Baltimore County News
County not required to pay monetary relief
On August 24, 2016, United States District Judge Richard D. Bennett ruled that Baltimore County was not liable to pay retroactive or prospective monetary "damages" in a case in which the court found that its retirement system discriminated against older workers in violation of the federal Age Discrimination in Employment Act (ADEA). The County had estimated that the "damages" could be as high as $19 million but the court ruled that the County did not have to pay anything and ordered the case closed.
This case began in 1999 and 2000 when the Equal Employment Opportunity Commission (EEOC) issued Notices of Charges of Discrimination to the County on behalf of correctional officers who complained that the contribution rates they were paying to the retirement system discriminated against them based on age. Until 2007, employees entering the retirement system paid rates based on their age at the time they joined. The County denied the charges.
More than five years passed during which the County heard nothing from EEOC. In March 2006, EEOC issued a notice that the County's retirement system violated the ADEA and in September of 2007, the EEOC filed suit against the County. Because the contribution rates had been negotiated by the County's six labor unions, they were also brought in as defendants. In order to mitigate any possible damages, the County decided to provide that beginning July 1, 2007, employees joining the retirement system would pay flat rates of contribution that were not based on their age at the time they joined.
The case was litigated twice in the federal district court and twice in the Fourth Circuit Court of Appeals. The Supreme Court denied the County's Motion to hear the case. If nothing else, all the lower courts in this case seemed to agree that the questions presented on whether the retirement system engaged in age discrimination were new and/or novel.
During this time, the County, of course, had to negotiate new Memoranda of Understanding with it six unions. The County proposed a timeline for flattening the rates for all employees who joined the retirement system before July 1, 2007. The County and unions set a rate for each union and then proposed legislation to the County Council providing that those paying rates above the new flat rate would have their rates reduced to the new rate on July 1, 2016 and those who were paying below the flat rate would see a gradual rise in their rates over the next three fiscal years. Employees also received a 2% COLA and will receive 2% COLAs in FY 2018 and 2019 as well.
After the basic agreement had been struck, the County then proposed the agreement as partial settlement of the damages phase. After some negotiation over language, the County, unions and EEOC signed a Joint Consent Order Regarding Injunctive Relief settling a portion of the damages phase in April. The County Council passed the bill changing the rates in May.
EEOC then moved for a determination of availability of retroactive and prospective monetary relief. EEOC essentially argued that the retirement system should pay for the "excessive contributions" those members of the retirement system who were paying the discriminatory rates from 1996 to the day the court issues judgment on the damages. They then argued that the County should pay prospective "damages" to the class of aggrieved individuals who will continue to pay at discriminatory rates until the age-neutral rates are completely phased in on July 1, 2018. As noted earlier, the County had once estimated that the total payments could be as high as $19 million.
The County argued that neither retroactive nor prospective relief was merited and the court agreed.
EEOC argued that retroactive monetary relief was required and that the court did not have the authority NOT to award the relief. In a comprehensive 42-page opinion, the Court noted that the ADEA provides that the Court may award "such legal and equitable relief as may be appropriate" and found that such relief was not appropriate for several reasons. Initially, the court was concerned about the burden on the retirement system or its members if it had to come up with $19 million. Paying that amount could have a tremendous effect on the members of the system, retirees and possibly even taxpayers. This expense could not be justified because up until very recently Baltimore County had reason to believe that its pension plan contribution scheme was entirely lawful prior to the determination of liability in the present case.
The delay was key to the decision in another way. The Court stated that "even if retroactive relief were mandatory under the ADEA, this Court would still not award retroactive relief in this case due to the EEOC’s unreasonable delay in pursuing its claims." The Court wrote “each month the EEOC did not apprise [the County] of its continuing interest in the case likely led [the County] to believe, with increasing certainty, that it had avoided litigation. ... Accordingly, this Court is authorized to reduce the County’s retroactive liability as appropriate. In light of the extreme circumstances present here, retroactive monetary relief will not be available."
The Court also relied on three Supreme Court pension cases that declined to award retroactive monetary damages.
The County is pleased with this decision and happy that it was effectively able to finally end this litigation when it signed the latest Memoranda of Understanding with its labor unions. It is entirely appropriate that a case that began because of contribution rates negotiated between the County and its unions ends with contribution rates negotiated between the County and its unions.