[00:00:02] Speaker 01: Shall I just begin? [00:00:03] Speaker 01: I'm sorry, I'm not used to doing this. [00:00:05] Speaker 01: Shall I just proceed? [00:00:07] Speaker 02: Please state your appearance. [00:00:10] Speaker 01: Oh, sorry. [00:00:11] Speaker 01: Jean Rayfan for Rosa Camacho. [00:00:15] Speaker 02: Okay. [00:00:15] Speaker 02: You may begin. [00:00:16] Speaker 02: Can you see, can you hear us, and can you see the clock? [00:00:22] Speaker 01: Yes, I can. [00:00:22] Speaker 01: Thank you very much. [00:00:23] Speaker 02: All right. [00:00:23] Speaker 02: Thank you. [00:00:26] Speaker 01: Okay, Rosa Camacho became a Fund member in [00:00:31] Speaker 01: 1980, she retired in 1991, and she turned 55 years of age in 2006. [00:00:41] Speaker 01: By virtue of her membership in the retirement fund, she acquired an accrued interest, a vested interest in COLA in the amount paid by U.S. [00:00:55] Speaker 01: Social Security, but not less than 2% provided she was 55 years of age. [00:01:01] Speaker 01: When she became 55 years of age, she received COLA. [00:01:08] Speaker 01: She received COLA in 2007 and 2008 in an amount over 2%, but not as much as the U.S. [00:01:17] Speaker 01: Social Security provided. [00:01:20] Speaker 01: She received COLA in 2009 and 2010, but less than 2%. [00:01:30] Speaker 01: She did not receive any COLA after 2010, after public law 17-32 was enacted. [00:01:40] Speaker 01: 17-32 virtually eliminated her COLA benefit. [00:01:49] Speaker 01: The Commonwealth Constitution provides that accrued benefits of this system shall be neither diminished nor impaired. [00:02:00] Speaker 01: Her rights to the accrued COLA benefits was guaranteed and is guaranteed by the Commonwealth Constitution. [00:02:11] Speaker 01: Full benefits under the settlement agreement includes benefit payments in the amount guaranteed by the Commonwealth Constitution. [00:02:26] Speaker 01: Her accrued COLA benefit [00:02:30] Speaker 01: is therefore included within the definition of full benefits. [00:02:38] Speaker 01: I think the problem with the district court decision was that. [00:02:42] Speaker 01: The court failed to consider. [00:02:46] Speaker 01: Whether. [00:02:47] Speaker 01: 8S. [00:02:51] Speaker 01: Section 8358, which is the was amended by 17-32, whether it impaired or diminished her accrued [00:03:00] Speaker 01: Benefits. [00:03:08] Speaker 01: She did not consider whether it was a violation of the Constitution. [00:03:13] Speaker 01: And I think that's where the mistake was. [00:03:16] Speaker 01: Ms. [00:03:16] Speaker 02: Rafferty, let me ask you a question, because it seems like you're arguing that Ms. [00:03:22] Speaker 02: Camacho is entitled to COLA benefits at the rate laid out in the 1993 Act. [00:03:29] Speaker 02: But didn't she retire in 1991? [00:03:35] Speaker 01: Yes, that's correct. [00:03:36] Speaker 01: There is a, one of the statutes says. [00:03:40] Speaker 02: So I'm just trying to figure out how she could be entitled to any COLA benefit greater, about greater than what she was statutorily permitted in 1991 at the time of her retirement. [00:03:57] Speaker 01: The statute says that her membership continues, continues to be a member after she retires. [00:04:05] Speaker 01: and an accrued benefit accrues during her membership. [00:04:13] Speaker 01: Therefore, she continued to be a member, and therefore, her benefit, she was entitled to the benefit after she retired also. [00:04:21] Speaker 03: Well, the 18, excuse me, 1889, she's not that old. [00:04:28] Speaker 03: The 1989 Act, as I understand it, which occurred during her tenure, [00:04:35] Speaker 03: said that the retirement annuity shall be calculated as follows and that they shall be entitled to a 2% COLA for retirement annuity. [00:04:49] Speaker 03: So that would have occurred during her tenure. [00:04:57] Speaker 03: Is that, in your view, a contractual obligation [00:05:04] Speaker 03: a statutory contractual obligation under the Northern Mariana Constitution, Article 3, Section 20A. [00:05:19] Speaker 01: Yes, it is a contractual relationship based on the Constitution. [00:05:29] Speaker 01: Let me just also say if you check the exercise of record on [00:05:33] Speaker 01: The COLA that was paid in 2007 and 2008, they refer to the, I believe they refer to the statute after she had retired, and that's how they were basing their retirement, the retirement benefit. [00:05:57] Speaker 02: Ms. [00:05:58] Speaker 02: Raefand, I just wanted to ask you, because it seems like you cite to the Cody case. [00:06:03] Speaker 02: That's the primary case. [00:06:04] Speaker 02: I think it's the only case that you discuss. [00:06:09] Speaker 02: I'm not sure that definitively answers the question, you know, that's before us. [00:06:14] Speaker 02: It looks like Alaska and Hawaii [00:06:17] Speaker 02: Both have nearly identical constitutional provisions. [00:06:25] Speaker 02: Have you had a chance to look at those or can you tell us today if there's any one, anything that we can learn from them or one that you maybe have looked at and that you find the case law in those different jurisdictions maybe more persuasive? [00:06:46] Speaker 01: You know, I have read those at some point, but I think the Cody case is the controlling one. [00:06:50] Speaker 01: It's from the Marianas Islands here. [00:06:55] Speaker 02: I'm not quite sure. [00:06:56] Speaker 02: Maybe you can help me understand, because it seems like the Cody case doesn't directly answer the question presented here. [00:07:07] Speaker 02: Why do you think it does? [00:07:12] Speaker 01: Well, one thing it says is that the accrued [00:07:15] Speaker 01: benefit is acquired by virtue of their membership. [00:07:22] Speaker 01: And their membership is how they accrue the benefit. [00:07:27] Speaker 01: In the Cody case, that was a little bit different. [00:07:31] Speaker 01: It was a disability case. [00:07:33] Speaker 01: There weren't a lot of statute in between. [00:07:37] Speaker 01: So I don't know what to say. [00:07:45] Speaker 00: Well, Council, I guess when I look at CODI, I see it indicating that PL 1360 is not retroactive and is only applicable to persons who were not yet members of the fund on the date the law was enacted. [00:08:01] Speaker 00: Here, however, there's no indication that the legislature intended PL 1360 to apply retroactively to persons who were members of the fund prior to the enactment of the law. [00:08:12] Speaker 00: So why do you think Cody, then, is controlling? [00:08:22] Speaker 01: She continued to be a member of the funds during her membership. [00:08:30] Speaker 01: she is entitled to the benefits that are available. [00:08:37] Speaker 03: So if I understand your position correctly is that membership is an ongoing concept. [00:08:42] Speaker 03: That has to be your argument because then the 1989 law that stated that the annuity shall include a 2% COLA [00:08:53] Speaker 03: Then if that's, if that follows, then the Cody holding is helpful to you because it said, you know, the benefit reduction can't apply to people who were members before the legislation was enacted. [00:09:14] Speaker 01: Let's see, I was just looking at public law 6-41 says a member who retires shall remain a member [00:09:21] Speaker 01: so long as she retains the right to any benefits from the fund. [00:09:24] Speaker 03: Therefore, she would... Well, the real question is... The real question seems to me to be whether she was a member at the time the 2% COLA statute was enacted. [00:09:38] Speaker 01: She was. [00:09:39] Speaker 01: She was a member since 1980. [00:09:45] Speaker 03: I think, if I understand opposing counsel's argument, it is in part that there's a moment in time when a person becomes a member and that's the only time that counts for this purpose. [00:10:00] Speaker 00: And for her that would be 1980. [00:10:03] Speaker 03: So that's why that seems to be a [00:10:07] Speaker 03: An unanswered by the case law question in this case, is membership a status that exists from the beginning to the end or is membership the acquisition of membership at a point in time? [00:10:25] Speaker 03: Are there any cases or specific laws that I've missed that answer that question? [00:10:37] Speaker 01: I think the Cody case says that acquisition occurs during membership. [00:10:42] Speaker 01: It doesn't say the first day of membership. [00:10:46] Speaker 01: And I can't imagine that on the first day of membership and you have no benefits that you work 20 years and you've accrued nothing. [00:10:59] Speaker 01: She accrues the benefits during her membership. [00:11:09] Speaker 00: But you don't have a case specifically saying that, aside from Cody, correct? [00:11:16] Speaker 02: That's correct. [00:11:17] Speaker 02: Okay. [00:11:19] Speaker 02: Do you want to reserve the balance of your time? [00:11:24] Speaker 02: Yes, please. [00:11:46] Speaker 04: Chief Judge Murgia, members of the panel, good morning. [00:11:49] Speaker 04: Thank you. [00:11:50] Speaker 04: Good morning. [00:11:53] Speaker 04: Welcome to Hawaii. [00:12:02] Speaker 04: In the, I think in the words of the Volkswagen case that we cited, clean air Volkswagen case, the court there looked at a settlement agreement and the appellate division, another panel from this circuit, concluded [00:12:26] Speaker 04: We are reading the plain terms of the settlement agreement. [00:12:31] Speaker 04: We are convinced that the district court got it right. [00:12:35] Speaker 03: But the settlement agreement isn't really the issue here. [00:12:38] Speaker 03: It seems to me the question is a constitutional question and a contract clause question, regardless of what the settlement agreement said. [00:12:51] Speaker 03: And to the extent that we don't have a clear answer to what membership means in the, [00:13:03] Speaker 03: in the Northern Mariana Constitution and we don't know how the court would actually treat this specific situation, should we certify a question to the Supreme Court and ask? [00:13:21] Speaker 04: Your Honor, I think that certainly would be a decision for the panel to make. [00:13:29] Speaker 04: I don't think that's necessary for two reasons. [00:13:33] Speaker 04: One, I think under Cody, the law in the CNMI is clear that a person's rights within the settlement, within the retirement fund at that point, vested [00:13:49] Speaker 04: when they became a member. [00:13:50] Speaker 04: So for Ms. [00:13:51] Speaker 04: Camacho, they vested in 1980. [00:13:53] Speaker 04: And that was kind of the definitive point for her rights. [00:14:01] Speaker 04: And COLA was not in existence at the time. [00:14:07] Speaker 03: So that's the question to be answered though, whether membership, that's why I asked your friend on the other side, whether membership is a static moment in time when a person arrives or whether membership within the meaning of the constitutional provision means an ongoing status, because that may be part of the answer. [00:14:37] Speaker 04: Okay. [00:14:39] Speaker 04: Cody, I think does not, would not, would indicate that the court believes that the vested rights are defined at the moment of membership when you become a member. [00:14:52] Speaker 00: But her counsel's point has merit. [00:14:56] Speaker 00: How could it be that for 20 years, membership means nothing from the moment that she became a member in 1980 to the time when she retired? [00:15:06] Speaker 00: I mean, that seems to be her argument. [00:15:10] Speaker 00: So defining, again, whether or not it accrues or not is going to be critical. [00:15:17] Speaker 04: Your Honor, I don't believe, I would not accept that it means nothing to be a member for 20 years because that defines the calculation of benefits. [00:15:27] Speaker 04: You know, the longer you're in the system, in the membership, that has an impact on your benefits, obviously. [00:15:39] Speaker 04: And certain rights that you have within the system. [00:15:45] Speaker 02: Is the settlement funds position that COLA's are included in the settlement agreements definition of full benefits? [00:15:57] Speaker 04: I'm sorry, you're up. [00:15:58] Speaker 02: Well, let me ask this. [00:15:59] Speaker 02: To what extent has the settlement fund paid Ms. [00:16:03] Speaker 02: Camacho and those similarly situated COLA benefits? [00:16:10] Speaker 02: Are they being paid at the 75% of the total amount? [00:16:16] Speaker 04: All right, that brings up the second point. [00:16:19] Speaker 04: No, the COLA payments have not been paid since, I believe, 2009. [00:16:30] Speaker 04: They're just, they, and under the settlement agreement, which state, in which the parties, and this I think is an important point, and it goes to the constitutional issue too. [00:16:46] Speaker 04: the parties okay so the background is of course is she getting paid at seventy five percent pursuant to that settlement uh... she is actually so far she is getting a hundred percent there were several months early on where she i believe was only paid [00:17:08] Speaker 04: uh... actually take that back she's always been paid a hundred percent the government is required under the settlement agreement to pay twenty five uh... seventy five percent if there's a shortfall and there were for a few months i believe the retirement fund actually paid that but of course the retirement fund doesn't want to do that because that depletes its corpus [00:17:37] Speaker 04: But the government has thus far been able to cobble together the money to pay both the 75% and the 25%. [00:17:48] Speaker 03: But that doesn't include the COLA, correct? [00:17:51] Speaker 04: No, and it never included the COLA because COLA was not included [00:17:56] Speaker 04: in the settlement agreement. [00:18:00] Speaker 04: It was the settlement agreement specifically defined the rights as of June 26, 2013. [00:18:09] Speaker 03: That was... But the settlement agreement can't override the requirements of the Constitution if they differ, correct? [00:18:21] Speaker 03: As a theoretical point, I know you don't think that it's relevant, but do you agree that if the Constitution says that she has to get coal, that overrides the settlement agreement? [00:18:34] Speaker 04: If the Constitution said that, exactly as you phrased it, [00:18:40] Speaker 04: that would be troubling. [00:18:43] Speaker 04: But I don't think even just positive of the issue. [00:18:47] Speaker 04: The Constitution doesn't say that. [00:18:49] Speaker 04: It says you cannot impair or diminish a benefit. [00:18:54] Speaker 03: Well, there's sort of, I'm harkening back to law school here, so it's been a while, and I may have this wrong, but the Constitution does say that membership in the system constitutes a contractual relationship, and so the government can't impair contracts under the federal Constitution. [00:19:17] Speaker 03: So why isn't that a problem? [00:19:19] Speaker 04: Because this was, the settlement agreement was not a one-sided deal. [00:19:25] Speaker 04: The settlement agreement involved an agreement by members of the then retirement fund who wanted to stay in the defined benefit plan. [00:19:41] Speaker 03: Except in 1989, the legislation was passed that said that [00:19:47] Speaker 03: annuities shall include a 2% cost of living adjustment annually. [00:19:55] Speaker 03: And that was during her tenure and before she retired. [00:20:00] Speaker 03: So why doesn't that apply to her and why is the state or the Commonwealth allowed to essentially renege on that statutory contract? [00:20:12] Speaker 04: It's not a reneging, Your Honor, and I think the New Mexico case that we cited was instructive on this. [00:20:21] Speaker 04: You had a retirement fund that was insolvent. [00:20:26] Speaker 04: and choices had to be made. [00:20:28] Speaker 04: The picture I have in my mind of this, to answer your question in a little different way, is imagine the Titanic, you know, Leonardo DiCaprio and Kate Winslet standing on the bow, except that the accident doesn't happen at night, it happens in the day, and they're heading for the iceberg and the crew sees it and says, we have to move. [00:20:52] Speaker 04: The passengers see it and say, we have to move. [00:20:55] Speaker 04: And then somebody says, well, wait a minute, we can't move because... Well, isn't that the function of a constitution is to say you can't move? [00:21:05] Speaker 04: No, no, because I... Well, no, because first the constitutional right is impaired and diminished, which the trial court [00:21:16] Speaker 04: uh... mentioned but did not really uh... uh... go into an analysis of because it found that the parties the the people who decided in our in my scenario the settlement agreement is moving the titanic and what happened was the people who wanted to stay in the defined benefit plan [00:21:39] Speaker 04: They said, okay, we want to stay in this. [00:21:43] Speaker 04: We agree that our rights will be as defined in 1 CMC 8358 for the purpose of COLA, which COLA was discretionary, undoubtedly was discretionary. [00:21:59] Speaker 03: And that discretionary statute came after the plaintiff here retired, correct? [00:22:08] Speaker 04: Yes, but she was a member of the fund, and she had a choice. [00:22:11] Speaker 04: She could have opted out. [00:22:13] Speaker 03: So now you say she is a member of the fund, so she's been a member of the fund the whole time? [00:22:18] Speaker 03: I mean, earlier you said membership was a one-time. [00:22:24] Speaker 04: No, no, no, no. [00:22:25] Speaker 04: Her accrued benefit, her accrued rights. [00:22:29] Speaker 04: The definition of full benefits is as defined when you become a member. [00:22:35] Speaker 04: That's what CODI, the proposition that CODI stands for. [00:22:41] Speaker 03: Well, it's undoubtedly financially really important to the Commonwealth to know the answer to this question. [00:22:51] Speaker 03: So it seems to me that makes it even more appropriate to ask [00:22:59] Speaker 00: the commonwealth court what how this all fits together and and the legislature to judge graver's question uh... in two thousand eleven amended uh... at section uh... eighty three fifty eight replacing that uh... shall language to maybe entitled language so the legislature has been sort of several times sort of moving [00:23:28] Speaker 00: around whether or not the COLA should be applied or shouldn't be applied or whether they shall be applied or whether they may be applied. [00:23:35] Speaker 00: So isn't this again a matter of us having to get definition and clarification from the Supreme Court in order for us to really answer the question? [00:23:50] Speaker 04: I don't believe so, Your Honor. [00:23:52] Speaker 04: I think that the answer is, and the changes, the COLA law has been amended six times. [00:24:01] Speaker 04: A lot of them were kind of technical amendments, but the settlement agreement that Ms. [00:24:11] Speaker 04: Raffin's client and all the other members who decided to stay in the defined benefit plan agreed to [00:24:22] Speaker 04: was the definition, among the things they agreed to, was the law as it applied, 8358 applied at the time, as of June 26, 2013. [00:24:36] Speaker 04: They agreed to that. [00:24:38] Speaker 04: They made an agreement. [00:24:41] Speaker 04: And the difference on the constitutional level. [00:24:44] Speaker 02: Was there agreement? [00:24:45] Speaker 02: Did everybody understand at that point in time that COLA's [00:24:50] Speaker 02: were full benefits. [00:24:54] Speaker 04: Your Honor, I think that did everybody understand? [00:25:00] Speaker 04: The members were represented by very competent counsel. [00:25:05] Speaker 02: It was as you... You think everybody understood that COLA's were included in the full benefits? [00:25:13] Speaker 04: They were not included in the full bill. [00:25:16] Speaker 04: It's discretionary. [00:25:17] Speaker 04: At the time, it was the law was that it was dependent on a contribution from the legislature. [00:25:28] Speaker 04: That if there was going to be a COLA, if the board said, oh, let's have a COLA, it only applied if the legislature appropriated the fund. [00:25:39] Speaker 02: You think everybody understood that? [00:25:43] Speaker 04: Well. [00:25:44] Speaker 02: That's because that's what you're telling us to believe or to rely on. [00:25:48] Speaker 04: Well, Your Honor, clearly I can't speak for every person in the settlement fund. [00:25:54] Speaker 04: I will speak for Ms. [00:25:55] Speaker 04: Camacho. [00:25:56] Speaker 04: Ms. [00:25:56] Speaker 04: Camacho knew she was not getting COLA payments after the settlement. [00:26:03] Speaker 03: Well, but the settlement agreement also specifically refers to the constitutional provision, Section 20A, as definitional for full benefits. [00:26:14] Speaker 03: So it sort of folds in on itself, it seems to me. [00:26:18] Speaker 03: Because since that constitutional guarantee is part of the definition within the settlement agreement, it seems like you're just saying, well, we're going to take half of what it says and not the other half. [00:26:32] Speaker 04: No, because, Your Honor, and I'm trying hard to dissuade you of this idea that the Constitution somehow guaranteed specifically COLA payments. [00:26:43] Speaker 04: The Constitution prohibits benefits from being diminished or impaired. [00:26:51] Speaker 04: It doesn't prohibit parties from contractually agreeing to alter, which is what the settlement agreement does. [00:27:00] Speaker 03: But the problem I have with that is that the settlement agreement's definition of full benefits states that it refers specifically to that which is guaranteed in Section 20A, and Section 20A says [00:27:18] Speaker 03: that it's a contractual relationship and that accrued benefits can't be diminished or impaired. [00:27:25] Speaker 03: So that's written into the definition of full benefits within the settlement agreement. [00:27:31] Speaker 03: It's a freestanding constitutional provision that would probably apply anyway, but it's in the settlement agreement as the definition. [00:27:39] Speaker 03: So that's my problem, I think, with the argument that you're making. [00:27:44] Speaker 04: OK. [00:27:48] Speaker 04: I don't think that it says, well, the settlement agreement does not define full benefits to, if I understood this correctly, let's be clear, full benefits does not include COLA payments. [00:28:11] Speaker 03: Well, it doesn't say that specifically. [00:28:13] Speaker 03: That's the problem. [00:28:14] Speaker 04: In the definition. [00:28:15] Speaker 03: That's why there's ambiguity here. [00:28:20] Speaker 02: And if you look to Alaska law, which has similar ones, the court there has interpreted that in a way that my favor, the plain, the appellant, if you look to Hawaii law, the court there has interpreted that. [00:28:32] Speaker 02: Their Supreme Court have looked at that in a way that maybe it doesn't. [00:28:38] Speaker 02: And if you look at federal contractual law, it's very difficult. [00:28:46] Speaker 02: So I just am wondering why is it this appropriate for the Supreme Court of the Commonwealth to decide? [00:28:54] Speaker 02: I mean, should we be deciding that? [00:28:57] Speaker 02: I know you're having a hard time understanding that what we're having a hard time dealing with, and that's, you know, whether these COLA's were meant to be part of the full benefits, which the Constitution guarantees, in which we do all both, arguing that Cody says you can't diminish. [00:29:19] Speaker 04: The settlement agreement does not abrogate the rights, any constitutionally guaranteed right. [00:29:27] Speaker 04: It is a contractual agreement actually to defer certain payments. [00:29:34] Speaker 04: The agreement to accept 75% [00:29:41] Speaker 04: was not a relinquishment of the other 25%. [00:29:46] Speaker 04: It was a contractual agreement of people who wanted to maintain the defined benefit plan. [00:29:55] Speaker 03: But then the question is 75% of what? [00:29:58] Speaker 03: That's what we're getting to. [00:29:59] Speaker 04: Okay, I understand. [00:30:00] Speaker 04: I understand. [00:30:01] Speaker 04: But once again, [00:30:04] Speaker 04: it was there was an agreement it is seventy five percent of full benefits uh... as defined in one cmc eighty three oh one that's what the parties agreed to that's what the people who wanted to stay in this is at uh... one point one three of the settlement agreement the people who wanted to stay in the defined benefit program who wanted to see it [00:30:32] Speaker 04: have a chance to survive fiscally, they agreed to this. [00:30:38] Speaker 04: And 83, within 8301 at SEC, referred to there, Section 8385 clearly states that COLA payments [00:30:59] Speaker 04: are subject to appropriation. [00:31:02] Speaker 04: They're only due if there's an appropriation. [00:31:06] Speaker 04: And I just think that's an important. [00:31:10] Speaker 02: Thank you. [00:31:11] Speaker 04: Thank you, your honors. [00:31:27] Speaker 02: Mr. [00:31:33] Speaker 01: Thank you very much. [00:31:36] Speaker 01: I don't think I have anything to add. [00:31:38] Speaker 01: We think the COLA, she accrued the interest in COLA. [00:31:47] Speaker 01: It's protected by the Commonwealth Constitution and she should be paid it and her entrance should be adjusted accordingly to that. [00:32:00] Speaker 01: Thank you. [00:32:02] Speaker 02: Thank you. [00:32:04] Speaker 02: The case of Rosa Camacho versus the Northern Mariana Island Settlement Fund is now submitted. [00:32:12] Speaker 02: The next case