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FOR IMMEDIATE NEWS RELEASE NEWS RELEASE # 27 FROM: CLERK OF SUPREME COURT OF LOUISIANA

The Opinions handed down on the 12th day of April, 2005 , are as follows:

BY KIMBALL, J. :

2004-C- 2482

DR. JUDITH FISHBEIN, M.D. v. STATE OF LOUISIANA THROUGH LOUISIANA STATE UNIVERSITY HEALTH SCIENCES CENTER AND TEACHERS' RETIREMENT SYSTEM OF LOUISIANA (Parish of E. Baton Rouge) For the reasons assigned, we conclude that plaintiff's claim is one for the recovery of compensation for services rendered and, as such, is subject to the three-year prescriptive period provided in La. C.C.art. 3494. Thus, when plaintiff filed suit on August 7, 2000, any claims she had for recovery of compensation for services rendered prior to August 7, 1997, were prescribed; however, her suit was timely filed with respect to those claims for recovery of compensation for services rendered that accrued between August 7, 1997, and July 1, 1998. As to those claims that have not prescribed, we find that plaintiff's supplemental salary was included in the definition of earnable compensation. Plaintiff's request for injunctive relief is remanded to the district court for further proceedings and with instructions. The judgment of the court of appeal is therefore affirmed in part and reversed in part. AFFIRMED IN PART, REVERSED IN PART, AND REMANDED. VICTORY, J., concurs with reasons.

04/12/2005

SUPREME COURT OF LOUISIANA
No. 2004-C-2482 DR. JUDITH FISHBEIN, M.D. v. STATE OF LOUISIANA THROUGH LOUISIANA STATE UNIVERSITY HEALTH SCIENCES CENTER AND TEACHERS' RETIREMENT SYSTEM OF LOUISIANA

ON WRIT OF CERTIORARI TO THE COURT OF APPEAL, FIRST CIRCUIT, PARISH OF EAST BATON ROUGE

KIMBALL, Justice

Plaintiff, a member of the Teachers' Retirement System of Louisiana ("TRSL"), filed suit shortly before she retired against her employer and TRSL seeking a declaration that "all earnable compensation" paid to her "be found to be part of her average monthly compensation for purposes of retirement and DROP benefits along with the average base salary." Plaintiff also sought, subsequent to the requested declaration, the issuance of a writ of mandamus ordering that her average earnable compensation be certified to include both her base salary and her supplemental salary, that her employer fund her retirement account in the appropriate amount, and that her employer authorize the correction and payment of any benefits due and owing based on her total salary. Defendants responded with an exception of prescription. For the reasons that follow, we conclude that plaintiff's suit is one for the recovery of compensation for services rendered and, as such, is subject to the three-year prescriptive period provided in La. C.C. art. 3494. Thus, when plaintiff
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filed suit on August 7, 2000, any claims she had for recovery of compensation for services rendered prior to August 7, 1997, were prescribed. Her suit, however, was timely filed with respect to those claims for recovery of compensation for services rendered that accrued between August 7, 1997, and July 1, 1998. As to those claims that have not prescribed, we find that plaintiff's supplemental salary should have been included as part of her earnable compensation as defined in La. R.S. 11:701(10). Facts and Procedural History Dr. Judith Fishbein ("plaintiff"), a pediatrician specializing in neonatology, was employed by the Louisiana State University Health Sciences Center or its predecessor ("LSU") from 1970 until she retired on April 15, 2001. At the beginning of her career at LSU, plaintiff was an instructor of pediatrics at Earl K. Long Medical Center in Baton Rouge. Plaintiff explained at trial that as a member of the pediatric

department, she had "major teaching responsibilities for medical students, residents, and others." She further described her duties as being "responsible for the care of patients that were at Earl K. Long Hospital, and also [having] some administrative responsibilities which changed over the years." Plaintiff served as chief of pediatrics for approximately nine years. During her employment with LSU, plaintiff was an untenured faculty member and, as such, could have been terminated without cause upon one year's notice by LSU. Plaintiff earned a salary for the work she performed for LSU that was not contingent on the number of patients she treated. Initially, plaintiff's gross salary consisted solely of a "base salary." Beginning in 1980, plaintiff began receiving a "supplemental salary" in addition to her base salary. The combination of her base salary and her supplemental salary comprised her total gross salary, with her supplemental salary equaling more than fifty percent of her gross salary in some

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years. In 1979, plaintiff became a member of TRSL. It is undisputed that LSU did not report plaintiff's total gross salary to TRSL, but reported only her base salary. Similarly, both LSU and plaintiff made retirement contributions to TRSL based only upon plaintiff's base salary. At no time was plaintiff's supplemental salary subjected to employee withholdings for retirement purposes or to the employer's share of retirement contributions on her behalf.1 Plaintiff received annual statements from TRSL that showed her retirement contributions were being made only on her base salary and not on her supplemental salary. Plaintiff testified that at least by 1989 she knew that only her base salary was being used as the basis for LSU retirement contributions made to TRSL on her behalf. When plaintiff questioned LSU personnel about this practice, she was told, "This is how we do it." Plaintiff testified that she never raised the issue with TRSL because she was told it was an LSU issue. On July 1, 1998, plaintiff entered the Deferred Retirement Option Plan ("DROP"), at which time her average compensation and creditable service were fixed. TRSL did not consider plaintiff's supplemental salary in fixing her benefits. On May 8, 2000, plaintiff's attorneys sent a letter to LSU and TRSL requesting that plaintiff's retirement benefit be adjusted to reflect her total compensation, including her supplemental salary. On August 7, 2000, plaintiff filed a petition against LSU and TRSL for declaratory judgment and writ of mandamus, requesting a declaration that "all earnable compensation" paid to her "be found to be part of her average monthly
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Plaintiff's total gross salary was reported on her annual W-2s, so her supplemental salary was subject to withholdings for federal and state income taxation purposes. Social security taxes were apparently not withheld from any portion of her salary.
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compensation for purposes of retirement and DROP benefits along with the average base salary." Plaintiff then sought, subsequent to the requested declaration, the issuance of a writ of mandamus ordering that her average earnable compensation be certified to include both her base salary and her supplemental salary, that LSU fund her retirement account in the appropriate amount, and that LSU authorize the correction and payment of any benefits due and owing based on her total salary. Defendants answered the petition, generally denying the requested relief and pleading the dilatory exception of prematurity, the declinatory exception of lack of subject matter jurisdiction, and the peremptory exceptions of prescription, no cause of action, and no right of action. Defendants further pleaded the affirmative defense of estoppel. These exceptions were not disposed of prior to trial and were deferred to the merits of the case. Prior to trial, the parties entered into several stipulations, including the following: (1) LSU has never reported to TRSL the total gross salary of Judith Fishbein, M.D.; rather, LSU has only reported to TRSL what LSU characterized as Dr. Fishbein's "base pay" or "base salary;" (2) LSU did not deduct the employee contribution for retirement on the total gross salary of Judith Fishbein, M.D., but rather only deducted and paid to TRSL the employee contribution on what it characterized as Dr. Fishbein's "base pay" or "base salary;" (3) LSU never paid TRSL the required employer's share on the total gross salary of Judith Fishbein, M.D., but only paid the employer's share on what it characterized as Dr. Fishbein's "base pay" or "base salary;" (4) LSU paid Judith Fishbein, M.D., an average of $17,916.05 per month during her highest thirty-six month period prior to her entering DROP; (5) Judith Fishbein, M.D., received only one pay check per month as an employee of LSU, which represented compensation for the work she performed as an

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employee of LSU. After trial on the merits, the district court rendered judgment dismissing plaintiff's suit with prejudice and at her costs based on grounds that her claim had prescribed. In its written reasons for judgment, the district court stated: Applying the law to the facts of this case, the court rules as follows: This court rules that the equitable doctrine of estoppel by laches is applicable to the claim of Dr. Fishbein. The court rules that under the doctrine of laches, she had a claim for those wages for a three year period preceding July 1, 1998, when she entered the DROP program. (La. C.C. art. 3494). Since Dr. Fishbein was participating in the DROP program administered by the Teachers' Retirement System, LSU no longer had an obligation to contribute to the retirement system on her behalf. (La. R.S. 11:787B). Consequently, her claim has prescribed because suit was not filed timely. Plaintiff appealed the adverse judgment, and the court of appeal reversed, finding that her claim had not prescribed and that her supplemental salary should be included in the calculation of her retirement benefits. Fishbein v. State ex rel. Louisiana State Univ. Health Sciences Ctr., 03-0765 (La. App. 1 Cir. 9/8/04), 887 So.2d 56. Specifically, although the court of appeal recognized that plaintiff is not seeking to recover retirement benefits, it characterized her claim as one for declaratory relief regarding the calculation of her retirement benefits. It found that neither the one-year prescriptive period provided by La. C.C. art. 3492 nor the threeyear prescriptive period provided by La. C.C. art. 3494 governed plaintiff's claim. Consequently, it determined that plaintiff's action was subject to the ten-year prescriptive period provided by La. C.C. art. 3499, which began to run when plaintiff became eligible to retire. The court of appeal concluded that plaintiff became eligible to retire when she had twenty years of creditable teaching service, or August 15, 1990. It found that because she filed suit on August 7, 2000, or within ten years of this date, her claim was not prescribed. Additionally, the court of appeal refused to
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apply the doctrine of estoppel by laches to bar plaintiff's claims because a prescriptive period was provided by positive written law and it was unnecessary to resort to equity to determine whether plaintiff should be allowed to pursue her claim. Next the court of appeal determined that plaintiff's supplemental salary constituted "earnable compensation" as defined by La. R.S. 11:701(10) such that it should be included in her retirement benefits calculation. Finally, the court of appeal

determined that plaintiff was entitled to injunctive relief. This court granted certiorari upon LSU's application to consider the peremptory exception of prescription and, if necessary, to determine whether the supplemental salary earned by plaintiff constitutes "earnable compensation" pursuant to La. R.S. 11:701(10). Fishbein v. State ex rel. Louisiana State Univ. Health Sciences Ctr., 04-2482 (La. 12/17/04), 888 So.2d 850. Discussion Prescription The prescriptive period applicable to an action is determined by the character of the action disclosed in the pleadings. Starns v. Emmons, 538 So.2d 275, 277 (La. 1989). In the instant case, plaintiff's petition states that she seeks a declaration "that all earnable compensation paid to Dr. Judith Fishbein, M.D., . . . be found to be part of the average monthly compensation for purposes of retirement and DROP benefits along with the average base salary."2 Generally, the right to seek a declaratory judgment does not itself prescribe. Church Point Wholesale Beverage Co., Inc. v. Tarver, 614 So.2d 697, 708 (La. 1993). However, the nature of the basic underlying

Although plaintiff initially sought such a declaration regarding her earnable compensation for purposes of her DROP benefits, the court of appeal noted that at oral arguments before that court, plaintiff's counsel represented that she "does not seek additional DROP benefits." Accordingly, any issue relating to plaintiff's earnable compensation for purposes of DROP is not before us.
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action determines the appropriate prescriptive period. Giroir v. Dumesnil, 248 La. 1037, 1058, 184 So.2d 1, 8 (1966). See also Montiville v. City of Westwego, 592 So.2d 390 (La. 1992). This is because prescription is an issue in terms of a plaintiff's standing to seek the declaratory judgment. Church Point Wholesale Beverage Co., Inc., 614 So.2d at 708. In the instant case, the basic action involves an allegation of LSU's failure to properly certify plaintiff's total earnable compensation and its failure to cause a monthly remittance in the correct amount of its share of retirement contributions on plaintiff's behalf. While this action is ultimately determinative of plaintiff's

retirement benefits, it is not in fact a claim for retirement benefits. Construing plaintiff's petition as a whole, her primary claim is essentially one for the proper reporting by LSU to TRSL of her total earnable compensation, including her supplemental salary, which would result in a higher level of contributions to TRSL on her behalf and, consequently, in a higher benefit at retirement. There is no dispute that plaintiff's retirement benefit has been correctly computed based upon her base salary as reported to TRSL by LSU. The dispute concerns whether her supplemental salary should have been reported to TRSL along with her base salary as earnable compensation and whether LSU should have made employer contributions to TRSL based upon plaintiff's supplemental salary. This court has recognized that retirement contributions represent "an increasingly important part of an employee's compensation for his services." Andrepont v. Lake Charles Harbor & Terminal Dist., 602 So.2d 704, 708 (La. 1992). Because of this, many courts have found in a variety of factual contexts that retirement benefits are deferred compensation for services. Id. In T.L. James & Co., Inc. v. Montgomery, 332 So.2d 834, 851 (La. 1975) (on rehearing), this court

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concluded that an employer's contribution into a retirement-type plan "is not a purely gratuitous act, but it is in the nature of additional remuneration to the employee who meets the conditions of the plan. The employer expects and receives something in return for his contribution, while the employee, in complying, earns the reward. The credits to these plans, when made, are in the nature of compensation (although deferred until contractually payable)." Relying on this portion of T.L. James, the Andrepont court concluded there is ample support for determining that contributions to retirement plans are among the emoluments of employment and can be considered deferred compensation. Andrepont, 602 So.2d at 708. We reaffirm our previous statements that contributions to retirement plans are a form of deferred compensation. Consequently, we find that plaintiff's claim is one for compensation for services rendered.3 The applicable prescriptive period, then, is found in La. C.C. art. 3494, which provides that an action for the recovery of compensation for services rendered is subject to a liberative prescription of three years.4

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Plaintiff, in fact, does not dispute this assessment of her claim. Although agreeing with the result reached by the court of appeal, plaintiff states the following in her brief to this court: Counsel suggests that although Judge Kuhn's analysis is supported in the law, reached the proper result and thus should be affirmed, there exists an equally valid argument that Dr. Fishbein's claim is one for compensation for services rendered as that phrase is used in Civil Code Article 3494. . . . Clearly, Dr. Fishbein's claim is one for compensation for services rendered. She does seek to recover monetary funds from LSU albeit these funds would be paid to TRSL. We submit that her retirement benefits are a form of deferred compensation.

This conclusion is further supported by La. R.S. 11:888, which provides the method by which corrections to a contributions report that erroneously reports the earnings or salary of a member are made. The statute prescribes two different methods of correcting the error depending upon whether more or less than three years have elapsed since the date the contributions report was due.
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The court of appeal rejected the argument that plaintiff's action was one for the recovery of compensation of services rendered and therefore held that La. C.C. art. 3494 was not applicable to plaintiff's claim. Instead, the court of appeal concluded that La. C.C. art. 3499, which provides that a personal action is subject to a ten-year liberative prescriptive period unless otherwise provided by legislation, applied to plaintiff's claim, perhaps partly due to the fact that La. Const. art. 10,

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