Police Pensions Protected (For Now)

by Timothy Talbot

California’s First Appellate District has issued a published opinion in the legal battle between the Alameda County Deputy Sheriffs’ Association and the Alameda County Employees’ Retirement Association.
Bottom line? The decision recognizes and protects promised pension benefits for long term public employees in Alameda, Contra Costa and Merced counties.

The Alameda decision is a significant victory for public employees of the three county retirement systems and for public employee pension rights in California, noted Timothy Talbot, a partner with the law firm Rains Lucia Stern St. Phalle & Silver.

Talbot argued the case in court and helped secure the victory. “This decision turns the pension debate back to rational discussions about the law and the compensation promised to public employees in exchange for their public service rather than overtly political grandstanding and hyperbole surrounding public employee compensation.”

The case involved a challenge to certain provisions of the Public Employees’ Pension Reform Act of 2013 (“PEPRA”) made applicable to “legacy” employees who were hired prior to the enactment of PEPRA.

After PEPRA became operative, the retirement systems in Alameda, Contra Costa and Merced counties implemented PEPRA’s exclusion of certain pay items from the calculation of pension benefits for both new and legacy employees.
The legacy employees, however, were promised pension benefits calculated on the inclusion of the pay items before PEPRA sought to eliminate them.

The Contra Costa Deputy Sheriffs’ Association (“CCCDSA”) was the first public employee association in California to file a lawsuit seeking to prevent the exclusion of these pay items from the pension calculations of legacy employees.
The Sheriffs Association asserted that the promised pension benefits were constitutionally protected and could only be modified in accordance with the “California Rule.”

Other public employee associations later filed suit in other jurisdictions, including Alameda, Marin and Merced counties. The cases in Alameda, Contra Costa and Merced were subsequently consolidated in Contra Costa County Superior Court under the lawsuit initiated by CCCDSA.

“The original lawsuit against the County of Contra Costa was filed to protect current employees from the loss of promised pension benefits that were earned and paid for by the public employers and the public employees,” said Talbot.

Ultimately, the trial court in Contra Costa County ruled that legacy employees never acquired a “vested” constitutionally protected right to inclusion of the pay items in the calculation of their pension benefits and denied the employees’ claims.

Meanwhile, a similar case filed in Marin County made its way to a different panel of the First Appellate District which rendered a controversial opinion in Marin Assn. of Public Employees v. Marin County Employees Retirement Assn. The Marin decision ignored more than 50 years of established California pension law and held that public employee pension benefits can be impaired without regard for the impact on the public employees. The Marin case is currently pending review by the California Supreme Court.

The Alameda Court of Appeal determined that some of the pay items at issue were vested and protected by the California Rule. However, the Court of Appeal also held that leave cash outs provided at the time of retirement, also known as terminal pay, were not vested. Nonetheless, the Alameda Court of Appeal concluded that principles of equity “tip decidedly in favor” of all legacy employees receiving terminal pay in the calculation of their pension benefits.

“The Alameda Court of Appeal understood the legal and moral significance of the promises made to the impacted employees and landed on the right side of the equation,” according to Talbot.

Finally, and perhaps most importantly for all of California’s public employees, the Alameda Court of Appeal declined to follow the Marin decision.

Timothy Talbot can be reached at (925) 609-1699 or TTalbot@RLSlawyers.com (California Court of Appeal Case Notification for: A141913).