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Impact of Decision in ACDSA on PEPRA Constitutionality

   Published on:  11 Jan, 2018

This Monday, January 8, 2018, the California First District Court of Appeal issued an important decision in Alameda County Deputy Sheriffs’ Association v. Alameda County Employees’ Retirement Association (“ACDSA”). The decision is largely a win for the public employees and a reaffirmation of most of the key principles of the vested rights doctrine that protects public employee pension benefits from modification. Congratulations to Tim Talbot at Rains Lucia Stern St. Phalle & Silver, PC, and the many other labor union lawyers involved in that effort.

This is the same appellate court – albeit a different three justice panel – that issued the 2016 decisions in Marin Association of Public Employees v. MCERA and CAL FIRE Local 2881 v. CalPERS. Both of these decisions tried to reinterpret decades of California Pension Law and threatened to open the door to a new round of pension attacks. As prior blasts have informed you, we were successful in persuading the Supreme Court to grant review of both the Marin and CAL FIRE cases. The decision in ACDSA helps restore some balance, and along with a 2015 decision in Protect Our Benefits v. City & County of San Francisco, it reiterates, this time in spite of the rulings in Marin and CAL FIRE, the key principles underpinning the protection of your pension.

Here are the key takeaways from the ACDSA decision:

—   When premiums are lawfully included in pension calculations, current employees acquire a vested constitutional right to pension benefits based on those pay items. After PEPRA some county retirement boards no longer treated some premiums as pensionable. ACDSA says that was unlawful and it rejects Marin, which reached the opposite conclusion.

—   ACDSA criticized the Marin court’s reliance on generalized claims of a “pension crisis” as the justification for impairing pension rights. ACDSA emphasized – consistent with prior cases – that in order to justify impairing a benefit, the employer must make a compelling case against the particular benefit and not, as Marin did, against pension systems as a whole. Speculation about a pension crisis will not cut it.

—   Whereas Marin held that employees are only entitled to a “reasonable” pension, ACDSA held that Marin got it wrong. The correct test is whether the impairment of the promised benefit is “reasonable.” ACDSA held that PEPRA failed to justify why it was targeting particular benefits of current employees. The court’s analysis must focus on the real impact to employees of the disadvantages caused by the enactment – mere speculation is insufficient.

ACDSA proffers a far more well-reasoned decision than in Marin or CAL FIRE. Ultimately, however, the California Supreme Court will resolve these opposing views of the First District Court of Appeal.

If you have any questions about this post, please contact Gregg Adam at gregg@majlabor.com.