Panel May Revive Lab Retirees' Suit Over Benefits

By Cynthia Foster Contact All Articles 

The Recorder

November 20, 2012


Judge Frank Roesch, Alameda County Superior Court 
Image: Jason Doiy/The Recorder

SAN FRANCISCO — A First District Court of Appeal panel Tuesday seemed likely to side with a group of East Bay retirees who say a trial court judge erroneously threw out claims that their former employer, Lawrence Livermore National Laboratory, illegally terminated their retirement medical benefits.

Two of the justices said Alameda County Superior Court Judge Frank Roesch had erred in tossing the case at the demurrer stage. And they said the lab's lawyer erred when he said in his appellate briefs that Roesch's factual findings were proper.

Instead, the panel reminded Joseph Quinn of Hanson Bridgett, the standard of review at the demurrer stage does not call for fact-finding, and Quinn was wrong to say so.

Quinn's error "helps highlight the criticism" made by the retirees that Roesch shouldn't have thrown the case out, said Justice Mark Simons.

The four petitioners are all long-time Lawrence Livermore Lab employees who retired before a coalition of mostly private-sector companies led by Bechtel Corp. took over management of the lab in 2007. (The lab was founded as an offshoot of the University of California, and is funded primarily by the U.S. Department of Energy.) They claim that Bechtel violated a 30-plus-year implied contract in 2008 when it canceled the retirees' university-sponsored group health insurance, instead opting to pay them a lump sum of money which they could use to buy their own insurance. The retirees, who could make class claims later in the case on behalf of all lab retirees, allege in their petition for a writ of mandate that the change in policy flies in the face of a promise of medical benefits made in retirement materials distributed to employees. Joe Requa, the lead petitioner in Requa v. Regents of the University of California, A132778, says his insurance premiums have gone up six-fold since he was excluded from the university's group plan.

Dov Grunschlag of Carter, Carter, Fries & Grunschlag, arguing for the retirees, pointed to a 2011 California Supreme Court decision in Retired Employees v. County of Orange, S184059, in which the high court held that a governmental body could enter into an implied contract to provide health benefits to employees. According to Grunschlag, that's exactly what the regents did in this case — booklets circulated to lab employees promised them health insurance as part of a larger retirement package.

But Quinn argued that the booklets didn't amount to a contract, and that the retirees are improperly suing to have access to a specific level and price of insurance when they don't even have a contractual right to insurance at all.

"An entirely implied contract" puts this case beyond the Supreme Court's ruling in Retired Employees, Quinn said, because in that case local governmental ordinances governed employment terms. In Requa, Quinn said, no statute or collective bargaining agreement applies.

Justices Simons, Barbara Jones and Terence Bruiniers have 90 days to issue an opinion.