Winston v. City of New York

VAN GRAAFEILAND, Circuit Judge,

dissenting:

I agree with my colleagues that, in determining whether New York City school teachers have a property interest in their pension rights protected under the federal constitution, we must look to the law of New York State, particularly as that law is laid down by the New York Constitution. However, when it comes to interpreting and applying article V, section 7, the pertinent portion of the New York Constitution, my colleagues and I part company.

Section 7 provides that, after July 1, 1940, membership in a retirement system such as that of the New York City teachers “shall be a contractual relationship, the benefits of which shall not be diminished or impaired.” The New York courts have made it crystal clear that, because of this constitutional provision, subsequent legislation may not diminish rights or vested interests possessed by a Retirement System member at the time he joined the System. See Robinson v. New York State Employees’ Retirement System, 46 N.Y.2d 747, 749 , 413 N.Y.S.2d 644 , 386 N.E.2d 253 (1978) (mem.); Donner v. New York City Employees’ Retirement System, 33 N.Y.2d 413, 416 , 353 N.Y.S.2d 428 , 308 N.E.2d 896 (1974); Matter of Ayman v. Teachers’Retirement Board of the City of New York, 9 N.Y.2d 119, 124-25 , 211 N.Y.S.2d 198 , 172 N.E.2d 571 (1961). These are contract rights which article I, section 10 of the United States Constitution requires this Court to protect, not to abrogate. See United States Trust Co. v. New Jersey, 431 U.S. 1, 14-32 , 97 S.Ct. 1505, 1513-1523 , 52 L.Ed.2d 92 (1977); Indiana ex rel Anderson v. Brand, Trustee, 303 U.S. 95,100 , 58 S.Ct. 443, 446 , 82 L.Ed. 685 (1938).

One of the most firmly established rights possessed by each System member is the right to retire without giving up vested retirement benefits and without regard to whether charges against the member are pending. In Matter of Rogalin v. New York City Teachers’ Retirement Board, 290 N.Y. 664 , 49 N.E.2d 623 (1943), charges were preferred against Rogalin because of his alleged mismanagement of school funds, and he was suspended from his position as a high school principal. On the following day, Rogalin filed an application *251 for retirement with the Teachers’ Retirement Board. The Board, as do my colleagues, argued that a public official should not be permitted to retire as of right during the pendency of charges of misconduct against him which ultimately might result in conviction and dismissal. This argument was rejected by the trial court in an unreported decision, which was affirmed without opinion in the Appellate Division, 265 A.D. 801 (1942), and in the Court of Appeals, 290 N.Y. 664 , 49 N.E.2d 623 . The trial court stated that the wisdom of the challenged enactment was a matter of legislative and not of judicial concern, and continued:

Since the language and intent of the statute are clear, it must be followed and may not be the subject of judicial construction for the infusion therein of a preconceived ideal of public policy not actually expressed.

See also Matter of Pierne v. Valentine, 266 A.D. 70, 78 , 42 N.Y.S.2d 404 (2d Dep’t 1943), aff'd on this point, 291 N.Y. 333, 343-44 , 52 N.Y.S.2d 890 (1943).

My colleagues’ somewhat unjudicial remarks concerning presumptions of guilt and “guilty” teachers resigning, taking their money and running, are not very cogent grounds for depriving all System members of the contract right guaranteed them by both the State and federal constitutions to resign without giving up their vested retirement benefits. No teacher is “guilty” until, after proper hearing and judicial review, he is found guilty.

Equally unpersuasive is the majority’s professed desire to relieve System members from having to decide whether to resign or face charges. Under the guise of protecting members from having to make a difficult decision, the majority would deprive all members of their constitutionally protected right to make a choice at all.

An equally important right possessed by all members of the Retirement System is that the means designed to assure their benefits should not be impaired and that the sources of funds for their benefits should be protected by insuring appropriate contributions and actuarially sound procedures. Sgaglione v. Levitt, 37 N.Y.2d 507, 511, 514 , 375 N.Y.S.2d 79 , 337 N.E.2d 592 (1975). Each member thus has the contractual right to insist that the assets of the System not be depleted by the making of unauthorized pension payments, a right possessed by every trust beneficiary under the common law, see Hoffa v. Fitzsimmons, 673 F.2d 1345, 1353 (D.C.Cir.1982).

It generally is presumed that contracting parties adopt the terms of their bargain in reliance on the law in effect at the time the agreement is reached and that such laws form a part of the contract just as though they were expressly incorporated in its terms. United States Trust Co. v. New Jersey, supra, 431 U.S. at 19 -20 n. 17, 97 S.Ct. at 1516 -1517 n. 17. Under section B20-38.0(2) of the Administrative Code, a member who is dismissed from service loses the right to collect any retirement allowance. Although the member’s own contributions to the annuity part of the allowance are repaid him, the contributions of the City and the Board are forfeited. Sections 2573, 2590-j(7)(b), 3020, and 3020-a of the Education Law establish the grounds and procedures for dismissal of System members. All of these statutory provisions are part of the contract between the System and its members. This Court should not assume the role of a super-legislature by amending the statutes, and perforce the contractual rights, of the thousands of Retirement System’s members who are not even parties to this litigation.

Agencies of the City of New York have fallen on hard times before, and it is not unreasonable to expect that this will occur again. , Unauthorized pension payments to dismissed members have a deleterious effect on the System’s solvency whatever the reason for the dismissal. It is simply wrong for this Court to order an amendment of the contract to which all System members are parties, so as to provide that any member dismissed from employment can continue to draw money from the pension funds unless the dismissal was for something bearing the vague label of “mis *252 conduct”. See Giaccio v. Pennsylvania, 382 U.S. 399, 404 , 86 S.Ct. 518, 521 , 15 L.Ed.2d 447 (1966); Soglin v. Kauffman, 418 F.2d 163, 167-68 (7th Cir.1969). As stated by then Justice Bergan in Gorman v. City of New York, 280 A.D. 39, 44-45 , 110 N.Y.S.2d 711 (1st Dep’t 1952), aff'd mem., 304 N.Y. 865 , 109 N.Y.S.2d 881 , appeal dismissed, 345 U.S. 962 , 73 S.Ct. 950 , 97 L.Ed. 1381 (1953), “the Constitution contemplates a public employment which validly continues until the right to be pensioned matures and it does not imply a restriction upon public authority to remove a member from a public position for valid cause, even though the right to a pension terminates with the removal.” “Valid cause” is spelled out in sections 2573, 2590-j(7)(b), and 3020 of the Education Law. It is not synonymous with “misconduct”.

My colleagues state quite correctly that Retirement System members have a contractual right to a pension “upon fulfilling the statutory conditions” and hold that “this contractual right is a property interest under State law.” They then reject the very “statutory conditions” which define the limit and extent of the “property interest” they purport to recognize. Cf. Board of Regents v. Roth, 408 U.S. 564, 577-78 , 92 S.Ct. 2701, 2709-10 , 33 L.Ed.2d 548 (1972). Under the guise of enforcing the procedural requirements of due process, the majority order an amendment of the substantive rights of the parties upon which the procedural requirements of due process are predicated. However, appellees have not established that they have been deprived of a right to substantive due process.

In Harrah Independent School District v. Martin, 440 U.S. 194 , 99 S.Ct. 1062 , 59 L.Ed.2d 248 (1979) (per curiam) a school board refused after a hearing to renew a tenured teacher’s employment contract because she refused to comply with the board’s requirement that she take five hours of continuing education courses over a three year period. The Court held that a claim of substantive due process under such circumstances would in no way resemble “the individual’s freedom of choice with respect to certain basic matters of procreation, marriage, and family life.” Id. at 198 , 99 S.Ct. at 1064 (cases cited). The Court continued:

The School Board’s rule is endowed with a presumption of legislative validity, and the burden is on respondent to show that there is no rational connection between the Board’s action and its conceded interest in providing its students with competent, well-trained teachers____ Such a course of conduct on the part of a school board responsible for the public education of students within its jurisdiction, and employing teachers to perform the principal portion of that task, can scarcely be described as arbitrary. Respondent’s claim of a denial of substantive due process under these circumstances is wholly untenable.

My colleagues’ determination that there has been a denial of substantive due process in the instant case is equally untenable. In holding that the pension forfeiture provision is overbroad because its only purpose is the “deterrence of misconduct”, my colleagues overlook the “presumption of legislative validity” referred to by the Harrah court and the express finding of reasonableness by the district court. 580 F.Supp. at 1476. They also disregard the indisputable interest that the New York Legislature has in providing New York City students with competent and well-trained teachers and in preserving the financial stability of the pension program covering over 55,000 New York City teachers. Indeed, the very reasoning my colleagues employ in arriving at their definition of statutory purpose will not withstand scrutiny. Starting with the unfounded and self-conceived premise that “[t]he only justifiable public policy served by pension forfeiture is the deterrence of misconduct,” they leap a substantial gap in logic by concluding that “deterrence of misconduct is its purpose.” (emphasis supplied). Their holding demonstrates, in sum, why “there is reason for concern lest the only limits to ... judicial intervention become the predelections of those who happen at the time to be [mjembers of this Court.” Moore v. City of East Cleveland, 431 U.S. *253 494, 502 , 97 S.Ct. 1932, 1937 , 52 L.Ed.2d 531 (1977).

Under well-settled New York law, Retirement System members may be discharged for the reasons set forth in the Education Law and in accordance with the hearing procedures prescribed by that Law. There is nothing in New York law that entitles a System member to the continued payment of pension benefits by the State if that member was properly discharged for a valid cause, even though the discharge was not for “misconduct”. See Green v. McGuire, 683 F.2d 32 , 37 (2d Cir.1982) (Oakes, J. concurring). The United States Constitution does not require that this Court put it there.

Because I find no merit in appellees’ equal protection claims, I would reverse and dismiss the complaint. 1

. A reader of the majority opinion might get the impression that there has been widespread discharge of New York City teachers on grounds such as inefficiency or inability to maintain discipline. In fairness to appellants, it should be stated that no such inference can be drawn from a review of the record. See 580 F.Supp. at 1477 n. 7. Moreover, despite the broad scope of the relevant Education Law provisions, the New York courts will reverse the Education Department’s decision to dismiss a teacher where the sanction of dismissal “is so disproportionate to the offense as to 'shock the conscience of the court’ ”. Harris v. Mechanicville Dist., 45 N.Y.2d 279, 284 , 408 N.Y.S.2d 384 , 380 N.E.2d 213 (1978) (quoting Matter of Pell v. Board of Educ., 34 N.Y.2d 222 , 232-35, 356 N.Y.S.2d 833 , 313 N.E.2d 321 (1974)).