CAL FIRE LOCAL 2881 et al., Plaintiffs and Appellants, v. CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM et al., Defendants and Respondents; THE STATE OF CALIFORNIA, Intervener and Respondent.
No. A142793
First Dist., Div. Three
Dec. 30, 2016
115
THE SUPREME COURT OF CALIFORNIA GRANTED REVIEW IN THIS MATTER (see Cal. Rules of Court, rules 8.1105(e)(1)(B), 8.1115(e)) April 12, 2017, S239958.
Carroll, Burdick & McDonough, Gary M. Messing, Gregg McLean Adam and Jason H. Jasmine for Plaintiffs and Appellants.
Silver, Hadden, Silver and Levine, Stephen H. Silver and Jacob A. Kalinski for Ventura County Professional Fire Fighters Association as Amicus Curiae on behalf of Plaintiffs and Appellants.
Mastagni Holstedt, David E. Mastagni, Isaac S. Stevens, Jeffrey R.A. Edwards and Erich A. Knorr for Lake County Correctional Officers’ Association; Mendocino County Deputy Sheriffs’ Association; Merced City Firefighters, International Association of Firefighters, Local 1479, AFL-CIO; Napa City Firefighters Association, International Association of Fire Fighters, Local
Leonard Carder, Peter W. Saltzman and Kate Hallward for IFPTE Local 21, et al. as Amici Curiae on behalf of Plaintiffs and Appellants.
California Public Employees’ Retirement System, Matthew G. Jacobs and Wesley E. Kennedy for Defendants and Respondents.
Kamala D. Harris, Attorney General, Douglas J. Woods, Assistant Attorney General, Tamar Pachter and Rei R. Onishi, Deputy Attorneys General, and Nelson Ryan Richards for Intervener and Respondent.
OPINION
JENKINS, J.—This is an appeal from the trial court‘s denial of a petition for writ of mandate and injunctive relief filed by plaintiff Cal Fire Local 2881 on behalf of itself and its members. Plaintiffs, professional firefighters employed by the State of California and the union representing them, sought this relief against defendant California Public Employees’ Retirement System (CalPERS) to compel it to continue to enforce
This airtime service credit, when purchased, provided an increase in the pension benefits paid to state employees during their retirement, as it enabled the purchasers to increase the amount of service credit factored into their pensions. However, in 2012, the Legislature eliminated this option as of January 1, 2013, upon enacting the California Public Employees’ Pension Reform Act of 2013 (PEPRA;
According to plaintiffs, the Legislature‘s elimination of the option provided under
FACTUAL AND PROCEDURAL BACKGROUND
The facts as found by the trial court are not in dispute. CalPERS is the sole administrative agency responsible for administering the public employees’ retirement system for the State of California. (
Of significance here, one such benefit, available to active CalPERS members as of January 1, 2003, was the option afforded under
This option to purchase airtime service credit was available to CalPERS members from January 1, 2003, through the end of 2012. However, as mentioned above, in September of 2012, the Legislature enacted PEPRA, a reform measure intended to strengthen the state‘s public pension system and ensure its ongoing solvency. (Stats. 2012, ch. 296, § 15, eff. Jan. 1, 2013.) One PEPRA provision,
Plaintiffs, representing a putative class of CalPERS members who were eligible to, but did not, purchase airtime service credit during this statutory time period that expired on January 1, 2013, initially filed this lawsuit on December 28, 2012.2 The operative pleading, to wit, the third amended verified petition for writ of mandate, was then filed on July 12, 2013. In this petition, plaintiffs assert that the option to purchase airtime service credit was a vested contractual right and, thus, that the Legislature‘s withdrawal of this right when amending
The State of California subsequently intervened in this lawsuit for the purpose of defending the amended statutory scheme. A writ hearing was held on February 24, 2014, followed by the trial court‘s filing of the amended final order on June 5, 2014. In this order, the trial court concluded that the elimination of the option of a state employee to purchase up to five years of retirement service credit did not impair or violate any pension right of
DISCUSSION
The overarching issue in this appeal relates to the proper construction of
“A writ of mandate lies ‘to compel the performance of an act which the law specially enjoins, as a duty resulting from an office, trust, or station; . . .’ [Citation.] ‘Two basic requirements are essential to the issuance of the writ: (1) A clear, present and usually ministerial duty upon the part of the respondent [citations]; and (2) a clear, present and beneficial right in the petitioner to the performance of that duty [citation].’ [Citation.] [] As to the petitioner‘s interest, the writ may not be issued where the injury is purely theoretical and the petitioner fails to show any benefit would accrue to him if the writ were issued, or that he will suffer any detriment if it is denied. [Citations.]” (Steelgard, Inc. v. Jannsen (1985) 171 Cal.App.3d 79, 83.) Further, ” ’ “[m]andamus will not lie to compel the performance of any act which would be void, illegal or contrary to public policy. [Citation.]” ’ ” (Torres v. City of Montebello (2015) 234 Cal.App.4th 382, 403; see also Moran v. Department of Motor Vehicles (2006) 139 Cal.App.4th 688, 691.)
On appeal, we apply the substantial evidence standard of review to a trial court‘s factual findings in granting or denying a writ of mandate, while independently reviewing its conclusions on legal issues, including legislative intent. (City of San Diego v. San Diego City Employees’ Retirement System (2010) 186 Cal.App.4th 69, 78; see also Board of Administration v. Wilson (1997) 52 Cal.App.4th 1109, 1129 [“The ultimate questions of whether vested contractual rights exist and whether impairments are unconstitutional present questions of law subject to independent review“].)
Here, as stated above, plaintiffs assert a vested contractual right to purchase up to five years of airtime service credit that is not subject to
As respondents point out, however, in challenging the amended statutory scheme as contrary to our Constitution, plaintiffs face certain legal hurdles. “The party asserting a contract clause claim has the burden of ‘mak[ing] out a clear case, free from all reasonable ambiguity,’ a constitutional violation occurred.” (Deputy Sheriffs’ Assn. of San Diego County v. County of San Diego (2015) 233 Cal.App.4th 573, 578.) “When the Constitution has a doubtful or obscure meaning or is capable of various interpretations, the construction placed thereon by the Legislature is of very persuasive significance.” (Methodist Hosp. of Sacramento v. Saylor (1971) 5 Cal.3d 685, 693.)
The reason for the elevated burden on plaintiffs raising a constitutional challenge under the contracts clause is this. “The state occupies a unique position in the field of contract law because it is a sovereign power. This gives rise to general principles which may limit whether an impairment has [occurred] as a matter of constitutional law. First, ‘[a]n attempt must be
Thus, the initial question here is whether plaintiffs lawfully claim a vested contractual right to airtime service credit as part of their pension benefits. As explained in plaintiffs’ authority, “A public employee‘s pension constitutes an element of compensation, and a vested contractual right to pension benefits accrues upon acceptance of employment. Such a pension right may not be destroyed, once vested, without impairing a contractual obligation of the employing public entity. [Citation.] [However, the] employee does not obtain, prior to retirement, any absolute right to fixed or specific benefits, but only to a ‘substantial or reasonable pension.’ [Citation.] Moreover, the employee‘s eligibility for benefits can, of course, be defeated ‘upon the occurrence of a condition subsequent.’ [Citation.]” (Betts v. Board of Administration of Public Employees’ Retirement System (1978) 21 Cal.3d 859, 863, 864 (Betts).)
“[I]t is well settled in California that public employment is not held by contract but by statute and that, insofar as the duration of such employment is concerned, no employee has a vested contractual right to continue in employment beyond the time or contrary to the terms and conditions fixed by law. [Citations.] Nor is any vested contractual right conferred on the public employee because he occupies a civil service position since it is equally well settled that ‘[t]he terms and conditions of civil service employment are fixed by statute and not by contract.’ [Citations.] Indeed, ‘[t]he statutory provisions controlling the terms and conditions of civil service employment cannot be circumvented by purported contracts in conflict therewith.’ [Citation.]” (Miller, supra, 18 Cal.3d at pp. 813-814.)
Within this legal framework, plaintiffs theorize the prior version of
However, as the trial court found, there is nothing in either the text of the statute (
In so concluding, we acknowledge plaintiffs’ reliance on statements made in CalPERS‘s “widely read” publication, Vested Rights of CalPERS Members: Protecting the pension promises made to public employees (July 2011), to try to show the existence of a vested contract right to purchase airtime service credit. In particular, plaintiffs point to the following exert from the CalPERS material: “Public employees obtain a vested right to the provisions of the applicable retirement law that exist during the course of their public employment. Promised benefits may be increased during employment, but not decreased, absent the employees’ consent. [][] These rules apply to all active CalPERS members, whether or not they have yet performed the requirements necessary to qualify for certain benefits that are part of the applicable retirement law. For example, even if a member has not yet satisfied the five[-]year minimum service prerequisite to receiving most service and disability benefits, the member‘s right to qualify for those benefits upon completion of five years of service vests as soon as the member starts work.” (Id., at p. 8, italics added.)
We accept plaintiffs’ point that CalPERS‘s statements on this issue are entitled to significant weight given the agency‘s designated role as administrator of the state‘s retirement system. (Bernard v. City of Oakland (2012) 202 Cal.App.4th 1553, 1565.) Nonetheless, the fact remains that, notwithstanding any statements or suggestions by CalPERS to the contrary (published or otherwise), California law is quite clear that the Legislature may indeed modify or eliminate vested pension rights in certain cases. As the California Supreme Court has explained: “Although vested prior to the time when the obligation to pay matures, pension rights are not immutable. For example, the government entity providing the pension may make reasonable modifications and changes in the pension system. This
” ‘We have described the applicable principles as follows: “An employee‘s vested contractual pension rights may be modified prior to retirement for the purpose of keeping a pension system flexible to permit adjustments in accord with changing conditions and at the same time maintain the integrity of the system. [Citations.] Such modifications must be reasonable, and it is for the courts to determine upon the facts of each case what constitutes a permissible change. To be sustained as reasonable, alterations of employees’ pension rights must bear some material relation to the theory of a pension system and its successful operation, and changes in a pension plan which result in disadvantage to employees should be accompanied by comparable new advantages. [Citations.]” ’ (Betts, supra, 21 Cal.3d at p. 864; accord, Miller, supra, 18 Cal.3d at p. 816 [” ‘[I]t is advantage or disadvantage to the particular employees whose own contractual pension rights, already earned, are involved which are the criteria by which modifications to pension plans must be measured.’ “].)
It is to this California Supreme Court authority, rather than to CalPERS statements, that we must defer. (See Bernard v. City of Oakland, supra, 202 Cal.App.4th at p. 1565 [while ” ‘the contemporaneous administrative construction of [an] enactment by those charged with its enforcement . . . is entitled to great weight,’ ” it is not controlling, particularly where ” ‘clearly erroneous or unauthorized’ “].) Were we to do otherwise, we would upset the proper functioning of a system designed to facilitate timely adaptation of the law in light of new or changing circumstances: “The rule permitting modification of pensions is a necessary one since pension systems must be kept flexible to permit adjustments in accord with changing conditions and at the same time maintain the integrity of the system and carry out its beneficent policy.”5 (Kern, supra, 29 Cal.2d at pp. 854-855.) Indeed,
And applying this legal standard to the case at hand, it is clear that, even if we had accepted plaintiffs’ argument that the option to purchase airtime service credit under
Plaintiffs do not challenge the trial court‘s findings or reasoning in concluding that a material relationship exists between the challenged legislative modifications that accompanied California‘s recent pension reform and the basic theory of the pension system and its successful operation. (Accord, Marin Assn. of Public Employees v. Marin County Employees’ Retirement Assn., supra, 2 Cal.App.5th 674, 704-705 [“the catalyst for the Pension Reform Act was dire financial predictions necessitating urgent and fundamental changes to improve the solvency of various pension systems“] (Marin Assn. of Public Employees).)6 Instead, plaintiffs challenge the trial court‘s additional finding that, in this instance, the amended statutory scheme eliminating the option to purchase airtime service credit resulted in no disadvantage to state employees. In this regard, the court pointed to statements in
Despite this legislative history, plaintiffs (as well as the amicus curiae supporting them) insist the right to purchase the airtime service credit was indeed financially beneficial, and that “no comparable advantage has been offered to offset the loss of [the elimination of this right]. This is barred under the Contracts Clause.” We disagree.
First, plaintiffs suggest that the state was required to provide a comparable advantage to offset the loss arising from elimination of the option to purchase airtime service credit, citing Allen v. City of Long Beach, supra, 45 Cal.2d 128. However, as our colleagues in this district recently explained after an exhaustive review of the case law: ” ‘Should’ [provide some new compensating benefit], not ‘must,’ remains the court‘s preferred expression. And ‘should’ does not convey imperative obligation, no more compulsion than ‘ought.’ (Lashley v. Koerber (1945) 26 Cal.2d 83, 90; see People v. Webb (1986) 186 Cal.App.3d 401, 409, fn. 2 [‘the word “should” is advisory only and not mandatory‘].) In plain effect, ‘should’ is ‘a recommendation, not . . . a mandate.’ [Citation.]” (Marin Assn. of
Further, plaintiffs also disregard the fact that, when amending the statutory scheme governing pension rights, the Legislature in fact provided eligible CalPERS members (like plaintiffs) a several-month window in which to purchase the airtime service credit before the option terminated. Specifically, as set forth above, while PEPRA was enacted in September of 2012 (Stats. 2012, ch. 296, § 15), the option to purchase airtime service credit did not expire until January 1, 2013, giving eligible members several weeks to apply to purchase this credit before its expiration. (
And, finally, we agree with the trial court that, while the airtime service credit clearly provided something valuable for those state employees choosing to purchase it, the fact remains that the employees, not the state, paid for this benefit. (See
Thus, for all the reasons stated, we conclude plaintiffs’ constitutional challenge to the identified PEPRA provisions must fail given their failure to make out a clear case, free from all reasonable ambiguity and reasonable doubt, that any contract clause violation occurred. To the contrary, the record supports the trial court‘s conclusion that the Legislature‘s modification of the statutory law governing the airtime service credit was wholly reasonable and carried “some material relation to the theory of a pension system and its successful operation.” (Miller, supra, 18 Cal.3d at p. 816.) While plaintiffs may believe they have been disadvantaged by these amendments, the law is quite clear that they are entitled only to a “reasonable” pension, not one providing fixed or definite benefits immune from modification or elimination by the governing body. (Kern, supra, 29 Cal.2d at pp. 854-855.) Plaintiffs have made no showing that, following the elimination of their right to purchase airtime service credit, their right to a reasonable pension has been lost. (See Marin Assn. of Public Employees, supra, 2 Cal.App.5th at p. 707 [“Repeated invocation of the inviolability of their ‘vested rights’ cannot substitute for analysis of just how the change to [the statutory law] demonstrates that employees will not retire with a ‘substantial’ or ‘reasonable’ pension“], review granted Nov. 22, 2016; see Cal. Rules of Court, rules 8.1105(e)(1)(B), 8.1115(e).)
Accordingly, plaintiffs’ petition for writ of mandate and injunctive relief was properly rejected. The judgment thus stands.8
The judgment is affirmed.
Pollak, Acting P. J., and Siggins, J., concurred.
Appellants’ petition for review by the Supreme Court was granted April 12, 2017, S239958.