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June 30, 2014 11:40 AM UTC

The Colorado Judicial Branch is Not a Political Tool of the Colorado Legislative Branch.

  • 1 Comments
  • by: PolDancer

The State of Colorado is currently attempting to escape its financial obligations through breach of contract.  The U.S. Supreme Court has directed appellate courts to give heightened scrutiny to attempts by state governments to escape their financial obligations.  Has this heightened scrutiny of the State of Colorado's attempt to break its contracts occurred?  To date, no trial, no discovery has occurred relating to the State of Colorado's attempt to escape its contractual obligations.

The sponsor of the 2010 bill that seeks to break Colorado state contracts admits the existence of the contract.  In 2009, lawyers for the Colorado state agency administering the contract admitted (in writing) the existence of the contract.  Indeed, the Colorado Court of Appeals, in 2012, confirmed the existence of the contract.  Yet, today, lawyers for the State of Colorado persist in arguing that the contract does not exist.

From the website of the Colorado Judicial Branch:

"The principle of judicial independence is central to a functioning democracy.  Essentially, this means that the courts are shielded from politics or any other force that could compromise its independence and institutional independence."

http://www.courts.state.co.us/Courts/Education/Independence.cfm

American Bar Association Standing Committee on Judicial Independence:

"Our time tested adherence to the Rule of Law and our system of justice is the envy of the world.  Maintaining this system as envisioned requires that we have a fair, impartial, and independent judiciary that enforces the Constitution and settles all disputes according to the rules.  All citizens, regardless of who they are or what they represent, have the right to a fair and impartial hearing.  And it is often the role of our courts to protect the unpopular or the minority.  Public trust and confidence in our courts will only be preserved for so long as we stay this course."

http://www.americanbar.org/content/dam/aba/administrative/judicial_independence/scji_chairs_message.authcheckdam.pdf

Statement of U.S. Supreme Court Justice Stephen G. Breyer, July 15, 2002:

"Independent judges, as my colleague Justice Ginsburg recently put it, do not act on behalf of particular persons, parties, or communities.  They serve no faction or constituency, and they must strive to do what is right in each individual case, even if the case in question should find the least popular person in America opposed by the most powerful government in the world."

http://www.supremecourt.gov/publicinfo/speeches/ncps_project.pdf

Senator Josh Penry, co-prime sponsor of the 2010 Colorado legislation breaking Colorado PERA pension contracts (SB10-001) acknowledges the existence of the Colorado PERA pension COLA contract, and states that the Colorado Legislature (the 61 member majority voting for the bill in 2010) seeks to break the contract.  Senator Josh Penry stated, during the legislative effort to break PERA pension contracts, that the Colorado Legislature was taking advantage of a "window of opportunity" to persuade Colorado courts to permit the PERA contract breach.  The SB10-001 bill sponsor has admitted (on videotape) that the proponents of the bill intended to expedite passage of the bill to ensure that it would become law before the release of pending investment performance figures for the Colorado PERA portfolio later in 2010.

Thus, the sponsor of SB10-001 admitted the intent of state legislative sponsors to manipulate Colorado courts through the timing of the legislation, SB10-001.  Senator Josh Penry knew that improved investment performance figures would be released by Colorado PERA administrators four months after the bill, SB10-001, was signed into law by Governor Bill Ritter.  Given the performance of equity markets in 2009, it was evident to all involved that Colorado PERA (and all other equity investors) would report significant portfolio gains for calendar year 2009 undermining any argument for the "actuarial necessity" of the legislative COLA taking.

In short, the sponsor of the Colorado public pension bill that is the subject of litigation, stated on videotape, that the Colorado PERA COLA benefit is a contractual obligation, and that short-term market volatility should be used to persuade Colorado courts to sanction the breach of state contracts.  However, Colorado PERA pensioners do not bear any market-risk under their contracts.  U.S. equity markets have risen approximately 140 percent from their 2009 low point.

In a videotaped discussion with Representative Mike May, (videocenter. denverpost.com) Senator Josh Penry, said ‘we can’t, can’t miss this window.’ And, . . . we have an opportunity to pass something that Republicans have long advocated, a significant increase in retirement age, which the PERA Board embraced, reigning in the cost of living increases . . ."

“Penry went on to say, ‘I think it is important to pass something because if you lose actuarial necessity, as you know, it becomes extremely difficult to increase retirement age.  You cannot change course and this year, when PERA’s investment numbers come out, their investment returns . . . numbers are going to be significant, like double, 15-16% investment return.  So that could change the specter of actuarial necessity.  We gotta’ do it this year or else these other structural changes won’t be possible.”

http://www.leg.state.co.us/Clics/clics2010a/commsumm.nsf/b4a3962433b52fa787256e5f00670a71/84960fa73d53e222872576c600712e80/$FILE/10HseFin0210AttachG.pdf

Transcript of remarks by Senator Josh Penry, R-Fruita, (appearing on "Your Show,"  Channel 20 with Channel 9 News (KUSA-TV)  host Adam Schrager on January 10, 2010 at 10:30 a.m.
Adam Schrader: " . . . can (it) be cut, because it’s part of the contract, but has it been reviewed by the Attorney General?  Can you do this legally?  Can you take 3.5% guaranteed and move it down to what is it, 2%?  Can you do it?"

Senator Josh Penry:  "2%, yah, yah, we can.  I mean, what the courts have said with the case law and opinions have said is that you can’t, it is a contract unless there is actuarial necessity . . ." "So what the courts have said from a legal standpoint, as long as there is actuarial necessity, as long as there is a bona fide emergency, it is okay."

(Note that in this interview even the sponsor of the bill admits that the Colorado PERA COLA benefit is a contractual obligation of Colorado PERA-affiliated employers.)

Have Colorado courts given the required "heightened scrutiny" to the Colorado Legislature's 2010 attempt to escape state financial obligations?  Certainly the fact that the sponsor of SB10-001 acknowledges the Colorado PERA COLA contractual obligation would be observed by a Colorado court at trial.

Since 2009, Colorado politicians and pension administrators have employed many political tools in their attempt to break contracts to which the State of Colorado is a party.  They have used the assets of Colorado PERA pensioners in political, legal, and public relations campaigns to break the pensioner's contracts.  Apparently, many Colorado politicians would be happy to usurp the authority of Colorado courts, and render the Colorado Judicial Branch a mere political actor for the Colorado Legislative Branch.

This sentiment, using courts for political purposes, is at the heart of Colorado's 2010 bill that seeks to break Colorado PERA pension contracts.  As noted above, the co-prime sponsor of the SB10-001 State Senator Josh Penry, has stated the desire of the proponents of SB10-001 to use 2008 market volatility as "a window of opportunity" for the Colorado Legislature to claim "actuarial necessity" and escape state contractual obligations.  The co-prime sponsor of SB10-001 did not try to conceal the desire of the proponents of the bill to manipulate Colorado courts to achieve a legislative political goal, breach of state contracts.

But, it is not the role of state appellate courts to unquestioningly embrace constitutionally impermissible political objectives of state legislatures.  An appellate court in New Jersey made this clear in a decision just last week.

’It is not the courts’ role to run the pension systems,’ Reisner wrote.  ‘Our responsibility is to interpret and apply the constitution in light of the evidence, and we will do so.”  “’But to a very great extent, the strength of the pension systems rests on policy choices made by the other two branches of government, and on their political will to preserve the systems and satisfy prior commitments made to public employees and retirees.’”  “Under settled law, for the state to be able to break the COLA contract, it must show at the trial court that the harm to retirees is not ‘substantial,’ that the government is breaking its agreement for a ‘reasonable public purpose,’ and that the freeze is related to ‘appropriate governmental objectives.’”

In 2010, the Colorado Legislature enacted a bill (SB10-001) that took contracted public pension COLA benefits from pensioners who possess "fully-vested" contractual rights in the Colorado PERA pension system.  The U.S. Supreme Court has directed appellate courts to give heightened scrutiny to attempts by state governments to escape their own financial obligations.
The defendants in this lawsuit, Justus v. State, were granted summary judgment by Judge Hyatt of the Denver District Court in 2011 (prior to his retirement) in a Decision that failed to even mention Colorado case law that is clearly relevant to the case (Bills and McPhail.)  This Colorado case law was referenced in a Colorado Attorney General's Opinion addressing contractual public pension rights in Colorado.  This undeniably on-point Colorado case law was cited even by laymen, by persons with no legal training, as the Colorado Legislature began contemplating breach of state contracts in 2009.  Later, this Colorado case law was confirmed as dispositive in the case, Justus v. State, by the Colorado Court of Appeals.  Since the Denver District Court granted the defendants in the case summary judgment in 2011, there was no opportunity for the process of discovery in the case.

Where even a routine process of legal discovery has not yet occurred in litigation involving a state's attempt to escape financial obligations, can heightened scrutiny be said to have occurred? Can heightened scrutiny be claimed where summary judgment was granted in a decision with no mention of a state's on-point Colorado Supreme Court case law?  Can heightened scrutiny be said to have occurred where the complete recorded legislative history of a contractual obligation has received no judicial scrutiny?  As summary judgment was granted by the Denver District Court in this case in 2011, facts that are critical to supporting the constitutional rights of Colorado PERA pensioners have not been discovered or reviewed by Colorado courts.

There is no question that the Colorado PERA COLA benefit is a contractual obligation of Colorado PERA-affiliated employers.  Colorado PERA administrators and PERA's lawyers should end the charade.  The evidence of this contractual obligation is plain and conclusive to any person who can read and who spends a few minutes looking for it.

The statutory language creating the Colorado PERA COLA benefit is clear, and identical to the statutory language creating the Colorado PERA pension base benefit.  The legislative history establishing the Colorado PERA COLA benefit is clear.  Colorado PERA's lawyers have confirmed the "automatic" COLA contract (in written testimony to the Legislature.)  The bill sponsor has confirmed the existence of the PERA COLA contractual obligation.  The Colorado Court of Appeals has confirmed the PERA COLA contractual obligation.

The United States Supreme Court has determined that state attempts to escape their own financial obligations shall receive very little deference.  In 1977, the United States Supreme Court accepted an appeal of a decision of the New Jersey Supreme Court in the case, United States Trust Company of New York v New Jersey (U.S. Trust.)  From the U.S. Supreme Court decision in U.S. Trust:

"Any financial obligation could be regarded in theory as a relinquishment of the State's spending power, since money spent to repay debts is not available for other purposes.  Similarly, the taxing power may have to be exercised if debts are to be repaid.  Notwithstanding these effects, the Court has regularly held that the States are bound by their debt contracts."

(My comment: If one accepts the premise that additional Colorado state and local government resources are required to meet Colorado PERA contractual obligations, although these PERA obligations consume less than three percent of all Colorado state and local government revenues, it should be noted that the Colorado Legislature has not yet exercised its constitutional powers to refer a measure to Colorado voters seeking sufficient revenue to meet these Colorado PERA contractual obligations.)

U.S. Trust:

" . . . complete deference to a legislative assessment of reasonableness and necessity is not appropriate because the State's self-interest is at stake.  A governmental entity can always find a use for extra money, especially when taxes do not have to be raised.  If a State could reduce its financial obligations whenever it wanted to spend the money for what it regarded as an important public purpose, the Contract Clause would provide no protection at all."

" . . . a State cannot refuse to meet its legitimate financial obligations simply because it would prefer to spend the money to promote the public good rather than the private welfare of its creditors."

"But a State is not completely free to consider impairing the obligations of its own contracts on a par with other policy alternatives.  Similarly, a State is not free to impose a drastic impairment when an evident and more moderate course would serve its purposes equally well."

http://scholar.google.com/scholar_case?case=15238053046927037053&q=U.S.+Trust&hl=en&as_sdt=4006

It is simply the case that Colorado politicians want to break the Colorado PERA statutory contract, and they want the Colorado Judicial Branch as their partner in the Colorado PERA pension contract breach.  Colorado politicians are asking that the Colorado Supreme Court ignore the Colorado Constitution, on-point Colorado case law, a Colorado Attorney General's Opinion, and U.S. Supreme Court precedent, all to help the politicians achieve a desired political outcome.

The question remains whether the Colorado Supreme Court, leading an independent branch of Colorado government, can possibly ignore clear, copious, widely available evidence establishing the PERA COLA benefit as a contractual obligation.  The Colorado Judicial Branch is not simply another political tool of the Colorado Legislative Branch.

For the Colorado Supreme Court to give heightened scrutiny to the State of Colorado's 2010 attempt to escape its financial obligations the court must, at a minimum, examine the complete legislative history of the Colorado PERA COLA benefit.  The legislative history of the PERA COLA benefit establishes, at the inception of the "automatic" PERA COLA benefit, that the COLA benefit is a contractual obligation of PERA-affiliated employers.

The legislative history of the Colorado PERA COLA benefit includes legislative testimony by Colorado PERA's representative Rob Gray that the PERA COLA benefit that the Legislature places into Colorado law is a "permanent" pension benefit, that PERA pensioners can rely on the pension benefit in retirement, that the PERA COLA is a "liability" of the Colorado PERA pension system, and that the permanent PERA COLA created "adds to the unfunded liabilities" of the PERA pension system.  Indeed, a member of the House Finance Committee at the legislative hearing creating the "automatic" PERA COLA benefit described the PERA COLA as "guaranteed," "now and in the future."

The legislative history of the Colorado PERA COLA benefit makes it plain that, as confirmed in 2009 by Colorado PERA's lawyers and the sponsor of SB10-001, the PERA COLA benefit is a contractual obligation of the State of Colorado and other employers in the PERA pension system.

Rob Gray, testifying to the Legislature's House Finance Committee in regard to the "automatic" PERA COLA benefit under consideration [in House Bill 93-1324]: “The PERA Board does support this bill.”  “We felt like it is something that is good pension policy . . . that it makes sense . . . THAT IT IS MAKING PERMANENT CHANGES, and also that it does help employers which is one of the goals of the bill.”  Rob Gray states that the proposed COLA "adds predictability for current and future retirees, people looking at leaving might look at this and say now I know how my future increases are going to be determined . . .”  Rob Gray characterizes the "automatic" PERA COLA benefit as a Colorado PERA liability: “when a change in benefits is added, like this bill, it extends out the period for paying off that unfunded liability.” If you listen to the recording of this meeting, you will also hear a member of the House Finance Committee refer to the Colorado PERA COLA provision under consideration as a pension benefit that is “guaranteed,” “now and in the future.”  [Note that the contracted PERA COLA benefit adopted by the committee was in later years improved by the Colorado General Assembly to flat 3.5 percent level, constitutionally permissible as this "improvement" did not impair PERA pension contracts.])

The plaintiffs in the case, Justus v. State, have informed the Colorado Supreme Court that the Colorado Legislature has failed to pay its public pension bills (actuarially required contributions,) that the PERA COLA is an "automatic" pension COLA benefit as opposed to an "ad hoc" pension COLA benefit, that discovery has not occurred in the case, and that the attempt by the State of Colorado to escape its financial obligations must receive heightened judicial scrutiny.

The Plaintiffs Amended Opening Brief (page 7) in the case Justus v. State, informs the Colorado Supreme Court that the Colorado Legislature has failed to pay actuarially required contributions to the Colorado PERA pension plan:

"However, the Legislature has continually kept contribution rates below the annual required contribution as determined by PERA’s actuaries.  In a March 2010 Report, the Pew Center on the States reported that Colorado contributed only 68.3% of its full actuarial required contribution over the past 10 years, and flagged it as one of ten 'lagging' states."

The Plaintiffs Amended Opening Brief (page 8) informs the Colorado Supreme Court that the Colorado PERA COLA is an "automatic" public pension COLA benefit, as opposed to an "ad hoc" public pension COLA benefit:

"In 1993, the Legislature amended this provision to make annual COLA increases granted on or after March 1, 1994 AUTOMATIC (my emphasis) and no longer dependent each year on approval by the legislature."

The Plaintiffs Amended Opening Brief (page 29) informs the Colorado Supreme Court of the U.S. Supreme Court's determination that state attempts to escape state contractual obligations shall receive heightened scrutiny, quoting U.S. Trust:

"A governmental entity can always find a use for extra money, especially when taxes do not have to be raised.  If a State could reduce its financial obligations whenever it wanted to spend the money for what it regarded as an important public purpose, the Contracts Clause would provide no protection at all."

From the Plaintiffs Opening Brief (page 31): “Requiring the petitioners to protect the future solvency of the pension system is an unconstitutional shifting of the state’s own burden.”

http://saveperacola.files.wordpress.com/2013/10/2013-10-24-plaintiff-petitioners_-amended-opening-brief1.pdf

From the Plaintiffs Reply Brief in the case, Justus v. State:

"As this case was decided on summary judgment, Defendants, as the moving parties, had the burden of establishing the non-existence of a genuine issue of material fact."

Page 9, "However, the current record is not the full record since discovery has not been completed."

Page 12, "Especially given that Defendants have the burden of proof, Retirees should at the very least be provided the opportunity to conduct full discovery and present evidence to the District Court that a 'more moderate course would serve [the Defendants’] purposes equally well.'"

Page 21, "In addition, Retirees should at the very least be entitled to conduct discovery on the State’s culpability in contributing to the funding deficits, and have a court determine whether it is reasonable for Retirees to now pay for the State’s conscious choice to fail to adequately fund PERA by keeping employer rates artificially low."

http://saveperacola.files.wordpress.com/2014/02/2014-01-10-petitioners-plaintiffs_-replybrief.pdf

The Colorado Judicial Branch exists to maintain rule of law in Colorado.  I do not believe that the Colorado Supreme Court might willfully ignore, or allow to be ignored, clear evidence of the contractual nature of the PERA COLA benefit (including the testimony of Colorado PERA's own lawyers) when that evidence is so readily and widely available.

For the Colorado Judicial Branch to allow the Colorado Legislative Branch to ignore Colorado public sector financial obligations based on a contrivance that the word "SHALL" means one thing in Part 6 of the PERA statutes, and another thing 23 pages later, in Part 10 of the PERA statutes would be a travesty of justice, rendering the Contract Clause meaningless.

Colorado PERA retirees insist that the Rule of Law in Colorado will not be abandoned at the whim of Colorado politicians.

Comments

One thought on “The Colorado Judicial Branch is Not a Political Tool of the Colorado Legislative Branch.

  1. Hey Algernon, over the years it has been my observation that the Colorado judiciary has become extremely politicized, especially the Colorado Supreme Court.  In a Denver Post Guest Commentary (6/16/2006) entitled "Politicians in Black Robes", former Gov Dick Lamm made some disparaging remarks directed at the Colorado Supreme Court in regards to the June 2006 'Defend Colorado Now' decision :

    "Last Monday's decision was not a matter of high judicial decisionmaking; it was a matter of raw, naked, arbitrary political power on the part of the court. In a decision that does not reflect legal reasoning but instead a political agenda, four members of the Colorado Supreme Court decided not to let Coloradans vote on this issue. Their action was unprincipled, unjust, unfair and unjustified."

    http://www.denverpost.com/guestcommentary/ci_3942822

    Former Gov Bill Owens was also more than miffed at this particular Supreme Court decision, calling the court "arrogant".  For an excellent overview of the Colorado judiciary, the following is a good read …  

    "Law, Politics, and Preferences: An Economic Analysis on Direct Democracy and the Single Subject Rule" by Michael D. Gilbert. 

    http://scholarship.law.berkeley.edu/cgi/viewcontent.cgi?article=1059&context=facpubs

    The Colorado Supreme Court is progressively becoming a political tool of the legislative branch, giving undue deference to their decisions … even when unconstitutional such as SB10-1. 

    Some new legal theory and reasoning in regards to "notions of fairness" and the breaking of contracts …

    http://www.law.harvard.edu/programs/olin_center/papers/pdf/book/04contracts.pdf

    This paper discusses the slippery slope of applying "notions of fairness" in the breaching of contracts.  The Colorado Supreme Court may be applying "notions of fairness" in their deliberations.  During oral arguments one justice remarked how many employees are not receiving COLAs in recent years.  

     

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