Rhode Island judge orders mediation in state pension dispute

BOSTON Tue Dec 18, 2012 1:18pm EST

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BOSTON Dec 18 (Reuters) - A Rhode Island judge ordered the state and a group of unions into mediation to try to resolve a lawsuit challenging a 2011 law that would cut union members' pension benefits by about $4 billion over the next two decades.

The case is a widely watched one as cash-strapped U.S. cities and states struggle to keep up with the costs of pension plans for their workers and retirees. Collectively, they face some $5 trillion in unfunded pension obligations, Rhode Island attorneys said in court earlier this month.

State Superior Court Associate Justice Sarah Taft-Carter - whom the state had tried to have tossed off the case because she is due to receive a pension - said on Tuesday the suit will continue to move towards trial even as the two sides begin to meet with federal mediators.

Unions representing police, firefighters, teachers and other state employees sued Governor Lincoln Chafee and other state officials, charging that they violated a contract when they passed the law that raised the age at which retirees can collect pension benefits and shifted to a defined-contribution rather than defined-benefit plan.

The state argued that the terms of its pension plan are not a contract and that state legislators have the right to modify the laws that dictate the terms.

Roger Boudreau, president of the American Federation of Teachers' retiree chapter in the state, who also chairs a 6,000-plus-member coalition of retirees from other state unions, welcomed the judge's move. The unions felt their voices were not heard in the debate that led to the decision to cut their pension benefits, Boudreau said.

"It's at least an opportunity for both sides to explore things in real terms that didn't occur but should have occurred previously," Boudreau said.

Chafee representatives had no immediate comment on the decision.

David Boies, an attorney known for representing former Vice President Al Gore in the court case contesting the results of the 2000 presidential election, is representing Rhode Island.

Attorneys for both sides are due back in court in Providence on Feb. 1.

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