Hon. Kelli Linville, Res. v. State Of Wa. Dept. Of Retirement Systems, App. ( 2019 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
KELLI LINVILLE,
DIVISION ONE
Respondent,
No. 78582-6-I
V.
PUBLISHED OPINION
STATE OF WASHINGTON,
DEPARTMENT OF RETIREMENT
SYSTEMS,
Appellant. FILED: December 2, 2019
DWYER, J. — This is a case about a public employee’s retirement benefits.
Kelli Linville has been a member of the state’s Teachers Retirement System
(TRS), which is administered by the Department of Retirement Systems (DRS),
since 1976. Although she served in public service positions that afforded her the
opportunity to enroll in the Public Employees Retirement System (PERS), she
remained in TRS until becoming eligible to retire. However, she did not then
retire but, rather, assumed another PERS-eligible position.
At this point, her application to join PERS was rejected pursuant to a
statute, RCW 41.04.270, that estops individuals from joining a new DRS
administered system if they are eligible to retire from one to which they already
belong. Following an unsuccessful administrative appeal to DRS, Linville sought
review in superior court, resulting in that court’s reversal of the DRS decision.
DRS now appeals, contending that the superior court incorrectly interpreted the
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pertinent statutes. We agree, reverse the superior court’s order, and reinstate
the decision of the agency.
D RS administers Washington’s state employee retirement programs,
including TRS and PERS. RCW 41.50.030. KeIli Linville became an employee
of the Bellingham School District in 1976 and, at that time, enrolled as a member
of TRS Plan 1. In 1992, Linville won election to the Washington House of
Representatives, a PERS-eligible position. Following the commencement of her
first term in 1993, she opted to continue accruing TRS service credits through her
legislative service rather than enroll in a PERS plan.1 Linville opted to remain in
TRS throughout her time in the legislature. She left the legislature after losing a
reelection campaign in 2010.2
At the time she left the legislature, Linville had accrued sufficient service
credits to retire, having 30.83 years of TRS service credits. Although Linville
ceased contributing to TRS at this time, she did not retire. Instead, she was
elected as Bellingham’s mayor in 2011. She began her first mayoral term on
January 1, 2012, and is currently serving her second term. The mayor’s job is
PERS-eligible; however, because Linville had already accrued sufficient TRS
service credits to qualify for a retirement allowance, she was denied PERS
membership.
1 Civil service employees who are “elected or appointed to an elective office” may choose
to become PEAS members or may maintain membership in the retirement system to which they
already belong. RCW 41.04.120. Had Linville opted to join PERS in 1993, she would have been
allowed to do so, thus becoming a “dual member.” RCW 41 .54.010(4).
2 Linville had lost reelection in 1994 and left office at the conclusion of her first term.
Shortly thereafter, she was appointed to fill a vacant seat for the same district beginning on
December 12, 1995. She won each of her subsequent reelection bids until 2010.
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No. 78582-6-1/3
In denying her application, DRS cited to RCW 41 .04.270(1)(b), which
precludes members of one DRS system from joining a second system once they
become eligible to receive retirement benefits through the system to which they
belong.3
Linville met the criteria for application of this statute, having accumulated
sufficient TRS credits to qualify for a retirement allowance. DRS also determined
that Linville did not meet the definition of “dual member” as that term is used in
RCW 41.04.270(2). DRS maintained that the estoppel statute exists to prevent
“double-dipping,” or the practice of receiving benefits from more than one state
retirement system. DRS maintained that the dual member exception exists to
benefit individuals who have contributed to one system, without reaching
retirement eligibility, allowing such employees to join and accrue benefits in a
second system should they change jobs in mid-career. Linville’s administrative
appeal to DRS’s petitions examiner was unsuccessful, and she sought judicial
review in the Whatcom County Superior Court.
The superior court reversed DRS’s decision on the basis that DRS
erroneously interpreted the law. Regarding the interplay of the estoppel statute
and the exception thereto, the court did “not see where in the legislation, or the
legislative history, [the exception] was intended to exclude those who could retire
but chose not to do so,” and opined that “[i]f Linville did not qualify, the Court fails
to see any employee who would, thus making the exception useless.” The
superior court ordered DRS to enroll Linville in PERS. DRS appeals.
~ We hereafter refer to RCW 41 .04.270 as the “estoppel statute.”
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Linville avers that DRS incorrectly interpreted and applied the pertinent
statutes, RCW 41.04.270 and RCW 41.54.010(4), to conclude that she did not
meet the definition of “dual member” contained in the latter statute. Linville
essentially argues that persons may never be estopped from joining a second
DRS system on the basis that they are eligible to collect a retirement allowance
from one to which they already belong. For its part, DRS correctly asserts that
such a reading of the statute broadens the dual member exception beyond
anything that the legislature could have intended.
Washington’s Administrative Procedure Act (APA), chapter 34 RCW,
establishes the exclusive means for obtaining judicial review of an agency action.
RCW 34.05.010. The party challenging a final agency order bears the burden of
demonstrating that it should be overturned. RCW 34.05.570(1)(a). We review
the order based on the agency record, sitting in the same position as the superior
court, and do not defer to the superior court ruling. Waste Mqmt. of Seattle, Inc.
v. Utils. &Transp. Comm’n, 123 Wash. 2d 621, 633, 869 P.2d 1034 (1994).
Familiar principles guide our analysis. RCW 34.05.570(3)(d), which allows
for relief when “[t]he agency has erroneously interpreted or applied the law,” is
the basis for Linville’s first challenge to the DRS order. When an agency order is
challenged on the basis of an error of law, we review the order de novo, but give
substantial weight to an agency’s interpretation of the law within its area of
expertise. Verizon Nw., Inc. v. Emj’t Sec. Dep’t, 164 Wash. 2d 909, 915-16, 194
P.3d 255 (2008).
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In interpreting a statute, the “fundamental objective is to ascertain and
carry out the Legislature’s intent.” Citizens All, for Prop. Rights Legal Fund v.
San Juan County, 184 Wash. 2d 428, 435, 359 P.3d 753 (2015) (quoting Dep’t of
Ecology v. Campbell & Gwinn, LLC, 146 Wash. 2d 1, 9-10, 43 P.3d 4 (2002)). “[l]f
the statute’s meaning is plain on its face, then the court must give effect to that
plain meaning as an expression of legislative intent.” Citizens All., 184 Wash. 2d at
435 (alteration in original) (quoting Campbell & Gwinn, 146 Wash. 2d at 9-10). In
determining the plain meaning of a statute, we consider “the ordinary meaning of
words, the basic rules of grammar, and the statutory context to conclude what
the legislature has provided for in the statute and related statutes.” In re
Forfeiture of One 1970 Chevrolet Chevelle, 166 Wash. 2d 834, 839, 215 P.3d 166
(2009). In so doing, we “construe a statute ‘so that all the language used is given
effect, with no portion rendered meaningless or superfluous.” Seattle City Light
v. Swanson, 193 Wash. App. 795, 810, 373 P.3d 342 (2016) (internal quotation
marks omitted) (quoting Rapid Settlements, Ltd. v. Symetra Life Ins. Co. 134 Wn.
App. 329, 332, 139 P.3d 411(2006)). “Common sense informs our analysis, as
we avoid absurd results in statutory interpretation.” State v. Alvarado, 164 Wash. 2d
556, 562, 192 P.3d 345 (2008).
The parties do not dispute that RCW 41.04.270 bars employees who are
enrolled in one DRS system, and are eligible to retire from that system, from
enrolling and accruing benefits in a second system. Its language provides:
(1) Except as provided [elsewhere], on and after March 19, 1976,
any member or former member who (a) receives a retirement
allowance earned by the former member as deferred compensation
from any public retirement system authorized by the general laws of
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No. 78582-6-1/6
this state, or (b) is eligible to receive a retirement allowance from
any public retirement system listed in RCW 41.50.030, but chooses
not to apply, or (c) is the beneficiary of a disability allowance from
any public retirement system listed in RCW 41.50.030 shall be
estopped from becoming a member of or accruing any contractual
rights whatsoever in any other public retirement system listed in
RCW 41.50.030: PROVIDED, That (a) and (b) of this subsection
shall not apply to persons who have accumulated less than fifteen
years service credit in any such system.
(2) Nothing in this section is intended to apply to any
retirement system except those listed in RCW 41.50.030 and the
city employee retirement systems for Seattle, Tacoma, and
Spokane. Subsection (1)(b) of this section does not apply to a dual
member as defined in RCW 41.54.010.
RCW 41.04.270.
As the language of the statute shows, there are two major exceptions to
estoppel: one for employees who have accumulated less than 15 years’ service
credit in a state retirement system and one for dual members. The dispute~
herein concerns only the applicability of the exception for “dual members”
contained in RCW 41.04.270(2). That exception provides that estoppel does not
apply when an employee is a “dual member,” defined as follows:
(4) “Dual member” means a person who (a) is or becomes a
member of a system on or after July 1, 1988, (b) has been a
member of one or more other systems, and (c) has never been
retired for service from a retirement system and is not receiving a
disability retirement or disability leave benefit from any retirement
system listed in RCW 41.50.030 or subsection (6) of this section.
RCW 41.54.010(4).
Thus, read together with the exception in RCW 41.04.270(2), the
legislature allowed for dual enrollment in some circumstances in which an
employee moves from one public job to another. Dual members are afforded the
ability to combine service credits from multiple systems for the purpose of
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No. 78582-6-1/7
determining retirement eligibility and, once eligible to retire, to retire from all
systems in which they are members and use their base salary from any system
as the compensation used to calculate their retirement allowance. ROW
41 .54.030. However, dual members remain expressly prohibited from “double
dipping” by ROW 41.54.020(1), which states:
(1) Those persons who are dual members on or after July 1, 1988,
shall not receive a retirement benefit from any prior system while
dual members without the loss of all benefits under this chapter.
Retroactive retirement in any prior system will cancel membership
in any subsequent systems except as allowed under RCW
41.04.270 and will result in the refund of all employee and employer
contributions made to such systems.
DRS maintains that Linville does not meet the definition of a dual member
due to the requirement of RCW 41 .54.01 0(4)(b). While she was a member of a
system—TRS—on July 1, 1988, per subsection (a) of that statute, and while she
has never been retired for service from a retirement system and is not receiving
any disability retirement or disability leave benefit, per subsection (c), she has
never been a member of any other system as required by subsection (b).
Pursuant to DRS’s reading of the statute, because Linville was a member of only
one system prior to commencing service in her current PERS-eligible position,
she cannot satisfy subsection (4)(b), and thus does not meet the definition of a
dual member.
Linville’s reading of the definitional statute, on the other hand, would
enable an unretired member of one system to choose to become a dual member,
at any time, by participating in another retirement system, regardless of
retirement eligibility. Linville seeks to use her current membership in TRS to
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No. 78582-6-1/8
satisfy RCW 41.54.01 0(4)(b) and then meet subsection (4)(a)’s requirement by
becoming a member of PERS—thereby avoiding estoppel of membership in a
second retirement system by becoming a member of a second retirement
system. This interpretation was adopted by the superior court, essentially
replacing RCW 41.54.01 0(4)(a)’s requirement that a dual member “is or becomes
a member” of a new system with the words “is, becomes, or applies to become a
member.” But we do not see any evidence in the plain language of the statute
that the legislature intended this to be the case.4 Without a rewriting of the
statute, the result favored by the superior court cannot be obtained.
Having established that Linville does not qualify for an exception to the
estoppel statute, we are left to apply that statute as it is written. Linville is a
member of a retirement system and is eligible to receive a retirement allowance
from that system. When Linville attained TRS retirement eligibility, she was not a
member of any other retirement system. She was still not a member of any other
system at the time she began serving in her current PERS-eligible position. The
determination of dual membership status is made at the time an individual
applies for membership in a new retirement system, not after entry into that
system. Although eligible to receive a TRS retirement benefit, Linville was not a
dual member at the time she applied for PERS membership. The exception does
~ Linville goes on to argue that DRS has read the definition of “dual member” too
narrowly, improperly defeating that which she asserts to be the purpose of the dual member
exception—to make it easier for anyone to enroll in two systems. The legislative history to which
Linville cites does not support her assertion of this legislative purpose. Instead, it stands for two
propositions: first, that dual members are defined as already being members of two systems at
the time they seek to avail themselves of the dual member exception, and second, that the
exception was intended to allow “transfer of service from one state retirement system to another
under limited criteria.” See FINAL B. REP. ON SUBSTITUTE S.B. 5150, 50th Leg., Reg. Sess. (Wash.
1987) (emphasis added).
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No. 78582-6-1/9
not apply to her. Because she is eligible to receive a TRS retirement benefit, she
is estopped from becoming a member of, or accruing any contractual rights in,
PERS. DRS was correct in this determination.
Ill
The APA also provides that an agency decision may be overturned when
it “is inconsistent with a rule of the agency unless the agency explains the
inconsistency by stating facts and reasons to demonstrate a rational basis for
inconsistency.” RCW 34.05.570(3)(h). Linville asserts that DRS has manifested
multiple interpretations of the statute through its regulations, which she contends
conflict with the statute and with each other. We disagree.
The first regulation she points to in support of this argument, WAC 415-
113-041, clarifies when a person meets the definition of a dual member. Titled
“Am I a dual member?,” it gives three criteria for dual membership that mirror the
requirements of RCW 41.54.010(4):
(1) You must be a participating member of a dual
member system. You must be a current member participant in at
least one of the systems listed in WAC 415-113-030 to be a dual
member. You may have established dual member status if you are
or were a member participant in one of those systems on or after:
(a) July 1, 1988, for current or former members of all plans of
PERS, SERS, TRS, SCERS orWSPRS;
(2)You must also be a former or current member of at
least one other system listed in WAC 415-113-030.
(3) You must not have been retired for service from a
retirement system. You are not a dual member if you have ever
been retired for service from any retirement system administered by
the department of retirement systems or a first class city retirement
system.
WAC 415-113-041.
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Linville’s assertion that this regulation conflicts with the statute is premised
entirely on the omission of the phrase “becomes a member” in WAC 41 5-1 13-
041(1), although it is present in RCW 41 .54.010(4). This assertion is not well
taken. Someone who “becomes a member” at any time after a specified cutoff
date (here July 1, 1988) clearly falls within the purview of WAC 415-113-041(1).
There is no conflict with the statute.
As her next averment of purported inconsistency in DRS’s interpretation,
Linville points to WAC 415-108-725, titled “If I have retired from another
retirement system or am eligible to retire, am I excluded from participating in
PERS?” This regulation was recently amended to effect a distinction in eligibility
between employees taking “normal,” as opposed to “early,” retirement benefits.
Linville asserts that the amendment shows that “[DRS]’s definition of dual
membership hinges on the value of the pension, not the status of the employee.”
To the contrary, the amendment clarifies that RCW 41.04.270(1 )(b) applies only
to those persons eligible to receive a retirement allowance pursuant to what is
referenced as “normal retirement,” as opposed to “early retirement.” The latter
term entails retiring before reaching the age or acquiring the quantity of service
credits necessary to receive full benefits under the statutory requirements for
“normal” retirement.
The reason for this amendment is that the option of early retirement did
not exist at the time of the estoppel statute’s enactment, and it cannot be read to
evince a fundamental change to the rule that dual membership eligibility hinges
on the employee’s status. The code provision is a proper interpretation of RCW
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No. 78582-6-I/li
41 .04.270(1)(b), in light of changes elsewhere in the statutory scheme, and is
consistent with that statute’s language and purpose.
In both of these instances, there is no manifest inconsistency in DRS’s
interpretation of the pertinent statutes. Thus, Linville’s challenge fails.
Iv
Linville also contends that DRS’s decision to deny her enrollment was
arbitrary and capricious. This contention is meritless, as DRS’s decision followed
the letter and intent of the statutes at issue.
Again, we review issues of law de novo, including whether an agency’s
decision is arbitrary and capricious. Stewart v. Dep’t of Soc. & Health Servs.,
162 Wash. App. 266, 273, 252 P.3d 920 (2011) (citing Wash. Indep. Tel. Ass’n v.
Wash. Utils. & Transp. Comm’n, 149 Wash. 2d 17, 24, 65 P.3d 319 (2003)).
Pursuant to RCW 34.05.570(3)(i), a petitioner may challenge an agency’s
order on the ground that the order is arbitrary or capricious.
“Arbitrary and capricious” refers to “willful and unreasoning action,
taken without regard to or consideration of the facts and
circumstances surrounding the action. Where there is room for two
opinions, an action taken after due consideration is not arbitrary
and capricious even though a reviewing court may believe it to be
erroneous.”
Pub. Util. Dist. No. 2 of Pac. County v. Comcast of Wash. IV, Inc., 184 Wash. App.
24, 45, 336 P.3d 65 (2014) (internal quotation marks omitted) (quoting Lane v.
Port of Seattle, 178 Wash. App. 110, 126, 316 P.3d 1070 (2013)).
DRS did not act arbitrarily or capriciously but, rather, applied the statutes
by which it is bound to the facts of Linville’s application. The parties do not
dispute that, without more, RCW 41 .04.270(1)(b) estops Linville from attaining
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No. 78582-6-1/12
PERS membership due to her eligibility to receive a retirement allowance from
another system. DRS considered whether Linville met the dual member
exception and, relying on the plain language of the pertinent statute, properly
concluded that she did not.5
V
To many, the DRS order may seem harsh. Harsher still may appear our
decision. But DRS was correct in its determination. Any ameliorative action
must come from the legislature.
The superior court’s judgment is reversed. The order of the Department of
Retirement Systems must be reinstated.
WE CONCUR:
~7.
Had Linville joined PERS upon becoming a state representative in 1993, she would
have become a dual member. At that time, she was not eligible to retire from TRS, and thus
would not have been estopped from joining PERS. She elected not to do so.
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