Police union lawsuit dismissed
By John Duchemin
Advertiser Staff Writer
A state judge yesterday dismissed the police union's $350 million lawsuit against the state of Hawai'i, but the case, which alleges lawmakers illegally diverted money from the Employees' Retirement System, is likely headed to the state Supreme Court.
Circuit Judge Gary W.B. Chang ruled that the State of Hawaii Organization of Police Officers failed to prove that lawmakers in 1999 violated the state constitution by diverting $347 million in profits from the $7 billion ERS.
Plaintiffs will immediately appeal Chang's ruling, said Mark Davis, a Honolulu attorney representing SHOPO in the case. SHOPO and ERS, which has joined the lawsuit as a plaintiff, want a court order barring the Legislature from tapping the pension fund's profits.
The police union also seeks return of the $347 million, which lawmakers diverted from the ERS in the late 1990s to help cover shortfalls in the state budget.
SHOPO lawyers argue that lawmakers disregarded the potential effects on the pension fund's financial soundness, thus violating protections in the state constitution. The constitution bans the government from acting in a way that would erode the ERS' long-term financial stability, argued Davis and two Alaska-based lawyers, Peter Maassen and Peter Gruenstein, who also represent SHOPO.
"Our argument is that the constitution protects the system from impairment," Davis said. "The founders wanted to remove the pension plan from the whim of the Legislature, and that provision of the constitution has no meaning if you tell the Legislature they can essentially decide whether they want to pay or not to pay the money."
But Chang sided with the defendants — the state and county governments — who argued that no such constitutional rules exist. Rather, the governments are only required to pay for retirees' benefits as they come due, argued Archie Ikehara, a lawyer with Matsui Chung Sumida & Tsuchiyama, which represented the state.
"We're very pleased with the decision," Ikehara said. He predicted Chang's ruling will be upheld if appealed.
