Union Gripe Against CalPERS Survives

SAN JOSE (CN) - A federal judge refused to dismiss an AFSCME union complaint accusing the California Public Employees Retirement System of denying Santa Clara employees a better pension plan despite a Superior Court ruling.

The dispute between the American Federation of State, County and Municipal Employees Local 101 is over a 2013 pension reform law signed by Gov. Jerry Brown.

Union employees claimed the Santa Clara Valley Water District increased the retirement age by 2 years for new employees after passage of the Public Employees Pension Reform Act (PEPRA). A 2012 contract set the retirement age at 60.

The water district sought dismissal based on the 11th amendment.

U.S. District Judge Beth Freeman ruled on Sept. 11: "As the Court understands it, pension formulas and other retirement benefits were purely a matter of negotiation between plaintiff and the district prior to the enactment of PEPRA," and the state has "not established that the terms of the CBA should be treated differently."

The state cited the ruling in Deputy Sheriffs' Ass'n, 233 Cal. App. 4th 573, in which the union argued that California's contract clause prohibited applying PEPRA to workers who were hired after PEPRA took effect, and were covered by previous collecting bargaining agreements with conflicting terms.

In that case, "The union argued that the collective bargaining agreements gave rise to constitutionally protected rights because the agreements predated PEPRA, were binding, and required use of the negotiated formula until they expired. The court concluded that 'the association's position conflicts with authorities indicating there is no contract clause protection for unvested contractual pension rights.'" (Citations omitted.)

The appeals court in Deputy Sheriffs' Ass'n "declined to reach the contract clause issue and resolved the case on other grounds," Freeman wrote. "Observing that the collective bargaining agreement expressly incorporated a preexisting statutory pension scheme, the court held that '[t]he pension rights provided to new employees by the incorporation of section 21070.5 into the agreement are no different than any other pension rights for state employees - they 'vest' upon the acceptance of employment.'"

Freeman wrote that she "cannot now determine which entity would be required to cure the prior denial of pension benefits at the 2 percent-at-60 level if plaintiff were to prevail in this lawsuit."

Thus even if the employees' claim "could be characterized as seeking retrospective relief, it is not clear on the face of the complaint or from matters judicially noticeable that a judgment in plaintiff's favor would require expenditure of state funds," Freeman said.

In December 2013, an arbitrator found that the water district violated the contract by changing the pension benefits, and in May this year a Santa Clara County judge confirmed the arbitration award, according to the employees' request for declaratory judgment and an injunction.

CalPERS refused to honor the Superior Court judgment, saying it would "continue to comply with the law as amended by PEPRA."

The pension changes affect only water district employees hired after PEPRA was enacted in 2013. Defendants in this case include Gov. Brown, CalPERS, several CalPERS officials and the state.

It follows a lawsuit filed in San Francisco Superior Court on Dec. 26 last year by several state judges who claimed the pension reform law was unfairly and retroactively applied to them.

The Santa Clara employees, and the judges, are represented by Beeson, Tayer & Bodine, of Oakland, who could not be reached for comment Tuesday.

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