Judge rules NMC allowed to pay 20 pct employer contributions

U.S. District Court for the NMI designated Judge Frances Tydingco-Gatewood yesterday ruled that the Northern Marianas College is allowed to pay a 20 percent accrued employer contributions rate instead of 30 percent that the government and autonomous agencies have been paying.

Tydingco-Gatewood denied NMI Settlement Fund trustee Joyce C. H. Tang’s motion to enforce the settlement agreement in Betty Johnson’s class action, which requests a court order that the NMC pay a 30 percent accrued employer contributions.

Tydingco-Gatewood said in interpreting the settlement agreement, the court must confine its inquiry to the four corners of the agreement.

“Doing so, the court finds that Section 5.0 of the Settlement Agreement is plain and unambiguous,” she said.

The judge said the autonomous agencies were required to pay accrued employer contributions “rates they were paying as of June 26, 2013.”

Tydingco-Gatewood said NMC is paying a 20 percent accrued employer contributions rate as of June 26, 2013.

In concurring with NMC’s position, Tydingco-Gatewood said the settlement agreement supersedes the requirement of the CNMI law that the autonomous agencies shall pay the same accrued employer contributions as the CNMI government.

The judge pointed out that the settlement agreement only requires the autonomous agencies to pay the accrued employer contributions rates each was paying as of June 26, 2013.

Tydingco-Gatewood said while trustee Tang and Johnson class counsel believe that applying the plain meaning to Section 5.0 of the settlement agreement would lead to unfairness because the settlement class would essentially be subsidizing NMC, the court does not believe this result—while unintended by the trustee and class counsel—to be absurd, irrational, or wildly unreasonable.

The facts show, Tydingco-Gatewood said, that NMC had been treated differently in the past with regard to accrued employer contributions payments, and that not all government agencies were paying the same rate.

Thus, she said, it is not unreasonable to expect the NMI to continue paying the 20 percent accrued employer contributions rate it was paying as of June 26, 2013.

“This is what the plain meaning of the Settlement Agreement requires,” the judge said.

In the motion, trustee Tang asked the court to compel NMC to comply with the settlement agreement by paying accrued employer contributions and penalties in the amount of $75,080.79. Tang also requested the court to order NMC to pay all future accrued employer contributions at the rate of 30 percent.

The trustee asserted that the applicable accrued employer contributions rate referred to in Section 5.0 in the settlement agreement was the 30 percent rate established by Superior Court Associate Judge Kenneth L. Govendo’s Aug. 22, 2011, order.

In 2010, the actuary recommended an employer contribution rate of 72.7215 percent.

In his Aug. 22 order, Govendo reduced the employer contribution rate to 30 percent because the CNMI government had fallen behind on its obligations.

The trustee contended “it was the intent of the parties that all government agencies would pay the same rate.”

The trustee further argued that the plain language of Section 5.0 in the settlement agreement does not permit the NMC to pay a lower rate than other government agencies.

The NMC, on the other hand, through counsel Mark Scoggins, asserted that the plain language of the settlement agreement controls, and it is from this language that the court may find the intent of the parties.

Scoggins argued that if it were truly the intent of the parties that autonomous agencies would pay the same accrued employer contributions rate, then the drafters of the agreements should have used the term “rate”—singular—as opposed to the terms “rates” as used in the settlement agreement.

Scoggins noted that the drafters of the settlement agreement were aware that autonomous agencies were not all paying the 30 percent rate the trustee insists is required.