Courts try to apply state Supreme Court precedent
in pension suits
By Laura Hautala
For
retired computer scientist Joe Requa, getting transferred off the University of
California health plan felt like a broken promise. Requa, who worked at the
UC-run Lawrence Livermore National Laboratory for 34 years, says he expected to
stay on the insurance plan for the rest of his life. But when a private
contractor took over the lab in 2007, the UC Regents took its lab retirees out
of their general pool of insured workers. Requa's new
health plan required higher employee contributions. "They're going sky high
as we get older," Requa said.As
a lawsuit over the change goes before the 1st District Court of Appeal today,
the justices could be the ones to decide whether any such promise was made. The
court will consider whether the retired workers sufficiently allege a contract
violation by the regents. Joe Requa v. The Regents of the University of California, Al32778 (Cal. App. 1st Dist., Jul. 29, 2011).
The
stakes are high for both sides, as public entities try to lower their unfunded
liabilities and retirees fight for what they see as deferred payment for their
public service.
"The
issue then is whether these employees have a right to those benefits,"
said A. Thomas Sinclair, a sole practitioner who is working on the appeal for
Requa and the three other retirees on the case.
Requa
is not the only former public employee to ask the courts to decide whether
retirement perks like health insurance and pensions are set in stone. Cases in
Sonoma and Contra Costa counties are currently in limbo, and the city of
Redding's employee union recently won its case asking for restored health care
benefits.
The
landscape around these cases shifted with a 2011 state Supreme Court decision
granting health benefits to retired public employees of Orange County. Those
retirees found themselves moved out of the larger pool of insured workers and
sued to have the previous coverage restored. Retired Employees Assn. of
Orange County v. County of Orange, 52 Cal.4th 1171 (2011).
'When they were handed over and over again these
booklets that say when you retire you will participate in the UC medical
benefits, that was a promise.' - Ernest J. Galvan
The
case found its way to the 9th U.S. Circuit Court of Appeals, where the court
decided it needed input from the state Supreme Court on state contract law. The
Supreme Court remanded the case to the trial court, finding the retirees had
the facts necessary to go forward with the case. Yet attorneys on both sides of
the issue claimed the decision as a victory.
At
issue is whether the actions of legislative bodies - be they county boards of
supervisors or the UC Regents - sometimes constitute contractual promises.
The
regents, represented by Joseph M. Quinn, Dorothy S. Liu and Sarah D. Mott of
Hanson Bridgett LLP in San Francisco, have argued they neither passed a
resolution nor made a promise to provide the UC health care benefits
indefinitely.
"We
appreciate the long and dedicated service of our employees," said Brooke
Converse, a spokeswoman for the UC Regents. But the regents agree with the
Superior Court's decision to dismiss the retirees' lawsuit. "We're pleased
that the judge acknowledged transfer of retiree medical benefits to the new
contractor," Converse said.
But
lawyers for the retirees, headed by Dov M. Grunschlag of Carter, Carter, Fries & Grunschlag, plan to argue today that the Regents intended
to provide health care for the appellants when they crafted a nearly
60-year-old resolution setting forth employee health care.
To
make their point, Sinclair said they'll point to
evidence that the Regents looked into the cost of providing retiree health care
and then directed the university system's president to look at appropriate
insurance for retirees. Attorneys for the retirees also intend to point out
that lab employee booklets repeatedly told workers they could stay on the plan
after retirement.
Ernest
J. Galvan of Rosen Bien Galvan & Grunfeld LLP,
who argued the Orange County case in front of the state Supreme Court, said the
UC Regents would like to construe the Orange County decision as very narrowly
defining how public entities enter into contractual agreements.
But
under his interpretation of the decision, Galvan said the lab retirees can adequately prove that the Regents intended to provide
the benefits as part of retirement.
"When
they were handed over and over again these booklets that say when you retire
you will participate in the UC medical benefits, that was a promise,"
Galvan said.