GEORGE B. SUMMERS AND RONALD FERTILE,
Petitioners Below, Appellants
THE WEST VIRGINIA CONSOLIDATED PUBLIC RETIREMENT BOARD,
Respondent Below, Appellee
Appeal from the Circuit Court of Kanawha County
Honorable Irene C. Berger, Judge
Civil Action No. 04-AA-32
Submitted: June 7, 2005
Filed: July 6, 2005
2. A valid legislative rule is entitled to substantial deference by the reviewing court. As a properly promulgated legislative rule, the rule can be ignored only if the agency has exceeded its constitutional or statutory authority or is arbitrary or capricious. Syllabus Point 4, in part, Appalachian Power Co. v. Tax Dept., 195 W.Va. 573, 466 S.E.2d 424 (1995).
3. 'Where economic rights are concerned, we look to see whether the classification is a rational one based on social, economic, historic or geographic factors, whether it bears a reasonable relationship to a proper governmental purpose, and whether all persons within the class are treated equally. Where such classification is rational and bears the requisite reasonable relationship, the statute does not violate Section 10 of Article III of the West Virginia Constitution, which is our equal protection clause. Syllabus Point 7, [as modified,] Atchinson v. Erwin,  W.Va. , 302 S.E.2d 78 (1983).' Syllabus Point 4, as modified, Hartsock-Flesher Candy Co. v. Wheeling Wholesale Grocery Co.,  W.Va. , 328 S.E.2d 144 (1984). Syllabus Point 4, Gibson v. W.Va. Dept. of Highways, 185 W.Va. 214, 406 S.E.2d 440 (1991).
4. The presumption is that a statute is intended to operate prospectively, and not retrospectively, unless it appears, by clear, strong and imperative words or by necessary implication, that the Legislature intended to give the statute retroactive force and effect. Syllabus Point 4, Taylor v. State Compensation Commissioner, 140 W.Va. 572, 86 S.E.2d 114 (1955).
Appellants George B. Summers and Ronald Fertile appeal the August 16, 2004, order of the Circuit Court of Kanawha County that denied Appellants' request to include lump-sum payments for accumulated vacation pay in the calculation of their final average salaries for the purpose of determining their retirement benefits from the Teachers Retirement System. After careful consideration of this matter, we reverse.
Board counters that the 2002 legislative rule is neither facially nor in application
violative of equal protection principles. First, says the Retirement Board, no
offensive classification is created by the 2002 rule. To the contrary, the rule
applies uniformly to all participants in the retirement system. Second, even
if a suspect classification is created, it is not constitutionally offensive
because it is reasonably related to the achievement of the legitimate state purposes
of controlling costs and providing for adequate funding of the retirement system.
We agree with the Retirement Board that the 2002 rule at issue is neither unconstitutional on its face or as applied. Assuming that the legislative rule at issue creates a classification, this Court has held:
economic rights are concerned, we look to see whether the classification is a
rational one based on social, economic, historic or geographic factors, whether
it bears a reasonable relationship to a proper governmental purpose, and whether
all persons within the class are treated equally. Where such classification is
rational and bears the requisite reasonable relationship, the statute does not
violate Section 10 of Article III of the West Virginia Constitution, which is
our equal protection clause.' Syllabus Point 7, [as modified,] Atchinson v.
Erwin,  W.Va. , 302 S.E.2d 78 (1983). Syllabus Point 4, as
modified, Hartsock-Flesher Candy Co. v. Wheeling Wholesale Grocery Co., 
W.Va. , 328 S.E.2d 144 (1984).
Syllabus Point 4, Gibson v. W.Va. Dept. of Highways, 185 W.Va. 214, 406 S.E.2d 440 (1991). It is clear to us that the legislative rule at issue is reasonably designed to serve the legitimate governmental purpose of controlling the amounts paid in retirement benefits and
to thereby ensure continued adequate funding of the Teachers' Retirement System. Therefore, we find the rule to be constitutional on its face.
We likewise find that the rule is constitutional as applied. [A] statute fair on its face but administered or applied in a discriminatory manner runs afoul of the equal protection clause of the Federal Constitution. But it is equally well settled that purposeful discrimination may not be assumed or merely asserted but must be proven. Brickhouse v. Commonwealth, 208 Va. 533, 538, 159 S.E.2d 611, 615 (1968) (citations and internal quotation marks omitted). See also Phillips v. Norris, 320 F.3d 844, 848 (8th Cir. 2003) (explaining that where inmate did not allege membership in protected class or violation of fundamental right, he must show that prison officials treated similarly situated classes of inmates differently, and that differing treatment was unrelated to rational penal interest and was intentional or purposeful discrimination). (See footnote 3) In the instant case, the facts show nothing more than an administratively less-than-perfect system and do not rise to the level of intentional, purposeful, or arbitrary discrimination that is offensive to the equal protection clause.
Appellants contend that they relied to their detriment on including the unused
vacation pay in their final year's salary when deciding to retire. Appellants
base this contention on Booth v. Sims, 193 W.Va. 323, 456 S.E.2d 167 (1995),
in which this Court held that the State cannot eliminate a retirement expectancy
without just compensation once an employee has substantially relied on it to
his or her detriment.
The Retirement Board responds that the detrimental reliance principle in Booth v. Sims is not applicable here. First, says the Retirement Board, the retirement system plan has never contained any provisions to permit the inclusion of lump sum vacation benefits in final salary calculations for retirement purposes. Therefore, there was no promise upon which to detrimentally rely. Second, evidence below indicates that the Wood County BOE began including lump sum vacation pay in salary calculations in 1996-97, by which time Appellants had been employed by Wood County for more than 30 years. Third, Wood County commenced the practice of including lump sum payments in salary calculations without disclosing to the Retirement Board the true character of the calculations reported to the Retirement Board for pension benefit purposes, and without eliciting the Retirement Board's position on the legality of the practice. Finally, Appellants have acknowledged that prior to retirement, they neither requested nor received any benefit estimates from the Retirement Board which included their anticipated lump sum payments for unused vacation days, and made no inquiries to the Retirement Board regarding the status of any legislative intervention on the issue.
In analyzing Appellants' detrimental reliance argument, the Hearing Examiner agreed with the Retirement Board and reasoned as follows:
stands for the proposition that government cannot take away contractual promise
of pension benefits after an employee has relied thereon to his detriment, such
detrimental reliance being presumed after ten years of service while the promise
shall have been made. That which is lacking in the present circumstance, at least,
is the contractual promise as enunciated by the statutes and Legislative rules
defining the [Teacher Retirement System] pension plan. There has just never been
such a promise upon which these applicants could have relied. All that occurred
with the adoption of CSR § 162-8-5.4 was to render certain that which had
never been promised in the first place. Booth, it is concluded, has no
proper application here.
We believe that the Hearing Examiner's analysis is correct. Booth concerned substantive amendments to existing provisions governing the state troopers' pension system such as an increase in the monthly payroll deduction from state troopers' salaries; a prohibition on the troopers' use of accumulated but unused annual and sick leave as credit toward years of service in determining eligibility for retirement benefits; and a reduction in the public safety retirement annual cost of living adjustment. In other words, promises of future benefits were actually altered. In contrast, in the instant case the Teacher Retirement System pension plan never contained a provision permitting the inclusion of lump-sum vacation pay in employees' final year salary calculations for the purpose of determining retirement benefits. Thus, unlike in Booth, the Teachers' Retirement System had not made a promise on which the teachers had relied. Therefore, the detrimental reliance principle set forth in Booth is not applicable to the present facts.
we have determined that the clear provisions of 162 C.S.R. § 8-5.4 are constitutionally
valid and that the principal of detrimental reliance set forth in Booth does
not prevent its application to Appellants. However, we find that the rule should
not be applied to Appellants for a different reason. According to W.Va. Code § 2-2-10(bb)
(1998), [a] statute is presumed to be prospective in its operation unless
expressly made retrospective[.] This Court has held that [t]he presumption
is that a statute is intended to operate prospectively, and not retrospectively,
unless it appears, by clear, strong and imperative words or by necessary implication,
that the Legislature intended to give the statute retroactive force and effect. Syllabus
Point 4, Taylor v. State Compensation Commissioner, 140 W.Va. 572, 86
S.E.2d 114 (1955). Because legislative rules have the force and effect of statutes,
the presumption of prospective application applies equally to such rules.
As indicated above, the legislative rule at issue became effective on April 10, 2002. The record reveals that Mr. Fertile made a request for an estimate of retirement benefits in February 2002, and applied for retirement benefits that same month. Therefore, this Court believes that Mr. Fertile's retirement process had progressed sufficiently far by the time 162 C.S.R. § 8-5.4 became effective that the legislative rule should not apply to the calculation of his retirement benefits. We find the same to be true of Mr. Summers. Although Mr. Summers did not apply for retirement benefits until April 19, 2002, nine days after 162 C.S.R. § 8-5.4 became effective, the record indicates that Mr. Summers filed a Benefit Estimate Request, in which he requested an estimate of his retirement benefits from the Teachers Retirement System, in December 2001, and indicated that his last day of employment would be June 30, 2002. Based on this, we find that the Retirement Board must include lump-sum payments for accumulated vacation pay in the calculation of Appellants' final average salary determination of benefits from the Teachers Retirement System in accord with Kiser v. West Virginia Consolidated Public Retirement Board, supra, which was the law in effect prior to 162 C.S.R. § 8-5.4. Accordingly, the circuit court's order to the contrary is reversed. (See footnote 4)