58 Cal.App.5th 671
Cal. Ct. App.2020Background
- Tod Hipsher was an LAFD firefighter (1983–2013) who for ~12 years ran an offshore illegal gambling operation; he pled guilty to a federal felony in 2014 after retiring.
- Under PEPRA § 7522.72 (effective Jan. 1, 2013) LACERA reduced Hipsher’s vested pension benefits (from ≈$82k to ≈$35k) retroactive to the period the felonious conduct began and returned his contributions for that period.
- Hipsher sued, claiming § 7522.72 violated the California Constitution’s contract clause and the ex post facto clause, and that he was denied due process when his pension was reduced.
- The trial court ordered LACERA to provide additional due process before effecting forfeiture but otherwise upheld the statute; this court initially upheld § 7522.72’s constitutionality and required due process by the retirement system.
- The California Supreme Court vacated and remanded for reconsideration in light of Alameda County (9 Cal.5th 1032); on remand the Court of Appeal again upheld § 7522.72, rejected the need to provide a comparable offsetting advantage, found no ex post facto violation, and ruled LACERA (not the County) must provide adequate administrative due process.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 7522.72 unconstitutionally impairs vested pension rights (contract clause) | Hipsher: statute materially impairs vested benefits and requires a comparable new advantage to offset the loss | LACERA/County: statute serves legitimate public purpose (protecting pension integrity); no offset required | Upheld § 7522.72 under Alameda County multi-step test; no comparable advantage required because that would undermine the statute’s purpose |
| Whether a felony-forfeiture provision can be treated as a "condition subsequent" allowing reduction of vested benefits | Hipsher: condition-subsequent theory is inapplicable here | Defendants: legacy employees’ rights may be modified where job-related felonies show unfaithful service | Court reaffirms that a condition subsequent (unfaithful job-related felony) can justify partial forfeiture of pension rights |
| Whether § 7522.72 is an ex post facto punishment when applied to pre-PEPRA conduct | Hipsher: statute is punitive in effect and therefore ex post facto as applied | Defendants: statute is civil and remedial, aimed at preserving pension integrity; any punitive character is insufficiently clear | Statute is civil and not punitive for ex post facto purposes under Mendoza‑Martinez factors; no ex post facto violation |
| Whether Hipsher was denied due process and which agency must afford it | Hipsher: he received no adequate notice/opportunity to contest job‑relatedness; County/LACERA should provide process | County: no further process required or County must do it; LACERA: ministerial duty to act on employer report | Court holds Hipsher was prejudicially denied due process; LACERA (the retirement board) must provide notice and an opportunity to be heard before forfeiture, using its administrative procedures |
Key Cases Cited
- Alameda County Deputy Sheriff's Assn. v. Alameda County Employees' Retirement Assn., 9 Cal.5th 1032 (Cal. 2020) (articulated multi‑step contract‑clause test for pension modifications)
- Cal Fire Local 2881 v. California Public Employees' Retirement System, 6 Cal.5th 965 (Cal. 2019) (upheld PEPRA pension reforms against contract‑clause challenges)
- Allen v. City of Long Beach, 45 Cal.2d 128 (Cal. 1955) (California Rule allowing reasonable pension modifications to preserve system integrity)
- Kern v. City of Long Beach, 29 Cal.2d 848 (Cal. 1947) (recognizes condition subsequent doctrine for forfeiture of pension rights for unfaithful service)
- Danser v. Public Employees' Retirement System, 240 Cal.App.4th 885 (Cal. Ct. App. 2015) (retirement board has authority to determine members’ benefit eligibility and interpret retirement law)
- Board of Regents of State Colleges v. Roth, 408 U.S. 564 (U.S. 1972) (property‑interest protection under the Fourteenth Amendment)
- Kennedy v. Mendoza‑Martinez, 372 U.S. 144 (U.S. 1963) (factors to decide whether a civil sanction is punitive)
- Collins v. Youngblood, 497 U.S. 37 (U.S. 1990) (ex post facto bars retroactive criminal punishment)