California Supreme Court Reiterates Deference Due to PERB Decisions in Labor Matters and Rejects Ruse By Former Mayor to Evade Meet-and-Confer Responsibilities

Today, in Boling v. PERB the California Supreme Court issued a unanimous decision favoring the challenge by public employee unions to a 2012 pension measure in San Diego.

The basic facts are that former San Diego Mayor Jerry Sanders, fearing that he could not command a majority of the City Council to support putting his anti-pension measure on the ballot and seeking to avoid the obligation to meet and confer over the measure if they did, put forward a pension measure in his "citizen" capacity, as opposed to as mayor. The measure forced all new City employees except for new police officers into 401k retirement plans instead of defined benefit plans. The City refused to meet and confer over the initiative, which was approved by voters overwhelmingly in the June 2012 primary election (on the same day as former San Jose Mayor Chuck Reed's ill-fated pension reform measure - Measure B).

The Supreme Court rejected the ruse of Sanders and the City that because Sanders was purportedly acting as a citizen there was no bargaining obligation. As the Supreme Court described, Sanders conceived of the initiative, developed its terms, negotiated with proponents and then used the powers of the Mayor's office to promote it. He even signed ballot arguments in favor of the measure as "Mayor Jerry Sanders."

The Court did not find this a particularly close call: "Allowing public officials to purposefully evade the meet-and-confer requirements of the MMBA by officially sponsoring a citizens' initiative would seriously undermine the policies served by the statute." And it concluded: "when a local official with responsibility over labor relations uses the powers and resources of his office to play a major role in the promotion of a ballot initiative affecting terms and conditions of employment, the duty to meet and confer arises."

In reaching this decision the Court reiterated that, while courts ultimately decide what statutes mean, they must still defer to PERB's interpretations of California labor laws such as Government Code section 3505.

Takeaway: Public entity pension reform measures remain fraught with legal pitfalls. Measure B in San Jose was a disaster - but San Jose realized it quickly and started to repair the damage in 2015 and 2016. Even in San Francisco, where November 2011 Proposition C passed with union support, a significant part of the Proposition was invalidated in the Protect Our Benefits decision.

This San Diego litigation took six years to reach the Supreme Court, after proceedings before PERB. PERB ruled that the election should be invalidated but that only a court could do that. The Supreme Court has returned the question of the remedy to the Court of Appeal. San Diego runs the very real risk that a court may ultimately - i.e., several years from now - invalidate the 401k benefits and order all post-2012 employees restored to the pre-existing defined benefit plan (San Diego's charter city retirement system was not subject to PEPRA).

If you have any questions about this alert, please contact Gregg Adam.