Contra Costa Dsa Challenges Pension Reform Law
Rains Lucia Stern (RLS), PC filed a Petition for Writ of Mandate in Contra Costa County Superior Court on Tuesday November 27, on behalf of the Contra Costa County Deputy Sheriffs’ Association (DSA) asserting that certain provisions of the California Public Employee Pension Reform Act (PEPRA) are unconstitutional and violate the vested pension rights of members of the DSA and other County employees. The legal challenge was led by Rocky Lucia and Peter Hoffmann of RLS, along with David Holsberry of Davis, Cowell & Bowe on behalf of his client United Professional Firefighters of Contra Costa County, Local 1230.
Ken Westermann, President of the DSA Board, authorized the litigation seeking to enjoin the Contra Costa County Employees’ Retirement Association (CCCERA) from implementing Assembly Bill 197, passed in conjunction with Assembly Bill 340, which together constitute the statewide package of pension reforms known as PEPRA. On Wednesday, November 28, Ken Westermann, Local 1230 representatives, and legal counsel appeared before Judge David Flinn of the Contra Costa County Superior Court to request a stay order from the court preventing CCCERA from implementing AB 197 until such time as a full hearing on the vested rights theories could be heard.
The DSA argued that CCCERA’s vote to comply with AB 197 forced thousands of highly experienced County employees to consider early retirement in order to avoid a catastrophic reduction of their pension benefits after December 31, 2012. The DSA made a showing that permitting the implementation of AB 197 against DSA members and other Contra Costa County employees would lead to dramatic, adverse consequences for the affected individuals as well as the County.
The judge considered the arguments and positions of the parties and issued a Stay Order which precluded the CCCERA from implementing AB 197 against its members, including the men and women of the DSA. In effect, the Stay Order requires CCCERA to maintain the status quo and to refrain from moving forward with implementation of AB 197 until a full hearing on the merits is held. The parties will appear later next month as part of a status conference.
CCCERA members (mostly County employees) hired prior to January 1, 2011, have a clearly established right to include certain elements of compensation in the calculation of their pension benefits, including vacation, holiday and sick leave accruals. This component of the employees’ final compensation is commonly referred to as “terminal pay.” Subsequent to the California Legislature’s passage of AB 197, the CCCERA Retirement Board voted to implement the legislation against current employees, despite the fact that it would unlawfully deprive those affected members of the right to include terminal pay in the calculation of their pension benefits.
The litigation team at Rains Lucia Stern, along with the DSA, assembled numerous declarations from various County employees, including members of each rank in the Sheriff’s Department and the sheriff, in support of the vested rights claim and the irreparable harm that would result if the injunctive relief was not granted by the court. While terminal pay has been portrayed by various groups and members of the media as a form of “spiking,” the DSA’s filing clearly established that terminal pay has been actuarially included in the costs of the members’ pension benefits and has been paid for by contributions from both the County and the employees for many years.
As part of its showing of irreparable harm, the DSA and Local 1230 revealed that there are over 2,000 County employees who could have faced the possibility of losing up to 18% of their pension benefit should AB 197 be upheld and applied to them. All of these members were faced with the unenviable choice of having to retire, perhaps prematurely, on or before December 31, 2012, or face the realistic loss of up to 18% of their pension benefit. As such, the DSA and Local 1230 were able to argue that there would be irreparable harm and injury not only to individual employees but to the County itself, as each Department was confronted with the possibility of having to provide vital services while experiencing the sudden loss of hundreds (if not thousands) of employees, if the requested relief was not granted.
While other employee groups are considering a legal challenge to PEPRA, this case is the first known legal challenge to any provision of PEPRA in the State of California.1 The litigation will ultimately define the ability of veteran employees throughout the County to enjoy a vested benefit earned by many years of service.
About the Author
Rocky Lucia is a partner in the firm of Rains Lucia Stern. He can be contacted at rlucia@rlslawyers.com
The vast majority, if not all, of the provisions of PEPRA, apply prospectively to employees hired on or after January 1, 2013, and are not subject to the pending litigation.