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As state lawsuit draws to close, city pensioners’ federal case may resume

Baltimore firefighters battle a three-alarm fire April 27 at a senior living facility under construction at Federal and Chester Streets in East Baltimore. (Jerry Jackson/The Baltimore Sun via AP)

A federal challenge to aspects of Baltimore’s pension system for firefighters and police has been reopened, at least for now. (Jerry Jackson/The Baltimore Sun via AP)

A federal judge reopened a case last week challenging aspects of Baltimore’s pension system for police and firefighters that had been stayed for more than two years while state litigation was pending.

The plaintiffs, active and retired Baltimore first responders participating in the city’s pension plan, filed a federal lawsuit in 2010 challenging changes to the plan they claimed improperly diminished their benefits. State law claims were dismissed from the federal litigation and sent to state court.

A Baltimore City Circuit Court judge ruled last year that the changes breached the city’s contract with members who were retired or eligible to retire. After the 2008 financial crisis, the city eliminated a variable benefit that increased as the market thrived but made no provision for when the market struggled; they replaced that benefit with one that contained a tiered cost of living adjustment.

Final arguments in the state litigation were presented Friday and that same day U.S. District Judge James K. Bredar, chief judge for the District of Maryland, ordered the federal case be reopened as of Aug. 6, 2014, the date when it was remanded from the 4th U.S. Circuit Court of Appeals.

The plaintiffs are represented by attorneys from Saul Ewing Arnstein & Lehr LLP in Baltimore. They did not respond to a request for comment.

In the federal case, a judge ruled the city substantially impaired the plaintiffs’ contract rights and dismissed their Takings Clause claim as moot. The 4th Circuit vacated the ruling, saying the plaintiffs still had a state law remedy for breach of contract, the subject of the state lawsuit. The case was remanded to the U.S. District Court in Baltimore for a ruling on the Takings Clause claim.

The case was stayed in 2016 during the state litigation. The parties are awaiting a final ruling from Baltimore City Circuit Judge Julie R. Rubin, but Bredar’s order asks them to file a joint status report in the federal action by Jan. 30.

Baltimore City Solicitor Andre M. Davis said Wednesday that unless Rubin reconsiders her summary judgment ruling from last year, the city will appeal that decision regardless of how she rules on the remaining issues. Rubin previously denied a motion to reconsider.

The city’s pension plan was instituted in 1962. In 1983 the variable benefit was established to allow retirees to receive increases to their basic pension benefits, according to the 4th Circuit’s summary of the facts. If the plan’s investments the prior year earned enough, benefits would increase. Those increases would be compounded in the future.

The variable benefit generated increases more than half the time since its inception but the city had  budget deficits beginning in 2008. In 2010, the city enacted the ordinance establishing a tiered cost of living adjustment, which made annual increases based on the age of the retiree. The plaintiffs filed suit after the change.

The case is Robert F. Cherry Jr. et al. v. Mayor and City Council of Baltimore City et al., 1:10-cv-01447.

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