FROM THE ST. FRANCIS COUNTY CIRCUIT COURT, NO.
62-CV-12-253-2. HONORABLE RICHARD L. PROCTOR, JUDGE.
APPELLANT: AMY TOTTEN BRAZIL.
APPELLEE: LAURA MACK GILSON; HEARTSILL RAGON; AARON MARSHALL
HEFFINGTON; SHAWN GARRICK CHILDS; JOHN WINFRED WALKER.
J. GLADWIN, Chief Judge. VIRDEN and GRUBER, JJ., agree.
J. GLADWIN, Chief Judge.
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.
Procedural History and Statement of Facts
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
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
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
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
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 . . . ...