Professional Fire Fighters of New Hampshire & a. v. State of New Hampshire & a.
167 N.H. 188
N.H.2014Background
- In 2011 the New Hampshire Legislature amended RSA 100-A:16, I(a) to increase NHRS member contribution rates for various groups (e.g., Group I: 5% → 7%; Group II police/fire: 9.3% → ~11.5–11.8%).
- Unions and six individual employees sued for declaratory and injunctive relief, alleging the increases violated the Contract Clauses of the New Hampshire and U.S. Constitutions by impairing vested contractual rights.
- The State moved to dismiss, arguing (among other things) that the statute did not create a contractual right to fixed contribution rates and that vesting occurs only after ten years of creditable service under RSA 100-A:10.
- The Superior Court found that pension rights vest after ten years and that increasing contribution rates substantially impaired the contract for those vested employees, violating state and federal contract clauses; it granted summary judgment for three plaintiffs who had 10+ years of service.
- On appeal, the State challenged the conclusion that RSA 100-A:16 created an unmistakable, unmodifiable contractual obligation as to contribution rates.
- The Supreme Court of New Hampshire reversed: the legislature did not unmistakably intend to bind future legislatures to fixed member contribution rates, so there was no Contract Clause violation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether RSA chapter 100-A creates a contractual right that contribution rates cannot be changed | Statute + vesting language establish vested contractual rights at permanent employment (or on vesting) that prohibit increasing member contribution rates without commensurate benefit | Legislature did not unmistakably intend to create a contract protecting fixed contribution rates; statutes are policies subject to change | Held for State: statute did not unmistakably create unmodifiable contractual rights in contribution rates |
| When do NHRS benefits vest | Plaintiffs: vesting occurs upon commencement of permanent employee status (earlier than 10 years) | State and trial court: vesting occurs after ten years of creditable service per RSA 100-A:10 | Court did not reach plaintiffs’ cross-appeal issue (reversed on contract-clause ground), so vesting question left unresolved on appeal |
| Whether the 2011 amendment substantially impairs a contractual relationship | Plaintiffs: increasing contribution rates for vested members is a substantial impairment without adequate justification | State: no contractual right to fixed rates; even if contract exists, legislature can prospectively amend terms to preserve accrued benefits | Held for State: no contractual obligation existed to bar prospective changes to contribution rates, so no contractual impairment under Contract Clauses |
| Applicability of the unmistakability doctrine to public statutes | Plaintiffs: statutory language and vesting show intent to bind future legislatures | State: statutory scheme lacks clear, unequivocal language indicating intent to bind the legislature | Court applied unmistakability doctrine and found no clear intent to bind; doctrine bars treating ordinary statutory benefits as contracts |
Key Cases Cited
- National R. Passenger Corp. v. A. T. & S. F. R. Co., 470 U.S. 451 (1985) (legislatures do not ordinarily create contracts by statute absent clear, unequivocal intent)
- Energy Reserves Group v. Kansas Power & Light, 459 U.S. 400 (1983) (substantial impairment of contracts by legislation must serve a significant and legitimate public purpose)
- United States v. Winstar Corp., 518 U.S. 839 (1996) (discussion of limits on state contractual commitments and the role of unmistakability)
- Maine Ass’n of Retirees v. Board of Trustees, 758 F.3d 23 (1st Cir. 2014) (public-contract claims arising from statutes face a high burden; federal and state contract-clause analyses align)
- Cloutier v. State, 163 N.H. 445 (2012) (state case interpreting a different retirement statute; relied on by plaintiffs below but distinguished by the court)
- Tuttle v. N.H. Med. Malpractice Joint Underwriting Assoc., 159 N.H. 627 (2010) (statutory constitutionality reviewed de novo; retrospective laws that impair vested rights implicate Part I, Article 23)