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Bevin v. Commonwealth ex rel. Beshear

Supreme Court of Kentucky

December 13, 2018

MATTHEW G. BEVIN IN HIS OFFICIAL CAPACITY AS GOVERNOR OF THE COMMONWEALTH OF KENTUCKY AND COMMONWEALTH OF KENTUCKY, EX REL. MATTHEW G. BEVIN, IN HIS OFFICIAL CAPACITY AS GOVERNOR OF THE COMMONWEALTH OF KENTUCKY APPELLANTS
v.
COMMONWEALTH OF KENTUCKY EX REL. ANDY BESHEAR, ATTORNEY GENERAL; ANDY BESHEAR, IN HIS OFFICIAL CAPACITY AS ATTORNEY GENERAL OF THE COMMONWEALTH OF KENTUCKY; KENTUCKY EDUCATION ASSOCIATION; KENTUCKY STATE LODGE FRATERNAL ORDER OF POLICE; BOARD OF TRUSTEES OF THE TEACHERS' RETIREMENT SYSTEM OF THE STATE OF KENTUCKY; AND BOARD OF TRUSTEES OF THE KENTUCKY RETIREMENT SYSTEMS APPELLEES

          ON APPEAL FROM FRANKLIN CIRCUIT COURT HONORABLE PHILLIP J. SHEPHERD, JUDGE NOS. 18-CI-00379 AND 18-CI-00414.

          COUNSEL FOR APPELLANT: Mark Stephen Pitt Stephen Chad Meredith Matthew Kuhn Office of The Governor

          COUNSEL FOR APPELLEE COMMONWEALTH OF KENTUCKY EX REL. ANDY BESHEAR, ATTORNEY GENERAL AND ANDY BESHEAR, IN HIS OFFICIAL CAPACITY AS ATTORNEY GENERAL OF THE COMMONWEALTH OF KENTUCKY: Andy Be shear Attorney General of Kentucky John Michael Brown La Tasha Arnae Buckner Steven Travis Mayo Samuel Robert Flynn Marc Farris Office of The Attorney General

          COUNSEL FOR APPELLEE KENTUCKY EDUCATION ASSOCIATION: Jeffrey Scott Walther Victoria Frances Dickson Walther, Gay, & Mack, PLC

          COUNSEL FOR APPELLEE KENTUCKY STATE LODGE FRATERNAL ORDER OF POLICE: David Lindsay Leightty Alison M. Messex Priddy, Cutler, Naake & Meade, PLLC

          COUNSEL FOR APPELLEE BOARD OF TRUSTEES OF THE TEACHERS' RETIREMENT SYSTEM OF THE STATE OF KENTUCKY: Robert B. Barnes General Counsel, Kentucky Teachers' Retirement

          COUNSEL FOR APPELLEE BOARD OF TRUSTEES OF THE KENTUCKY RETIREMENT SYSTEMS: Mark C. Blackwell Katherine I. Rupinen Joseph Patrick Bowman Kentucky Retirement Systems

          COUNSEL FOR AMICUS CURIAE, BERTRAM ROBERT STIVERS II, IN HIS OFFICIAL CAPACITY AS PRESIDENT OF THE KENTUCKY SENATE: David E. Fleenor R. Vaughn Murphy Tyler Peavler Office of The Senate President

          COUNSEL FOR AMICUS CURIAE, DAVID W. OSBORNE, IN HIS OFFICIAL CAPACITY AS SPEAKER PRO TEMPORE OF THE KENTUCKY HOUSE OF REPRESENTATIVES: David Eric Lycan Office of The Speaker

          OPINION

          VENTERS, JUSTICE

         Appellant, Governor Matthew G. Bevin, appeals from an opinion and order of the Franklin Circuit Court granting summary judgment to the Kentucky Education Association, the Kentucky State Lodge Fraternal Order of Police, the Board of Trustees of the Teachers' Retirement System of the State of Kentucky, the Board of Trustees of the Kentucky Retirement Systems, and Kentucky Attorney General Andy Beshear, which together we refer to as "Appellees." Appellants are supported in this appeal by an Amicus Curiae brief filed by Senate President, Bertram Robert Stivers, II, and Speaker Pro Tempore of the Kentucky House of Representatives, David W. Osborne, together referred to herein as Amicus.

         As Plaintiffs in the circuit court, Appellees filed suit challenging the validity of Senate Bill 151 (SB 151), based upon what they contend to be its flawed enactment. SB 151 was passed during the 2018 session of the Kentucky General Assembly and it ostensibly makes several modifications to the various state government employee pension plans, including the pension plans for teachers, state police, and county employees.

         The circuit court held that in passing SB 151 the legislature violated § 46 of the Kentucky Constitution by failing to give the bill a reading on three different days in each legislative chamber (the "three-readings" requirement), and by failing to obtain 51 votes in the House of Representatives as required for a bill which appropriates money or creates a debt. Upon its conclusion that SB 151 was not passed in compliance with the Kentucky Constitution, the circuit court voided the bill without addressing the substantive issues of whether the legislation violated the inviolable contract status afforded to state pensions under KRS 161.714[1] and whether the legislation violated the prohibition against impairment of contracts contained in § 19 of the Kentucky Constitution.[2]

         On appeal, Appellants first assert that a judicial interpretation of the three-readings requirement of § 46 is a non-justiciable matter, related exclusively to the legislative branch of government under principles connected with separation of powers and the political question doctrine, and thus, the circuit court erred by adjudicating it. Consistent with that argument, Appellants further assert that this Court is without authority to declare the meaning of § 46.

         For the reasons set forth below, we disagree. Upon review, we conclude that the passage of SB 151 did not comply with the three-readings requirement of § 46 and that the legislation is, therefore, constitutionally invalid and declared void. Based upon this disposition, we do not address the arguments challenging the substantive provisions of SB 151. Our disposition renders moot the question of whether SB 151 constitutes an appropriation or created a debt subjecting it to the 51-vote majority provision of § 46. To address issues that may or may not recur in subsequent legislation would be an advisory opinion. The "courts do not function to give advisory opinions, even on important public issues, unless there is an actual case in controversy." Newkirk v. Commonwealth, 505 S.W.3d 770, 774 (Ky. 2016) (quoting Philpot v. Patton, 837 S.W.2d 491, 493 (Ky. 1992)). The substantive merits of any future legislation on the subject matter before us should proceed without being influenced by this Court's opinion on the present legislation.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         In response to the inadequate funding of Kentucky's public employee pension systems and a rising concern about the ability of those systems to meet future obligations, the Kentucky General Assembly opened its 2018 session with ambitious plans to address the looming financial threat by reforming the public pension systems. As an initial step toward that goal, Senate Bill 1 (SB 1) was introduced in the Senate on February 20, 2018. With the title, "AN ACT relating to retirement," SB 1 would make several changes to the Kentucky Employees Retirement System, County Employees Retirement System, State Police Retirement System, and Kentucky Teachers' Retirement System. The title of the bill is important because Section 51 of the Kentucky Constitution requires:

No law enacted by the General Assembly shall relate to more than one subject, and that shall be expressed in the title, and no law shall be revised, amended, or the provisions thereof extended or conferred by reference to its title only, but so much thereof as is revised, amended, extended or conferred, shall be reenacted and published at length.

         Vocal opponents of SB 1 complained that it reduced annual cost-of-living-adjustments for retired public employees, put newly-hired employees into a hybrid-cash balance plan rather than the defined-benefits plans enjoyed by current employees, and limited the extent to which unused sick-leave credit could be used to enhance the retirement benefits for current and future public employees. Resistance to SB 1 led to protests at the Capitol and in other forums around Kentucky. Legislative action on the bill stalled. Senate leadership referred SB 1 back to committee for additional study. No further action was taken on the bill, but the concern for the solvency of the pension systems did not subside.

         On the fifty-seventh day of the sixty-day legislative session, the House Committee on State Government met to address pension-reform alternatives. Consensus on a plan for reform was reached. With time waning for legislative action, the Committee was confronted with § 46's requirement for the bill to be read at length on three different days. Section 46 states in pertinent part:

No bill shall be considered for final passage unless the same has been reported by a committee and printed for the use of the members. Every bill shall be read at length on three different days in each House, but the second and third readings may be dispensed with by a majority of all the members elected to the House in which the bill is pending.

(emphasis added).

         To pass the newly agreed-upon reform, the Committee invoked the following previously-used legislative maneuver: a different bill which had already been given one or more readings in each chamber would be "amended" by inserting the newly agreed-upon pension-reform text, with the expectation that the previous readings of the bill would count toward the three-reading requirement. To this end, SB 151 was selected.[3]

         SB 151 had originated in the Senate with the title, "AN ACT relating to the local provision of wastewater services." In its original form, SB 151 consisted of eleven pages of text concerning contracts for the acquisition of local wastewater facilities.

         When SB 151 was called in the House, it was amended by a Committee Substitute containing the pension reform language. The Committee Substitute removed every word of the bill pertaining to wastewater facilities and replaced those words with 291 pages of text addressing pension reform, much of which had been part of SB 1 but modified to remove the language that drew the most aggressive opposition.

          When the Committee Substitute was introduced, SB 151 had already received three readings on different days in the Senate and two readings in the House. All the readings of the bill, however, in both substance and title, were in its form as a bill pertaining to local wastewater services. The principal issue before us is whether any of the prior readings of SB 151 in its original form can be counted toward satisfaction of the three-readings requirement of the bill after its transformation from a wastewater bill to a pension reform bill. Appellants and Amicus assert that the prior readings should count toward the three-reading requirement, while Appellees contend that none count.

         Our review of SB 151 in its final 291-page version discloses that the great majority of its text mirrors the language previously seen in SB 1. SB 1 and SB 151 were identical in many substantive respects, but the most significant difference is that the more serious reforms of the substituted version of SB 151 applied only to future public employees. Current employees remained largely unaffected.

         Although several legislators opposing the pension reform embodied in SB 151 raised questions about the procedure by which it was being considered, none specifically objected to the practice of stripping out the wastewater services provisions and replacing them with pension-reform language. Silence on that aspect of the controversy lends credence to Appellants' claim that this legislative maneuver has long been regarded as an acceptable practice in the General Assembly. Among the issues raised by the legislative opponents was concern that SB 151, as amended, lacked the actuarial analysis required by KRS 6.350; that it lacked a statutorily-required fiscal note; and that it lacked the local government impact study required by KRS 6.995. They also complained that public input was averted, and that insufficient time had been allowed for legislators to review the substitute prior to voting.

         With newly-inserted language transforming the act from a wastewater bill to a pension reform bill, SB 151 was voted out of Committee and reported favorably to the House floor, where it was immediately called up for final passage. Bearing only the title "AN ACT relating to the local provision of wastewater services," SB 1 was read in the full House "by title only" and then voted on as a pension reform bill.

         To summarize, SB 151 with its original wastewater services title and text was "read" twice in the House before the introduction of the Committee Substitute that removed and replaced all its text but left the title intact. Thereafter, the House again "read" SB 151 by its title as a wastewater services bill but with the substantive text of a pension reform bill. Appellants assert that this final reading of the bill by its title provided the third-reading required by § 46. The House voted to pass SB 151 by a vote of 49 to 46 with five members abstaining. After the voting was completed, the title of SB 151 was then amended to identify it as a measure relating to retirement and public pensions, thus, complying with the subject-title match requirement of Section 51 of the Kentucky Constitution.

         During its course through the legislative process, SB 151 received three readings in the Senate as a bill, in substance and title, pertaining to local wastewater services. In the House, it received two readings as a bill, in substance and title, pertaining to local wastewater services, and then it received a final "reading" in the House, still designated by title as a bill pertaining to local wastewater service but with the its textual content relating exclusively to public pension reform. Consequently, SB 151 was never "read" in either chamber by its title as an act relating to retirement and public pensions.

         After the final vote and in due course, the Speaker Pro Tempore of the House signed the bill[4] and referred it back to the Senate the same day, where, with no additional reading by text or title in its newly-amended form, SB 151 passed by a vote of 22-15. SB 151 was then signed by Senate President Stivers and sent to the Governor for his signature, which occurred on April 10, 2018.

         The Kentucky Attorney General and various associations representing public employees and retirees promptly brought an action in Franklin Circuit Court challenging the enactment and validity of SB 151. With no dispute about the material facts, the circuit court granted summary judgment to Appellees. As relevant to this appeal, the circuit court held that SB 151 was passed in violation of § 46. The circuit court also determined that the bill constituted an appropriation and/or the creation of a debt and was thus in violation of the 51-vote majority requirement of § 46. Because of the trial court's disposition of the case, it did not reach the merits of the inviolable contract issue. Appellants promptly appealed to the Court of Appeals. This Court accepted immediate transfer of the proceedings pursuant to CR 74.02.

         II. STANDARD OF REVIEW

         The trial court granted summary judgment to the Appellees upon their claims that the procedure by which SB 151 was enacted violated § 46. The standard of review on appeal when a trial court grants a motion for summary judgment is "whether the trial court correctly found that there were no genuine issues as to any material fact and that the moving party was entitled to judgment as a matter of law." Blackstone Mining Co. v. Travelers Ins. Co., 351 S.W.3d 193, 198 (Ky. 2010) (quoting Scifres v. Kraft, 916 S.W.2d 779, 781 (Ky. App. 1996)); CR 56.03. Because there are no factual issues in dispute and all issues before us concern issues of law, our review is de novo. Owen v. University of Kentucky, 486 S.W.3d 266, 269 (Ky. 2016).

         III. LEGISLATIVE COMPLIANCE WITH SECTION 46 IS A JUSTICIABLE ISSUE

         We first consider the threshold issue raised by Appellants and Amicus asserting that the judicial branch should abstain from adjudicating legislative compliance with § 46's three-reading requirement because doing so would violate the well-established doctrine of the non-justiciability of political questions.

          The "political question" doctrine is natural corollary to the more familiar concept of separation of powers. Baker v. Carr, 369 U.S. 186, 210 (1962). The doctrine holds that the judicial branch "should not interfere in the exercise by another department of a discretion that is committed by a textually demonstrable provision of the Constitution to the other department," Fletcher v. Commonwealth, 163 S.W.3d 852, 860 (Ky. 2005); or seek to resolve an issue for which it lacks judicially discoverable and manageable standards, Vieth v. Jubelirer, 541 U.S. 267, 276 (2004).

         Appellants argue that the processes and procedures by which a bill becomes a law are exclusively assigned to the legislative branch and that the legislature has exclusive authority to determine what is required by § 46. They argue that judicial intrusion into that question would violate the stringent separation of powers doctrine embedded in Kentucky's constitution. Amicus further contends that, regardless of the justiciability of the three-readings requirement, the provision is not mandatory but is instead merely directory to the legislative branch.

         We recognize the wisdom and viability of the political question doctrine, and we acknowledge our obligation to refrain from interfering with the internal processes and internal rules by which the other branches perform their constitutional functions. However, in this instance we are not addressing whether the passage of SB 151 conformed to the internal rules and processes of the General Assembly. We are confronted, instead, with the question of what § 46 of the Kentucky Constitution means when it says that "[e]very bill shall be read at length on three different days in each House"; and whether the enactment of SB 151 comports with that constitutional provision.

         We must reject the argument that this Court has no voice in that determination. The foundational principle described in Marbury v. Madison, 5 U.S. 137, 177-78 (1803), has been a cornerstone of the American republic for as long as the republic has endured: "It is emphatically the province and duty of the judicial department to say what the law is. Those who apply the rule to particular cases, must of necessity expound and interpret that rule. . . . This is of the very essence of judicial duty."

         Kentucky has not wavered in its allegiance to that principle. See Stephenson v. Woodward, 182 S.W.3d 162, 174 (Ky. 2005) [J]ust as this court will not infringe upon the independence of the legislature, we will not cast a blind eye to our own duty to interpret the Constitution and declare the law."). Section 46 is not a procedural rule or policy written and adopted by the legislature to perform its constitutional function; it is an explicit provision of the Kentucky Constitution.

         A. The issue before this Court is not a political question.

         In support of the argument that the three-readings requirement of § 46 is a non-justiciable political question, Appellants cite § 39 of the Kentucky Constitution, which provides: "Each House of the General Assembly may determine the rules of its proceedings." From this provision, Appellants reason that the three-reading requirement is a "procedural requirement" imposed by the Constitution, "leav[ing] it to the General Assembly to determine how this requirement must be met."

         Appellants also cite Sibert v. Garrett, 246 S.W. 455, 457 (Ky. 1922), for the frequently-repeated observation that "[p]erhaps no state forming a part of the national government of the United States has a Constitution whose language more emphatically separates and perpetuates what might be termed the American tripod form of government than does our Constitution . . . ." We note that Sibert also reminds us the separation of powers doctrine "does not destroy the power of the courts to pronounce an act unconstitutional when its enactment is either expressly or by necessary implication inhibited and subversive of the purposes and intention of the makers of the [Kentucky] constitution . . . ." Id. at 457.

         Sibert emphasizes that under Kentucky's strong separation of powers doctrine, the power to declare a legislative enactment unconstitutional when its enactment violates constitutional principles is solidly within the Court's constitutional authority. We reiterated this point in Rose v. Council for Better

         Education, Inc.:

To avoid deciding the case because of "legislative discretion," "legislative function," etc., would be a denigration of our own constitutional duty. To allow the General Assembly (or, in point of fact, the Executive) to decide whether its actions are constitutional is literally unthinkable.

790 S.W.2d 186, 209 (Ky. 1989).

         The Court's power to determine the constitutional validity of a statute "does not infringe upon the independence of the legislature." Stephenson, 182 S.W.3d at 174 f[W]e will not cast a blind eye to our own duty to interpret the Constitution and declare the law."). Far from being an intrusion into the arena constitutionally assigned to the legislature, the Kentucky Constitution and the constitutions of the United States and virtually all states vest the ultimate authority for discerning the meaning of constitutional provisions in the judicial branch. Interpreting the Constitution is, after all, "the very essence of judicial duty." Marbury, 5 U.S. at 177.

         The Court's power, indeed, its duty, to declare the meaning of constitutional provisions is a primary function of the judicial branch in the scheme of checks and balances that has protected freedom and liberty in this country and in this Commonwealth for more than two centuries. The power of judicial review is an integral and indispensable piece of the separation of powers doctrine. To desist from declaring the meaning of constitutional language would be an abdication of our constitutional duty. Philpot v. Haviland, 880 S.W.2d 550, 553 (Ky. 1994).

         Quoting Baker v. Can, we recognized in Philpot six standards for determining when the Courts should defer the resolution of an issue based upon the ...


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