C.A. Nos. PB 10-0060, PB 10-0311 (consolidated)
Sup. Ct. R.I.Dec 5, 2011Background
- Plaintiffs Faella, DiMaio, and Ross are former Johnston police officers receiving disability pensions and have ING 457 accounts with two sub-accounts per participant.
- The Town established the ING Accounts in 1984 under a 457 plan, with employer 12% and employee 6% contributions tied to the 1993 Contract.
- The 1993 Contract governs disability distributions from ING Accounts and purportedly predates the subsequently ratified CBAs.
- From 1983 to 2008, multiple CBAs were executed; none of the 1984 ING Accounts, 1993 Contract, or many CBAs were formally ratified by the Town Council.
- Johnston contends the 1993 Contract was not ratified and should be preempted by the ratified 2001-2004 and 2005-2008 CBAs, which provide disability benefits under a defined-benefit plan.
- The court must decide (i) whether the 1993 Contract is valid despite lack of council ratification, and (ii) whether it is preempted by the CBAs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the 1993 Contract binding despite lack of Town Council ratification? | Plaintiffs argue the Town Council ratified via acquiescence and continued funding. | Johnston contends the 1993 Contract was never ratified and thus unenforceable. | The court holds the 1993 Contract is binding due to Town Council acquiescence and implied ratification. |
| Does the 1993 Contract conflict with or get preempted by the CBAs? | The 1993 Contract coexists with CBAs; CBAs do not clearly preempt it. | CBAs control retirement benefits and preempt the 1993 Contract. | The court holds the 1993 Contract is not preempted and coexists with CBAs; ING distributions remain due. |
| Are the ING Accounts properly characterized as funding for CBAs or as separate deferred compensation plans? | ING Accounts are 457 deferred compensation plans; not funding for defined benefits. | ING Accounts fund the defined pension plans via the pension system and are implicitly governed by CBAs. | The court finds the ING Accounts are separate deferred compensation and not mere funding for the CBAs; they co-exist. |
| Does equitable estoppel apply against the Town to enforce the 1993 Contract? | Town's past practice and silence estop the Town from denying the contract. | Municipal estoppel requires explicit ratification; silence is insufficient. | The court applies estoppel against the Town; the 1993 Contract is binding and enforceable. |
Key Cases Cited
- Murphy v. Duffy, 46 R.I. 210 (R.I. 1922) (silence may amount to approval where duty to act exists)
- Shiavulli v. School Committee of North Providence, 114 R.I. 443 (R.I. 1975) (silence can justify estoppel when committee’s duty to approve is required)
- Ferrelli v. Dep’t of Employment Security, 106 R.I. 588 (R.I. 1970) (equitable estoppel against government requires reliance within actual authority)
- Newport Hospital v. Ward, 56 R.I. 45 (R.I. 1936) (public interests and taxpayer burden considered in estoppel against municipality)