Lawyers set for battle over RI pensions

PROVIDENCE, R.I. (WPRI) - Public-sector unions' lawsuit challenging the landmark Rhode Island pension law will get its first big day in court on Friday morning.

R.I. Superior Court Judge Sarah Taft-Carter will hear arguments starting at 9:30 on motions by the state to dismiss the union suit and to force her to step aside because at least three members of her family are part of the state pension system. WPRI.com will have complete coverage of the hearing on air and online.

The unions' lawyers argue workers and retirees have a contractual right to their pensions and therefore the benefits can't be altered after the fact by lawmakers. The state's lawyers argue there is no contract right and in any event the public interest requires pension cuts because of Rhode Island's fiscal challenges.

The stakes are high for Rhode Island taxpayers and the roughly 66,000 individuals in the pension system.

• Nesi's Notes: In-depth pension coverage

The state and its municipalities are banking on the law being upheld, which will shave their pension obligations by more than $3 billion. Retirees are facing years without an annual increase in their pensions under the law, which also moved current workers in July to a new system that pairs a smaller pension with a 401k-style benefit.

On Thursday, the R.I. Supreme Court refused to intervene in the case and allowed Taft-Carter to continue hearing arguments. Taft-Carter, the daughter of former Cranston Mayor James Taft, was appointed to the bench two years ago by former Gov. Donald Carcieri. She made an initial ruling in favor of the unions last year agreeing on the contract issue.

Treasurer Gina Raimondo, the first-term Democrat who pushed through the pension law, has recruited the nationally prominent lawyer David Boies to join the state's legal team. Boies, who argued the losing side in Bush vs. Gore, will get a small fraction of his usual $1,250-an-hour fee if Taft-Carter agrees Friday to let him practice law in Rhode Island.

"If the voters when this passed originally said, 'OK, what we’re going to do is we’re going to set up a fund, and we’re going to tax people right now to put money into that fund and pay for it,' that would be one thing," Boies told WPRI.com in an extended interview Thursday. "But the argument is that the legislature years ago passed a statute, and now the current legislature can’t change that statute."

"That’s an extraordinary argument," he said.

Gov. Lincoln Chafee, who signed the pension changes into law last November, has signaled in recent days he wants to open discussions with organized labor to reach a settlement that will avoid protracted litigation. That idea has won support from others including Providence Mayor Angel Taveras, a potential Raimondo rival in the 2014 governor's race.

"I have confidence in the state’s legal case. But a strong case does not guarantee a win," Chafee said Wednesday. "The most prudent approach is to continue to aggressively press the state’s case in court while, at the same time, exploring reasonable settlement options that could yield favorable alternatives in the best interest of the taxpayers."

Robert Walsh, executive director of the National Education Association Rhode Island teachers union and a leading strategist for the workers' side, pointed out that Taft-Carter has already handed his side a legal victory and expressed confidence about the final result - though he also said labor leaders know pensions must be altered.

"There are two different paths," Walsh told WPRI.com this week. "You can be Gina Raimondo and say, 'There's only one right answer and I have it,' or you can be the mayor of Providence, and say, 'We can get to a right answer together.'"

Raimondo says she's strongly opposed to the idea of negotiating, and she has the backing of House Speaker Gordon Fox, perhaps the most powerful figure in state government.

"It's now the job of the judicial branch to evaluate the legislation passed by the General Assembly, and we should let it do its work," the treasurer said Wednesday. "If at some point the court asks the state to sit down to try and reach a settlement, we will do so in good faith."

The fight over pensions in Rhode Island is getting attention across the country as other state and local governments consider changes to the retirement benefits that in many cases they promised their workers years ago without setting aside enough funding.

"What the courts in Rhode Island do is inevitably going to impact what happens in other states," Boies said. "That’s why I think this is such a critical issue, not just for the citizens of Rhode Island, but for citizens in the states around the country."

Ted Nesi ( tnesi@wpri.com ) covers politics and the economy for WPRI.com and writes the Nesi's Notes blog. Follow him on Twitter: @tednesi

Tim White and The Associated Press contributed to this report.