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Kramon & Graham obtains unanimous appellate victory in Court of Appeals of Maryland

In a major victory for Kramon & Graham's client, the City of Baltimore, the Court of Appeals of Maryland upheld local governments' rights to make reasonable prospective changes to their pension plans. Kramon & Graham represented the City continuously since it reformed the public safety unions' pension plan in 2010. At that time, the City faced dire financial circumstances that threatened its ability to provide core services to its citizens, and all relevant actors agreed the pension plan was actuarially unsound. Among other things, the changes involved increased length of service and contribution requirements for active employees and a new, guaranteed Cost of Living Adjustment formula to provide raises for retirees that replaced a variable benefit formula that was endangering the plan's ability to provide basic benefits. The unions filed suit in 2010 in federal court to challenge the reforms.  After a federal appellate court held in 2014 that the changes did not constitute impairments under the federal Constitution's Contract Clause, the public safety unions brought a state law breach of contract action in the Circuit Court for Baltimore City. The circuit court determined that Maryland law permitted the City to make prospective changes for active members of the pension plan, and that these changes were reasonable; consequently, there was no breach of contract as to these members. The court also rejected the unions' experts' damages assumptions and instead accepted the damages model the City's expert developed, concluding that retirees and retirement-eligible plan members experienced approximately $30 million in damages from the change in plan. This amount was a small fraction of the damages the unions claimed, and the court ruled that many retirees and retirement-eligible members were not damaged by the changes but actually fared the same or better under the new tiered COLA than the variable benefit it replaced. The Court of Appeals affirmed the circuit court's determination in all respects. Click here for the Court of Appeals opinion in Robert F. Cherry et al. v. Mayor and City Council of Baltimore City.

The case has been covered by multiple media outlets in stories including the Baltimore Sun's "Baltimore police and fire unions frustrated by appeals court ruling upholding city's right to raise retirement age" and the Daily Record's "Md. high court affirms $30.7M award to Baltimore police, fire retirees," both published on August 17, 2021, and the Washington Post's "Baltimore police, fire unions frustrated by ruling raising retirement age," published on August 19, 2021.