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  • WisBar News
    September
    11
    2018

    Retirement Benefits: City Did Not Violate Worker’s Due Process Rights

    Joe Forward

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    Retirement Benefits

    Sep. 11, 2018 – The U.S. Court of Appeals for the Seventh Circuit recently ruled that the City of Madison did not violate the due process rights of a public worker seeking backdated hours and wages for purposes of retirement benefits in the public system.

    Madison mischaracterized the employment status of Gary Cleven, who began working for the city in the 1980s as a theatrical stagehand. The city classified Cleven as an independent contractor. Thus, he was not eligible to participate in the Wisconsin Retirement System, and the city never withheld or paid retirement contributions.

    In 2006, a union petitioned the Wisconsin Employment Relations Commission (WERC) for an election to represent the stagehand workers who were classified as independent contractors. WERC rejected the city’s claim that the stagehands were not employees.

    Thus, WERC allowed the election and the stagehands elected the union to represent them. The union then bargained with the city and the city agreed to pay the stagehands’ required contributions to the Wisconsin Retirement System at the start of 2010.

    The sides did not reach any agreement on whether contributions should apply retroactively, before the start date of the labor agreement. Cleven engaged the Employee Trust Funds Board to obtain retroactive credit back to 1983.

    He also wanted the city to pay his share of retroactive contributions, about $200,000. The board found that he was eligible for participation in the retirement system as of 1983 but did not decide who should pay the past-due employee contribution amount.

    However, the board ordered the city to report Cleven’s earnings from 1983 to 2010 to the Wisconsin Retirement System, which would have triggered an invoice to the city.

    On the question of who should pay the employee contributions, Cleven sought review in state courts. But the case was dismissed on procedural grounds in circuit court, the appeals court affirmed, and the Wisconsin Supreme Court declined to review the case.

    Meanwhile, the city declined to report Cleven’s earnings to the Wisconsin Retirement System, as ordered. The city did not want to pay the contribution and have to seek reimbursement from Cleven before the state court litigation concluded.

    After the Wisconsin Supreme Court declined to review the case, Cleven filed another action in circuit court seeking a writ of mandamus to compel the city to report his earnings, from 1983 to 2010, to the Wisconsin Retirement System as ordered.

    The circuit court ordered the city to report the earnings. The city did so and paid the retroactive employer and employee contributions. The city then joined Cleven in litigation to determine whether the city was responsible to pay employee contributions.

    At trial, the city lost, but an appeal is pending. In 2016, though, Cleven filed a lawsuit in federal court, alleging the city violated his due process rights by holding his retirement benefits “hostage” with no pre-deprivation hearing. He had wanted to retire in 2011.

    The district court ruled for the city and in Cleven v. Soglin et al., No. 17-3332 (Sep. 10, 2018), a three-judge panel for the Seventh Circuit Court of Appeals affirmed, concluding the city did not violate Cleven’s procedural due process rights.

    The panel rejected Cleven’s claim that due process required the city to hold a hearing before the city decided to defy the Employee Trust Funds Board’s order to report Cleven’s hours and earnings to the Wisconsin Retirement System. Due process was satisfied, the panel ruled, through the writ of mandamus procedure that he used.

    “Cleven says that a writ of mandamus is insufficient because he was entitled to a predeprivation remedy. He is incorrect,” wrote Judge Amy Barrett.

    The panel said the city “acted without authorization” when it failed to comply with the board’s directive, and it didn’t matter that the city did so intentionally. The mandamus action served the due process function by allowing Cleven to compel the city.