Biggs, Can

States Afford Rising Public Pension Debts?, Forbes (Jul. 28,

6

costs of all entitlements.13 Several have reflected on how

elected officials choose to offer ever-greater benefits and then,

“maddeningly, [] choose not to fund public pensions as they

are required.”14 But none have suggested an Article III court

can resolve the issue. Nor have any courts tried, until today.

2020),

https://www.forbes.com/sites/andrewbiggs/2020/07/28/can-

states-afford-rising-public-pension-debts/?sh=4e5c612897ee.

13

See Brian M. Riedl, Deficit Reduction Requires Major

Entitlement Reform, Heritage Found. (May 18, 2011),

https://www.heritage.org/budget-and-spending

/commentary/deficit-reduction-requires-major-entitlement-

reform (“Driven by entitlement costs, the national debt is set to

reach cataclysmic levels.”); Robert E. Moffit, Price rises every

day without entitlement reform, Heritage Found. (June 14,

2006), https://www.heritage.org/health-care-

reform/commentary/price-rises-every-day-without-

entitlement-reform (observing that we are in “a time when

entitlement costs already are growing much more rapidly than

the tax receipts that are supposed to pay for them”).

14

Paul M. Secunda, Litigating for the Future of Public

Pensions, 2014 Mich. St. L. Rev. 1353, 1374 (2014); see also

Frederick M. Hess & Juliet P. Squire, “But the Pension Fund

Was Just Sitting There. . .” The Politics of Teacher Retirement

Plans, 5:4 Education Finance and Policy 587, 588 (MIT Press,

2010) (“For public pension funds, including those that cover

teachers, the primary safeguard is the self-discipline of public

officials and the hope that they will not be unduly tempted by

short-term electoral considerations and influential

constituencies. Given the state of public pension funds, these

safeguards hardly seem adequate.”).

7

I am skeptical. In one sense, the dispute unfolds like a

common law contract problem, asking the Court to merely

determine the best meaning of an agreement. Viewed through

that lens, I agree with much of the Court’s reasoning in Part

III.A holding the Consent Judgment obligates the GVI for

outstanding contributions under Section 718(g). Likewise, I

agree with the analysis in Part III.B reasoning that interest and

penalties cannot be read into the Consent Judgment

retroactively.15 Indeed, as a matter of interpretation, I would go

15

I do not see a need to consult the lack of legislative

history to resolve “whether the statutory text . . . manifests an

intent” to apply retroactively. Landgraf v. USI Film Prods.,

511 U.S. 244, 257 (1994) (emphasis added); see also I.N.S. v.

St. Cyr, 533 U.S. 289, 316 (2001) (“The standard for finding [

] unambiguous direction” in the first Landgraf step “is a

demanding one”), superseded by statute, REAL ID Act of

2005, Pub. L. No. 109–13, 119 Stat. 310, as recognized in

Nasrallah v. Barr, 140 S. Ct. 1693 (2020); Gordon v. Pete’s

Auto Serv. of Denbigh, Inc., 637 F.3d 454, 459 (4th Cir. 2011)

(interpreting the “demanding” first Landgraf step as “requiring

prescription that is truly express and unequivocal”) (citing St.

Cyr, 533 U.S. at 316) (internal citation omitted). I recognize

that when the statute is silent on retroactivity, courts have

sometimes looked to legislative history. But “[w]hen the

express terms of a statute give us one answer and extratextual

considerations suggest another, it’s no contest. Only the

written word is the law, and all persons are entitled to its

benefit.” Bostock v. Clayton Cnty., Ga., 140 S. Ct. 1731, 1737

(2020). As a result, “legislative history can never defeat

unambiguous statutory text,” particularly when it does not

exist. Id. at 1750; see also Arevalo v. Ashcroft, 344 F.3d 1, 12

8

further and conclude the Consent Judgment imposes additional

obligations on the GVI under Title 3 V.I.C. § 718(f), because

GVI’s responsibility to pay “employer contributions” in

Section 718 includes the “employer contributions” required by

Section 718(f). If that were the scope of our decision, if this

were just two parties asking a court to figure out who owes

what, few would find the opinion today noteworthy.

But we are writing on a far bigger stage, one that, I fear,

will rightly draw the attention of governors and the governed

across the country. If they interpret our decision to mean that

the Article III judicial power comprehends a monetary award

to pay a general statutory obligation, whether or not the

separate sovereign has appropriated funds, a new and

dangerous chapter in the pension wars will open.

So I write separately to emphasize the narrower scope

of the Court’s holding affirming only that the GVI is liable for

the obligations in the Consent Judgment. But in doing so, the

Court is not ordering the GVI to disburse monies from the

Virgin Islands’ treasury. And that is because the federal courts

almost always lack that authority. We stand, it seems,

dangerously close to the Constitutional precipice. The parties

need not return and ask us to step off.

I. THE CONSENT JUDGMENT

(1st Cir. 2003) (“At most, legislative histories of this type tell

us that while Congress may have thought retroactivity to be an

important topic, it could not muster a clear consensus on the

subject.”) (citing Rivers v. Roadway Exp., Inc., 511 U.S. 298,

309 (1994)). For that reason, I see no need to note its absence

here.

9

GERS’s cross-appeal requires examining the ordinary

understandings of an agreement. I begin with the small dispute

over the best reading of the Consent Judgment. And the

principles guiding that analysis—defining the words using

their common meaning when drafted—informs the larger

dispute over the best reading of Article III. It is a puzzle with

only two pieces, both turning on the same questions of

interpretation.

A. The Consent Judgment Encompasses Section 718(f)

Start with the consent judgment, an instrument with

“attributes of both contracts and injunctions.” E.O.H.C. v.

Sec’y United States Dep’t of Homeland Sec., 950 F.3d 177, 192

(3d Cir. 2020). Sometimes a consent decree imposes a

correction, coercing compliance, handing out punishment,

prohibiting future wrongs. That side of the coin matches the

power of an injunction. Id. But “when a party seeks not to

punish but to enforce the other party’s commitments,” like

GERS here, the consent judgment “works more like a

contract.” Id. So the Consent Judgment “is to be construed

basically as a contract,” United States v. ITT Cont’l Baking

Co., 420 U.S. 223, 238 (1975), with traditional principles of

interpretation informing the terms. Flemming ex rel. Estate of

Flemming v. Air Sunshine, Inc., 311 F.3d 282, 289 (3d Cir.

2002).

Interpretation of any text turns, of course, on the text.

Tamarind Resort Assocs. v. Gov’t of Virgin Islands, 138 F.3d

107, 110 (3d Cir. 1998) (“It is axiomatic that where the

language of a contract is clear and unambiguous, it must be

given its plain meaning.”) (citing Restatement (Second) of

Contracts § 202(3)(a) (1981)); see also In re Diet Drugs

(Phentermine/Fenfluramine/Dexfenfluramine) Prod. Liab.

10

Litig., 706 F.3d 217, 223 (3d Cir. 2013) (“When the terms of a

contract are clear and unambiguous, its meaning must be

determined from the four corners of the contract.” (internal

citation and quotation marks omitted)). If needed, we can aid

that effort by looking at documents “expressly incorporated in

the decree.” ITT Cont’l, 420 U.S. at 238. These principles lead

me to conclude that the Consent Judgment includes the GVI’s

obligations under Title 3 V.I.C. § 718(f), what GERS calls the

“actuarially determined employer contribution” or “ADEC.”

Appellee’s Br. at 53.

Here is why. The Consent Judgment tells the GVI to

timely pay “the total amount due of . . . employer contributions

as defined in Title 3, Section 718.” JA113–14. Naturally, that

includes all of Section 718, from (a) to (g). So if Section 718(f)

is an “employer contribution,” the GVI pays that amount.

Section 718 does not explicitly spell out what is, or is not, an

“employer contribution.” Indeed, that phrase does not appear

anywhere in Section 718. But we have plenty of other help.

Section 718(a) explains who funds GERS: its members,

the “employer,” and “interest income.” Section 718 also details

what “contributions” the “employer” makes. For example,

Section 718(g) says the “employer shall contribute” a fixed

percentage of GVI employee salaries. Likewise, Section

718(k) says the “employer shall . . . contribute to the System”

costs of “any special early retirement program.” 3 V.I.C. §

718(k) (1995).16 All of which inform the best reading of the

16

As is often the case in a decades-old dispute, the

locations of these provisions have moved around. Codification

of the quoted version of Section 718(k) occurred in 1994. Act

11

similar wording in Section 718(f) that the “employer shall

make contributions” to finance the fund’s actuarially

determined reserve.

Taken together, there is nothing in Section 718

suggesting that one particular subsection defines “employer

contributions,” or that Section 718(f) does not. Or, as we have

noted, the same words or phrases in different parts of the same

statute have the same meaning unless there is “such variation

in the connection in which the words are used as reasonably to

warrant the conclusion that they were employed in different

parts of the act with different intent.” Cf. Official Comm. of

Unsecured Creditors of Cybergenics Corp. ex rel. Cybergenics

Corp. v. Chinery, 330 F.3d 548, 559 (3d Cir. 2003) (en banc)

(quoting Atlantic Cleaners & Dyers, Inc. v. United States, 286

U.S. 427, 433 (1932)). The Consent Judgment reflects that

structure, incorporating all of the “employer contributions . . .

defined in Title 3, Section 718” and thus the “employer . . .

contribution” in Section 718(f) as well as the “employer . . .

contribut[ions]” in Section 718(g). That excludes a reading that

places Section 718(g), but not Section 718(f), into the Consent

Decree. See 11 Williston on Contracts § 30:25 (4th ed. 2020)

(“When a writing refers to another document, that other

document, or the portion to which reference is made, becomes

constructively a part of the writing, and . . . [t]he incorporated

of Aug. 26, 1994, No. 6007, § 8(c), 1994 V.I. Sess. Laws 150,

158. A later reorganization moved this section into the current

Section 718(j), 3 V.I.C. § 718(j) (2021), and Section 718(k)

now addresses the timing and prioritization of the employer’s

funding of early retirement programs. See V.I.C. § 718(k)

(2021); Act of Nov. 2, 2005, No. 6794, § 14.4, 2005 V.I. Sess.

Laws 380, 396.

12

matter is to be interpreted as part of the writing.”); see also

Antonin Scalia & Bryan Garner, Reading Law: The

Interpretation of Legal Texts 101 (2012) (stating general terms

“are to be accorded their full and fair scope” and “are not to be

arbitrarily limited”).

The District Court saw a flaw in this design. At the time

of the Consent Judgment, the ADEC obligation flowed from

an annual calculation. See § 718(e) (1968).17 In contrast, the

Consent Judgment requires payments every pay period. That,

the District Court held, makes an ADEC obligation under

Section 718(f) impossible. But two obstacles hinder that

reading. First, that is not what the Consent Judgment says. And

we are not free to reorganize, rewrite, or restate the parties’

clearly expressed intentions.

Second, even if it did, that does not read out the

obligation of Section 718(f) because nothing prevents a pro

rata ADEC payment every pay period after calculation.

Indeed, that is the process used for all employer and employee

contributions. See 3 V.I.C. § 718(h) (1968) (“[E]mployer and

employee contributions shall be paid into the system each

payroll period”), amended, Nov. 2, 2005, No. 6794, § 14.3,

2005 V.I. Sess. Laws 380, 397 (“[E]mployer and employee

contributions must be paid to the system within ten days after

the closing of each payroll period.”); 3 V.I.C. § 718(h) (2021)

(“[E]mployer and employee contributions shall be paid to the

System within ten working days after the pay date.”). In other

words, even if we accept the District Court’s premise that the

17

Section 718(e) currently requires a “bi-annual[]”

computation. Act of Oct. 26, 2015, No. 7802, § 2(f), 2015 V.I.

Sess. Laws 147, 155; see 3 V.I.C. § 718(e) (2021).

13

Consent Judgment only encompasses regular pay period

obligations, that still includes the regular pro rata contributions

under Section 718(f) each pay period.

B. Section 718(f) Obligates the GVI to Contribute the

ADEC

For these reasons, I read the Consent Judgment to

include “employer contributions” required by Section 718(f), a

conclusion the majority shares. We differ only in defining what

Section 718(f) requires. Here again our task is interpretation,

not invention. As always, we employ the “fundamental canon

of statutory construction” requiring that we “interpret the

words consistent with their ordinary meaning” when enacted.

Wis. Cent. Ltd. v. United States, 138 S. Ct. 2067, 2070, 2074

(2018) (internal quotation marks omitted); see also United

States v. Johnman, 948 F.3d 612, 617 (3d Cir. 2020). “It is a

focused inquiry and ‘[o]ur analysis begins and ends with the

text.’” United States v. Smukler, --- F.3d ----, No. 19-2151,

2021 WL 1056021, at *6 (3d Cir. 2021) (quoting Little Sisters

of the Poor Saints Peter & Paul Home v. Pennsylvania, 140 S.

Ct. 2367, 2380 (2020)). We tackle the task of interpretation

using our “toolkit” with “all the standard tools of

interpretation” used to “carefully consider the text, structure,

history, and purpose” of the statute. Kisor v. Wilkie, 139 S. Ct.

2400, 2414–15 (2019) (cleaned up). With that aim, we seek not

a perfect answer on meaning, for one does not exist, but to

“‘reach a conclusion about the best interpretation,’ thereby

resolving any perceived ambiguity.” Shular v. United States,

140 S. Ct. 779, 788 (2020) (Kavanaugh, J., concurring)

(quoting Kisor, 139 S. Ct. at 2448 (Kavanaugh, J., concurring

in the judgment)). Using that inquiry, I believe the best

meaning of Section 718(f) obligates a GVI contribution

14

separate from its fixed-percentage obligations in Section

718(g) sufficient to fund an “actuarially determined” reserve.18

The majority reaches for a different set of tools and, as

a result, reads Section 718(f) to merely preview the employer’s

fixed percentage obligation in Section 718(g). An obligation,

they write, to provide no more than “the fixed-percentage

contributions of employees and employers to be calibrated to

account for the changing actuarial needs of the system.” Maj.

Op. at 53. But those conclusions do not flow from the text of

the statute. Rather, they emerge first from what the statute does

not say (based on language deleted in 1968), and second, the

testimony of GERS representatives in legislative hearings

decades after the statute’s enactment. Respectfully, I disagree

with both that reasoning and result.

1. Section 718 Requires An Adequately Funded

Actuarial Reserve

Before explaining why, let me note our broad areas of

agreement. For one, none dispute that Section 718 requires

actuarial soundness. That is plain from Section 718(a)

requiring that the “obligations of the System shall be financed

in accordance with actuarial reserve requirements[.]” 3 V.I.C.

§ 718(a). As both commonly and technically19 understood

when enacted, a pension plan with a “fully funded” “actuarial

18

To be sure, the question of what the statute requires

is separate from whether this Court has the power to enforce

such requirements, a question addressed below.

19

See Louisiana Pub. Serv. Comm’n v. F.C.C., 476 U.S.

355, 357 (1986) (explaining “the rule of construction that

technical terms of art should be interpreted by reference to the

trade or industry to which they apply”).

15

reserve” is one in which the “reserve[’s] assets” have met the

“actuarially determined obligation accrued.” Dorrance C.

Bronson, Pension Plans – The Concept of Actuarial

Soundness, 20-1 J. of the Amer. Ass’n of Univ. Tchrs. of Ins.

36, 37 (Mar. 1953); see also Actuarially Sound Retirement

System, Black’s Law Dictionary (11th ed. 2019) (defined since

1947 as “[a] retirement plan that contains sufficient funds to

pay future obligations, as by receiving contributions from

employees and the employer to be invested in accounts to pay

future benefits”).20 Using that meaning, Section 718(f) requires

the “actuarially determined reserve” to “provide . . . for the

annuities and benefits” of the System. 3 V.I.C. § 718(f) (1968).

And the “actuarial reserve” contemplated by Section 718 is a

pool of assets sufficient to satisfy its liabilities to future

retirees. In the parlance of private pensions, this is a “defined

benefit” plan—a “general pool of assets” entitling beneficiaries

to “a fixed periodic payment”—rather than a defined

contribution plan in which “the employer’s contribution is

20

Accord Newton L. Bowers, Jr., An Approximation to

the Distribution of Annuity Costs, 19 Transactions of Soc’y of

Actuaries 295, 306 (1967) (defining a pension plan’s “actuarial

reserve” as “the expected value of future annuity payments.”);

James A. Graaskamp, Implications of Vested Benefits in

Private Pension Plans: Comment, 33 J. of Risk and Ins. 489,

493 (Sep. 1966) (describing “present actuarial reserve

formulas” in pension plans as requiring “pay[ing] both vested

and unvested, earned and unearned benefits”); Phelim Boyle &

Mary Hardy, Guaranteed Annuity Options, 33 Astin Bulletin

125, 129 (2003) (describing the “traditional actuarial reserving

method” as “set[ting] aside additional capital to ensure that the

liabilities under the guarantee will be covered with a high

probability”).

16

fixed and the employee receives whatever level of benefits the

amount contributed on his behalf will provide.” Hughes

Aircraft Co. v. Jacobson, 525 U.S. 432, 440 (1999) (internal

citations omitted).

So too, all agree that Section 718(f) demands that

GERS’s “actuarially determined reserve” receive “adequate”

funding. No mysterious meaning here. Then, as now, the

ordinary meaning of “adequate” in a quantitative context

means “equal to what is required.” Adequate, Black’s Law

Dictionary (4th ed. 1968); see also “adequate, adj.” OED

Online, Oxford University Press, March 2021,

www.oed.com/view/Entry/2299 (last visited April 6, 2021)

(“Fully satisfying what is required; quite sufficient, suitable, or

acceptable in quality or quantity.”). In other words, Section

718(f)’s “adequate” modifier does not disturb what is

otherwise clear from Section 718: that a particular funding

quantum must satisfy the System’s future outputs: the

members’ “annuities” and “benefits.”21 Finally, we reach the

same conclusion that the fixed-percentage calibrations in

Section 718(b) and Section 718(g) have not, and will not,

achieve actuarial soundness. They are not, in other words,

adequate. As history and math both prove, when the

“actuarially determined reserve” exceeds the sum of those

fixed-percentage contributions (plus income), the reserve

cannot achieve “adequa[cy].” 3 V.I.C. § 718(f).

21

And, since 1998, administrative costs. See Act No.

5223, §§ 1–2, 1998 V.I. Sess. Laws 234, 234–35 (deleting then

Section 718(i) requiring the GVI to fund the system’s

administrative costs and folding that obligation into Section

718(f).)

17

2. The GVI Must Ensure Adequacy

Here is where I depart from the majority. Accepting that

(a) the System must fund an actuarially sound reserve, and (b)

arithmetic renders that impossible from fixed-percentage

contributions alone, then something must make up that

difference. The majority calculates differently, reading Section

718(f) to preclude what Section 718 otherwise requires,

thereby baking a funding shortfall into the statute. In a bit of

self-sabotage, the argument goes, the Legislature really meant

to incentivize all to do more by creating a hard-capped

contribution system regularly “[re-]calibrated” to “account for

the changing actuarial needs of the system.” Maj. Op. at 53.22

And I admit, that seems like a good way to marshal the public

and political pressure needed to turn aspirations into action.

Pay as you go, or face a shortfall sure to shorten the terms of

those tasked with finding needed funds. Except that is not what

22

The majority recognizes that the fixed-percentage

contributions in Sections 718(b) & (g) “have not been

accurately calibrated to the actuarial needs of the system.” Maj.

Op. at 54. So if the “actuarially determined reserve” exceeds

the sum of those fixed-percentage contributions (plus interest),

the reserve cannot achieve “adequa[cy].” 3 V.I.C. § 718(f).

Even so, the majority asserts that Section 718 does not

“ensure a shortfall” because the statute

This text is long and has been trimmed here. Open the source document for the complete record.