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Annapolis loses on pension move in federal court

The long-running battle between the city of Annapolis and approximately 60 retired police officers and firefighters has concluded its short detour in federal court.

Lawyers for the city had asked a federal judge to declare as permissible a plan to increase the retirees’ pension by 2 percent annually. The retirees, all members of the Annapolis Police/Fire Retirees Association, countered the plan violated multiple state court rulings requiring the pension plan to increase the same amount as the salaries of active-duty police and firefighters. They also noted they had already challenged the city’s plan in state court, where they revived litigation that started in 2002.

U.S. District Judge William M. Nickerson ruled last month the case was “clearly a matter of state and local law.”

“It borders on sophistry to argue that this action and the state court action somehow concern different issues and facts,” Nickerson wrote.

Eric Paltell, a lawyer for Annapolis, said he planned to talk with the city’s law department in the next week to decide whether to file an appeal.

Robert E. Deso, a lawyer for the retirees, described Nickerson’s ruling as “blunt and upfront.”

“He called it out correctly,” Deso said of Nickerson. “There was no reason to sue these people individually.”

But Deso only represents the retirees in the state litigation, in Anne Arundel County Circuit Court. The retirees represented themselves in the federal case, which was filed in August. Almost all of the defendants filed nearly identical, three-page motions to dismiss between the end of August and end of September.

“It appears that the City is attempting to utilize the Federal Declaratory Judgment Act to avoid defending a motion to enforce a continuing Maryland declaratory judgment, which enforcement motion is pending in the Circuit Court of Maryland for Anne Arundel County, and in which the City has previously filed the same arguments and exhibits it has now filed in this Court,” the motions state.

Lawyers for the city, in response, wrote the filings’ language and “legal principles” suggested they were ghostwritten, which could be grounds for sanctions as a violation of the Federal Rules of Civil Procedure.

While Nickerson’s ruling did not address the accusation, Russell R. Hall Jr. was happy to. Hall is a former Annapolis police lieutenant and president of the retirees association. He also earned a paralegal degree after retirement and worked part-time at an Annapolis law firm.

Upon receiving the federal lawsuit, Hall reviewed it with Deso, who thought the case “wouldn’t go anywhere,” according to Hall. Deso also was not a member of the Maryland federal bar, so he suggested the retirees go pro se rather than pay more legal fees.

“I don’t doubt at all this was meant to put additional economic pressure on the retirees,” said Deso, of Deso & Buckley P.C. in Washington.

Paltell, the city’s lawyer, denied the allegation and said the lawsuit was filed to get a ruling that the 2 percent annual increase in the retirees’ pension was permissible under federal law.

“The city was hoping that, by getting such a ruling, it would bring an end to the retirees’ challenges to its efforts to provide them with a fixed annual increase,” said Paltell, of Kollman & Saucier P.A. in Timonium.

Hall said he wrote his motion to dismiss and spoke to many of his fellow retirees about the case.

“I filed mine and told them, ‘This is what we needed to do,’” he said. “I guess they took a lot of my information and included it in their filings.”

Deso said he did not write the motion to dismiss, although he did communicate with Hall throughout the course of the federal litigation.

“I thought it was on point,” he said of Hall’s filling. “I thought it was valid.”

Hall said the federal court ruling was a “relief” for him and his fellow retirees.

“To drag these people into court over this was ridiculous,” he said. “They didn’t expect to have to go through the litigation again.”

Members of the association first filed suit in Anne Arundel County Circuit Court in October 2002 after the city changed its pension payment plan to only reflect cost-of-living adjustments for active-duty personnel, not pay raises. Judge Ronald A. Silkworth sided with the retirees, a decision reversed by the Court of Special Appeals.

The Court of Appeals ultimately sided with the retirees in 2007, leading to Silkworth’s issuing a declaratory judgment in 2008 tying any pension increases to any salary increases by active-duty personnel.

A combination of the judge’s order, more retirees and the recession pushed funding for the pension down from 114 percent in 2008 to 88 percent in 2011, according to the city’s federal lawsuit. In 2012, the pension was projected to be only 44 percent funded by 2026 “if the city failed to act.” The underfunding also caused a downgrade in the city’s credit rating, the lawsuit said.

The city reached memoranda of agreement in October 2013 with active-duty firefighters and police officers to increase their salaries by a total of 10 percent through July 2016, while at the same time increasing retirees’ pension payments by 2 percent annually. The moves were projected to ensure the plan was at least 96 percent funded through 2032, and the 2 percent annual increase was equal to the average annual increase to their pension the previous 18 years.

Lawyers for the retirees warned the city in February that the proposal violated the declaratory judgment and filed a motion for injunctive relief in June, asking Silkworth to enforce the judgment.

Silkworth heard arguments in the case in September but has yet to issue his ruling.

The federal case is City of Annapolis v. Edgar A. Bowen Jr., et al., 1:14-cv-02558-WMN.