A lawsuit brought by public sector unions and retirees over Rhode Island's 2011 pension overhaul can now move forward, a judge ruled Wednesday, days after both sides said a lengthy mediation had failed.
Superior Court Judge Sarah Taft-Carter denied the state's motion to dismiss the lawsuit, which was filed before the closed-door mediation began more than a year ago.
Public-sector unions and retirees had sued over the law, which was designed to save Rhode Island $4 billion over the next 20 years by reining in pension costs. The law has been used as a model for other states.
Unions and retirees have argued that their pension benefits constituted an implied contract, while the state disputes that. Taft-Carter notes in her decision that unlike some other states, Rhode Island's constitution and law do not explicitly state that public employees have a contractual right to their pension benefits.
But she writes that other factors support it being a contract, such as the fact that workers have served the public for a required number of years and contributed a required percentage of their salaries to the pension system in return for pension benefits.
"A valid contract exists between plaintiffs and the state, entitling plaintiffs to their pension benefits," she wrote.
Taft-Carter notes that her standard for reviewing the state's motion to dismiss was not whether the lawsuit is likely to succeed, but rather to assume the allegations are true, and examine the facts in a light favorable to the unions and retirees.
The judge's action was expected, and the state is preparing for trial, Faye Zuckerman, Gov. Lincoln Chafee's spokeswoman, and Joy Fox, Treasurer Gina Raimondo's spokeswoman, said in a joint statement.
"The state continues to believe that the pension changes enacted by our General Assembly are constitutional and that the state has strong legal arguments to support its positions," they said.
Ray Sullivan, a spokesman for the lawyers representing unions and retirees, said they were pleased the court had recognized there was an implied contract.
"These retired workers lived up to their end of the deal by dutifully paying into a pension system that was promised to be there when they needed it," he said.
A trial in the case has already been scheduled to start in September.