The California Public Employees' Retirement System won't be allowed to sue San Bernardino, Calif., to collect more than $5 million owed by the insolvent city, a judge ruled Friday.

U.S. Bankruptcy Judge Meredith M. Jury made the ruling at a court hearing in Riverside, Calif., that is being watched by other cities struggling with high pension costs across the country. If CalPERS is allowed to sue and wins a monetary judgment, "the impact on the city's ability to reorganize would be astronomical," she said.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.