Courts in California still sorting out public pension rulings

The California courts are still sorting out rulings made by appellate courts and the state’s Supreme Court in lawsuits brought against public pension reforms signed into law by Gov. Jerry Brown in 2013.

The high court denied on November 24 two requests for depublication of the First Appellate District’s decision in Marin Association of Public Employees v. Marin County Employees' Retirement Association.

“Marin County was the first published decision of a lower court of appeal upholding the constitutionality of amendments that the Public Employees’ Pension Reform Act of 2013, (PEPRA), made to the definition of “compensation earnable,” [which is used to calculate retirement allowances], in the County Employees Retirement Law of 1937,” wrote Nossaman partners Ashley Dunning and Peter Mixon in a Nov. 25 electronic alert.

California Supreme Court

Many of the changes under PEPRA only applied to employees hired after the law passed, but it also made changes to retirement calculations for existing employees, by doing such things as eliminating pension spiking.

The changes wrought by PEPRA resulted in the filing of four lawsuits against different pension systems. Three of those cases were consolidated under Alameda County Deputy Sheriff’s Association v. Alameda County Employees’ Retirement Association, but the court agreed to hear all four cases with Alameda as the lead case.

The California Supreme Court issued a ruling in the Alameda County case on July 30 finding that the PEPRA exclusions were constitutional, without addressing the California Rule, a series of precedents seen as protecting the contractual rights of current active and deferred retirement system members to a pension calculated under the basic statutory terms in effect at the time of their employment. The court ruled that the PEPRA changes did not fall under the California Rule.

As state and local governments work to apply the court’s rulings, they are also bracing for the next wave of litigation in superior courts. There is additional Alameda County-related litigation pending in at least three counties, according to the Nossaman attorneys.

The high court’s decision to keep Marin County published means that the courts will be able to draw on this additional legal analysis to assist them in their resolution of the constitutional issues that are presented, along with the guidance of the Alameda decision itself, according to the Nossaman attorneys.

Even with the rulings, public pensions systems and their boards still face challenges from members, and in some cases participating employees, Dunning and Mixon wrote.