Settlement Fund says it never agreed to withdraw as intervenor in PSS suit

The NMI Settlement Fund has asserted that it never agreed to withdraw from the lawsuit filed by the Public School System and Education Commissioner Dr. Alfred Ada against Gov. Ralph DLG Torres and Finance Secretary David Atalig before the Superior Court, in exchange for PSS filing an amended complaint.

The Settlement Fund pointed out that at the June 26, 2020, hearing before the Superior Court on the Settlement Fund’s motion to intervene in the lawsuit, PSS represented to the court that it would file an amended complaint, conceding a number of issues that PSS believed would resolve the Settlement Fund’s concerns regarding the impairment of payments due the Settlement Fund under the settlement agreement in Betty Johnson’s class action.

In the Settlement Fund’s opposition filed Friday to PSS and Ada’s motion for summary judgment, Fund counsel Joyce C. H. Tang and Nicole M. Torres-Ripple said PSS has since retracted its representation to the court that it would file an amended complaint, claiming that the Settlement Fund’s withdrawal from this case was a condition to the filing of the amended complaint.

Tang and Torres-Ripple said PSS’ statement in its July 22, 2020, email that it “compromised” to file the amended complaint in exchange for the Settlement Fund withdrawing from this case is “factually inaccurate and misleading.”

First, Tang and Torres-Ripple said, the Settlement Fund never agreed to withdraw from this case in exchange for PSS filing an amended complaint.

The lawyers said that, as Superior Court Associate Judge Joseph N. Camacho is aware, the complaint, as filed, was deficient and did not reflect the “new” arguments made by PSS at the June 26 hearing.

Second, the lawyers said, in granting the Settlement Fund’s motion to intervene, Camacho found “that the disposition of PSS’ claims may impair the Settlement Fund.”

“Even if the amended complaint were to be filed today, the Settlement Fund contends that, as drafted, its rights may still be impaired,” Tang and Torres-Ripple said.

The lawyers said the current posture of this case is that PSS has made “concessions” in its draft amended complaint that correct most of the inconsistencies in the complaint and the motion, but leave two issues unresolved for the Settlement Fund.

One, they said, PSS continues to challenge the constitutionality of all appropriations (referred to by PSS as “earmarks”) including the two appropriations to the Settlement Fund under Public Law 20-33 (creating the Settlement Fund Revolving Fund and funding from Business Gross Revenue Tax and Hotel Tax and Alcohol Container Tax to the Retirement Fund. The lawyers said the two appropriations are intended to provide for the Minimum Annual Payments and other payments due the Settlement Fund under the Johnson settlement agreement.

Second, they said, PSS continues to assert that the fiscal year 2020 budget law, P.L. 21-8, is unconstitutional because it contains eight appropriations that includes the Johnson settlement appropriations laws that should not be treated as special revenue. PSS asserts that they are general revenue and should be included in the computation of PSS’ 25% share.

Tang and Torres-Ripple said the Settlement Fund’s position is that the Johnson settlement agreement appropriation laws are constitutional and enforceable appropriations, and they are both special and general revenues.

As for the constitutionality of the budget law, Tang and Torres-Ripple said that even if portions of the law are determined to be unconstitutional, the invalidation of a section does not invalidate the entire budget law.

Finally, Tang and Torres-Ripple said, the Settlement Fund has no position on the correct method to calculate PSS’ 25% share, so long as it does not impair or interfere with the funding sources for the Settlement Fund.

They said PSS is not entitled to funds appropriated under the Settlement Fund appropriation laws because these payments are constitutionally mandated.

PSS and Ada are suing Torres and Atalig to guarantee for PSS an annual budget of not less than 25% of the Commonwealth’s general revenue. PSS and Ada said Public Law 21-08, which established the Commonwealth government budget for fiscal year 2020, appropriated $37,718,904 to PSS, which is approximately 16% of the budget.

The Settlement Fund moved to intervene in the lawsuit. Camacho granted the motion.