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Judge tosses LORP lawsuit
SoVaNow.com / July 01, 2013Retired Halifax County school employees who brought suit against the School Board over the trustees’ decision to drop an early retirement incentive program saw the case tossed out of court Monday morning.
Retired Circuit judge Charles Strauss of Chatham granted a School Board motion to dismiss a lawsuit aimed at reinstating the Local Option Retirement Plan (LORP), which the trustees terminated in July 2012, citing budgetary burdens. Under the program, recently retired teachers and other school staff agreed to take early retirement, in return for which they received 20 percent of their former pay. The pay compensated the retirees for ongoing work with the school division, such as filling in as substitute teachers.
After hearing from lawyers for both sides, Strauss ruled that the case was flawed because the 105 retirees who brought the action could not seek redress with a group claim for declaratory judgment. His ruling left the door open for the plaintiffs to pursue individual breach of contract lawsuits against the School Board, in addition to their rights to appeal the ruling.
Ben Rand, a Richmond attorney representing the plaintiffs and son of retired local judge Michael Rand, did not hide his disappointment after Strauss announced his decision.
“This is not what we hoping for,” said Rand. Regarding the next step, he said, “We have to talk to all our plaintiffs.”
The decision, couched in legal jargon, left some members of the packed Circuit Court chambers confused about what had happened. Rand and a fellow attorney with the Richmond firm of Blacksburn, Conte, Schilling & Click huddled with a large crowd of school retirees after the hearing ended to discuss possible next steps.
In subsequent interviews. two of the lead LORP plaintiffs, former Sinai principal Michael Wilborne and Central Office administrator Phyllis Jackson, said the retirees as a group have decided to proceed with follow-up litigation.
"We now know the direction we need to go in," said Wilborne.
Added Jackson, "The judge sounded positive about [filling individual] breach of contract [cases]."
Craig Wood, the School Board’s lawyer, said the judge’s decision, while it doesn’t cut off all possible legal avenues for the retirees, makes it very difficult for the case to proceed. The plaintiffs could bring a breach of contract lawsuit as a group — which would raise jurisdictional and standing issues that presumably figured into Strauss’ decision Monday to dismiss the case — or break the case down into 105 separate actions.
“Obviously I don’t believe it ever gets past this point,” said Wood.
Judge Strauss declined to address the merits of arguments made by both sides on whether the School Board had the right to terminate LORP. He prefaced his decision by saying, “I’m agreeing with some of what’s been said by both sides and I’m disagreeing with some of what’s been said by both sides.”
Wood had argued the School Board was within its rights to cancel the early retirement program, under a provision of the Virginia Constitution that bars governing boards from taking on long-term debt except under limited circumstances. The plaintiffs’ argument was tantamount to suggesting that the current School Board had the authority to obligate future School Boards to continue LORP payments, said Wood.
The LORP agreements granted to recent retirees, he continued, were essentially personal service contracts, which do not meet the conditions for the issuance of long-term debt in Virginia, such as approval by a voter referendum. As such, the contracts “impose no obligation on the governing body to pay for future services,” he said.
LORP was sold to early retirees as a seven-year program, although recipients signed a form acknowledging their understanding that the program was subject to cancellation on a year-to-year basis if the School Board decided not to allocate funds for it.
That’s exactly what the School Board did on July 24 when it terminated the program, said Wood. He added that the trustees “recognize from a humane perspective” that the decision was a bitter pill for retirees. He added, “It was a hard thing to do. It was hard for the School Board.
“But nevertheless, the Virginia Constitution says that reliance [on LORP’s future] was not well taken … and there was no breach of contract,” said Wood.
Rand argued that the School Board was not compelled to cancel the program for budget reasons, as trustees and Superintendent of Schools Dr. Merle Herndon contend, and he cited trustees’ initial approval of funding for the program for the 2012-2013 fiscal year. After the budget went into effect July 1, 2012, the School Board cancelled LORP less than a month later.
Virginia law gives school divisions clear authority to establish early retirement incentive programs, Rand argued, and the School Board’s decision to cancel LORP does not invoke constitutional questions that the School Board has raised, he continued. Rather, the question is whether the School Board breached employee contracts, leading to the decision to bring suit. He added that the 105 retirees opted to challenge the action as a group, rather than as individuals, in the interest of court efficiency.
Rand said that contrary to the School Board’s assertions, LORP saved money by allowing the School Board to replace relatively high-paid senior employees with less costly new hires. He scoffed at the claim that trustees could simply cancel LORP contracts under the argument that the current school board could not pass on obligations to future school boards.
“We believe the second we [the plaintiffs] gave up 80 percent of our salary, we started performing [future] services” for the School Board, he said.
This story will be updated.
CommentsRetired teachers get your petitions ready!!!!!! We need some integrity!!!!!!!
- By Joe Blow on 07 / 01 / 13
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