Court rulings expand borough PERS liability

ANCHORAGE — A pair of recent rulings from a U.S. District court judge could come with a hefty price tag for the Mat-Su Borough.

In the first ruling, issued by judge John Sedwick April 7 said borough employees who claim they were wrongly denied eligibility to receive Public Employees Retirement System benefits are not eligible, despite working hours which would have classified them as full-time employees.

But a second ruling, issued Tuesday, significantly expands the number of employees who may be eligible, federal court documents show.

Attorneys for the potentially hundreds of employees denied the state-funded benefits — labeled “disfavored” employees in court filings — said they were puzzled by the first ruling, but elated by the second. Now, instead of a single class judgment, the two rulings open the door for each employee in this disfavored group to launch an individual lawsuit against the borough.

Because borough employees based their claim to class status on conditions which potentially varied widely among claimants, an individual hearing would be required to determine which employees had worked enough hours to attain eligibility, Sedwick wrote.

“To assess whether the putative class members share a common question, courts must identify the elements of each of the class members’ claims and analyze each claim separately,” the judgment reads.

Basically, the ruling goes against the employees, who had sought class status, said Jon Wiederholt, an associate attorney representing the disfavored employees.

“The inability to class certify does not even remotely end our case,” he said. “On some level it makes our case a great deal more compelling.”

The borough had sought to strike the eligibility of borough employees before 2011, according to Wiederholt, but the ruling now means that employees potentially going back to the year 1968 — when the borough first signed the contract with Alaska for PERS eligibility — could file lawsuits.

“Realistically, we could be going back any longer than 20 years,” he said.

PERS-eligible former borough employees who have not yet retired, like Houston fire Capt. Christian Hartley, may be able to sue the borough at some point in the future when they have retired, even if they no longer hold the job which made them eligible, according to Wiederholt and the ruling.

The second ruling blunts the potential impact of time, because it means that a statute of limitations would not begin to run down until after any of the disfavored employees retired, Wiederholt said.

“It does potentially open the borough up to lots of claims going back 20 years, but it exposes them for liability for years into the future,” he said.

Borough officials have estimated the total liability at between $1.5 million and $2 million, Wiederholt said.

Borough attorney Nick Spiropoulos was unavailable to answer questions about the lawsuit Friday afternoon. A representative from his office directed calls for comment back to the ruling.

Contact Brian O’Connor at 352-2269, brian.oconnor@frontiersman.com, or on Twitter @reporterbriano.