DISCOVERY AND THE “TRANSPARENT” ORGANIZATION.

As we know, Colorado PERA has testified to the Colorado General Assembly’s Joint Budget Committee that public pension benefits in Colorado cannot be reduced by the General Assembly:

“Terms of the plan are legally binding and protected from reduction by the Constitution.”

Link:

http://www.kentlambert.com/Fil…

The Colorado Court of Appeals finds itself agreeing with Colorado PERA in regard to the contractual nature of public pension rights:

“We consider McPhail and Bills dispositive (indisputably bringing to a conclusion a legal controversy) of whether plaintiffs here have a contractual right to a particular COLA.”  In the cases McPhail and Bills, the Colorado Supreme Court “found a contractual right based on members’ provision of services and contributions to the retirement fund.”

The Colorado Court of Appeals also reversed the Denver District Court’s summary judgment on the plaintiff’s “Takings Clause claim.” On page 36 of its decision, the Colorado Court of Appeals restores the plaintiff’s Takings Clause claim and cites the case Lynch: “contract rights can constitute property interests protected by the Takings Clause.”

One would imagine that such consensus would bring an end to the dispute over the Colorado General Assembly’s 2010 taking of contracted, vested PERA retiree COLA benefits in SB 10-001.

However, in spite of the consensus, the Colorado PERA Board of Trustees continues to press for the breach of PERA pensioner contracts and has appealed the recent Colorado Court of Appeals decision to the Colorado Supreme Court.  

If the ultimate resolution of the case Justus v. State remains far off in the future, in the interim period, I believe that the parties to the case would benefit from the examination of certain materials related to Colorado PERA contractual pension rights.  The discovery of these materials should be a relatively simple matter given that Colorado PERA is a “transparent” organization.  

Here are some materials I’m interested in:

In 2005, a commission appointed by the Colorado Treasurer, the “Commission to Strengthen and Secure PERA” completed a report to the Treasurer.

Here’s a link to the final report of the “Commission to Strengthen and Secure PERA”:

http://www.copera.org/pdf/Misc…

I’m not particularly interested in the commission’s report itself.  Rather, I’m interested in the transcripts of the hearings from deliberations of the commission.  During these deliberations, the commission received testimony from Colorado PERA officials and from the Colorado Attorney General’s Office relating to the contractual nature of Colorado public pension benefits.  

Transcripts of these commission hearings were once available on the website of the Colorado State Treasurer.  I suspect that Colorado PERA, or the Colorado Treasurer’s Office has retained copies of these transcripts.  Assistant Attorney General Heidi Dineen of the Colorado Attorney General’s Office testified before the commission in regard to contractual public pension rights.  (Heidi Dineen’s name, by the way, is at the bottom of the 2004 Colorado AG opinion addressing Colorado pension contractual rights.)

Transcripts of the commission’s hearings have been mentioned in the press.  Here are a few examples:

Silver and Gold Record, June 16, 2005:

“Romero advised PERA members to look at the state treasurer’s Web site, which has a link to the commission and meeting transcripts . . .”

Link:

https://www.cu.edu/sg/messages…

Silver and Gold Record, July 14, 2005:

“According to a transcript of the June 17 meeting, Brian Anderson of the treasurer’s office responded to concerns about the commission’s private operations, by noting that an informal opinion from the attorney general’s office stated that the commission is not a public body because it acts in an advisory capacity rather than as a policy-making body.”

Link:

https://www.cu.edu/sg/messages…

Here are a few quotations of Assistant Attorney General Heidi Dineen in the press relating to Colorado public pension contractual rights:

“At its most recent meeting on April 15, the commission heard from Assistant Attorney General Heidi Dineen on state case law regarding pensions and the legal tests required for reducing benefits.”  ”‘You can reduce the pension for a person you haven’t even hired, [but] you can’t reduce the pension for a retiree,’ Dineen said, adding that the middle of that continuum is where changes can be made.”

“A commission formed by State Treasurer Mike Coffman to examine the status of the Public Employees’ Retirement Association is looking at its legal options for reducing employee pension benefits.”

“Dineen explained that in the 1980s, the Colorado Supreme Court ruled on a case involving fire and police pensions, and that ruling established what is known as the Peterson test.  The plaintiff in that case argued that no changes could be made to public employees’ pension plans after being hired.  The court rejected that argument, Dineen said, and decided to allow adverse changes that meet one of three conditions.”

“Under the Peterson test, any adverse change to a partially vested pension plan must: be balanced by a corresponding change in benefits, be a change that is ‘actuarially necessary’ or be a change that strengthens or improves the pension plan, according to Dineen.”

“However, under the definition of ‘partially vested’ in the Peterson test, the plan also must have unfunded liabilities and not be meeting the current costs of pension benefits, she said.”

Link:

https://www.cu.edu/sg/messages…

Here are some more materials I’m interested in (of course, some of these documents may be “privileged”):

-  I seem to recall reading that Colorado PERA Executive Director Greg Smith has written in the past relating to contractual public pension rights.  I would like to see his thoughts on this subject prior to commencement of the PERA Board’s efforts to breach PERA pensioner contracts.

-  Communications between PERA officials/administrators and public sector union officials relating to the development of the 2009 PERA Board pension reform recommendations.

-  Communications between PERA officials/administrators and representatives of Governor Ritter’s Office relating to the development of the 2009 PERA Board pension reform recommendations.

-  Communications between PERA officials/administrators and SB 10-001 co-prime sponsor Brandon Shaffer/other legislators relating to the development of the 2009 PERA Board pension reform recommendations.

-  Communications between PERA officials/administrators and the General Assembly’s Office of Legislative Legal Services relating to the development of the 2009 PERA Board pension reform recommendations.

-  Internal Colorado PERA e-mails/communications relating to the development of the 2009 PERA Board pension reform recommendations.

-  Any materials provided by Colorado PERA representatives or Senator Josh Penry or Senator Paula Sandoval to Nicole Myers of the General Assembly’s Office of Legislative Legal Services regarding an amendment to SB 09-282 placing into the PERA statutes a requirement that the Colorado PERA Board of Trustees provide pension reform recommendations to the General Assembly.  (I would like to know if Colorado PERA essentially “asked itself” to provide recommendations to the General Assembly.)

-  Instructions provided by Colorado PERA to actuaries involved in the 2009 examination of alternative PERA pension reforms.

-  Transcripts and audio recordings of Colorado PERA Board of Trustees deliberations of pension reform alternatives.

-  Colorado PERA published materials relating to the contractual public pension rights.

My hope is that through these materials we might learn the extent to which Colorado PERA Executive Director Greg Smith encouraged or discouraged the attempt to breach public pension contracts by the PERA Board.  We may also learn whether (as I suspect) the plan to breach PERA pensioner contracts was premeditated, i.e., whether a fa├žade of false deliberation was constructed by Colorado PERA lobbyists and public sector union lobbyists to lend credibility, objectivity, and legitimacy to a preordained conclusion to breach PERA pensioner contracts.

These are some of the materials relating to Colorado public pension rights that I believe should be available to the public.  However, in spite of the “transparency” of Colorado PERA, I have questions regarding the extent to which Colorado PERA is obligated to make these materials available.  In seeking an answer to my questions, I found guidance in an excellent article published in The Colorado Lawyer in 2007 by Caleb Durling of the law firm Reilly Pozner LLP.

The article, “The Pension Committee Decision: The Duty to Preserve Records” is publicly available on the internet at this link:

http://www.rplaw.com/wp-conten…

Here are a few relevant excerpts from the article:

“By now, it should be abundantly clear that the duty to preserve means what it says and that a failure to preserve records- paper or electronic-and to search in the right places for those records, will inevitably result in the spoliation of evidence.”

“Over the last decade, courts have refined the obligations of parties to preserve and collect paper and electronic documents.”

“Judge Scheindlin has turned to the thornier problems of defining parties’ obligations to preserve and collect relevant documents, both paper and electronic, and the sanctions for the parties who do not act willfully or in bad faith but who, by handling their discovery obligations with a ‘pure heart and an empty head,’ cause the loss or destruction of documents through negligence or gross negligence.”

“As with her Zubulake opinions, courts and litigants across the country, including in Colorado, will rely on Judge Scheindlin’s framework and reasoning in Pension Committee when discovery problems emerge, particularly with regard to the loss of paper and electronic documents due to carelessness or gross negligence.”

“As a result, she awarded monetary sanctions to the plaintiff and ordered that the plaintiff also was entitled to an adverse inference instruction concerning the deleted e-mails and destroyed backup tapes.”

“The goals of sanctions are to: (1) deter spoliation; (2) place the risk of erroneous judgment on the spoliating party; and (3) restore the prejudiced party to the position it would have been in but for the wrongful destruction.”

“The case has two overarching takeaways for litigants. First, document preservation is an obligation that cannot be ignored. Second, there now are relatively well-defined standards of conduct and sanctions available to enforce that obligation.”

“Pension Committee removes all doubt concerning both the duty to preserve paper and electronic documents and the sanctions that can result for even the negligent failure to satisfy that duty.”

In regard to “litigation holds,” Mr. Durling writes:

“Zubulake IV, the most influential of the five opinions, held that a party’s duty to preserve documents arises when ‘a party reasonably anticipates litigation.’”

“The duty to preserve arises, as Judge Scheindlin explained in Zubulake IV, when ‘a party reasonably anticipates litigation.’  At that point, the party must suspend any routine document retention and destruction policy and institute a litigation hold.”

” . . . the ‘failure to issue a written litigation hold constitutes gross negligence because that failure is likely to result in the destruction of relevant information.’”

I wonder, at what point did Colorado PERA anticipate litigation resulting from the recommendation to breach PERA pensioner COLA contractual obligations?  At what point did Colorado PERA institute a “litigation hold” in this regard?

I seem to recall numerous statements from Colorado PERA officials in the last decade regarding their expectation that PERA members and retirees would litigate any breach of their pension contracts.   Such statements may very well be found on the transcript of the “Commission to Strengthen and Secure PERA.”  In all likelihood, such statements were made during Colorado PERA’s 2009 statewide road trip campaign to build support for the breach of PERA pensioner contracts.

At a minimum, a quick search reveals that Colorado PERA officials expected this litigation as of January 15, 2010.  On January 15, 2010, PERA officials were quoted in the press stating that they expect litigation over the PERA Board’s proposal to breach public pension contracts:

“That’s where the lawsuits come in.  Williams and others say numerous PERA members, especially retirees, have indicated they are likely to pursue litigation if their benefits are cut.

No matter what, ‘There will be lawsuits,’ Williams said.

Link:

http://www.coloradostatesman.c…

Was Colorado PERA’s “litigation hold” in place as of January 15, 2010?

Algernon Moncrief

About Algernon Moncrief

Independent Nationwide Public Pension Rights Blogger.

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