Abbott v. City of Bellevue, 967 N.W.2d 95

Background

In 2009 the Bellevue Police Officers Association (BPOA) litigated and settled with the City: covered officers would contribute 6% of salary to a retirement account, the City would match 6%, and retirees meeting age/service conditions would receive the greater of (A) the accumulated account (defined contribution) or (B) a formula-based percentage of final compensation (defined benefit).
The Nebraska Police Officers Retirement Act was later amended to increase required contributions to 6.5% (2013) and 7% (2015); the City amended its Police Retirement Plan accordingly and began withholding the higher percentages from officers’ paychecks.
The BPOA and several current officers sued under 42 U.S.C. § 1983 and Nebraska declaratory judgment law, alleging the City’s increased deductions unconstitutionally impaired contractual obligations (Contracts Clause) and asserting Takings claims; they sought injunctive relief, disgorgement of excess withholdings, and § 1988 attorney fees.
The district court granted partial summary judgment for the officers, found the City had unconstitutionally impaired the settlement contract, and ordered specific remedial language inserted into the City’s Retirement Plan that (1) separated 6% and excess contributions into distinct accounts and (2) included a formula for payment; the court denied a § 1988 fee award, finding plaintiffs not "prevailing parties."
On appeal the BPOA/current officers challenged (a) the court-ordered remedial language as reducing officers’ benefits, (b) language affecting defined contribution calculations, and (c) the denial of § 1988 fees; the Nebraska Supreme Court affirmed in part, modified the remedy, reversed the fee ruling, and remanded for fee proceedings.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Remedy will reduce defined benefit payments	District court intended officers to receive the defined benefit AND return of excess (>6%) contributions with earnings; the formula the court ordered instead reduces the benefit.	City says, read in context, the order gives the intended relief and causes no reduction.	Court found the formula ambiguous/problematic, modified the ordered formula so officers receive the defined benefit plus EE012, ER012, and EE912 accounts (clarified City liability).
Remedy could reduce defined contribution below statutory minimum	Plaintiffs: ordered language excludes City’s >6% contributions from the defined contribution comparison, potentially lowering the defined contribution below Retirement Act guarantees.	City: settlement controls; retirees under the contract have no right to Retirement Act benefits.	Court declined to resolve this speculative issue; removed the declaratory language addressing defined contribution calculation as unnecessary and speculative.
Whether plaintiffs are "prevailing parties" under 42 U.S.C. § 1988	Plaintiffs: district court’s injunction/declaratory relief altered the City’s behavior and legal relations and thus made them prevailing parties eligible for fees.	City: plaintiffs suffered no concrete damages yet (no retirements electing the defined benefit); relief was not the precise relief sought and was insignificant.	Court held plaintiffs are prevailing parties because the district court awarded actual relief altering the parties’ legal relationship; reversed the denial of fees and remanded for the district court to exercise its discretion on fees.
Dismissal of § 1983/Takings claims	Plaintiffs: district court erred by dismissing § 1983 and Takings claims.	City: argued dismissal appropriate; plaintiffs failed to meet municipal-liability standards.	Court clarified the Contracts-Clause § 1983 claim succeeded (impairment found); it did not decide the Takings issue on appeal and declined to address municipal-liability challenges because City did not cross-appeal.

Key Cases Cited

Calabro v. City of Omaha, 247 Neb. 955, 531 N.W.2d 541 (1995) (public employee retirement plans treated as contract rights under Contracts Clause)
Halpin v. Nebraska State Patrolmen’s Retirement Sys., 211 Neb. 892, 320 N.W.2d 910 (1982) (retirement system contract protections)
Caruso v. City of Omaha, 222 Neb. 257, 383 N.W.2d 41 (1986) (discussed definition of "impair" in Contracts Clause context)
Bauers v. City of Lincoln, 255 Neb. 572, 586 N.W.2d 452 (1998) (Contracts Clause impairment analysis cited by district court)
Hensley v. Eckerhart, 461 U.S. 424 (1983) (prevailing party test and fee principles)
Lefemine v. Wideman, 568 U.S. 1 (2012) (injunction or declaratory relief can establish prevailing-party status under § 1988)
Monell v. New York City Dep’t of Social Servs., 436 U.S. 658 (1978) (municipal liability principles under § 1983)
Pure Wafer, Inc. v. Prescott, City of, 845 F.3d 943 (9th Cir. 2017) (distinguishing contractual breach from constitutional impairment)