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Miami

Cypen & Cypen
SPECIAL SUPPLEMENT

for
JANUARY 17, 2013

Stephen H. Cypen, Esq., Editor

FLORIDA SUPREME COURT UPHOLDS 
PENSION AMENDMENTS

 
Florida Governor Rick Scott and other state officials appealed the judgment of the Circuit Court for the 2nd Judicial Circuit in and for Leon County to the 1st District Court of Appeal, which certified to the Supreme Court that the Appeal was one presenting issues of great public importance that require immediate resolution by the Court.  In a 4 (Labarga, Polston, Pariente and Canady) to 3 (Lewis, Perry and Quince) decision, the Supreme Court of Florida has reversed the circuit court ruling in its entirety. 

The overriding issue was the constitutionality of certain provisions of chapter 2011-68, Laws of Florida, enacting Senate Bill 2100, which as of July 1, 2011, converted the Florida Retirement System from noncontributory by employees to contributory, required all current FRS members to contribute 3% of their salaries to the retirement system and eliminated the retirement cost-of-living adjustment for creditable service after the effective date of the act. The circuit court found violations of three separate provisions of the Florida Constitution: Article I, section 10, which prohibits laws impairing the obligation of contracts; Article X, section 6, which provides that no private property shall be taken except for a public purpose and with full compensation paid therefor; and Article I, section 6, providing that the right of public employees to bargain collectively shall not be denied or abridged. Based on those rulings, the circuit court held the challenged amendments to be unconstitutional, and ordered the State to reimburse, with interest, all funds deducted or withheld pursuant to the challenged provisions from the compensation or cost-of-living adjustments of employees who were members of FRS prior to July 1, 2011. 
 
The Supreme Court held

  • The preservation of rights statute (Section 121.011(3)(d), Florida Statutes (1974)), was not intended to bind future legislatures from prospectively altering benefits for future service performed by all members of FRS.  The 2011 amendments requiring a 3% employee contribution as of July 1, 2011, and continuing thereafter, and the elimination of the COLA for service performed after that date are prospective changes within the authority of the Legislature to make. The preservation of rights statute does not create binding contract rights for existing employees to future retirement benefits based upon the FRS plan that was in place prior to July 1, 2011.  (The court specifically declined to recede from the seminal case Florida Sheriffs Ass'n v. Department of Administration, 408 So. 2d 1033 (Fla. 1981).) 
  • Because the Court concluded that no contract between the state and members of FRS had been breached, the court also reversed the trial court’s judgment that a breach of contract effected an unconstitutional taking under Article X, section 6, of the Florida Constitution.
  • The right to bargain collectively is guaranteed to both public and private employees in Florida, as set forth in Article 1, section 6, of the Florida Constitution.  However, nothing in the subject amendments prohibits government employees from engaging in collective bargaining over retirement benefits.  Because the amendments on their face do not prohibit collective bargaining on issues of retirement, the Court did not reach the State's argument that the Legislature may limit the right to collective bargaining on retirement issues based on the principle of separation of powers and the Legislature's exclusive control over public funds.

Scott v. Williams, SC 12-520 (Fla. January 17, 2013), 38 Fla. L. Weekly S25ahttp://www.floridasupremecourt.org/decisions/2013/sc12-520.pdf.

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Items in this Newsletter may be excerpts or summaries of original or secondary source material, and may have been reorganized for clarity and brevity. This Newsletter is general in nature and is not intended to provide specific legal or other advice.


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