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Swindle v. Remington

Supreme Court of Alabama

March 8, 2019

Sarah S. Swindle et al.
v.
Sheila Hocutt Remington

          Appeal from Montgomery Circuit Court (CV-16-315)

          BOLIN, JUSTICE.

         Sarah S. Swindle, Bill Newton, Young Boozer, Philip Cleveland, Susan Williams Brown, Richard Brown, Joe Ward, Luke Hallmark, Susan Lockridge, Russell Twilley, John R. Whaley, Charlene McCoy, C. Ray Hayes, and Donald L. Large, Jr., in their official capacities as board members of the Public Education Employees' Health Insurance Program ("PEEHIP"), appeal from a summary judgment entered by the Montgomery Circuit Court in favor of Sheila Hocutt Remington, acting personally and as then president of the Alabama Education Association ("the AEA"). Specifically, the members of the PEEHIP Board ("the Board") challenge the circuit court's determination that they violated the Alabama Open Meetings Act, § 36-25A-1 et seq., Ala. Code 1975, and its judgment granting Remington declaratory and injunctive relief.

         I. Facts and Procedural History

         A. Background

         PEEHIP is a self-funded group-health-insurance plan that provides benefits to participating teachers and public-education employees ("the insureds"). The Board is responsible for maintaining the health plan. See Ala. Code 1975, § 16-25A-4. As a self-funded health plan, PEEHIP's annual budget must pay all covered health costs for the insureds during each fiscal year.

         At times relevant to this appeal, the Board conducted biannual meetings, one in the fall and one in the spring.[1]The usual practice for PEEHIP staff members ("staff") during the spring meeting was to present the Board with a proposed annual budget for the upcoming fiscal year, which begins on October 1. Since April 2014, staff has also presented financial reports and updates, including information regarding PEEHIP's projected budget shortfalls, if any, for the following three fiscal years (e.g., in April 2014, these were fiscal years 2015, 2016, and 2017), during the meeting.

         B. The April 2016 Meeting

         At some point during the week before the scheduled spring Board meeting, Swindle, the chair of the Board, along with Diane Scott, chief financial officer for the Retirement Systems of Alabama ("RSA") and PEEHIP, and other PEEHIP officials collectively decided to schedule a training session before the open meeting.

         On April 22, 2016, Don Yancey, a PEEHIP staff member, via Tisha Woodhan, another PEEHIP staff member, sent an e-mail to Board members advising that an "education session" was set for 9:30 a.m. on the morning of the April 27, 2016, Board meeting, which was scheduled for the afternoon. Yancey also advised that "attendance at this education session will be limited to board members and PEEHIP staff only" and that "[i]t was vitally important that we make this educational session as productive as possible and that as many questions as possible be dealt with so that the board meeting can be as short as possible, as there are some board members who need to leave early due to travel schedules."

         According to Scott, on April 27, 2016, staff conducted a closed training session for the Board in the morning, which was followed by a luncheon and then an open meeting in the afternoon. Specifically, Scott stated in her affidavit:

"At 9:30 a.m. on April 27, 2016, prior to the PEEHIP Board's public meeting that afternoon, PEEHIP staff conducted a non-public training session for the PEEHIP Board in the training room of RSA's offices at 201 South Union Street, Montgomery, Alabama 36104. The sole purpose of the training session was for PEEHIP staff members to make educational presentations about various matters including recommended options that Board members needed to understand in order to deliberate them at the afternoon Board meeting. These recommendations were different actions the Board could take to meet a projected $141.5 million deficit in PEEHIP funding for FY 2017, and a projected $220 million deficit in FY 2018. The recommendations included proposed increases in the amounts paid monthly by PEEHIP members for their health insurance. The Board members present at the training session listened to the staff reports and presentations about numerous matters, including PEEHIP's financial situation, projected budget shortfalls, a proposed transition to a Medicare Advantage Prescription Drug Program (projected to save PEEHIP $55 million in FY 2017), and staff recommendations to increase premiums and spousal surcharges, and asked questions as necessary so that they could better understand the matters about which the staff was presenting. These matters were complex and technical and needed careful explanation by staff members to be sure that Board of Control members understood and could deliberate these issues at a public meeting scheduled for later the same day."

         Scott also stated in her affidavit that, at the beginning of the morning session, Leura Canary, PEEHIP's general counsel, instructed the Board on the requirements for complying with the Open Meetings Act as follows:

"Canary explained that the Board members could not 'deliberate' with one another prior to the open meeting and ... that 'deliberation' is defined by the Open Meetings Act as an exchange of information or ideas among a quorum of a governmental body intended to arrive at or influence a decision as to how to vote on a specific matter. She also told the board members that they could question PEEHIP staff about the presentations so that they could fully understand the presentations, but she specifically instructed that they should limit their comments to those questions and that during the training session, at the lunch, or at any time outside the public meeting they should not discuss the presentations or any matter which might come before the Board for a vote."

         Attorneys Canary and Jared Morris remained present during the morning session.

         During the session, several Board members "asked questions as necessary so that [they] could better understand the issues about which the staff was presenting, including the proposed increases in the amount paid monthly by PEEHIP members for their health insurance."[2] According to those Board members, no one engaged in any deliberation during the morning session.

         The recollection of Board members Susan Brown and Ward, however, is markedly different from that of the other Board members. Both Susan Brown and Ward objected to the morning session on the basis that no notice was provided to the public and that the session was closed to the public. They both alleged:

"Before the lunch break and before the public was allowed to enter the meeting, [the Board was] provided information concerning proposed health insurance increases related to PEEHIP. That information was provided in a way that was designed to suggest that the Board should adopt the proposed premium increases. There was deliberation concerning this specific matter, which later in the day was coming up for a vote. Various members shared thoughts and views on the proposed increases, through discussion, questioning and otherwise."

         In addition, Ward stated that, although staff recommended the proposed increases, he advocated that the Board should take the additional funds necessary to cover the shortfall from the trust fund itself.

         At noon, the Board and staff remained in the training room for a luncheon, which included a farewell presentation for Lee Hayes, a retiring PEEHIP official, and for Swindle as a long-term Board member and chair of the Board.

         After the luncheon, the Board and staff moved from the training room to the boardroom of the RSA building. The open Board meeting, which was publicly noticed with the Alabama Secretary of State, began at 1:00 p.m. The meeting was conducted by Swindle and attended by the press and members of the public. During the open meeting, staff presented a financial report concerning PEEHIP's projected budget shortfall of $141.5 million for fiscal year 2017 and $220 million for fiscal year 2018. Staff also presented various proposals to fill the projected shortfall for fiscal year 2017, including a federal program. During the three-hour open meeting, the Board openly deliberated regarding the recommendations. According to the appellants, all the information presented during the morning session, as well as additional information, was presented during the open meeting.[3]

         The Board voted on several matters during the afternoon meeting. They approved staff's recommendation to adopt the Medicare Advantage Prescription Drug Plan, a new retiree health plan. The Board also voted seven to six against a member's proposal to take the maximum allowable amount from the Alabama Retired Education Employees' Health Care Trust to help fill the projected shortfall for fiscal year 2017. In addition, they voted seven to six in favor of increasing spousal surcharges and premiums effective October 1, 2016.

         C. The Lawsuit

         On May 17, 2016, Remington filed the underlying action in her individual capacity and in her capacity as the then president of AEA's board of directors, asserting a violation of the Open Meetings Act and seeking declaratory and injunctive relief, including an order invalidating the premium and surcharge increases. On May 27, 2016, the Board filed a motion to dismiss the action. After the court conducted a hearing on the motion to dismiss, the parties agreed to a briefing schedule on their respective motions for a summary judgment.

         On September 23, 2016, the court signed a proposed order submitted by Remington that directed PEEHIP to hold the April 27, 2016, premium and surcharge increases in escrow until the conclusion of the litigation. In October 2016, the parties filed their motions for a summary judgment.

         D. The December 2016 Open Meeting

         During an open meeting held on December 6, 2016, Ward moved to rescind the Board's April 27, 2016, decision to increase PEEHIP premiums and spousal surcharges effective October 1, 2016. Recognizing that the topic was not on the agenda, the Board first voted in favor of waiving notification of the matter.[4] The Board then voted eight to seven to deny the motion to rescind the April 2016 decision.

         E. The Additional Court Proceedings

         On December 20, 2016, the Board filed a motion to supplement its summary-judgment motion with additional evidentiary materials in support of the new argument that Remington's claims were rendered moot by the action taken at the December 6, 2016, open meeting rejecting the motion to rescind. On December 21, 2016, the circuit court conducted oral argument on the motions for a summary judgment.

         The trial judge, on August 20, 2017, entered a written order granting Remington's request for relief. In its order, the circuit court found that the morning session was part of a "meeting" within the Open Meetings Act and that, therefore, the Board violated §§ 36-25A-1(a) and -3, Ala. Code 1975, by failing to give notice and by holding the morning session in private. Specifically, the circuit court found:

         "1. Defendants violated the Open Meetings Act.

"The Board gathered together by prearrangement for the whole day of April 27. But the public was given notice of, and was allowed to attend, only part of that day's prearranged gathering: the afternoon portion. The public was given no notice of, and was not allowed to attend, the morning portion of the day's gathering.
"The court finds that the morning portion of the gathering either constituted or was part of a 'meeting' within the meaning of the Open Meetings Act; therefore the Defendants violated § 36-25A-l(a) and -3 by failing to give notice and by holding the morning portion of the gathering in private. This is actionable under § 36-25A-9(b)(1) and (2)[, Ala. Code 1975].
"The Act defines 'meeting' in § 36-25A-2(6)(a)[, Ala. Code 1975]. The subparts of that definition that are most pertinent here are the second and third provisions:
"'2. The prearranged gathering of a quorum of a governmental body ... during which the full governmental body ... is authorized, either by law or otherwise, to exercise the powers which it possesses or approve the expenditure of public funds.
"'3. The gathering, whether or not it was prearranged, of a quorum of a governmental body during which the members of the governmental body deliberate specific matters that, at the time of the exchange, the participating members expect to come before the full governmental body at a later date. [In this case in only a matter of hours.]'
"The Act's definition of 'meeting' also contains some exclusions, of prearranged gatherings that are not 'meetings.' Defendants have claimed that their conduct falls within one of those exclusions, § 36-25A-2(6)(b)(1), [Ala. Code 1975, ] as they claim that the morning portion of the gathering was a 'training session.' That subsection provides that the term 'meeting' does not include:
"'1. Occasions when a quorum of a governmental body ... attends social gatherings, conventions, conferences, training programs, press conferences, media events, association meetings and events or gathers for on-site inspections or meetings with applicants for economic incentives or assistance from the governmental body, or otherwise gathers so long as the ... full governmental body does not deliberate specific matters that, at the time of the exchange, the participating members expect to come before the ... full governmental body at a later date.'
"Defendants have also invoked § 36-25A-2(6)(b)(2), [Ala. Code 1975, ] which says that the term 'meeting' does not include '[o]ccasions when a quorum of a subcommittee, committee, or full governmental body gathers, in person or by electronic communication, with state or federal officials for the purpose of reporting or obtaining information or seeking support for issues of importance to the subcommittee, committee, or full governmental body.'
"The Court concludes that the morning gathering constituted, or was part of, a 'meeting' within the meaning of the Act for each of the three following reasons, any of which alone would be sufficient. Therefore, Defendants violated the Act by holding that meeting, beginning at 9:30 a.m., without public notice and without allowing public attendance.
"A. First, the entire day's gathering constituted a meeting, and Defendants violated the Act by holding a portion of that meeting in private without public notice.
"Defendants gathered by prearrangement all day long on April 27. On that day, they could (and did) deliberate and exercise their powers. The primary subject of the morning part of the gathering was the same as the primary subject of the afternoon part of the gathering: i.e., whether to adopt member cost increases recommended by PEEHIP staff. Thus the day's gathering constituted a 'meeting' within the definition of § 36-25A-2(6)(a)(2) and (3)[, Ala. Code 1975].
"Defendants contend that this was not one gathering, but two and that only the second part was a 'meeting.' But that contention does not fit within the language of the Open Meetings Act itself, or with the common understanding of that language. The Act does in fact recognize that a single 'meeting' can have different 'portion[s],' which is a very apt description of what happened here, see, § 36-25A-2(2), -2(7). The Act recognizes that a meeting can be separated into different 'portions' -- and that one 'portion' can take place in private when permitted by the parts of the Act dealing with executive sessions. (The member cost increases at issue here would not have been a proper subject for an executive session, and Defendants implicitly conceded that point.) But simply holding one part of a gathering in a different room, and excluding the public, does not make that part of the gathering a different 'meeting.' The reasonable conclusion is that when a covered entity meets all day on the same topic, there is one meeting rather than two or more.
"B. Second, the morning portion of the gathering, even if taken alone, constituted a 'meeting' under Ala. Code [1975, ] § 36-25A-2(6)(a)(2), and it was neither a 'training program' under § -2(6)(b)(1) nor a meeting with 'state or federal officials' of the sort that is excepted under § -2(6)(b)(2).
"The morning portion of the gathering was a 'meeting' even if taken in isolation because the Board had the authority to exercise its powers there. This definition (under § 36-25A-2(6)(a)(2)) does not ask whether the Board did exercise its powers in the morning session; it asks instead whether it could have. 'By law,' id., there is no limitation on when or how often the PEEHIP Board can meet and exercise the powers which it possesses. On the contrary, the law governing PEEHIP's Board simply gives that Board the authority to exercise the powers which it possesses whenever it meets (so long as there are at least six votes). Ala. Code [1975, ] § 16-25A-2(d). And a body cannot exempt a meeting from the coverage of the Open Meetings Act simply by deciding that it will take no actual votes in that meeting; if the law were that simple, then there would be no need for the detailed definition of 'meeting, and exceptions to it, in the Act.
"The Board argues that the morning session was not a 'meeting' because no deliberation took place in the morning. (The premise is incorrect, as shown in the next subsection, but the Court will accept it for purposes of this present part of the discussion only.) In this, the Board relies on § 36-25A-2(6)(b)(1), and in particular on a broad reading of the phrase 'otherwise gathers' in that subsection, to suggest that no gathering is a 'meeting' unless there is deliberation. But that is a misreading of [-2(6)](b)(1). It ignores two important canons of statutory interpretation: the canon against surplusage, Ex parte Ward, 89 So.3d 720, 727-28 (Ala. 2011), and the canon of ejusdem generis when interpreting phrases such as 'otherwise gathers,' State Superintendent of Educ. v. Ala. Educ. Ass'n, 144 So.3d 265, 274 (Ala. 2013). The phrase 'otherwise gathers' refers to gatherings without deliberation that are materially like the other types of gatherings-without-deliberation specifically listed in that provision. It does not refer to a situation like the one in this case, where the Board met by prearrangement to hear a presentation by its own staff that was specifically designed to advocate for a particular vote on a particular matter to be taken up by the Board on that very day.
"The Board also contends that the morning gathering was not a meeting because it was a 'training program' excluded under § 36-25A-2(6)(b)(1). But the Court does not agree. The ordinary meaning of the phrase 'training program' can readily encompass events in which members of a body are trained as to how to do their jobs -- e.g., how to prepare or read a budget, how to follow rules of parliamentary procedure, or generally how to follow relevant law in employment matters that will come before them. It does not encompass a situation like the one in this case, where the Board met by prearrangement to hear a presentation by its own staff that was specifically designed to advocate for a particular vote on a particular matter to be taken up by the Board on that very day. That is not a 'training program' in normal language usage. Cockrell v. Pruitt, 214 So.3d 324 (Ala. 2016) (words to be given their ordinary meaning).
"The Board also contends that the morning gathering was not a meeting because it was a gathering of the sort excluded under § -2(6)(b)(2): ('Occasions when a quorum of a ... governmental body gathers ... with state or federal officials for the purpose of reporting or obtaining information or seeking support for issues of importance to the ... governmental body'). The ordinary, natural and common meaning (Cockrell, supra) of the phrase 'state or federal officials' in this context does not include a body's meeting with its own subordinates, its staff. The ordinary meaning refers to inter-governmental or inter-departmental meetings, not intra-entity meetings. Had the Legislature meant to exempt meetings with an entity's own staff from the Open Meetings Act, 'state or federal officials' is certainly not the phrase that would have been used. Moreover, reading the [-2(6)](b)(2) exception to include meetings with staff would create a bizarre anomaly: that state-level government bodies can meet in private with their own Staff at will, while local-level government bodies cannot. (After all, the exception is for 'state or federal officials,' not 'local or state or federal officials.') There is no reason to believe that the Legislature intended that anomalous and important disparity. This is all the more reason to read the phrase 'state or federal officials' according to its ordinary meaning, as not including an entity's meeting with its own staff.
"C. Third, the morning portion of the gathering, even if taken alone, constituted a 'meeting' under either section -2(6)(a)(2) or (3), and there was deliberation. Under § 36-25A-2(1), 'deliberation' is an 'exchange of information or ideas among a quorum of members of a ... governmental body intended to arrive at or influence a decision as to how any members of the ... governmental body should vote on a specific matter that, at due time of the exchange, the participating members expect to come before the ... body.' Here, at the very least, there was deliberation in that the Board Chair exchanged information with others, which the Board Chair intended to influence their votes. The Board Chair called the meeting so that the others would be given information advocating their adoption of proposed member cost increases. And, as the evidence shows, other Board members reacted at the very least with questions. The very nature of those questions was, of necessity, to test the reliability of the information and the wisdom of the proposal that was being fed to them; there is no other conceivable purpose. As anyone who has ever attended an oral argument knows, any question conveys information too: information about what the questioner believes to be the weak spots in the argument, or information about what more persuasion the questioner would need in order to accept the argument. All of this is deliberation, and therefore again the morning session (even if standing alone) was a meeting that should have been open to the public.
"2. Declaratory and injunctive relief are appropriate.
"As to appropriate relief, the court begins with a declaration (as authorized by Ala. Code [1975, ] § 36-25A-9(e)) that Defendants violated the Act by not giving public notice of the 9:30 am gathering, and by excluding the public from that gathering.
"The Court also finds it appropriate to issue injunctive relief, as also authorized by section -9(c). This is not simply a matter, as Defendants would have it, of enjoining them to 'follow the law.' It is an injunction to enforce the law in a particular recurring type of scenario, where Defendants have -- until this very moment -- been operating under an incorrect view of their legal obligations. Therefore the Court orders that Defendants and their successors shall give the public notice set forth in the Act and shall allow public attendance whenever a quorum of the Board gathers to hear a presentation by PEEHIP staff on any specific matter that is expected to come before the Board. If such matters are permissible subjects of the Act's provisions on executive sessions, the Board may follow those provisions on executive sessions.
"3. Invalidation of the vote is also appropriate, leading to further relief.
"Finally, the Court decides in its discretion to exercise the authority conferred in § 36-25A-9(f), [Ala. Code 1975, ] to invalidate the challenged actions taken on April 27 (i.e., the vote(s) raising member costs). The statute allows the Court to take such action if suit was promptly filed (it was) and if the violation was not the result of 'mistake, inadvertence, or excusable neglect' (it was not, and Defendants implicitly concede point) and if 'invalidation of the governmental action taken would not unduly prejudice third parties who have changed their position or taken action in good faith reliance upon the challenged action of the governmental body.' There is no evidence in this case that anyone actually changed their position or took action in reliance on the votes in question. Defendants urge that PEEHIP members and vendors rely on the Board to keep PEEHIP financially afloat, and that may be true; but this Court is not in any position to conclude that this is the same as saying that anyone took action or changed their position because of the votes taken on April 27.
"Defendants also urge that this relief is barred by the provision which states that 'any action taken at an open meeting conducted in a manner consistent with this chapter shall not be invalidated because of a violation of this chapter which occurred prior to such meeting.' But that argument depends on the premise that there were multiple separate meetings on April 27. The premise is wrong, as has been discussed above. There was one meeting (a day-long gathering, both morning and afternoon, both primarily focused on the same question of whether to increase member costs), though that meeting was broken up into different 'portion[s]' to use the Act's terminology. As discussed above, the full-day meeting was not conducted in a manner consistent with the Open Meetings Act, as the public was givennotice of only part of it and was allowed to attend only part of it. Moreover, the actions taken by the Defendants evidence an intention to violate the 'spirit' if not the letter of the law. The position advanced by the Defendants would render the Open Meetings Act meaningless and nullify the legislative protection intended for the public.
"Finally, Defendants rely on the fact that at a subsequent meeting there was a failed motion to rescind the increased member costs. But the Court concludes that invalidating the challenged April 27 votes is still appropriate. If the failure of that motion is practically nearly equivalent to a ratification of the April 27 vote -- as Defendants urge -- then Defendants will be able to hold another vote promptly, and will be able to affirmatively adopt the member cost increases so long as they follow the Open Meetings Act and any other applicable law. Such an affirmative vote would remove any question about whether a failure of a motion to rescind is exactly the same as a ratification.
"It is Ordered, Adjudged, and Decreed that the actions of the Defendants taken on April 27, 2016, are invalidated as a violation of the Alabama Open Meetings Act, Section 36-25A-1 et seq., Code of Alabama 1975, as amended. Meanwhile, the amounts now held in escrow must be distributed by the Defendants back to the PEEHIP members who contributed those amounts."

         On August 24, 2017, the Board filed a notice of appeal. On September 8, 2017, this Court granted a stay of the summary judgment pending appeal.

         F. The March 2018 Open Meeting

         During the pendency of this appeal, the Board conducted an additional open meeting. On March 6, 2018, the Board voted to approve a new premium structure that eliminated spousal surcharges for participants and reduced the total monthly costs for participants with a covered spouse and no other covered dependents effective May 1, 2018.[5]

         II. Standard of Review

         In Pittman v. United Toll Systems, LLC, 882 So.2d 842 (Ala. 2003), this Court set forth the standard of review applicable to summary judgment:

"This Court's review of a summary judgment is de novo.
"'In reviewing the disposition of a motion for summary judgment, "we utilize the same standard as the trial court in determining whether the evidence before [it] made out a genuine issue of material fact," Bussey v. John Deere Co., 531 So.2d 860, 862 (Ala. 1988), and whether the movant was "entitled to a judgment as a matter of law." Wright v. Wright, 654 So.2d 542 (Ala. 1995); Rule 56(c), Ala. R. Civ. P. When the movant makes a prima facie showing that there is no genuine issue of material fact, the burden shifts to the nonmovant to present substantial evidence creating such an issue. Bass v. SouthTrust Bank of Baldwin County, 538 So.2d 794, 797-98 (Ala. 1989). Evidence is "substantial" if it is of "such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." Wright, 654 So.2d at 543 (quoting West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala. 1989)). Our review is further subject to the caveat that this Court must review the record in a light most favorable to the nonmovant and must resolve all reasonable ...

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