The James R. Browning U.S. Court of Appeals Building, home of the 9th U.S. Circuit Court of Appeals, is pictured in San Francisco, California, Feb. 7, 2017.
THE U.S. Court of Appeals for the Ninth Circuit has certified a legal question to the CNMI Supreme Court seeking guidance on whether the Cost-of-Living Allowance or COLA for retirees under the CNMI Constitution is protected and cannot be diminished.
Chief Judge Mary H. Murguia, and Circuit Judges Susan P. Graber and Salvador Mendoza certified the following question to the local high court:
“Did Section 8334(e) of the Northern Mariana Islands Retirement Fund Act of 1988, 1989 N. Mar. I. Pub. L. 6-17, grant Class II members of the Northern Mariana Islands Retirement Fund, who were already employed by the Commonwealth when the Act took effect, an accrued cost-of-living-increase benefit that may not be diminished or impaired under the terms of Article III, Section 20(a) of the Commonwealth Constitution?”
In their order dated Dec. 9, 2024, the circuit judges said the certified question presents novel issues of Commonwealth law that could have far-reaching fiscal consequences.
“Given the lack of controlling case law regarding the applicability of Article III, Section 20(a) of the Commonwealth Constitution to — and the potentially significant financial ramifications of — Plaintiff’s claim, we respectfully request that the Commonwealth Supreme Court accept certification of the question identified above,” the circuit judges added.
Background
In 1980, the CNMI created the Northern Mariana Islands Retirement Fund for the benefit of its public employees. The Commonwealth eventually fell behind on its contributions to the Retirement Fund, prompting retirees to initiate a class action. The parties settled their dispute, and an entity called the NMI Settlement Fund was named as trustee.
The resulting settlement agreement guaranteed class members at least 75% of their “full benefits,” as defined by statute and by Article III, Section 20(a) of the Commonwealth Constitution.
In 2016, the Settlement Fund informed Rosa A. Camacho, a class member, that she had been overpaid due to a miscalculation regarding her past overtime compensation and that her future benefits would be reduced as a result.
Camacho filed an administrative appeal. During the administrative proceedings, she claimed that the Settlement Fund had, in fact, underpaid her by failing to provide COLAs.
Arguing that the question of whether the settlement agreement guaranteed the plaintiff COLAs was for the district court to decide, not the administrative process, the Settlement Fund sought to compel Camacho to litigate the issue in the district court. She responded by asking the district court to decide both the COLA and the overtime questions in her favor.
The district court concluded that her “full benefits” did not include COLAs under either of the definitions provided in the settlement agreement. The court first reasoned that cost-of-living increases were not statutorily guaranteed because, as of July 26, 2013, Section 8358(d) conditioned the availability of COLAs on discretionary legislative action. Second, the district court concluded that Article III, Section 20(a) of the Commonwealth Constitution did not guarantee the plaintiff COLAs because no such payments existed in Commonwealth law when she joined the Retirement Fund in 1980.
Camacho, through her attorney, Jeanne Rayphand, appealed, seeking to recover “unpaid COLA for the years 2009 to the present at the rate that beneficiaries of the United States Social Security System were paid but not less than 2% per annum.”
She did not challenge the district court’s interpretation of Section 8358 as amended by the 2011 Act. Rather, Camacho argued that she accrued a right to receive COLAs because they were introduced during her membership in the retirement system.
Camacho said applying the current version of Section 8358 would violate her constitutional rights under § 20(a) because COLAs were incorporated into her benefits before she retired from public service.
