Crosby v. City of Gastonia
2011 U.S. App. LEXIS 4641
| 4th Cir. | 2011Background
- Fund created in 1955; Board of Trustees administers it, with City officials but City has no direct control.
- 1959 funding proviso: benefits payable only if funds available, up to 2% per five years of service, not exceeding 14% of highest-three salary.
- 1983 City Ordinance tracked Act but omitted the 1959 funding proviso; later informational guides referenced the fund.
- 1990s financial distress; 1995 audit prompted responses; 1996 officers authorized a 2% salary deduction; 2001 audit suggested up to 7.5% to stave off depletion.
- 2002 legislative action halted further officer contributions, allowed early withdrawal of contributions; fund exhausted by August 2005; multiple retirees sue in 2006.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §1983 provides a remedy for Contracts Clause impairment. | Crosby asserts a §1983 claim for federal Contract Clause rights. | Gastonia contends Carter bars §1983 relief for Contract Clause impairment. | Count I fails as a §1983 remedy for Contract Clause impairment. |
| Whether Count I is a direct constitutional challenge or a §1983 claim. | Plaintiffs frame Count I as a federal constitutional claim. | City argues the claim is a direct Contract Clause challenge, not a §1983 claim. | District court correctly treated it as a direct challenge and dismissed as nonmeritorious. |
| If a contract existed, was there a breach under NC law given funding conditions? | Plaintiffs allege breach of contract due to impairment of pension obligations. | City argues benefits were contingent on funds; once funds depleted, no breach occurred. | Assuming a contract, no breach could be owed because benefits were expressly contingent on available funds. |
| Whether the district court properly exercised supplemental jurisdiction over the state-law claims. | Federal claims were dismissed, but state claims remained ancillary. | District court acted within its discretion to retain supplemental jurisdiction. | Court did not err in addressing state-law claims under supplemental jurisdiction. |
Key Cases Cited
- Carter v. Greenhow, 114 U.S. 317 (1885) (Contracts Clause remedies under §1983 are limited)
- St. Paul Gaslight Co. v. City of St. Paul, 181 U.S. 142 (1901) (breach of contract may not imply a federal constitutional violation)
- Bell v. Hood, 327 U.S. 678 (1946) (jurisdiction before merits when federal questions asserted)
- Arbaugh v. Y & H Corp., 546 U.S. 500 (2006) (subject-matter jurisdiction and supplemental jurisdiction considerations)
- Kestler v. Board of Trustees, 48 F.3d 800 (1995) (Contracts Clause implications reviewed by Fourth Circuit)