Aft v. State

334 Mich.App. 215

964 N.W.2d 113

AFT, AFT Michigan, Alpena Montmorency-Alcona ISD Paraprofessionals, Alpena-Montmorency-Alcona ISD Teachers, Arenac Eastern Federation, Bay Arenac Skills, Brown City Employees Organization, Brown City Federation of Teachers, Center Federation, Cheboygan Otsego Presque Isle Intermediate Paraprofessionals and Bus Personnel, Cheboygan-Otsego Presque Isle ISD Teachers, Cheboygan-Otsego Presque Isle Support Personnel, Chesaning Union Auxiliary Service Employees, Clare-Gladwin ISD Federation, Crawford Ausable Bus Drivers Federation, Crawford Ausable Custodians/Secretarial Federation, Crawford Ausable Support Staff Federation, Crawford Ausable Federation of Teachers, Crestwood Federation of Teachers, Dearborn Federation of School Employees, Dearborn Federation of Teachers, Detroit Association of Educational Office Employees, Detroit Federation of Paraprofessionals, Detroit Federation of Teachers, East Detroit Federation of Teachers, Ecorse Federation of Teachers, Fairview Federation of Teachers, Glen Lake Federation of Teachers, Hale Federation of Teachers, Hamtramck Federation of Teachers, Hemlock Auxiliary Service Employees, Hemlock Federation of Teachers, Henry Ford Community College Adjunct Faculty Organization, Henry Ford Community College Federation of Teachers, Highland Park Federation of Paraprofessionals, Highland Park Federation of Teachers, Huron Valley Continuing Education, Imlay City Federation of Teachers, Inkster Federation of Teachers, Iosco ISD Federation of Teachers, Iosco ISD Intermediate Federation Auxiliary Employees, Kingsley Federation of Teachers, Kirtland Community College Federation of Teachers, Lake City Support Staff Federation, Lake City Teachers & Paraprofessionals Federation, Lake Shore Federation of Ed Secretaries, Lake Shore Federation of Teachers, Lake Shore Federation Support Staff, Lamphere Federation of Paraprofessionals, Lamphere Federation of Teachers, Lansing Community College Administrative Association, Les Cheneaux Federation of Support Staff, Les Cheneaux Federation of Teachers, Macomb Intermediate Federation of Paraprofessionals, Macomb Intermediate Federation of Teachers, Melvindale/Nap Federation of Teachers, Melvindale/Nap Paraprofessionals, Midland Federation of Paraprofessionals, Midland ISD Federation of Paraprofessionals, Midland ISD Federation of Teachers, Northville Federation of Paraprofessionals, Onaway Federation of School Related Personnel, Onaway Federation of Teachers, Plymouth-Canton Community Schools Secretarial Unit, Plymouth-Canton Federation of Plant Engineers, Romulus Federation of Paraprofessionals, Roseville Federation of Teachers, Rudyard Federation of Aides, Rudyard Federation of Teachers, Saginaw ISD Federation of Teachers, Tawas Area Federation of Teachers, Taylor Federation of Teachers, Utica Federation of Teachers, Van Dyke Educational Assistants Federation, Van Dyke Professional Personnel, Warren Woods Federation of Paraprofessionals, Washtenaw Intermediate School Employees Federation, Waterford Association of Support Personnel, Wayne County Community College Federation of Teachers, Wayne County Community College Professional & Administrative Association, Wayne County RESA Salaried Staff, Wexford-Missaukee ISD Federation of Teachers, and Whitefish Township Federation of Teachers, Plaintiffs-Appellees/Cross-Appellants,

v.STATE of Michigan, Defendant-Appellant/Cross-Appellee.

Deborah McMillan, Thomas Brenner, Theresa Dudley, Katherine Daniels, and Corey Cramb, Plaintiffs-Appellees/Cross-Appellants,

v.Public School Employees Retirement System, Public School Employees Retirement System Board, Trust for Public Employee Retirement Health Care, and Department of Technology, Management, and Budget, Defendants-Appellants/Cross-Appellees,andDirector of the Department of Technology, Management, and Budget, Defendant.

Timothy L. Johnson, Janet Heslet, Ricky Mack, and Denise Zieja, Plaintiffs-Appellees/Cross-Appellants,

v.Public School Employees Retirement System, Public School Employees Retirement System Board, Trust for Public Employee Retirement Health Care, and Department of Technology, Management, and Budget, Defendants-Appellants/Cross-Appellees,andDirector of the Department of Technology, Management, and Budget, Director of the Office of Retirement Services, and State Treasurer, Defendants.

No. 345036

No. 345418

No. 345420

Court of Appeals of Michigan.

Submitted September 1, 2020, at Detroit.

Decided October 15, 2020, at 9:15 a.m.

Mark H. Cousens, Southfield, for AFT and others.

White Schneider PC (by Timothy J. Dlugos, James A. White, Okemos, and Andrew J. Gordon ) and Michigan Education Association (by Michael M. Shoudy, Okemos) for Deborah McMillan and others.

Miller Cohen, PLC, Detroit (by Robert D. Fetter, Bruce A. Miller, and Keith D. Flynn ) for Timothy L. Johnson and others.

Dykema Gossett PLLC (by Gary P. Gordon, W. Alan Wilk, Jason T. Hanselman, and Hilary L. Vigil ), Special Assistant Attorneys General, for the state of Michigan and others.

Before: Jansen, P.J., and K.F. Kelly and Cameron, JJ.

Cameron, J.

In these three cases consolidated for appeal, defendants-appellants (defendants) appeal and plaintiffs-appellees (plaintiffs) cross-appeal a July 24, 2018 order of the Court of Claims. That order directed defendants to pay equitable judgment interest on funds collected under MCL 38.1343e, as amended by 2010 PA 75 (former MCL 38.1343e ). The July 24, 2018 order also denied plaintiffs’ request for statutory interest under MCL 600.6455. We affirm in part and reverse in part.

I. BACKGROUND

On May 19, 2010, the Legislature enacted 2010 PA 75, which revised the Public School Employees Retirement Act, MCL 38.1301 et seq. In relevant part, § 43e of 2010 PA 75 required public school employees to contribute 3% of their salaries to the Michigan Public School Employees’ Retirement System (MPSERS). The funds were to be placed in an irrevocable trust that funded retiree health care benefits.

Plaintiffs brought suits contesting the constitutionality of 2010 PA 75 on various grounds. In July 2010, the trial court ordered that "[t]he 3% levy from the wages of all members of the [MPSERS] pursuant to 2010 [PA] 75 shall not be placed in the irrevocable trust ...." The trial court instead ordered that the money would be "placed in a separate interest bearing account" and that the money could "not be spent or otherwise disbursed" until further order of the court. Additionally, in September 2010, the trial court entered a stipulated order that provided as follows:

Defendants agree that if the final Court to rule in this case finds MCL 38.1343e to be unconstitutional, otherwise illegal, or unenforceable as a result of a breach of contract, Defendant [MPSERS] ... will repay to each member of MPSERS who contributed under MCL 38.1343e the amount of their individual contributions, plus any interest earned thereon in the separate interest-bearing account.

The trial court ultimately concluded that former MCL 38.1343e was unconstitutional. On appeal, this Court held that former MCL 38.1343e was unconstitutional under multiple provisions of the Michigan and United States Constitutions. AFT Mich. v. Michigan , 297 Mich. App. 597, 825 N.W.2d 595 (2012) ( AFT Mich. I ), vacated by 498 Mich. 851, 864 N.W.2d 555 (2015). In response to this Court's decision, the Legislature enacted 2012 PA 300, which altered the scope and effect of MCL 38.1343e but did not repeal it. All of the plaintiffs challenged 2012 PA 300, and the trial court dismissed their claims. This Court affirmed the trial court's decision in AFT Mich. v. Michigan , 303 Mich. App. 651, 846 N.W.2d 583 (2014) ( AFT Mich. II ), and the Michigan Supreme Court affirmed this Court's decision regarding 2012 PA 300, AFT Mich. v. Michigan , 497 Mich. 197, 866 N.W.2d 782 (2015) ( AFT Mich. III ). However, our Supreme Court vacated this Court's decision in AFT Mich. I and remanded with instructions for this Court to reconsider its decision in light of the enactment of 2012 PA 300 and in light of the Supreme Court's "decision upholding that Act." AFT Mich. v. Michigan , 498 Mich. 851, 851, 864 N.W.2d 555 (2015).

On remand, this Court concluded that neither the passage of 2012 PA 300 nor our Supreme Court's decision to uphold 2012 PA 300 affected the validity of 2010 PA 75. AFT Mich. v. Michigan (On Remand) , 315 Mich. App. 602, 893 N.W.2d 90 (2016) ( AFT Mich. IV ), vacated in part by 501 Mich. 939, 904 N.W.2d 417 (2017). This Court concluded that 2010 PA 75 and its compulsory-contribution provision remained unconstitutional for several reasons. AFT Mich IV , 315 Mich App at 611-612, 893 N.W.2d 90. In Part II of the opinion, this Court held that "2010 PA 75, from its effective date until the completed transition to a voluntary system, violated" the Contracts Clauses of the United States and Michigan Constitutions. Id. at 621, 893 N.W.2d 90. This Court remanded the case to the trial court "with the direction to return the subject funds, with interest, to the relevant employees." Id. at 612, 893 N.W.2d 90.

Our Supreme Court affirmed this Court's "holding that 2010 Public Act 75 violated the respective Contract Clauses of both the federal and state constitutions ...." AFT Mich. v. Michigan , 501 Mich. 939, 939, 904 N.W.2d 417 (2017) ( AFT Mich. V ). Our Supreme Court additionally held that, "[b]ecause 2010 Public Act 75 is unconstitutional, the funds collected pursuant to that act before the effective date of 2012 Public Act 300 must be refunded to the plaintiffs in accordance with the Court of Appeals judgment." Id.

On January 22, 2018, the trial court entered an order, noting that it had been directed to order the "return of the subject funds, with interest, to the relevant employees." The trial court ordered defendants to disburse the funds "together with the interest earned on the amounts in the interest-bearing account." Defendants complied with the trial court's order.

In February 2018, plaintiffs filed a...