A U.S. District Court for the NMI judge issued yesterday a temporary restraining order that prohibits Gov. Benigno R. Fitial from enforcing an executive order declaring a state of emergency for the financially troubled NMI Retirement Fund.
“It's messy, isn't it?” designated judge Frances Tydingco-Gatewood quipped, referring to the Fund's situation at a hearing that lasted over two hours. Her comment drew laughs from the few people who watched the proceedings.
After listening to the counsels' arguments, Tydingco-Gatewood found that two unnamed retirees that are suing the Fund have met the requirements in obtaining a TRO and ordered them to post a $1 bond.
Tydingco-Gatewood, however, denied the unnamed retirees' request to treat the TRO hearing as a preliminary injunction hearing. Instead, the judge set the preliminary hearing for Oct. 2, 2012.
A preliminary injunction is a court order issued in the early stages of a lawsuit that prohibits a party or parties from performing an act in order to preserve the status quo until a pending ruling or outcome is issued.
Tydingco-Gatewood also considered appointing temporary ad litem trustees for the Fund board in order for the board to have a quorum, enable it to reply to the lawsuit, and deal with the day-to-day operations of the Fund.
Tydingco-Gatewood ordered the two unnamed retirees and the CNMI government to each submit by Sunday at least two to three names as temporary ad litem trustees.
The judge also granted the unnamed retirees' emergency motions to lift the stay in their lawsuit that has been in effect since Jan. 25, 2010, and to file a second amended complaint.
Margery S. Bronster, one of the counsels for the two unnamed retirees, appeared at the hearing via telephone from Honolulu. NMI board counsel Braddock Huesman appeared via video teleconference from Washington D.C.
At the U.S. District Court for the NMI were Tydingco-Gatewood, Fund counsel Carolyn Kern, the unnamed retirees' local counsel Stephen Woodruff, and assistant attorney general Reena J. Patel, representing Fitial and his co-defendants.
Bronster mentioned to the court that they suggested the court's appointment of ad litem trustees for the Fund board, citing precedent. She said the court can make such appointment considering that the Fund lacks quorum and cannot reply to the lawsuit.
She said that failure to proceed with the lawsuit due to the lack of quorum would end up rewarding Fitial and his co-defendants with their improper actions.
As to who will shoulder the expenses for the ad litem trustees, Bronster said it will be the Fund's responsibility.
She said the situation now is that the Fund will be eliminated and that they believe it should not be eliminated merely because of the lack of quorum.
The judge agreed with Bronster that she needs to interview the nominated trustees.
Fund counsel Kern said the appointed trustees should have the power to appoint a Fund administrator, considering that the pension agency will have no administrator by next week.
If ad litem trustees will be appointed, Patel said their scope of power should be limited or they might overstep boundaries.
At this point, Judge Tydingco-Gatewood asked why Fitial not just appoint trustees. She also asked if the failure to appoint is because no one is qualified.
Patel said her understanding is that there are issues of level of experience to appointed trustees and confirmation by the Senate.
At present, the Fund board has two trustees-Nacrina Barcinas and Adelina C. Roberto. The board needs four trustees to have a quorum.
After agreeing about the need to appoint ad litem trustees, Tydingco-Gatewood then asked the parties to discuss the motion to lift the stay order.
Bronster said they will not repeat their arguments in the pleadings submitted in court but she emphasized that if the Commonwealth court is prohibited from enforcing the court's judgment against the CNMI government, they believe that the federal court should allow them to proceed with the litigation of their lawsuit.
She described Fitial's executive order as “game changer.”
Patel said the administration is trying to remedy the problem, citing the bond initiative, among other things.
Patel reiterated the administration's position that the executive order specifically states that its purpose is to prolong the longevity of the Fund's benefits.
But Bronster said the executive order is intended to frustrate the Fund's ability to pay the retirees.
Tydingco-Gatewood agreed that the unnamed retirees will suffer irreparable harm and other factors if a TRO is not granted.
Bronster said the court should treat the TRO hearing as preliminary injunction since the issues have been sufficiently argued.
But Patel requested for a preliminary injunction hearing.
Tydingco-Gatewood then set a hearing date for preliminary injunction. She however, told the parties not to submit similar arguments because she has already read all their pleadings.
The judge said she will issue a written decision.