On Aug. 30, 2012, the Commonwealth Supreme Court issued a ruling in Board of Trustees of the Northern Mariana Islands Retirement Fund v. Martin B. Ada, holding unconstitutional a 3-percent retirement bonus previously afforded to various public officials via statute, as well as the availability to Martin B. Ada of “double-dipping” benefits afforded pursuant to the NMI Constitution.
The NMI Legislature created the 3-percent retirement bonus through Public Law 6-17 in 1989. The bonus was calculated at “three percent times [the] average annual salary times [the] years of service” and benefited certain Retirement Fund members, including “governors, Commonwealth trial court judges, lieutenant governors, mayors, members of the Legislature and resident representatives to the United States.” Though the bonus was repealed in 2003 by Public Law 13-60, Ada claimed benefits for the years when he was a legislator and the bonus was in effect.
The “double-dipping” benefits are attributable to a provision contained in Article III, Section 20 of the NMI Constitution, where a retiree may collect both salary and retirement benefits for up to 60 days per year if the retiree becomes re-employed.
In holding the 3-percent bonus unconstitutional, the Supreme Court noted that the bonus created a conflict of interest between the legislators and the public in violation of Article II, Section 15 of the NMI Constitution. This conflict arose because the bonus the legislators approved only benefited a small group of individuals, of whom the legislators were part. The court further reasoned that it was “reasonable to conclude” that the interest of the legislators in the bonus conflicted with the interest of the general public in maintaining a solvent Fund.
The Supreme Court also addressed the remedy for this constitutional defect. The court first noted that the Fund and its members acted in good faith reliance upon the unconstitutional 3-percent bonus. Due to this good faith reliance on an unconstitutional statute, the Court held that members of the Fund who already received distributions were entitled to retain the distributions. The court held, however, that members who have not yet received the 3-percent bonus, including Ada, are “barred from receiving the bonus in the future.”
Regarding the statute of limitations for recouping the “double-dipping” benefits, the court found that Ada is entitled to the benefits because the Fund failed to repudiate them until February 2008, at the earliest. Consequently, the Court concluded that Ada's claim for double-dipping benefits for the years 2000 through 2002 is not barred by the relevant six-year statute of limitations.
The Supreme Court's full opinion is Board of Trustees of the Northern Mariana Islands Retirement Fund v. Martin B. Ada, 2012 MP 10, and can be found at http://www.cnmilaw.org/supreme_12.htm. (NMI Judiciary)