Teachers settle pension lawsuit for $117M
“If there was ever a case where we had to earn our money, this was it," attorneys say.
A group of DeKalb County School District employees have settled their class action lawsuit against the Board of Education over pension contributions for $117.5 million, to be paid over the next five years, representatives for both sides said Thursday.
The agreement ends a decade of litigation for teachers and other school employees who alleged the DeKalb County Board of Education illegally ended contributions to their retirement funds.
The agreement is subject to approval by DeKalb County Superior Court Judge Gregory A. Adams. The most most recent development came when Adams flipped his earlier position and granted a motion for class certification with an order signed March 26. The judge named teachers to serve as representatives in the lawsuit going forward. The lead plaintiff is Elaine Gold.
More than 10,000 teachers and other employees contend—“and the appellate courts have established”—that the school district “breached their contract by improperly reducing certain retirement benefits,” Adams said. “If ever there was a question that ought to be resolved once and for all, it is whether this school district shortchanged these teachers unlawfully.” This is the same judge who had previously thrown out the lawsuit.
The Georgia Court of Appeals reversed Adams and remanded the case to him for reconsideration. Judge John Ellington wrote the reversal opinion on June 1, 2018, agreeing with the teachers that they had “an enforceable ‘governmental promise’ that required two years’ notice before reducing or suspending funding.” Ellington wrote for a panel that included Judge Charlie Bethel and Senior Judge Herbert Phipps. The school district appealed to the Georgia Supreme Court, which unanimously affirmed the panel’s ruling in November 2019. (Both Ellington and Bethel had moved up to the high court by then.)
The DeKalb teachers’ pension program was created like those of other school districts that opted during the 1970s to create an alternative to Social Security retirement benefits. The dispute dates to 2009 and the Great Recession, when then-Gov. Sonny Perdue announced a 3% reduction in state funding for all Georgia school systems, Ellington explained.
“In an effort to manage the expected loss of up to $20 million in state funding and the resulting budget deficit, the board decided to suspend contributions” to the teachers retirement plan, Ellington said. “Although the board notified employees that funding of the [retirement] plan would be suspended, it did not give two years’ notice prior to suspending funding.”
Ellington pointed to “evidence in the record from which a fact-finder could infer” that the school board was aware that suspending funding to the retirement plan without the required two-year notice violated its own policies.
Furthermore, Ellington said, “There is no evidence in the record that the district has restored any funding.” He said that, in June 2010, the school board “amended its by-laws and policies to remove the two-year notice provision.”
The board disputed the two-year notice requirement, but the teachers argued that failing to meet it made the budget cuts illegal. The $20 million on the line for the year the contributions were cut, multiplied by the 10 years of budgets since, could have meant $200 million or more is at stake in the case—plus interest.
The school district defense attorneys are Allegra Lawrence-Hardy, Thomas Bundy III, Lisa Haldar and Leslie Bryan of Lawrence & Bundy.
The Barnes Law Group represents lead plaintiff Elaine Gold and others. The team includes former Gov. Roy Barnes and John Salter Jr. They were joined by Michael Terry and Jason Carter of Bondurant, Mixson & Elmore.
The settlement will go to the teachers in the form of checks. About a third—approximately $38 million—will go to attorney fees and costs, according to the lawyers.
“Ten years of litigation, four appeals, completely lost it twice and had to reverse it,” Terry said Thursday. “If there was ever a case where we had to earn our money, this was it.”
The school district responded to an inquiry from the Daily Report on Thursday with an emailed statement.
“After extensive negotiations, we are pleased to have achieved a mutually agreeable resolution of the Gold case, which involves disputed claims relating to the Board TSA (tax-sheltered annuity) plan. This class-wide settlement represents a fair resolution for the District’s employees while giving the District flexibility in payment with the hope of minimal budgetary disruption.
“Both sides believe this settlement turns the page on this longstanding dispute, ending almost a decade of litigation and further demonstrating the District’s commitment to its most valued resource: classroom educators and employees. The parties hope this resolution allows for our collective focus to be on the critical mission of educating the wonderful children of DeKalb County Schools. The settlement is subject to approval by the Court, and the parties are preparing papers to submit to the Court for preliminary approval. If approved, more information will be provided for those who may qualify as members of the class.”
Katheryn Hayes Tucker is an Atlanta-based reporter covering legal news for the Daily Report and other ALM publications.