Alaska Supreme Court Opinions made Available byTouch N' Go Systems and Bright Solutions


Touch N' Go
®, the DeskTop In-and-Out Board makes your office run smoother.

 

You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Peter Metcalfe, individually and on behalf of all others similarly situated v. State of Alaska (4/2/2021) sp-7512

Peter Metcalfe, individually and on behalf of all others similarly situated v. State of Alaska (4/2/2021) sp-7512

           Notice:    This  opinion   is  subject   to  correction  before  publication   in   the  PACIFIC  REPORTER.  

           Readers  are r   equested  to  bring  errors to the attention  of  the  Clerk  of  the  Appellate C                 ourts,  

           303  K  Street, Anchorage, Alaska  99501, phone   (907)  264-0608, fax   (907)  264-0878,  email  

           corrections@akcourts.us.  



                                                                                                                             

                       THE  SUPREME  COURT  OF  THE  STATE  OF  ALASKA  



PETER  METCALFE,  individually  and  )  

on  behalf  of  all  others  similarly                              )     Supreme  Court  No.  S-17157  

situated,                                                           )  

                                                                                                                                      

                                                                    )     Superior Court No.  1JU-13-00733 CI  

                                  Appellant,                        )  

                                                                                               

                                                                    )     O P I N I O N  

           v.                                                       )  

                                                                                                             

                                                                    )     No. 7512 - April 2, 2021  

                      

STATE OF ALASKA,                                                    )  

                                                                    )  

                                  Appellee.                         )  

                                                                    )  



                                                                                                                     

                                     

                       Appeal from the Superior Court of the State of Alaska, First  

                                                                                           

                       Judicial District, Juneau, Kevin Miller, Judge.  



                                                                                                                

                       Appearances:  Jon Choate, Choate Law Firm LLC, Juneau,  

                                                                                                              

                       for Appellant. JessicaM. Alloway,Senior Assistant Attorney  

                                                                                                            

                       General,  Anchorage,  and  Kevin  G.  Clarkson,  Attorney  

                                                           

                       General, Juneau, for Appellee.  



                                                                                                                     

                       Before:          Winfree,  Maassen,  and  Carney,  Justices,  and  

                                                                                    *   [Bolger, Chief Justice,  

                                                                                                                 

                       Matthews and Fabe, Senior Justices. 

                       and Stowers, Justice, not participating.]  

                                                                   



                       MAASSEN, Justice.
  

                                              

                       CARNEY, Justice, with whom FABE, Senior Justice, joins, dissenting.
  

                                                                                                                              



           *  

                       Sitting by assignment made under article IV, section 11 of the Alaska                                            



Constitution and Alaska Administrative Rule 23(a).                            


----------------------- Page 2-----------------------

I.                        INTRODUCTION   



                                                     Article   XII,   section   7   of   the   Alaska   Constitution   provides   that   the  



"[a]ccrued benefits" of a State employee retirement system "shall not be diminished or                                                                                                                                                                                                                                                       



impaired."    Members of the plaintiff class are former State employees.                                                                                                                                                                                                                             When they   



enrolled in the State employee retirement system, a statute provided that if they left                                                                                                                                                                                                                                                  



eligible employment, withdrew their contributions to the system, and later returned to                                                                                                                                                                                                                                                        



eligible employment, they could repay their withdrawn contributions, be reinstated to                                                                                                                                                                                                                                                        



their original benefits level, and have their credited service time restored.                                                                                                                                                                                                                          The statute   



was later repealed.                                                         The superior court ruled on summary judgment that this repeal did                                                                                                                                                                                            



not  diminish   or   impair   the   former   employees'   accrued   benefits   and   was   therefore  



constitutional.  



                                                     We conclude that the statutory reinstatement right was an accrued benefit                                                                                                                                                                                            



of the retirement system protected against diminishment or impairment by article XII,                                                                                                                                                                                                                                                



section 7.                              We therefore reverse the superior court's judgment and remand the case for                                                                                                                                                                                                                        



further proceedings.   



II.                        FACTS AND PROCEEDINGS                                     



                          A.                         Facts  



                                                     This is the second appeal in a case challenging changes made to two of the                                                                                                                                                                                                           

                                                                                                                                                        1          Public employees in the Public Employees'  

 State's employee retirement systems.                                                                                                                                                                                                                                                                



Retirement System (PERS) and the Teachers' Retirement System (TRS) are eligible for  

                                                                                                                                                                                                                                                                                                                                           



health, disability,and retirement benefits. Before2005 thesebenefitswereseparated into  

                                                                                                                                                                                                                                                                                                                                       



different  "tiers"  depending  on  when  an  employee  joined  the  system.                                                                                                                                                                                                                                                    When  

                                                                                                                                                                                                                                                                                                                       



                           1                         This case was first appealed in                                                                                            Metcalfe v. State                                                    , 382 P.3d 1168 (Alaska                                          



2016),  abrogated on other grounds by Hahn v. GEICO Choice Ins. Co.                                                                                                                                                                                                                      , 420 P.3d 1160                          

(Alaska 2018).   



                                                                                                                                                                      -2-                                                                                                                                                          7512
  


----------------------- Page 3-----------------------

Peter Metcalfe joined PERS in 1980 he was a member of Tier 1 - the most generous tier                                                                            



                                                                                                  2  

of benefits available to any PERS or TRS member.                                                      



                          In  1981  Metcalfe  left  PERS-eligible  employment  and  withdrew  his  

                                                                                                                                                                

                                                                                                    3    He  thereby  became  a  "former  

retirement  system  contributions  from  the  system.                                                                                                  

                                                                                     

member" as defined by statute.4                                  Corresponding statutes were also in effect for TRS.5  

                                                                                                                                                                        



Other statutes in effect at the time - and since before Metcalfe joined PERS - provided  

                                                                                                                                                      



that a former member who returned to eligible employment and repaid any refunded  

                                                                                                                                                     



contributions, plus interest, would be placed back in the member's original benefits tier  

                                                                                                                                                                 



and credited for previous service years.  Essentially, this allowed former members who  

                                                                                                                                                               



returned to eligible employment to reenter PERS or TRS as if they had never left.  

                                                                                                                                                                        



Reinstatement  of  prior  benefits  tier  and  credited  service  was  provided  by  former  

                                                                                                                                                         



                                                                 6                                                                                        7  

                                                                    and former AS 14.25.062 for TRS members.   

AS 39.35.350 for PERS members                                                                                                           

                                                



             2            Public employees who joined PERS or TRS between January 1, 1961, and                                                                  



June 30, 1986, are eligible for "Tier 1 benefits."                                            



             3            See AS39.35.200(a) (providing that inactivePERSemployees are"entitled  

                                                                                                                                                       

to receive a refund of the balance of the employee contribution account").  

                                                                                                                           



             4            See AS39.35.680(20)(definingPERS"formermember"as "employeewho  

                                                                                                                                                               

is  terminated  and  who  has received  a  total  refund  of  the  balance  of  the  employee  

                                                                                                                                                   

contribution account").  

                          



             5            AS 14.25.150(a) (providing that terminated TRS employees are "entitled  

                                                                                                                                               

to a refund of the balance of the member contribution account"); AS 14.25.220(18)  

                                                                                                                                           

(defining TRS "former member").  

                                              



             6            See former AS 39.35.350(b) (1980) ("An employee may reinstate credited  

                                                                                                                                                        

service associated with a refund by repaying the total amount of the refund. Interest will  

                                                                                                                                                                

accrue from the date of the refund until repayment of the refund or retirement, whichever  

                                                                                                                                                   

occurs first."), repealed by ch. 9, § 133, FSSLA 2005.  

                                                                                              



             7            See former AS 14.25.062 (1980), repealed by ch. 9, § 133, FSSLA 2005.  

                                                                                                                                                            



                                                                                 -3-                                                                         7512
  


----------------------- Page 4-----------------------

                          The Alaska Legislature made changes to PERS and TRS in 2005, including                                                      



                                                                                                                                                                      8  

closing the existing tiers to new members and creating a defined contribution plan.                                                                                      

                                                                                                                                                      9  Former  

AlaskaStatutes 39.35.350 and 14.25.062wererepealed effectiveJune30, 2010.    

                                                                                                                                            



members were granted a five-year period to return to eligible employment and repay  

                                                                                                                                                             



their refunded contributions if they intended to take advantage of the reinstatement  

                                                                                                                                             

provided by the repealed statutes.10  Failure to act during this five-year period resulted  

                                                                                                                                                         

in the permanent forfeiture of their previously credited service.11  The legislative changes  

                                                                                                                                                         



provided no benefit to members specifically intended to offset this apparent detriment.  

                                                                                                                                                                         



                          Metcalfe did not return to eligible employment in the five-year period.  In  

                                                                                                                                                                    



2012 he inquired about his eligibility for PERS retirement benefits, and the Division of  

                                                                                                                                                                    



Retirement and Benefits notified him that, because of the repeal of AS 39.35.350, he was  

                                                                                                                                                                 



"not eligible to reinstate [his prior] service, [and] any entitlement based on [his] prior  

                                                                                                                                                              



PERS service [was] forfeit."  

                                                          



             B.           Proceedings  



                          In 2013 Metcalfe filed a complaint in the superior court alleging that the  

                                                                                                                                                                  



repeal of AS 39.35.350 and AS 14.25.062 violated his rights and those of other similarly  

                                                                                                                                                       



situated persons protected by article XII, section 7 of the Alaska Constitution.   The  

                                                                                                                                                                



superior court dismissed Metcalfe's claims for contract damages and for declaratory and  

                                                                                                                                                                 

injunctive relief as time-barred.12                                  Metcalfe appealed.   We affirmed the dismissal of  

                                                                                                                                                                   



             8            Ch. 9, § 122, FSSLA 2005;                             see  AS 39.35.710.
   



             9            See  ch. 9, §§ 133, 149, FSSLA 2005.
                         



             10
          See id.  

                                  



             11           See id.  

                                  



             12           Metcalfe v. State, 382 P.3d 1168, 1170-71 (Alaska 2016), abrogated on  

                                                                                                                                             

                                                                                                                                             (continued...)  



                                                                                 -4-                                                                          7512
  


----------------------- Page 5-----------------------

Metcalfe's contract damages claim on the ground that the remedy it sought was not                                                                     



appropriate for a violation of article XII, section 7; the proper remedy, rather, was                                                                

                                                                                              13  We reversed the dismissal of the  

recognition of the constitutionally protected contract.                                                                                                



declaratory and injunctive relief claim and remanded for further proceedings, holding  

                                                                                                                                              



that the claim was not time-barred and that the superior court did not abuse its discretion  

                                                                                                                                           

in determining that the claim was ripe for review.14                                             We declined to answer whether  

                                                                                                                                             



Metcalfe had a vested PERS right under former AS 39.35.350 until "the superior court  

                                                                                                                                                   



[had]  the  opportunity  to  resolve  both  the  class  action  issues  and  the  remaining  

                                                                                                                                         

declaratory judgment issues in the first instance."15  

                                                                                             

                        Following remand the superior court certified the case as a class action.16  

                                                                                                                                                              



The State filed a motion for summary judgment, which the court granted.  The court  

                                                                                                                                                   



reasoned that (1) the protections of article XII, section 7 apply only to members of State  

                                                                                                                                                   



retirement systems, and because Metcalfe and the class are statutorily defined as "former  

                                                                                                                                              



members" their claims are not protected; and (2) the repeal of reinstatement of credited  

                                                                                                                                              



            12          (...continued)
  



other  grounds  by  Hahn  v.  GEICO  Choice  Ins.  Co.,  420  P.3d   1160  (Alaska  2018).
  



            13          Id.  at   1175;  see  also  infra  section  IV.B.  



            14          Metcalfe,  382  P.3d  at   1175-77.  



            15          Id.  at   1177.  



            16          The  class  is defined  to  include  "[e]very  person  who  became   [a  PERS  or  



TRS]  member  between  January  1,  1961  and  July  27,  2005  who,  at  some  point,  left  PERS  

or  TRS  qualifying  employment,  took  a  refund  of  their  retirement  contributions  to  PERS  

or   TRS,   and   did  not  return  to  PERS   or   TRS   qualifying employment  before  June   30,  

2010."    



                                                                           -5-                                                                     7512
  


----------------------- Page 6-----------------------

service did not diminish or impair an "accrued benefit" of a state employee retirement                                 



                                                                                              17  

system.   Metcalfe appeals on behalf of the class.                                                 



                                                  

III.         STANDARD OF REVIEW  



                                                                                                                                 18  

                                                                                                                                                                       

                                                                                                                                      "We will affirm a  

                          "We review a grant of summary judgment de novo." 



                                                                                                                                                                   

grant of summary judgment 'when there are no genuine issues of material fact, and the  



                                                                                                                            19  

                                                                                                                                                               

prevailing party . . . [is] entitled to judgment as a matter of law.' "                                                          "We review de novo  



                                                                                                                                                                   

questions of law, including constitutional questions . . . . In de novo review we apply our  



                                                                                                                                                                    

independent judgment and 'adopt the rule of law that is most persuasive in light of  



                                                               20  

                                                              

precedent, reason, and policy.' " 



IV.          DISCUSSION  



                                                                                                

             A.           Overview Of Article XII, Section 7  



                                                                                                                                                 

                          Article XII, section  7  of the Alaska Constitution, entitled "Retirement  



                                                                                                                                                                    

Systems," provides: "Membership in employee retirement systems of the State or its  



                                                                                                                                                                    

political subdivisions shall constitute a contractual relationship.  Accrued benefits of  



                                                                                                                                                                

these systems shall not be diminished or impaired." Interpreting this provision, we have  



                                                                                                                                                                   

described retirement benefits as a form of deferred compensation, "an element of the  



                                                                                                                                                                 

bargained-for  consideration  given  in  exchange  for  an  employee's  assumption  and  



             17           BecauseMetcalfewas                         aPERSmember our discussion focuseson                                             thePERS   



statutes, though Metcalfe represents former members of both PERS and TRS.                                                                     



             18           Achman v. State, 323 P.3d 1123, 1126 (Alaska 2014) (quoting Kalenka v.  

                                                                                                                                                                      

Jadon, Inc., 305 P.3d 346, 349 (Alaska 2013)).  

                                                                              



             19           Id. (quoting Fraternal Order of Eagles v. City & Borough of Juneau, 254  

                                                                                                                                                                  

P.3d 348, 352 (Alaska 2011)).  

                                              



             20           Ebli v. State, Dep't of Corr., 451 P.3d 382, 387 (Alaska 2019) (citation  

                                                                                                                                                        

omitted) (quoting Fraternal Order of Eagles, 254 P.3d at 352).  

                                                                                                                  



                                                                                  -6-                                                                          7512
  


----------------------- Page 7-----------------------

                                                                             21  

performance of the duties of his employment."                                     An individual's rights in the retirement           



                                                                                                                                               22  

system therefore vest upon the individual's employment and enrollment in the system.                                                                



                                                                                                                                               23  

                       "Our caselawsuggeststhat'accruedbenefits' shouldbedefinedbroadly."                                                           

                                                                                                                                



                                                 

Accrued benefits "include[] all retirement benefits that make up the retirement benefit  



                                                                                                                                                

package that becomes part of the contract of employment when the public employee is  

           24  - "not just dollar amounts, but 'the practical effect of the whole complex of  

hired"                                                                                                                                         

provisions.' "25  Accrued benefits "arise by statute, from the regulations implementing  

                                                                     



           21         Hammond  v.  Hoffbeck,  627  P.2d   1052,   1056-57  (Alaska   1981).  



           22         Id.  at   1057.   



           23         Duncan  v.  Retired  Pub.  Emps.  of  Alaska,  Inc.,  71  P.3d  882,  887  (Alaska  



2003).  



           24         Id.  at  888.  



           25  

                                                                                                                            

                      Metcalfe v. State, 382 P.3d 1168, 1174 n.18 (Alaska 2016) abrogated on  

                                                                                                                                        

other grounds  by Hahn  v.  GEICO  Choice Ins.  Co.,  420  P.3d  1160 (Alaska  2018)  

                                                                                                                                                    

(quoting Sheffield v. Alaska Pub. Emps.' Ass'n , 732 P.2d  1083, 1087 (Alaska 1987)).  

                                                                                                                                 

Seven state constitutions explicitly provide contractual protection for state retirement  

                                                                                                                                

benefits; see Anna K. Selby, Note, Pensions in a Pinch:  Why Texas Should Reconsider  

                                                                                                 EX.  TECH  L.  REV.  1211,  1232  

Its Policies on Public Retirement Benefit Protection, 43 T 

(2011).   The  New  York  and  Illinois  constitutions  protect  "benefits,"  a  term  construed  to  

mean  both  benefits  already  earned  and  those  to  be  earned  in  the  future.   Id.  at  1233.   The  

Michigan,   Louisiana,   and   Hawaii   constitutions   "each   contain   a   provision   protecting  

employees'  'accrued  benefits,'  which  are construed  to include only the already  earned  

benefits  of  retirement  members."   Id.  at  1233-34.   Although  Alaska's  article  XII,  section  

7   uses   the   narrower   term   "accrued   benefits,"   we   interpret   this  provision   broadly,  

following  New  York's  and  Illinois's  stricter  protection  encompassing  both previously  

earned  and  future   earned   benefits;   see   Sheffield,   732   P.2d   at   1087-88   (discussing  

Birnbaum v. N.Y. State  Teachers' Ret. Sys., 152 N.E.2d  241 (N.Y.   1958));  Hammond,  

627  P.2d at 1056  &  n.8  (citing  Illinois a   nd  New  York  law  in  rejecting  "[t]he  rule  that  

regards  members'  rights  in  public  employees'  benefits  systems  as  vested  only  at  the  time  

at  which  an  individual  employee is eligible to receive  payment  of  those  benefits");  see  

                                                                                                                           (continued...)  



                                                                       -7-                                                               7512
  


----------------------- Page 8-----------------------

                                                                                                                               26  

those   statutes,   and   from   the   [Division   of   Retirement   and   Benefits']   practices."                                 



                                                                                                                               

                    When  determining  whether  accrued  benefits  have  been  diminished  or  



                                                                                                                             

impaired  for  purposes  of  article  XII,  section  7,  we  disregard  "the  form  of  the  

                                                  27   We have found constitutional violations in changes  

                                                                                                                       

                                      

change . . . in favor of its impact." 

to eligibility rules,28  the method of calculating benefits,29  the financial soundness of the  

                                                                                                                              

benefits system,30  and the level of health care coverage provided.31  

                                                                                    



                    Notwithstanding our liberal interpretation of article XII, section 7, "[w]e  

                                                                                                                          



recognize[] that retirement systems require some flexibility for successful operations,"  

                                                                                                                 



and we have followed the so-called "California Rule" to "hold[] that the constitution  

                                                                                                                 

does not preclude modifications to system rights after employment and enrollment."32  

                                                                                                                                    



But any changes that disadvantage employees "must be offset by comparable  new  

                                                                                                                            



          25        (...continued)  



also  Selby,  supra  at   1233.    



          26        McMullen  v.  Bell,   128  P.3d   186,   190-91  (Alaska  2006).   



          27        Sheffield,  732  P.2d  at   1087.  



          28        Hammond,  627  P.2d  at   1058-59.  



          29        Flisock   v. State,  Div.   of  Ret.   &  Benefits,   818   P.2d   640,   643-44   (Alaska  



 1991).  



          30        Municipality  of  Anchorage  v.  Gallion,  944  P.2d  436,  442-44  (Alaska  1997).  



          31        Duncan  v.  Retired  Pub.  Emps.  of  Alaska,  Inc.,  71  P.3d  882,  886-89  (Alaska  



2003).  



          32        Metcalfe v. State, 382 P.3d 1168, 1174 (Alaska 2016).  See generally Amy  

                                                                                                                           

B. Monahan, Statutes as Contracts?  The  "California Rule" and Its Impact on Public  

                                                                                                                         

Pension Reform, 97 IOWA   L.   REV.   1029,   1036,   1071 (2012)   (explaining   "California  

                                 

Rule"  and  discussing  state  cases  citing  it  with  approval).  



                                                               -8-                                                        7512
  


----------------------- Page 9-----------------------

                      33  

advantages";              if they are not, disadvantaged employees "may choose to accept the new                                             



                                                                                                           34  

system or may opt to keep the benefits in effect at enrollment."                                                



                                                                                                                                    

           B.	         The Repeal Of The Reinstatement Provision Diminished Or Impaired  

                                                                                                 

                       An Accrued Benefit Of The Retirement System.  



                                                                                                                                                 

                       Under our consistent interpretations of article XII, section 7, the repeal of  



                                                                                                                                       

the statutory right of reinstatement diminished Metcalfe's accrued benefits.   Alaska  



                                                                                                                            35 

                                                                                                                                

Statute 39.35.350 was in effect at the time he entered State employment.                                                        It provided  



                                                                                                                                          

a clear benefit:  the opportunity for him to leave State employment, withdraw his PERS  



                                                                                                                                             

contributions, then repay the contributions and reinstate his credited service if he was  



                                                                                                                           

again employed by the State.  Metcalfe, and other persons considering the advantages  



                                                                                                                                  

and disadvantages of State employment while the statute was in effect, could reasonably  



                                                                                                                                     

rely on this provision when making important employment decisions.  The statutory  



                                                                                                                                    

option was "an element of the bargained-for consideration" the State gave "in exchange  



                                                                                                                                       36  

                                                                                                                                            And  

for [Metcalfe's] assumption and performance of the duties of his employment." 



                                                                                                                                     

for purposes of the article XII, section 7 protection, the benefit became an "accrued  



                                                                                                                               37  

                                                                                                                                      

benefit" as soon as Metcalfe became employed and enrolled in the system. 



           33          Hammond,  627  P.2d  at  1057;  see  also  Alford  v.  State,  Dep't  of  Admin.,  Div.  



of  Ret.  &  Benefits,   195  P.3d   118,   123  (Alaska  2008)  (stating  that  in  Hammond  we  held  

that  "an  employee  must  be  allowed to  choose  which system  he  or  she  desires  to  come  

under  if  the  state  does  not  provide  an  offsetting  advantage").  



           34          McMullen v. Bell, 128 P.3d 186, 191 (Alaska 2006).  

                                                                                                                  



           35          See former AS 39.35.350 (1977).  

                                                                    



           36          See Hammond, 627 P.2d at 1056.  

                                                                       



           37          See id. at 1057.  

                                        



                                                                       -9-	                                                                7512
  


----------------------- Page 10-----------------------

                                         The State makes a number of arguments against this conclusion. It initially                                                                                                                                



argues that the reinstatement provision "was not a benefit of [employees'] 'membership'                                                                                                                                         



in PERS" but rather "an employment benefit," because it was a right that only an active                                                                                                                                                                  



employee could exercise.                                                            The State argues                                            that we have applied the protection of                                                                              



article XII, section 7 only to "benefits offered to members                                                                                                                                 during their retirement.                                                    "   



(Emphasis in original.)                                                  But AS 39.35.350 was a part of the PERS statutes and granted                                                                                                               



a reinstatement opportunity that could be exercised only by individuals who had been                                                                                                                                                                         

                                                                                                                                                                                                                                           38   And the  

members of PERS; it was plainly a benefit that came with PERS membership.                                                                                                                                                                                         



 State's argument simply does not square with our consistent interpretation of article XII,  

                                                                                                                                                                                                                                                               

section 7 as protecting "the practical effect of the whole complex of provisions."39  

                                                                                                                                                                                                                                                                               



Regardlessofwhen theoptionisexercised, reinstating employeesto their former benefits  

                                                                                                                                                                                                                                                    



tier, with restoration of their credited service time, has a "practical effect" on retirement  

                                                                                                                                                                                                                                            



benefits at their  most fundamental:                                                                                  it increases "the dollar  amount of the benefits  

                                                                                                                                                                                                                                                  



                              40  

payable."                           



                                         The State argues that we have historically looked to California case law in  

                                                                                                                                                                                                                                                                      



interpreting article XII, section 7, and at oral argument it cited Cal Fire Local 2881 v.  

                                                                                                                                                                                                                                                                      

 California Public Employees' Retirement System41 in support of its position that the anti- 

                                                                                                                                                                                                                                                              



diminishment clause applies only to "deferred compensation" as narrowly defined.  In  

                                                                                                                                                                                                                                                                    



                     38                  See McMullen                                 , 128 P.3d at 190-91 ("An employee's vested benefits arise                                                                                                             



by statute, from the regulations implementing those statutes, and from the [Division of                                                                                                                                                                              

Retirement and Benefits'] practices.").                                           



                     39                  See Sheffield v. Alaska Pub. Emps.' Ass'n, 732 P.2d 1083, 1087 (Alaska  

                                                                                                                                                                                                                                                   

 1987) (emphasis omitted) (quoting Opinion of the Justices, 303 N.E.2d 320, 327 (Mass.  

                                                                                                                                                                                                                                                       

 1973)).  



                     40                  See id. (quoting Hammond, 627 P.2d at 1058).  

                                                                                                                                                                      



                     41                  435 P.3d 433 (Cal. 2019).  

                                                                                                                            



                                                                                                                                -10-                                                                                                                        7512
  


----------------------- Page 11-----------------------

our seminal case            Hammond v. Hoffbeck                   we looked to California's " 'limited vesting'               

approach" to determine the extent to which the legislature may modify vested rights,                                                    42  



but  important  constitutional  differences  prevent  us  from  following  California  law  

                                                                                                                                     



uniformly.           California  lacks  a  constitutional  provision  specific  to  state  retirement  

                                                                                                                          



systems;  it  instead applies the protection of its contracts clause to some terms and  

                                                                                                                                     

conditions of public employment - but only as "the exception, rather than the rule."43  

                                                                                                                                             



The referenced "rule" - the starting point when California courts analyze legislative  

                                                                                                                           



changes to state employee retirement systems - is this:  "The terms and conditions of  

                                                                                                                                        



public employment are ordinarily considered to be statutory rather than contractual, and  

                                                                                                                                      

they are subject to modification at the discretion of the governing legislative body."44  

                                                                                                                                             



Article XII, section 7 of the Alaska Constitution is directly to the contrary: "Membership  

                                                                                                                      



in  employee  retirement  systems  of  the  State  .  .  .  shall  constitute  a  contractual  

                                                                                                                        



relationship." (Emphasis added.) Thus, although California's case law helped us decide  

                                                                                                                                 



the extent to which the legislature could modify "vested contractual pension rights," as  

                                                                                                                                        

                           45  the very language of our constitution prevents us from relying on  

discussed above,                                                                                                                       

                 



California law when deciding which rights are vested in the first place.  

                                                                                                         



                     The   dissenting   opinion   argues   that   we   should   define   "deferred  

                                                                                                                          



compensation" like the California Supreme Court did in Cal Fire Local 2881.  But as  

                                                                                                                                        



noted  above,  California  affords  constitutional  protection  to  only  some  retirement  

                                                                                                                          



           42         627  P.2d  at   1057.  



           43         Cal  Fire  Local  2881,  435  P.3d  at  442.  



           44        Id.  at  437;  see  also  id.  at  442-43  ("[T]he  fundamental  principle  [is]  that  the  



terms  and  conditions  of  public   employment,  to  the  extent  those  terms  and  conditions  

derive  from  legislative  enactments,  are  not  generally  protected  by  the  contract  clause  

from  repeal  or  revision  at  the  discretion  of  the  legislative  body.").  



           45        See Hammond, 627 P.2d at 1057.  

                                                                   



                                                                  -11-                                                             7512
  


----------------------- Page 12-----------------------

benefits: those that are (1) manifestly intended by the legislature to be contract rights or                                                



                                            46  

(2)  implied contract rights.                                                                                                               

                                                Implied contract rights in the California system are said to  



                                                                                                                                          

be benefits involving an element of "deferred compensation" in the sense that they are  

                                                                                  47   By contrast, all public retirement  

                                                                                                                              

                                                                    

"roughly proportional to the time of . . . service." 



benefits in Alaska arecontractually based and constitutionally protected, and they accrue  

                                                                                                                                     



when an employee begins work as a member of a retirement system, not after a particular  

                                                                                                                               



period of service.  It would therefore make no sense for us to use the term "deferred  

                                                                                                                                

compensation" to distinguish protected from unprotected benefits.48                                              To use the term as  

                                                                                                                                            



the dissenting opinion advocates would create a new category of retirement benefits that  

                                                                                                                                          



are not constitutionally protected, which would be contrary to article XII, section 7 and  

                                                                                                                                          



the case law interpreting it.  

                                          



                      The  State  also  argues  that  Alaska's  constitutional  protection  does  not  

                                                                                                                                          



extend to the reinstatement right because article XII, section 7 protects the "contractual  

                                                                                                                           



relationship"  and  there  is  no  contract  for  reinstatement  "until  the  former  member  

                                                                                                                                 



return[s] to public employment and beg[ins] the reinstatement process."   The State  

                                                                                                                                       



contends that AS 39.35.350 was simply an offer to contract again in the future under  

                                                                                                                                      



specified terms (return of withdrawn contributions in exchange for reinstatement to the  

                                                                                                                                           



previous benefits tier and restoration of credited service time) and that the offer could be  

                                                                                                                                            



revoked any time before it was accepted. But this argument confuses the initial contract  

                                                                                                                                  



of employment - which promised the reinstatement right - and the later exercise of  

                                                                                                                                            



that right.   The conditional reinstatement right was a part of the PERS "complex of  

                                                                                                                                            



           46         435  P.3d  at  443-49.  



           47         Id.  at  448.  



           48         Indeed,   in   Hammond   we   used   the   term   comprehensively   and   without  



limitation  to  refer  to  "benefits  under  PERS."   Hammond,  627  P.2d  at   1057.  



                                                                    -12-                                                              7512
  


----------------------- Page 13-----------------------

provisions"   at   the   time   of   Metcalfe's   initial   employment   and   became   an   "accrued  



benefit" at that time.                    



                          The State further argues for a distinction between former members like                                                                



Metcalfe and "inactive members" - employees who are no longer employed by the                                                                                     

                                                                                                                                              49     The State  

State but who have not withdrawn their contributions from the system.                                                                                         



argues that inactive members are legitimately eligible to take advantage of reinstatement  

                                                                                                                                              



of credited service because, by leaving their contributions in the system, they gave  

                                                                                                                                                              



"sufficient consideration" to make the State's reinstatement "offer" irrevocable. But the  

                                                                                                                                                                   



State's  "offer"  was  irrevocable  when  the  employee  accepted  State  employment  in  

                                                                                                                                                                   



objective  reliance  on  the  promise  that  conditional  reinstatement  and  restoration  of  

                                                                                                                                                                   



credited  service  time  were  among  the  benefits  of  enrollment  in  the  system.                                                                           The  

                                                                                                                                                               



employee's  contributions  to  the  system were  not  necessary  to  maintain  the  offer's  

                                                                                                                                                          



irrevocability; consideration for that benefit, like every other benefit of the system, was  

                                                                                                                                                                 



simply  the  "employee's  assumption  and  performance  of  the  duties  of  his  [or  her]  

                                                                                                                                                               

                            50  It was 40 years ago that we rejected the notion that "members' rights  

employment."                                                                                                    



in public employees' benefits systems . . . vested only at the time at which an individual  

                                                                                                                                                     

employee is eligible to receive payment of those benefits."51  

                                                                                                                                                   

                                                                                                                   The concept of a "revocable  



                                                                                                                                                                   

offer"  does  not  fit  comfortably  with  our  consistent  descriptions  of  the  reach  of  



                                                                                                                                                   

article XII, section 7.  In short, the right to conditional reinstatement and the restoration  



                                                                                                                                                                      

of credited service did not vest only when the former employee sought to exercise it; it  



                                                                                                                                                                  

vested when the State made the promise as an inducement to employment and the  



             49           Compare               AS         39.35.680(21)                   (defining             "inactive            member"),                with  



AS  39.35.680(20)  (defining  "former  member").  



             50           See  Hammond,  627  P.2d  at   1056.  



             51           See  id.  



                                                                                -13-                                                                                7512  


----------------------- Page 14-----------------------

                                                                                                                                     52  

employee accepted it by beginning work and enrolling in the system.                                                                         



                                                                                         

             C.	          An Accrued Benefit Available Only To Former Members Cannot Be  

                                                                                                                                                    

                          Extinguished By A Legislative Determination That Former Members  

                                                                                                                    

                          Are Not Entitled To Take Advantage Of It.  



                                                                                                                                                                

                          Because  Metcalfe  left  public  employment  and  took  a  refund  of  his  



                                                                                                                                                             53 

                                                                                                                                                                  

retirement contributions, he is statutorily defined as a "former member" of PERS.                                                                                 A  



                                                                                                                                                            

"former member" is specifically excluded from the definition of "member" in the PERS  



                54  

                                                                                                                                                   

statutes.           The superior court relied on these statutory definitions in rejecting Metcalfe's  



                                                                                                                                                        

claim, reasoning that as a "former member" he was not within the class of persons  



                                                                                                                                                                 

protected by article XII, section 7.  The State urges the same interpretation, as did the  



                                                                55 

                                                                                                                                                     

dissent in this case's first appeal.                                The dissent reasoned that "[b]ecause the provision  



                                                                                                                                   

only governs '[m]embership in employee retirement systems,' the anti-diminishment  



             52           Further, we see no reason why PERS members would understand that                                                                     



leaving contributions in the system was necessary consideration for keeping the State's                                                                   

conditional   reinstatement  offer   open,   as   former   AS   39.35.350   expressly   said   the  

opposite:    "An employee may reinstate credited service associated with a refund by                                                                              

repaying the total amount of the refund."                                        



             53           See AS 39.35.680(20) (defining "former member" as "an employee who  

                                                                                                                                                              

is  terminated  and  who  has received  a  total  refund  of  the  balance  of  the  employee  

                                                                                                                                                   

contribution account or who has requested in writing a refund of the balance in the  

                                                                                                                                                                 

employee contribution account").  

                                             



             54           AS 39.35.680(22)(C)(i) (specifying that definition of "member" excludes  

                                                                                                                                                      

"former members"); see AS 39.35.680(22)(A) (defining "member" as "a person eligible  

                                                                                                                                                         

to participate in the plan and who is covered by the plan").  

                                                                                                    



             55          Metcalfe v.  State,  382  P.3d 1168,  1177-79 (Alaska 2016)  (Fabe,  C.J.,  

                                                                                                                                                              

concurring in part and dissenting in part),  abrogated on other grounds by Hahn v.  

                                                                                                                                                                   

GEICO Choice Ins. Co., 420 P.3d 1160 (Alaska 2018).  

                                                                                              



                                                                               -14-	                                                                         7512
  


----------------------- Page 15-----------------------

                                                                                                      56  

provision protects only                        members  of such systems."                                  The dissent concluded: "Metcalfe                 



is not a member of PERS within the meaning of the PERS statutes, so the constitutional                                                              



                                                                                                                                                                            57  

prohibition on impairing or diminishing membership benefits does not apply to him."                                                                                              



                                                                           58  

                                                                 

Today's dissent takes the same view. 



                           The flaw with this reasoning is two-fold: both in its strained reading of the  

                                                                                                                                                                          



plain language of article XII, section 7 and in its assumption that the legislature can  

                                                                                                                                                                        



narrow the constitution's reach by statute.  First, article XII, section 7 does not protect  

                                                                                                                                           



only the rights of "members"; it protects the rights of individuals who accrued benefits  

                                                                                                                                                                



because of their membership in a State employee retirement system.                                                                                   And second,  

                                                                                                                                                                



whether or not an individual is a "member" as that term is statutorily defined (and as it  

                                                                                                                                                                             



may be redefined from time to time by future legislatures), an individual with an accrued  

                                                                                                                                                                



benefit in a State retirement system has a constitutional right that the benefit "not be  

                                                                                                                                                                           



diminished or impaired" by subsequent legislation.  

                                                                                  



                           We thus agree with Metcalfe that "the key determination for whether an  

                                                                                                                                                                           



individual has standing to claim article XII, section 7 protection is whether they have a  

                                                                                                                                                                             



vested  right to  a benefit  generated  by membership  in  the State's public retirement  

                                                                                                                                                          



systems."                (Emphasis  in  original.)                              There  will  certainly  be  cases  when  current  

                                                                                                                                                                



membership is dispositive of a former member's rights because the right to the benefit  

                                                                                                                                                                  



was extinguished when the member left the system; this would be the case, for example,  

                                                                                                                                                              



if Metcalfe, as a former member, were trying to claim health benefits under PERS.  But  

                                                                                                                                                                        



that is not his claim.  The benefit Metcalfe is claiming is one that was promised would  

                                                                                                                                                                   



be available to him only if he first became a "former member."  To say that he cannot  

                                                                                                                                                                  



              56           Id.  at 1178 (second alteration in original) (emphasis in original).                                            



              57           Id.  at 1177.            



              58           Dissent at 19.        



                                                                                    -15-                                                                             7512
  


----------------------- Page 16-----------------------

claim the benefit                         because  he is a former member is plainly to render the State's promise                                                                                   



                                                                                                                                           59  

illusory and to diminish or impair the promised benefit.                                                                                          



                                 Lastly,  allowing  the  State  to  take  back  its  promise  of  conditional  

                                                                                                                                                                                          



reinstatement and  restoration  of credited  service  time would  undermine one of the  

                                                                                                                                                                                                                



primary purposes of state employee retirement systems: "to induce persons to enter and  

                                                                                                                                                                                                                

continue in public service."60   This inducement works in the long term only if employees  

                                                                                                                                                                                              



can trust the State's promise that the accrued benefits of system membership will not be  

                                                                                                                                                                                                                   



diminished or impaired. Article XII, section 7 ensures that the State's promises are kept.  

                                                                                                                                                                                                            



V.               CONCLUSION  



                                 We  REVERSE  the  superior  court's  summary  judgment  order  and  

                                                                                                                                                                                                             



REMAND for further proceedings consistent with this opinion.  

                                                                                                                                          



                 59               The dissenting opinion's two examples "in which the former member of a                                                                                                              



relationship   or   organization  has  .  .   .   clearly   disavowed   any   intention   to   regain  

membership" - a divorced spouse and "a ballplayer who quit the team" (Dissent at 24,                                                                                                                             

n.25) - omit the determinative context: the existence of an agreement that clearly spells                                                                                                                  

out what happens if the "former member"                                                                   does  seek "to regain membership."                                                           



                 60              See State v. Allen, 625 P.2d 844, 846 (Alaska 1981).  

                                                                                                                                                     



                                                                                                       -16-                                                                                                 7512
  


----------------------- Page 17-----------------------

 CARNEY, Justice, with whom FABE, Senior Justice, joins, dissenting.                                                                        



                          I   respectfully   disagree   with   the   court's   decision   reversing   summary  



judgment and remanding this case to the superior court for further proceedings. I would                                                                     



 affirmsummary judgment because "article XII, section 7 of the Alaska Constitution does                                                                        

                                                                 1  TheAlaskaconstitution does not protect thestatutory  

notencompassMetcalfe's claim."                                                                                                                         

right at issue; and, as the court acknowledges, "Metcalfe is not a member of PERS."2  

                                                                                                                                                     



             The statutes in effect when Metcalfe was hired provided "former members" with  

                                                                                                                                                                



the opportunity to return to PERS membership at the same benefits level if the former  

                                                                                                                                                           



member obtained state employment and repaid the funds that had been withdrawn with  

                                                                                                                                                               

 interest.3          For  more  than  two  decades,  Metcalfe  apparently  made  no  effort  to  take  

                                                                                                                                                               



 advantage of that opportunity.  

                                    



                          In 2005 the Legislature dramatically restructured the entire state retirement  

                                                                                                                                                    

 system.4   One piece of the legislative restructuring was the repeal of the statute allowing  

                                                                                                                                                       



 "former members" to regain their PERS membership by "buying back" their previous  

                                                                                                                                             

                          5    The Legislature included a five-year grace period, enabling "former  

benefit level.                                                                                                                                          

                



members" to exercise their option to return to state employment and to regain their  

                                                                                                                                                              

previous PERS benefit level by repaying their withdrawn funds with interest.6                                                                           Despite  

                                                                                                                                                         



             1            Metcalfe   v.   State,   382   P.3d    1168,  1177  (Alaska   2016)   (Fabe,   C.J.,  



 concurring  in  part  and  dissenting  in  part).  



             2            Id.  



             3            See  former  AS  39.35.350(b)  (1980).  



             4            See  ch.  9,  FSSLA  2005.  



             5            See ch. 9, § 133, FSSLA 2005 (repealing former AS 39.35.350).  

                                                                                                                                 



             6            See  id.  §   149  (providing  that  repeal  of  AS  39.35.350  would  take  effect  in  



                                                                                                                                              (continued...)  



                                                                                -17-                                                                          7512
  


----------------------- Page 18-----------------------

receiving notice, Metcalfe did not exercise that option before 2010, when the grace                                                                                                                                                             



period expired.   



                                        Instead Metcalfe waited another two years before "inquiring" about his                                                                                                                                         



PERS status. After being informed that he was not a member of PERS, Metcalfe waited                                                                                                                                                          



 another year before filing the complaint that eventually led to today's decision.                                                                                                                                                       I do not       



think Metcalfe and other similarly situated individuals are entitled                                                                                                                                           to constitutional  



protection under these circumstances.                               



                                        I am not convinced that the statutory right to quit, cash out all retirement   



contributions, and later buy back into the retirement system at a certain level is an                                                                                                                                                                    



"accrued benefit" within the meaning of that term in the constitution.  Like the court I                                                                                                                                          



recognize we have defined "accrued benefits" broadly, including "all retirement benefits                                                                                                                                                  

                                                                                                                                       7     But I disagree that the right to return to  

that make up the retirement benefit package."                                                                                                                                                                                                              



PERS at a particular  level after  a voluntary  decision to  cash  out of and  relinquish  

                                                                                                                                                                                                                                  



membership in PERS is part of a member's "retirement benefit package." We have never  

                                                                                                                                                                                                                                                 



held that a plaintiff without contributions and corresponding funds designated for his or  

                                                                                                                                                                                                                                                           

her eventual benefit in a retirement system has a claim under article XII, section 7.8  And  

                                                                                                                                                                                                                                                    



                    6                   (...continued)  



2010).   



                    7                   Op.  at  7.  



                    8                   See   McMullen   v.   Bell,   128   P.3d   186,   190-91   (Alaska   2006)   (agreeing  



individual  with   contributions   in PERS   "ha[d]   a  right  to  have  his  benefits   determined  

under  the  law  and  practices  that  were  in  effect  when  he  was  hired");  Bartley  v.  State,  

Dep't   of  Admin.,   Teacher's   Ret.   Bd.,   110   P.3d   1254,   1265   (Alaska   2005) (holding  

teachers  with  contributions  in  TRS  were  "constitutionally  entitled  to  have  their  pension  

benefits  calculated  under  the  law  in  effect  when  they  joined  TRS");  Duncan  v.  Retired  

Pub.  Emps.  of A                                 laska,  Inc.,  71  P.3d  882,  885  (Alaska  2003)  (holding  employees  with  

contributions   in   PERS   were   also   entitled   to   promised   health   insurance   coverage);  

                                                                                                                                                                                                                         (continued...)  



                                                                                                                           -18-                                                                                                                   7512
  


----------------------- Page 19-----------------------

that is precisely the issue in this case:                                                                      Metcalfe asserts that the now-repealed statutory                                                                   



right to reenter the PERS system                                                                 is  the constitutionally protected benefit, even though  



he currently has no funds in PERS. Because Metcalfe has no contributions in the system                                                                                                                                                  



or funds designated for his benefit, he has no accrued benefits that can be impaired and                                                                                                                                                         



therefore no claim under article XII, section 7.                                                                                  



                                       The court apparently agrees with Metcalfe that the statutory right, standing                                                                                                                



 alone, is a constitutionally protected benefit of the PERS retirement benefit system. The                                                                                                                                                      



court reasons that the statutory right is an accrued benefit because it was part of the                                                                                                                                                           



consideration that induced Metcalfe to state employment in the first place and because                                                                                                                 



Metcalfe "could reasonably rely on this provision when making important employment                                                                                                                                      

decisions."9  



                    8                  (...continued)  



                                                                                                                                                                                                                                   

Municipality of Anchorage v. Gallion, 944 P.2d 436, 444-45 (Alaska 1997) (holding  

                                                                                                                                                                                                                                             

 employees with contributions in municipal retirement systems were entitled to have  

                                                                                                                                                                                                                                       

 financial soundness of plans evaluated and maintained separately from other plans);  

                                                                                                                                                                                                                                  

Flisock v. State, Div. of Ret. & Benefits, 818 P.2d 640, 643 (Alaska 1991) (holding  

                                                                                                                                                                                                                                                      

teacher with contributions in TRS had right to benefits calculated according to law in  

                                                                                                                                                                                                                                              

 existence when employment began); Sheffield v. Alaska Pub. Emps. Ass'n, 732 P.2d  

                                                                                                                                                                                                                                      

 1083, 1089 (Alaska 1987) (holding individual with contributions in PERS was entitled  

                                                                                                                                                                                                                                     

to  have  funds  calculated  by  actuarial  table  that  existed  when  employment  began);  

                                                                                                                                                                                                                                               

Hammond v. Hoffbeck, 627 P.2d 1052, 1059 (Alaska 1981) (holding employees with  

                                                                                                                                                                                                                                               

contributions in PERS were entitled to "benefits under the system in effect at the time  

                                                                                                                                                                                                                                       

they were hired"); State v. Allen, 625 P.2d 844, 849 (Alaska 1981) (holding elected  

                                                                                                                                                                                                                                    

officials  "participating  in  [legislative  retirement  system]  at  the  time  repeal  became  

                                                                                                                                                                                                                      

 effective . . . [were] entitled to the benefits provided by that system upon retirement").  



                    9                  Op. at 9.  

                                                                  



                                                                                                                        -19-                                                                                                                 7512
  


----------------------- Page 20-----------------------

                     In  Hammond v. Hoffbeck                    we addressed when the right to benefits in a                           



                                               10  

public retirement system vest.                                                                                                

                                                  We held that benefits within a public retirement system  



                                                                                                                   

vest when employment begins because benefits are "an element of the bargained-for  



                                                                                                                                    

consideration given in exchange for an employee's assumption and performance of the  

                                            11   It was undisputed that the PERS funds at issue were  

                                                                                                                                

duties of his employment." 



capable of constitutional protection.   We have thus determined  when  constitutional  

                                                                                                                   



protection begins, but that does not necessarily determine  whether  something is an  

                                                                                                                                    



accrued benefit in a retirement system.  In Hammond we recognized that benefit plans  

                                                                                                              



aim  to  do  more  than  induce  people  to  state  employment;  they  also  seek  to  retain  

                                                                                                                               



employees  over  time  and  to  induce  employee  reliance  on  the  eventual  retirement  

                                                                                                                        

income.12        In recognition of PERS's multiple goals, we have held that the constitution  

                                                                                                                      



protects "system benefits offered to retirees when an employee is first employed and as  

                                                                                                                                     

improved during the employee's tenure."13  

                                                     



           10        627  P.2d  at   1056-57.  



           11        Id.  at   1056.  



           12        Id.   at   1057   n.10   ("The   universally   recognized   primary   objectives   of  



retirement   plans   are   to   enable   the   employer   to   attract   better  employees,   to   reduce  

turnover, to  facilitate orderly retirement  of older  employees,  to  retain valuable employees  

who  might  seek  more  productive  employment  elsewhere,  and, most importantly  from the  

employee  viewpoint,  to  assure  a  measure  of  income  upon  retirement  adequate  to  allow  

the  annuitant  to  live  in  reasonable  security."  (quoting  Rubin  G.  Cohn,  Public  Employee  

Retirement  Plans  -  The  Nature  of  the  Employees'  Rights,  1968  UNIV . ILL. L. FORUM  32,  

40-41  (1968))).  



           13        Duncan,  71  P.3d  at  888.  



                                                                 -20-                                                           7512
  


----------------------- Page 21-----------------------

                                                                                                                                                           14  

                            Even if Metcalfe may have relied on the statutory provision,                                                                       his reliance   



is   significantly   different   than   reliance   on   a   retirement   system   in  which   one   has  



contributions and funds designated for his or her benefit.                                                                 For example, if an employer              



changed the way employment benefits are calculated to reduce the amount of benefits                                                                                     

                                                                  15 the retired employee's reliance on the previous method  

paid to a now-retired employee,                                                                                                                                          



of  calculating  affects  the  retired  employee  in  several  ways.                                                                       First,  the  method  of  

                                                                                                                                                                                   



calculation, as part of the retirement package, may have induced acceptance of the job.  

                                                                                                                                                                                          



Second, the employee contributed money to the fund with the expectation of eventually  

                                                                                                                                                                   



receiving an amount, based on the calculation method, in return.  Finally, the employee  

                                                                                                                                                                    



may  have  foregone  putting  additional  money  away  for  retirement  based  on  an  

                                                                                                                                                                                  



expectation of the amount of funds that would be received based on the calculation  

                                                                                                                                                                 



method.  On the other hand, while the existence of the statutory right may have induced  

                                                                                                                                                                        



Metcalfe  to  take  a  job  with  the  State,  it  did  not  encourage  him  to  continue  his  

                                                                                                                                                                                 



employment (and to keep contributing to the fund), and it did not induce him to forego  

                                                                                                                                                                           



his own retirement planning.  (If it did lead him to forego planning for retirement, his  

                                                                                                                                                                                  



reliance would be unreasonable because his ability to return to State employment was not  

                                                                                                                                                                                  



entirely within his control.)  

                                         



                            In light of the significant substantive differences between this claimed  

                                                                                                                                                                       



benefit and  those we have previously  addressed,  I  disagree with  the court that the  

                                                                                                                                                                                 



statutory right is a constitutionally protected accrued benefit.  

                                                                                                                  



              14            And his failure to take any step to reinstate his PERS membership for                                                                                 



decades makes his reliance questionable.                   



              15            These facts were at issue in Flisock v. State, Div. of Ret. & Benefits, 818  

                                                                                                                                                                                

P.2d 640, 643 (Alaska 1991).  

                                                                 



                                                                                        -21-                                                                                 7512
  


----------------------- Page 22-----------------------

                          We have historically referred to California's interpretation of its similar                                                    

constitutional clause when we have interpreted article XII, section 7.                                                               16            

                                                                                                                                          The California  



                                                                                                                                                                    

supreme court recently reached a conclusion similar to mine.  In Cal Fire Local 2881 v.  



                                                                                                                                        

California Public Employees' Retirement System the court upheld the constitutionality  



                                                                                                                                                                   

of the legislature's decision to withdraw the statutory right to buy additional years of  



                                                                                                                                                    

service in the public employee retirement plan because that right was not "deferred  

                              17       The  court  explained  that  payment  of  pension  benefits  was  

compensation."                                                                                                                                                



constitutionally protected based upon its recognition that "a public employee 'is not fully  

                                                                                                                                                              



compensated upon receivinghissalary payments because, in addition, he has then earned  

                                                                                                                                                          



certain pension benefits, the payment of which is to be made at a later date.' "   In  

                                                                                                                                                                 



contrast, the right to purchase additional years of service was not earned over time by an  

                                                                                                                                                                   



employee's work.  The court therefore concluded that the statutory right was not a form  

                                                                                                                                                              

of deferred compensation.18  

                                                       



             16           See Duncan             , 71 P.3d at 889 n.26;                    Hammond, 627 P.2d at 1057.                     



             17           435 P.3d 433, 449, 454 (Cal. 2019).  The court today dismisses this case                     



by suggesting that California courts always defer to the legislature because "[t]he terms  

                                                                                                                                                            

and conditions ofpublicemploymentareordinarily consideredtobe statutory rather than  

                                                                                                                                                               

contractual,   and   [thus]   subject   to   modification   at   the   discretion  of   the   governing  

legislative body."                  Op. at 11.           But the California court pointed out that "[c]onstitutional                    

protection can arise, however, . . . when . . . contractual rights are implied as a result of  

                                                                                                                                                                   

the nature of the employment benefit, as is the case with pension rights." Cal Fire Local  

                                                                                                                                                            

2881, 435 P.3d at 437 (emphasis added).  

                                                                 



             18           The court carefully noted that the benefits of individuals who had already  

                                                                                                                                                         

purchased  additional  service  were  not  at  issue,  only  whether  the  right  to  purchase  

                                                                                                                                                     

additional years of service was itself a benefit.  Id. at 444.  

                                                                                                       



                                                                               -22-                                                                          7512
  


----------------------- Page 23-----------------------

                             In  Hammond   we "h[e]ld that benefits under PERS are in the nature of                                                                                      



                                                      19  

deferred compensation."                                                                                                                                                                   

                                                            But the right to return to the PERS system, like the right to  



                                                                                                                                                                                        

purchase additional years of service, is not a form of deferred compensation.  Like the  



                                                                                                                                                                                         

right  to  purchase  additional  years  of  service,  the  statutory  right  was  not  related  to  



                                                                                                                                                                       

employment service performed or the amount of contributions made to the fund.  And  



                                                                                                                                                                                        

like the right to purchase additional service years, the statutory right did not induce the  



                                                                                                                                                                                         

same magnitude of reliance as standard retirement benefits, such as the payment of  



                                20  

                   

pension funds. 



                             ThatMetcalfeisno longer aPERSmember also informs my conclusion that  

                                                                                                                                                                                       



the statutory right is not an accrued benefit meriting constitutional protection. The court  

                                                                                                                                                                                   



acknowledges that Metcalfe, and the rest of the class, are "former members" of PERS,  

                                                                                                                                                                          

                                                             21     And "former members" are specifically excluded from  

as the superior court found.                                                                                                                                                       

                                                

membership in PERS.22   Both the current statutory framework and that in effect when  

                                                                                                                                                                                  



               19            627 P.2d at 1057.          



               20            The court asserts that it                                is  not appropriate to describe constitutionally                     



protected benefits as deferred compensation because "all public retirement benefits in                                                                                                    

Alaska are contractually based and constitutionally protected."   Op. at 12.   But that  

                                                                                                                                                                                      

assertion assumes its conclusion:                                         it does not analyze or explain why the statutory right                                                    

is a "public retirement benefit" under our precedent.                                        



               21            Op. at 3.  

                                             



               22            See AS39.35.680(22)(C)(i) (providing that thedefinitionof"'member' . . .  

                                                                                                                                                                                             

does not include former members").  

                                                                                 



                                                                                           -23-                                                                                    7512
  


----------------------- Page 24-----------------------

                                                                                         23  

Metcalfe was hired                in   1980   contained this exclusion.                        And he became a "former         

member" when he withdrew all of the funds from his PERS account in 1981.                                                   24  



                     It is difficult to conceive of a scenario in which the former member of a  

                                                                                                                                         



relationship or organization in any arena has more clearly disavowed any intention to  

                                                                                                                                       

regain membership.25   Yet the court accords Metcalfe the same benefits as those who not  

                                                                                                                                      



only did not so clearly disavow membership, but who seized the opportunity offered to  

                                                                                                                                        



return to active PERS membership. The court does not explain why article XII, section 7  

                                                                                                                                         



would accord Metcalfe, with no benefits in the retirement system aside from his alleged  

                                                                                                                               



statutory benefit, and a PERS member, with contributions in the system and benefits  

                                                                                                                              



designated for that member's behalf, the same protection.  

                                                                            



                     In  doing  so,  the  court  pays  slight  heed  to  the  importance  of  actual  

                                                                                                                                



membership in PERS or to its legal definition.  Our constitution protects only members  

                                                                                                                            



of employee retirement systems:  "Membership in employee retirement systems of the  

                                                                                                                                      



           23        Compare  AS  39.35.680(22)(C)(i),  with  former  AS  39.35.680  (21)  (1981).   



See also  Metcalfe v. State,  382  P.3d   1168,   1178  (Alaska  2016)  (Fabe,  C.J.,  concurring  

in  part  and  dissenting  in  part).  



           24        See AS 39.35.680(20); former AS 39.35.680(19) (1981) (defining former  

                                                                                                                                

member).  



           25        A  divorced party  may  not  "buy  back"  into a  former  spouse's  inheritance  



many  years  after  their  divorce  was  finalized;  nor  may  a  ballplayer  who  quit  the  team,  

took   her  ball,   and   went   home   demand   a   share   of   the   team's   championship  pay   won  

decades  later.  



                     The  court  asserts  that  these  examples  "omit  the  determinative  context:   the  

existence  of an agreement that clearly spells out what happens if the 'former member'  

does   seek   to   'regain   membership.'   "     Op.   at   16   note   59.     But   it   is   not   clear   this  

"determinative  context"  exists.   The  court  summarily  concludes  the  statutory  benefit  is  

part of  a  constitutionally  protected  agreement  simply  because  the  statute  was  in  effect  

when  Metcalfe  was  hired  and  Metcalfe  could  have  relied  on  it.    



                                                                  -24-                                                            7512
  


----------------------- Page 25-----------------------

 State . . . shall constitute a contractual relationship" and the "[a]ccrued benefits of these                                                          



                                                                                           26  

systems   shall  not   be   diminished   or   impaired."                                                                                                  

                                                                                                  The  statutes  at  issue  clearly  and  

                                                                                                                                         27   And as the  

                                                                                                                                                             

                                                                                                                  

unambiguously exclude former members like Metcalfe from membership. 



dissent pointed out in our previous consideration of Metcalfe's claims, "all of our past  

                                                                   



decisions on diminishment of benefits under PERS or other public employee retirement  

                                                                                                                                               

systems  have  addressed  the  benefits  of  members."28                                                 But  Metcalfe  disclaimed  any  

                                                                                                                                                          



membership,  removed  his  contributions  from  the  system,  and  needed  the  State's  

                                                                                                                                                    

agreement before he could become a member again.29  

                                                                                       



                         Because the statutory right is not an accrued benefit and Metcalfe is no  

                                                                                                                                                             



longer a PERS member, I disagree with the court's opinion.  

                                                                                                 



             26          Alaska Const., art. XII, § 7 (emphasis added);                                        see also Metcalfe               , 382 P.3d     



at 1177 (Fabe, C.J., concurring in part and dissenting in part)                                                   .  



             27          See AS 39.35.680(19), (22)(C)(i); former AS 39.35.680(19), (21)(C)(i)  

                                                                                                                                               

(1981); see also Metcalfe, 382 P.3d at 1178 (Fabe, C.J., concurring in part and dissenting  

                                                                                                                                               

in part).  

      



             28          Metcalfe, 382 P.3d at 1178 (Fabe, C.J., concurring in part and dissenting  



in part) (emphasis in original).  

                                         



             29          SeeMcMullen v. Bell, 128 P.3d 186,192-93(Alaska2006) (concluding that  

                                                                                                                                                            

employee did not have right to retirement fund calculation that included cashed-in leave  

                                                                                                                                                         

based in part on board finding that employee "did not have any reasonable expectation  

                                                                                                                                             

that  he  would  be  able  to  include  cashed-in  leave  when  calculating  his  retirement  

                                                                                                                                              

benefits"  and  that  "it  never  occurred  to  [employee]  that  cashed-in  leave  might  be  

                                                                                                                                                             

included  when  calculating  retirement  benefits"  (emphasis  added));  Municipality  of  

                                                                                                                                                              

Anchorage v. Gallion , 944 P.2d 436, 443-44 (Alaska 1997) ("[W]hether or not members  

                                                                                                                                                 

of Plans I and II expected when they enrolled to share in any surplus by an increase in  

                                                                                                                                                              

benefits, they reasonably could have expected that the product of their contributions  

                                                                                                                                         

would be used for their ultimate benefit." (emphasis added)).  

                                                                                                                    



                                                                             -25-                                                                       7512
  

Case Law
Statutes, Regs & Rules
Constitutions
Miscellaneous


IT Advice, Support, Data Recovery & Computer Forensics.
(907) 338-8188

Please help us support these and other worthy organizations:
Law Project for Psychiatraic Rights
Soteria-alaska
Choices
AWAIC