# Appendix — Pineman v. Fallon

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 1988
- **Citation:** 488 U.S. 824

## Text

No. ae
In The ba
Supreme Court Of Che United States

OCTOBER TERM, 1988

KAREN PINEMAN, ALPHONSE MAROTTA,
DANIEL CLIFFORD, JUDITH NARUS, |
ROSE SCHEWE and ALFRED K. TYLL,

Petitioners,

V.

WILLIAM J. FALLON, Chairman of the
State Employees Retirement Commission,
HENRY E. PARKER, Treasurer of the
State of Connecticut, and
J. EDWARD CALDWELL, Comptroller of the
State of Connecticut,

Respondents.

APPENDIX TO
PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

PAUL W. ORTH
SHIPMAN & GOODWIN
799 Main Street

Hartford, CT 06103

(203) 549-4770

Printed by

Brescia’s Printing Services, Inc.
66 Connecticut Boulevard
East Hartford, CT 06108

528-4254

APPENDIX TABLE OF CONTENTS

STATUTES IN ISSUE: Page
ye ee A 4. SS. eS Al

Conn. Gen. Stat. §5-156(a)
(1971 Enactment and 1975
SD Pa ee eee ee ee ee Al4

Conn. Gen. Stat. §5-162(c)(1)
(1958 Revision and 1975
a Al9

Conn. Gen. Stat. §5-162(d)(1)
(1958 Revision and 1975
Ee aie acy ee We eae ee Oe A21

Conn. Gen. Stat. §5-162(d)(3)
(1958 Revision and 1975
I eae a a Gob wie eee « A23

Conn. Gen. Stat. §5-163(c)
(1958 Revision and 1975
Sa EO GED ae ar ee a A26

Conn. Gen. Stat. §5-166(a)
(1958 Revision, 1971 Amendment
ana i975 Amendment) ....ccccccce A28

PRIOR DECISIONS:

Pineman I-
Pineman v. Oechslin, 494 F.Supp.
Bee. Sw COMR. LOGO} cc ccc wcccwene A30

Pineman II-
Pineman v. Oechslin, 637 F.2d
Oe ee eS sD eee A175

Pineman III
Pineman v. Oechslin, 195 Conn.
405, 486 A.2d 603 (1965)... A198

APPENDIX TABLE OF CONTENTS

(Continued )

Pineman V-
Pineman v. Fallon, 662 F.Supp.

1311 (D.Conn. 1987)..----+++-+--

Pineman VI-
Pineman v. Fallon,
F.2d (24 Cir. 1968) ..««+-

Judgment - Pineman v. Fallon,
(2a Cir. March 10, 1988)....-.--

Substitute House Bill No. 5176

PUBLIC ACT No. 75-531

AN ACT CONCERNING ELIGIBILITY FOR STATE

RETIREMENT.

Section 1. Subsection (c) of
section 5-162 of the general statutes
is repealed and the following is
substituted in lieu thereof:

(c) Schedule 1--Twenty-five or
more years of state service.

(1) EXCEPT AS PROVIDED IN SECTION
5 OF THIS ACT, [Each] EACH member who
has completed twenty-five or more years
of state service shall be retired, on
his own application or on the
application of the executive head of
the agency employing him, on the first
day of the month named in the
application, and on or after the
member's fifty-fifth birthday [, if a

ae

man, or fiftieth birthday, if a woman. ]

(2) Each member who has completed
twenty-five or more years of state
service and has reached his seventieth
birthday and who is in an appointive
position shall continue in service and
shall be retired on the first day of
the month on or after his seventieth
birthday, upon notice from the
retirement commission to the member, to
the executive head of his agency and
the comptroller.

(3) Each member referred to in
subdivisions (1) and (2) of this
subsection shall receive a monthly
retirement income beginning on his
retirement date equal to one-twelfth of
(A) plus (B)}: (A) Twenty-five per cent
of his social security earnings, plus
fifty percent of his excess earnings;
(B) the number of years, if any, taken
to completed months, of his state

- A2 -

service in eucesa of twenty-five years
multiplied by one percent of his social
security earnings, plus the number of
such years multiplied by two per cent
of his excess earnings.

Sec. 2. Subsection (d) of section
5-162 of the general statutes is
repealed and the following is
substituted in lieu thereof:

(d) Schedule 2--Less than
twenty-five years of state service.

(1) EXCEPT AS PROVIDED IN SECTION
5 OF THIS ACT, [Each] EACH member who
has completed less than twenty-five
years of state service shall be retired
on his own application, the first day
of the month following his application,
if [he then meets any one of the
following conditions: (A) The member is
a woman who has completed five years of
state service and reached her
sixty-fifth birthday; (B) the member is

as

a woman who has completed ten years of
state service and reached her
fifty-fifth birthday; (C)] the member
[is a man who] has completed ten years
of state service and reached his
sixtieth birthday.

(2) Each such member in an
appointive position who has reached his
seventieth birthday shall continue in
service and shall be retired on the
first day of the month on or after his
seventieth birthday, upon notice from
the retirement commission to the
member, the executive head of his
agency and the comptroller.

(3) Each member referred to in
subdivisions (1) and (2) of this
subsection shall receive a monthly
retirement income beginning on his
retirement date equal to one-twelfth of
(A) plus (B): (A) The number of years

of his state service, taken to

» At =

completed months, multiplied by the
applicable percentage of his social
security earnings determined from the
table below for the appropriate age and
years of state service; (B) the number
of such years multiplied by the
applicable percentage of his excess
earnings determined from the table

below for such age and years of service.

Percentage
[Age of Member Years of _ of Social
on His Retire- State Ser- Security Excess
ment Date vice Earnings Earnings
Man Woman
70 and 65 and 5
over over and over* 1.25% 2.50%
65 to 70 60 to 65 10 1.00 2.00
64 59 10 94 1.88
63 58 10 .88 1.76
62 57 10 82 1.64
61 56 10 .76 1.52
60 55 10 .70 1.40
59 54 10 65 1.30
58 53 10 .60 1.20
57 52 10 56 1.12
56 51 10 53 1.06
55 50 10 50 1.00

“Not more than 20 years may be counted
for this age and percentage group. }

PERCENTAGE
AGE OF MEMBER yEars OF OF SOCIAL

ON HIS RETIRE- sTATE SECURITY EXCESS
MENT DATE SERVICE EARNINGS EARNINGS
70 AND OVER 4 AND OVER* 1.25% 2.50%
65 - 20 10 1.00

64 10 24 1.88
63 10 88 1.76
62 10 82 1.64
61 10 26 L52
60 10 20 1.40
39 10 ‘65 30
58 10 60 1.20
37 10 56 Ll
26 10 53 1.06
a2 10 50 1.00

*NOT MORE THAN 20 YEARS MAY BE COUNTED FOR
THIS AGE AND PERCENTAGE GROUP.

For each full year of service
beyond ten, the percentage of social
security earnings shall be increased by
one-fifteenth of the difference between
one and the percentage shown in the
above table opposite the age of the
retiring employee, and the percentage
of excess earnings shall be increased
by one-fifteenth of the difference
between two and the percentage shown in
the above table opposite the age of the
retiring employee.

» AS =

Sec. 3. Subsection (c) of section
5-163 of the general statutes is
repealed and the following is
substituted in lieu thereof:

(c) EXCEPT AS PROVIDED IN SECTION
5 OF THIS ACT, [A] A member whose state
service is terminated because of
economy lack of work or abolition of
his position, or who, being an army or
air national guard technician in the
military department, is dismissed by
reason of separation from the national
guard because of age, after he has
completed twenty-five years of state
service but before he has reached his
fifty-fifth birthday, [if aman, or her
fiftieth birthday, if a woman,] shall
be entitled to a retirement income.

The amount of each monthly payment

shall be determined from subsection (c)
of section 5-162, if the member elects
the first day of the month on or after

» BF a

_————

such birthday as his retirement date;
and shall be the actuarial equivalent
of such amount, as determined by the
retirement commission, if the member
elects the first day of the month on or
after his termination date as his
retirement date.

Sec. 4. Subsection (a) of Section
5-166 of the general statutes is
repealed and the following is
substituted in lieu thereof:

(a) EXCEPT AS PROVIDED IN SECTION
5 OF THIS ACT, [A] A member who leaves
state service before he is eligible for
retirement but after completing at
least ten years of state service, of
which at least five years shall have
immediately preceded the date of his
leaving state service, shall continue
to be a member, and shall be eligible
for a retirement income as provided in
section 5-162, but on a reduced

“a ee

actuarial basis, as determined by the
retirement commission [provided, if
such member is a woman she shall be
eligible upon reaching her fiftieth
birthday and if a man, he shall be
eligible] upon reaching his fifty-fifth
birthday. Such vested retirement
income shall not be subject to
divestiture by subsequent employment
unless the member withdraws his

retirement contribution.

Sec. 5 (NEW) (a) Any member who has
completed twenty-five years of state
service and has reached the age of
fifty prior to June 30, 1980, may elect
to be retired on the first day of the
month following such application and
receive retirement benefits in
accordance with the provisions of
subdivision (3) of subsection (c) of
section 5-162 of the general statutes,

- Ad--

provided such member so elects prior to
June 30, 1980.

(b) Any member who has completed
at least ten but less than twenty-five
years of state service and reached the
age of fifty-five prior to June 30,
1980, may elect to be retired on the
first day of the month following his
application and receive retirement
benefits in accordance with subsection
(d) of this section, provided such
member so elects prior to June 30, 1980.

(c) Any member who has completed
at least five but less than ten years
of state service and has reached the
age of sixty-five prior to June 30,
1980, may elect to be retired on the
first day of the month following such
application and receive retirement
benefits in accordance with the

provisions of subsection (d) of this

- AlO -

section, provided such member so elects
prior to June 30, 1980.

(d) Each member referred to in
subsections (b) and (c) of this section
shall receive a monthly retirement
income beginning on his retirement date
equal to one twelfth of (A) plus (B):
(A) The number of years of state
service taken to completed months,
multiplied by the applicable percentage
of his social security earnings
determined from the table below for the
appropriate age and years of state
service; (B) the number of years
multiplied by the applicable percentage
of his excess earnings determined from
the table below for such age and years

of service.

- All -

Percentage

Age of Member __ Years of Of Social

on his Retire- State Security Excess
ment Date Service Earnings Earnings
65 and over 5 and over* 1.25% 2.50%
60 to 65 10 1.00 2.00
59 10 .94 1.88

58 10 .88 1.76
57 10 .82 1.64

56 10 .76 1.52
55 10 .70 1.40
54 10 .65 1.30
53 10 .60 1.20
52 10 .56 1.12
51 10 53 1.06
50 10 .50 1.00

*Not more than 20 years may be counted
for this age and percentage group.

For each full year of service beyond
ten, the percentage of social security
earnings shall be increased by
one-fifteenth of the difference between
one and the percentage shown in the
above table opposite the age of the
retiring employee, and the percentage
of excess earnings shall be increased
by one-fifteenth of the difference
between two and the percentage shown in
the above table opposite the age of the
retiring employee.

- Al2 -

Sec. 6. This act shall take
effect from its passage.

Approved June 30, 1975

8471H

- Al3 -

Conn.Gen.Stat. §5-156a

1971 Public Act 666§4

Funding of retirement system on
actuarial reserve basis

(a) The state employees’
retirement system shall be funded on an
actuarial reserve basis. The
retirement commission shall, on or
before December first, annually certify
to the general assembly the amount
necessary on the basis of an actuarial
determination to gradually establish
and subsequently maintain the
retirement fund on such determined
actuarial reserve basis, and make such
other recommendations with regard to
such fund and its administration as the
commission deems appropriate. The
retirement commission shall, at least
once every three years, prepare a

valuation of the assets and liabilities

- Al4 -

0 tte

of the system. On the basis of each
such valuation, it shall redetermine
the normal rate of contribution and,
until it is amortized, the unfunded
past service liability. The general
assembly shall review the commission's
recommendations and certification and
shall appropriate to the retirement
fund the amount certified by the
retirement commission as necessary
provided said certification is in
compliance with this section.

(b) The retirement commission
shall determine on an actuarial basis
(1) a normal rate of contribution which
the state shall be required to make
into the retirement fund in order to
meet the actuarial cost of current
service and (2) the unfunded past
service liability. For the first

fifteen years, the funding program for

- Al5S -

the actuarial reserve basis shall
consist of the following percentages of
the sum of normal cost and the amount
required for a forty-year amortization

of unfunded liabilities:

Percentage to be
paid of normal cost
plus full 40-year

amortization

Fiscal year from the beginning
Beginning of such fiscal year

7-1-71 30

7-1-72 35

7-1-73 40

7-1-74 45

7-1-75 45

7-1-76 50

7-1-77 55

7-1-78 60

7-1-79 65

7-1-80 70

7-1-81 75

7-1-82 80

7-1-83 85

7-1-84 90

7-1-85 95

- Al6 -

Bain.

provided said state payments shall not
be less than seventy-five per cent of
total retirement income payments for
each fiscal year commencing July l,
1973; and for each of the fiscal years
ending June 30, 1972, and June 30,
1973, respectively, shall be seventy
per cent of the total retirement income
payments.

(c) Transfer of appropriated
amounts from the general fund to the
retirement fund shall be made in equal
monthly payments during the fiscal year.

(d) No act liberalizing the
benefits of the plan shall be enacted
by the general assembly until the
assembly has requested and received
from the retirement commission a
certification of the cost of such
change under the actuarial funding
basis adopted by this act using full
normal cost plus forty year

amortization.

- Al7 -

1975 Amendment

1975, P.A. 75-581, §4, amending
subsec. (b), substituted “sixteen” for
“fifteen years in the second sentence,
increased the percentage for each
fiscal year beginning 7-1-75 by 5%, and
provided for fiscal year beginning

7-1-86.

- Alg -

Conn.Gen.Stat. §5-162(c)(1)

1958 Revision

Retirement date and retirement income

(c) Schedule 1-Twenty-five or more
years of state service.

(1) Each member who has completed
twenty-five or more years of state
service shall be retired, on his own
application or on the application of
the executive head of the agency
employing him, on the first day of the
month named in the application, and on
Or after the member's fifty-fifth
birthday, if€ aman, or fiftieth

birthday, if a woman.

- Ald -

1975 Amendment

1975, P.A. 75-531, §1, amended
subsec. (c)(1l) by inserting “Except as
provided in section 5 of this act “, at
the beginning and by deleting”, if a
man, or fiftieth birthday, if a woman”

from the end.

- A20 -

Conn.Gen.Stat. §5-162(d)(1)

1958 Revision

Retirement date and retirement income
(d) Schedule 2-Less than
twenty-five years of state service.
(1) Each member who has completed
less than twenty-five years of state
service shall be retired on his own
application, on the first day of the
month following his application, if he
then meets any one of the following
conditions: (A) The member is a woman
who has completed five years of state
service and reached her sixty-fifth
birthday; (B) the member is a woman who
has completed ten years of state
service and reached her fifty-fifth
birthday; (C) the member is a man who
has completed ten years of state
service and reached his sixtieth

birthday.

- A2l -

1975 Amendment

1975, P.A. 75-531, §2, amended
subsec. (d)(1l) by inserting “Except as
provided in section 5 of this act,", by
deleting “he then meets any one of the
following conditions: (A) The member
is a woman who has completed five years
of state service and reached her
sixty-fifth birthday; (B) the member is
a woman who has completed ten years of
state service and reached her
fifty-fifth birthday; (c)" following
“following his application, if", and by
deleting “is a man who" following “the

member";

- A22 -

Conn.Gen.Stat. §5-162(d) (3)

1958 Revision

Retirement date and retirement income

(d) Schedule 2-Less than 25 years
of state service.

(3) Each member referred to in
subdivisions (l) and (2) of this
subsection shall receive a monthly
retirement income beginning on his
retirement date equal to one-twelfth of
(A) plus (B): (A) The number of years
of his state service, taken to
completed months, multiplied by the
applicable percentage of his social
security earnings determined from the
table below for the appropriate age and
years of state service; (B) the number
of such years multiplied by the
applicable percentage of his excess
earnings determined from the table

below for such age and years of service.

- A23 -

Percentage

of Social
Age of Member on Years of Security Excess
His Retirement Date State Service Earnings Earnings
ney Man . Woman
70 andover 65andover 5 and over* 1.25% 2.50%
65 to 70 60 to 65 10 1.00 2.00
64 59 10 94 1.88
63 58 : 10 .88 1.76
62 57 10 82 1.64
61 56 10 -76 1.52
60 55 10 .70 1.40
59 54 10 65 1.30
58 53 10 .60 1.20
57 52 10 56 1.12
56 51 10 53 1.06
55 50 10 .50 1.00

* Not more than 20 years may be counted for
this age and percentage group

For each full year of service beyond
ten, the percentage of social security
earnings shall be increased by
one-fifteenth of the difference between
one and the percentage shown in the
above table opposite the age of the
retiring employee, and the percentage
of excess earnings shall be increased
by one-fifteenth of the difference
between two and the percentage shown in
the above table opposite the age of the

retiring employee.

- A24 -

ical

1975 Amendment

1975, P.A. 75-531, §2, amended
subsec. (d)(3), by substituting the
table for former table which had
included separate columns for men and

women for age at retirement.

Age of Member on Years of State Percentage of Social Excess

His Retirement Date Service ** Security Earnings Earnings
70 and over 5 and over * 1.25% 2.50%
65 to 70 10 1.00 2.00
64 10 94 1.88
63 10 88 1.76
62 10 82 1.64
61 10 .76 1.52
60 10 .70 1.40
59 10 .65 1.30
58 10 .60 1.20
57 10 56 1.12
56 10 53 1.06
55 10 .50 1.00

“Not more than 20 years may be counted for this age
and percentage group.

** Between the ages of fifty-five and sixty, the minimum
service requirement is ten years of actual state service.

Conn.Gen.Stat. §5-163(c)

1958 Revision

Early retirement

(c) A member whose state service
is terminated because of economy, lack
of work or abolition of his position,
or who, being an army or air national
guard technician in the military
department, is dismissed by reason of
separation from the national guard
because of age, after he has completed
twenty-five years of state service but
before he has reached his fifty-fifth
birthday, if aman, or her fiftieth
birthday, if a woman, shall be entitled
to a retirement income. The amount of
each monthly payment shall be
determined from subsection (c) of
section 5-162, if the member elects the

first day of the month on or after such

- A26 -

ill

birthday as his retirement date; and
shall be the actuarial equivalent of
such amount, as determined by the
retirement commission, if the member
elects the first day of the month on or
after his termination date as his

retirement date.

1975 Amendment

1975, P.A. 75-531, §3, amended the
first sentence of subsec. (c) by
inserting “Except as provided in
section 5 of this act," at the
beginning and by deleting "if aman, or
her fiftieth birthday, if a woman,”

following “his fifty-fifth birthday,".

- A27 -

Conn.Gen.Stat. §5-166(a)

1958 Revision

Leaving state service before becoming
eligible for retirement

(a) A member who leaves state
service before he is eligible for
retirement but after completing at
least ten years of state service, of
which at least five years shall have
immediately preceded the date of his
leaving state service, shall continue
to be a member, and shall be eligible
for a retirement income as provided in
section 5-162, but on a reduced
actuarial basis, as determined by the
retirement commission, provided, if
such member is a woman she shall be
eligible upon reaching her fiftieth
birthday and if aman, he shall be
eligible upon reaching his fifty-fifth

birthday.

- A28 -

—T

1971 Amendment

1973, P.A. 73-171 added, to

subsec.(a), the second sentence.

1975 Amendment

1975, P.A. 75-531, §4, amended the
first sentence of subsec. (a) by
inserting "Except as provided in
section 5 of this act," at the
beginning, and by deleting “, provided,
if such member is a woman she shall be
eligible upon reaching her fiftieth
birthday and if aman, he shall be
eligible” following “as determined by

the retirement commission".

9145H

Karen PINEMAN, Alphonse Marotta,
Daniel Clifford, Judith Narus, Rose

Schewe and Alfred K. Tyll

William G. OECHSLIN, Chairman of
the State Employees Retirement
Commission, Henry E. Parker, Treasurer
of the State of Connecticut, and J.
Edward Caldwell, Comptroller of the

State of Connecticut.

Civ. No. H 77-164.
United States District Court,
District of Connecticut.

April 16, 1980.

State employees brought action
challenging legislation which
established for all employees

retirement ages which were identical to

- A30 -

the high retirement ages previously
applicable only to male employees. The
District Court, José A. Cabranes, J.,
held that statutory amendments which
established for all state employees
retirement ages that were identical to
the high retirement ages previously
applicable only to male employees of
the state was in violation of the
contract clause of the United States
Constitution, as that legislation was
applied to state employees who had not
reached normal retirement age prior to
June 30, 1980, and who were such
employees on June 30, 1975, since the
legislation impaired obligations of
contract entered into between state and
its employees requiring state to permit
those male and female employees to
retire on terms of State Employees
Retirement Act, and since the

impairment could not be justified as

- A3l -

either necessary to serve important

public purpose or as being reasonable
in light of the surrounding

circumstances

Plaintiffs‘ motion for summary

judgment granted.

Paul W. Orth, Hoppin, Carey &

Powell, Hartford, Conn., for plaintiffs.

J. Sarah Posner, Asst. Attorney
General, State of Connecticut, Carl R.
Ajello, Attorney General, Hartford,

Conn., for defendants.

- A32 -

MEMORANDUM OF DECISION ON PLAINTIFFS’

MOTION FOR SUMMARY JUDGMENT

JOSE A. CABRANES, District Judge.

Contents
a eee et ee ee 527
Ba ee EE i'd s 6-0 o 0-6 6 6 ee 6 ke ee 529
II. THE FACTUAL BACKGROUND.......... 530

A. The Fitzpatrick

AN ae ee ee 530
B. The Plaintiffs’

Reliance on Pre-1975

GC. FRO 2975 ASlevocccccessess 533
D. The Legislative History
OF CRO 2975 ASE. cccccseces 535
III. THE PLAINTIFFS* CLAIMS.......... 536
IV. THE CONTRACT CALUSE OF THE

UNITED STATES CONSTITUTION...... 537

- A33 -

Ent rOGuUCtiON..ccccscccsecsece
Connecticut’s Contractual
Obligations to the
Plainti€Es. .ccccccccsacscccses
1. Contractual Obliga-
tions in Pensin Plans

Under Connecticut

2. Mere “Gratuities” or
Contractual Rights?....
3. The Content of the
Plaintiffs‘ Contrac-
tual and Connecti-
cut’s Obligations......
Connecticut's Impairment
of Its Contractual
ODLIGSCLONS.ccccccscccsssece
The Unconstitutionality
of Connecticut's Impair-

ment of Its Contractual

- A34 -

541

.
;

V.

GCOLRGSCEORS sc ccs cccssdcacers TrTreuy 547
l. The “Reserved Powers”
DER eis 6 bc ecek cekbsseébece 547
2. Judicial Scrutiny Under
the United States Trust Company

, ear ear aan er 548

et ere a ee 549

(b) Reasonableness......... 552
Cs a eb web aoe 6 080 bree week 553

- A35 -

Introduction

This action is a sequel to this

court's decision in Fitzpatrick v.

Bitzer’. In that case, decided in
1974, Chief Judge Clarie held invalid
the provisions of the Connecticut State
Employees Retirement Act,
Conn.Gen.Stat. Section 5-152 et seq.,
which required male employees of the
State to work five years longer to earn
pension benefits than similarly
Situated female employees. Judge
Clarie ruled that these provisions
discriminated against men on account of
their sex, in violation of Title VII of
the Civil Rights Act of 1964, as
amended ("Title VII").* The decision

in Fitzpatrick was not appealed by the

state,* and Connecticut began to

administer its retirement statute in a

- A36 -

~ acieiiioéiis i

manner consistent with the court's
ruling, permitting both men and women
to retire with full pension benefits at
the lower ages formerly applicable only

to women. *

At the next legislative session,
the General Assembly passed Public Act
75-531 ("the 1975 Act"), which amended
the portions of the State Employees
Retirement Act which this court found

to be discriminatory in Fitzpatrick.

The 1975 Act established for all
employees retirement ages which were
identical to the higher retirement ages
applicable only to male employees prior

to Fitzpatrick.

In this class action, certain male
and female employees of the State of

Connecticut challenge the constitution-

- A37 -

ality of the 1975 Act. The state
concedes that the effect of the 1975
Act was to require the plaintiffs, who
had become state employees and remained
in the state's service in reliance upon
the terms of pre-1975 law (as modified
by Judge Clarie‘s order), to work up to
five years longer than that law had
required in order to qualify for
retirement with full pension benefits.
The plaintiffs claim that the 1975 Act
therefore impaired the state's
pre-existing contractual obligations to
them, in violation of the contract
clause of the United States

Constitution. °®

The defendants, who are the
Connecticut officials ultimately
responsible for administering the State

Employees Retirement Act, deny that

- A38 -

pre-1975 law gave rise to any
contractual obligations. They assert
that “a pension is not a matter of
contract,” but “a gratuity ‘springing
from the appreciation and graciousness

of the sovereign.‘”°®

Accordingly,

they argue, the plaintiffs have no
rights which fall within scope of the
contract clause, even though (as they
admit) the state required the
plaintiffs to become members of the
State Employees Retirement System and
to contribute substantially to the fund
out of which benefits are paid, and the
plaintiffs joined and remained in the

state’s employ in reliance upon the

terms of pre-1975 law.

With due respect, the court
declines to follow the defendants'

reasoning. Rather, on the basis of the

- A39 -

uncontested facts before the court on
the plaintiffs' motion for summary

judgment, the court finds that the

state entered into a contractual
relationship with the plaintiffs,
pursuant to which the state bound
itself to permit the members of the
plaintiff class to retire from state
- service on the terms provided by the
law which was in effect immediately
prior to the adoption of the 1975 Act.
The court further finds that the 1975
Act severely impaired the state's
contractual obligations to this class
of its employees, and that this
impairment is unconstitutional under
the criteria set forth by the Supreme
Court, for the state has not argued,
much less established, that the
abrogation of its contractual

Obligations was either necessary for

« KAO

the achievement of the state's purposes
Or reasonable in light of the

circumstances.

Because the 1975 Act, as applied to
the plaintiffs, violates the contract
rrr of the United States
Constitution, the plaintiffs' motion
for summary judgment is granted. An
injunction shall be issued against the
enforcement of the 1975 Act with
respect to those state employees who
were in state service on June 30, 1975
(the effective date of the 1975 Act),
are still in the state's service, and
will not be eligible to retire with
full pension benefits prior to June 30,

1980.’

Among the plaintiffs to whom the

court grants relief from the chailenged

- A4l -

statutory provisions are female state
employees who entered state service
prior to the enactment of the 1975
Act. The state has admitted that all
of these class members relied on the
promise of pension benefits set forth
in the pre-1975 version of the State
Employees Retirement Act, both before
and after it was modified by the

decision in Fitzpatrick. The court

also grants similar relief to male
employees who entered state service
prior to the adoption of the 1975 Act.
It may be suggested that this decision
grants a “windfall” to those male class
members who entered state service
before this court's decision in

Fitzpatrick by permitting them to

retire on terms more favorable than the
ones upon which they relied under prior

law. However, the court is bound by

- A42 -

the state's admission that these class
members either expected to become
eligible for pension benefits on terms
as favorable as those extended to

temale employees under pre-Fitzpatrick

law, Or remained in state service after

the Fitzpatrick decision in reliance

upon the promise of benefits identical
to those of female employees which was
held out to them by the state following
that decision. Moreover, even apart
from the question of the expectations
of this group of class members, all
males who were in the state's employ at

the time of the Fitzpatrick decision

became entitled, under the terms of

Judge Clarie'’s order, to retire on the
terms applicable to similariy situated
female employees under the former law.
The court cannot deny any males in the

plaintiff class the right to retire on

- A43 -

the terms to which similarly situated
female class members are entitled
without in effect undoing Judge

Clarie's decision in Fitzpatrick.

Nothing in this ruling affects the
application of the 1975 Act, on a
prospective basis, to employees who
were not in the state's service on June
30, 1975, and who therefore had no
contractual rights to retire on the
more advantageous terms afforded by
prior law. The court holds only that
the retroactive application of the more
stringent requirements for pension
eligibility contained in the 1975 Act
to the discrete class of state
employees who brought this action is

unconstitutional.

The rules on retirement ages

enforced by this decision are those

- A44 -

embodied in contractual arrangements
between the state and its employees
prior to June 30, 1975. In holding the
1975 Act unconstitutional to the extent
that it changed those rules
retroactively as applied to the
plaintiffs, the court makes no judgment
concerning the wisdom of the pension
policies which the state enforced prior
to the enactment of the 1975 Act, or,
indeed, concerning the policies
embodied in the 1975 Act. Any harm to
the state treasury which may be caused
by the court's enforcement of the
state's contractual obligations-and the
state has neither shown nor suggested
the existence of such harm-is the
direct result of obligations assumed by
the state itself and of prior judicial
determinations, binding on the state,

which required that Connecticut's male

- A45 -

employees be accorded the same rights
as female employees under the state's

retirement system.

I. THE PARTIES

The plaintiff class, as certified
in this court's order of February 20,
1979, consists of “all existing
employees of the State of Connecticut
who will not reach normal retirement
age prior to June 30, 1980 and who were
such employees on June 30, 1975."°
It includes both male and female
employees. The phrase “normal
retirement age” refers to the age at
which employees are permitted to retire
with pension benefits, under the State
Employees Retirement Act, without
regard to special provisions for early

retirement.’

- A46 -

The defendants are William G.
Oechslin, chairman of the State
Employees Retirement Commission, Henry
G. Parker, Treasurer of the State of
Connecticut,'° and J. Edward
Caldwell, Comptroller of the State of
Connecticut and Secretary of the State
Employees Retirement Commission' '

The State Employees Retirement
Commission is responsible for
administering the State Employees
Retirement System and all other
retirement systems of the State of
Connecticut except the Teachers’
Retirement Fund. Conn.Gen.Stat.
§5-155(d). Nearly all of Connecticut's
employees are required by law to belong
to the State Employees Retirement

12

System.

- A4d7 -

The members of the State Employees
Retirement System must choose one of
two benefit plans. The first of these
plans is independent of the federal
Social Security program; the other is
coordinated with it. See
Conn.Gen.Stat. §§ 5-157, 5-158a-g.
Under either plan, the employees are
required to make contributions to the
State Employees Retirement Fund, out of
which the members’ retirement benefits
are paid. Indeed, employees have been
required to contribute to the
retirement fund since 1939, when the

retirement system was established. '’

An employee not covered by Social
Security must contribute 5% of his or
her salary to the fund, Conn.Gen.Stat.
§5-161(b), while an employee who has

Social Security coverage must

- A48

contribute to the fund an amount equal
to 2% of that part of his or her salary
on which the state makes Social
Security contributions plus 5% of the
remainder of his or her salary,
Conn.Gen.Stat. §5-161l(a). Actuarial
studies by the state demonstrate that,
depending upon the plan selected, the
age of retirement and the sex of the
employee, between 12% and 25% of an
employee's benefits is attributable to
his or her contributions, including the
interest accrued on those
contributions.'* The balance of the
benefits paid out of the State
Employees Retirement Fund is
attributable to appropriations by the

State. See Conn.Gen.Stat. §5-156a.

- A49 -

II. THE FACTUAL BACKGROUND

The facts relevant to the pending
motion are rather complex. However,
they are not in dispute.'’ Much of
the factual background is a matter of
public record, particularly the record

of the Fitzpatrick litigation. The

other relevant facts were admitted by
the defendants or stipulated by the

parties.

A. The Fitzpatrick Litigation

A brief recapitulation of the

history of the Fitzpatrick litigation

is the logical starting point for the
narrative of the facts relevant here.

The Fitzpatrick plaintiffs were members

of the class of male state employees

and former employees who belonged to

- A5O -

the State Employees Retirement System.

Fitzpatrick v. Bitzer, supra, 390

F.Supp. at 279. They challenged the
following statutory provisions then in

effect:

(1) Former Conn.Gen.Stat.
§5-162(c)(1), which allowed an employee
with 25 years of state service to
retire with pension benefits “or or
after the member's fifty-fifth
birthday, if aman, or fiftieth

birthday, if a woman";

(2) Former Conn.Gen.Stat.
§5-162(d)(1), which allowed any female
employee with at least 10, but less
than 25, years of state service to
retire with pension benefits at age 60,
but only permitted a male employee who

had served for that period of time to

- ASl -

retire with pension benefits at age

65;'°

(3) Former Conn.Gen.Stat.
§5-162(d)(3), which provided that the
calculation of retirement benefits be
made according to a table based on age
and sex, which ensured that a female
retiree would receive retirement
benefits equal to those received by a
male retiree five agai her senior;

(4) Former Conn.Gen.Stat.
§5-163(c), which permitted an employee
whose state service was terminated
under one of certain enumerated
conditions to retire with pension
benefits after the completion of 25
years of state service “before he has
reached his fifty-fifth birthday, if a
man, or her fiftieth birthday, if a

woman. .. ."*; and

- AS2 -

(5) Former Conn.Gen.Stat.
§5-166(a), which provided that, in
certain circumstances, an employee who
left state employment before reaching
the normal age of eligibility would be
eligible for retirement income, on a
reduced actuarial basis, at age 55 if

male, or age 50 if female.

See Fitzpatrick v. Bitzer, supra, 390

F.Supp. at 281.

In Fitzpatrick, Judge Clarie held

that these statutory provisions
violated Title VII of the Civil Rights
Act of 1964, as amended in 1972.'’

Fitzpatrick v. Bitzer, supra, 390

F.Supp. at 288. The court granted the
plaintiffs' request for injunctive
relief, prohibiting the defendants from

administering the State Employees

- AS3 -

Retirement Act in a discriminatory
manner in the future. Id. at 290.
The court's order stated:

"The defendants are accordingly
ordered to administer the State
Employees' Retirement Act without
unreasonable sex classifications
unfavorable to men as they relate
to retirement age and benefit
computations; so that men will be
eligible to retire at age 50 and
receive the same treatment as
Similarly situated women. Nothing
herein shall be construed to
interfere with the State
Legislature performing its
constitutional function of freely
determining public policy, as it
pertains to deciding upon a uniform
retirement age for all men and
women employees of the State of
Connecticut in the future, provided
the same is carried out without
discrimination as to age or
benefits on the basis of sex."

390 F.Supp. at 290 (emphasis added).
As a result of this order, from
which, as noted, the state did not

® the State of Connecticut

appeal,’
enforced the existing provisions of the
State Employees Retirement Act so that

men were treated precisely as women

- AS54 -

previously had been treated. Men with
25 years of continuous service were
thus permitted to retire at age 50
after Judge Clarie's order; other men
in state service were likewise
permitted to retire upon the terms
applicable to similarly situated

females.'?

B. The Plaintiffs' Reliance on

Pre-1975 Law

Through admissions and exhibits
obtained from the defendants, the
plaintiffs have established the
following facts relevant to the
question of the plaintiffs* reliance on
the law as it stood prior to the 1975

Act.**

At least since 1971, employees and

prospective employees of the State of

- ASS -

Connecticut have been made aware of the
retirement benefits available to them
under state law, at or before the time
they were hired. Moreover, prospective
employees have frequently inquired,
before entering the state’s employ,
about Connecticut's retirement benefit
laws, the State Employees Retirement
System and the benefits to which they
would be entitled if they became state
employees. The booklet which the state
distributes to new employees to
describe the State Employees Retirement
System declares: “You may retire--and
receive immediate retirement
benefits--at any time after you reach
the minimum permissible retirement
age.” Nowhere in that booklet does the
state expressly reserve the right to
change the minimum permissible
retirement ages, and the defendants

have not argued that the state ever

conveyed to the plaintiffs any

intention to reserve such rights.

State employees rely upon the
information which the state conveys to
them about its retirement laws, systems
and benefits, without regard to
subsequent changes adverse to them.
Indeed, some of the plaintiffs accepted
state employment, leaving otherwise
more lucrative positions, because of
Superior retirement benefits available

to them as state employees.

After joining state service,
Connecticut's employees frequently
inquire about retirement benefits,
including the options available to them
under state law and the ages at which
State law entitles them to retire with
benefits. The information which state

employees learn from such inquiries is

- AS7 -

a material and substantial factor in
their personal retirement plans.
Accordingly, the terms of the State
Employees Retirement Act are
substantial inducements for prospectiv:
employees to enter state service and

for those already in the state's emplo;

to remain in state service.

| The law upon which female members
| of the plaintiff class relied was the
State Employees Retirement Act, as it
read prior to its amendment in 1975.
The provisions of that law which
governed the retirement ages and
benefits of women were in no way

affected by the decision of the court

in Fitzpatrick.

Prior to that decision, which was
filed on September 16, 1974, the law

upon which most male employees relied

- AS58 -

contained the discriminatory
provisions--requiring men to work
longer than women to become eligible
for equivalent benefits--which were

held unlawful in Fitzpatrick. It is

admitted, however, that even before the

Fitzpatrick decision was announced, “an

indeterminate number of male state
employees believed that they would
obtain, through legislative or judicial
action, equal treatment with women
under the state's retirement laws,
l.e., that the retirement ages and
benefits applicable to women would be
made available to them through a change
in the laws.” In any event, the
‘itzpatrick decision changed the law to
enable men to retire on the terms
formerly applicable only to women, and
between September 1974 and June 1975
both prospective employees and men

already in state service learned,

- ASI -

either from pension benefit information
disseminated by the state or from other
sources, that the retirement ages and
benefits applicable to men had, by
virtue of the court's order, become
identical to those applicable to

women. The law upon which male members
of the plaintiff class were relying
just before the adoption of the 1975
Act was therefore the rule articulated

by Judge Clarie in Fitzpatrick: men

already in state service had the right
to retire at the same ages and with the
same levels of benefits as female state

employees. See Fitzpatrick v. Bitzer,

supra, 390 F.Supp. at 290.

C. The 1975 Act

The 1975 Act amended the State
Employees Retirement Act in a number of

ways. As the plaintiffs contend, and

- A60 -

the defendants concede,’' the thrust

of the amendments was to require
certain employees, both male and
female, to work as many as five years
longer than they were required to work
by prior law (i.e., the State Employees
Retirement Act, as modified by this

court's decision in Fitzpatrick) in

order to obtain the same level of
pension benefits. The 1975 Act did not
have this effect on all employees, for
it contained a “grandfather clause"’?
which exempted from the more stringent
age requirements for eligibility those
employees who would reach, before June
30, 1980, the lower age threshold
imposed by prior law; as a result of
this provision, the 1975 Act affected
only the plaintiffs and those who
entered state service after June 30,

1975.

- A6l -

The specific statutory provisions
which the plaintiffs challenge are the

following:

(1) Amended Conn.Gen.Stat.
§5-162(c) and 5-162(d), which require
an employee to reach the age of 55, if
he or she has completed 25 years of
state service, or the age of 60, if he
or she has completed at least 10 but
less than 25 years of state service,
before retiring with benefits.
Immediately prior to the enactment of
these amended provisions, such
employees could retire with benefits at
ages 50 and 55, respectively. These
subsections also establish benefit
schedules which reduce the levels of
retirement benefits that some members

of the plaintiff class can expect.

- A62Z -

(2) Amended Conn.Gen.Stat.
§5-163(c), which provides that an
employee whose state service is
terminated under certain conditions’?
is entitled to retirement benefits if
he or she has completed 25 years of
state service, but has not yet reached
his or her 55th birthday. The
applicable age for such an employee had
been 50 under the law which had been
enforced by the state immediately prior

to the adoption of the 1975 Act.

(3) Amended Conn.Gen.Stat.
§5-166(a), which provides that an
employee who leaves state service under
certain conditions before becoming
eligible for retirement with pension
benefits under other provisions of the
statute’* shall nonetheless be
eligible for a pension on a reduced

actuarial basis upon attaining the age

- A63 -

of 55. Under the law as applied

immediately prior to the enactment of
the 1975 Act, such an employee was

eligible for these benefits at age 50.

(4) Conn.Gen.Stat. §5-163a, which
permits any employee reaching either
(a) the age of 50 and his or her 25th
year of state service, or (b) the age
of 55 and nis or her 10th year of state
service, prior to June 30, 1980 to
retire with a pension at full benefit
levels before that date. This
provision protected these classes of
state employees from the more stringent
age qualifications embodied in other
provisions of the 1975 Act, but left
the members of the plaintiff class
exposed to the more restrictive

standards of the new law.

- A64 -

The effects of these provisions of

the 1975 Act on the named individuals
who represent the plaintiff class
illustrate the types of injuries which
the 1975 Act inflicts upon the
plaintiffs' expectations.*’ For
example, plaintiff Karen Pineman, who
is now 44 years old, has been in
continuous state service since January
16, 1956. Under former Conn.Gen.Stat.
§5-162(c)(1), which, as applied to
female employees, was unaffected by
Judge Clarie's 1974 order, she could
have expected to retire with pension
benefits at age 50--i.e., in 1986. The
1975 Act requires her to work an
additional five years--until 1991l--to

receive benefits at the same levels.

Plaintiff Alphonse S. Marotta is in
an analagous position. He is 45 years

old and has been in continuous state

- A65 -

service since June 20, 1955. Former
Conn.Gen.Stat. §5-162(c)(1) would have
required him, solely as a consequence
of his sex, to work until his 55th
birthday in order to obtain the
benefits due him as a 25 year veteran
of continuous state service. However,

the order of this court in Fitzpatrick,

which required the state to administer
its retirement statute “so that men

will be eligible to retire at age 50,"
changed the expectations of men in Mr.
Marotta's position. After the court's

order in Fitzpatrick, but before June

30, 1975 (the effective date of the
1975 Act), such male employees were
permitted to retire with pension
benefits at age 50. Indeed, the 1975
Act continued to allow retirement with
full benefits at age 50 for employees
who had served the state for 25 years

and reached age 50 before June 30,

1980. Conn.Gen.Stat. §5-163a.

However, because Mr. Marotta will not
reach age 50 until after June 30, 1980,
under the 1975 Act he will have to wait
until his 55th birthday, in 1990
(rather than his 50th birthday, in

1985), to retire with pension benefits.

Plaintiff Alfred K. Tyll is ina
Similar situation. He is 48 years old
and will have completed 25 years of
continuous state service by June 30,
1980. The 1975 Act requires him to
work until age 55-i.e., 1987--before he
may retire with pension benefits; the

law in effect after Fitzpatrick but

before the 1975 Act would have
permitted his retirement with full
benefits in 1982, when he turns 50.
Under the 1975 Act, Mr. Tyll is
eligible for full retirement benefits

Only after working five years longer

- A67 -

than he would have been required to

work under prior law.

The 1975 Act forces some employees
to choose between working longer than
previous law would have required in
order to receive retirement benefits at
the levels they expected and retiring
prematurely with retirement income
calculated at lower benefit levels.

For example, plaintiff Daniel Clifford,
who is 47 years old and began state
service on September 15, 1959, would
have been entitled to a full pension in
1984 (after 25 years of service) but
for the 1975 Act. However, its
provisions require him either to work
until 1988, when he reaches the age of
55 and thereby qualifies for retirement
with full pension benefits, or to
retire before that time with vested

retirement income on a reduced

- A68 -

actuarial basis, pursuant to amended
Conn.Gen.Stat. §5-166(a). If he
chooses the latter option, Mr. Clifford
will receive something less than the
full pension benefits at age 50 which
he would have obtained had the 1975
Act's retroactive provisions not become
law. Plaintiff Judith Narus is put to
the same choice by the 1975 Act; she
may either work longer than prior law
required to receive benefits at the
usual full pension levels, or retire
before reaching her 55th birthday and
accept benefits calculated at a lower

level.

Finally, the practical effect of
the 1975 Act is to reduce the benefits
of some plaintiffs who have served the
state for less than 25 years, pursuant
to the benefit schedule set forth in

amended section 5-162(d). For example,

- A69 -

under prior law, plaintiff Rose Schewe,
who will have completed fifteen years
of state service on September 10, 1980,
would have received monthly benefits
including 2.5% of her earnings in
excess of the amount on which the state
made Social Security contributions,
multiplied by her years of service.
However, under the 1975 Act, this
component of her benefits will be
calculated on the basis of a 2.0%
multiplier for “excess earnings" if she
retires after reaching age 65, but
before her 70th birthday. Only if she
continues to work until she reaches age
70 will Ms. Schewe become eligible,
under the 1975 Act, to receive benefits
calculated at the 2.5% rate to which
she would formerly have been entitled

at age 65.

- A70O -

D. The Legislative History of the 1975

Act

The 1975 Act had its origins in
House Bill 5176, which was introduced
on the floor of the Connecticut House
of Representatives on June 3, 1975.

See General Assembly Proceedings 1975:

House of Representatives 6342-43. The

Original version of this bill would
have raised the retirement age only for
those who would become state employees
after June 30, 1975. It did not
purport to have any retroactive

effect. The bill was, however, amended
on the floor to provide that one grvup
of employees already in state
service--the members of the plaintiff
Class--would, along with future
generations of state employees, be
Subject to the more stringent age

qualifications for pension

- A7?l -

eligibility. In the words of the
amendment’*s sponsor, “({t]his amendment
restores males who are under age 45 to
the [age] 55 retirement that was in
effect before the recent Court
decision, and it establishe[s] age 55
for females who are presently under age
45." Id. at 6346 (remarks of Rep.

Wright).

After brief debate, the House
passed the bill, as amended. Id. at
6362. The next day, the Senate passed
the bill in the same form. General

Assembly Proceedings 1975: Senate

3590. Neither the House of
Representatives nor the Senate held
public hearings on the legislation
which became the 1975 Act. See id. at

3582 (remarks of Sen. Rome).

- A72 -

A

Although there are no formal
reports explaining the legislature's
purpose in passing the 1975 Act, it is
clear from the debates in both houses
that the General Assembly was reacting

to the decision in Fitzpatrick with a

view toward achieving two related
objectives: (1) putting an end to
Connecticut's policy of permitting
certain state employees to retire with
pension benefits at age 50, which many
legislators believed to be an unduly
early retirement age, and (2) saving
money by reducing the expenses which
the state incurs to fund its share of

the State Employees Retirement System.

On the House floor, the amended
bill's sponsor, Representative Wright,
brought these two aims of the
legislation into sharp focus.

Condemning past Connecticut policy

- A73 -

which allowed some state employees to
retire at age 50, he said: “I don’t
think there is any other state or
probably any municipality that has a
retirement age that allows employees to
retire at age 50 and receive 50% of
their pay. This is far more liberal
than is provided in [sic] any public
employer, and one that I think if we
don't correct it can bankrupt the State

of Connecticut.” General Assembly

Proceedings 1975: House of

Representatives 6346. Citing a report

which estimated that the amended bill
would save between $3,000,000 and
$5,000,000 in 1975-76, Representative
Wright added, “I‘m sure the House will
be able to find a place to use that
three to five million dollars, should
this amendment pass.“ Id. Another

proponent of the amended bill,

- A74 -

)
)
;

Representative Dice, stated:

“(T)]here are very few, if any,
retirement plans where you can
retire at age 50. The only one
that I know is the military
service, and I hope our state
employees are not equivalent to
being in the military service,
where they would have to go
overseas to that extent.”

Id. at 6347-48. Representative Dice

added that Connecticut faced the risk
of bankruptcy if it did not reduce its
pension obligations, comparing the
Situation to that of New York City.
Id. at 6348. Representative Mannix
offered a similar assessment of the
Situation:

“Most, if not all, of the taxpayers
who have a retirement plan in the
State of Connecticut can normally
retire at age 60. They're being
asked by us and the government of
the State to underwrite a
retirement plan at age 50. To me,
this is inexcusable. Something's
got to be done. If we continue on
this way, as has been pointed out,
we're going to end up in
bankruptcy.”

Id. at 6348.

- A7S -

The day after the amended bill
cleared the House, the Senate took up
the measure. The remarks made by the
bill‘s supporters in the upper chamber
paralleled those made by its advocates
in the House. Senator Hennessey
expressed the view that “we're just
trying to straighten out a Court

decision.” General Assembly

Proceedings 1975: Senate 3579. The

thrust of the position of the bill's
supporters was that “50 years of age is
an unreasonable age for retirement,”
id. at 3578 (remarks of Sen. Amenta);

see also id. at 3582 (remarks of Sen.

Fauliso); id. at 3588 (remarks of Sen.
Ciarlone), and that the biil would save
Connecticut $3,600,000 in the next
fiscal year alone, see id. at 3575
(remarks of Sen. Baker); id. at 3586-87
(remarks of Sen. Houley). A study

prepared by the actuary of the pension

- A76 -

a

fund was reported to have established
that, in fiscal year 1975-76, the state
would save $800,000 by prospectively
caising the retirement age for new
employees, and another $2,800,000 by
extending that provision to those
persons already in the state's employ
who would not be eligible to retire
with pension benefits under after June
30, 1980-i.e., the plaintiffs in this
action. Id. at 3587 (remarks of
Senator Houley). As Senator Houley
noted, enacting the amended bill would
permit the state to start realizing
Savings on its appropriations for the
State Employees Retirement Fund in the
very fiscal year for which the
legislature had just passed a budget.

Id.

- A77 -

III. THE PLAINTIFFS‘ CLAIMS

The plaintiffs' principal
contention is that the 1975 Act
operates to impair the state's
contractual obligations to them, in
violation of the contract clause of the
United States Constitution.’°® They
seek a declaratory judgment
establishing that the 1975 Act, as
applied to the plaintiff class, is
unconstitutional, as well as injunctive
relief requiring the defendants to
administer the State Employees
Retirement Act, insofar as it applies
to the plaintiffs, without regard to
the provisions of the 1975 Act. They
do not chalienge the constitutionality
of the prospective application of the
1$75 Act to those who became state

employees after June 30, 1975.

- AMS >

The plaintiffs would require the
state to permit them to retire with
fuli pension rights (a) upon completion
of 25 years of continuous state
service, at age 50; and (b) upon
completion of at least 10, but less
than 25, years of continuous state
service, at age 55. In addition, the
terms of retirement and the benefit
levels for which the plaintiffs would
be eligible would be those which were
applied to all state employees retiring
in the period after this court's

Fitzpatrick decision, but prior to the

1975 Act. These are the same terms and
benefits which the state--consistently
with Title VII--afforded all employees,
regardless of sex, immediately after

the Fitzpatrick decision, and which

were preserved by the 1975 Act for
those employees covered by its
“grandfather clause," Conn.Gen.Stat.

§5-163a.

IV. THE CONTRACT CLAUSE OF

THE UNITED STATES CONSTITUTION

A. Introduction

{1] The constitutional provision
invoked by the plaintiffsS reads
Simply: “No State shall .. . pass any

Law impairing the Obligation of

Contracts ... U.S. Conet. art. I,
§10, cl. 1. However, the analysis of a
contract clause challenge to state
legislation is anything but simple.
While the language of the Constitution
is, on its face, absolute, a
substantial body of Supreme Court cases
demonstrates that the contract clause
does not prohibit every impairment by a
state of contractual obligations. See,

e.g., El Paso v. Simmons, 379 U.S. 497,

85 S.Ct. 577, 13 L.Ed.2d 446 (1965);

Home Building & Loan Association v.

- A80 -

aug. 4 te GD

Bae.eoe.s, 290 U.6. 398, 54 &.Ct. 231,

78 L.Ed. 413 (1934).*’ Nonetheless,
the Supreme Court has recently reminded
us that the contract clause “is not a

dead letter,” Allied Structural Steel

Co. ¥. Spannaus, 438 U.S. 234, 241, 98

Beuee 2Phey “274k, 37 L.EG.24 727
(1978), and that it requires
particularly careful examination of
state legislation which impairs a
contract to which the state itself is a
Barty, 20. at 244 n.15, 98 S.Ct. at

2722 n.15; United States Trust Co. v.

New Jersey, 431 U.S. 1, 22-23, 25-26,

7? Bates 2900, £952 7=1516, 1519, S52

L.Ed.2d 92 (1977).

In United States Trust Co., the

Court, in an opinion by Justice
Blackmun, reaffirmed the continuing
vitality of the contract clause in

modern constitutional law:

- A8l -

431

"Both [Home Building & Loan
Association v. Blaisdell and El
Paso v. Simmons, supra] eschewed a
rigid application of the Contract
Clause to invalidate state
legislation. Yet neither indicated
that the Contract Clause was
without meaning in modern
constitutional jurisprudence, or
that its limitation on state power
was illusory. Whether or not the
protection of contract rights
comports with current views of wise
public policy, the Contract Clause
remains a part of our written
Constitution."

U.8. -€& 264. 97 SCO. @€ 2528.

In United States Trust Co., as

here, the question was whether a state

law violated the contract clause by

impairing a state's own contractual

obligations to private parties. At

issue there was the constitutionality

of a 1974 New Jersey statute which,

together with an identically worded New
York statute, repealed a 1962 covenant

(itself embodied in legislation enacted
by both states) limiting the ability of

the bi-state Port Authority of New York

- A82 -

and New Jersey to use its revenues and
reserves to subsidize unprofitable rail
passenger transportation between the
two states. The plaintiff, a New York
bank, was a substantial holder of Port
Authority bonds subject to the covenant
and was a trustee for two series of

such bonds.

The Court in United States Trust

Co. held that the retroactive appeal of
the 1962 covenant was an unjustifiable
impairment of the state's contractual
obligations to the plaintiff, in
violation of the contract clause.
Citing such venerable authority as

Fletcher v. Peck, 10 U.S. (6 Cranch)

87, 137-39, 3 L.Ed. 162 (1810) and

Trustees of Dartmouth College v.

Woodward, 17 U.S. (4 Wheat.) 518, 4
L.Ed. 629 (1819), the Court observed

that “[Li]lt long has been established

- A83 -

that the Contract Clause limits the
power of the States to modify their own
contracts as well as to regulate those
between private parties." United

States Trust Co. v. New Jersey, supra,

431 U.S. at 17, $7 &.Ct. OO feees ee
the same time, the Court noted, “the
Contract Clause does not prohibit the
States from repealing or amending
statutes generally, or from enacting
legislation with retroactive effects."

Id. (footnote omitted).

[2] Where, as here, it is claimed
that the contract clause prohibits a
state's statutory modification of its
own obligations, the court must
determine whether contractual
obligations within the purview of the
contract clause exist; if so, whether
the state legislation under attack

impaired those obligations; and if

—

- A84 -

there is an impairment of contract,
whether it is forbidden by the

Constitution. See generally United

States Trust Co. v. New Jersey, supra,

S35 U.5. at 21-32, 97 S.Ct. at

1517-1522.

B. Connecticut's Contractual

Obligations to the Plaintiffs

[3,4] A statute gives rise to a
contractual obligation which is subject

to the contract clause “when the

language and circumstances evince a
legislative intent to create private

rights of a contractual nature

enforceable against the State." United

States Trust Co. v. New Jersey, supra,

ee ss ee. 2S, 6 6SFlU SCE. @t 1515
n. 14. In its inquiry into the
existence of a contract within the

meaning of the contract clause, a

- A85 -

—E—— CC —t~S

federal court must “accord respectful
consideration and great weight" to

relevant state law, Indiana ex rel.

Anderson v. Brand, 303 U.S. 95, 100, 58

S.Ct. 443, 446, 82 L.Ed. 685 (1938),
although it is not bound by the state's

law of contracts. Irving Trust Co. v.

Day, 314 U.S. 556, 561, 62 S.Ct. 398,
401, 86 L.Ed. 452 (1942). See

generally Hale, The Supreme Court and

the Contract Clause: o> Cae ¥,

Harv.L.Rev. 852, 852-72 (1944).
Accordingly, the appropriate starting
point for this court's examination of
the question whether Connecticut's
State Employees Retirement Act created
contractual obligations to state
employees is the common law of the

State of Connecticut.

- A86 -

enamel

Contractual Obligation in

Pension Plans Under

Connecticut Law

[5] In the leading case of Bird v.

Connecticut Power Co., 144 Conn. 456,

133 A.2d 894 (1957), the Connecticut
Supreme Court of Errors held that a
non-contributory pension plan in which
employees were not required to
participate created contractual rights
enforceable against a private
employer. In Bird, the court rejected,
in no uncertain terms, the employer's
argument that, as a matter of law, it
had complete discretion to modify its
employees’ expectations of pension
benefits:
“A board of directors cannot
legally strip an employee of the
benefits of a pension plan where
the employee has complied with the
terms of the offer of a pension,

Since the purposes of the plan
could be readily frustrated at the

- A87 -

whim of the directors. ... Even
where an employer declares the plan
is within the absolute discretion
of the directors, the court will
interpret the plan as a whole so as
to give effect to its general
purpose in securing the loyalty and
continued service of the employees,
and the employer may not defeat the
employees’ reasonable expectations
of recovering the promised reward.

Bird v. Connecticut Power Co., supra,

144 Conn. at 463, 133 A.2d at 897

(citations omitted).

In Wyper v. Providence Washington

Insurance Co., 533 F.2d 57 (2d Cir.

1976), the court affirmed a decision by
Judge Blumenfeld of this court,
following Bird and holding that under
Connecticut law, “a pension plan
creates contractual rights and

court review may not be defeated
through reservation of discretionary
powers in the pension board.” Id. at

63 (footnote omitted). In Wyper,

- ABB -

which, like Bird, involved a private
employer's pension plan, Judge Gurfein
reiterated the contractual nature of
pension rights under Connecticut law:

“Later Connecticut opinions citing
Bird treat it only as establishing
that informal pension plans give
rise to contractual rights which
cannot be defeated by assertion of
discretionary power, and we agree.
See Bordon v. Skinner Chuck Co., 21
Conn.Supp. 184, 150 A.2d 607, 610
({Super.Ct.Hartford Cty.] 1958);
Ellis v. Emhart Mfg. Co., 150 Conn.
501, 191 A.2d 546, 549 (1963).”

533 F.2d at 63 n.9.

If an “informal” pension plan in
which employees are not required to
participate and to which they
contribute nothing of pecuniary value
creates a binding contract, it would
seem to follow, a fortiori, that a
highly structured and formal pension
plan--like the State Employees
Retirement System--in which the
employees must participate and into

which they must make monetary

- AB9 -

—— However, the state

appropriate. *
could have attained this goal without
affecting the contractual rights of the
plaintiffs; indeed, to the extent that
the 1975 Act applies
prospectively--i.e., to those who were
not in state service as of its
effective date--the legislature has
accomplished this purpose without
injuring contractual rights. The

“evident and more moderate course,”

United States Trust Co. v. New Jersey,

supra, 431 U.S. at 3l, 97 S.Ct. at
1522, of a purely prospective change in
the retirement ages serves
Connecticut's unquestioned interest in
establishing what its legislature
considers a more reasonable scheme of
retirement ages equally well and
without impairing the obligations of

its contracts.

- Al33 -

The second purpose of the 1975
Act--saving money--could likewise have
been accomplished without affecting the
contractual rights and obligations
created by the State Employees
Retirement Act, as modified by

Fitzpatrick and as in force at the time

the legislature passed the 1975 Act.
The Generai Assembly is of course free
to choose among legislative options
which would have the laudatory effect
of reducing the burdens borne by
Connecticut's taxpayers. However,
nothing in the record indicates that it
was impossible for the legislature to
reduce state spending without
abrogating the state's contract with
the plaintiffs. Indeed, common sense
suggests the existence of other
options; the legislature must have had
available to it myriad alternative ways

of exercising fiscal restraint without

- Al34 -

affecting constitutionally protected

rights.

This is not a case where the
legislature found itself confronted by
a dire fiscal emergency which impaled
the state on the horns of the dilemma
of either repudiating its contractual
obligations or ceasing to perform such
basic governmental functions as
protecting its citizens’ health, safety
and welfare. This case is thus readily

distinguishable from Ropico, Inc. v.

City of New York, 425 F.Supp. 970

(S.D.N.Y. 1976) and Subway-Surface

Supervisors Association v. New York

City Transit Authority, 44 N.Y.2d. 101,

404 8. 7.6.20):323,.$ 373. 8.2.20 364
(1978), two important New York cases
which recently upheld state legislation

Challenged under the contract clause.

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In Ropico, which was decided before
the Supreme Court's decision in United

States Trust Co., the court upheld

against a contract clause challenge
state legislation which suspended for a
three-year period repayment of the
principal on certain short-term notes
issued by the City of New York, but
which permitted the affected
noteholders either to exchange their
notes for the longer-term obligations
of a special state agency (the
Municipal Assistance Corporation) or to
obtain interest on their notes until
the principal was repaid.*® In

Subway-Surface Supervisors Association,

the court held that the contract clause
did not prohibit a temporary freeze on
the wages of New York City employees as
part of another statute designed to

alleviate the city’s fiscal emergency.

- Al36 -

The statutes under challenge in

Ropico and Subway-Surface Supervisors

Association were both passed by the New

York Legislature, in extraordinary
sessions, on the basis of detailed
legislative findings of fact which
spelled out the conditions that
constituted a grave emergency,
threatening the city’s very existence
7

as a viable governmental entity. °*

In both Ropico and Subway-Surface

Supervisors Association, the

legislation under attack was necessary
to prevent an unparalleled financial
Crisis from, in the words of the
Legislature, “almost permanently
destroy[ing] the fiber of the

048

city. Connecticut was not backed
into any such corner in 1975;*’ the
General Assembly which passed the

legislation under attack in this action

was not forced to choose between

abrogating its contractual commitments
Or permitting the state to become
insolvent, and thereby unable to
continue to function as a viable

governmental entity.

Accordingly, the court finds that
the retroactive application of the 1975
Act to the plaintiffs cannot be

justified, under the United States

Trust Co. test, aS an impairment of

contractual obligations which was 7
necessary to achieve the state's
concededly legitimate and important

purposes.

(b) Reasonableness

As applied to the plaintiff class,
the 1975 Act is not “reasonable in
light of the surrounding

circumstances,” as required by United

- Al38 -

States Trust Co. v. New Jersey, Supra,

42% US. GE 9a St BE. ok 582. *

The Court there rejected New Jersey's
argument that unforeseen changes
occurring after the adoption of a 1962
bondholders' covenant justified as
"reasonable" 1974 legislation which
repealed the 1962 covenant and impaired
the contractual obligations established
by that covenant. In doing so, the
Court indicated that unforeseen
subsequent circumstances might, in an
appropriate case, be sufficient to
demonstrate that a law impairing
pre-existing contractual obligations
was “reasonable in ight of the
Surrounding circumstances.” Referring

to El Paso v. Simmons, supra, the Court

wrote:

"There a 19th century statute had
effects that were unforeseen and
unintended by the legislature when
Originally adopted. As a result
speculators were placed in a

position to obtain windfall
benefits. The Court held that
adoption of a statute of limitation
[for the reinstatement rights of
purchasers of state land who had
defaulted on their interest
obligations] was a reasonable means
to ‘restrict a party to those gains
reasonably to be expected from the
contract’ when it was adopted. 379
U.S., at 315, 65 @3.Ce. 86-2072

United States Trust Co. v. New Jersey,

supra, 431 U.S. at 31, 97 O.06. 65 4502

(footnote omitted).

The application to this case of the

concept of unforeseen circumstances
giving rise to unintended “windfalls”
(as in El Paso), on the basis of this

court's decision in Fitzpatrick, is

troublesome. The pension benefits
granted to female employees after

Fitzpatrick cannot be deemed

unforeseeable “windfalls," because
Judge Clarie's decision did not change
the terms of their entitlement to such

benefits. However, it is arguable’'

- A140 -

that this characterization is
applicable to the benefits which the
sstate was required to pay male

employees as a result of Fitzpatrick.

Thus, the defendants might have
attempted to justify the 1975 Act as a
“reasonable” attempt to “'‘'restrict
[male members of the plaintiff class]
to those gains reasonably to be
expected from the contract’ when it was

adopted,” United States Trust Co.,

Suerea, 431 U.S. at 31, 97 S.Ct. at

1522, quoting El Paso v. Simmons,

Supre, 279 U.S. at 515, 85 S.Ct. at
587, and to prevent male plaintiffs
from reaping “windfalls." However,
such a construction would require the
court to uphold the 1975 Act in its
effect on males in the plaintiff class
(including men who were also members of

the plaintiff class in Fitzpatrick v.

Bitzer) but invalidate it as it applies

to female plaintiffs. A holding that
the contract clause permits the
impairment of Connecticut's obligations
to men, but not women, in the plaintiff
class would, of course, permit the
state to treat male plaintiffs in the
discriminatory manner which Judge
Clarie found unlawfui under Title VII.
Such disparate treatment of men and
women, explicitly forbidden by this
court's enforcement of Title VII in

Fitzpatrick, could not possibly be

regarded as “reasonable in light of the

Surrounding circumstances.”

Moreover, factors other than
"unforeseen circumstances” which have
been deemed relevant to the
"reasonableness" inquiry militate
against a finding that the 1975 Act was
reasonable as applied to the

plaintiffs. The effect of the 1975 Act

- Al42 -

on the plaintiffs would not be “simply
a temporary alteration of the
contractual relationships"™ in question,

Allied Structural Steel Co. v.

Spannaus, supra, 438 U.S. at 250, 98

S.Ct. at 2726. Rather, it would work
"a severe, permanent, and immediate
change in those
relationships--irrevocably and
retroactively." Id. Nor does the
scope of the 1975 Act, as it applies to
persons in the state's employ as of its
effective date, appear reasonable. The
statute does not apply equally to all
who were then in state service;
instead, it singles out those who would
not reach the-age for normal retirement
within the next five years. The
defendants have offered no
justification or explanation for the

decision to “grandfather in" some state

employees, while leaving the plaintiffs

subject to the new eligibility

requirements for pension benefits. C

Ph

Allied Structural Steel Co. v.

Spannaus, supra, 438 U.S. at 250, 98

S.Ct. at 2725.

Accordingly, the court cannot
conclude that the 1975 Act, as applied
to the plaintiffs, was a reasonable
method of furthering the state's

interests.

V. CONCLUSION

On the basis of the admitted and
stipulated facts, the court finds that
Connecticut and the members of the
plaintiff class were parties to a valid
and binding contract. Immediately
prior to the time the 1975 Act became
law, this contract required the state

to permit both male and female members

- Al44 -

of that class to retire on the terms of
the State Employees Retirement Act
which, before this court's decision in
Fitzpatrick, had applied only to female
employees. The court finds that the
1975 Act severely impairs the
obligations of this contract. Indeed,
although they have claimed that the
plaintiffs have no contractual rights,
the defendants have conceded that if
any such rights existed, the 1975 Act
impaired the state's contractual
obligations to the plaintiffs. That
impairment cannot be justified, under
the tests set forth by the Supreme
Court in United States Trust Co., as
either “necessary” to “serve an
important public purpose” or
“reasonable in light of the surrounding

Circumstances." The 1975 Act, as

applied to the plaintiffs, thus

unconstitutionally impaired the state's

contractual obligations.

This conclusion in no way affects
the constitutionality of the 1975 Act
insofar as it applies to employees who
entered state service after June 30,
1975. Nor does it prevent the members
of the legislature, as the duly elected
representatives of the people of
Connecticut, from enacting in the
future any legislation on the subject
of state employees’ pensions which
comports with their considered judgment
and wisdom on matters of public policy
and does not interfere with rights
protected by the Constitution or laws
»9€ the United States. In his opinion
in Fitzpatrick, Judge Clarie expressly
stated:

"Nothing herein shal
to interfere with t

Legislature performing its

constitutional function of freely
determining public policy, as it
pertains to deciding upon a uniform
retirement age for all men and
women employees of the State of
Connecticut in the future,

provid[ing] the same is carried out

without discrimination as to age or

benefits on the basis of sex."
Fitzpatrick v. Bitzer, supra, 390
F.Supp. at 290 (emphasis added). To
those words this court today only adds
the proviso, which inheres in our
constitutional system, that such
legislation as the state may enact on
this subject may not transgress the

limitations on state power, such as the

-ontract clause, which are embodied in

the United States Constitution
¢ 1intiff - t r cor >u airy
inted , permanent
t : e, requiring the
id ter the State
ement Act in a manner
tne pla Leeed &

contractual rights. The parties shall
settle within ten days an order
consistent with this memorandum of
decision, ensuring that the State
Employees Retirement Act is
administered in a way which protects
the contractual rights of every member
of the plaintiff class, and curing each
of the various types of injury which
the 1975 Act works upon their
constitutionally protected
expectations. The order shall further
provide for notice of this decision to
be sent to all members of the plaintiff
class and shall include a proposed form

of notice to the class.

It is so ordered.

- Al4d8 -

FOOTNOTES

390 F.Supp. 278 (D.Conn. 1974),
aff'd in part and rev'd in part on
grounds not relevant here, 519

F.2d 559 (2d Cir. 1975), aff'd in

not relevant here, 427 U.S. 445,
96 S.Ct. 2666, 49 L.Ed.2d 614
(1976).

42 U.S.C. Section 2000e et seq.

The appeal in Fitzpatrick (see n.l
Supra) was taken by the plaintiffs
and involved only the question
whether the Eleventh Amendment to
the United States Constitution
barred recovery by them of
monetary damages and attorney's
fees. The Supreme Court
ultimately held that Connecticut's
immunity under the Eleventh
Amendment was no obstacle to
either form of relief. There was
no appeal from Judge Clarie's
holding in Fitzpatrick that the
Connecticut statute violated the
rights of male employees under the
Title VII, or from the injunction
which he issued against the state
officials named as defendants in
Fitzpatrick. See Fitzpatrick v.
Bitzer, supra, 427 U.S. at 450n.7,
96 &.Ct. at 2666 n.7.

Stipulation Concerning Facts,
Filed March 26, 1980 §2.

u.m. Consett. eft 1, 636, f - Mis

seg., somehow negat

existence f any tract

state ene y 5 pr t t

. 1975, ts effe > ; >

Brief in O; sit ee E t

Motion for Su ary igmer

l-3 While the ect t

bargaining law ¢f le f t
f contract between tne tate
its employees, it does . a [

t act retroact ely and ¢t

1f the state'‘s ntracts wit!

employees, reviously made, int

something less thar ntracts

The court ther )

connection between the collective
bargaining legislation of 19
the issue of whether previous
legislation gave rise to
contractual obligations.

See Brief in Opposition to
Plaintiffs‘ Motion for Summary
Judgment, pp. 3-5. Cf. Pennie v
Reis, 132 U.S. 464, 471, 10 S.Ct.
149, 151, 33 L.Ed. 426 (1889)
(interest of police officer in
employee benefit fund was “a mere
expectancy, created by the law,
and [is] liable to be revoked or
destroyed by the same authority”
until the happening of the
conditions established by law).
Among the cases upon which the
defendants rely for the

proposition that public employees’

pensions are mere gratuities,
conferring no contractual rights,
is Board of Trustees v. People ex
rel. Behrman, 119 Colo. 301, 203
P.2d. 490, (1949). Behrman, was,
however, expressly overruled on
this point in Police Pension &

- Al60 -

=

In Yeazell v. Copins, 98 Ariz.

169, 242, 402-7220 238i. 343
(1965), the court held that
Arizona's statutory provisions
for public employees’ pensions
were contractual in nature.
The court rejected the
argument that the pension
benefits were gratuities, in
part because the Arizona
legislature, like
Connecticut's, was
constitutionally /forbidden
from conferring gratuities on
state employees.

As long ago as 1956, a
commentator who surveyed this
field of law observed that
"the tendency today is to
consider a pension plan a
contract," and to reject “the
gratuity theory of pensions."
Note, Contractual Aspects of
Pension Plan Modification, 56
Colum. L.R@v. 251, 235 €21996) .
In addition to the states
whose courts have rejected the
“gratuity” concept, several
states, of which New York was
the first, have adopted
constitutional provisions
declaring public employees'
pensions benefits to be
contractual in nature. See
a.%. Const. act. ¥, S7,
("membership in any pension or
retirement system of the state
or a Civil division thereof
shall be a contractual
relationship, the benefits of
which shall not be diminished
Or impaired"); Alaska Const.
art XII, §7; Hawaii Const.

act... Bats Sai iis Ceoaee. Ort. 13,
SS; Bien. Conét. ast. 1%; 324. $j$in
Massachusetts, a statute
establishes as contractual the
relationship between the state and
members of its public employees'
retirement system. Mass. Gen.L.
cn. 32,. S25¢3)... Tae tact that, in
other jurisdictions, prior case
law based on the “gratuity" theory
has been overruled by
constitutional amendments or
statutes is no impediment to this
court's determination that
Connecticut's common law of
contracts requires a rejection of
the "gratuity" theory. The
inherent but unexercised power of
a legislature or constitutional
convention to discard an outmoded
judge-made doctrine is no obstacle
to a judicial decision that
overrules such a doctrine, see
generally B. Cardozo, The Nature
of the Judicial Process 127-28,
134-38, 149-58 (1921), much less a
bar to a decision--such as this
one--which restates and
interprets, rather than revises,
the state's common law.

See pp. 547-548, infra.

In view of the clear holding in
Fitzpatrick that the provisions of
state law applicable to men
violated Title VII, those
provisions must, under the
Supremacy clause of the United
States Constitution, yield to the
requirements of the federal
statute. See Stryker v. Register
Publishing Co., 423 F.Supp. 476,
479 (D. Conn. 1976) (Newman, J.).

- Al63 -

See pp. 532-533 & N. 20, Supra.

At oral argument on the pending
motion, the court asked
defendants' counsel whether,
assuming arguendo the existence of
a contractual obligation, the 1975
Act impaired the state's
obligation to its employees.
Counsel responded:
"Yes, I think I would have to
concede that asking a
particular state employee to
work five years more would be
an impairment of the contract.”
Transcript of Oral Argument on
Plaintiffs‘ Motion for Summary
Judgment, Feb. 7, 1980, p. 37.

The dual standard of judicial
scrutiny employed by the Court was
suggested in Note, The
Constitutionality of the New York
Municipal Wage Freeze and Debt
Moratorium: Resurrection of the
Contract Clause, 125 U.Pa.L.Rev.
167, 184-91 (1976); see United
States Trust Co. v. New Jersey,
supra, 431 U.S. at 26 n.25, 97
S.ct. at 1519 n.25. Several
commentators have expressed the
view that this dual standard
breathes new life into the
contract clause, at least in cases
involving contracts to which
states or their subdivisions are
parties. See, e.g., Note, The
Contract Clause: Is There Life
After Death?, 30 Baylor L.Rev. 191
(1978); Comment, Constitutional
Law: Contract Clause Protection
of Municipal Bond Obligations, 29
U.Fla.L.Rev. 1000, 1010 (1977).
While, as a general proposition,

- Al64 -

this may be accurate, the point
should not be overstated. Even in
the immediate aftermath of Home
Building & Loan Association v.
Blaisdell, supra--the case which
is often considered to have
Signaled the demise of the
contract clause--the Supreme Court
voided state laws which
unreasonably and unnecessarily
impaired contractual obligations.
See, e.g., W.B. Worthen Co. v.
Kavanaugh, 295 U.S. 56, 60-63, 55
ns ey eee, 296-5598, 79 L.Ed.
1298 (1935); W.B. Worthen Co. v.
Thomas, 292 U.S. 426, 432-34, 54
Saues eaes oeeeo.9o, 76 L.Ed. 1344
(1934). See generally B. Wright,
The Contract Clause of the
Constitution 111-19 (1938).

Justice Blackmun's observation
that “({a] governmental entity can
always find a use for extra money,
especially when taxes do not have
co me geneecq, 431 U.S. at 26, 97
S.Ct. at 1519, is strikingly
reminiscent of the remarks of the
sponsor of the amended bill which
became the 1975 Act: "I'm sure
this House will be able to find a
place to use [the] three to five
million dollars [to be saved]
should this amendment pass."
General Assembly Proceedings

1975: House of Representatives
6346 (remarks of Rep. Wright).

The Supreme Court's own
straightforward explanation of the
need for closer scrutiny where the
state has impaired its own
contractual obligations is thus
Orne out by the record before the
court in this case. Clearly, the

- Al65 -

A
4

rationale for careful examination
of the legislature's action in a
case such as this has nothing to
do with the existence or
intimation of “legislative
venality or corruption," as one
commentator has suggested. See
The Supreme Court, 1976 Term, 91
Harv.L.Rev. 70, 89 (1977).

Because this court does not review
the merits or wisdom of the
state's decisions on matters of
public policy in determining the
constitutionality of the statute,
it cannot fairly be said that the
application of the United States
Trust Co. tests revives “the
heyday of economic due process
associated with Lochner v. New
Yock, i198 U.8. 39, tas Btu. 239,
49 L.Ed. 937] (1905), and similar
cases long since discarded,"
United States Trust Co. v. New
Jersey, supra, 431 U.S. at 60-61,
$7 &.Ct. at iS37 (Srennan, d.,
dissenting). Lochner and similar
decisions were based on the
premise, no longer tenable in
modern constitutional
jurisprudence, that the
Constitution forbids the enactment
of any legislation designed to
achieve certain goals. For
example, in Lochner, the Court
held that it was not within a
state's power to regulate the
hours a baker might be required to
work, on the ground that the due
process clause made this an
impermissible purpose of state
legislation. See generally L.
Tribe, American Constitutional Law

- Al66 -

§8-4 (1978). However, the
contract clause analysis
undertaken here does not prohibit
the state from exercising its
sovereignty to achieve any
particular goal. The inquiry
which the court undertakes is only
an examination of the necessity
and reasonableness of the means
chosen to achieve concededly
proper, and indeed important,
legislative ends. The court does
not in any way second-guess the
legality or desirability of the
purposes which the General
Assembly sought, as a matter of
public policy, to advance in
adopting the 1975 Act.

In fact, some of the provisions of
the 1975 Act have no effect on the
former policy of permitting
retirement with benefits at age
50. See, e.g.,
Conn.Gen.Stat.§5-162(d)(1)
(raising age from 55 to 60 for
certain employees). The
impairment of contractual
obligations which result from the
application of those provisions to
members of the plaintiff class is
wholly unrelated to the goal of
putting an end to retirements at
age 50. Such sections of the
statute can be upheld, if at all,
only on the theory that they were
necessary and reasonable means of
achieving the state’s goal of
Saving money.

Clearly, no provision of the

United States Constitution or of
federal law requires Connecticut
to allow its employees to retire

~« WI6T. we focus our
attention on the initial question
whether the pre-1975 Retirement Act
created a contractual obligation
obliging Connecticut to maintain the
pre-1975 retirement ages for female
state employees who had not yet begun
receiving retirement benefits when the
Act was revised. This is an issue of
both state and federal law. Initially
it is a question of state law, for only
those arrangements enforceable as
contractual obligations under state law
are protected by the Contract Clause
against impairment. At the same time,
there is a federal law component to the
inquiry. Federal courts must have the
ultimate authority to determine, as a
matter of constitutional law, whether a

particular arrangement, of the sort

normally enforceable as a contract

under state law, is a contract
protected by the Contract Clause;
otherwise, states could always evade
the restraint of the Clause by
determining, through legislation or
adjudication, that an arrangement
previously regarded as a contract was
no longer enforceable. For this reason
the Supreme Court has frequently
instructed that federal courts must
independently determine the existence
of a contract and the nature and extent
of its obligations in order to decide
whether it enjoys the protection of the

Contract Clause. E.g., Irving Trust

Co, v. Day, 314 U.S. 566, 561, 62 S.Ct.

398, 401, 86 L.Ed. 452 (1942). This
federal law aspect of a Contract Clause
case is often the dominant inquiry,
because, at least in modern cases, the
state law status of a contract is

rarely in dispute. See Allied

- Alg5s -

Structural Steel Co. v. Spannaus,
supra; United States Trust Co. v. New
Jersey, supra; Veix v. Sixth Ward
Building & Loan Association, 310 U.S.
32, 60 S.Ct. 792, 84 L.Ed 1061 (1940);
Blaisdell, 290 U.S. 398, 54 S.Ct. 231,
78 L.Ed 413 (1934). In this case,
however, there is considerable
uncertainty as to the state law nature
of contingent pension benefits for
public employees.

No Connecticut court has yet ruled
on the precise question whether state
employees have vested pension rights
prior to becoming eligible to receive
benefits. The states that have
considered the question have adopted a
variety of approaches. Some states
hold that there are no rights under a

pension plan until the state employee

satisfies all the eligibility

requirements, including age and years
of service, for receiving benefits.
See, e.g., Etherton v. Wyatt, 155
Ind.App. 440, 293 N.E. 2d 43
(Ct.App.1973); McFeely v. Pension
Comm'n 8 N.J. Super., 575, 73 A.2d 757
(Law Div.1950); Creps v. Board of
Firemen’'s Relief & Retirement Fund
Trustees, 456, S.W. 2nd 434
(Tex.Civ.App.1970). Others hold that
pension rights vest unconditionally
upon employment. See, e.g., Yeazell v.
Copins, 98 Ariz., 109, 402 P.2d 541
(1965); N.Y. Const. art. V, §7. Still
others apply a liimited vesting concept,
holding that pension right vest upon
employment subject to “reasonable”
modification by the public employer.
See, e.g., Stork v. State, 62 Cal.App.3
465, 133 Cal. Rptr. 207 (1976); Police
Pension Relief Bd. v. Bills, 148 Colo.

383, 366 P.2d 581 (1961); City of

- Al87 -

>
Frederick v. Quinn, 35 Md.App. 626, 371

A.2d 724 (Ct.Spec.App.1977). And some
determine vesting rights according to
the nature of the employee's
contributions: voluntary plans vest
upon employment, but mandatory plans do
not vest. See, e.g., State ex rel.
Q'Donald v. City of Jacksonville Beach,
142 So.2d 349 (Fla.Dist.Ct.App.1962),
aff'd, 151 So.2d 430 (1963). Cf. United
States Railroad Retirement Bd. v.
Fritz,—vU.S.—, 101 S.Ct 453, 66
L.Ed.2d 368 (1980) (railroad retirement
benefits, established by federal law,
are not contractual); Flemming v.
Nestor, 363 U.S. 603, 610-11, 80 S.Ct.
1367, 1372, 4 L.Ed.2d 1435 (1960)
(social security benefits are not
contractual; Congress's reservation of
right to alter, amend, or repeal the
system simply makes express what is
implicit in the institutional needs of
the program).

- Al88 -

{2] In the absence of any
authoritative ruling by the courts of
Connecticut on the vesting of state
employee pension rights, both sides in

_\this case have relied on a small number
of Connecticut decisions on somewhat
related questions of pension law. Bird
v. Connecticut Power Co., supra; Borden
v. Skinner Chuck Co., supra; Fraser v.
City of Norwich, 137 Conn. 43, 75 A.2d
60 (1950); State ex rel. Herbert v.
Ryan, 16 Conn.Sup. 319
(Super.Ct.1949). The District Court,
analogizing from a decision in the
field of private pensions, Bird v.
Connecticut Power Co., supra, predicted
that Connecticut courts would recognize
contractual rights to public pensions
arising immediately upon entry into
state employment. We are not prepared
either to accept or to reject that

prediction. In our view abstention is

- Al89 -

appropriate to afford the state courts
an opportunity to adjudicate the
contract law aspect of appellees'
claim, even though the federal courts,
thereafter resolving the constitutional
issue, will not be obliged to give the
state court ruling the conclusive
deference that abstention normally

entails. See Atlantic Coast Line

Railroad. Co. v, Priliins, 332 U.S.

168, i70, 67 &.C. 131564, 1565, 91 L.Ed.

1977 (1947); Irving Trust Co. v. Day,

supra, 314 U.S. at 561, 62 S.Ct st 401;
Higginbotham v. City of Baton Rouge,
306 U.S. 535, 5336-39, 59 &.Ct 7OS, 706,
83 L.Ed. 968 (1939).

Despite the lack of the usual
conclusiveness of a state court
determination of state law, abstention
principles are fully applicable in this
case. The issues in this lawsuit

combine significant aspects of both the

- A190 -

Pullman® and Burford’ branches of

the abstention doctrine. The state
common law rule® governing the
vesting of public employee pension
rights is highly uncertain. The
subject matter, the fixing of
compensation benefits to state
employees, is of vital importance to
the State and its governmental

functioning. See National League of

Cities v. Usery, 426 U.S. 833, 96 S.Ct.

2465, 49 L.Ed.2d 245 (1976). State
autonomy and the relationship between
state and federal authority would be
impaired were the federal courts to set
state policy independently and follow
their own instincts as to state
contract law. Considerations of comity
that underlie our federal system of
government make abstention

appropriate. see Burford v. Sun Oil

C., 229 U.B. 315, 334, 334, GF S.CU.

- A191 -

1098, 1106, 1107, 87 L.Ed 1424 (1943);
Railroad Commission v. Pullman, 312
U.S. 496, 498, 501, 61 S.Ct 643, 645,
85 L.Ed. 971 (1941).

The District Court's judgment with
respect to the invalidity of the 1975
Act, as applied to persons employed
before June 30, 1975, is vacated and
remanded for further proceedings in
accordance with this opinion.” No

costs.

20731

- Al92 -

FOOTNOTES

1 The Clause provides: "No State
shall ... pass any ... Law impairing
the Obligation of Contracts ...." U.S.
Comee. Bee. £, SIC, cl. 1.

2 The 1975 Act adopted the
retirement ages formerly applicable
only to male employees, as the new,
uniform eligibility ages.
Conn.Gen.Stat. §§5-162(c), 5-162(d),
and 5-163(c) (1975). However, all
employees, both male and female, who
would reach the ages at which female
employees were eligible to retire under
the pre-1975 Act, within five years of
the effective date of the 1975 Act,
i.e., by June 30, 1980, were eligible
to retire at those lower ages.
Conn.Gen.Stat. §5-163a (1975).

3 Appellees also challenged the
1975 amendments to the State Employees
Retirement Act under the Due Process
and Equal Protection Clauses of the
Fourteenth Amendment. They alleged
that the amendments constituted a
taking of property-their contract
rights to pension benefits-without just
compensation, and an arbitrary and
irrational classification of
employees-one according to
birthdate-because employees who would
reach the former, lower retirement age
within five years of the enactment of
the amendments, by June 30, 1980, were
exempted from the higher retirement
eligibility ages established by the
amendments. Because the District Court
found that the 1975 amendments violated
the Contract Clause, it did not reach
the merits of these claims. Pineman v.

- A193 -

Oechslin, 494 F.Supp. 525, 536 n.26
(D.Conn.1980).

4 Benefits under the plan for
those retiring with less than 25 years
of service are determined by a fixed
percentage of the employee's earnings,
which increases according to the
employee's age at retirement. For
example, a female employee with more
than 10 years of service, who retired
at age 65 under the pre-1975 Act
(although she could have retired at
55), would have received annual
benefits equal to the sum of 1.25% of
her social security earnings and 2.5%
of her earnings in excess of the amount
on which the State made social security
contributions, both multiplied by her
years of service. Conn.Gen.Stat.
§5-162(d)(3) (amended 1975). But under
the present benefit schedule, it she
retired at that same age, she would
receive annual benefits equal to the
sum of 1% of her social security
earnings and 2% of her excess earnings,
both multiplied by her years of
service. Conn.Gen.Stat. §5-162(d) (3)
(1975). To obtain the same benefits
available under the prior law she must
now work five years longer and retire
at age 70. Only those female employees
who would have retired at age 70 or
over, and do so under the 1975 Act,
receive the same benefits as they would
have received under the pre-1975 Act.

2 The State argues on appeal that
the District Court lacked subject
matter jurisdiction on the grounds that
42 U.S.C. §1983 and 28 U.S.C. §1343(3)
confer jurisdiction only upon claims
based on the Fourteenth Amendment or

- A194 -

incorporated through it. We disagree
and construe §1343(3) to confer
Jurisdiction to decide all
constitutional claims. Cf. Maine v.
Thiboutot,—wvU.S. , 260. B.4% 2204,

65 L.Ed2d 555 (1980) (§§ 1983
encompasses Claims based on all laws);
Anglo-American Provision Co. v. Davis
Provigion Co,, 105 F. 536 (6.D.N.Y.
1900) (predecessor statutes to §§ 1983
and 1343(3). Rev.Stat. §§ 1977, 1979,
and 629, confer jurisdiction on claim
under Full Faith and Credit Clause).

6 Railroad Commission v. PulJman,
3iz U.8. £36, Gi S.C. 643, 83 babe. 937i

(1941).

7 Burford v. Sun Oil Co., 319
0.8. 240, Ge B.C. 2090. 87 &. 84. 1424
(1943).

8 The principles of abstention
apply to cases involving unsettled
issues of state common law just as to
more typical cases involving a state
statute. Cf.H Hart & H. Wechsler, The
Federal uL an he F ral stem
992 (2d ed. 1973). One court suggested
that a federal court, exercising
federal question jurisdiction, should
not abstain from deciding a common law
issue, although it also found that the
state common law at issue was not
uncertain. Moreno v. University of
Maryland, 420 F.Supp. 541, 553
(D.Md.1976), aff'd without opinion, 556
F.24@ S73. (408 Cit... 1977), semetio
certified sub nom. Elkins v. Moreno,
433. 0.8. 6467, 30 B.0. 22284 2o &. BC. 2¢
614 (1978). However, the Supreme
Court, in reviewing that decision,
certified the state common law question

- A195 -

to the Maryland Court of Appeals
because the question was “potentially
dispositive" of the constitutional
question and no controlling precedents
existed; because of the importance of
the subject matter (who can become a
domiciliary of the state) to state
government, the Supreme Court did not
defer to the District Court's
determination of state law. Elkins v.
Moreno, supra, 435 U.S. at 662, 98
S.Ct. at 1347. And, as the Court had
previously explained in Bellotti v.
Baird, 428 U.S. i432, 353; 36 @.Ct.
2857, 2868, 49 L.Ed.2d 844 (1976),
remanding a case for certification of a
state law question does not mean that
abstention would have been improper if
certification had not been available.

IFollowing the procedure
established in England v. Louisiana
State Board of Medical Examiners, 375
U.S. 411, 84 §&.Ct 461, if &.86.26 440
(1964), the District Court is to retain
jurisdiction pending state court
determination of the state law
question. If the Connecticut courts
adopt the District Court's view of
Connecticut contract law, that state
employees acquire pension rights
unconditionally upon employment, then
the District Court may enter a fresh
judgment embodying its view of the
constitutionality of the retirement age
revisions, in which event an appeal may
be taken to this Court. If the state
courts reject initial vesting of state
employee pension rights, then, should
the appellees return to District Court,
that Court will have to consider the
contract issue independently,
enlightened by the reasoning of the
state courts.

In seeking a state court
declaration concerning the contract law
issue, appellees will have to consider
whether to follow the England option of
reserving the federal issue so that
they may return to District Court, or
whether they prefer to submit all
issues to the state courts. If federal
issues are reserved, we see no reason
why the state courts, if they should
decide as a matter of state law that
pension rights vest subject only to
"reasonable" modification, could not
also rule, as a matter of state law,
whether the revisions of the 1975 Act
are reasonable, having due regard to
their nature and orgin. Such a state
law ruling, if the state courts choose
to make it, would be instructive for
the federal courts, though not
conclusive. We intimate no views on
any aspect of the merits.

20731

195 Conn 405 MARCH, 1985 405
Pineman v. Oechslin

eral.” The plaintiff, in his appeal, has not challenged
either the first or the third of these findings. We have
already concluded that there was sufficient evidence
so that the second finding was not clearly erroneous.
The plaintiff has therefore not established his right to
recover under General Statutes § 35-28 (d).

There is no error.

In this opinion the other judges concurred.

KAREN K. PINEMAN ET AL. v. WILLIAM G.
OECHSLIN ET AL.
(12529)

HEALEY, PARSKEY, SHEA, DANNEHY and BIELUCH, Js.

The named plaintiff state employees brought a class action on behalf of
themselves and all similarly situated state employees challenging the
constitutionality of a 1975 amendment to the State Employees Retire- |
ment Act. Prior to 1975, female state employees were permitted to retire |
at age fifty with twenty-five years of service and male state employ-
ees were permitted to retire at age fifty-five with twenty-five years
of service. In 1975, the disparate treatment of males and females hav-
ing been determined to be in violation of the prohibition against sex-
based discrimination, the act was amended to establish fifty-five as the
retirement age for all state employees with twenty-five years of ser-
vice. The plaintiffs claimed that the amendment impaired the state’s
contractual obligation to them in violation of the contract clause of the
United States constitution. The trial court rendered judgment for the
defendants from which the plaintiffs appealed and the defendants cross
appealed. Held that because there is no clear expression by the legisla-
ture that the State Employees Retirement Act is intended to create
vested contractual rights in favor of state employees prior tc their satis-
faction of all of its eligibility requirements, the act does not create such
rights.

Although the State Employees Retirement Act establishes a property inter-
est on behalf of all state employees in the existing retirement fund,
which interest is entitled to protection from arbitrary legislation under
the state and federal due process provisions, the issue of whether the
1975 amendment to the act constituted a deprivation of that property
interest without due process of law was not considered, that issue not
having been discussed at trial or briefed or argued here.

Argued December 13, 1984—decision released March 12, 1985

- A196 -

a

406 MARCH, 1985 195 Conn 405

Pineman v. Oechslin

Class action challenging the constitutionality of the
1975 revision of the Connecticut Employees Retirement
Act which raised the retirement eligibility age for
female employees, brought to the Superior Court in the
judicial district of Hartford-New Britain at Hartford
where the court, N. O’Neill, J., rendered judgment for
the defendants, from which the plaintiffs appealed and
the defendants cross appealed. No error.

Paul W. Orth, with whom was Austin Carey, Jr., for
the appellants-appellees (plaintiffs).

Peter T. Zarella, with whom was Richard R. Brown,
for the appellees-appellants (defendants).

PARSKEY, J. The principal issue presented by this
appeal is whether state employees have contractual!
interests in the State Employees Retirement Act (act),
General Statutes §§ 5-152 through 5-192x. Because we
agree with the trial court that the act creates no con-
tractual rights we find no error.

The plaintiffs brought a class action in the United
States District Court for the District of Connecticut
against the named defendant, chairman of the state
employees retirement commission, Henry E. Parker,
state treasurer, and J. Edward Caldwell, state comp-
troller. The action sought a declaratory judgment estab-
lishing that the State Employees Retirement Act,
§§ 5-152 through 5-192x, as amended by No. 75-531 of
the 1975 Public Acts, impairs the state’s contractual
obligations to the plaintiffs in violation of article I, § 10,
of the constitution of the United States which provides
that ‘“[njo State shall . . . passany . . . Law impair-
ing the Obligation of Contracts . . . .” The district
court, agreeing with the plaintiffs, issued a permanent
injunction ‘‘requiring the defendants to administer the
State Employees Retirement Act in a manner which
respects the plaintiffs’ contractual rights.”” Pineman

- A199 -

195 Conn 405 MARCH, 1985 407
Pineman v. Oechslin
v. Oechslin, 494 F. Sup. 525, 554 (D. Conn. 1980). On
appeal, the United States Court of Appeals for the Sec-
ond Circuit vacated the district court’s judgment and
remanded the case with direction that the district court
abstain from adjudicating the federal constitutional
claim so as to afford the state court an opportunity to
adjudicate the plaintiffs’ contract claims as a matter
of state law. Pineman v. Oechslin, 637 F.2d 601 (2d
Cir. 1981). The district court thereafter issued an
abstention order setting forth the questions which
appeared to be undecided, stayed further proceedings
of the federal action and retained jurisdiction for such
further proceedings as may be appropriate or neces-
sary upon the conclusion of the state court proceedings.

Thereafter the plaintiffs brought an action in the
Superior Court seeking, inter alia, a judgment declar-
ing that the “‘pre-1975 Retirement Act . . . created
a contractual obligation obliging Connecticut to main-
tain the pre-1975 retirement ages for female state
employees who had not yet begun receiving retirement
benefits when such act was revised by the act on June
30, 1975.” The individual plaintiffs consisting of three
female (Karen Pineman, Judith Narus, Rose Schewe)
and three male (Alphonse S. Marotta, Daniel Clifford,
Alfred K. Tyll) state employees, sought and were
granted an order certifying their right to maintain the
action on behalf of all similarly situated state employ-
ees. The trial court, after examining the Retirement
Act and other statutes which it deemed relevant, con-
cluded that in enacting the Retirement Act the legis-
lature never intended to create contractual rights in
state employees. We agree with the trial court’s con-
clusion.

HISTORICAL BACKGROUND OF THE STATE
EMPLOYEES RETIREMENT ACT

The act as initially adopted in 1939 permitted male
employees to retire at age fifty-five with twenty-five

- A200 -

408 MARCH, 1985 195 Conn 405
Pineman v. Oechslin
years of service and female employees to retire at age
fifty with twenty-five years of service. General Stat-
utes (Sup. 1939) § 67e et seq. This disparate treatment
of male and female employees continued into 1974. Gen-
eral Statutes (Rev. to 1975) § 5-162. In that year, the
act was held to violate the prohibition against sex-based
employment discrimination contained in Title VII of
the Civil Rights Act of 1964. Fitzpatrick v. Bitzer, 390
F. Sup. 278 (D. Conn. 1974), aff'd in part and rev'd in
part on other grounds, 519 F.2d 559 (2d Cir. 1975), aff'd
in part and rev'd in part on other grounds, 427 U.S.
445, 96 S. Ct. 2666, 49 L. Ed. 2d 614 (1976). At the
1975 session of the General Assembly, the act was
amended to establish fifty-five years as the retirement
age for all state employees with twenty-five years of
service. Public Acts 1975, No. 75-531.' It also provided

' Public Acts 1975, No. 75-531, provides in relevant part:

“AN ACT CONCERNING ELIGIBILITY FOR STATE RETIREMENT.

“Section 1. Subsection (c) of section 5-162 of the general statutes is
repealed and the following is substituted in lieu thereof:

“(c) Schedule 1—Twenty-five or more years of state service.

“(1) EXCEPT AS PROVIDED IN SECTION 5 OF THIS ACT, [Each)
EACH member who has completed twenty-five or more years of state ser-
vice shall be retired, on his own application or on the application of the
executive head of the agency employing him, on the first day of the month
named in the application, and on or after the member's fifty-fifth birth-
day, if a man, or fiftieth birthday, if a woman]... .

“Sec. 2. Subsection (d) of section 5-162 of the general statutes is repealed
and the following is substituted in lieu thereof:

“(d) Schedule 2—Less than twenty-five years of state service.

“(1) EXCEPT AS PROVIDED IN SECTION 5 OF THIS ACT, [Each)
EACH member who has completed less than twenty-five years of state ser-
vice shall be retired on his own application, on the first day of the month
following his application, if [he then meets any one of the following condi-
tions: (A) The member is a woman who has completed five years of state
service and reached her sixty-fifth birthday; (B) the member is a woman
who has completed ten years of state service and reached her fifty-fifth
birthday; (C)] the member [is a man who] has completed ten years of state
service and reached his sixtieth birthday. .

“Sec. 3. Subsection (c) of section 5-163 of the general statutes is repealed
and the following is substituted in lieu thereof:

“(c) EXCEPT AS PROVIDED IN SECTION 5 OF THIS ACT, [A] A

- A201 -

195 Conn 405 MARCH, 1985 409
Pineman v. Oechslin

that any employee with twenty-five years of state ser-
vice who attained the age of fifty prior to June 30, 1980,
could elect to retire and receive normal retirement
benefits.

member whose state service is terminated because of economy, lack of work
or abolition of his position, or who, being an army or air national guard
technician in the military department, is dismissed by reason of separa-
tion from the national guard because of age, after he has compieted twenty-
five years of state service but before he has reached his fifty-fifth birth-
day, [if a man, or her fiftieth birthday, if a woman.) shall be entitled to a
retirement income. The amount of each monthly payment shal] be deter-
mined from subsection (c) of section 5-162, if the member elects the first
day of the month on or after such birthday as his retirement date; and shall
be the actuarial equivalent of such amount, as determined by the retire-
ment commission, if the member elects the first day of the month on or
after his termination date as his retirement date.

“Sec. 4. Subsection (a) of section 5-166 of the general statutes is repealed
and the following is substituted in lieu thereof:

“(a) EXCEPT AS PROVIDED IN SECTION 5 OF THIS ACT, [A] A
member who leaves state service before he is eligible for retirement but
after completing at least ten years of state service, of which at least five
years shall have immediately preceded the date of his leaving state ser-
vice, shall continue to be a member, and shali be eligible for a retirement
income as provided in section 5-162, but on a reduced actuarial basis, as
determined by the retirement commission[, provided, if such member is
a woman she shall be eligible upon reaching her fiftieth birthday and if a
man, he shall be eligible] upon reaching his fifty-fifth birthday. Such vested
retirement income shall not be subject to divestiture by subsequent employ-
ment unless the member withdraws his retirement contribution.

“Sec. 5. (NEW) (a) Any member who has completed twenty-five years
of state service and has reached the age of fifty prior to June 30, 1980,
may elect to be retired on the first day of the month following such appli-
cation and receive retirement benefits in accordance with the provisions
of subdivision (3) of subsection (c) of section 5-162 of the general statutes,
provided such member so elects prior to June 30, 1980.

““(b) Any member who has completed at least ten but less than twenty-
five years of state service and reached the age of fifty-five prior to June
30, 1980, may elect to be retired on the first day of the month following
his application and receive retirement benefits in accordance with subsec-
tion (d) of this section, provided such member so ek ts prior to June 30, 1980.

“(c) Any member who has completed at least five but less than ten years
of state service and has reached the age of sixty-five prior to June 30, 1980,
may elect to be retired on the first day of the month following such appli-
cation and receive retirement benefits in accordance with the provisions
of subsection (d) of this section, provided such member so elects prior to
June 30, 1980... .”

410 MARCH, 1985 195 Conn 405
Pineman v. Oechslin 7

APPLICABLE RULES OF STATUTORY
CONSTRUCTION

Prior to entering a discussion of whether the act cre-
ates vested contractual rights in the plaintiff employ-
ees, we note the appropriate standard of statutory
interpretation traditionally applied to questions such
as the one before us. “In determining whether a law
tenders a contract to a citizen it is of first importance
to examine the language of the statute. If it provides
for the execution of a written contract on behalf of the
state the case for an obligation binding upon the state
is clear. Equally clear is the case where a statute con-
firms a settlement of disputed rights and defines its
terms. On the other hand, an act merely fixing sala-
ries of officers creates no contract in their favor and
the compensation named may be altered at the will of
the legislature. This is true also of an act fixing the term
or tenure of a public officer or an employee of a state
agency. The presumption is that such a law is not
intended to create private contractual or vested rights
but merely declares a policy to be pursued until the
legislature shall ordain otherwise.’’ (Footnotes omit-
ted.) Dodge v. Board of Education, 302 U.S. 74, 78-79,
58 S. Ct. 98, 82 L. Ed. 57 (1937). ‘The principal func-
tion of a legislative body is not to make contracts but
to make laws which declare the policy of the state and
are subject to repeal when a subsequent legislature shall
determine to alter that policy.” Indiana ez rel.
Anderson v. Brand, 303 U.S. 95, 100, 58 S. Ct. 443,
82 L. Ed. 685 (1938).

Although the legislature may authorize a contract to
be made on behalf of the state; Wilson v. East Bridge-
port School District, 36 Conn. 280, 282 (1869); there
exists a ‘well-established presumption” against find-
ing that a statute creates private vested contractual

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195 Conn 405 MARCH, 1985 411

Pineman v. Oechslin

rights absent a clear showing of legislative intent to
the contrary. Taliaferro v. Dykstra, 434 F. Sup. 705,
710-11 (E.D. Va. 1977). Since the effect of such autho-
rization is to surrender the legislature’s governmental
power of revision and to restrict the legislative author-
ity of succeeding legislatures, a legislative intent to cre-
ate contractual rights will not be assumed unless the
statutory language expressing such intent is clear and
unambiguous. Indiana ex rel. Anderson v. Brand,
supra, 110 (Black, J., dissenting).

APPROACH TO PUBLIC PENSIONS

The specific issue of whether Connecticut’s statutory
retirement plan for state employees is contractual in
nature is a question of first impression before this
court.? To guide us in resolving this issue, we look to
the various approaches adopted by other courts that
have been confronted with similar questions. See
Pineman v. Oechslin, 637 F.2d 601, 604-605 (2d Cir.
1981). In a few states, the issue has been removed from
the court’s domain by the enactment of constitutional
or statutory provisions expressly stating that public
pension plans give rise to vested contractual rights.
Annot., ‘‘Vested Right of Pensioner to Pension,’ 52
A.L.R.2d 437, 441 (1957); see, e.g., N.Y. Const., art.
V, § 7; Pineman v. Oechslin, 494 F. Sup. 525, 544 n.36
(D. Conn. 1980). No such provision exists in the stat-
utes or constitution of Connecticut.

2 In State ex rel. Kirby v. Board of Fire Commissioners, 129 Conn. 419,
29 A.2d 452 (1942), we had occasion to address the general issue of the
right of governmental employees to public pensions. In that case, involv-
ing a claim by a fireman to retirement benefits, we agreed with the defend-
ant board; A-179 Rec. and Briefs, p. 532; that the relator had no contractual
rights to his pension. “‘{U]nder retirement acts generally even where the
person eligible for retirement has contributed by way of dues or assess-
ments to make up the retirement fund he has no vested right to retirement.”
State ex rel. Kirby, v. Board of Fire Commissioners, supra, 426. We went
on to observe, however, that the relator had a statutory right to receive
his pension under the provisions of the municipal charter, which at that
time was granted by special act of the General Assembly. See Baker v. Nor
walk, 152 Conn. 312, 314, 206 A.2d 428 (1965).

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412 MARCH, 1985 195 Conn 405

Pineman v. Oechslin

Where such an express statement of legislative intent
is lacking, the traditional view, still adhered to in many
jurisdictions, is that there are no rights, contractual
or otherwise, under a pension plan until the state
employee satisfies all the eligibility requirements,
including age and years of service, for receiving bene-
fits. See Pineman v. Oechslin, 637 F.2d 601, 605 (2d
Cir. 1981), and cases cited therein. This approach is
premised on the view that statutory pension benefits
are in the nature of a gratuity, and that public employ-
ees have merely an expectancy interest in the pension
fund, revocable at the will of the legislature. See
Christensen v. Minneapolis Municipal Employees
Retirement Board, 331 N.W.2d 740, 745-46 (Minn.
1983); Cohn, ‘“‘Public Employee Retirement Plans —
The Nature of the Employees’ Rights,” 1968 U. Il. L.F.
32, 34-37 (1968). A simply applied but rigidly doc-
trinaire analysis developed in which the nature of the
employee’s rights was classified as contractual or
gratuitous, depending upon whether participation in
the plan was voluntary or compulsory. Voluntary plans
were deemed to create vested rights while compulsory
participation meant no vested interest accrued. See
annot., 52 A.L.R.2d, supra, pp. 441-43.

This rigid analytic approach, and the gratuity con-
cept generally, have been the subject of increasing criti-
cism and judicial discomfort. As one commentator
recently put it: ‘In the seventh decade of the 20th cen-
tury it seems somewhat absurd to speak of a pension
as in the ‘nature of a bounty springing from the appre-
ciation and graciousness of the sovereign.’ [Blough v.
Ekstrom, 14 Ill. App. 2d 153, 160, 144 N.E.2d 436
(1957).] Medieval notions of the beneficence and gra-
ciousness of worldly monarchs have no relevance to
modern notions of sovereignty.’’ Cohn, supra, p. 37;
see Christensen v. Minneapolis Municipal Employees
Retirement Board, supra, 746-47; Spina v. Consoli-

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195 Conn 405 MARCH, 1985 413
Pineman v. Oechslin

dated Police & Firemen’s Pension Fund Commission,
41 N.J. 391, 401, 197 A.2d 169 (1964). We find this criti-
cism valid and persuasive, and therefore decline to view
the retirement benefits created by the act as mere
gratuities, as to which the legislature enjoys an unfet-
tered power of revocation.

In search of a more modern and realistic approach
to the nature of employee rights in public pensions, a
growing minority of jurisdictions has construed the
existence of vested rights, contractual in nature, even
in the absence of a clear expression of legislative intent
to create such rights. Three basic approaches have
evolved in jurisdictions analyzing public pensions in con-
tractual terms. Two of these employ a limited vesting
concept, holding that pension rights vest upon employ-
ment subject to ‘‘reasonable” modification by the public
employer. See Pineman v. Oechslin, 637 F.2d 601, 605
(2d Cir. 1981), and cases cited therein. One version of
the limited vesting approach permits a modification of
vested rights if the change bears a material relation
to the purposes of the pension system, and if any result-
ant disadvantage to the employee is accompanied by
an offsetting advantage. See, e.g., Stork v. California,
62 Cal. App. 3d 465, 133 Cal. Rptr. 207 (1976); Police
Pension & Relief Board v. Bills, 148 Colo. 383, 366 P.2d
581 (1961). The second view allows those modifications
to the retirement contract that reasonably enhance the
actuarial soundness of the retirement fund. See, e.g.,
Harvey v. Allegheny County Retirement Board, 392 Pa.
421, 141 A.2d 197 (1958). Finally, a third approach
characterizes the public employee’s interest in a statu-
tory pension in terms of promissory estoppel, holding
that

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385019_1858%3A2. Public record. Not legal advice.