United States District Court, E.D. Pennsylvania
MEMORANDUM
KEARNEY, J.
The
Chief Deputy Prothonotary of Philadelphia's court system
contributed part of her income into the City's retirement
system for over three decades. In Spring 2014, she abused the
court's credit card to pay over $73, 000 of her son's
debts. The court fired her and pressed criminal charges. She
plead guilty to a third-degree felony theft and paid back the
stolen funds. The City's Pension Board then disqualified
her from her pension based on her conviction on two specific
grounds in the Retirement Code: theft of funds of the City,
or official agency of the City, or agency, engaged in
performing any governmental function for the City or the
Commonwealth and "malfeasance in office or
employment." She immediately sued both here and in state
court claiming this language is unconstitutionally vague and
the penalty acts an illegal forfeiture or taking of her
property interest. We abstained to allow the state court to
interpret the terms of the City's legislation. The state
appellate court defined the "malfeasance" as
including her admitted theft and upheld her pension
ineligibility. Finding we may decide the issues under federal
law, we hold the "malfeasance" language is not void
for vagueness under the Fourteenth Amendment and the loss of
the full pension net of her contributions is not an improper
forfeiture under the Eighth Amendment, an improper taking
under the Fifth Amendment, or an arbitrary deprivation of
property and excessive punitive sanction under the Fourteenth
Amendment. We grant the City's motion for summary
judgment.
I.
Undisputed Facts[1]
Deborah
Dailey began working as a stenographer for the First Judicial
District of Pennsylvania in 1979.[2] For the next thirty-four
years she worked for the First Judicial District ultimately
becoming the Chief Deputy Prothonotary and Clerk of
Courts.[3] Ms. Dailey became a member of "Plan
J" of the City of Philadelphia Public Employees
Retirement System[4] upon employment[5] and made contributions into
the Retirement System.[6] The Retirement System contains several
plans for retirement, disability, and incidental death
benefits for the City's employees and their survivors and
beneficiaries.[7] The Retirement Code sets the terms of
eligibility for retirement benefits and contributions into
the Retirement System by the City and members.[8]The Retirement
Code also sets terms for disqualification from receiving
retirement or any other benefits from the Retirement
System.[9] If a member "separates from service
for any cause other than death, disability or
retirement," her total contributions made into the
Retirement System "shall ... be repaid ... without
interest."[10]
Between
February and May 2014, Ms. Dailey admittedly stole over $73,
000 from the First Judicial District by using its credit card
without authorization to pay bills for her son.[11] The First
Judicial District terminated Ms. Dailey's employment on
May 14, 2014 when it learned of Ms. Dailey's
conduct.[12] Ms. Dailey repaid the First Judicial
District in full before pleading guilty on February 18, 2015
to theft by unlawful taking or disposition - movable
property, a third-degree felony under Pennsylvania
law.[13] A judge sentenced Ms. Dailey to thirty
months' probation and payment of court
costs.[14]
Four
months after entering her guilty plea, Ms. Dailey applied for
optional early retirement benefits under Philadelphia's
Retirement System.[15] On September 17, 2015, the Pension Board
voted to "permanently disqualify [Ms. Dailey's]
pension eligibility and suspend [her] pension benefits,
"[16] notified Ms. Dailey of her
disqualification for pension eligibility under Retirement
Code Section 22-1302(1)(a)(.4) and (.5) based on her guilty
plea to theft of movable property, and advised her of her
right to a hearing before a panel of the Pension Board to
challenge its decision.[17]Under the terms of the Retirement
Code, the City will return contributions made by Ms. Dailey
into the Retirement System without interest.[18]
A.
Retirement Code § 22-1302(1)(a)(.4) and (.5).
The
Pension Board disqualified Ms. Dailey under Sections
22-1302(1)(a) (.4) and (.5) of the Retirement Code:
"Notwithstanding any other provision of this Title, no
employee ... shall be entitled to receive any retirement or
other benefit or payment of any kind except a return of
contribution paid into the Retirement System, without
interest, if such employee:
(a) pleads or is finally found guilty, or pleads no defense,
in any court, to any of the following:
(.4) Theft, embezzlement, willful misapplication, or other
illegal taking of funds or property of the City, or those of
any official agency of the City, or agency, engaged in
performing any governmental function for the City or the
Commonwealth;
(.5) malfeasance in office or employment;,
..."[19]
Ms.
Dailey challenges the constitutional validity of subsections
(.4) and (.5). She claims Section 22-1302(1)(a) as applied to
her violates the Excessive Fines Clause of the Eighth
Amendment; as applied to her is an arbitrary deprivation of
property and an excessive punitive sanction in violation of
the Due Process Clause of the Fourteenth Amendment;
subsection (.4), as applied to her, and subsection (.5), both
on its face and applied to her, are void for vagueness in
violation of the Due Process Clause of the Fourteenth
Amendment; and Section 22-1302(1)(a) as applied to her
violates the Takings Clause of the Fifth
Amendment.[20]
B.
Ms. Dailey's administrative appeal of the Pension
Board's September 17, 2015 decision.
Ms.
Dailey appealed the Pension Board's September 17, 2015
decision. A three-member panel of the Pension Board held a
hearing on January 13, 2016. The hearing panel issued
findings of fact and conclusions of law in support of its
determination.[21] The hearing panel found Ms. Dailey,
represented by counsel, "offered minimal testimony"
to explain her use of the credit card, and did not call any
witnesses or introduce documents into evidence.[22]
The
Pension Board concluded Ms. Dailey's disqualification
from the Retirement System should be upheld because
violations of sections (.4) and (.5) require
disqualification, focusing on the language
"no employee ...
shall be entitled to receive any
retirement benefit or other benefit of any kind" upon
conviction of an applicable offense while in
office.[23] The Pension Board concluded to receive a
pension "Retirement System members must satisfy multiple
conditions precedent: years of service, payment of
contributions, vesting, and age" and "is also
contingent upon the requirement that the employee not have
engaged in certain criminal conduct in office, as set forth
in Section 22-1302."[24]
Determination
of pension eligibility in the Retirement System is vested in
the Pension Board. The Pension Board determined
"commission of an applicable offense in office by a
public employee is a breach of the public trust and of the
public employment contract, which severs entitlement to
pension benefits."[25] The Pension Board found Ms.
Dailey's guilty plea to theft of movable property from
the First Judicial District while in office constituted a
breach of the public employment contract, triggered the
mandatory provisions of Section 22-1302, and rendered her
ineligible to receive pension benefits.[26]
The
Pension Board considered Ms. Dailey's constitutional
arguments made at the hearing claiming Section
22-1302(1)(a)(.4) does not apply to the First Judicial
District because it is not the "City" or an
"agency"; Section 22-1302(1)(a)(.5) does not apply
because Ms. Dailey did not plead guilty to
"malfeasance"; disqualification constituted an
excessive fine in violation of the Eighth Amendment;
malfeasance in subsection (.5) is unconstitutionally vague;
and the Board failed to provide procedural due
process.[27] The Pension Board rejected each
argument, and, after considering Ms. Dailey's arguments
made at the hearing and briefing, the three-member hearing
panel recommended the denial of Ms. Dailey's
appeal.[28]
At its
regularly scheduled meeting on February 25, 2016, the Pension
Board confirmed the recommendation of the hearing panel,
denied Ms. Dailey's appeal, and "approved to
permanently disqualify [Ms. Dailey] from pension eligibility
...."[29] On February 26, 2016, the Pension Board
advised Ms. Dailey of her right to appeal its decision to the
Court of Common Pleas.[30]
C.
Ms. Dailey sued the City here and in the Philadelphia County
Court of Common Pleas challenging the Pension Board's
disqualification.
Four
weeks later, Ms. Dailey filed her complaint here and, the
next day, filed an appeal from the Pension Board's
decision to the Court of Common Pleas of Philadelphia
County.[31] In an amended complaint here, Ms. Dailey
challenges Section 22-1302(1)(a) of the Code under 42 U.S.C.
Section 1983[32] alleging it violates the Excessive Fines
Clause of the Eighth Amendment (Count I); is an arbitrary
deprivation of property and an excessive punitive sanction
under the Due Process Clause of the Fourteenth Amendment
(Count II); subsection (.4), as applied to her, and
subsection (.5) both on its face and as applied to her is
void for vagueness and fails to provide sufficient notice
under the Due Process Clause of the Fourteenth Amendment
(Count III); and Section 22-1302(1)(a), as applied to her,
violates the Takings Clause of the Fifth Amendment (Count
IV).[33] Ms. Dailey asks we find the City
violated § 1983; award compensatory damages to make her
whole for past and future monetary harm with prejudgment
interest; award compensatory damages for emotional harm;
costs and attorney's fees; and any other appropriate
damages and relief.
In May
2016, Ms. Dailey moved for partial summary judgment
simultaneously with her first amended complaint on all claims
except for her Fifth Amendment Takings Clause
claim.[34]At the time, Ms. Dailey maintained two
actions; one here and one in the Court of Common Pleas of
Philadelphia County both challenging the Pension Board's
decision to disqualify her from the Retirement System. At the
same time, the City moved to dismiss this case arguing we
should abstain under Younger[35] to avoid
interfering in the ongoing state proceeding implicating
important state interests and where Ms. Dailey could
adequately litigate her federal constitutional
claims.[36]The City also argued even if we did not
abstain under Younger, Ms. Dailey fails to state
constitutional claims.
After
considering the parties' briefing and oral argument, we
decided to abstain under Pullman[37] from deciding
the constitutionality of the Retirement Code pending the
state court's determination of the meaning of subsections
(.4) and (.5).[38] In deference to Pennsylvania's
courts, we invoked Pullman abstention and put the
matter on our suspense docket until the state courts resolved
the issue of whether the Pension Board erred in applying
Retirement Code sections 22- 1302(1)(a)(.4) and (.5) to
disqualify Ms. Dailey from pension eligibility.
D.
Ms. Dailey appealed the Pension Board's decision
to the state courts, we continued to abstain under
Pullman, and Ms. Dailey facially reserved her
federal constitutional claims in state court.
Ms.
Dailey proceeded in the Court of Common Pleas after we
abstained pending its interpretation of Section
22-1302(1)(a)(.4) and (.5) of the Retirement Code. Once in
the Court of Common Pleas, Ms. Dailey made an
England[39] reservation asserting her right to
return here to prosecute her federal constitutional claims.
Under England, a litigant in state court may reserve
her federal claims for decision by the federal court, and
avoid the preclusive effect of the state court decision, when
a federal court abstains under Pullman. We are
guided by the Supreme Court's explanation of an
England reservation: "when a federal court
abstains from deciding a federal constitutional issue to
enable the state courts to address an antecedent state-law
issue, the plaintiff may reserve [her] right to return to
federal court for the disposition of [her] federal
claims."[40]
On
December 20, 2016, after oral argument, the Honorable Abbe F.
Fletman of the Philadelphia County Court of Common Pleas
affirmed the Pension Board's February 25, 2016 final
decision.[41] Ms. Dailey appealed to the Pennsylvania
Commonwealth Court.[42]
On
August 18, 2017, Judge Fletman issued her opinion in support
of her order affirming the Pension Board.[43] Judge Fletman
applied the standard of review from an agency's decision
requiring her to affirm the Pension Board's decision
unless it violated Ms. Dailey's constitutional rights,
committed an error of law, or made necessary findings of fact
unsupported by substantial evidence.[44] Judge Fletman concluded
the Pension Board did not violate Ms. Dailey's
constitutional rights because it acted under a mandatory
provision of the Retirement Code; did not commit an error of
law in finding Ms. Dailey ineligible to receive pension
benefits for failing to meet the conditions precedent for
pension eligibility; and the Board's decision is based on
substantial evidence.[45] Judge Fletman did not interpret
subsection (.4) or (.5).
Ms.
Dailey then asked us to remove the case from our suspense
docket arguing the reason for Pullman abstention is
no longer applicable in the wake of Judge Fletman's
opinion which concededly did not interpret the subsections of
the Retirement Code at issue.[46] Ms. Dailey argued her
England reservation allowed her to return to
prosecute her federal constitutional claims regardless of her
appeal to the Commonwealth Court. The City countered we must
continue to abstain under Pullman until the
Pennsylvania appellate courts weigh in on the meaning and
application of Section 22-1302(1)(a)(.4) and
(.5).[47]The City also argued we should continue
to abstain under Pullman because, if unsuccessful in
the state courts, Ms. Dailey's England
reservation allows her to "petition this Court to argue
that the federal claims she preserved mandate
relief."[48]
We
continued to abstain, deferring to the Commonwealth Court to
interpret the challenged sections of the Retirement
Code.[49] We recognized "[t]here is no
question Ms. Dailey may return to this Court for adjudication
of her federal claims" after "determination from
Pennsylvania's appellate courts whether the Retirement
Code applies to Ms. Dailey as an employee of the First
Judicial District."[50] We continued to abstain under
Pullman "in the hope the Pennsylvania courts
will address the ambiguity in the application of the
Retirement Code to Ms. Dailey."[51]
E.
The Commonwealth Court interprets the Retirement Code and the
Pennsylvania Supreme Court denies Ms. Dailey's petition
for allowance of appeal.
Ms.
Dailey pressed on in the Commonwealth Court arguing:
• by its language subsection (.4) does not apply to her
because she pleaded guilty to theft from the First Judicial
District which is not "the City, ... any official agency
of the City, or agency, engaged in performing any
governmental function for the City or the Commonwealth"
and subsection (.4) fails to give notice and guidance to
Retirement System members of a disqualifying event making its
application unconstitutional under the Pennsylvania
Constitution;
• by its language, subsection (.5) does not apply to her
because she did not plead guilty to "malfeasance in
office or employment" subsection (.5) fails to give
notice and guidance to Retirement System members of a
disqualifying event making its application unconstitutional
under the Pennsylvania Constitution;
• the decision of the Court of Common Pleas is contrary
to the Pennsylvania Public Employee Pension Forfeiture Act,
43 P.S. § 1311 et seq.
• application of subsections (.4) and (.5) to suspend
and revoke her pension benefits violated the Pennsylvania
Constitution because she had no notice of grounds for
disqualification and both subsections as applied to her are
void for vagueness; revocation of her pension is so excessive
as to amount to the deprivation of property without due
process of law; revocation of her pension is unreasonable and
an unduly oppressive deprivation of important rights without
due process of law; and revocation of her pension constitutes
a forfeiture punitive in nature in violation of the excessive
fines clause of the Pennsylvania Constitution.[52]
After
oral argument, the Commonwealth Court affirmed Judge Fletman
and more specifically on point, the Pension
Board.[53] It rejected Ms. Dailey's argument
subsection (.5) does not apply to her because she did not
plead guilty to "malfeasance in office or
employment."[54] The Commonwealth Court affirmed the
Pension Board's reasoning Ms. Dailey's theft from the
First Judicial District is the "commission of a wrongful
and unlawful act by a public official, constituting
malfeasance in office and employment in violation of Section
22-1302 of the Retirement Code."[55]
In
reaching its decision, the Commonwealth Court relied on its
reasoning in Tepper v. City of Philadelphia Board of
Pensions and Retirement[56] decided in 2017 during our
Pullman abstention. In Tepper, the
Commonwealth Court defined the meaning of subsection (.5) and
concluded "malfeasance" occurs "when there is
'either the breach of a positive statutory duty or the
performance by a public official of a discretionary act with
an improper or corrupt motive.' ... The focus is on
'the underlying illegal act, as opposed to the particular
crime, [that] form[s] the basis for a forfeiture ...
.'"[57] The Commonwealth Court explained it
construes the undefined term "malfeasance"
according to is "common and approved usage" meaning
a wrongful or unlawful act, especially wrongdoing or
misconduct by a public official, citing Black's Law
Dictionary.[58]
For the
same reasons, the Commonwealth Court rejected Ms.
Dailey's argument subsection (.5) is unconstitutionally
vague and its application violates her right to due process
and held the Pension Board properly relied on subsection (.5)
of the Retirement Code to disqualify Ms. Dailey from
eligibility for her pension.[59] Because it concluded
subsection (.5) "provides adequate grounds for
disqualification in this instance" the Commonwealth
Court found it "need not determine whether the [First
Judicial District] is an 'agency' for purposes of
[subsection (.4)] of the Retirement Code."[60]
The
Commonwealth Court additionally rejected Ms. Dailey's
argument the forfeiture of her pension is unconstitutional as
an excessive fine under the United States and Pennsylvania
Constitution based on its earlier decision, Scarantino v.
Public School Employees' Retirement
Board.[61]In Scarantino, a former public
school superintendent challenged the forfeiture of his
retirement benefits under Pennsylvania's Public School
Employees' Retirement System after he plead guilty to a
federal criminal offense. The employee challenged the
forfeiture of $1.5 million in pension benefits violates the
Pennsylvania Constitution and the Excessive Fines Clause of
the United States Constitution. The Commonwealth Court
rejected the argument. The Commonwealth Court explained the
"Excessive Fines Clause of the Eighth Amendment is only
implicated if the fine is a punishment" and"
[forfeitures are 'fines' if they constitute
punishment for an offense."[62]The Commonwealth Court
found "the relationship between a public school employee
and the [Retirement System] is contractual in nature"
and eligibility to receive retirement benefits includes
satisfaction of all conditions precedent including "that
an employee cannot have been convicted of one of the
enumerated crimes or a substantially the same [sic] federal
crime."[63]
The
Commonwealth Court concluded Ms. Dailey's eligibility for
pension benefits, like the plaintiff in Scarantino,
is based on contract and does not result in an
unconstitutional forfeiture where she did not meet the
conditions precedent.[64] The Commonwealth Court rejected Ms.
Dailey's remaining due process arguments subsections (.4)
and (.5) are unconstitutionally vague and constitute a
grossly excessive deprivation of property, explaining the
case authority she relied on "rest[s] on her incorrect
assertions that pension disqualification is a fine or
punishment."[65]
Unsuccessful
in the Commonwealth Court, Ms. Dailey petitioned for
allowance of appeal to the Pennsylvania Supreme Court. On May
22, 2019, the Pennsylvania Supreme Court denied Ms.
Dailey's Petition for Allowance of Appeal.[66]
F.
Removal of the case from our suspense docket.
As Ms.
Dailey exhausted her arguments at the highest Pennsylvania
appellate courts, we removed this case from our suspense
docket.[67] The City renewed its Motion to dismiss
and Ms. Dailey renewed her Motion for partial summary
judgment seeking judgment on her Excessive Fines Clause and
Due Process Clause claims.
We
notified the parties we may consider the entry of summary
judgment in favor of the City and, under Federal Rule of
Civil Procedure 56(f), granted the parties leave to file
supplemental memoranda.[68] The City supplemented its arguments
asking we deny Ms. Dailey's partial Motion for summary
judgment and enter judgment in its favor on all her claims,
including the Fifth Amendment Takings Clause
claim.[69] Ms. Dailey responded summary judgment
should be entered in her favor on her Excessive Fines Clause
and Due Process Clause claims and deny the City's Motion
for summary judgment.[70] We held oral argument on the pending
motions.
II.
Analysis[71]
The
threshold issue is the effect of the Commonwealth Court's
November 9, 2018 decision. The City argues we must give it
preclusive effect and dismiss Ms. Dailey's amended
complaint in its entirety (with the exception of her Takings
Clause claim). It argues under issue preclusion, or
collateral estoppel, the Commonwealth Court's decision
precludes Ms. Dailey's federal constitutional claims
here. Ms. Dailey responds she made an effective
England reservation and the Commonwealth Court's
decision has no effect whatsoever on her claims here.
We must
review Ms. Dailey's federal constitutional claims. But we
do so by applying the construction given the Retirement Code
Section 22-1302 by the Commonwealth Court. We are bound by
the Commonwealth Court's construction of the Retirement
Code. Applying the Commonwealth Court's interpretation of
the Retirement Code, it is not unconstitutionally vague.
Turning
to the remainder of Ms. Dailey's claims, the Retirement
Code is not an excessive fine, does not violate substantive
due process, and is not property for the purposes of her
Takings Clause claim. We enter judgment in favor of the City
dismissing all of Ms. Dailey's claims in the accompanying
Order.
A.
Following our Pullman abstention and Ms.
Dailey's England reservation, we follow the
Commonwealth Court's November 9, 2018 interpretation of
the Retirement Code.
Ms.
Dailey's threshold argument both here and in her state
court action is Retirement Code Section 22-1302(1)(a)
subsection (.4) as applied to her and subsection (.5) on its
face and as applied to her are void for vagueness. Faced with
an uncertain question of Pennsylvania's interpretation of
subsections (.4) and (.5) at the time Ms. Dailey filed her
complaint in 2016, we abstained under
Pullman[72]
Absent
clarification by Pennsylvania's state courts, we could
not then determine whether subsection (.4)'s prohibition
on theft from "the City, or those of any official agency
of the City, or agency, engaged in performing any
governmental function for the City or Commonwealth"
applied to Ms. Dailey as an employee of the First Judicial
District. Similarly, we could not then determine the
definition of "malfeasance in officer or
employment" in subsection (.5). Applying the test for
Pullman abstention in this circuit, we recognized at
least one Pennsylvania Commonwealth Court decision defined
the meaning of "malfeasance" in Retirement Code
Section 22-1302 but in another later decision the
Commonwealth Court declined to address whether subsection
(.5) is vague, creating uncertain issues of state law
underlying the federal constitutional claims
here;[73] we found the state court's
resolution of the meaning of the Retirement Code may obviate
the need for our adjudication of Ms. Dailey's
constitutional claims; and, any erroneous construction of the
Retirement Court by us would disrupt important state
policies.[74]
Abstention
under Pullman postpones decisions on constitutional
questions because "when the outcome of a constitutional
challenge turns on the proper interpretation of state law, a
federal court's resolution of the constitutional question
may turn out to be unnecessary. The state courts could later
interpret the state statute differently. And the state
court's different interpretation might result in a
statute that implicates no constitutional question, or that
renders the federal court's constitutional analysis
irrelevant. ... Abstention ... avoid[s] this risk by
deferring a federal court's decision on the
constitutionality of the state statute until a state court
has authoritatively resolved the antecedent state-law
question."[75] When we abstain under Pullman,
our "decision sends the plaintiff to state court. Once
the plaintiff obtains the state courts' views on the
statute, [she] may return to federal court, state-court
decision in hand, for resolution of the constitutional
question."[76]
And
this is exactly the situation now. We have in hand the
Pennsylvania Commonwealth Court's November 9, 2018
decision interpreting "malfeasance" in subsection
(.5). As analyzed below, we apply its interpretation to Ms.
Dailey's void for vagueness argument.
Perhaps
conflating the issues, the City argues we must dismiss Ms.
Dailey's claims (except for her Takings Clause claim)
because the Commonwealth Court's decision is preclusive.
The City argues issue preclusion requiring (1) "the
party against whom preclusion is asserted is the same, [and]
the issue is identical;" (2) "the previous judgment
was final and on the merits;" and (3) "the parties
had a full and fair opportunity to
litigate."[77] The City argues the issues are identical
here because Ms. Dailey's England reservation
failed. The City contends she voluntarily presented both her
state and federal constitutional claims to the state
courts, the Commonwealth Court decided her federal
constitutional claims, and Ms. Dailey is attempting to
"take a second bite at the apple." This argument
hinges on the City's assertion Ms. Dailey chose
to advance her federal constitutional claims in her state
court action, relying heavily on San Remo Hotel, L.P. v
City and County of San Francisco[78]
In
San Remo, California hotel owners challenged under
the Fifth Amendment Takings Clause a city ordinance requiring
payment of a fee before approval of a permit to convert
residential units to tourist units. After originally filing a
complaint in state court, the hotel owners filed an action in
federal court against the City and County of San Francisco
alleging both state and federal constitutional
claims.[79] The district court granted summary
judgment in favor of the City and County.[80] On appeal to
the Court of Appeals for the Ninth Circuit, the hotel owners
asked the court to abstain under Pullman
"because a return to state court could conceivably moot
the remaining federal questions."[81] The Court of
Appeals granted the hotel owners' request for
Pullman abstention on the facial challenge to the
City ordinance, appending in a footnote the hotel owners
"would be free to raise their federal takings claim in
the California Courts" but if the hotel owners
"wanted to retain [their] right to return to federal
court for adjudication of [their] federal claim, [they] must
make an appropriate reservation in state
court."[82]
The
hotel owners returned to state court where they made an
England reservation.[83] The state trial court
dismissed the complaint, the intermediate appellate court
reversed, and the California Supreme Court reversed the
appellate court, reinstating the trial court's order
dismissing the complaint.[84] The hotel owners did not seek
a writ of certiorari from the California Supreme
Court's decision to the United States Supreme Court and
instead returned to federal district court.[85]
The
district court found the hotel owners' facial attack on
the City ordinance barred by issue preclusion, a decision
affirmed by the Court of Appeals for the Ninth
Circuit.[86] The Supreme Court affirmed, finding the
hotel owners' England reservation did not negate
the preclusive effect of the state-court
judgment.[87] The Court recognized the hotel owners
"were entitled to insulate from preclusive effect one
federal issue-their facial constitutional challenge to [the
City ordinance]-while they returned to state court to resolve
their petition for writ of mandate."[88] But the hotel
owners "chose to advance broader issues than the limited
issues contained within their state petition ... on which the
Ninth Circuit relied when it invoked Pullman
abstention" and "effectively asked the state court
to resolve the same federal issues they asked it to reserve.
England does not support the exercise of any such
right."[89]
In
response to the City's issue preclusion argument, Ms.
Dailey responds she made an effective England
reservation and, after our abstention under Pullman,
litigated only her state constitutional claims in the state
courts. She argues the Pennsylvania and United States
Constitutions are not identical, she only referred to federal
constitutional law as interpretive guidance for her
Pennsylvania constitutional claims, and when the City opposed
removal of this action from the suspense docket after Judge
Fletman's decision, it argued Ms. Dailey's
England reservation is one of the reasons why we
should continue abstention under Pullman.
The
preclusive effect of the Commonwealth Court's decision is
a close call. We are guided by Supreme Court's teaching
in San Remo an England reservation does not
"fully negate the preclusive effect of the state-court
judgment with respect to any and all federal issues that
might arise in the future federal litigation" and
district courts are "not free to disregard 28 U.S.C.
§ 1738 [full faith and credit statute] simply to
guarantee that all takings plaintiffs can have their day in
federal court."[90] It is difficult to separate the
constitutional claims under the Pennsylvania and United
States Constitutions making this unlike a typical
England reservation. They appear to be the same
legal issue. If so, we could readily conclude Ms. Dailey
waived her England reservation and the Commonwealth
Court's final decision should be afforded preclusive
effect.
Although
we could potentially find a waiver of the England
reservation, on balance, it is prudent to consider the issues
on their merits. Based on a review of Ms. Dailey's
Commonwealth Court briefing, she did not "choose to
advance broader issues" and voluntarily litigate her
federal constitutional claims in the state court action,
making her different than the petitioners in San
Remo. A review of the Commonwealth Court's
opinion reveals it did not address the federal constitutional
claims the Retirement Code is void for vagueness in violation
of due process. While the Commonwealth Court characterized
Ms. Dailey's argument "forfeiture of her pension is
unconstitutional as an excessive fine under the United States
and Pennsylvania Constitutions" and ultimately rejected
her argument, Ms. Dailey did not advance arguments under the
federal constitution there.
The
Commonwealth Court's decision is not preclusive on the
issue before us.
B.
We reject Ms. Dailey's argument Giaccio allows
us to ignore the Commonwealth Court's interpretation of
"malfeasance."
The
Pennsylvania Commonwealth Court, both in its Dailey
opinion and in Tepper, construes the term
"malfeasance" in subsection (.5)
'"according to its common and approved usage,'
that is as a wrongful or unlawful act, especially wrongdoing
or misconduct by a public official." Ms. Dailey argues
we must reject the Commonwealth Court's interpretation of
the term "malfeasance" as used in subsection (.5)
of the Retirement Code.
At oral
argument, Ms. Dailey argued our analysis must be under the
"federal constitutional provision," and the
Commonwealth Court did not decide "whether or not the
provision [subsection (.5)] actually set standards or even if
it applied to Ms. Dailey in particular."[91] Ms. Dailey
argues the Commonwealth Court's interpretation of the
Retirement Code is defective because it did not
"address[] the federal constitutional analysis" and
its interpretation of the term "malfeasance" as
"the commission of a wrongful and unlawful act by a
public official" does not give "the kind of
guidance, the notice that's constitutionally
required."[92] She argues the Commonwealth Court
"gave a reading of (.5) that was still constitutionally
suspect" and, when asked at oral argument how we can
invalidate the Commonwealth Court's interpretation of
"malfeasance," Ms. Dailey responded we may
"second guess the Commonwealth Court" and we are
not bound by its decision.[93] To support this argument, she
relies solely on a 1966 Supreme Court decision, Giaccio
v. State of Pennsylvania.[94]
We
reject Ms. Dailey's argument in its entirety. We cannot
simply disregard the Commonwealth Court's interpretation
of the term "malfeasance." To the contrary, on a
facial challenge to a state statute to determine
"whether a state statute is too vague and indefinite to
constitute valid legislation, we must take the statute as
though it read precisely as the highest court of the State
has interpreted it."[95] "If there is no
authoritative precedent from the state supreme court, this
court may look to an intermediate appellate court's
construction of the statute."[96] We must also
"consider any limiting construction that a state court
or enforcement agency has proffered."[97]
Ms.
Dailey's reliance on Giaccio is misplaced
because it arises in an entirely different procedural
context. In Giaccio, the plaintiff challenged as
vague a Pennsylvania statute authorizing juries to assess
costs against acquitted defendants, with threat of
imprisonment until paid, without prescribing definite
standards to govern the jury's
determination.[98] The plaintiff challenged the statute
in the state trial court which held
the state statute void for vagueness in violation of due
process."[99] The Pennsylvania Superior Court reversed
the trial court[100] and the Pennsylvania Supreme Court
affirmed the Superior Court.[101]
Mr.
Giaccio appealed from the Pennsylvania Supreme Court to the
United States Supreme Court.[102] There, the Commonwealth
argued even if the challenged statute is void for vagueness
as originally written, subsequent state court interpretations
provided "standards and guides that cure the former
constitutional deficiencies."[103] The United States
Supreme Court disagreed, finding the "court-created
conditions and standards still leave to the jury such broad
and unlimited power in imposing costs on acquitted defendants
that the jurors must make determinations of the crucial issue
upon their own notions of what the law should be instead of
what it is."[104]
Ms.
Dailey argues Giaccio provides authority for us to
invalidate the Commonwealth Court's interpretation of
"malfeasance" in subsection (.5). But Ms.
Dailey's case is procedurally different. In
Giaccio, the United States Supreme Court reviewed a
direct appeal from a state court judgment by writ of
certiorari. This is not the context here. Ms. Dailey
could have, but chose not to, file a petition for writ of
certiorari from the Pennsylvania Supreme Court's
denial of her petition for allowance of appeal to the United
States Supreme Court. Instead, Ms. Dailey returned to us
seeking summary judgment on, inter alia, her federal
due process void for vagueness claim arguing Giaccio
allows us, and in fact requires us, to invalidate the
Commonwealth Court's two recent interpretations of the
term "malfeasance" in subsection (.5).
We
abstained under Pullman to allow the Pennsylvania
courts to interpret Retirement Code Section 22-1302(1)(a)(.4)
and (.5). During our abstention, the Commonwealth Court twice
interpreted the term "malfeasance" in subsection
(.5). We apply its interpretation of this term to Ms.
Dailey's void for vagueness claims.
C.
Section 22-1302(1)(a)(.5) is not unconstitutionally vague on
its face or as applied to Ms. Dailey.
Ms.
Dailey seeks summary judgment on her void for vagueness claim
because the term "malfeasance" in subsection (.5)
is unconstitutionally vague. In her amended complaint, Ms.
Dailey claims Section 22-1302(1)(a)(.5)-"malfeasance in
office or employment"-violates the Due Process Clause,
both on its face and as-applied to her.[105] She
argues subsection (.5) only permits disqualification from the
City's Retirement System where an employee "pleads
or is finally found guilty, or pleads no defense, in any
court, to ...[m]alfeasance in office or employment." Ms.
Dailey argues she pleaded guilty to theft of movable property
by unlawful taking and not
"malfeasance in office or employment." She argues
to the extent subsection (.5) allowed the City to disqualify
her from pension benefits based on her guilty plea to theft,
the term "malfeasance" is unconstitutionally vague.
The Due
Process Clause of the Fourteenth Amendment provides no state
"shall... deprive any person of life, liberty, or
property, without due process of law; ..,
."[106] Under federal constitutional law,
"[i]t is a basic principle of due process that an
enactment is void for vagueness if its prohibitions are not
clearly defined."[107] The "void for vagueness"
doctrine addresses two due process concerns: "first,
that regulated parties should know what is required of them
so they may act accordingly; second, precision and guidance
are necessary so that those enforcing the law do not act in
an arbitrary or discriminatory way."[108] Although
rooted in the context of criminal statutes, the void for
vagueness doctrine now extends to the civil
context.[109]
The
measure of "vagueness" is based on the
understanding of people of "common intelligence."
"It is well-settled in American jurisprudence, a statute
which either forbids or requires the doing of an act in terms
so vague that men of common intelligence must necessarily
guess as its meaning and differ as to its application,
violates the first essential of due process of
law."[110] The void for vagueness doctrine is
"based on the idea of fairness. Its purpose is only to
give 'fair warning' of prohibited
conduct."[111] "[V]agueness challenges to
statutes which do not involve First Amendment freedoms must
be examined in light of the facts of the case at
hand."[112]
There
are two different void for vagueness challenges: facial or
as-applied. "The difference between the two is
significant."[113] A party asserting a facial challenge
to a statute "must establish that no set of
circumstances exists under which the Act would be
valid."[114] "This is a particularly demanding
standard and is the 'most difficult challenge to mount
successfully."'[115] The Supreme Court
"disfavors" facial challenges because such claims
"often rest on speculation"; "run contrary to
the fundamental principle of judicial restraint that courts
should neither anticipate a question of constitutional law in
advance of the necessity of deciding it nor formulate a rule
of constitutional law broader than is required by the precise
facts to which it is to be applied"; and "threaten
to short circuit the democratic process by preventing laws
embodying the will of the people from being implemented in a
manner consistent with the Constitution."[116]
By
contrast, an as-applied challenge "does not contend that
a law is unconstitutional as written but that its application
to a particular person under particular circumstances
deprived that person of a constitutional
right."[117] Ms. Dailey's briefing does not
distinguish between her facial and as-applied attack on
subsection (.5).
Through
Retirement Code Section 22-1302(1)(a), the City disqualifies
an employee from retirement benefits if she "pleads or
is finally found guilty ... to ... [m]alfeasance in office or
employment." We have the Commonwealth Court's
interpretation of the term "malfeasance." Since our
abstention Order, the Commonwealth Court decided
Tepper and its opinion in Ms. Dailey's state
court action, reaffirming Tepper's construction
of "malfeasance."
In
Tepper, the Commonwealth Court recognized while the
term "malfeasance" is not defined in the Retirement
Code, the term is defined by the Commonwealth Court's
earlier case law. In those cases, the term
"malfeasance" is defined as "not merely error
in judgment or departure from sound discretion, but the act,
omission or neglect must be willful, corrupt and amount to a
breach of duty legally required by one who has accepted
public office"[118] and "where there is
'either the breach of a positive statutory duty or the
performance by a public official of a discretionary act with
an improper or corrupt motive.'"[119] The
Commonwealth Court explained "[t]he focus is on the
'underlying illegal act, as opposed to the particular
crime, [that] form[s] the basis for the
forfeiture.'"[120] The Commonwealth Court explained it
construes "malfeasance" '"according to its
common and approved usage,' that is as a wrongful or
unlawful act, especially wrongdoing or misconduct by a public
official."[121]
Ms.
Dailey objects to the Commonwealth Court's definition of
"malfeasance." She argues the term
"malfeasance" is vague and provides
"insufficient guidance as to what conduct is permitted
and what conduct is prohibited" under subsection (.5)
like the constitutionally defective statute in
Giaccio. She contends the Commonwealth Court's
definition violates federal constitutional law under
Giaccio.
The
statute in Giaccio, and the constructions applied by
the state courts, are far different than the definition of
"malfeasance" provided by the Commonwealth Court.
The Supreme Court in Giaccio found the challenged
statute constitutionally infirm because it contained no
standards at all and did not provide conditions on the
jury's power to impose costs upon an acquitted
defendant.[122] The Supreme Court rejected the meaning
given by the trial court in its jury charge explaining costs
could be imposed if it found "some misconduct less than
that charged against [the acquitted
defendant]."[123] The Supreme Court found "some
misconduct," though "nearer to giving a guide to
the jury," still "falls short of the kind of legal
standard due process requires."[124]
This is
far from the term "malfeasance" defined by the
Commonwealth Court according to its common usage as a
wrongful or unlawful act, especially wrongdoing or misconduct
by a public official as well as its earlier decisions
similarly defining malfeasance.
The
void for vagueness standard is based on an understanding of
people of "common intelligence." Subsection (.5) is
not unconstitutionally vague measured against this standard.
Ms. Dailey bears the burden of proving vagueness "not in
the sense that it requires a person to conform [her] conduct
to an imprecise but comprehensible normative standard, but
rather in the sense that no standard of conduct is specified
at all."[125] She does not meet her burden
subsection (.5) is so vague people of "common
intelligence must necessarily guess as its meaning and differ
as to its application." It is undisputed Ms. Dailey
plead guilty to theft from the First Judicial District by
using its credit cards for her own personal use without
authorization. She does not dispute the Pension Board's
characterization, at the time of her offense, she occupied
the position of "a high-ranking [First Judicial
District] officer" who, as a public employee, committed
an "in-office offense."[126] We cannot conceive a
person of common intelligence "must necessarily
guess" the theft of over $73, 000 from her public
employer constitutes "malfeasance in office or
employment" disqualifying her from the City's
Retirement System.
We
similarly dispose of Ms. Dailey's additional arguments
challenging subsection (.5). Ms. Dailey challenges the facts
underlying the decision by arguing the Commonwealth Court
"did not address whether [she], as an employee of the
[First Judicial District], was a 'public official'
within the meaning of the Retirement Code's disqualifying
provision or whether the underlying 'wrongful and
unlawful act' of [a] [First Judicial District] employee
was 'in office and employment' within the meaning of
the City's Retirement Code."[127] But Ms.
Dailey does not dispute at the time of her termination she
occupied the position of Chief Deputy Prothonotary and Clerk
of Courts or the Board's finding theft from the First
Judicial District, her employer, "directly related to
her position in the [First Judicial District], which gave her
access to the credit card."[128]We cannot locate in the
record, and Ms. Dailey does not direct us to it, where Ms.
Dailey challenged the Pension Board's conclusion finding
her a "public official" who committed an
"in-office offense."
Ms.
Dailey additionally argues vagueness based on
Pennsylvania's abolition of all common law crimes
including "malfeasance in office." She argues
because subsection (.5) only applies to "malfeasance in
office or employment" and Pennsylvania abolished the
common law crime of "malfeasance in office," it is
unreasonable to interpret "malfeasance in office in a
manner that would expand the substantive scope of the
'malfeasance in office or employment' provision"
in subsection (.5).[129] A broad interpretation of
subsection (.5) is unreasonable, she argues, because it would
render other crimes "specifically enumerated" in
Section 22-1302(1)(a) "superfluous."[130]Ms. Dailey
contends it is reasonable for a member to interpret
subsection (.5) only by a guilty plea to the crime of
"malfeasance in office."
Under
Pennsylvania's rules of statutory construction,
"[w]ords and phrases shall be construed according to
rules of grammar and according to their common and approved
usage; but technical words and phrases and such others as
have acquired a peculiar and appropriate meaning or are
defined in this part, shall be construed according to such
peculiar and appropriate meaning or
definition."[131] We are also instructed by
Pennsylvania's rules of statutory construction
"[t]he object of all interpretation and construction of
statutes is to ascertain and effectuate the intention of the
General Assembly" and "[e]very statute shall be
construed, if possible, to give effect to all of its
provisions."[132] We presume the General Assembly
"does not intend a result that is absurd, impossible of
execution or unreasonable"; "intends the entire
statute to be effective and certain"; "does not
intend to violate the Constitution of the United States or of
this Commonwealth"; "when a court of last resort
has construed the language used in a statute, the General
Assembly in subsequent statutes on the same subject matter
intends the same construction to be place upon such
language"; and "intends to favor the public
interest as against any private interest."[133]
Ms.
Dailey's construction-essentially, employees would only
reasonably understand "malfeasance in office or
employment" to mean the now abolished common law crime
of "malfeasance in office"-runs counter to
Pennsylvania's rules of statutory construction. We are
directed to give the word "malfeasance" its common
and approved usage and presume the Code's drafters do not
intend an absurd result or to violate the Constitution. It
would be absurd to include "malfeasance in office or
employment" as a disqualifying event but have it without
effect because the common law crime of "malfeasance in
office" is abolished. If we accepted Ms. Dailey's
argument, subsection (.3) of Section 22-1302 would also be
void for vagueness because "graft" is not a
statutorily defined offense under Pennsylvania's criminal
code.
We
reject Ms. Dailey's suggestion our Order abstaining under
Pullman supports her vagueness argument. In our
Order, we explained "uncertain issues of state law
underlying the federal constitutional claim brought in
federal court"-the first Pullman factor-weighed
in favor of abstention. We explained "we cannot
determine, in the first instance, whether §§ (.4),
(.5)" of the Retirement Code applies, finding "at a
minimum, ... uncertain issues of state law as to whether [Ms.
Dailey's] guilty plea to theft could also constitute
'malfeasance' under Pennsylvania law, as addressed by
at least one Pennsylvania appellate
court."[134] We now have the Commonwealth
Court's decisions in Tepper and Dailey
defining malfeasance.
Retirement
Code Section 22-1302(a)(1)(.5) is not void for vagueness
either on its face or as applied to her. We enter judgment in
favor of the City on Ms. Dailey's void for vagueness Due
Process Clause claims. Having determined subsection (.5) does
not violate due process, we need not reach subsection
(.4)'s application to Ms. Dailey. She is disqualified
under subsection (.5)
D.
The Pension Board's disqualification does not violate the
Excessive Fines Clause of the Eighth Amendment.
Ms.
Dailey next argues even if Retirement Code is not void for
vagueness, the City's disqualification of her under the
Retirement Code deprived her of her rights under the
Excessive Fines Clause of the Eighth Amendment. The Eighth
Amendment proscribes "[e]xcessive bail shall not be
required, nor excessive fines imposed, nor cruel and unusual
punishments inflicted."[135] The clause "nor
excessive fines imposed" "limits the
government's power to extract payments, whether in case
or in kind, 'as punishment for some
offense.'"[136] The Eighth Amendment's
Excessive Fines Clause is violated where the "fine"
is a punishment for an offense and is
"excessive."[137]
Ms.
Dailey argues forfeiture under the Section 22-1302(1)(a) of
the Retirement Code is both punitive and excessive. As to the
punitive prong, Ms. Dailey argues it is undisputed the
forfeiture of her vested retirement benefit is punitive under
the Supreme Court's standard in Austin v. United
States.[138] In Austin, the Supreme Court
considered whether the United States' in rem
action seeking forfeiture of a criminal defendant's
mobile home and business under federal statute is a
punishment. The Court concluded "forfeiture generally
and statutory in rem forfeiture in particular
historically have been understood, at least in part, as
punishment."[139] With reference to the specific
forfeiture statute challenged, the Court examined the
legislative history of the statute finding Congress chose to
"tie forfeiture directly to the commission of drug
offenses" and "understood [the statute] as serving
to deter and to punish" and concluded the statute is
punitive, and subject to the Excessive Fines
Clause.[140] The Court declined to establish a test
for determining whether a forfeiture is constitutionally
excessive.[141]
Five
years after Austin, the Supreme Court set the
standard for "excessive" in United States v.
Bajakajian.[142] Under Bajakajian's test,
"punitive forfeiture violates the Excessive Fines Clause
if it is grossly disproportional to the gravity of a
defendant's offense."[143] In applying this
standard, we "compare the amount of the forfeiture to
the gravity of the defendant's offense" and,
"[i]f the amount of the forfeiture is grossly
disproportional to the gravity of the defendant's
offense, it is unconstitutional."[144] Applying
Bajakajian, Ms. Dailey argues forfeiture of over
$2.2 million in estimated lifetime vested retirement benefits
is unconstitutionally excessive because it is grossly
disproportional to the gravity of her offense.
The
City responds Austin does not apply because Ms.
Dailey's pension is not property used in relation to her
criminal offense. Instead, the City argues, Ms. Dailey did
not meet eligibility and is not entitled to her pension
because of her guilty plea to theft from the First Judicial
District. Under the Retirement Code, her in-office criminal
conduct is a failure to satisfy the conditions precedent to
qualify for retirement benefits.[145]
The
City relies on an earlier Commonwealth Court decision,
Scarantino v. Public School Employees' Retirement
Board[146] on which the Commonwealth Court relied
in its November 9, 2018 decision. In Scarantino, a
former public-school superintendent challenged an order of
the Public School Employees' Retirement Board determining
he forfeited his retirement benefits under Pennsylvania's
Public Employee Pension Forfeiture Act[147] as a
result of his guilty plea to a federal crime. Among his
challenges to the Board's decision, the superintendent
argued forfeiture of $1.5 million in pension benefits
violates the excessive fines clause of both the Pennsylvania
and United States Constitution.
The
Commonwealth Court in Scarantino found the
relationship between a public school employee and the
retirement system contractual in nature.[148] The court
cited Section 1313(a)'s "mandatory disqualification
and forfeiture of benefits upon 'conviction[] or plea[]
of guilty or no defense to any crime related to public office
or public employment."[149] Section 1313(b) deems
"[s]uch conviction or plea ... a breach of a public
officer's or public employee's contract with his
employer."[150] The Commonwealth Court in
Scarantino concluded to receive retirement benefits
and employee must satisfy all conditions precedent, like age
and years of service, and must also satisfy an additional
condition precedent for eligibility "that an employee
cannot have been convicted of one or the enumerated crimes or
a substantially the same federal crime."[151]
In
affirming the Court of Common Pleas in Ms. Dailey's state
action, the Commonwealth Court relied on Scarantino.
It held Ms. Dailey, as a public employee, did not meet the
conditions precedent of pension eligibility, rejecting her
excessive fines argument. Ms. Dailey takes issue with the
Commonwealth Court's reliance on
Scarantino[152]
We see
no reason to depart from the Commonwealth Court's
decision in Scarantino and disagree with Ms.
Dailey's argument the forfeiture of her pension benefits
is a punishment. In reaching its conclusion in
Scarantino, the Commonwealth Court relied on the
Pennsylvania Supreme Court's decision in Commonwealth
v. Abraham[153]In Abraham, the Pennsylvania
Supreme Court examined Pennsylvania's Forfeiture Act in
the context of a former teacher's challenge to his guilty
plea to indecent assault of a minor. After his guilty plea,
the teacher filed a petition under the Post Conviction Relief
Act, arguing in effectiveness of his plea counsel for failing
to inform him he would forfeit his pension upon pleading
guilty.[154] The Supreme Court addressed whether
the "forfeiture of a pension that stems from a public
school teachers' negotiated plea to crimes committed in
the scope of his employment is a collateral consequence of a
criminal conviction which relieves counsel from any
affirmative duty to investigate and
advise?"[155]
The
Pennsylvania Supreme Court determined forfeiture of the
pension is non-punitive.[156]It reasoned the goal of
Pennsylvania's Forfeiture Act is triggered by "a
specific class of crimes which are particularly abhorrent
when committed by those serving the public; that a plea to
such crimes is deemed a breach of the employment contract
suggests strongly that the statute is designed to ensure
employees maintain their integrity while in public
employment" and the Act's goal is "to restrict
future benefits for employees who commit certain crimes, a
deterrent."[157] The Supreme Court held the Forfeiture
Act "is to ensure accountability and address corruption;
it is triggered by an employee's breach of the public
employment contract by commission of a very specific class of
crimes" and "[a]n employee who breaches his
contract forfeits his right to deferred compensation for
services rendered in the past. Entitlement to the
compensation that is deferred, however, is not without
conditions, the relevant one being that the employee not
commit any of the enumerated crimes."[158]
We are
not persuaded by Ms. Dailey's argument
Scarantino is distinguishable. Under Pennsylvania
law, the forfeiture of a public employee's pension is
triggered by the employee's breach of the public
employment contract. We see no reason to distinguish
Scarantino and Abraham from Ms.
Dailey's case based on her membership in the City's
Retirement System versus the State's Retirement System.
Ms. Dailey concedes Mr. Scarantino's employment
relationship with the State Employee Retirement System is
contractual in nature but argues it is only because
Pennsylvania's Public Employee Pension Forfeiture Act
("Forfeiture Act") contains specific language
making a public official's or public employee's
contract with her employer based in contract.[159] She
argues Section 1331(b) of Forfeiture Act specifically states
...