American Federation of Teachers – New Hampshire & a. v. State of New Hampshire & a.
167 N.H. 294
N.H.2015Background
- NHRS is a contributory, defined-benefit pension plan funded by employee and employer contributions and investments.
- In 2007-2008 the legislature amended RSA 100-A:1 to redefine “earnable compensation,” largely excluding other compensation, and changed COLA funding under RSA 100-A:41-a.
- Plaintiffs filed suit in 2009 challenging the amendments as violations of state and federal Contract Clauses; cross-appeals challenged vesting timing and COLA rights.
- The trial court held that some public employees had a contractual right to include “other compensation” in average final compensation and that COLAs could be protected; it limited standing of some intervenors.
- The court reviewed the issues de novo, applying the unmattered/unmistakability doctrine, and the appellate court reversed on earnable compensation but affirmed on COLA, remanding for further proceedings.
- The court did not address remedial challenges raised by NHRS, which took no position on the merits beyond objecting to certain remedies.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether amendments to earnable compensation violate Contract Clauses | RSA 100-A creates a contract; eliminating 'other compensation' impairs vested rights. | No unmistakable intent to contractually bind; changes not a substantial impairment. | Amendments do not violate Contract Clauses; reversed. |
| Whether NHRS members have vested rights to 'other compensation' in earnable compensation | Ten years of service vests rights to defined earnings components. | Vesting is not equivalent to contract; statute does not show unmistakable intent to bind future changes. | No vesting of rights to include 'other compensation'; reversed on this point. |
| Whether NHRS members have vested rights to COLAs | Legislative language in pre-amendment statutes indicates an entitlement to COLAs. | COLAs are contingent and funded; no explicit contractual obligation to perpetually provide COLAs. | No vested COLA rights; COLA amendment does not violate Contract Clause; affirmed. |
| Whether the amendments are retroactive in effect | Amendments affect past computation of benefits. | Amendments are prospective with respect to calculations; do not alter past awards. | Not necessary to resolve retroactivity beyond the above holdings; decision consistent with the other holdings. |
Key Cases Cited
- Parker v. Wakelin, 123 F.3d 1 (1st Cir. 1997) (contract clause review of impairment framework)
- Energy Reserves Group v. Kansas Power & Light, 459 U.S. 400 (Supreme Court 1983) (substantial impairment requires significant public purpose)
- National R.R. Passenger Corp. v. A. T. & S. F. R. Co., 470 U.S. 451 (Supreme Court 1985) (unmistakability doctrine; policies vs contracts; intent to bind legislature)
- Maine Ass’n of Retirees v. Board of Trustees, 758 F.3d 23 (1st Cir. 2014) (COLA funding and contract analysis in pension context)
- Cloutier v. State, 163 N.H. 445 (2012) (distinguishes vesting and contractual rights in pension context (NH nuances))
- Justus v. State, 336 P.3d 202 (Colo. 2014) (COLA contractual intent and legislative changes)
- Scott v. Williams, 107 So. 3d 379 (Fla. 2013) (prospective change to COLA authority; legislative control)
- Bartlett v. Cameron, 316 P.3d 889 (N.M. 2013) (COLA adaptation and funding context)