Orders signal more court review of California pensions

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Two recent orders from the California Supreme Court indicate the court isn't finished reviewing cases challenging the state’s 2013 pension reform law and the California Rule.

The high court issued orders Wednesday in each of the four cases it had accepted for review, but had deferred, pending its ruling in Alameda County Deputy Sheriff’s Association v. Alameda County Employees’ Retirement Association.

California Supreme Court Chief Justice Tani Gorre Cantil-Sakauye and her brethren issued new orders on public pension cases last week.

It ruled on that case in July.

“These final two orders make it clear that we have not yet heard the last word on the California Rule from our courts,” Nossaman partners Ashley Dunning and Peter Mixon wrote.

The high court dismissed two of the petitions for review in Public Employees’ Pension Reform Act-related cases and remanded the other two cases back to the courts of appeal.

The cases, which all challenge different aspects of 2013's PEPRA, have garnered broad attention in California and nationally, where laws similar to the California Rule have prevented significant changes to public pensions by states and municipalities struggling with retirement liabilities.

The rule is based on a series of court decisions dating back to the 1950s that have been interpreted as preventing any changes to existing employee pensions.

The high court did not directly take up the California Rule in its July 30 ruling in the Alameda County case, but did affirm the state’s right to eliminate pension spiking, a reform outlined in PEPRA.

The court dismissed for review Marin Association of Public Employees v. Marin County Employees’ Retirement Association and McGlynn v. State of California in light of the ruling in the Alameda case, the Nossaman partners wrote.

The order in Marin means that the ruling that affirmed the Marin County Superior Court’s dismissal of plaintiffs’ challenge to the retirement board’s implementation of the PEPRA stands, the Nossaman partners wrote. The order in McGlynn also means the lower court ruling stands that opined the estoppel provided no basis upon which to exempt judges who were appointed to the bench as of January 1, 2013 from PEPRA.

The final two orders the state Supreme Court issued on September 23 both involve challenges to the constitutionality of felony forfeiture provisions of PEPRA.

In both Hipsher v. Los Angeles County Employees Retirement Association and Wilmot v. Contra Costa County Employees’ Retirement Association, the high court referred the cases back to appellate courts with directions to vacate the decision and reconsider in light of the high court’s Alameda ruling.

In the Wilmot case, the high court further specifically ordered that the appellate “court is directed to address and resolve petitioner's claim under the contract clause of the California Constitution," the Nossaman partners wrote.

Both Hipsher and Wilmot questioned whether the California legislature’s felony forfeiture statute enacted in 2012, which expanded the scope of pension forfeiture laws, passes muster under the state constitution’s contracts clause.

The cases asked the court to assess whether retirees who commit a felony on the job could forfeit their retirement benefits. Both cases were referred back to the appelate courts to determine in light of the Alameda ruling, but could end up returning to the Supreme Court for further review.

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Public pensions Pension reform California State of California Lawsuits
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