GILLIAN EMLAW WILLIAMS V PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTE
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STATE OF MICHIGAN
COURT OF APPEALS
GILLIAN EMLAW WILLIAMS,
UNPUBLISHED
January 11, 2011
Petitioner-Appellee,
v
PUBLIC SCHOOL EMPLOYEES RETIREMENT
SYSTEM and PUBLIC SCHOOL EMPLOYEES
RETIREMENT BOARD,
No. 292556
Ingham Circuit Court
LC No. 06-001684-AA
Respondents-Appellants.
Before: HOEKSTRA, P.J., and CAVANAGH and BORRELLO, JJ.
PER CURIAM.
Respondents appeal by leave granted an order of the circuit court ordering respondents to
allow petitioner to switch retirement plans retroactive to 1990. For the reasons set forth in this
opinion, we reverse and remand for reinstatement of the order of the Retirement Board denying
permission for petitioner to join the member investment plan.
I.
FACTS AND PROCEDURAL HISTORY.
In 1989 when petitioner was 18 years old, she began working for the Washtenaw
Intermediate School District as a seasonal employee for five weeks during the summer.
While she attended college, petitioner worked for five weeks each summer from 1989
through 1992, and in the summer of 1994. She also worked for ten weeks during the summer
of 1996. The school district offered its employees a choice of two retirement plans: the
basic retirement plan and the member investment plan (MIP). The MIP became effective in
1987 and pursuant to MCL 38.1343a, newly hired employees were given 30 days to select a
retirement plan. If a new employee did not choose a retirement plan within that 30-day
period, they were enrolled by default in the basic plan. From January 1, 1990, all new
employees were automatically placed in the MIP. The Public School Employees Retirement
System (PSERS) left it to individual school districts to inform their employees about their
retirement choices. Petitioner did not select a retirement plan when she was hired in 1989 so
consequently, she was enrolled in the basic retirement plan. Petitioner alleges that the school
district did not make her aware that she had a choice between the basic plan and MIP.
MCL 38.1343a was amended by 1990 PA 298 to provide a 15-month open window
period in which basic plan members could switch into the MIP. This window period began
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in the fall of 1991, and in October of that year, the Office of Retirement Services mailed
enrollment packets to the homes of all members of the basic plan. The enrollment packets
explained the two retirement plans and gave an estimate of how much the basic plan
members would have to contribute to transfer to the MIP. According to defendant PSERS,
this packet was mailed to petitioner’s address of record, her parent’s home, which was the
same address where petitioner received her tax forms. Defendant PSERS asserted that all
basic plan members were sent at least three mailings advising them of the opportunity to join
the MIP. Lois Musbach, an analyst with the service credit section in the Office of Retirement
Services believed that a packet was sent to the address on file for petitioner, but did not know
to what address the packet was actually sent or whether it may have been returned as
undeliverable. Musbach further testified that respondent had allowed members to elect the
MIP outside of the two statutory windows based on extenuating circumstances, including
where employees could prove that respondents sent the information to the wrong address or
where an employer informed respondent that the employer had failed to give the employee
the necessary forms. According to defendant PSERS’s records, petitioner never responded to
the information sent to her, nor did she elect to join the MIP and she remained a member of
the basic retirement plan. Petitioner contends that she did not receive these mailings and was
therefore unaware of her opportunity to switch plans.
In 2004 petitioner began working full-time at Lincoln Consolidated Schools. In 2005,
she learned about the two retirement plans and that she had been enrolled in the basic plan. She
sought to switch plans, but her request was denied by PSERS. She requested and received a
formal hearing, which resulted in a recommendation that petitioner be allowed to join the MIP.
PSERS filed exceptions to the recommendation, and on October 26, 2006, the Retirement Board
rejected the hearing officer’s recommendation and denied petitioner’s request to transfer from
the basic retirement plan into the MIP. The Retirement Board made the following relevant
findings:
From 1989 to 2005, Petitioner’s address on file was with the Respondent
was [petitioner’s parent’s address]. Petitioner received tax forms at this address.
In the fall of 1991, all Basic Plan Members had the opportunity to enroll in the
Member Investment Plan under the provisions of 1990 PA 298. All Basic Plan
Members were sent a minimum of three mailings advising them of the
opportunity to join the Member Investment Plan. The mailings were sent to the
Petitioner’s address on file with the Respondent. (citations omitted).
The Retirement Board concluded that none of the statutory provisions pertaining to membership
in the retirement plans required respondents or any other entity to notify petitioner about changes
in the law:
1990 PA 298 amended MCL 38.1343a(3) to provide members of the Basic
Plan, such as Petitioner, with the option to elect the Member Investment Plan.
This statute did not require the Respondent or anyone else, to notify the Petitioner
of [t]his statutory change. Because Petitioner did not elect the Member
Investment Plan under the provision of 1990 PA 298, she remained in the Basic
Plan . . . Petitioner is presently a member of the Basic Plan as required by 1985
PA 91, MCL 38.1343a.
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There are no currently existing statutory provisions which allow the
Petitioner to change from the Basic Plan to the Member Investment Plan.
Petitioner did not have any due process right to be informed of the
opportunity to elect the Member Investment Plan when 1985 PA 91 and 1990 PA
298 were enacted.
Therefore, Petitioner has failed to prove, by a preponderance of the
evidence, that she is a member of the Member Investment Plan or has the right to
change form the Basic Plan to the Member Investment Plan. As a result the
Respondent is not required to accept Petitioner as a member of the Member
Investment Plan or to accept contributions from her to the Member Investment
Plan as provided in MCL 38.2343a.
Petitioner filed a petition for review in the circuit court. She requested a taking of
additional evidence under MCL 24.305 and MCR 7.105(I), which was granted on February 20,
2007. On remand, the hearing officer articulated the issue as:
. . . whether, after considering additional evidence taken by Petitioner and
presented by Petitioner through this Hearing Officer, the Board’s Order of
October 26, 2006, denying Petitioner’s request to transfer from the Basic
Retirement Plan to the Member Investment Plan, should be upheld and reiterated
in its entirety.
While the remand proceedings were pending, petitioner filed an original action in the
Ingham Circuit Court seeking declaratory and injunctive relief on the basis of alleged violations
of the Administrative Procedures Act (APA), MCL 24.201 et. seq., and the Open Meetings Act
(OMA), MCL 15.261 et. seq. The circuit court granted summary disposition in favor of the
Retirement Board on November 27, 2007, and this Court affirmed that decision.1
On January 23, 2008, the hearing officer issues a Supplemental Proposal for Decision
(SPFD) on remand, recommending that the Retirement Board’s order denying petitioner’s
request to change retirement plans be upheld and reiterated in its entirety. Thereafter, petitioner
filed exceptions to the SPFD and on April 24, 2008, the Retirement Board adopted the hearing
officer’s findings and conclusions.
The circuit court found on appeal, however, that the Retirement Board’s decision was
arbitrary, capricious, and an abuse of discretion. The trial court stated on the record:
. . . I agree that notice of the law, we’re all presumed to know the law, but
Michigan is in fact a notice state, and I take that very seriously, especially when it
1
Williams v Michigan Public School Employees Retirement Bd, unpublished opinion per curiam
of the Court of Appeals, issued September 29, 2009 (Docket No. 282543).
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comes to someone’s retirement, which is what I started out saying, and this young
woman was not given enough facts or information to provide her notice she was
even eligible for a retirement, and I think there were many opportunities for that
to occur . . . so what I’m going to do is I believe that the ruling that-where the
board said that she was denied entry into the MIP was arbitrary and capricious, it
was abuse of discretion. I am going to allow her to be enrolled in the MIP plan
retroactive to her employment in 1990. I’m going to authorize her to be allowed
to make the MIP contribution as described in MCL 38.1343a, and I think that’s all
I need to do. I think the reading of defendant’s interpretation of all this is narrowtoo narrow for my comfort level.
II.
ANALYSIS.
On appeal, respondents first contend that petitioner failed to preserve for appeal her
objections to the Retirement Board’s decision because she did not file any exceptions to the
SPFD, and the SPFD included a recommendation that the board deny her request to join the MIP.
We review this issue of law de novo. In re Complaint of Rovas Against SBC Michigan, 482
Mich 90, 97; 754 NW2d 259 (2008).
When the Retirement Board chose not to follow the hearing referee’s proposal for
decision and denied petitioner’s request to join the MIP, she timely objected by filing her petition
for review with the circuit court. The circuit court remanded the case back to the agency, but
only for consideration of petitioner’s allegations of procedural irregularities, not to consider the
merits of her argument that she should be allowed to join the MIP. On remand, the agency
considered petitioner’s Administrative Procedures Act2 and Open Meetings Act3 claims, as well
as petitioner’s procedural due process claim that respondents did not give her an adequate
hearing. There was no reason for petitioner to object to the SPFD on the basis of issues that were
not considered in the SPFD and had already been appealed to the circuit court. None of the
issues considered in the SPFD formed the basis of the circuit court’s order that petitioner be
allowed to join the MIP. Therefore, that issue remained before the circuit court while the
procedural claims were on remand, and the circuit court did not err by addressing petitioner’s
claims.
We agree with respondents, however, that the circuit court erred because the Retirement
Board’s decision was not arbitrary, capricious, or an abuse of discretion. When this Court
reviews a lower court’s review of an administrative agency’s decision, our role is to “determine
whether the lower court applied correct legal principles and whether it misapprehended or
grossly misapplied the substantial evidence test to the agency’s factual findings.” Boyd, 220
Mich App at 234. The circuit court’s review of respondents’ decision was “limited to
determining whether the decision was contrary to law, was supported by competent, material,
2
MCL 24.201 et seq.
3
MCL 15.261 et seq.
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and substantial evidence of the whole record, was arbitrary or capricious, was clearly an abuse of
discretion, or was otherwise affected by a substantial and material error of law.” Dignan v Mich
Pub Sch Employees’ Retirement Bd, 253 Mich App 571, 576; 659 NW2d 629 (2002).
The circuit court held that PSERS was required to provide notice to petitioner because
Michigan is a “notice state.” Petitioner does not advance this argument on appeal rather she
asserts that respondent’s action in failing to provide her notice violated her due process and equal
protection rights. This Court has noted that “[o]ne of the most obvious precepts of due process is
that all members of any given class must be afforded substantially the same procedure.” Arnold
v Crestwood Bd of Ed, 87 Mich App 625, 646; 277 NW2d 158 (1978). The Equal Protection
Clause4 commands that “all persons similarly situated should be treated alike.” Tennessee v
Lane, 541 US 509, 522; 124 S Ct 1978; 158 L Ed 2d 820 (2004) (internal citation and quotation
marks omitted).
Petitioner argues that her due process rights were violated because she was not “provided
with any notice or the same notice that was provided to other members.” Similarly, she asserts
“Equal protection was violated because Petitioner was not provided the same notice other
employees received or the same opportunity to switch plans that was provided to other
employees who did not receive information from their employers. Petitioner’s argument belies
the record evidence in this case. It is undisputed that respondents generally left the responsibility
of providing employees with retirement information to the individual school districts. After the
passage of 1990 PA 298, respondents did undertake to directly inform basic plan members about
their opportunity to switch plans. Even assuming petitioner’s contention that she did not receive
any of the three mailings that were sent to her address of record as true, petitioner failed to
produce any evidence that respondents treated petitioner any differently than other members of
the class. Review of the record evidence leads us to conclude that the Board’s decision on this
issue was not contrary to the law, and therefore the trial court clearly erred in so holding.
Dignan, 253 Mich App at 576.
Petitioner’s next argument relative to her theory that her due process and equal protection
rights were violated is seemingly grounded in her contention that she should have been able to
“belatedly elect the MIP.” The Equal Protection Clause requires that similarly situated people be
treated similarly. Lane, 541 US at 522 (2004). Petitioner cites evidence in the record of the
original agency hearings to the effect that other individuals who did not receive actual notice of
the statutory window to switch plans were allowed to switch later. However, the record does not
demonstrate that any of those allowed to switch were similarly situated to petitioner.
PSERS did allow other employees who did not receive notice to switch to the MIP after
the statutory window had closed. Testimony presented by respondent on this issue indicated that
members were allowed to elect the MIP outside of the two statutory windows based on
extenuating circumstances. Those circumstances enumerated by respondent occurred when (1)
employees could prove that respondents sent the information to the wrong address or (2) where
4
US Const, Am XIV, § 1.
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an employer informed respondent that the employer had failed to give the employee the
necessary forms. Neither extenuating circumstance is applicable to this case. Petitioner does not
directly assert that respondent sent notice to the wrong address; rather she seemingly implies that
notice must have been sent to the wrong address or not sent at all as she does not recall ever
receiving notice. However, to prevail, petitioner must have proffered some evidence that
respondent’s treated her differently from other members of the class. Petitioner has failed to
proffer any such evidence and accordingly, we cannot find that her due process or equal
protection rights were violated by the acts or alleged omissions of respondent.
Additionally, we note that the Retirement Board found that petitioner did not have any
due process right to be informed of the opportunity to elect the MIP plan and that finding is
supported by the clear statutory language of MCL 38.1343a. This Court has held that no
individual is entitled to notice of a new law, even one that impacts benefits received by the
individual, when the statute does not specifically require such notification. Saxon v Dep’t of
Social Servs, 191 Mich App 689, 701-702; 479 NW2d 361 (1991). The statutes involved here
did not require respondents to provide notice to the plan members. Therefore, the circuit court’s
ruling, that “Michigan is in fact a notice state,” as applied to this case, was based on erroneous
legal principles. Accordingly, the trial court’s decision must be reversed. Boyd, 220 Mich App
at 234.
Petitioner provides two alternative justifications for the circuit court’s order. These
arguments were not raised by the appellant, and petitioner would normally be required to bring a
cross-appeal in order to raise them. However, alternative bases for upholding a lower court’s
order need not be cross-appealed. Turcheck v Amerifund Financial, Inc, 272 Mich App 341,
351; 725 NW2d 684 (2006).
Petitioner first argues that a 1998 amendment, which added an exception to the definition
of who is a member of PSERS found at MCL 38.1305, operates retroactively to make her a
member of the MIP. Because statutes are presumed to operate prospectively, this Court will only
apply a statute retroactively if the Legislature clearly indicated an intention to give the statute
retroactive effect. Frank W Lynch & Co v Flex Technologies, Inc, 463 Mich 578, 583; 624
NW2d 180 (2001). The exception provides as follows:
(1) “Member” means a public school employee, except that member does
not include any of the following:
* * *
(l) A person, not regularly employed by a reporting unit, who is employed
by a reporting unit in a temporary, intermittent, or irregular seasonal or athletic
position and who is under the age of 19 years.
If this statute operated retroactively, it would mean that petitioner was not a member of PSERS
during the summer of 1989. Everyone who first became a member on or after January 1, 1990
automatically became a member of the MIP and not the basic plan. 1989 PA 194; MCL
38.1343a. If 1998 PA 123 operates retroactively, then petitioner did not become a member until
after January 1, 1990, and is a member of the MIP retroactive to her first day of employment in
1990.
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To support the argument that the statute be given retroactive effect, petitioner points to
the following language from the House Legislative Analysis of the bill:
It has been pointed out that there are a small number of current retirement system
members who were employed by a school district in seasonal or athletic program
positions (probably as high school or college students) during the period in which
participation in the MIP was voluntary, and who opted for the basic plan, not
realizing they were making an irrevocable decision that would seriously affect
their retirement plans after eventually joining the MPSERS as full-time
employees (most likely, as teachers). This small group of people would like the
opportunity to reconsider the option to join the MIP program. [House Legislative
Analysis, HB 4943, July 6, 1998, p 1.]
“[L]egislative analyses are ‘generally unpersuasive tool[s] of statutory construction;’”
nonetheless, a court may “‘“look to the legislative history of an act, as well as to the history of
the time during which the act was passed, to ascertain the reason for the act and the meaning of
its provisions.”’” Kinder Morgan Michigan, LLC v City of Jackson, 277 Mich App 159, 170;
744 NW2d 184 (2007) (citations omitted; alteration by Kinder). This analysis does suggest that
the Legislature intended to aid people in petitioner’s situation.
However, petitioner fails to note that the bill addressed this concern by offering another
opportunity for people in petitioner’s situation to opt into the MIP:
(1) On or before December 31, 1998, or, if the notification described in
subsection (4) is not received by July 1, 1998, then on or before the expiration of
180 days after the department receives that notification, a member who meets all
of the following conditions may irrevocably elect to make the contributions
described in section 43a(2) to the member investment plan:
(a) He or she was employed by a reporting unit on or after January 1, 1987
and before January 1, 1990.
(b) He or she had 1 year or less of credited service in effect on January 1,
1990.
(c) He or she did not elect to make contributions to the member
investment plan.
(d) He or she was not a member during the period that members were
eligible to make the election under section 43a(3).
***
(4) This section does not apply until the department receives notification
from the United States internal revenue service that this section will not cause the
retirement system not to be qualified for tax purposes under the internal revenue
code. [MCL 38.1343d(1), (4).]
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It does not appear that the IRS gave the triggering notification for this part of the bill to take
effect. Indeed, the legislative analysis predicted this outcome. House Legislative Analysis, HB
4943, July 6, 1998, p 2. Moreover, the analysis states that the language that petitioner wishes to
make retroactive was meant to reduce the state’s administrative costs, because young seasonal
employees were forced to contribute 4 percent of their paychecks to the retirement program, but
could get the money back at the end of their season of employment, costing the state around
$60,000 per year to collect the money and give it back. Id. Administrative efficiency would not
be served by applying the statute retroactively. Consequently, contrary to the assertions of
petitioner, we find no clear directive in the legislative history of the act to hold that the
Legislature intended the law to be retroactive.
In sum, MCL 38.1305(1)(l) is not expressly retroactive, and the legislative history does
not suggest that it was intended to be retroactive. If anything, a proper reading of the legislative
history suggests just the opposite.
Respondents also argue that the circuit court erred by allowing petitioner’s motion to take
additional evidence. The additional evidence taken on remand concerned petitioner’s claims of
procedural irregularities. Those claims were already dealt with by this Court as stated supra.
Furthermore, striking the additional evidence would have no impact on the issues discussed
above and accordingly, this issue is moot. Driver v Naini, 287 Mich App 339, 355; 788 NW2d
848 (2010).
The ruling of the circuit court is reversed. We remand for reinstatement of the order of
the Retirement Board denying permission for petitioner to join the MIP. We do not retain
jurisdiction. No costs are accessed in this case, a public question being involved. MCR 7.219.
/s/ Joel P. Hoekstra
/s/ Mark J. Cavanagh
/s/ Stephen L. Borrello
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