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Palestine-Wheatley School District v. Hopkins

Court of Appeals of Arkansas, Division IV

February 24, 2016

PALESTINE-WHEATLEY SCHOOL DISTRICT, APPELLANT
v.
GEORGE HOPKINS, EXECUTIVE DIRECTOR; ARKANSAS TEACHER RETIREMENT SYSTEM; and BOBBIE FINGERS, APPELLEES

          APPEAL FROM THE ST. FRANCIS COUNTY CIRCUIT COURT, NO. 62-CV-12-253-2. HONORABLE RICHARD L. PROCTOR, JUDGE.

         For APPELLANT: AMY TOTTEN BRAZIL.

         For APPELLEE: LAURA MACK GILSON; HEARTSILL RAGON; AARON MARSHALL HEFFINGTON; SHAWN GARRICK CHILDS; JOHN WINFRED WALKER.

         ROBERT J. GLADWIN, Chief Judge. VIRDEN and GRUBER, JJ., agree.

          OPINION

          ROBERT J. GLADWIN, Chief Judge.

         The Palestine-Wheatley School District (District) appeals the January 20, 2015 order of the St. Francis County Circuit Court affirming the decision of the Arkansas Board of Trustees (Board) of the Arkansas Teacher Retirement System (ATRS). The District argues that ATRS acted without substantial evidence, abused its discretion, and acted in an arbitrary and capricious manner in (1) finding that the District was responsible for paying the employer contribution to ATRS on settlement proceeds received by appellee Bobbie Fingers and (2) failing to follow the calculation of damages designated in the settlement as back pay. We affirm.

         I. Procedural History and Statement of Facts

         Fingers was a member of ATRS, having been employed by the District as a teacher and a principal. She filed suit against the District in the United States District Court, Eastern District of Arkansas, alleging employment discrimination after she had been passed over for superintendent on three separate occasions. The federal magistrate judge mediated a settlement between the parties, and the following colloquy occurred:

The Court: The settlement is that [the District] will pay to [Fingers] the sum of $275,000, and that is all inclusive of all her claims, known and unknown, whether they're ripe or not ripe, every claim that she could have had up until this date, and it includes attorneys' fees and costs and everything associated with this lawsuit as well.
. . . .
The two attorneys--or Mr. Walker and Mr. Brazil will do the allocation of how the $275,000 is allocated. Some of it will of course be allocated to back pay, and [the District] will pay employment taxes on that; otherwise the tax liability will be on [Fingers] and her attorney for however they pay their 1099 taxes or whatever.
So in other words, the total liability for the school--or total exposure for [the District] is limited to $275,000 plus the payroll taxes on the portion that is designated W-2.
Mr. Walker, have I accurately stated the terms?
Mr. Walker: I think you have, Your Honor, with the understanding that Mr. Brazil and I, recognizing that an amount--a portion of this amount is for back pay, will seek to have her made whole, to the extent that that is possible, and the attorneys would be responsible for trying to effect that with the Teacher Retirement board. But any payments that are related to that circumstance will come out of the $275,000.

         Fingers signed a release (Release) that recounted the terms of the settlement as set forth above. The Release specifically provided as follows:

I further acknowledge and agree that of the net amount paid to me $70,000.00 for 1099 and the balance will be due after retirement and fees would be 10-40 taxable income for which the district is hereby authorized to make appropriate deductions to be forwarded to the Internal Revenue Service on my behalf.

          Following the settlement conference and execution of the Release, ATRS notified the District by letter dated August 8, 2011, that it owed employer contributions based on the settlement in the amount of $26,610.18, plus interest, based on all payments made to Fingers, except attorney's fees. The District filed an appeal with ATRS, which resulted in a ruling by the executive director issued on November 23, 2011, that the District was liable for the contributions. The executive director of ATRS found in pertinent part as follows:

First, no party disputes that a 14% contribution is owed on the settlement amount that was ultimately paid for the benefit of Bobbie A. Fingers . . . ...

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