Settlement agreement OK’d in Johnson class action suit

After years of litigations both in local and federal courts, what was once perceived as an impossible court event took place in 2013—a global settlement agreement in a class action that settles the issue on how the NMI Retirement Fund could collect from the CNMI government and eventually pay the retirees and refund the employees’ contributions.

The settlement in retiree Betty Johnson’s lawsuit against the Fund and the CNMI government that has been litigated for four years in federal court came a few months before the Fund’s assets were to be depleted in March 2014.

The settlement also resolved the Fund’s collection efforts in connection with its lawsuit filed in 2006 against the CNMI government over the latter’s failure to remit required payments. In 2009, Superior Court Associate Judge Kenneth L. Govendo ruled that the government owes the Fund $282 million in damages.

Now, the CNMI government has to deal with how much and how to pay the multi-million-dollar petitions for attorneys’ fees and costs requested by Johnson’s battery of lawyers. U.S. District Court for the NMI designated judge Frances Tydingco-Gatewood is set to resolve in January 2014 the remaining issue of attorneys’ fees and costs that the CNMI has agreed to pay as part of the settlement.

It was on June 26, on the third and last day of the final settlement conference in Johnson’s class action, when the parties reached a then-tentative settlement agreement.

On Aug. 6, Tydingco-Gatewood preliminarily approved the settlement agreement. With that order, the Fund has to pay $10 million as refunds of contributions to current government employees who have requested to leave the Fund.

The settlement agreement was overwhelmingly supported by retirees. Only 16 opted out, asking to be excluded from the settlement class by the Sept. 20 deadline.

On Sept. 30, Tydingco-Gatewood gave final approval to the settlement agreement after finding it to be “fair, reasonable and adequate.”

Under the settlement agreement, the CNMI government agrees to make annual payments that will enable the settlement fund pay to at least 75 percent of class members’ benefits.

The judge also entered a consent judgment for $779 million in case the CNMI government fails to meet its obligations in the settlement agreement.

With the final approval, all Fund assets were transferred and assigned as assets of the settlement fund. The settlement fund is now being administered by the court-appointed trustee, attorney Joyce Tang of the Civille & Tang law firm of Guam.

On Oct. 22, the Fund released over $40 million in defined benefit plan contributions to applicants, which gave a welcome shot in the arm for the local economy and whose stimulating effect is still being felt up to today.