The lawsuit by public-sector unions challenging Rhode Island's landmark pension overhaul law is headed for a jury trial scheduled to start April 20.
A jury trial represents the great unknown, some legal experts say.
"That's the Kabuki theater of litigation," said
Rhode Island Superior Court Judge Sarah Taft-Carter, ruling from the bench Tuesday, granted the state's request for a jury to decide on the legality of the Rhode Island Retirement Security Act of 2011. In her 30-minute speech in the Providence courtroom, Taft-Carter said a jury trial was constitutionally sound.
"Jury trials have their benefits, but they are unpredictable -- very unpredictable," said Mineola, N.Y., attorney and St. John's University law professor Anthony Sabino. "Having 10 to 12 ordinary citizens deciding your fate can have unexpected results. It's anyone's guess as to how a jury will react. Just because you see the facts one way does not mean a jury will agree."
Outgoing Gov. Lincoln Chafee said he was pleased with the decision.
"Nevertheless, I continue to hope that settlement discussions will be revisited when the General Assembly returns in January," he said in a statement.
The 2011 law, which passed after heated debate, reduced benefits for active participants in the $8 billion Employees' Retirement System of Rhode Island by shifting them to a hybrid system combining defined-benefit and defined-contribution plans, and limiting cost of living adjustments for retirees, among other changes.
The state in 2011 expected to reduce its unfunded liability from $4.4 billion to $2.7 billion and lower its annual contribution from $305 million to $177 million.
Spiotto cannot recall so-called reform legislation subject to a jury trial.
"The dynamic uncertainty should increase the possibility of a settlement," he said in an interview. "It's an interesting issue. With a jury, essentially, you're getting a referendum on a very selected basis, from where the jury pool is pulled."
Gov.-elect Gina Raimondo, who championed the law during her first year as state general treasurer, remained confident in Rhode Island's legal stance.
"The state's legal positions in the litigation will be set forth fully in the documents filed with the court and the oral arguments made in court, all of which will be a matter of public record. Otherwise, the state will not be commenting on this ongoing litigation," said Raimondo, who is about to leave the treasurer's office after her election as governor.
Pensions are a political football in Rhode Island.
They served as a backdrop to last month's gubernatorial election, when Democrat Raimondo defeated Republican Allan Fung, who crafted his own municipal pension compromise as Cranston mayor. Providence Mayor Angel Taveras, who lost the Democratic primary to Raimondo, also worked out a compromise in the capital city.
In addition, Rhode Island is home to the 2011 Central Falls bankruptcy. While in Chapter 9, the 19,000-population city cut retiree benefits by up to 55% while protecting bondholders.
Five unions opposed the state's request for a jury trial.
"Whether presenting to a judge and/or a jury, Council 94 is confident that our attorneys will present a strong case at trial," said J. Michael Downey, president of Rhode Island Council 94 of the American Federation of State, County, and Municipal Employees, AFL-CIO.
A compromise that state officials announced earlier this year failed when a police union rejected it. The compromise, which officials said would have preserved 95% of the expected savings, needed the approval of all unions.
Moody's Investors Service at the time called the impasse a credit negative for Rhode Island and its local governments. Moody's rates Rhode Island's general obligation bonds Aa2. Fitch Ratings and Standard & Poor's rate them AA.
