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RICHARD B. KLEIN v. COMMONWEALTH PENNSYLVANIA (03/03/89)

decided: March 3, 1989.

RICHARD B. KLEIN, APPELLANT,
v.
COMMONWEALTH OF PENNSYLVANIA, STATE EMPLOYEES' RETIREMENT SYSTEM, APPELLEE. FRANCIS J. CATANIA, ET AL., V. COMMONWEALTH OF PENNSYLVANIA, STATE EMPLOYEES' RETIREMENT BOARD AND ROBERT L. CUSMA, IN HIS CAPACITY AS SECRETARY OF THE STATE EMPLOYEES' RETIREMENT SYSTEM AND R. BUDD DWYER, IN HIS CAPACITY AS TREASURER OF THE COMMONWEALTH OF PENNSYLVANIA. APPEAL OF RICHARD B. KLEIN



Appeal by permission from the Order of the Commonwealth Court of July 27, 1987 at No. 2374 C.D. 1986 affirming the Order of the State Employees' Retirement Board dated January 22, 1986, Pa. Commw. , Nix, C.j., and Larsen, Flaherty, McDermott, Zappala, Papadakos and Stout, JJ. Nix, C.j., files a concurring opinion in which Flaherty and Stout, JJ., join. McDermott, J., dissents.

Author: Larsen

[ 521 Pa. Page 332]

OPINION ANNOUNCING THE JUDGMENT OF THE COURT*fn*

Although it arises from complex legislation and protracted litigation, the principal issue raised in this appeal is really quite simple: may the legislature compensate judges of the same class/level of court (in this case, at the Common Pleas bench) who perform the same functions and duties at different rates of compensation based solely on the dates on which they began their respective terms of office. We hold that such different rates of compensation for judges creates unequal, arbitrary and unreasonable classifications of judges within the same class/level which violate the equal protection provisions of the Constitution of the Commonwealth of Pennsylvania, and are in conflict with the constitutional mandate to have a unified judicial system in this Commonwealth.

[ 521 Pa. Page 333]

I. Facts and Procedural History

This case is the latest in a series of cases challenging legislative amendments to the State Employees' Retirement Code of 1959, Act of June 1, 1959, P.L. 392, as amended, formerly 71 P.S. §§ 1725-101-1725-809.*fn1 For purposes of this appeal, we need only highlight the critical differences between the retirement benefits provided under the Retirement Code of 1959 and its repealer, the State Employees' Retirement Code of 1974, Act of March 1, 1974, P.L. 125, No. 31, as amended, 71 Pa.C.S.A. §§ 5101-5956, and we will not reiterate the exact operations of the two Codes (of 1959 and 1974) which have been explained at length in previous decisions of this Court. (For a full explication of the mechanics of operation and explanation of the differences between the two Codes, see McKenna v. Commonwealth State Employees' Retirement Board (SERB), 495 Pa. 324, 433 A.2d 871 (1981) and Catania v. SERB, 498 Pa. 684, 450 A.2d 1342 (1982).)

For our purposes, suffice it to say that the retirement benefits available to judges are vastly disparate, depending upon whether the respective judge took office before or after March 1, 1974, the effective date (with certain non-relevant exceptions) of the State Employees' Retirement Code of 1974. Those who took office prior to that date are eligible to elect the optional Class E-1 status and an optional SSI (Social Security Integration) retirement plan. A judge electing the optional plans (as almost all eligible judges have done) is required to contribute a larger portion of his or her salary than "regular" Class A state employees, and in return receives substantially higher benefits upon retirement. Those judges who took office after March 1, 1974, contribute to the retirement fund at the same rate as

[ 521 Pa. Page 334]

    all Class A employees*fn2 and can no longer elect the optional plans providing for additional member contributions with commensurate additional retirement benefits.

To illustrate the significant disparity between the benefits available to judges who took office before and after March 1, 1974, consider the following hypothetical situation.*fn3 Common Pleas Judge "X" is a male who took office in January, 1974, elected the optional retirement plans and retired after twenty years of service at age sixty with a final average salary of $80,000 (the current salary for common pleas judges who are not president or administrative judges*fn4). Upon retirement, Judge "X" would be eligible to receive a maximum annual pension benefit of $66,566.00, and his benefits would have a "present value" under the optional retirement packages of $827,549.00.

By contrast, hypothetical Common Pleas Judge "Y" is a male who took office immediately after the effective date of the State Employees' Retirement Code of 1974 and retired at the age of sixty after twenty years of service at a final average salary of $80,000. Since Judge "Y" would be unable to increase his contributions under the optional Class E-1 plan and SSI supplemental plan, he would be eligible to receive a maximum annual pension benefit of $32,000.00, and his benefits would have a "present value" of $397,824.00.

[ 521 Pa. Page 335]

Thus, Judge "Y"'s annual pension benefit would be $34,566.00 less than that of Judge "X", and the "present value" of his retirement benefits would be $429,725.00 less.*fn5 There is, further, a net difference in the amount of pension benefits less pension contributions as the Commonwealth's contributions to the pension accounts of pre-1974 judges are more than double the Commonwealth's contributions of post-1974 judges.

The instant case involves the appeal of the Honorable Richard B. Klein, judge of the Court of Common Pleas of Philadelphia County. The facts are not in dispute, and will be recounted from the Commonwealth Court's opinion, per Judge Francis Barry for an en banc court:

Richard B. Klein (claimant) appeals an order of the State Employees' Retirement Board (Board) denying his request for reinstatement to class E-1 status under the State Employees' Retirement Code of 1959 . . . .

The facts are undisputed. Claimant first became a member of the State Employees' Retirement System (system) on May 4, 1967, when he accepted a position as special assistant attorney general. On December 30, 1971, he was appointed judge for the Court of Common Pleas of Philadelphia County and, thus, became eligible for class E-1 status under the 1959 Code. When this appointment expired on January 6, 1974, claimant elected to withdraw his accumulated deductions effective February 26, 1974. On January 5, 1976, following a successful election, claimant began serving a new term as common pleas judge. On January 7, 1976, he requested reinstatement to the class E-1 status he had held during his first term as judge. Claimant was given credit for all his years of prior service and he was permitted to repay the contributions he had previously withdrawn. However, his request for reinstatement to class E-1 status was

[ 521 Pa. Page 336]

    denied on grounds that such reinstatement is prohibited by the 1974 Code. The Board affirmed this determination and the present appeal followed.

Klein v. SERB, 108 Pa. Commw. 39, 40-41, 528 A.2d 1071, 1071-72 (1987).

On appeal to Commonwealth Court, Judge Klein argued that the Board's refusal to allow him to re-enter the retirement system as a Class E-1 contributor denied him a right to which he would have been entitled under the Code of 1959 (i.e., the right to withdraw from service and gain re-entry under the same Class E-1 status) and so was an unconstitutional impairment of his contractual rights. Additionally, he argued that the Board's refusal to grant him Class E-1 status is in direct violation of the consent decree entered into on behalf of himself and all other class members and the Board in Catania v. SERB, 71 Pa. Commw. 393, 455 A.2d 1250 (1983) (on remand from this Court at 498 Pa. 684, 450 A.2d 1342 (1982)). The Commonwealth Court rejected these contentions and affirmed the Board's determination. Klein v. SERB, 108 Pa. Commw. at 45, 528 A.2d at 1074.

Judge Klein also filed a separate petition for enforcement of the Catania consent decree to the Commonwealth Court's original jurisdiction, raising the same issues which he raised in the appeal to that Court. The Commonwealth Court sustained the Board's preliminary objections to this petition for the reasons set forth in its opinion on the appeal from the Board's determination. Catania v. SERB (Appeal of Klein), 108 Pa. Commw. 46, 528 A.2d 1074 (1987).

Judge Klein has filed this direct appeal as of right from the original action in Commonwealth Court at No. 101 C.D. 1981 sustaining the Board's preliminary objections to his petition for enforcement. 42 Pa.C.S.A. § 723(a). We granted allocatur to hear the appeal from the Commonwealth Court's order at No. 2374 affirming the Board's determination refusing to allow appellant to re-enter the retirement system as a Class E-1 member. 42 Pa.C.S.A.

[ 521 Pa. Page 337]

§ 724. We now reverse both orders of the Commonwealth Court.

II. Legal Discussion

A. Unified Judicial System

On April 23, 1968, the Pennsylvania Constitution was adopted by the electorate which promulgated a new Judiciary Article V. Section 1 of Article V established the unified judicial system of this Commonwealth:

Unified judicial system

The judicial power of the Commonwealth shall be vested in a unified judicial system consisting of the Supreme Court, the Superior Court, the Commonwealth Court, courts of common pleas, community courts, municipal and traffic courts in the City of Philadelphia, such other courts as may be provided by law and justices of the peace. All courts and justices of the peace and their jurisdiction shall be in this unified judicial system. (emphasis added)

Section 16(a) of Article V provides that "Justices, judges and justices of the peace shall be compensated by the Commonwealth as provided by law. Their compensation shall not be diminished during their terms of office, unless by law applying generally to all salaried officers of the Commonwealth." Unlike its predecessors, section 16 did not provide that judicial officers shall receive "adequate compensation." However, this Court has held that the Constitution of 1968 requires that the legislature "provide compensation adequate in amount and commensurate with the duties and responsibilities of the judges involved. To do any less violates the very framework of our constitutional form of government." Glancey v. Casey, 447 Pa. 77, 86, 288 A.2d 812, 816 (1972) (emphasis added).

It is apparent that the Constitution of 1968 does not establish or contemplate different rates of compensation for justices, judges and justices of the peace performing similar duties and responsibilities. It is also clear that ...


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