Sonoma County Ass'n of Retired Employees v. Sonoma County
2013 U.S. App. LEXIS 3856
| 9th Cir. | 2013Background
- Association sued Sonoma County alleging breach of vested, perpetual retiree healthcare benefits.
- County had subsidized retiree health benefits since at least 1964; 2008 resolution capped contributions at $500/month with five-year phase-in.
- Association claimed two promises: 1964 promise to pay most costs and 1985 tie agreement aligning retirees with active staff benefits.
- District court dismissed the complaint as insufficient to show an express contract; later amended complaint added MOUs, resolutions, and ordinances.
- California Supreme Court REAOC II held under certain circumstances a county may form implied contractual rights to health benefits; district court’s reasoning changed in light of that decision.
- Court of Appeals remanded for further proceedings consistent with REAOC II, recognizing a potential for implied terms and need for clear legislative basis.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can implied terms vest health benefits in perpetuity? | Association asserts MOUs and conduct create implied terms vesting benefits. | County contends no implied terms without express contract or proper legislative basis. | Remanded; REAOC II allows implied terms under limited circumstances. |
| Must a compensation contract by ordinance or resolution be shown to create implied terms? | Resolutions and MOUs may reflect implied contractual terms vesting benefits. | Legislation requires clear intent to contract; mere policies are insufficient. | Not resolved here; remanded to assess if ordinances/resolutions clearly evince intent to contract. |
| Does the district court have to grant leave to amend in light of REAOC II? | Amendment could state a viable claim under REAOC II. | Amendment would be futile given lack of express terms. | Remand to consider amended pleadings; leave to amend not futile in light of REAOC II. |
| Was there waiver or lack of preservation of implied-term arguments on appeal? | Argument preserved; not waived by earlier positions. | Issues not properly raised in district court and controlled by Harris. | No waiver; REAOC II analysis governs on remand. |
Key Cases Cited
- Retired Employees Ass’n of Orange Cnty., Inc. v. County of Orange (REAOC II), 52 Cal.4th 1171 (Cal. 2011) (implied terms in public employment contracts; vested rights possible under specified conditions)
- Glendale City Emps. Ass’n v. City of Glendale, 15 Cal.3d 328 (Cal. 1975) (labor-management agreements are binding contracts)
- Cal. Teachers Ass’n v. Cory, 155 Cal.App.3d 494 (Cal. Ct. App. 1984) (circumstances showing consideration can create contract from legislation)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (pleading standard requires plausible claims, not mere conclusions)
- Harris v. County of Orange, 682 F.3d 1126 (9th Cir. 2012) (distinguishes implied-term claims from express-term disputes; remand for REAOC II context)