Goodsell Quinn :: Goodsell Quinn to represent State Employees in Lawsuit against State.

Stephen M. Pincus
Stember Feinstein Doyle Payne & Cordes, LLC
Pittsburgh, PA 15219
(412) 422-8064
spincus@stemberfeinstein.com

Verne Goodsell
Goodsell Quinn, LLP
Rapid City, SD
(605) 343-3000
verne@goodsellquinn.com

SOUTH DAKOTA PUBLIC SECTOR RETIREES CHALLENGE NEWLY-LEGISLATED CUTS TO ANNUAL PENSION ADJUSTMENT

Rapid City, South Dakota – Four retired South Dakota employees filed a class action lawsuit today in Hughes County Circuit Court on behalf of thousands of South Dakota public sector retirees receiving pension benefits whose annual postretirement improvements were cut as a result of recently passed legislation. They are represented by the law firms of Stember Feinstein Doyle Payne & Cordes, LLC and Goodsell Quinn, LLP.

The suit alleges that reductions in the amount of annual pension improvements are unconstitutional because they violate the retirees’ contractual rights to receive pension benefits at the levels promised to them when they retired. The plaintiffs, Merton Tice, Marshall Young, Boots Newstrom and Dean Bryson, seek to represent a class including pension recipients under the South Dakota Retirement System (SDRS). The defendants are the State of South Dakota, Governor Rounds, the pension plan, and pension plan’s officials and directors.

“The South Dakota and United States Constitutions do not permit a public employer to take away pension benefits to those who are already retired,” said Stephen M. Pincus, one of the attorneys for the retirees. “And that is exactly what the legislature did.”
The suit, Tice v. South Dakota, asks the court to rule that the recent changes are unconstitutional and to order the defendants not to implement them.

The benefits administered by SDRS are funded, in large part, by contributions from participating members. For example, active SDRS members who are police officers and firefighters are required by law to contribute 8% of their wages to SDRS.

Until this year, SDRS increased retiree’s benefits every year by 3.1% to account for the effects of inflation. In March 2010, the Legislature passed and Governor Rounds signed Senate Bill 20 which lowered the annual increase to 2.1% for fiscal year 2011, which begins on July 1, 2010. After fiscal year 2011, the new law provides increases between 2.1% and 2.8% when the market value of the SDRS remains less than 100%. Only if the fund has a market value of 100% or over will the promised 3.1% increases be provided. SDRS was funded at 91.8% as of June 30, 2009.

As a result of these pension changes, retirees will potentially lose millions of dollars in promised benefits. For example, a retired SDRS member who will receive an annual pension of $36,485 in 2010 (approximately the average benefit for those with 30 or more years of credited service) will lose approximately $40,000 to $77,000 over the next twenty years due to these changes, if the fund does not reach the 100% funding level.

Retired Judge Marshall Young said, “The State must carry out its contractual obligations and keep the promises it made to retirees.” Attorney Verne Goodsell noted, “It is unfair for the State to renege on its contractual promises made to individuals when they retired.”
The law firms representing the Plaintiffs are experienced in pension and employment law as well as class actions.
ABOUT Stember Feinstein Doyle Payne & Cordes, LLC (www.stemberfeinstein.com)

Stember Feinstein Doyle Payne & Cordes is a Pittsburgh, Pennsylvania law firm that has brought numerous class actions challenging the elimination or reduction of retiree benefits. Recently, the firm represented about 750,000 retirees from GM, Ford and Chrysler in restructuring their retiree health benefits, and it is currently involved in cases in the public sector similar to this one in Minnesota, Colorado, Massachusetts and New Hampshire.

ABOUT GOODSELL QUINN, LLP (www.goodsellquinn.com)
Goodsell Quinn, LLP is a Rapid City law firm that specializes in complex litigation, including multidistrict litigation and class actions; personal injury; and medical malpractice cases. The firm is recognized for representing businesses and individuals who have been hurt or damaged. Most recently, the firm resolved the first mesothelioma asbestos exposure claim to go to trial in South Dakota, after the first day of trial.

For a copy of the Complaint, please visit www.stemberfeinstein.com/caseupdates.