No. 92-301
IN THE SUPREME COURT OF THE STATE OF MONTANA
1993
DEBRA ARNESON,
Plaintiff and Respondent,
STATE OF MONTANA, by and through
its DEPARTMENT OF ADMINISTRATION,
TEACHERS ' RETfREUENT DIVISION. ,.~.
and TEACHERS* RETIREMENT BOARD, f '-. .#,g
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Defendants and Appellants. , i QOT: ?
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APPEAL FROM: District Court of the First Judicial District,
In and for the County of Lewis and Clark,
The Honorable Jeffrey M. Sherlock, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
Brenda Nordlund, State of Montana Teachersf
Retirement Division, Helena, Montana
For Respondent:
Peter Michael Meloy, Meloy Law Firm, Helena, Montana
Submitted: August 16, 1993
Decided: December 7, 1993
Filed:
Retired Justice R. C. McDonough delivered the Opinion of the Court.
This is an appeal from the decision of the District Court of
the First Judicial District, Lewis and Clark County, concluding
that 5 19-4-711, MCA (1991) (now codified at 5 19-20-711, MCA), is
unconstitutional to the extent that it employed an unreasonable
classification in violation of the equal protection clause of the
Montana Constitution, Article 11, Section 4. We affirm.
The appellants' appeal and the respondent's cross appeal raise
the following issues:
1. Did the District Court err when it applied the rational
basis test rather than the middle-tier analysis to determine
whether the age classification in 5 19-4-711, MCA (1991), violates
equal protection guarantees of the Montana Constitution?
2. Did the District Court err when it concluded that the age
classification in 5 19-4-711, MCA (1991), violates Article 11,
Section 4, of the Montana Constitution by denying respondent equal
protection of the laws?
3. Did the District Court err when it concluded that the age
distinction in 5 19-4-711, MCA (1991), does not violate the Montana
Human Rights Act?
In 1989 the legislature passed Chapter 115 Session Laws of
1989 which, for its purpose, provided for a post-retirement
adjustment increase in the pensions of the beneficiaries of the
Teachers' Retirement System. The law provided that to be eligible
for the adjustment, retirees or their beneficiaries must be 55
years of age or older; or, irrespective of age, all those receiving
disability or survivorship benefits.
The respondent's benefit was derived from her mother, who was
a member of the Teachers1 Retirement System, and who had reached
retirement age and retired. The mother selected the retirement
option that would permit benefits to be paid to her for her
lifetime and upon her death continue through the life of her
beneficiary (respondent), The mother died shortly after her
retirement and the respondent began receiving the benefits. The
respondent is 3 1 years of age.
The respondent has been classified as a beneficiary due to the
fact that her mother had retired and was a beneficiary at time of
her death, and respondent succeeded to the benefits. Being under
55 years of age she did not receive the adjustment. However, if
her mother had continued to work and died while working the
respondent would be considered a survivor and would receive the
adjustment even though she was 31 years of age. Her request for
the post-retirement adjustment was denied and she brought this
action.
The respondent contends that the statute violates Article 11,
Section 4 of the Montana Constitution in that it denies her the
equal protection of the laws.
No facts are in dispute. Our scope of review will be as to
determine whether the District Court's interpretation of the law is
correct, Steer, Inc. v. Department of Revenue (1990), 245 Mont.
470, 474-475, 803 P.2d 601, 603.
We will discuss the first twa issues together. Different
tests of scrutiny are applied to such statute relative to the
contentions of the respondent.
his statute, under the equal protection question, does not
come under the strict scrutiny test because strict scrutiny of a
legislative classification is required only when the classification
impermissibly interferes with the exercise of a fundamental right
or operates to a peculiar disadvantage of a suspect class, Here
the respondent is not a member of a suspect class nor is a
fundamental right involved.
In her cross appeal the respondent urges us to adopt the
middle-level scrutiny test. The test is applied when the middle
level of review is used and is as follows: The means chosen by the
legislature (classification) must serve important governmental
objectives and must be substantially related to the achievement of
those objectives. The middle-level scrutiny test has been recently
applied by the U.S. Supreme Court in discussing cases involving
such things as gender, alienage and illegitimacy, but the court has
specifically refused to invoke it involving age and has applied the
rational test thereto. Gregory v, Ashcroft (1991), 501 U.S. ,
115 L.Ed.2d 410, 111 S.Ct. 2395; Massachusetts Bd. of Retirement v.
Murgia (19761, 427 U.S. 307, 965 S.Ct. 2562, 49 L.Ed.2d 520.
This Court applied the middle tier scrutiny test in Butte
Communion Union v. Lewis (1986), 219 Mont. 426, 712 P.2d 1309, in
which we said in developing a middle tier test, as follows:
We proceed to develop our own middle-tier test for
determining whether HB 843 violates the Montana
Constitution. We do so because although a right to
welfare is not contained in our Declaration of Rights, it
is sufficiently important that art. XII, sec. 3 (3)
directs the Legislature to provide necessary assistance
to the misfortunate. A benefit lodged in our State
Constitution is an interest whose abridgment requires
something more than a rational relationship to a
governmental objective.
Butte Communitv Union, 712 P.2d at 1313. The Court in that opinion
also stated:
However, because the Constitutional Convention delegates
deemed welfare to be sufficiently important to warrant
reference in the Constitution, we hold that a
classification which abridges welfare benefits is subject
to a heightened scrutiny under an equal protection
analysis and that HB 843 must fall under such scrutiny.
Butte Community Union, 712 P.2d at 1311.
The application of the middle tier scrutiny test in the above
case was based on a benefit directed in our Constitution. Here
there is no such constitutional direction. We have previously
declined to apply the middle tier scrutiny test to an "age plus"
classification, absent a constitutionally based benefit. See
Matter of Wood (1989), 236 Mont. 118, 127, 768 P.2d 1370, 1376. We
also decline to apply it here.
The District Court applied the lowest level of scrutiny, the
rational basis test, which determines whether the classification is
rationally related to furthering a legitimate state purpose. The
trial court found the classification here did not rationally relate
to furthering a legitimate state purpose.
The District Court basically found in applying the rational
basis test that there was not any reason which was rationally
related to the legitimate state purpose to grant a post-retirement
adjustment to those who are receiving disability or survivorship
allowances and who are under 55 years of age and to deny such
adjustment to people in the plaintiff's position under age 55.
We will also apply the rational basis test.
To a certain extent, nearly all legislation classifies or sets
forth classifications of applicability, benefits and recipients.
If some of these classifications are imperfect they do not
necessarily violate the equal protection clauses.
We note that every possible presumption must be indulged in
favor of the constitutionality of the statute. See State v.
Safeway Stores (1938), 106 Mont. 182, 199, 76 P.2d 81, 84.
The purpose of this law is to grant to the Retirement System
beneficiaries, retireesf survivors, and disabled, an amount to
alleviate the eroding effect of inflation on their pension. Both
the survivor of an employee and the beneficiary of an employee who
has retired, are subject to the effect of inflation. But the
classification as to who is to receive the post-retirement
adjustment does not include the respondent who is the beneficiary
of a former employee who had retired. As a result, this
legislation is "under inclusive.^ This differentiation does not
create a reasonable classification between such ultimate adult
survivor and adult beneficiary. They are both similarly situated
with respect to the purpose of this law.
The respondent states that there is no possible purpose which
can be conceived to justify such a classification considering the
overall purpose of the legislation of post-retirement adjustment to
compensate for inflation. The respondent contends no distinction
should be made between a beneficiary of a retired employee and the
beneficiary of an employee who died while working when the
beneficiaries are both under the age of 55. We agree.
We are unable to find any rational relationship to the purpose
of the legislation for the establishment of such a classification.
It is wholly arbitrary and an example of the legislature picking
and choosing who will receive benefits. Such a classification must
distinguish one class from another taking into consideration the
purpose of the statute. See Peter Kewitt Sonst Co. v. State Board
of Equalization (l973), 161 Mont. 140, 147, 505 P.2d 102, 106-07
(quoting State v. State Board of Equalization (1965), 145 Mont.
380, 403 P.2d 635).
The granting of a post-retirement adjustment does not come
within the approach of considering whether the enactment is
experimental or piecemeal, and therefore applying the legislation
to one phase of the problem and not affecting others. See Eastman
v. Atlantic Richfield Co. (l989), 237 Mont. 332, 339, 777 P.2d 862,
866. As we stated above, the legislature cannot arbitrarily pick
and choose. The appellant has made such an argument on a money
saving basis, but even if the governmental purpose is to save
money, it cannot be done on a wholly arbitrary basis. The
classification must have some rational relationship to the purpose
of the legislation. There is nothing in the record or by
conjecture which would justify the differentiation here.
The appellant makes a distinction between the class of service
retirees and their beneficiaries and the class of disability and
survivorship beneficiaries in that the class of service retirees is
based on voluntar iness and the class of disability and survivorship
beneficiaries is not. That may be true on the basis of the
retirees or the disabled, but it is not true as applied to the
adult beneficiaries of an employee, a retired employee, or a
disabled employee, In addition, there is no record as to what is
voluntary and what is not voluntary.
There is no reasonable basis to the classification which
permits an adult beneficiary of a disabled or deceased member to
receive the adjustment regardless of age, and deny the adult
beneficiary of a deceased service retiree who retired under
voluntary or involuntary circumstances the adjustment because the
beneficiary is under 55 years of age. The constitutional defect of
the statute as applied to respondent is revealed when it is
reviewed in light of its practical application, See State v. Jack
(l975), 167 Mont. 456, 462, 539 P.2d 726, 729. We conclude that its
application to this respondent whereby the classification excludes
her from receiving the post-retirement adjustment, is
unconstitutional and in violation of Article 11, Section 4 of the
Montana Constitution. We affirm the District Court on the first
two issues. Because of our holdings on the first two issues, there
is no need to decide the third issue of whether the age distinction
violates the Montana Human Rights Act. Affirmed. /
Justices
Justice Terry N. Trieweiler specially concurring.
I rejoice at the majority's re-discovery of the rights
provided for in the Equal Protection Clause of Article 11,
Section 4, of Montana's Constitution. However, I find it peculiar
that nowhere in the majority's opinion is any mention made of the
.
majority s decision in Stratemeyer v. MAC0 Workers' Compensation Trust (Mont
1993), 8 5 5 P.2d 5 0 6 , 50 St. Rep. 731. Perhaps that is because the
result in this case cannot be reconciled with the majority's
decision in Stratemeyer. That is because under Stratemeyer there is no
legislative classification which won't satisfy the toothless
rational basis test.
This same majority held in Stratemeyer that even where no
rational basis for a legislative classification is established by
the Legislature or proven in district court, this Court can
speculate about why the Legislature acted as it did, and that
speculation can serve as the basis for overcoming a constitutional
challenge. This Court went on to add that even when the State
offers no evidence to justify a legislative classification, a
person challenging the legislation has the burden of proving that
there is no rational basis. In other words, under the Stratemeyer
decision, a citizen victimized by legislative discrimination has
to, first of all, imagine every conceivable basis for that
discrimination about which this Court might speculate and then
somehow disprove it. This Court then went on in Stratemeyer to
conclude that a justification for the classification at issue in
that case could have been the Legislature's intention to save
money, even though there was no evidence in the record that the
classification would save money. This Court held that:
The exclusion of mental claims rationally relates to the
possible uoal of reducing costs and having a viable
program for the State and the enrolled employers and
employees in the workers1 compensation field. [Emphasis
added].
Straterneyer, 855 P.2d at 511.
Certainly, by that standard the classification in this case
passes any rational basis test. Who can dispute that
discriminating against beneficiaries under a certain age "relates
to the possible goal of reducing costs" for the teachers'
retirement system?
I, of course, have no regard for the Straterneyer decision. I
would not follow it and will urge its early demise at every
opportunity.
The majority, however, has neither followed it, distinguished
it, nor overruled it. Therefore, its decision in this case is both
legally and intellectually inconsistent.
Surely this decision must cause a great deal of confusion to
those legal scholars and lawyers who follow this Court's decisions
for the purpose of discerning reliable legal and constitutional
principles upon which to base future advice and conduct. To you,
let me simply provide the following explanation. .%ratemeyer dealt
with a classification in the highly political area of workers'
compensation law. This case deals with the less politically
controversial area of teachers' retirement benefits.
Because of this Court's history of using the rational basis
test as a flexible tool for political expediency, I would not base
this decision on such a fragile foundation. I believe that the
right to be free from discrimination based on age is a significant
enough right that classifications based on age warrant middle-tier
scrutiny.
The Equal Protection Clause of the Fourteenth Amendment to the
U.S. Constitution, and the Equal Protection Clause in Article 11,
Section 4, of the Montana Constitution, provide that "[nlo person
shall be denied the equal protection of the laws.'' The equal
protection clause guarantees that similar individuals will be dealt
with in a similar manner by the government. Butte Community Union v.
Lewk (1986), 219 Mont. 426, 430, 712 P.2d 1309, 1311.
Traditionally, the United States Supreme Court has relied on
a two-tier system of scrutiny for reviewing whether a state's
statutory scheme violates the comparable provision in the
Fourteenth Amendment to the United States Constitution. Butte
Community Union, 712 P.2d at 1311. Historically, the two modes of
analysis have been strict scrutiny and the rational basis test.
Matterof Wood (1989), 236 Mont. 118, 123-24, 768 P.2d 1370, 1374.
Justice Marshall pointed out the inadequacy of the two-tiered
system of scrutiny for analyzing age discrimination cases in his
dissent in Massachusetts Board of Retirement v. Mu@ ( 1976), 427 U.S . 307,
319, 96 S. Ct. 2562, 2569-70, 49 L. Ed. 2d 520, 528-29 (Marshall,
J., dissenting), as follows:
If a statute invades a fundamental" right or
discriminates against a llsuspecttl class, it is subject to
strict scrutiny. If a statute is subject to strict
scrutiny, the statute always or nearly always, seeKorematsu
v. United States, 323 U . S . 214, 65 S.Ct. 193, 89 L.Ed. 194
(1944), is struck down. Quite obviously, the only
critical decision is whether a strict scrutiny should be
invoked at all. . . .
But however understandable the Court's hesitancy to
invoke strict scrutiny, all remaining legislation should
not drop into the bottom tier, and be measured by the
mere rationality test. For that test, too, when applied
as articulated, leaves little doubt about the outcome;
the challenged legislation is always upheld. It cannot
be gainsaid that there remain rights, not now classified
as "fundamental," that remain vital to the flourishing of
a free society, and classes, not now classified as
Ifsuspect," that are unfairly burdened by invidious
discrimination unrelated to the individual worth of their
members. Whatever we call these rights and classes, we
simply cannot forego a11 judicial protection against
discriminatory legislation bearing upon them, but forthe
rare instances when the legislative choice can be termed
"wholly irrelevant" to the legislative goal. McGowanv.
Maryland, 366 U.S. 420, 425, 81 s.ct. 1101, 1104,
6 L.Ed.2d 393 (1961). [Citations omitted].
Perhaps in response to the legitimate concerns articulated so
clearly by Justice Marshall, the U.S. Supreme Court has begun to
recognize a third level of scrutiny for rights that are not
"fundamentalw and classes that are not now considered wsuspect,N
but which deserve more scrutiny than provided for under the
rational basis test. In analyzing the circumstances which will
give rise to this heightened "middle-tier" of scrutiny, Professor
Laurence Tribe offers the following explanation:
Broadly speaking, there are two circumstances that
trigger heightened scrutiny. The first involves
infringement of "important," although not necessarily
nfundamental," rights or interests. The extent to which
the Court's scrutiny is heightened depends both on the
nature of the interest and the degree to which it is
infringed. Thus, in Plyler v. Doe, the Court adopted a
requirement that the State's goal be "substantial" when
faced with a classification which served to deprive
illegal alien children of any education, an interest
which the Court explicitly held to be rsimportan[t]ls in
"maintaining our basic institutions. Significant in the
Court's decision to heighten scrutiny was the risk that
such deprivation would serve to lVcreat[e] and
perpetuat[e] ... a subclass of illiterates within our
boundaries."
Likewise, in Hampton v. Mow Sun Wong, infringement of
the interest of aliens in employment in the federal
competitive civil service was struck down specifically
because of how broadly the lllibertyvt aliens is
of
restricted by their exclusion from such a large part of
the economy. . . .
A second broad circumstance in which intermediate
review has been triggered involves government's use of
sensitive, although not necessarily suspect, criteria of
classification. Rules discriminating against aliens are
subjected to a judicial approach clearly more demanding
than the basic requirement of minimum rationality and yet
sometimes less demanding, particularly when federal laws
or regulations are involved, than the scrutiny employed
to review rules burdening racial and ancestral
minorities. Rules discriminating against illegitimates
are now explicitly subjected to an intermediate form of
heightened review. Gender discrimination similarly
occupies an intermediate position. Likewise, the Court
has implicitly subjected a classification based on mental
retardation to intermediate review despite explicit
efforts to deny that it was doing so.
L. Tribe, American Constitutional Law, 5 16-33 (2d ed. 1988).
It is true that the U.S. Supreme Court has declined to extend
this heightened level of scrutiny to classifications based upon
age. Murgia, 427 U.S. 307. However, our Court has developed its
own line of authority recognizing a middle-tier of analysis, and in
doing so, we have stated that:
This Court need not blindly follow the United States
Supreme Court when deciding whether a Montana statute is
constitutional pursuant to the Montana Constitution.
...
We will not be bound by decisions of the United
States Supreme Court where independent state grounds
exist for developing heightened and expanded rights under
our state constitution.
Butte Community Union, 7 1 2 P .2d at 1313 .
In Butfe Community Union, this Court was asked to decide whether
legislation which linked eligibility for welfare benefits to a
person's age violated the Equal Protection Clause found in ~rticle
11, Section 4, of the Montana Constitution.
We held that to be a fundamental right under Montana's
Constitution, the right must be found in Montanals Declaration of
Rights or be a right vrwithout which other constitutionally
guaranteed rights would have little meaning. I' B u m Community Union,
712 P.2d at 1311. We held that, although mentioned in the
Constitution, the right to welfare was not a fundamental right.
However, since it was an important enough right to be mentioned
elsewhere in the Constitution, we held that its abridgment required
something more than a rational relationship to a governmental
objective. We stated that:
A need exists to develop a meaningful middle-tier
analysis. Equal protection of l a w is an essential
underpinning of this free society. The old rational
basis test allows government to discriminate among
classes of people for the most whimsical reasons.
Welfare benefits grounded in the Constitution itself are
deserving of great protection.
.. . Where constitutionally significant interests
are implicated by governmental classification, arbitrary
lines should be condemned. Further, there should be
balancing of the rights infringed and the governmental
interests to be sewed by such infringement.
Butte Comrnunily Union, 7 1 2 P. 2d at 1314.
For these reasons, we adopted the following standard of review
for those interests which we deemed significant enough to warrant
a middle-tier analysis:
We hold that a finding that HB 843 is constitutional
requires the State to demonstrate two factors: (1) that
its classification of welfare recipients on the basis of
age is reasonable; and (2) that its interest in
classifying welfare recipients on the basis of age is
more important than the people's interest in obtaining
welfare benefits.
Butte Communily Union, 712 P.2d at 1314.
Based upon that test, we held in language relevant to the
issue raised in that case that:
[T]he State's objective in enacting HB 843--saving
money--must be balanced against the interest of
misfortunate people under the age of 50 in receiving
financial assistance from the State. The trial record
does not show the State to be in such a financially
unsound position that the welfare benefit, granted
constitutionally, can be abrogated.
Butte Cornrnuni~Union, 7 1 2 P.2d at 1314.
In this case, the District Court and the majority have
declined to apply the middle-tier analysis provided for in Butte
Community Union based on their conclusion that retirement benefits
are not the same as welfare benefits and that there is no
requirement in Montana's Constitution that retirement benefits be
provided. However, the involvement of an important right or
interest is only one of the two circumstances that triggers
heightened scrutiny. "A second broad circumstance in which
intermediate review has been triggered involves government's use of
sensitive, although not necessarily suspect, criteria of
classification." L. Tribe, American Constitutional Law, 5 16-33
(2d ed. 1988). According to the laws of Montana, age is a
"sensitive" if not ltsuspectn
basis for classification. To hold
otherwise would be to ignore the import of 5 49-1-102, MCA, of the
Montana Human Rights Act which provides that "[tlhe right to be
free from discrimination because of ... age . . . is recognized
as and declared to be a civil right."
Accordingly, I would hold that statutory classifications based
upon age involve a sensitive basis for classification and warrant
a middle-tier test for determining whether they violate the Equal
Protection Clause of Montana's Constitution. I would conclude that
the District Court erred when it applied the rational basis test,
rather than the middle-tier analysis, to determine whether the age
classification in 5 19-4-711, MCA (1991), violates equal protection
guarantees of the Montana Constitution.
However, I would affirm the result of the District Court's
decision. In order to establish that the age classification set
forth in 9 19-4-711, MCA (1991), does not violate the State's Equal
Protection Clause, the State must demonstrate two factors: (1) that
its classification on the basis of age is reasonable: and (2) that
its interest in classifying entitlement to retirement benefits on
the basis of age is more important than plaintiff's interest in
obtaining retirement benefits.
The record in this case fails to satisfy either requirement.
There is no legislative history which even attempts to set forth
the reason for the discriminatory treatment of retiree
beneficiaries as opposed to disability or death beneficiaries.
Neither was there any evidence offered in the District Court or
before the Legislature which would demonstrate on an actuarial
basis the State's interest in limiting the post-retirement
adjustment to retirees or their beneficiaries who are at least
55 years of age. Without such an evidentiary basis, it is
impossible for plaintiff, or for this Court, to compare the
interests of the State Retirement System to the interests of
retirees and their beneficiaries who are denied benefits because of
their age.
On appeal, the attorneys for the Teachers' Retirement System
have asserted that voluntary retirees are more likely to be
financially prepared to retire than involuntary retirees. It
contends that young voluntary service retirees and their
beneficiaries who are under 55 years of age may rely on their
earning capacity to supplement their retirement benefits. By
contrast, the Teachers' Retirement System argues that involuntary
retirees (those who are disabled or the beneficiary of deceased
employees) have only their retirement allowance to rely on. The
problem with the arguments raised by the Teachersf Retirement
System on appeal is that they have no factual basis in the
legislative history or the record from the ~istrictCourt.
Without a factual basis for their assertion, these arguments
are merely broad generalizations such as those that we condemned in
Butte Community Union. There, we held that the State employed an
arbitrary classification when it asserted, without a factual basis,
that "people under the age of 50 are more capable of surviving
without assistance than people over the age of 50. It Butte Communily
Union, 712 P.2d at 1314. Likewise, I would conclude that the age
classification in 5 19-4-711, MCA (19911, is arbitrary, not
grounded in fact, and therefore, invalid. Accordingly, I would
hold that to the extent that the age classification in 5 19-4-711,
MCA (1991), denies a post-retirement benefit to those service
retirees and their beneficiaries under the age of 55, the statute
violates the Equal Protection Clause of the Montana Constitution.
Justice Hunt joins the foregoing special concurrence.