Gov. Matt Bevin asked a judge that he recently called "an incompetent hack" to step aside in Attorney General Andy Beshear's legal challenge of Kentucky's new public pension law, but the judge said late Thursday he's staying put.
In a four-page letter hand-delivered Wednesday to Franklin Circuit Judge Phillip J. Shepherd, Bevin Administration General Counsel Steve Pitt asked the judge to "consider whether grounds exist requiring your Honor to disqualify himself" from the case.
Pitt told the judge he may have a financial interest that could be affected by the outcome of the proceedings, "thus giving rise to a reasonable concern as to perceptions about the court's impartiality."
Pitt said Shepherd's membership in the state judicial retirement plan "could directly affect your personal state pension rights in the future."
All judges would not have that conflict, Pitt argued. Unlike Shepherd, judges who took office after Jan. 1, 2014, don't have a traditional defined-benefits pension and thus aren't affected by the outcome of the lawsuit, Pitt said.
Late Thursday afternoon, Shepherd created a motion to address the letter and filed a nine-page order denying the request to recuse himself from the pension case.
Shepherd's order said there are no changes to the judicial retirement system at issue in the lawsuit.
"It would stretch the concept of conflict of interest beyond any reasonable recognition to hold that a court cannot preside over a case involving interpretation of any legal rule that could at some unknown future date be applied by the legislature to members of the judiciary," said Shepherd.
He said the court has no vested interest in any particular interpretation of the state's "inviolable contract" with public pension recipients and no concerns about future legislative action regarding judicial pensions because the state Constitution protects the General Assembly from cutting judicial pay.
Shepherd said he is mindful of the Code of Judicial Conduct requirement to recuse when personal bias, prejudice or appearance of bias could give rise to a lack of public confidence in the fairness of the court's ruling.
"By the same token, the court has an equally compelling duty to hear and decide all assigned cases," he said.
Shepherd also noted that if Bevin's "theory of recusal" were accepted, all seven Kentucky Supreme Court justices would have to recuse themselves in this case since their services pre-date Jan. 1, 2014.
He added that if two or more justices recuse themselves, the governor would get to appoint justices to hear the case.
"The potential for the appearance of conflict asserted by the governor here is remote and speculative, but there is a certainty that the credibility of the judicial system would be severely damaged if the governor would be empowered to appoint the entire membership of the Kentucky Supreme Court that would hear and decide this case in which the governor is a litigant."
Records in the state Judicial Retirement Plan show that all but one of the 21 appellate judges, including all seven on the Kentucky Supreme Court, were in the retirement plan before Jan. 1, 2014, and would not meet the standard Pitt set for Shepherd.
Pitt declined to comment on whether appellate judges could meet Bevin's standard to hear the pension suit. "We're taking one step at a time on this and now we're in circuit court," he said.
Pitt's letter to Shepherd was obtained through an Open Records request with the state attorney general's office. Requests also were made to other parties in the lawsuit.
Pitt told the judge that the request for him to disqualify himself "truly gives us no pleasure," but "we feel we have no alternative but to raise the issue."
Bevin's attorney said he sent the request to the judge in a letter instead of making a motion in court "to give him the opportunity to consider it outside the court."
Shepherd is scheduled to hear oral arguments in the case on June 7.
Bevin spokeswoman Elizabeth Kuhn said Shepherd, "without any briefing or hearing, issued a hasty opinion refusing to recuse. His opinion, which proves why recusal in this matter is necessary, makes a mockery of the judicial system."
Attorney General Andy Beshear said the governor's request "is yet another attempt by Gov. Bevin to prevent and delay justice for our teachers, police officers, firefighters, social workers and other public employees whose constitutional rights have been violated by the governor and state lawmakers."
Beshear has filed a slew of lawsuits against Bevin in the last few years, but probably none more watched than his challenge of the public pension law.
Beshear has already won several minor victories in court on his lawsuit against the pension law, including one this week that allowed two state employee groups to join his effort.
Beshear has said if the law is not stopped, there will be "mass retirements" of teachers, police and other government workers.
Bevin has accused Beshear of being "political" as he blamed Beshear's father, former Gov. Steve Beshear, of not adequately funding the state's pension systems. They have an unfunded liability of more than $40 billion.
Shepherd has put the pension lawsuit, filed April 11, on a fast track. He is aware that the law goes into effect July 14 and has said he will try to make a ruling as soon as he can.
The losing party in Shepherd's decision can appeal to the Kentucky Court of Appeals, or perhaps directly to the Kentucky Supreme Court to expedite the issue. Both parties have said they expect the case will go to the Supreme Court.
A Supreme Court decision is expected before the November 2019 general election, which features the race for governor. Both Bevin, a Republican, and Beshear, a Democrat, are mentioned as possible candidates for governor.
The lawsuit also lists Senate President Robert Stivers and House Speaker Pro Tem David Osborne among the defendants.
In previous hearings on the lawsuit, Beshear has won rulings that allowed him to remain as a plaintiff and prevented Bevin's attorneys from deposing representative of the three plaintiffs — Beshear's office, the Kentucky Education Association and the Kentucky Fraternal Order of Police.
Bevin got so upset with the Beshear victories that he called Shepherd "an incompetent hack" in a radio interview.
With no objection from Bevin, Franklin Circuit Judge Thomas Wingate accepted a motion Wednesday to allow the Kentucky Association of Transportation Engineers and Kentucky Transportation Employee Association to file a friend-of-the-court brief in support of Beshear's lawsuit.
Frankfort attorney William E. Johnson represents the transportation engineers and employees associations. He said the groups, which represent about 2,300 employees, are "very concerned about their pensions and want to make sure their voices are heard in court."
"It is doubtful that we will ever see a more arbitrary action than the acts of those who pushed" the measure, Johnson said in his motion.
The lawsuit claims the law, approved in the final days of this year's legislative session, violated the inviolable contract the state made with public employees to provide them with promised pension benefits.
The law places teachers hired after Jan. 1, 2019, in a hybrid cash-balance plan, which is similar to a 401(k), rather than a traditional pension, and the law requires those teachers to work longer before becoming eligible for retirement. State employees hired between 2003 and 2008 also are required to pay 1 percent more for health care in retirement.
Beshear also claims the legislature ignored constitutional and statutory provisions when passing the law. He said lawmakers failed to provide an actuarial analysis of the bill, failed to give the bill three readings on three different days in the House, and failed to have the bill signed by the elected House speaker.
Beshear argues that the elected House speaker was Jeff Hoover, who stepped down as speaker after allegations of sexual harassment surfaced, and not Osborne, the House speaker pro tempore who presided over the House this year and signed the bills.