A group of teachers and other school employees has settled a class-action lawsuit with the DeKalb County (Georgia) Board of Education (BOE) for $117 million, ending a decade of litigation and resolving allegations that contributions to their pension plans were illegally cut short.
The protracted pension dispute stretches back to the financial meltdown of 2009, which prompted then-Governor Sonny Perdue to cut state funding for Georgia school systems by 3%. To manage the expected $20 million loss in funding and the resulting budget deficit, the DeKalb County BOE chose to suspend contributions to an employee pension that had been in place since the 1970s.
A class action representing more than 10,000 teachers and school employees was filed against the BOE. The plaintiffs alleged that the BOE’s decision to suspend retirement fund contributions was illegal because they were not given the required two years’ notice before any reduction or suspension of the contributions.
According to Law.com, $200 million or more was at stake in the case — $20 million for the year the BOE ended the contributions multiplied by 10 years plus interest.
In June 2018, Georgia Court of Appeals Judge John Ellington overturned a decision by DeKalb County Superior Court Judge Gregory A. Adams, who had rejected the plaintiffs’ arguments in an earlier decision.
Judge Ellington found that BOE was aware that suspending the pension contributions without the required two-year notice violated its own policies. Additionally, he found “no evidence that the district restored any funding” and that it “amended its by-laws and policies” after the case was filed “to remove the two-year notice provision.”
Judge Ellington then remanded the case back to Judge Adams, who reversed his previous decision and granted a motion for class certification with an order signed March 26.
Judge Adams said that “the appellate courts have established” that the BOE breached its contract by “improperly reducing certain retirement benefits.”
“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,” the judge wrote.
The settlement will be paid to the teachers and other employees over the next five years, Law.com sources said.
Lawyers in Beasley Allen’s Consumer Fraud & Commercial Litigation section handle similar claims from employees in a variety of industries whose pensions are in jeopardy due to corporate mergers, bankruptcy or similar circumstances. For more information on these types of claims, contact Dee Miles, the Fraud Section Head.