Settlement Fund is OK’d to intervene in PSS’ suit

Superior Court Associate Judge Joseph N. Camacho granted last Friday the NMI Settlement Fund’s motion to intervene in the lawsuit filed by the Public School System and Education Commissioner Dr. Alfred Ada against Gov. Ralph DLG Torres and Finance Secretary David Atalig.

Camacho, however, denied the Settlement Fund’s motion to suspend the proceedings in the lawsuit.

At a status conference/motion hearing at the CNMI Supreme Court courtroom, Camacho ruled that since the Office of the Attorney General did not argue that they could adequately also represent the retirees, the motion to intervene is granted but, citing the Settlement Fund’s failure to articulate its grounds, Camacho denied suspending the proceedings in the lawsuit.

PSS and Ada’s motion for summary judgment will be heard on Aug. 28, 2020.

PSS and Ada, through counsel Tiberius Mocanu said he will file an amended complaint that will drop any language referencing the Settlement Fund so that it will not be part of the case.

Settlement Fund trustee Joyce Tang argued on the motion to intervene. Settlement Fund counsel Nicole M. Torres-Ripple argued on the motion to stay.

On the motion to stay, assistant attorney general John P. Lowrey first did not take a position for or against the motion to stay. He later changed his mind and joined PSS in opposing the motion.

But Camacho ruled that the CNMI court is a separate jurisdiction and no decision has been made that would affect the settlement agreement in Betty Johnson’s class action.

In their opposition to the motions filed Thursday, PSS and Ada, through Mocanu, asserted that the Settlement Fund’s basis for its desire to intervene is “entirely fabricated” and unsupported by fact. Mocanu said the Settlement Fund does not have standing to intervene as it does not have any interest in the lawsuit’s outcome.

He said the Settlement Fund essentially argues that, should PSS succeed in this suit, the CNMI would risk defaulting on the settlement agreement in the Betty Johnson class action. That position prompted the Settlement Fund to intervene in the case and to suspend the proceedings so that it can enforce the settlement agreement in in the U.S. District Court for the NMI.

“However, PSS does not seek to take a literal 25% of the earmarked funds to the Settlement Fund. Nor does it seek to limit, reduce, or stop any payment to the Settlement Fund,” he said.

Instead, Mocanu said, PSS asks that the Superior Court find the earmarks listed in its complaint unconstitutional inasmuch as they do not function to create special revenue and thus shield the same from the calculation of PSS’ constitutional entitlement to 25% of general revenue.

He said PSS is not trying to take 25% of what is owed the Settlement Fund.

PSS, the lawyer said, just wants the $43 million the Settlement Fund was paid this year to be declared as paid from the general revenues of the Commonwealth and thus to be included in the calculation of the total amount available for appropriation, of which PSS is entitled to 25%.

“It’s that simple,” Mocanu said.

He said the Settlement Fund may have a semblance of an argument to intervene had PSS actually moved forward with its prior intention to file for a temporary restraining order or preliminary injunction. Mocanu said PSS has already dropped its bid for any form of injunctive relief.

He said PSS’ prior intention to do so was a consequence of no longer receiving appropriations from the government and thus being unable to fund the continued operation of its schools. “However, on account of the pandemic and the governor’s executive order, the schools were closed for another reason and PSS furloughed its employees,” Mocanu said.

PSS and Ada sued Torres and Atalig to guarantee for PSS an annual budget of not less than 25% of the Commonwealth’s general revenue.

In their lawsuit, PSS and Ada alleged that Torres is in violation of the NMI Constitution because he is carrying out payments and collections under Public Law 21-08, which established the Commonwealth government budget for fiscal year 2020. That law, Mocanu said, appropriated $37,718,904 to PSS, which is approximately 16% of the budget.

PSS and Ada also alleged that Atalig is in violation of the CNMI Constitution because every allotment and disbursement made pursuant to P.L. 21-08 is unconstitutional.

PSS and Ada asked the court to declare that P.L. 21-08 is unconstitutional.

In their answer to the lawsuit, Torres and Atalig, through the Office of the Attorney General, said the governor’s actions are licensed by the state of emergency declared by Executive Order 2020-04, pursuant to the CNMI Constitution, the Homeland Security and Emergency Management Act, and the CNMI Emergency Health Powers Act of 2003.