AFSCME Council 25 v. State Employees' Retirement System

294 Mich. App. 1
CourtMichigan Court of Appeals
DecidedAugust 25, 2011
DocketDocket Nos. 302959, 302960, 302961, and 302962
StatusPublished
Cited by29 cases

This text of 294 Mich. App. 1 (AFSCME Council 25 v. State Employees' Retirement System) is published on Counsel Stack Legal Research, covering Michigan Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
AFSCME Council 25 v. State Employees' Retirement System, 294 Mich. App. 1 (Mich. Ct. App. 2011).

Opinion

FORT Hood, J.

Defendants, the entities and individuals charged with the administration, collection, and distribution of the State Employees’ Retirement System, [4]*4appeal as of right the Court of Claims’ decision holding that MCL 38.35, the statute requiring a three percent employee compensation contribution to finance the Public Employee Retirement Health Care Funding Act, 2010 PA 77, MCL 38.2731 to 38.2747, is unconstitutional. We affirm.

I. BASIC FACTS AND PROCEDURAL HISTORY

Plaintiffs1 addressed wage provisions during collective-bargaining negotiations with the state. Ultimately, the parties agreed to a collective-bargaining agreement (CBA) that provided that hourly wages would be frozen for the fiscal year 2008-2009, increased by one percent for fiscal year 2009-2010, and increased by three percent for fiscal year 2010-2011. The CBA was approved by the Civil Service Commission (CSC or the commission) and transmitted to then Governor Jennifer Granholm for incorporation into the state budget.

An attempt to reject the three percent wage increase included in the 2010-2011 budget failed in the Legislature. On February 23, 2010, House Concurrent Resolution (HCR) 42 was introduced that proposed rejection of an increase in rates of compensation as recommended by the CSC. There is no indication that the resolution was voted on by house members of the Legislature. On March 3, 2010, an attempt to reject the three percent wage increase was made in the Senate when Senate Concurrent Resolution (SCR) 35 was introduced. This SCR contained an acknowledgment of the constitutional authority of the CSC and the requirement that a vote of two-thirds of the members serving in each house was required to reject the commission’s approval of the [5]*5wage increase. Despite the introduction of SCR 35 and numerous attempts to pass the resolution throughout March 2010, it did not garner a sufficient number of votes for passage. On March 24, 2010, HCR 48 was introduced. This HCR also contained an acknowledgment of the constitutional authority of the CSC and the requirement that a two-thirds vote of the members serving in each house was required to reject the increase. There is no indication that action was taken on this resolution.

Unable to obtain the two-thirds vote in each house to override the three percent compensation increase negotiated in the CBA and approved by the CSC, the Legislature enacted 2010 PA 185, MCL 38.35, and 2010 PA 77, MCL 38.2731 et seq. MCL 38.35 required a mandatory three percent contribution from the compensation of active employee members from November 1, 2010, through September 30, 2013, into the Public Employee Retirement Health Care Funding Act, MCL 38.2731 et seq. Plaintiffs filed suit in the Court of Claims to challenge the reduction from compensation by the enactment of MCL 38.35.2 Plaintiffs alleged that the reduction in compensation was in violation of both the Michigan Constitution and the United States Constitution and of contractual rights. Defendants countered that the regulation of the retirement system was within the province of the Legislature and that the Court of Claims lacked jurisdiction because the availability of the benefits at a later date presented a hypothetical question. The Court of Claims held that MCL 38.35 violated art 11, § 5 of the Michigan Consti[6]*6tution, rejected the jurisdictional challenge, and did not address the remaining claims. Defendants appeal as of right.

II. JURISDICTION

A challenge to the jurisdiction of the Court of Claims presents a statutory question that is reviewed de novo as a question of law. Parkwood Ltd Dividend Housing Ass’n v State Housing Dev Auth, 468 Mich 763, 767; 664 NW2d 185 (2003). The Court of Claims has exclusive jurisdiction to hear and determine “all claims and demands, liquidated and unliquidated, ex contractu and ex delicto, against the state and any of its departments, commissions, boards, institutions, arms, or agencies.” MCL 600.6419(1)(a); Parkwood, 468 Mich at 767. The Court of Claims also has concurrent jurisdiction over “any demand for equitable relief and any demand for a declaratory judgment when ancillary to a claim filed” pursuant to MCL 600.6419. MCL 600.6419a. The determination whether the Court of Claims possesses jurisdiction is governed by the actual nature of the claim, not how the parties phrase the request for relief or the characterization of the nature of the relief. Parkwood, 468 Mich at 770. “[T]he Court of Claims has exclusive jurisdiction over complaints based on contract or tort that seek solely declaratory relief against the state or any state agency.” Parkwood, 468 Mich at 775.

In the present case, defendants contend that the Court of Claims lacked jurisdiction to issue a declaratory judgment because the issue regarding the availability of benefits for current employees upon their retirement presents a hypothetical injury premised on a future contingent event. The power of state courts to pass upon the constitutionality of state statutes arises only when interested litigants require the use of judicial [7]*7authority for protection against actual interference, not hypothetical threats. Golden v Zwickler, 394 US 103, 110; 89 S Ct 956; 22 L Ed 2d 113 (1969). Here, although defendants’ statement of the issue alleges a jurisdictional challenge, in fact, defendants effectively assert that there is no justiciable controversy because the availability of health benefits upon retirement for current employees is contingent on a future event. We disagree.

A condition precedent to invoke declaratory relief is the requirement that an actual controversy exist. Detroit v Michigan, 262 Mich App 542, 550; 686 NW2d 514 (2004). An actual controversy is present when a declaratory judgment is necessary to direct a plaintiffs future conduct in order to preserve his or her legal rights. Shavers v Attorney General, 402 Mich 554, 588; 267 NW2d 72 (1978). Although the actual-controversy requirement prevents a court from ruling on hypothetical questions, a court is not precluded from addressing issues before actual injuries or losses have developed. Id. at 589. Furthermore, “declaratory relief is designed to resolve questions . . . before the parties change their positions or expend money futilely.” Detroit, 262 Mich App at 551.

Although defendants characterize plaintiffs’ claims as seeking relief from a hypothetical event, plaintiffs allege a current confiscation of their compensation without adherence to the provisions of Const 1963, art 11, § 5 and in violation of their CBA and contractual rights. Specifically, irrespective of the future availability of retiree health benefits to current employees, plaintiffs challenge the reduction in wages from November 1, 2010, through September 30, 2013. In light of the present reduction in compensation, defendants’ jurisdictional challenge claiming that plaintiffs are raising a [8]*8hypothetical scenario regarding events that may occur upon their retirement fails.

III. STANDARD OF REVIEW

The trial court’s decision regarding a motion for summary disposition is reviewed de novo with the evidence examined in the light most favorable to the nonmoving party. In re Egbert R Smith Trust, 480 Mich 19, 23-24; 745 NW2d 754 (2008).

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Bluebook (online)
294 Mich. App. 1, Counsel Stack Legal Research, https://law.counselstack.com/opinion/afscme-council-25-v-state-employees-retirement-system-michctapp-2011.