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United Police Society of Mt. Lebanon; Retired Police Officers; Mark v. Mt. Lebanon Commission; Stephen M. Feller; Mt. Lebanon Pension Plan

July 16, 2012

UNITED POLICE SOCIETY OF MT. LEBANON; RETIRED POLICE OFFICERS; MARK KUBIT, MARY EICHINGER, JOHN MICHALEC, DAVID WHITE, LES PALOMBINE, MARY SUE JOYCE, WILLIAM LAURENCE, KEVIN MACKIN, TOM GIANNI, ROBERT GEHRMANN, PAT O'DONNELL, AND BLAISE LAROTONDA
v.
MT. LEBANON COMMISSION; STEPHEN M. FELLER; MT. LEBANON PENSION PLAN ADMINISTRATOR; MUNICIPALITY OF MT. LEBANON, APPELLANTS



The opinion of the court was delivered by: Renee Cohn Jubelirer, Judge

Argued: April 17, 2012

BEFORE: HONORABLE DAN PELLEGRINI, President Judge HONORABLE RENEE COHN JUBELIRER, Judge HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge

OPINION BY

JUDGE COHN JUBELIRER

The Mt. Lebanon Commission (Commission), Stephen M. Feller, the Mt. Lebanon Pension Plan Administrator (Plan Administrator), and the Municipality of Mt. Lebanon (Municipality), (collectively, Mt. Lebanon), appeal from the July 28, 2011 Order (2011 Order) of the Court of Common Pleas of Allegheny County (trial court). The trial court granted the appeal of the United Police Society of Mt. Lebanon (Union) and Retired Police Officers Les Palombine and Robert Gehrmann*fn1 (together, Officers), and directed Mt. Lebanon to apply cost of living adjustments (COLA) to the pension payments of Officers and other participants in Mt. Lebanon Police Officers' Pension Plan of January 1, 2000 (Plan), at the rate of 2% of their Final Average Monthly Compensation (FAMC) per year until that amount reaches 90% of FAMC in accordance with the trial court's interpretation of Section 4.09 of the Plan.*fn2 Mt. Lebanon argues that it strictly complied with the Municipal Pension Plan Funding Standard and Recovery Act (Act 205),*fn3 which governs minimum funding standards for municipal pension plans, including the requirement that an accurate cost estimate must be obtained before adoption of any modification of a pension plan. Mt. Lebanon contends that the interpretation of the COLA cap by the Union and Officers was never studied and, therefore, cannot be adopted pursuant to Act 205.

This matter dates back to July 10, 2006, when thirteen retired officers and an unspecified number of active officers notified the Plan Administrator of a January 24, 2005 grievance "concerning calculation of duration of [COLA] benefits" also known as the COLA cap. (Record from Administrative Proceedings (Record), Exhibit A, Letter from Officers to Plan Administrator, (July 10, 2006), at 1 (Claim Petition).) On January 15, 2007, the Plan Administrator issued a Notice of Denial of the Claim Petition (Notice of Denial) as "not ripe for review" for the unspecified, active officers and as "untimely"*fn4 and, therefore, waived for the thirteen retired officers. (Record, Exhibit B, Notice of Denial by Plan Administrator, January 15, 2007, at 1-2.) On March 1, 2007, an appeal of the Notice of Denial was filed with the Commission. (Record, Exhibit C, Appeal to Commission, March 1, 2007, at 1-3.) The Commission, as the body designated by the Plan to hear appeals from decisions of the Plan Administrator pursuant to Section 8.08(c) of the Plan, affirmed the denials.*fn5 (Record, Exhibit I, Commission Decision, June 11, 2007, at 1-6.)

On appeal, the trial court concluded that the heart of the dispute was the method of calculating the maximum pension benefit for each officer pursuant to the COLA formula. The trial court stated that "the entire matter was ripe," and remanded it to the Commission to correctly calculate the COLA benefits before addressing issues of timeliness. (Trial Court Decision/Order, July 23, 2009, at 6-7.) After hearing testimony and argument, the Commission issued a decision on February 8, 2011, including its findings of fact. The Commission's findings included some background about the COLA provision indicating that this provision was new to the Plan and, therefore, a modification to the pension plan. Specifically, the Commission found:

10. The first time the [Union] requested a cost-of-living adjustment was in 1999 during contract negotiations that resulted in a collective bargaining agreement being entered into in 2000 (hereinafter, the "2000 Agreement"). The 2000 Agreement was effective until December 31, 2003. . . .

12. The COLA provision of the Plan was agreed to in the 1999 Negotiations.

13. The parties to the 1999 Negotiations did not specifically discuss how the COLA provision would apply to the Early Retirement Benefit. Consequently, the 2000 Plan contains no language describing how, if at all, the COLA provision should be applied to retirees who elect the Early Retirement Benefit option.

(Findings of Fact (FOF)

¶¶ 10, 12-13.)

The Commission viewed the question before it as whether:

(a) [A]n early retiree should be treated the same as a normal retiree; that is, they should receive a COLA benefit up to a 15% maximum.[*fn6 ] Thus, an early retiree whose benefit was reduced to 50% of [FAMC] ...


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