759 F.2d 242: Helen Winston, Harry Van Gorder and
Natalie Vernon,plaintiffs-appellees-cross-appellants, v. the City of New York,
New York City Teachers, Retirementsystem, Board of Education of the City School
District Ofthe City of New York, Frank J. Macchiarola, As Chancellor Ofthe City
School District of the City of New York, Board Ofeducation of Community School
District 3, Gordon M. Ambach,as Commissioner of the New York State Department
Ofeducation, Defendants,the City of New York, New York City Teachers'
Retirementsystem, Board of Education of the City School District Ofthe City of
New York, Frank J. Macchiarola, As Chancellor Ofthe City School District of the
City of New York, Board Ofeducation of Community School District
3,defendants-appellants-cross-appellees
United
States Court of Appeals, Second Circuit. - 759 F.2d 242
Argued
Sept. 19, 1984.Decided April 5, 1985
J.
Christopher Meagher, New York City (Stephen Mendelsohn, James R. Sandner, New
York City, of counsel), for plaintiffs-appellees-cross-appellants.
Edward
F.X. Hart, New York City (Larry A. Sonnenshein, Antonia Levine, Frederick A.O.
Schwarz, Jr., New York City, of counsel), for
defendants-appellants-cross-appellees.
Before
VAN GRAAFEILAND and CARDAMONE, Circuit Judges and MacMAHON, District Judge.*
CARDAMONE,
Circuit Judge:
1
The main
issue on this appeal is whether New York City public school teachers have a
property interest in their pension rights protected under the due process
clause of the 14th Amendment to the United States Constitution. Plaintiffs
challenge a provision of the New York City Administrative Code, which provides
that public school teachers dismissed for cause automatically forfeit their
right to City-funded retirement benefits. A second issue is whether this threat
of pension loss unconstitutionally chills the teachers' rights to a hearing
over the reasons for their dismissal. Under the present statutory scheme,
teachers can either put their pensions at risk in an attempt to keep their jobs
and vindicate their reputations, or they can resign and be presumed guilty of
the charges made against them.
2
*
Plaintiffs, two present teachers and one former teacher in the New York City
school system, sought declaratory and injunctive relief pursuant to 42 U.S.C.
Sec. 1983 to invalidate Section B20-38.0(2) of the New York City Administrative
Code insofar as it deprives a city teacher dismissed from service of
city-funded pension benefits and the right to collect a retirement allowance.
The United States District Court for the Eastern District of New York (Glasser,
J.) granted summary judgment in plaintiffs' favor and enjoined the City
defendants from implementing Sec. B20-38.0(2) on the grounds that the statute
unconstitutionally chilled plaintiffs' rights to a hearing over loss of their
employment. The court directed the City to reinstate plaintiff Vernon who had
resigned, in order to afford her a predetermination hearing. 580 F.Supp. 1470
(E.D.N.Y.1984). But the district court judge rejected the teachers' argument
that they have a property interest in their pensions prior to retirement and
are therefore being deprived of property without due process of law. He also
dismissed their equal protection claims, dismissing one on the merits and
finding the second claim better addressed in the analysis of whether
plaintiffs' rights to a predismissal hearing are "chilled" by the
Code provision. City defendants appeal, and plaintiffs cross-appeal from the
trial court's rejection of the several other constitutional grounds upon which
relief was sought.
3
We agree
with the holding that the forfeiture provision in the Code unconstitutionally
chills the exercise of teachers' due process rights to a predismissal hearing.
We further conclude that under New York State's Constitution teachers have a
property interest in their contractual right to a pension upon fulfilling the
statutory conditions. This property interest, derived from the State
Constitution, is protected by the due process clause of the 14th Amendment.
Here, the forfeiture provision violates the teachers' due process rights because
it fails to provide for a separate determination of whether a dismissed teacher
has engaged in misconduct warranting pension forfeiture.
4
Tenured
public school teachers in New York cannot be dismissed except for cause
following a hearing under New York Education Law Sec. 3020-a. Under the
challenged provision, section B20-38.0(2), the City repays a dismissed
teacher's own contributions to the Teacher's Retirement System,1 but the
teacher forfeits the contributions made by the City and School Board. Although
a teacher may resign while under charges and still receive pension benefits, he
is subject to a presumption of guilt that is used to deprive him of licensure
and re-employment rights. The grounds for charges against tenured teachers
that, if sustained, may lead to dismissal are very broad. The City dismisses
some for serious misconduct, such as sexual molestation, but it dismisses many
for reasons that would seem not to involve misconduct, such as inefficiency or
inability to maintain discipline. The charges against the plaintiffs in this
case are typical of the charges brought.
5
The
school board charged plaintiff Helen Winston, a second grade teacher for 23
years, with incompetency and inefficiency based on allegations that she failed
to plan and organize classroom activity properly, failed to maintain control of
students in her class, and was absent for a total of 12 days during the school
year. When plaintiffs moved for summary judgment, she was awaiting a decision
by a section 3020-a hearing panel. The school board similarly charged plaintiff
Harry Van Gorder, a high school biology teacher for 25 years, with incompetency
and inefficiency based on allegations that he used ineffective teaching
methods, had poor classroom control, used class time unproductively, taught
lessons in an inappropriate sequence, planned class time poorly, and generally
failed to provide proper instruction to his students. At the time of the
summary judgment motion, Van Gorder was also awaiting a decision. Finally, the
school board charged plaintiff Natalie Vernon, a special education teacher for
27 years, with recklessly injuring a student in her class. After a hearing, the
panel found her innocent. The defendant Board of Education appealed the
decision to the State Commissioner of Education, who, under the statute, can make
an independent determination of just cause for discharge. Before the
Commissioner heard the appeal, plaintiff Vernon submitted her resignation while
protesting her innocence. The New York State Unemployment Board later found
that she had resigned to protect her pension rights from the vicissitudes of
litigation. Winston, Van Gorder and Vernon each have a present value of
approximately $150,000 in pension reserves subject to forfeiture.
6
II
7
The
automatic penalty of section B20-38.0(2) places an unconstitutional burden on a
teacher's right to a hearing. Even assuming that the teachers have no property
interest in their pension rights, the forfeiture provision chills the teachers'
procedural due process right to a hearing over the reasons for their dismissal.
As tenured public school teachers, plaintiffs have constitutionally protected
property interests in their continued employment and in their right to a
predismissal hearing under Education Law Sec. 3020. See Board of Regents v.
Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 2709, 33 L.Ed.2d 548 (1972).
Clearly, parties have the "right to contest the validity of a legislative
or administrative order affecting [their] affairs without necessarily having to
face ruinous penalties if the suit is lost." See Brown & Williamson
Tobacco Corp. v. Engman,527 F.2d 1115, 1119 (2d Cir.1975), cert. denied, 426 U.S. 911, 96 S.Ct. 2237, 48 L.Ed.2d 837 (1976).
8
The City
relies heavily on Brady v. United States, 397 U.S. 742,
90 S.Ct. 1463, 25 L.Ed.2d 747 (1970), in arguing that the choice that teachers
must make between resigning to keep their pensions and jeopardizing those
pensions by defending against the charges is not an unconstitutional burden on
a fundamental right. In Brady the Supreme Court upheld a defendant's guilty
plea despite his contention that his plea was prompted by his fear of receiving
the death penalty should he exercise his right to trial by jury. In so holding,
the Court limited its previous decision in United States v. Jackson, 390 U.S. 570, 88 S.Ct. 1209, 20 L.Ed.2d 138 (1968), in which
it had invalidated a provision of the federal kidnapping law that permitted the
death penalty only in cases where the defendant had elected a jury trial. The
Court emphasized in Brady that it had not held in Jackson that all pleas of
guilty encouraged by the fear of a possible death sentence were involuntary or
that such pleas were invalid whether involuntary or not. Brady, 397 U.S. at 747, 90 S.Ct. at 1468. The Brady court explained
that the holding in Jackson resulted instead from the finding that "the
legitimate goal of limiting the death penalty to cases in which a jury
recommends it could be achieved without penalizing those defendants who plead
not guilty and elect a jury trial, so that the death penalty provision "
'needlessly penalize[d] the assertion of a constitutional right.' " Id. at
746, 90 S.Ct. at 1467, quoting Jackson, 390 U.S. at 583,
88 S.Ct. at 1217 (emphasis added). We agree with the able judge below that
these cases stand for the proposition that we must balance the need for the
challenged statute against its chilling effect on the exercise of the parties'
constitutional rights.2
9
III
10
Turning
first to the need for the forfeiture scheme, the City concedes the importance
of economic security in old age, but contends that the State legislature has a
legitimate interest in deeming those whose conduct warrants
discharge--regardless of whether the grounds constitute misconduct--as
undeserving of a pension. It is unnecessary to address whether this is a
compelling interest because, as the district judge points out, the statute does
not operate to further such an interest. Under the present scheme a teacher who
sexually molests a child may resign and receive a pension, yet a teacher
forfeits his pension after a quarter-century of faithful and competent service
if a hearing panel finds that he can no longer maintain class discipline. The
injustice of this is plain. All the guilty teachers can resign, take their
money and run. Those believing themselves innocent of the charges must stake
their economic future on a panel decision. Clearly, the scheme does not further
the asserted state interest, much less a compelling one. Thus, the scheme's
operation itself refutes the City's claim that the burden on a teacher's right
to a hearing is justified.
11
Unquestionably,
the scheme has a chilling effect. The City does not dispute that Vernon, after
being exonerated at the hearing level and believing herself innocent,
nonetheless resigned to protect herself from the vicissitudes of litigation on
appeal, thereby casting herself falsely in the light of one condemned. See
Matter of Marland v. Ambach, 79 A.D.2d 48, 50, 436 N.Y.S.2d 360 (3rd Dep't
1981), aff'd, 59 N.Y.2d 711, 463 N.Y.S.2d 422, 450 N.E.2d 228 (1983) (finding
it "obvious" that a retirement made in the face of pension loss is
involuntary and made under duress). The Brady majority emphasized that it
"would have serious doubts about this case if the encouragement of guilty
pleas by offers of leniency substantially increased the likelihood that
defendants, advised by competent counsel, would falsely condemn
themselves." Brady, 397 U.S. at 758,
90 S.Ct. at 1474. The difference in the reliability of the admissions of guilt
of criminal defendants and of teachers facing discharge hearings is no doubt in
part due to the difference between the standards of proof. Criminal defendants
must be found guilty beyond a reasonable doubt; charges against teachers merely
have to be proved by a preponderance of the credible evidence. A teacher's
stakes on such a "bet" are so high, that given these poor odds, the
City has effectively eliminated that teacher's access to a forum to vindicate
his or her innocence. See Ex parte Young, 209 U.S. 123, 147, 28 S.Ct. 441, 448, 52 L.Ed.2d 714 (1908).
12
The City
must therefore redraft the offending provision so as either to eliminate or
acceptably minimize the chilling effect. This could be accomplished by
eliminating the choice of resigning and retaining the pension. Alternatively,
it could be acceptably minimized were the hearing panel empowered to make a
separate determination of whether the reasons for discharge warranted
forfeiture.3 For the
reasons discussed below a separate determination that a teacher's conduct
warrants forfeiture of his or her pension is constitutionally compelled.
13
IV
14
Plaintiffs'
claim that the forfeiture provision violates their due process rights is
premised on their assertion that they have a property interest. The district
court judge rejected that premise, finding that a terminated employee has no
legal entitlement under State law to a pension and that, therefore, plaintiffs'
pension rights were not subject to due process protection. We disagree.
Although plaintiffs do not have an entitlement to their pensions as such, they
do have a contractual right to a pension under the State Constitution upon
fulfilling the statutory conditions, and this contractual right is a property
interest under State law. In light of this property interest, the State may not
arbitrarily condition the right of teachers to receive a pension without
running afoul of the 14th Amendment.
15
We begin
by recognizing that property interests "are created and their dimensions
are defined by existing rules or understandings that stem from an independent
source such as state law." Board of Regents v. Roth, 408 U.S. at 577, 92 S.Ct. at 2709. Hence, we look to state law
to determine whether a property interest exists, recognizing that a
"property interest in employment can, of course, be created by ordinance,
or by an implied contract." Bishop v. Wood, 426 U.S. 341, 344, 96 S.Ct. 2074, 2077, 48 L.Ed.2d 684 (1976)
(footnote omitted); Goetz v. Windsor Central School District, 698 F.2d 606, 608 (2d Cir.1983). Once a state creates a
property interest it may not later say that the interest does not exist,
because by then federal protections will have attached. Quinn v. Syracuse Model
Neighborhood Corp., 613 F.2d 438, 447-48 (2d Cir.1980). These state property
rights have been taken, so to speak, under the wing of the 14th Amendment's
protection, and safely shielded there from diminishment or infringement.
Accordingly, the creation of a property interest is found by reference to state
law, but once found its sufficiency as protected property in the constitutional
sense is decided by federal standards. We look first therefore to state law.
16
The
statutory scheme places two conditions on teachers' pension benefits: 15 years
of service and retirement or resignation.4 The City
contends that these conditions are conditions precedent, and until a teacher
satisfies these conditions, any property interest in the pension remains
inchoate. Relying on Matter of Eberle v. LaGuardia, 285 N.Y. 247, 33 N.E.2d 692
(1941), the district judge agreed with the City that an individual's pension
rights do not vest until he satisfies all of the stated conditions, including
retirement or resignation. See also Robbins v. Police Pension Fund, 321 F.Supp.
93 (S.D.N.Y.1970) (police officer's pension rights did not vest because he
failed to meet a statutory requirement that he be a member of the police
department without termination or forfeiture of office at the time he applied
for pension). Eberle involved a claim of entitlement to a pension by a
discharged civil servant who had been dismissed upon a finding that he was
guilty of misconduct. He argued that "the deductions from his salary and
the expected benefits of the retirement plan constituted a part of his
compensation during his tenure of office and that to deprive him of such
benefits now would deprive him of compensation which has already been
earned." 285 N.Y. at 253, 33 N.E.2d 692. Rejecting that argument, the New
York Court of Appeals held that while the Code granted members of the City
certain "contractual" or "quasi-contractual" rights, only
when the statutory conditions for retirement were met did those rights vest.
285 N.Y. at 251, 33 N.E.2d 692. As Eberle was removed from City service before
his retirement became effective, the court found that the teacher had not met
the statutory conditions and had no vested right to a pension. He was not
deprived of compensation already earned, the court explained, because the
statute gave him no right to a pension. See id.
17
The City
urges that the teachers' pension rights are created and defined by the
Administrative Code provisions, as construed in Eberle. But Eberle no longer
governs this question. Section 7 of article V of the State Constitution (the
effective date of which was postponed until July 1, 1940) provides that
"membership in any pension or retirement system of the state or of a civil
division thereof shall be a contractual relationship, the benefits of which
shall not be impaired." N.Y. Const. art. V, Sec. 7. The Constitutional
Convention specifically rejected a proposal that "a city be able to
[provide] by statute or local law in force at the time of the commencement of
such membership that the system in such city shall not be contractual in
character." Journal of the Constitutional Convention of the State of New
York 425 (1938). See Annot., 52 A.L.R.2d 437, 467-70 (1957) (discussing effect
of the amendment and characterizing Eberle as among cases "of historical
interest").
18
As the
New York Court of Appeals explained in Birnbaum v. Teachers Retirement Systems,
5 N.Y.2d 1, 176 N.Y.S.2d 984, 152 N.E.2d 241 (1958), the purpose of section 7
was "to fix the right of the employee at the time he became a member of
the system" and to "prohibit their diminution or impairment prior to
retirement." Id. at 9, 176 N.Y.S.2d 984, 152 N.E.2d 241 (emphasis in
original). The district court correctly noted that since the provision
challenged here existed prior to the constitutional amendment it was not
affected by it. It also correctly noted that as the provision was in effect at
the time these teachers took their jobs there could be no impairment due to
unsettled expectations, which was the purpose of the amendment. But these
points lead only to a conclusion that the challenged provision does not violate
the no-impairment clause of the State Constitution. They do not address the
question of whether the constitutional amendment, as interpreted by Birnbaum,
established that teachers have a property interest in their contractual right
to a pension prior to their retirement. The opinion below glosses over the
distinction between nonimpairment of settled expectations and government
regularity.
19
The
Birnbaum court specifically rejected the proposition that pension rights remain
inchoate prior to retirement. "[T]he theory that '[p]rior to retirement
... the member's rights are inchoate' " was the "very theory that the
constitutional amendment was designed to set at rest." Birnbaum, 5 N.Y.2d
at 8, 176 N.Y.S.2d 984, 152 N.E.2d 241. The Court of Appeals specifically held
that pension rights "vest" at the time the employee became a member
in the system. Id. at 9, 176 N.Y.S.2d 984, 152 N.E.2d 241. The court stated
that the purpose of the amendment was to reject the view of an earlier case,
relied on in Eberle, which had held that "down to the point where there
has been compliance with all precedent conditions and the award has been or as
of right should have been made," the member's interest remained
"revocable at the will" of the State. Id. at 8, 176 N.Y.S.2d 984, 152
N.E.2d 241. It is not within our province to hold that New York's highest court
meant something other than what it said when interpreting the New York State
Constitution.
20
V
21
The view
compelled by Birnbaum is that a property interest in contractual rights to a
pension vests when a teacher becomes a member of the retirement system, subject
to being divested if the two statutory conditions are not met. Viewed in this
light, the statutory scheme operates the same as the one in Greene v. McGuire, 683 F.2d 32 (2d
Cir.1982). In that case, we held that under the governing state law, New York
City police officers lost whatever property interest they had in their
continued employment upon being convicted of a felony. The provision was a
"condition on the jobs" that was "as explicit as a clause in
their contract." Id. at 35. "Once [the officers] were convicted--and
the condition fulfilled--they lost their property interest." Id.
Recognizing that the government may not deprive a person of a property interest
arbitrarily, we specifically found that the provision was not arbitrary because
an officer lost his job "only after a determination by an independent body
that the officer had been guilty of serious misconduct." Id. Thus, we must
now turn to the question of whether the forfeiture provision considered here
arbitrarily denies teachers pensions that they have earned.
22
We must
examine whether the challenged Code provision rationally advances the public
policy served by pension forfeiture in light of what pensions represent under
state law. Eberle 's rejection of the argument that the dismissed teacher was
entitled to a pension because the pension represented deferred compensation was
in keeping with the earlier view of pensions as a gratuity. Under this view,
pensions were deemed akin to a gold watch given only to those in good standing.
A long line of cases subsequent to Eberle have made it clear that pensions
represent deferred compensation aimed at promoting long and faithful service.
See, e.g., Birnbaum, 5 N.Y.2d at 9, 176 N.Y.S.2d 984, 152 N.E.2d 241; Matter of
Gordon v. Monaghan, 309 N.Y. 336, 342, 130 N.E.2d 882 (1955). The clear import
of article 5, section 7 of the State Constitution is to "give[ ] all
employees ... a guarantee that no future legislative body can take away the
benefits which he may be presumed to have fairly earned by reason of his
previous service." Journal of the Constitutional Convention of the State
of New York, Doc. No. 11 at 4 (1938) (emphasis added).
23
The only
justifiable public policy served by pension forfeiture is the deterrence of
misconduct in violation of the public trust. That is the rationale of Eberle
and Robbins. In Eberle, which involved an unexplained shortage of funds, the
New York Court of Appeals addressed itself to charges of "fault and
delinquency." 285 N.Y. at 249, 33 N.E.2d 692. Similarly, the district
court in Robbins feared that without the threat of the loss of pension rights
those in positions of public trust would heedlessly engage in improper
behavior. 321 F.Supp. at 98.
24
But
because deterrence of misconduct is its purpose, the forfeiture provision is
overbroad. Under the present scheme, teachers often lose their pension rights
on grounds not constituting misconduct. A separate determination of whether the
individual has in fact engaged in misconduct is necessary to save the scheme
from unconstitutional arbitrariness. Absent a determination that an employee is
guilty of misconduct, termination of his contractual right to a pension is a
deprivation of property without procedural due process of law. We may not
second-guess the hearing panel's definition of what constitutes misconduct, but
we hold that the statute must grant it the authority to make such a
determination.
25
Inevitably
there will be questions about what process the City must provide in making its
separate determination. We do not believe that a full trial-like hearing is
necessary. An individual teacher is already entitled to participate personally
in a hearing over the reasons for discharge. The determination of those grounds
will necessarily overlap with the question of whether there was misconduct
sufficient to warrant forfeiture of the individual's pension. A second
trial-like hearing therefore is not needed because there is no indication that
it would improve the accuracy of the determination. See Basciano v. Herkimer, 605 F.2d 605, 609-10 (2nd Cir.1978) (reasonably reliable
determination of eligibility for accident disability retirement benefits can be
made without trial-like hearing). The panel need merely be empowered at the
hearing held to make a separate determination of whether the employee is guilty
of misconduct warranting forfeiture.
26
As
Professor Charles A. Reich explained in his classic article, The New Property:
27
No form
of government largess is more personal or individual than an old age pension.
No form is more clearly earned by the recipient.... No form is more obviously a
compulsory substitute for private property; the tax on wage earner and employer
might readily have gone to higher pay and higher private savings instead. No
form is more relied on, and more often thought of as property. No form is more
vital to the independence and dignity of the individual.
28
Reich,
The New Property, 73 Yale L.J. 733, 769 (1964). Due process requires that this
form of government largess can be denied New York State public employees only
if the individual's service--even though long--has not been faithful.
29
VI
30
In light
of this conclusion we find it unnecessary to address plaintiffs' claim that the
forfeiture provision also violates their rights to equal protection of the law
and substantive due process. Accordingly, the decision below is affirmed in
part and reversed in part. We remand the case to the district court with a direction
that it enter an order declaring plaintiffs' rights in accordance with this
opinion.
31
VAN
GRAAFEILAND, Circuit Judge, dissenting:
32
I agree
with my colleagues that, in determining whether New York City school teachers
have a property interest in their pension rights protected under the federal
constitution, we must look to the law of New York State, particularly as that
law is laid down by the New York Constitution. However, when it comes to
interpreting and applying article V, section 7, the pertinent portion of the
New York Constitution, my colleagues and I part company.
33
Section 7
provides that, after July 1, 1940, membership in a retirement system such as
that of the New York City teachers "shall be a contractual relationship,
the benefits of which shall not be diminished or impaired." The New York
courts have made it crystal clear that, because of this constitutional provision,
subsequent legislation may not diminish rights or vested interests possessed by
a Retirement System member at the time he joined the System. See Robinson v.
New York State Employees' Retirement System, 46 N.Y.2d 747, 749, 413 N.Y.S.2d
644, 386 N.E.2d 253 (1978) (mem.); Donner v. New York City Employees'
Retirement System, 33 N.Y.2d 413, 416, 353 N.Y.S.2d 428, 308 N.E.2d 896 (1974);
Matter of Ayman v. Teachers' Retirement Board of the City of New York, 9 N.Y.2d
119, 124-25, 211 N.Y.S.2d 198, 172 N.E.2d 571 (1961). These are contract rights
which article I, section 10 of the United States Constitution requires this
Court to protect, not to abrogate. See United States Trust Co. v. New Jersey, 431 U.S. 1, 14-32, 97 S.Ct. 1505, 1513-1523, 52 L.Ed.2d 92
(1977); Indiana ex rel Anderson v. Brand, Trustee, 303 U.S. 95, 100, 58 S.Ct. 443, 446, 82 L.Ed. 685 (1938).
34
One of
the most firmly established rights possessed by each System member is the right
to retire without giving up vested retirement benefits and without regard to
whether charges against the member are pending. In Matter of Rogalin v. New
York City Teachers' Retirement Board, 290 N.Y. 664, 49 N.E.2d 623 (1943),
charges were preferred against Rogalin because of his alleged mismanagement of
school funds, and he was suspended from his position as a high school
principal. On the following day, Rogalin filed an application for retirement
with the Teachers' Retirement Board. The Board, as do my colleagues, argued
that a public official should not be permitted to retire as of right during the
pendency of charges of misconduct against him which ultimately might result in
conviction and dismissal. This argument was rejected by the trial court in an
unreported decision, which was affirmed without opinion in the Appellate
Division, 265 A.D. 801 (1942), and in the Court of Appeals, 290 N.Y. 664, 49
N.E.2d 623. The trial court stated that the wisdom of the challenged enactment
was a matter of legislative and not of judicial concern, and continued:
35
Since the
language and intent of the statute are clear, it must be followed and may not
be the subject of judicial construction for the infusion therein of a
preconceived ideal of public policy not actually expressed.
36
See also
Matter of Pierne v. Valentine, 266 A.D. 70, 78, 42 N.Y.S.2d 404 (2d Dep't
1943), aff'd on this point, 291 N.Y. 333, 343-44, 52 N.Y.S.2d 890 (1943).
37
My
colleagues' somewhat unjudicial remarks concerning presumptions of guilt and
"guilty" teachers resigning, taking their money and running, are not
very cogent grounds for depriving all System members of the contract right
guaranteed them by both the State and federal constitutions to resign without
giving up their vested retirement benefits. No teacher is "guilty"
until, after proper hearing and judicial review, he is found guilty.
38
Equally
unpersuasive is the majority's professed desire to relieve System members from
having to decide whether to resign or face charges. Under the guise of
protecting members from having to make a difficult decision, the majority would
deprive all members of their constitutionally protected right to make a choice
at all.
39
An
equally important right possessed by all members of the Retirement System is
that the means designed to assure their benefits should not be impaired and
that the sources of funds for their benefits should be protected by insuring
appropriate contributions and actuarially sound procedures. Sgaglione v.
Levitt, 37 N.Y.2d 507, 511, 514, 375 N.Y.S.2d 79, 337 N.E.2d 592 (1975). Each
member thus has the contractual right to insist that the assets of the System
not be depleted by the making of unauthorized pension payments, a right
possessed by every trust beneficiary under the common law, see Hoffa v.
Fitzsimmons, 673 F.2d 1345, 1353 (D.C.Cir.1982).
40
It
generally is presumed that contracting parties adopt the terms of their bargain
in reliance on the law in effect at the time the agreement is reached and that
such laws form a part of the contract just as though they were expressly
incorporated in its terms. United States Trust Co. v. New Jersey, supra, 431 U.S. at 19-20 n. 17, 97 S.Ct. at 1516-1517 n. 17. Under
section B20-38.0(2) of the Administrative Code, a member who is dismissed from
service loses the right to collect any retirement allowance. Although the
member's own contributions to the annuity part of the allowance are repaid him,
the contributions of the City and the Board are forfeited. Sections 2573,
2590-j(7)(b), 3020, and 3020-a of the Education Law establish the grounds and
procedures for dismissal of System members. All of these statutory provisions
are part of the contract between the System and its members. This Court should
not assume the role of a super-legislature by amending the statutes, and
perforce the contractual rights, of the thousands of Retirement System's
members who are not even parties to this litigation.
41
Agencies
of the City of New York have fallen on hard times before, and it is not
unreasonable to expect that this will occur again. Unauthorized pension
payments to dismissed members have a deleterious effect on the System's
solvency whatever the reason for the dismissal. It is simply wrong for this
Court to order an amendment of the contract to which all System members are
parties, so as to provide that any member dismissed from employment can
continue to draw money from the pension funds unless the dismissal was for
something bearing the vague label of "misconduct". See Giaccio v.
Pennsylvania,382 U.S. 399, 404, 86 S.Ct. 518, 521, 15 L.Ed.2d 447 (1966);
Soglin v. Kauffman, 418 F.2d 163, 167-68 (7th Cir.1969). As stated by then Justice
Bergan in Gorman v. City of New York, 280 A.D. 39, 44-45, 110 N.Y.S.2d 711 (1st
Dep't 1952), aff'd mem., 304 N.Y. 865, 109 N.Y.S.2d 881, appeal dismissed, 345 U.S. 962, 73 S.Ct. 950, 97 L.Ed. 1381 (1953), "the Constitution
contemplates a public employment which validly continues until the right to be
pensioned matures and it does not imply a restriction upon public authority to
remove a member from a public position for valid cause, even though the right
to a pension terminates with the removal." "Valid cause" is
spelled out in sections 2573, 2590-j(7)(b), and 3020 of the Education Law. It
is not synonymous with "misconduct".
42
My
colleagues state quite correctly that Retirement System members have a
contractual right to a pension "upon fulfilling the statutory
conditions" and hold that "this contractual right is a property
interest under State law." They then reject the very "statutory
conditions" which define the limit and extent of the "property
interest" they purport to recognize. Cf. Board of Regents v. Roth,408 U.S. 564, 577-78, 92 S.Ct. 2701, 2709-10, 33 L.Ed.2d 548
(1972). Under the guise of enforcing the procedural requirements of due
process, the majority order an amendment of the substantive rights of the
parties upon which the procedural requirements of due process are predicated.
However, appellees have not established that they have been deprived of a right
to substantive due process.
43
In Harrah
Independent School District v. Martin, 440 U.S. 194,
99 S.Ct. 1062, 59 L.Ed.2d 248 (1979) (per curiam) a school board refused after
a hearing to renew a tenured teacher's employment contract because she refused
to comply with the board's requirement that she take five hours of continuing
education courses over a three year period. The Court held that a claim of
substantive due process under such circumstances would in no way resemble
"the individual's freedom of choice with respect to certain basic matters
of procreation, marriage, and family life." Id. at 198, 99 S.Ct. at 1064
(cases cited). The Court continued:
44
The
School Board's rule is endowed with a presumption of legislative validity, and
the burden is on respondent to show that there is no rational connection
between the Board's action and its conceded interest in providing its students
with competent, well-trained teachers.... Such a course of conduct on the part
of a school board responsible for the public education of students within its
jurisdiction, and employing teachers to perform the principal portion of that
task, can scarcely be described as arbitrary. Respondent's claim of a denial of
substantive due process under these circumstances is wholly untenable.
45
My
colleagues' determination that there has been a denial of substantive due
process in the instant case is equally untenable. In holding that the pension
forfeiture provision is overbroad because its only purpose is the
"deterrence of misconduct", my colleagues overlook the
"presumption of legislative validity" referred to by the Harrah court
and the express finding of reasonableness by the district court. 580 F.Supp. at
1476. They also disregard the indisputable interest that the New York
Legislature has in providing New York City students with competent and
well-trained teachers and in preserving the financial stability of the pension
program covering over 55,000 New York City teachers. Indeed, the very reasoning
my colleagues employ in arriving at their definition of statutory purpose will
not withstand scrutiny. Starting with the unfounded and self-conceived premise
that "[t]he only justifiable public policy served by pension forfeiture is
the deterrence of misconduct," they leap a substantial gap in logic by
concluding that "deterrence of misconduct is its purpose." (emphasis
supplied). Their holding demonstrates, in sum, why "there is reason for
concern lest the only limits to ... judicial intervention become the
predelections of those who happen at the time to be [m]embers of this
Court." Moore v. City of East Cleveland, 431 U.S. 494, 502, 97 S.Ct. 1932, 1937, 52 L.Ed.2d 531 (1977).
46
Under
well-settled New York law, Retirement System members may be discharged for the
reasons set forth in the Education Law and in accordance with the hearing
procedures prescribed by that Law. There is nothing in New York law that
entitles a System member to the continued payment of pension benefits by the
State if that member was properly discharged for a valid cause, even though the
discharge was not for "misconduct". See Green v. McGuire,683 F.2d 32, 37 (2d Cir.1982) (Oakes, J. concurring). The
United States Constitution does not require that this Court put it there.
47
Because I
find no merit in appellees' equal protection claims, I would reverse and
dismiss the complaint.1
Section
B20-38.0 provides in pertinent part:
Termination
of membership; resignation, transfer or dismissal --Withdrawals from the
retirement association shall be by resignation, by transfer, or by dismissal.
....
Contrary
to the dissent's characterization of our holding, we do not hold that teachers
should not be permitted to resign as of right during the pendency of charges.
There will be no unconstitutional chilling if a separate determination of whether
there has been misconduct warranting forfeiture is made, which, in any event,
we find constitutionally compelled in Section III. Thus, there is no need or
reason to eliminate the option of resigning and receiving a pension. In fact,
we seriously question, but need not address whether eliminating the option
would be allowed under Section 7 of article V of the State Constitution, N.Y.
Const. art. V, Sec. 7
Section
B20-44.2 provides in pertinent part:
Vested
retirement rights --a. [A]ny contributor who has been a member of the
retirement system and has had fifteen or more years of accredited service....
who discontinues service in the schools or colleges of the city other than by
death or retirement or dismissal and who does not withdraw his accumulated
deduction shall have a vested right to receive a deferred retirement allowance
on attaining the age at which he would first be eligible had he remained in service....
Such member shall be known as a discontinued member.
New York
City Administrative Code ch. 20, title B, Sec. B20-44.2.
From Betsy Combier: Here is the lower court decision:
WINSTON v. CITY OF NEW YORK No. 82 Civ. 1847.
580
F.Supp. 1470 (1984)
Helen
WINSTON, Harry Van Gorder and Natalie Vernon, Plaintiffs,
v.
The CITY OF NEW YORK, New York City Teachers' Retirement System, Board of
Education of the City School District of the City of New York, Frank J.
Macciarola, as Chancellor of the City School District of the City of New York,
Board of Education of Community School District 3, Gordon M. Abach, as
Commissioner of Education of New York State Department of Education,
Defendants.
United States District
Court, E.D. New York.
February 29, 1984.
James R. Sandner, New York City, for plaintiffs; Richard E.
Casagrande, Albany, N.Y., J. Christopher Meagher, New York City, of Counsel.
Antonia Levine, Corp. Counsel of City of New York, New York
City, for City of New York.
Robert D. Stone, State Educ. Dept., Albany, Evelyn Tenenbaum,
Asst. Atty. Gen. of N.Y., New York City, for state defendants.
MEMORANDUM AND ORDER
GLASSER, District
Judge:
The plaintiffs in this
suit are teachers presently or formerly employed by the defendant Board of
Education of the City School District of the City of New York ("Board of
Education"), or one of its component community school districts. They are
challenging a provision of State law, codified in Section B20-38.0 of the NewYork City Administrative Code, that provides that New York public school
teachers who are dismissed for cause are ineligible to receive City-funded
retirement benefits. All parties to the action have moved for summary judgment,
pursuant to Rule 56 of the Federal Rules of Civil Procedure. For the reasons
that follow, summary judgment is granted in plaintiffs' favor against the City
defendants.1
I. Background
A. Dismissal Procedures
Tenured public school
teachers in New York cannot be dismissed from their teaching positions except
for cause, after a hearing provided under New York Education Law § 3020-a.
Either the teacher or the employing board of education may appeal a hearing
panel's decision to an appropriate court or to the Commissioner of Education.
N.Y.Educ.Law § 3020-a(5) (McKinney). Teachers such as plaintiff Winston, who
serve in a community school district, are subject to removal proceedings by the
community school board for any of the following reasons: unauthorized absence
from duty or excessive lateness; neglect of duty; conduct unbecoming the
teacher's position; incompetent or inefficient service; violation of state or
city bylaws or regulations; or "[a]ny substantial cause that renders the
employee unfit to perform his obligations properly." N.Y.Educ.Law §2590-j(7)(b) (McKinney). All other New York City teachers, including plaintiffs
Van Gorder and Vernon, are subject to removal proceedings by the New York City
Board of Education on a showing of cause. See N.Y.Educ.Law §§ 2573,
3020, & 3020-a (McKinney). Section 3020, which applies to all school
districts in the state, provides that a teacher may be removed for
"neglect of duty, incapacity to teach, immoral conduct,
[580 F.Supp. 1473]
or other reasons which, when appealed to the Commissioner of
Education, shall be held by him sufficient cause for such dismissal."2
B. The Pension Scheme
In New York City, a
teacher who retires from the public school system is eligible for a
"retirement allowance" under the provisions of the New York City
Teachers' Retirement System ("TRS"). See Administrative Code of the
City of New York, Ch. 20, Title B, § B20-44.0. The retirement allowance
consists of the accumulated deductions taken from the teacher's salary, which
are placed in an annuity savings fund, plus a contribution from the City.
Teachers who do not qualify for retirement, but who resign from the public
school system after at least fifteen years of credited service, still have a
"vested right" to receive a retirement allowance when they reach the
age at which they would have been eligible to retire had they remained in service.
§ B20-44.2.3 However, the teachers who are dismissed prior to
retirement do not qualify under § B20-44.2 and can only withdraw the amount of
their accumulated deductions in the annuity savings fund.
C. Plaintiffs' Claims
Plaintiff Winston had
been an elementary school teacher for twenty-one years, from 1959 to January
1981, at which time the Board of Education at Community School District 3
preferred charges against her pursuant to N.Y.Educ.Law § 2590-j(7)(b)
(McKinney) for "neglect of duty," "incompetent and inefficient
service," and "substantial cause that renders her unfit to perform
properly her obligations to the service." These charges were based on
allegations that on certain occasions during the period from September 30, 1980
to January 23, 1981, plaintiff Winston failed to plan and organize properly
classroom activity and failed to maintain control of students in her class, and
that she was absent a total of twelve days during the 1980-81 school year.
Plaintiff Van Gorder was similarly charged by the Board of Education of the
City School District of the City of New York with "incompetent and
inefficient service," "conduct unbecoming his position and
prejudicial to the good order, efficiency and discipline of the service,"
and "substantial cause that renders this employee unfit to properly
perform his duties to the service," following twenty-four years of service
as a high school teacher. These charges were based on allegations that at
certain times during the period from September 1979 to June 1982, plaintiff Van
Gorder used ineffective teaching methods, had poor classroom control, used
class time unproductively, taught lessons in an inappropriate sequence, planned
classwork poorly, and generally failed to provide
[580 F.Supp. 1474]
proper instruction to his pupils. Pending a hearing and
determination on these charges, plaintiffs Winston and Van Gorder have been
removed from their classroom posts and have been assigned to administrative
duties.
Plaintiff Vernon was a
special education teacher in the New York City school system for twenty-seven
years, from February 1953 through September 1980. In May 1979, defendant
Macchiarola, on behalf of the Board of Education of the City of New York,
preferred charges against her for recklessly injuring a ten-year-old child in
her special education class. Following a hearing demanded by Vernon, the
hearing panel concluded that the Board of Education had failed to prove the
charges against her. This ruling was appealed to defendant Ambach as
Commissioner of Education of the State of New York, who, under the statute, can
make an independent determination regardless of the hearing panel's decision.
Pending this appeal, however, Vernon submitted her resignation and applied to
the TRS for retirement benefits. She allegedly resigned to protect her pension
rights since, under § B20-38.0(2), these rights are forfeited by dismissal
prior to retirement, and she did not want to risk the possibility of an adverse
determination by the Commissioner of Education.
Plaintiffs have
challenged § B20-38.0(2) on the following constitutional grounds:
(1) By not providing
dismissed teachers with an independent hearing to determine whether their
pension benefits should be forfeited, the statute deprives plaintiffs of their
procedural due process rights.
(2) The imposition of
a forfeiture of pension rights for all dismissed teachers is arbitrary and
irrational and thus deprives plaintiffs of their constitutionally protected
interests in violation of their substantive due process rights.
(3) The forfeiture
provision violates plaintiffs' equal protection rights by impermissibly
discriminating (a) between those who exercise their rights to a hearing and
those who resign prior to a hearing to avoid dismissal; and (b) between public
school teachers outside New York City, who are not subject to the automatic
forfeiture provision and City public school teachers, who automatically lose
their pensions upon their dismissal.
(4) In denying pension
benefits to those teachers who exercise their right to a hearing prior to
dismissal and against whom an adverse determination is made, the provision
unconstitutionally chills plaintiffs' procedural due process rights to a
pre-dismissal hearing.
II. Plaintiffs' Invocation of
Procedural Due Process To Protect Their Pension Rights
Plaintiffs' first
claim—that the denial of an independent hearing on the forfeiture of their
pension deprives them of procedural due process—is premised on their assertion
that they have a constitutionally cognizable right to their pension benefits.
Because I find this premise to be erroneous, this claim is rejected.
The requirements of procedural due process apply only to the
deprivation of interests encompassed by the Fourteenth Amendment's protection
of liberty and property. When protected interests are implicated, the right to
some kind of prior hearing is paramount. But the range of interests protected
by procedural due process is not infinite.
Board of Regents v.
Roth, 408 U.S. 564,
569-70, 92 S.Ct. 2701, 2705, 33 L.Ed.2d 548 (1972).
Property interests
"are created and their dimensions are defined by existing rules or
understandings that stem from an independent source such as state law." Id.
at 577, 92 S.Ct. at 2709, quoted in Bishop v. Wood, 426 U.S. 341,
344 n. 7, 96 S.Ct. 2074, 2077, 48 L.Ed.2d 684 (1976). See also Greene v.
McGuire, 683 F.2d 32, 34 (2d Cir.1982) (finding that convicted police
officers automatically forfeited their property interests in their jobs under
state law and thus were not entitled to a due process hearing on their petition
for reinstatement). In the instant case, plaintiffs'
[580 F.Supp. 1475]
pension rights were created and defined by the TRS
provisions as they appear in the Administrative Code. These provisions indicate
that a right to a pension does not vest until all the stated conditions are
met, including the teacher's retirement pursuant to §§ B20-41.0 & B20-44.2,
or resignation pursuant to § B20-44.2. Moreover, the New York courts have held
that dismissed public employees have no cognizable rights to a pension. See
Robbins v. Police Pension Fund, 321 F.Supp. 93
(S.D.N.Y.1970) (police officer's pension rights do not vest where he failed to
meet a statutory requirement that he be a member of the Police Department
without termination or forfeiture of office at the time he applied for
pension); Matter of Eberle v. LaGuardia, 285 N.Y. 247, 33 N.E.2d 692
(1941) (civil service employee's pension rights did not vest where employee
applied for retirement before his dismissal but failed to fulfill all the
statutory conditions for retirement).4
Therefore, plaintiffs, who have failed to meet the statutory conditions for the
vesting of their pension rights, cannot assert a property right derived from
state law that is entitled to procedural due process protection.
Plaintiffs next argue
that even if their claim to pension benefits does not rise to the level of a
property right, it nonetheless warrants procedural due process protections. In
support of their contention they advance the following theories:
(1) Plaintiffs'
interest constitutes a "benefit" or "privilege" that cannot
arbitrarily be denied. See Bell v. Burson, 402 U.S. 535,
539, 91 S.Ct. 1586, 1589, 29 L.Ed.2d 90 (1971); Flemming v. Nestor, 363 U.S. 603,
610-11, 80 S.Ct. 1367, 1372, 4 L.Ed.2d 1435 (1960);
(2) Property rights
include the right to acquire property, see Lynch v. Household Finance Corp.,
405 U.S. 538, 544, 92 S.Ct. 1113, 1118, 31 L.Ed.2d 424 (1972),
and this encompasses plaintiffs' expectation of the vesting of their pension
right;
(3) Since the New York
courts have referred to pension benefits as "compensation for services
previously rendered," Gordon v. Monaghan, 309 N.Y. 336,
342, 130 N.E.2d 882, 885 (1955), plaintiffs presently enjoy a right to pension
benefits that can only be deemed forfeited for just cause, and pursuant to a
due process inquiry;
(4) The enactment of
the Employees' Retirement Income Security Act ("ERISA"), 29 U.S.C. §§
1001-1381, which strictly prohibits the forfeiture of vested pension benefits
in the private sector, evidences a national recognition of pension rights as
property interests deserving of more substantial protection in cases of pension
forfeiture.
All of those theories
would necessitate an independent inquiry into the nature and scope of the
expectation created by the TRS, which I find to be inappropriate in
[580 F.Supp. 1476]
light of the Supreme Court's comments in Bishop v. Wood,
supra. In Bishop, a policeman claimed that since a city ordinance
classified him as a "permanent employee," he had a constitutional
right to a hearing prior to his dismissal. The court held, however, that
because the city ordinance creating this expectation had been interpreted by
lower federal courts as affording no rights to continued employment, due
process considerations were not invoked. 426 U.S. at 345-46, 96 S.Ct. at 2078.
In contrast to the contentions of the dissenters, see Id. at 350-55, 96
S.Ct. at 2080-82 (Brennan, J. dissenting); Id. at 361-62, 96 S.Ct. at
2085 (Blackmun, J. dissenting), the majority did not recognize the propriety of
an independent federal law inquiry into the existence of a property interest.
The existence or non-existence of a property interest was for the state to
decide.5
It follows that in this case, where New York courts have held that a public
employee's interest in future pension benefits—be they characterized as
property rights, privileges or mere expectancies—does not invoke due process
rights, this Court cannot, consistently with Bishop, reinterpret the
nature of this interest. See also Greene v. McGuire, supra, (evaluating
property interests on basis of state court determination).6
Even were I to be
inclined to inquire into the reasonableness with which the state and city
defendants have created and conditioned the plaintiffs' pension interests, I
would not deem this case to be the appropriate occasion for the invocation of
due process protections. Contrary to the plaintiffs' assertions, I do not find
the defendants' statutory conditions precedent to the vesting of pension
benefits to be arbitrary or unreasonable. The statutory requirement is no less
principled than the determination of the minimum number of years of employment
required for vesting. Indeed, it was the defendants' determination to reduce
the number of years required for vesting that precipitated plaintiffs' dilemma.
Given the discretion that the State and City have in creating the pension
privilege, their refusal to accord property right/due process status to this
privilege does not appear unreasonable.
To the plaintiffs'
claim that ERISA alters the nature of the pension rights, the simple answer is
that ERISA's provisions do not govern public pension plans. No useful purpose
would be served by speculating whether, in light of ERISA's enactment, states
will expand or curtail the scope of pension rights.
For the foregoing
reasons, I find that plaintiffs cannot successfully challenge the pension
forfeiture provision on the ground that they have been deprived of procedural
due process.
III. Plaintiffs' Substantive Due
Process Rights
Plaintiffs have
challenged the effect of the Administrative Code provisions upon pension rights
as being irrational and thus violative of their substantive due process
[580 F.Supp. 1477]
rights. The following reasons have been advanced to support
this claim: (1) the New York City Administrative Code deprives dismissed
employees of their pension rights without an independent inquiry into the
culpability of their conduct; (2) the Code creates a conclusive presumption
that all dismissed teachers have been guilty of misconduct or have not rendered
long and faithful service; (3) the Code's forfeiture provision punishes
teachers for activity subsequent to—and therefore unrelated to—the satisfactory
services performed incident to their pension rights; (4) the Code punishes the
exercise of constitutional rights.
I note at the outset
that plaintiffs lack standing to assert that the Code is unconstitutional for
failing to require an inquiry into their culpability or for creating a
presumption of culpability. While it may be true that under the Code teachers
can be deprived of pension rights as a result of dismissals that were not
prompted by culpable conduct—such as dismissals for mental or physical
incapacity,7—the plaintiffs now before the Court are all the
subjects of dismissal proceedings on charges that may arguably be regarded as
culpable conduct. To permit the plaintiffs to assert the rights of those whose
conduct is not even arguably culpable would violate "the principle that a
person to whom a statute may constitutionally be applied will not be heard to
challenge that statute on the ground that it may conceivably be applied
unconstitutionally to others, in other situations not before the Court." Broadrick
v. Oklahoma, 413 U.S. 601, 93 S.Ct. 2908, 37 L.Ed.2d 830 (1973). See
also McGowan v. Maryland, 366 U.S. 420,
429-30, 81 S.Ct. 1101, 1107, 6 L.Ed.2d 393 (1961) (constitutional rights are
personal and may not be asserted vicariously).
The standing barrier
aside, these two reasons, together with the third reason stated
above—challenging the relevance of subsequent misconduct to pension entitlement
—all rest on the misplaced premise that plaintiffs have a constitutionally
cognizable property interest in their pension benefits. As apparently conceded
in plaintiffs' brief, the Due Process Clause's rational basis test is only
invoked where a protected liberty or property interest is implicated by a
legislative classification or scheme. See Harrah Independent School District
v. Martin, 440 U.S. 194, 197-98, 99 S.Ct. 1062, 1064, 59 L.Ed.2d 248
(1979); Cleveland Board of Education v. LaFleur, 414 U.S. 632,
639-40, 94 S.Ct. 791, 796, 39 L.Ed.2d 52 (1974). For the reasons set forth in
the preceding section, supra, I have found that no such interests are
implicated in this case.8 Therefore, the Administrative Code provisions cannot
be challenged for any of these reasons as a violation of substantive due
process rights.
Plaintiffs' fourth
reason—that the Code provisions are irrational for punishing the exercise of
their constitutional rights to a hearing—cannot be disposed of as easily.
Unlike the other asserted grounds, this claim invokes substantive due process
considerations based upon plaintiffs' right to a hearing rather than upon their
pension rights. As so framed, however, plaintiffs' claim becomes identical to
the one discussed infra in Section V—namely, that their procedural due
process rights are being chilled by virtue of the threatened deprivation of
their pension rights. I will therefore discuss the rationality of the
challenged Code provisions in that Section.
IV. Plaintiffs' Equal Protection
Claims
Plaintiffs have framed
two arguments in support of their equal protection claims: (1)
[580 F.Supp. 1478]
the defendants have unlawfully discriminated between New
York City teachers, whose pension benefits are automatically forfeited upon
dismissal, and New York State teachers outside the City, whose benefits are not
conditioned on resignation or retirement in good standing; (2) the defendants
have unlawfully discriminated between those choosing to resign without a
hearing and those who exercise their right to a hearing. While one of these
claims may merit constitutional scrutiny in other contexts, I find that neither
is appropriately redressable under the Equal Protection Clause of the
Fourteenth Amendment.
As to plaintiffs'
first claim, there is simply no evidence to support the finding of an invidious
or irrational classification. The retirement systems for State and City public
school teachers differ in many respects besides the pension forfeiture
provisions. As the defendants point out, the City retirement system is larger
and more diverse than elsewhere in the State, and thus operates under different
constraints. Given these circumstances, it would be incorrect to describe the
City and State teachers as forming two similar classes that are being treated
unequally. The State has simply pursued the permissible goal of providing its
localities with different benefits according to their different needs. See
San Antonio School District v. Rodriguez, 411 U.S. 1,
54 n. 110, 93 S.Ct. 1278, 1307, 36 L.Ed.2d 16 (1973).
Plaintiffs' second
claim, although cast in terms of equal protection analysis, is better
adjudicated by addressing the particular right upon which the allegedly unequal
classification is being based—the right to a hearing before dismissal.
Classifications are not unconstitutional per se under the equal protection
clause. In this particular case, the merits of plaintiffs' equal protection
claim will turn on this Court's evaluation of the procedural due process right
at stake and the extent to which it is being impaired, which is the focus of Section
V, infra. This evaluation will in turn determine the level of scrutiny
with which this Court will review the challenged provision of the
Administrative Code. No useful purpose will be served by an equal protection
analysis. See Westen, The Empty Idea of Equality, 95 Harv.L. Rev. 537,
560-64 (1982) (criticizing the employment of the equal protection clause in
right-to-travel cases), cited with approval in Greenawalt, How Empty Is
the Idea of Equality? 83 Col.L.Rev. 1167, 1182 (1983).9 Whatever redress plaintiffs are entitled to under the
equal protection clause10 will necessarily be subsumed under the procedural due
process claim discussed in the section that follows.
V. The Chilling of Plaintiffs'
Procedural Due Process Rights To A Pre-Dismissal Hearing
As a result of the
Administrative Code's provisions relating to dismissal and pension rights, New
York City teachers such as plaintiffs face the following dilemma: if they
exercise their rights to a hearing prior to dismissal and do not prevail, they
forfeit pension benefits that would vest if they chose instead to resign.
[580 F.Supp. 1479]
That the chilling of procedural due process rights has
constitutional dimension was first indicated in Ex parte Young, 209 U.S. 123, 28
S.Ct. 441, 52 L.Ed. 714 (1908), where the Supreme Court invalidated on equal
protection and due process grounds a state statute that imposed penalties of
fines and imprisonment for the violation of laws establishing the maximum rates
to be charged by railroad companies. The court reasoned that "[w]hen the
penalties [are] ... so enormous ... as to intimidate [a party] from resorting
to the courts to test the validity of the legislation, the result is the same
as that the law in terms prohibited the company from seeking judicial
construction of laws which deeply affect its rights." Id. at 147,
28 S.Ct. at 448. See also Brown and Williamson Tobacco v. Engman, 527 F.2d 1115
(2d Cir.1975) (reaffirming the "right to contest the validity of a
legislative or administrative order affecting [a party's] affairs without
necessarily having to face ruinous penalties if the suit is lost," Id.
at 1119), cert. denied, 426 U.S. 911, 96 S.Ct. 2237, 48 L.Ed.2d 837.
Similar due process
concerns have been expressed to protect a defendant's privilege against
self-incrimination. In Garrity v. New Jersey, 385 U.S. 493,
87 S.Ct. 616, 17 L.Ed.2d 562 (1967), the Supreme Court held that when a
policeman was compelled to testify by the threat that otherwise he would be
removed from office, the testimony that he gave could not be used against him
in a subsequent criminal prosecution. The reasoning in Garrity was
subsequently employed to overturn the dismissal of a policeman because he
failed to relinquish his privilege against self-incrimination. See Gardner
v. Broderick, 392 U.S. 273, 88 S.Ct. 1913, 20 L.Ed.2d 1082 (1968). See
also Spevack v. Klein, 385 U.S. 511,
87 S.Ct. 625, 17 L.Ed.2d 574 (1967) (invalidating on Fifth Amendment grounds,
the disbarment of a lawyer solely for his refusal to testify at a disciplinary
proceeding).
Although these cases
evidence the Supreme Court's continued concern with chilling the exercise of
constitutional rights, recent Supreme Court cases appear to mark a trend toward
limiting the circumstances in which statutes will be invalidated on these
grounds. This is particularly evident in cases adjudicating the procedural
rights of criminal defendants. In Brady v. United States, 397 U.S. 742,
90 S.Ct. 1463, 25 L.Ed.2d 747 (1970), the Supreme Court upheld the guilty plea
of a defendant despite his contention that the plea was prompted by fear of the
death penalty should he exercise his right to trial. In so holding, the Court
limited its previous decision in United States v. Jackson, 390 U.S. 570,
88 S.Ct. 1209, 20 L.Ed.2d 138 (1968), in which it invalidated, on due process
grounds, a provision of the federal kidnapping law that permitted the death
penalty only in cases where the defendant had elected a jury trial. According
to the Court in Brady, "Jackson ruled neither that all pleas of
guilty encouraged by the fear of a possible death sentence are involuntary
pleas nor that such encouraged pleas are invalid whether voluntary or
not." Brady, supra, 397 U.S. at 747, 90 S.Ct. at 1468. Rather, the
holding in Jackson was said to result from the finding that "the
legitimate goal of limiting the death penalty to cases in which a jury
recommends it could be achieved without penalizing those defendants who plead
not guilty and elect a jury trial," so that "the death penalty
provision `needlessly penalize[d] the assertion of a constitutional right.'"
Id. at 746, 90 S.Ct. at 1468, quoting Jackson, supra, 390 U.S. at
583, 88 S.Ct. at 1217. A similar reading of Jackson was followed in Chaffin
v. Stynchcombe, 412 U.S. 17, 93 S.Ct. 1977, 36 L.Ed.2d 714 (1973), where the
Court found that the imposition of a harsher sentence by a jury on retrial
after a defendant's successful appeal of a criminal conviction did not
impermissibly chill the right to appeal. See Id. at 30 & n. 17, 93
S.Ct. at 1984. Compare North Carolina v. Pearce, 395 U.S. 711,
89 S.Ct. 2072, 23 L.Ed.2d 656 (1969) (because due process prohibits
vindictiveness as part of sentencing, imposition of harsher sentence by a judge
on retrial is impermissible unless the new sentence is based on objective
information concerning defendant's conduct obtained
[580 F.Supp. 1480]
after the original sentencing proceeding).
While Brady,
Chaffin and other cases subsequent to Jackson have thus limited the
reach of the Due Process Clause to invalidate statutory schemes that chill the
exercise of constitutional rights, these cases have not articulated clear
standards that can be universally applied. In Chaffin, the Court held
that the challenged statute was valid because the alleged chilling was an
incidental consequence of the achievement of legitimate governmental purposes.
412 U.S. at 32-33, 93 S.Ct. at 1986. The opinion was also based, however, on
the Court's determination that the likelihood of the defendant being adversely
affected by the exercise of his right was too remote to be deemed an
unconstitutional chilling. Id. at 33-35, 93 S.Ct. at 1986. Overall it
appears that, at least in the area of criminal procedure, the Court is prepared
to balance the importance and need for the challenged statute, against the
extent to which it chills the exercise of the party's constitutional rights. See
also Bordenkircher v. Hayes, 434 U.S. 357,
98 S.Ct. 663, 54 L.Ed.2d 604 (1978) (due process clause not violated when a
state prosecutor carried out a threat made during plea negotiations to have the
accused reindicted on more serious charge for which he could have been
originally prosecuted).
In the present case
the chilling effect on plaintiffs' procedural due process rights is incidental
in the sense that the statutory scheme being challenged was designed not to
penalize the exercise of procedural due process rights, but to further the
legitimate governmental purpose of limiting pension rights to those teachers
who were in good standing when their pension rights accrued. The extent of this
chilling is substantial, however, in that teachers in plaintiffs' position must
choose between the certain loss of their employment by resignation with the
retention of pension rights and the risk of forfeiting those pension rights
should they try to retain their jobs by insisting upon a hearing.11 Considering the two relevant factors here—the
necessity of the statutory scheme to accomplish a legitimate governmental
objective and its chilling effect on the exercise of plaintiffs' rights—a more
precise method for weighing the significance of these factors than that
provided in the above cited cases needs be sought. The
"right-to-travel" cases furnish useful guides in this quest.
As in the present
case, the plaintiffs in right-to-travel cases argued that the exercise of their
constitutionally protected right was being chilled through the threatened
deprivation of a benefit to which they ordinarily could not claim a
constitutionally vouchsafed entitlement. The argument was successfully used to
challenge durational residence requirements that prevented the plaintiffs from
receiving various state-provided benefits. See Memorial Hospital v. Maricopa
County, 415 U.S. 250, 94 S.Ct. 1076, 39 L.Ed.2d 306 (1974) (indigent
medical care); Dunn v. Blumstein, 405 U.S. 330,
92 S.Ct. 995, 31 L.Ed.2d 274 (1972) (voter registration); Shapiro v.
Thompson, 394 U.S. 618, 89 S.Ct. 1322, 22 L.Ed.2d 600 (1969) (welfare
benefits).
In all of these cases,
the invalidation of the residency requirement was premised on the determination
that the state had failed to demonstrate a compelling state interest to justify
the requirement. Application of the compelling state interest test was prompted
by an inquiry into "the extent to which the residence requirement served
to penalize the exercise of the right to travel." Memorial
Hospital, supra, 415 U.S. at 257, 94 S.Ct. at 1081 (emphasis in original).12
[580 F.Supp. 1481]
In determining whether the termination of pension benefits
in the present suit should be deemed a "penalty," this Court is
mindful of the fact that the Supreme Court's application of the compelling
state interest test has been limited to residency requirements used to
condition the receipt of "basic necessities of life." Memorial
Hospital, supra, 415 U.S. at 259, 94 S.Ct. at 1082. Compare Vlandis v.
Kline, 412 U.S. 441,
452-53 n. 9, 93 S.Ct. 2230, 2236, 37 L.Ed.2d 63 (1973) (declining to overrule Starns
v. Malkerson, 401 U.S. 985, 91 S.Ct. 1231, 28 L.Ed.2d 527 (1971), which
upheld one year residency requirement as a condition to lower tuition at state
institutions of higher education). While the plaintiffs' need for pension
benefits may not be quite as compelling as an indigent's need for welfare or
medical benefits, I find that it nevertheless qualifies as a "basic
necessity," the deprivation of which should be deemed a
"penalty." Not only is the forfeiture of pension rights here
irretrievable, as in the case of welfare and medical benefits, but it is
permanent in that the plaintiffs will forever be deprived of this means of
support. Compare Sosna v. Iowa, 419 U.S. 393, 95
S.Ct. 553, 42 L.Ed.2d 532 (1975), (upholding residency requirement for divorce
application since plaintiff's rights are postponed, rather than irretrievably
forfeited). For these reasons, and in the light of the overall concerns
expressed above about chilling the exercise of procedural due process rights, I
believe the application of the compelling state interest test to be warranted
here.
Although the
Administrative Code provisions at issue may be said to further legitimate state
goals, I find that neither the goals nor the methods designed for their
implementation are calibrated with sufficient precision to satisfy the
compelling state interest test. Certainly, the State's efforts to remove
incompetent teachers from their jobs is commendable, but this goal would be
achieved whether or not dismissed teachers forfeited their pensions. As to the
State's goal of limiting pensions to those who deserve it, I find that the
manner employed to achieve that goal belies any assertion that the interest is
compelling. Putting aside for the moment plaintiffs' claim that deserving
teachers may be included among those who forfeit their pensions, see supra
Section IV, it is beyond dispute that many undeserving teachers are receiving
pensions simply because they have retired or resigned either before dismissal
proceedings are concluded or before the State discovers their incompetency.
Under such circumstances, the City defendants can hardly claim that their interest
in limiting pension benefits to deserving teachers is compelling. In the final
analysis, the City defendants are putting a price on a procedural due process
right, the exercise of which must be free and unfettered. They have no right to
do so. See North Carolina v. Pearce, supra, 395 U.S. at 724, 89 S.Ct. at
2080 (1968).
Admittedly, the
present statutory scheme is an efficient means of attempting to attain the
stated goals. But administrative efficiency will not suffice to satisfy the
compelling state interest test. See Memorial Hospital, supra, 415 U.S.
at 263, 94 S.Ct. at 1084; Shapiro, supra, 394 U.S. at 634, 638, 89 S.Ct.
at 1331, 1333. In the absence of a compelling interest, the State must devise a
statutory scheme that either acceptably minimizes or eliminates the chilling
effect on the plaintiffs' exercise of their rights. Since, in this case, I find
that the plaintiffs are being penalized by the forfeiture of their pensions for
exercising their procedural due process rights without evidence of a compelling
state interest to justify that penalty, the challenged statutory scheme must be
declared invalid.13
[580 F.Supp. 1482]
VI. Conclusion
Under Rule 56(c) of
the Federal Rules of Civil Procedure, summary judgment shall be rendered where
"there is no genuine issue as to any material fact" and "the
moving party is entitled to judgment as a matter of law." Applying this standard
to the present case, I find that the plaintiffs are entitled to summary
judgment. The City Defendants are hereby enjoined from implementing § B20.38.0
of the New York City Administrative Code, insofar as it would deprive
plaintiffs of retirement benefits to which they would otherwise be entitled.
Furthermore, the City defendants are ordered to reinstate plaintiff Vernon, so
that she may have an opportunity to exercise her right to a pre-termination
hearing.
SO ORDERED.
FootNotes
1. The text of this opinion has not addressed the merits of defendant Ambach's
motion for summary judgment. Defendant Ambach argues that since the plaintiffs'
constitutional challenge is directed primarily at § B20-38.0 of the
Administrative Code, which is administered and enforced solely by the City
defendants, there is no need for him to remain a party to the suit. Until now,
this Court has declined to grant defendant Ambach's motion, since there
remained a possibility that an injunction restraining the continuation of the
dismissal procedures under § 3020 of the Education Law would become necessary
pending the resolution of plaintiffs' claim against the City defendants.
Inasmuch as this Court is now disposing of plaintiffs' claims against the City
defendants as a matter of law, however, and is doing so in a manner that will
not require relief against the State of New York, defendant Ambach's motion may
be deemed granted.
2. Plaintiffs contend that provisions of the Education Law
that apply to school districts outside of the City of New York are also
relevant since the New York courts have held that the enumeration of grounds
for dismissal of tenured teachers are not exclusive and that other grounds
recognized by the Commissioner of Education will also be upheld. See Bott v.
Board of Education, Deposit Central School District, 41 N.Y.2d 265, 268-69, 392 N.Y.S.2d 274, 277, 360 N.E.2d 952,
954 (1977). These provisions include as additional grounds for teacher
dismissal: immoral conduct, incompetency, conduct unbecoming a teacher,
physical or mental disability, and neglect of duty. N.Y.Educ.Law §§ 1102, 2509,
3012(2), 3014(2) (McKinney). I do not pass on this argument since, for reasons
indicated, I find it to be immaterial to the disposition of the instant motion.
3. Section B20-44.2 provides in relevant part: Vested
retirement rights.—a. (1) Except as provided in paragraph three of this
subdivision a, any contributor who has been a member of the retirement system
and has had fifteen or more years of accredited service, at least five years of
which immediately precedes termination, who discontinues service in the schools
or colleges of the city other than by death or retirement or dismissal and who
does not withdraw his accumulated deductions shall have a vested right to
receive a deferred retirement allowance on attaining the age at which he would
first be eligible for retirement had he remained in service but in no case,
except as otherwise provided in paragraph two of this subdivision, prior to the
date he attains the age of sixty years. Such member shall be known as a
discontinued member.
4. Plaintiffs contend, in spite of this authority, that
their pension expectancies are property interests under New York law. In
support of this contention, they cite Article 5, § 7 of the State Constitution,
which provides that "membership in any pension or retirement system of the
State or a civil division thereof shall be a contractual relationship, the
benefits of which shall not be diminished or impaired." See Birnbaum v.
Teachers Retirement System, 5 N.Y.2d 1,
176 N.Y.S.2d 984, 152 N.E.2d 241 (1958) (invalidating the use of new mortality
tables to compute retirement benefits, where such computations had the effect
of reducing the annuities of members of the earlier system). I find this
argument to be misplaced. The purpose of the amended section of the State
Constitution was "to fix the right of the employee at the time he became a
member of the system." Id., 5 N.Y.2d at 9, 176 N.Y.S.2d at 990, 152 N.E.2d
at 245. This purpose is not thwarted by the statutory scheme being challenged,
since § B20-38.0 preceded both plaintiffs' entrance into the TRS and the
enactment of the State constitutional provision. Moreover, the Appellate
Division's First Department clearly stated in Gorman v. City of New York, 280 A.D. 39,
110 N.Y.S.2d 711 (1st Dept.1952), that the State Constitution "does not
imply a restriction upon public authority to remove a member from a public
position for valid cause, even though the right to a pension terminates with
the removal." Id. at 44-45, 110 N.Y.S.2d 711 (upholding city amendment
requiring thirty days' notice before retirement). As in Gorman, the City
defendants may here condition the receipt of pension benefits on retirement in
good standing, see id. at 44, 110 N.Y.S.2d 711, without infringing any property
rights of the employees.
5. Although the Supreme Court remains divided over whether a
state can condition its grant of a property interest solely by procedural
limitations accompanying the grant of that interest, see Bishop v. Wood, supra,
426 U.S. at 350-55, 96 S.Ct. at 2080-82 (Brennan J. dissenting) & 355-61
(White, J. dissenting); Arnette v. Kennedy, 416 U.S. 134,
94 S.Ct. 1633, 40 L.Ed.2d 15 (1974); G. Gunther, Constitutional Law, at 654-55,
it is clear from Bishop and Arnette that the Court will defer to state rulings
defining the scope of a state-created property right. As indicated supra in the
text, the scope of a teacher's right to a pension has been defined not only by
the procedural limitations contained in the Administrative Code, but also by
state court authority. Therefore, in the present case, there can be no doubt
that Bishop controls and that no property interest has been created.
6. In so holding, the decision does not preclude New York
courts from reexamining the scope of the employees' entitlements under
state-sponsored pension plans, on the basis of changing public attitudes. See,
e.g., Uricoli v. The Board of Trustees, Police and Fireman's Retirement System,
91 N.J. 62, 449 A.2d 1267 (1982) (finding that state forfeiture statute
did not mandate automatic forfeiture of pensions in every instance of
misconduct, in part because of the "national public policy of secure
retirement income"). Pending such developments, however, this Court is
bound by the law of New York as it now exists.
7. Defendants argue, based on citations to decisions of the
Department of Education, that teachers have in fact been subjected to dismissal
and forfeiture of pension benefits only in instances of highly culpable
conduct. Plaintiffs counter that the absence of dismissal cases based on
charges of non-culpable conduct— such as mental or physical disability—is not
conclusive evidence that teachers are not subject to dismissal on these lesser
grounds.
8. Even were a rational basis test to be applied here, the
pension provisions would be sustained for the reasons set forth supra Section
II. The provisions are reasonably aimed at limiting pension benefits to
deserving teachers, which is a valid state purpose.
9. Essentially, Professor Westen contends that equality is
an empty principle, in that the merits of a plaintiff's equal protection claim
ultimately depend, not on his classification according to a certain
characteristic, but rather on the strength of the right he has been deprived of
by virtue of the classification. Professor Greenawalt contends that the
principle of equality does have an independent force in many areas of law, but
agrees with Professor Westen that in the right-to-travel cases the Equal
Protection Clause adds nothing to the merits of the plaintiff's claims.
10. The City defendants have argued that plaintiffs have no
cognizable claim under the Equal Protection Clause because there is no
classification to begin with. Since I have chosen not to address plaintiffs'
equal protection claims, I need not address this argument. I note in passing,
however, that the contention itself lends further support to the viewpoint expressed
by the Court that plaintiffs' claim is ultimately rooted in their rights to
procedural due process and pension benefits, and not in equal protection. A
finding of a classification subject to equal protection analysis would be
premised on a prior determination that an important right is present, the
exercise of which has formed the basis for distinguishing between groups of
individuals.
11. The City defendants dispute the assertion that the
chilling effect is substantial by citing instances where teachers have demanded
a hearing rather than resign. City Defendants' Brief pp. 24-26. Of course,
there may still be numerous unreported instances in which teachers have chosen
not to exercise their right to a hearing because of their desire to secure
pension benefits. In any event, for the reasons set forth in the text that
follows, and infra note 12, I need not address this claim.
12. Dunn, supra, 405 U.S. at 339-40, 92 S.Ct. at 1002, and
Memorial, supra, 415 U.S. at 258, 94 S.Ct. at 1082, rejected attempts to
distinguish Shapiro where plaintiffs failed to show additionally that the right
to travel had actually been deterred. Therefore, I need not address the City
defendants' contention that teachers have not actually been deterred from
exercising their procedural due process rights. See supra note 10.
13. In so holding, I do not depart from the principle
expressed in the criminal procedure cases that the withdrawal of a benefit as a
consequence of the exercise of a procedural due process right constitutes an impermissible
chilling only where the withdrawal is "unnecessary and therefore
excessive." Jackson, supra, 390 U.S. at 582, 88 S.Ct. at 1216. See
Chaffin, supra; Bordenkircher, supra; Brady, supra; text at pp. 15-17. The
requirement of necessity parallels the compelling state interest test utilized
here and in the right to travel cases. While in the latter cases, application
of the heightened level of scrutiny followed a determination that the statute
imposes a penalty, in the Jackson-line of cases, the Supreme Court inquired
into whether the chilling was direct or incidental. In both lines of cases, the
result was predicated upon the Court's evaluation of the particular benefit,
the receipt of which was conditioned on the forfeiture of a constitutional right.
In my view, the benefit at issue here—plaintiffs' pension rights—is more in the
nature of an expectancy than, e.g., a reduced sentence for pleading guilty. See
Bordenkircher, supra; Brady, supra. It is for this reason that I have found an
unconstitutional chilling, in contrast to Bordenkircher and Brady. Admittedly,
it is harder to distinguish Chaffin on this basis. A defendant who appeals his
conviction arguably acts with some expectation that he will not receive a more
severe sentence upon a new trial. His more immediate expectation, however, is
that if his appeal has merit, he will be entitled to a new trial. The granting
of a new trial, regardless of the outcome, could hardly be deemed a penalty.
Moreover, the Chaffin opinion was based in part on the majority's finding that
the likelihood of the defendant being penalized was too remote to be deemed a
chilling of his constitutional rights. According to Justice Powell, the
likelihood of actually receiving a harsher sentence is quite remote at the time
a convicted defendant begins to weigh the question whether he will appeal.
Several contingencies must coalesce. First, his appeal must succeed. Second, it
must result in an order remanding the case for retrial rather than dismissing
outright. Third, the prosecutor must again make the decision to prosecute and
the accused must again select trial by jury rather than securing a bench trial
or negotiating a plea. Finally, the jury must again convict and then ultimately
the jury or the judge must arrive at a harsher sentence in circumstances devoid
of a genuine likelihood of vindictiveness.Chaffin, supra, 412 U.S. at 33-34, 93
S.Ct. at 1986. In contrast, only one contingency need be met before plaintiffs'
exercise of their constitutional rights is penalized: their failure to prevail
at their hearing. This will automatically subject plaintiffs to dismissal and
the resultant loss of their pension benefits. Under these circumstances, a more
sensitive inquiry into the existence of a penalty and its chilling effect is demanded.
PS 132 Principal Anissa Chalmers
