Annapolis sues police, fire retirees to get ruling in pension dispute

The city of Annapolis has named dozens of retired police officers and firefighters in a federal lawsuit, the latest tactic in a decade-long legal battle over changes to retiree pensions.

In court filings last week, the city asked a judge to rule that a recent switch to an annual 2 percent cost-of-living increase for retirees — instead of a previous sliding scale tied to city employee raises — is legal.


Attorney Eric Paltell, who represents the city in the case, said a ruling is needed because, "the retirees have made it crystal clear that they do not believe this is legal."

He said the city named the retirees in the suit because the court would not review the law unless there was a demonstrated dispute. The city cited a February letter from the retirees' attorney, Robert E. Deso, sharply criticizing the pension change and threatening to sue the city.

Russell Hall, a 64-year-old retired police lieutenant who is among those named in the lawsuit, decried the city's move to take the retirees to federal court. Some who have fought with the city on pension issues since 2002 have died, and the oldest member of the group is 96, he said.

"They're really tired of fighting the city over this. It's ridiculous," said Hall, who is president of the Annapolis Police/Fire Retirees Association.

The 2 percent increase for police and fire pensions was negotiated with unions last year and made official by the city council in July, with Mayor Mike Pantelides as the lone dissenting vote. The raises replace a system of four categories for pensions, each with varying triggers for raises, some tied to employee raises or linked to the Consumer Price Index.

The 63 retirees named in the lawsuit are in categories that link pension increases to current employee raises.

Hall said the retirees are frustrated they weren't included in negotiations for the 2 percent increase. He said on the surface, it might not be a bad deal, but his group never had the chance to weigh the pros and cons.

Hall also believes the city's decision to specifically name the 63 retirees is payback for a prior legal case. In 2002, those same retirees contended that the city was circumventing the previous arrangement by not giving them the same raises as current employees. That case started at the city's Civil Service Board and went all the way to the Maryland Court of Appeals, where in 2008 the retirees won an order that gave them the raises and back pay.


Now, Hall said, the city "selectively picked us to punish us and harass us. It's just sad that the city's doing that to these people that have served."

In response to the lawsuit, the retirees have asked the Anne Arundel Circuit Court to review that 2008 victory — Hall said they hope a judge will reaffirm that the city must keep giving raises to retirees at the same pace as employees, rather than at the fixed 2 percent.

A hearing is scheduled for September on the retirees' request.

No hearings have been scheduled for the city's federal case.

Paltell said the switch to a 2 percent annual increase was one of several changes made to put the pension plan on solid financial footing after it was hit by the recession and a wave of employee retirements.

With the prior arrangement of multiple categories for pension increases, some retirees went years with no increases and then saw large bumps, he said, making it difficult to predict the long-term outlook for the pension fund.


The city believes the switch to the 2 percent annual increases is legal under state and federal law because the historical average increase has been 2.02 percent. Federal law allows such changes only if there is an overriding public need; state law mandates that changes must offer substantially similar benefits, Paltell said.

"We think it's a fair change," Paltell said.

Though the federal lawsuit names 63 people, it affects hundreds of retirees, Paltell said. He said the city doesn't want to burden retirees with another case, but wants to ensure the change is legal. "The city really is trying to help them," he said.