tanner v. calpers ruling
TRANSCRIPT
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S U P E R I O R C O U R T O F C A L I F O R N I A
C O U N T Y O F S A C R A M E N T O
DATE:
JUDGE:
December22,2014
HON. SHE LLEY ANNE W. L . CHANG
DEP. NO.
C L E R K :
24
HIGGINBOTHAM
JOSEPH TANNER,
Petitioner,
C A L I F O R N I A P U B L I C E M P L O Y E E S
RETIREMEN T SY STEM (CalPERS);
BOARD
O F
ADMINISTRATION OF TH E CALIFO RNIA
PUBLIC E M P L O Y E E S R E T I R E M E N T S Y S T E M ;
and DOES 1 THROUGH
100, inclusive.
Respondents.
Case
No.34-2013-80001492
CIT Y O F
V A L L E J O ,
RealPartyinInterest.
Nature of Proceedings:
RULING ON SUBMITTED MA TTER: PETITION FOR
WRIT OF ADMINISTRATIVE MANDAMUS AND
WRIT OF MANDATE
The
following
is the Court's tentative
ruling
to the above-entitled matter set fo rhearing in
Department 24 on
Friday,
December 12, 2014, at 1:30
p.m.
The tentative
ruling
shall become
thefinalrulingof the Court,unlessa party
wishing
to be heard soadvisesthe clerkof
this
Department no later than 4:00p.m. on the court day preceding the hearing, andfurther
advises
the clerk that such party hasnotifiedthe other side ofitsintentiontoappear.
f
oralargument is requested, the parties shallnot ifythe clerk, at the time of therequest,
what specificissues
willbeaddressedat the hearing. Oral argument shall not exceed 20
minutes per side.
Petitioner, Joseph
Tanner,
petitions forawritof administrative mandamus to set asideadecision
(Decision) of RespondentCaliforniaPublicEmployees' Retirement System (CalPERS),which
found that Petitioner's unmodified
annual
retirement allowance was $216,446. Petitioner claims
that he is entitled toaretirement allowance based ona$305,844base
salary,
which includes
items that Respondent determined to be non-pensionable. Petitioner also petitions for awritof
mandate directingCalPERSto set aside its Decisionandfollow the law.' ThePetition is
D E N I E D .
' ThePetitionchallenges CalPERS
administrative decision,
whichis thepropersubjectof a writ of
administrative
mandamus underCodeof CivilProcedure section 1094.5.Because
Petitioner's 'traditional
mandateclaiminthe
Petitionalso
seeksto
setasideCalPERS
decisionon thebasis
that
itallegedlydid not
follow
the law, and
because
1
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B CKGROUND
The background facts are takenfromthe parties'briefs,relevant portions
of
theadministrative
record,
and the administrative
law
judge's(ALJ)decision, adopted by CalPERS.
Petitioner is a retired member of CalPERS and
made
contributions thereto through his service
withvarious governmental entities asCityManagerfortheCityof
Pacifica,
Redevelopment
ConsultantfortheCityo fAlameda, AssistantCityManagerfortheCityofAlameda,C ity
ManageroftheC ityofPleasantH i ll , CityManagerfortheC ityof
Emeryville,
andCityManager
for
theCityofGait. (AR,3596.)
Sometimepriorto November 2006,
while
employed at theCityof
Pacifica,
Petitioner was
contacted by a recruiter regarding an openingforthepositionofCityManagerwiththeCityof
Vallejo(Vallejo).
(AR,
3597.) Petitioner
informed
the recruiter,Mr. W illiamAvery,that he
desired a substantially higher salary than whatVallejowasinitiallyoffering forthe positionat
least
$300,000 in
PERSable
or
pensionable
compensation
eligible
for
CalPERS retirement
benefits.
(Id.;
AR,643) OnNovember 6, 2006, theinterim CityManagerfor Vallejo,John
Thompson, communicated to theC ity
Council
that Petitioner
requestedtotal
amiual
compensation of $349,952,whichincluded $267,840
o f
pensionablecompensation.
(AR,
651-
652,
2508-2510.) Petitioner wished to beinitiallyhiredas an interim CityManagerforvarious
reasons,
including
the fact that he wished towait
for
a certain time period afterretiringfromthe
Cityo f
Pacifica,
andbecausehe was concerned aboutworking for Vallejo. (AR,3597-3598.)
Ata November 14, 2006 closedsessionmeeting, theCityCouncildiscussedPetitioner's
proposed employment contract. On November 16, 2006, theCity
Council
heldanotherspecial
meeting on November 16, 2006 and appointed Petitioner asC ityManager. (AR,3598-3599.)
InNovember 2006, Petitionerentered
into
an employment contractwithVallejo(November
2006 Contract). The 2006 Contract had a startdateofJanuary8, 2007 and wasforathree-year
term. (AR393, 404.) Under the November 2006 Contract, Petitionerwouldbegin as a limited
term CityManager,which wouldautomatically convert to a
permanent
employee position
two
months
into
the
three-year
term,onMarch8, 2007, when Petitionerwouldbe reinstated in
CalPERS.
(AR,
393, 404.) His basesalary wasinitiallyset at $216,000.
(AR399.)
However,
the November 2006 Contractprovidedthat Petitionerwouldreceive other items of
non-
pensionablepay thatwould convert to basesalary
once
his limitedtenn period expired as
well
as aleaveallowance and
severance
pay. (A R399, 401.)
Petitioner retired
from
the
C ity
of
Pacifica,effective
January
8, 2007,
with
a
final
compensation basesalary of $170,216. He drew an annual retirement allowancefromPacifica
of$131,543that
year.
(AR,624, 379-381.) OnJanuary8, 2007, he
began
working for Vallejo.
(AR,393.)
Petitioner
does
not againreferenceany
separatecauses
of
actionin
his memorandumofpoints and authorities
(MPAs),the
Court
disposesof
thispetition
pursuant
to
Codeof
Civil
Proceduresection 1094.5.
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VallejoHumanResourcesManager Debra Boutteforwardedthe November 2006 Contract to
CalPERS. (AR,3599.) OnJanuary26, 2007, CalPERS employee Carious Johnson mailed a
responseto Boutte. CalPERS'responsedetailed the provisionsofthe November 2006 Contract
that
conflicted
withthe Public Employees' Retirement
Law (PERL).
(AR,409-411.) The letter
statedthat although Petitioner's initialsalary of $216,000qualifiedas pensionable compensation,
the items that
would
be automatically added or converted to
base
pay were not.
(AR,
410.)
Theseitems included
management
leave credits, automobile allowance, and deferred
compensation, andseverancepay.
Additionally,
CalPERS' letternotifiedBoutte that i fEMPC
(employer-paid
member
contributions)
andmanagementincentive pay were intended to be
pensionable, the contract provisions must be revised to complywiththe pertinent regulations.
(Id.) For example, as toEMPCpay, theCitymust adopt a resolutionfora group orclassof
employees and amend the contract. (Id.)Finally,the letter
informed
Boutte that anyseverance
paywhichchould be paid to Petitioner was not pensionable. (AR,411.)
Whenshown CalPERS' letter, PetitionertoldVallejo staff
to
f ix it . (AR,3601.)
On March27,
2007, the
Vallejo
City
Council
approved Petitioner's new employment agreeinent,
entered into asofMarch8, 2007, which supercedes[sic]the November 18, 2006 Agreement
(March2007 Contract). (AR,458-471,464.) Petitioner'sbasesalary was changed
from
$216,000 to $305,844 annually, and the contract term wasfromMarch 8, 2007 to March 8, 2010.
(AR,464.) TheMarch2007 Contractomittedlanguagerelating to converting the car allowance,
deferred compensation, and 30daysof
management
leave tobasesalary, alongwiththe
employeesoptionto sell back 120 hours of accrued annual leave. (AR,458-471.) Theprovision
regarding 12 months'severancepay was amended to add that it is not reportable to CalPERS.
(AR,466.)
Petitioner resignedeffectiveJune
1,
2009. TheC ity
Council
adopted a settlement
agreement
with
Petitioner
in
which
they paid
h imseverance
pay of$390,000.
(AR,
3607-3608.)
Petitioner submitted his application
for
retirement benefits on May 22, 2009. Petitioner reported
his highest compensation paid asfrom
June
1,2007 to
May
31 ,2008 ($305,842.) (AR,3607-
3608.) CalPERS denied Petitioner's reported
final
compensation and
found
that Petitioner's
basesalary was $216,000. (AR,3609, 3611.)
I L
D I S C U S S I O N
a. Request forJudicialNotice; Administrative Record
CalPERS
unopposed request for
judicial
notice
is
G R A N T E D .
The Court
admonishes
Petitioner
forproviding
a copyoftheadministrative record that is
unbound and extremelyd ifficul ttoreview. The administrative record is quite large, as the
administrativehearing in this matter lasted 10 days. Despite thisfact,Petitionerfurnishedthe
Court
withan administrative record comprised of loose documents in
folders,
and an electronic
copywith
multiple
PDF documents. IntheftiturePetitioner shouldensurethat any
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administrative record, and in particular, hearing transcripts, is bound and in a format that allows
the Court to easily review it.
b. Standard of Review
This Court'staskis to determine whether the Boardabusedits discretion.Inthiscase, abuseof
discretion is established i fthecourtdeterminesthat thefindingsare not supported by the weight
of
theevidence. (Code of
Civ .
Proc, 1094.5(c); Strumsky
v .
San Diego County Employees
Ret. Assn (1974) 11 Cal.3d 28, 44-45.)
In
exercising its independent judgment, a
trial
court
must
afford
a strong presumption of
correctness
conceming the administrative
findings,
and the
party challenging the administrative decision
bears
the burden ofconvincingthe court that the
administrativefindingsare contrary to the weight ofthe evidence. {Fukudav. C ityo fAngels
(1999) 20 Cal.4th 805, 817.)
Further, to the extent the Court finds any ambiguity in the applicable provisions ofthePERL or
regulations goveming CalPERS' administration thereof,
under
well-settled law the Court must
give
substantial
deference
to the Board's interpretations of
those
provisions. In
City
of
Pleasanton
v.Boardof
Administration
(2012) 211 Cal.App.4th 522, the court explained that
where our review requires that we interpret the PERL or a
PERS
regulation, the court
accords
greatweight to [CalPERS'] interpretation.[Citation.]This is in recognition ofthefact that as the
agency
charged
with
administering PERL, [CalPERS] has expertise and
teclinical
knowledge as
wellas an 'intimate knowledgeofthe problems dealtwithin thestatuteand the various
administrativeconsequencesarisingfromparticular interpretations.' {Id.at 539.)
c. Argument
CalPERSfoundthat, by entering into the March 2007 Contract,
Vallejo rolled
or converted
five
items into [Petitioner's]
original
basesalary of $216,000 in order to arrive at a newbasesalary of
$305,844. (AR,3604-3605.)
Accordingly,
the approximate $90,000 difference between
these
amountswas not pensionable. Having reviewed the record and applied its independent
judgment, the Court
concludes
that CalPERS did not
abuse
its discretion in determining that only
$216,000 of Petitioner's salary waspensionable compensation.
i.
C a l P E R SDid Not Abuse its Discretion in Determining that Specific
Items were Excluded from Petitioner's Pensionable Compensation
As
a
preliminary
matter, the Courtdiscussesthe governing background law that allows CalPERS
to administer its retirement system and review its
members'
applications
for
retirement benefits.
1. BackgroundL a w
CalPERS is a prefunded, defined benefit retirement plan. {Odenv.BoardofAdministration
(1994) 23 Cal.App.4 194, 198.) Under the PERL, the determination of what benefits and items
of
pay constitute
pensionable
compensation is crucial to the computation of
the employee's
ultimate pension benefits. {Molinav.Boardof
Administration
(2011) 200 Cal.App.4 53, 64.)
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Theformulafordetermininga CalPERS' member's retirement
benefit
takes
into
account (1)
yearsofservice, (2) apercentagefigurebasedon age at thedateof
refirement,
and (3) final
compensation. {City ofSacramento v.Public EmployeesRet.Sys. (1991)221Cal.App.4 1470,
1479.)
The
PERLspecifically
defines pensionable compensation. Compensation includes and shall
not
exceed compensation eamable, whichisdefinedas (1) pay rate, and special
compensation.
(Gov.
Code,
20630, 20636.)
TheP ERL
furtherdefines payrate and special compensation.
'Payrate' meansthenormal
monthlyrateofpay
orbasepay
o f
themember
paid
in
cash
to
similarlysituated members ofthe
same
group orclassofemploymentforservices rendered on a
full-timebasis
during
normalworkinghours, pursuant to
publicly
available pay
schedules.
'Payrate,' fora member who is not
in
a group orclass,
means
themonthlyrateofpayor
base
pay
ofthe member, paidincashand pursuant topubliclyavailable pay
schedules,for
services
rendered on afiill-tim e
basis
duringnormal
working
hours, subject to the
limitations
o f
paragraph
(2)
ofsubdivision(e). (Gov.Code, 20630, subd.
(b)(1).)
' Special Compensation' includes a paymentforspecialskills,knowledge,abilities,work
assignment,holidayhours, or otherworkconditions. [Tf]Special compensation shall belimited
tothat
which
is received by a member pursuant to a labor
policy
or agreement or as otherwise
required
bystateor federal
law,
tosimilarlysituated members ofagroup orclassofemployment
that isin
addition
to payrate.
fanindividual
is not part
of
agroup or
class,
special compensation
shallbelim itedto thatwhichthe
[CalPERS]
board determines is received bysimilarlysituated
members inthe closest related group orclassthat is inadditionto payrate.... (Gov.Code,
20636, subd.
(c)(1),
(2).)
Special compensation shall be
for
services rendered
during
normal
working
hours and, when
reported to the
[CalPERS]
board, the employer shallidentifythe payperiod
in
whichthe special
compensation was earned. Special compensationdoesnot include finalsettlement pay, ^
paymentsmadeforadditionalservices rendered outsideo fnormalworkinghours, or other
payments that the [CalPERS] board has notaffirmativelydetermined to be special
compensation.
(Gov.
Code,
20636, subd.
(c)(3),
(7).)
CalPERS regulationsftirtherdefine special compensation items that must be reported to
CalPERS i fthoseitems are containedinawrittenlaborpolicyor
agreement.
(2
Cal.
Code
Regs.,
571,
subd. (a).)
Among
otherthings,thesespecial compensation items must be: (1) available
to
all
members
in
the group or
class;
(2)
parto f
normally
required duties; (3)
performed
during
normalhours
o femployment;
(4) paid
periodically
as earned; (5)
historically
consistent with
prior
paymentsforthejobclassification;(6) not paidexclusively
in
thefinalcompensation
period;(7) notfinalsettlement pay;
additionally,
the items must (8) notcreatean unfunded
liability
over and above PERS' actuarial assumptions. (2
Cal.
Code
Regs.,
571,
subd. (b).)
Final
Settlement Pay
means
any
cash
or conversions
ofemployerbenefits
inexcess
of
compensation
earnable
awarded to a member
in
connection
with
oranticipation
ofa
separation
from
employment.
(Gov.
Code,
20636,
subd.
(f);
2
Cal.
Code
Regs.,
570.)
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Thus, the PERL and applicable regulationsspecificallydefine pensionable compensation, and its
components, pay rate and special compensation.
ii . PetitionerHasNotEstablishedthat He isEntitledto theClaimed
Benefits
Inthe administrative proceedings
below.
Petitioner, as the applicantforthe entitlement, (here
retirement benefits) had the burdenofprooftoestablish arightto the entitlement,absenta
statutoryprovisionto the contrary. {See Lindsayv.San Diego Ret.Bd
(1964) 231
Cal.App.2d
156, 161-162.) Petitioner challenges CalPERS' determination that
only
$216,446ofPetitioner's
$305,844 salary was pensionable, or compensation
forpurposesof
receivingCalPERS
retirement benefits. CalPERS determined that Petitioner had not met his burdenofproof
in
establishing that the entire $305,844 salary was pensionable. Thus to show that CalPERs
abused
itsdiscretion
in
makingthisfinding.Petitioner must establish that the $305,844 was his pay
rate, or that theadditionalitems were special compensation
totaling
$305,844.
1. Petitioner's
SalaryDoes
Not Appear on a Publicly Available
PaySchedule
First,Petitioner cannotlegitimatelyclaimthat his salary of $305,844 is pay rate, because
Petitioner has not shown that this salary was on apubliclyavailable pay schedule. {See
Prentice v.BoardofAdministration(2007) 157Cal.App.4 '983, 993-994.)
CalPERSarguesthat the
only
documents that
list
Petitioner's salary at $305,844 are the
March
2007 Contract and the May 8, 2007 documentsrelatingto that contract, and that
these
documents cannot be a pay schedule becausethey do not refer to Petitioner orlistany other
person or
position.
Further, CalPERS
contends
that
there
is no evidence that the
City
intended
that
these
documentswouldserveas pay
schedules.
Additionally,CalPERS points to evidence
that Petitioner's salary was not the type thatwouldhave appearedon a pay schedule, and that
theC ity didnotfeelobligated to post theC ityManager's salary on a pay schedule. (AR,
1798-1789, 2430.)
Petitionerrespondsin his ReplyBriefthat (1) his salary waspubliclyavailable, and (2) Ms.
Boutte
testifiedthat a documentrelatingto the
March
8, 2007C ityManager Salary
Computation
was a payscheduleand was a type of document that theC itywouldmakepublicly
available as to theC ityManager's salary.(AR,823, 1876-1877.) Thus, Petitioner
contends
that
his salaryappearedon apubliclyavailable pay schedule. The Court is notpersuaded.
The factsdemonstratethat theCitymadean exceptional arrangement withPetitioner to provide
him significantcompensation. Indeed, this compensation waswellabovethe salary paid to the
lastVallejoCityManager($198,000).
(AR,
552-557, 2143-2144.)
Further, the document cited by Petitioner as his pay schedule differsfromthe payschedules
for
other groups or classificationsofCityemployees.
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ThePERLdefinitionof payrate requires that an employee's salaryappearon apublicly
available pay schedule i ftheemployee issimilarlysituated to other
members
ofthe
same
group orclassof employment or i fthe member is notina group or
class.
The documents cited
by
the parties show that
Vallejo's
salary
informationfor
Petitionermarkedly
differedfrom
the
salary
infonnationfor
Department
Heads
and
Executive
Assistants (a group orclass
of
employees). Here,
Vallejo
published salary
range
information
for
Department
Heads
&
Executive Assistants on a yearly
basis,
e.g.,fromJuly
1,2006-June
30, 2007, and July
1,
2007-
June30, 2008. (AR,539-542.) Incontrast, the pay schedule document cited by Petitioner is
specificto
him
only,inthat it is dated
March
8, 2007 and pertains
only
to the
City
Manager.
Petitioner's broadinterpretationof pay schedule
would
permit an
agency
to provideadditional
compensation to a particularhigh-rankingofficial,any time itmadea documentwithhis specific
pay
information
publiclyavailable. {Prenticev.Boardof
Administration,
supra,157
Cal.App.4 '
at
p.
994.) The Courtdoesnot believe that the Legislature intended such a broad
constmction
of pay schedule.
Accordingly,
CalPERS was not
obligated
to consider the document cited by Petitioner to be a
publicly
available pay schedule and
find
that the entire $305,844 salary was Petitioner's pay
rate. CalPERSd idnotabuseits discretion on thisbasisinfindingthat
only
$216,446 of the
$305,844 was pensionable.
2.
The
AdditionalItems that Petitioner Seeks to Include are not
SpecialCompensation
In
claiming
that entire amounto fPetitioner's $305,844 salary is pensionable. Petitionerargues
that CalPERS must consider as compensation certain itemsreflectedinthe November 2006
Contract, and converted to salary
in
theMarch2007 Contract. This includes the automobile
allowance, employer paid deferred compensation, 30-day leave allowance, and one percent of
the employer cost of member
contributions.
Theseitemse.g., the
difference
between
Petitioner's $305,844 converted salary, and the $216,446, salary inthe November 2006
Contract
are not special compensation that is pensionable.
First,
the value
of
thesecomponents
of
Petitioner's pay is
specifically
excluded under the PERL.
(Gov.Code,20636, subd.
(g)(4)(E),
(F),(H) ,(I).)Government Code section 20636,
subdivision
(g)(4)
excludes
from
the
definitionof
payrate and special compensation
for
state
members :
(E)
Employerpayments that are to be credited as employee
contributions
for
benefitsprovidedby this system, or employer payments that are to be credited to employee
accounts
in
deferred compensation plans. The amounts deductedfroma
member's
wagesfor
participation in
a deferred compensation plan may not be considered to be 'employer payments.'
(F)Paymentsfor
unused vacation, armual leave, personal leave, sick leave, or compensating time
off,
whether paid in lump sum or otherwise. (G)
Final
settlement pay.
(H )Payments
for
overtime,
including
payin
lieuof
vacationor
holiday.
(I )Compensation
for
additional
services
outside regular
dufies,
such as standby pay, callback pay, courtduty,allowanceforautomobiles.
The
parties
do
not dispute that Petitioner
isa
state
member and subject
to this specific
statute. (See
Molinav.
BoardofAdministration
(20110 200
Cal.App.4'''53[applying
Govemment Code section 20636 to
fonnercity
employee].)
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andbonuses
forduties
perfomiedafter
the member's regular
work
shift. Accordingly,
these
items
are not special compensation.
PefiUoner
appears
toarguethat
these
items
fall
within
management
incentive
pay, oneofthe
categories
of special
compensation. (2Cal.CodeRegs. 571.)
AllowingPetifioner
to
characterize
these
components as management
incentive
pay
falling within
special
compensation wouldrender Government Code 20636's exclusions meaningless,becauseany
extraamounts paid to a manager couldbe called management
incentive
pay.
Additionally,Petifioner'sNovember 2006 Contractmadeclear that various itemsof
non-
pensionable compensationwouldautomatically convert to
base
salary.
Accordingly,
these
items
couldalso be considered finalsettlement pay,
which
is also excluded
from
special
compensafion.
(Gov.Code,20636, subd.(g)(4)(G).)
CalPERS
Regulation
570 defines FinalSettlement Pay as:
any pay or
cash
conversions
o f
employeebenefits
in
excess
ofcompensafion
eamable, that are granted or awarded to a member
incormection
withor in
anticipationo faseparationfromemplovment.
Final
setfiementpay is excluded
from payrollreporting
to PERS,
in
either payrate or compensation eamable.
For
example,
finalsettlement pay may consist of
severance
pay or so-called
golden
parachutes .It may bebasedon accruals over aperiodofpriorservice. It
is
generally, but not
always,
paidduringthe
period
offinal
compensafion.
It may
be paid
in
either
lump-sum,
or
periodic
payments.
Finalsettlement pay may take the
form
ofanyitemof
special
compensation not
listed
in Section
571.
It may also take the
form
of
a
bonus,
retroacfive
adjustment
to
payrate, conversion of
special
compensation to payrate, or any other method of
payrollreported to PERS. (2Cal.CodeRegs., 570.)
TheMarch
2007 contract attempted to
convert previously
non-pensionable items to
pensionable compensation. Respondents arguethat there was no
logical
reasonto convert non-
pensionable pay items to
base
salary, other than toincrease compensation eai-nable in
anficipafionof
retirement,which
occurred alittleovertwo
yearsafter
the conversion occurred.
Thisargument iswell-taken,as (1)
Pefitioner
had already retiredfromtheCityof
Pacifica
before
commencing employmentwith
Vallejo,(2)Petitionerclaimsthat he
initially
began
working
for
Vallejoas a retiredannuitant , and(3)theVallejocontracts wereforatermo f
three
years.
Thus,
CalPERS
could
reasonably
infer
that Petitioner
couldrefire
after separating
from
Vallejo,
and
that the converted non-pensionable items occurred
in
anticipationof
a
separationfrom
employment.
Accordingly,CalPERSd idnot
abuse
its
discrefioninrejecting
the
claimed
totalamountof
Petitioner's
$305,844 salary as pensionable on the
basis
that
this
amount
included
non-
pensionable items that were not special compensation.
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iii.
Vallejo's Authority to Determine Compensation and C a l P E R S
Authorityto Review it
Petitioner
argues
that CalPERS' reviewofhis
refirement
benefits cannot trump
Vallejo's
authorityto contractwithits employees and provide them a negotiated-for salary. The Court is
not
persuaded.
Vallejo'sCityCharter authorizes it to contractwithCalPERS
for
the purpose ofadministering
refirement
benefits. (AR,3616 [cifingCityCharter202, 807].) As such,Vallejois subject to
the PERL provisions and CalPERS' reviewofVallejoemployees'
applicafions
for
retirement
benefits. CalPERS is not obligated toaccepttheMarch2007 Contract terms as compensationfor
purposesofcalculatingretirement benefits. {Molinav.Boardo fPersonnel Admin.,supra, 200
Cal.App.4 'at 67
[noting
difference between salary and nanowerdefinitionof compensation
earnable ].)
Further, CalPERS has a duty to its members to determine who are employees and is the sole
judgeofthecondifionsunderwhichpersonsmay be admitted to and continue to receive benefits
under this system. (Gov. Code, 20125.) CalPERS has
jurisdicfion
to administer andhear
all
matters related to Petitioner'sapplicationforretirement benefits.
iv.
C a l P E R S Authority to Review Petitioner's Employment as Retired
Annuitant
Petitioner alsoarguesthat CalPERS
lacked
jurisdicfionto investigate hisclaim forretirement
benefits,becausewhen hefirstbegan his employment as aCityManager, he was a retired
annuitant. The Court rejects this argument.
The retired annuitant sections ofthePERL
allow
retired CalPERS members towork fora
CalPERS-participating employer
for
a limitedduration not to exceed 960 hours annually,
whilemaintaining
refirement
status. (Gov. Code, 2 1 2 2 1 ,subd.(h),21224.)
Further, Petitioners' November 2006 Contract provides that Petitionerwillbeinitiallyhired as a
limitedterm employee but then become a permanent employee and be reinstated in
CalPERS on or before March 8, 2007. (AR,393.) TheMarch2007 Contract alsomakesthe
same
provision. (AR,458.) AcceptingPetitioner's argument as true, a CalPERS beneficiary
couldevadeany CalPERS review by structuring employment contracts to provide that the
employee
would
be
initially
hired as a
refired
annuitant and then automatically become a
pennanentemployee and CalPERS inember shortly thereafter.
BecausePetitioner's employment contractsprovidedthat he
would
become a pemianent
employee on or before March 8, 2007, andbecausethe contracts wereforthree-year terms, his
initial limitedterm or alleged retirement annuitant statuscannot preclude CalPERSfrom
investigafing
his
claim
for
refirement
benefits.
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V. PrinciplesofContract
Interpretation
Do NotProhibitC a l P E R Sfrom
Reducing
Petitioner'sClaimedRetirement Benefits
Petitionerarguesthatprinciplesofcontractinterpretation
prohibit
CalPERSfromreducing his
pensionable
benefit
from
$305,844 to $216,446
because
CalPERS may not
look
beyond the
March
2007 Contract. The Court rejects
these
arguments.
For example,Pefitionerarguesthat the parol evidence rulebarsCalPERSfromlookingto the
November 2006 contractinevaluating Petitioner's
requestfor
$305,844 in pensionable
compensation under the
March
2007 Contract. Petifioneris mistaken.
Theparolevidence
rule, codified
inCode ofCivilProceduresecfion1856 andCivilCode 1625,
provides that when parties
enter
an integrated
writtenagreement,
extrinsic evidence may not be
reliedupon to alter or add to the termsofthe
writing.
(Code ofCiv .Proc, 1856;Civ.Code,
1625;RiverislandColdStorage, Inc., (2013) 55 Cal.4 ' 1169, 1174.) However, the parol
evidence rule
does
not apply to exclude evidenceofthe circumstances under
which
the
agreement
wasmadeor towhichit relates, or toexplainanextrinsicambiguityor to otherwise
interpretthe terms
o f
the
agreement,
or to establish illegalityor
fraud.
(Code
Civ.
Proc, 1856,
subd. (g).)
CalPERS is mandated to investigate claims
for
retirement benefits. Further,
it
may require a
member orbeneficiaryto provide
information
itdeems necessaryto determine CalPERS'
liability withrespectto,and anindividual'sentitlement to CalPERS benefits. (Gov.Code,
20128.)
Accordingly,
the parol evidence ruledoesnot bar CalPERSfromexaminingthe terms
of
theNovember 2006 and
March
2007
agreements
to examine the circumstances underwhich
theagreementsweremade,explainan
extrinsic
ambiguity,or establish illegalityorfraud.
CityCouncil
Resolution
No.07-68 authorized the mayor toexecutethefirst amendment to the
2006 Contract.(AR,418, 3615, 3616.) TheC ity
Councilalso
believed that
it
was amending the
2006 Contract to incorporate thelanguagerecommended by CalPERS, and that the amendment
wouldnotchangethe costoftheoriginalNovember 2006 Contract. The way to determine
whether that was truee.g., whether the $305,844 claimed by Petitioner was pensionablewas
toexamine the differences between the November 2006 and
March
2007 Contracts. (Id.)
Further, after CalPERS communicated toVallejothat various items
in
the November 2006
Contract were nonpensionable,Vallejothenforwardedto CalPERS the
March
2007 contract
with
a substantially higherbasesalary.
Accordingly,
the parol evidence rule
does
not
prohibit
CalPERSfrom
examining
the two
contracts.
The Court rejects Pefitioner's other argument, that CalPERS is bound by theMarch2007
contract,becauseit sought to
reform
amutualmistakethat the parties thought they were
negotiating
for$305,844
in
pensionable compensation. Theprincipleso fcontractinterpretation.
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and what Petitioner andVallejomay
have
intended, do not trump CalPERS'authorityto review
aclaim forretirement benefits.
vi . Estoppel
Pefifioner
claims that CalPERS is estopped
from
denying
him
the
f i i l l
amount
of
hisrequested
pension. This argument is
without
merit.
Equitable estoppel may beassertedagainst the govemment insomecircumstances. {Medinav.
Board
o f
Ret. (2003) 112Cal.App.4 '864, 868.) The requisite elementsforequitable estoppel
against a private party are: (1) the party to be estopped was apprised
of
the facts, (2) the party to
be estopped intended by conduct to induce reliance by the otherparty,or acted so as tocausethe
other party reasonably to believe reliance was intended, (3) the party asserting estoppel was
ignorantofthe
facts, and (4) the party asserting estoppel suffered injuryin reliance on the
conduct.{Ibid) The govermnent may be bound by an equitable estoppel in the
same
manner as
a private party when the elements requisite to such an estoppel against a private party arepresent
and,
in
the considered
view
of
a
court
ofequity,
the
injustice
which would
result
from
a
failure
to
upholdan estoppel is of
sufficient
dimensiontojust ifyanyeffectuponpublicinterest orpolicy
which wouldresultfromthe raisingofan estoppel. {Id.atpp.868-869.)
The elements of estoppel are not met. Namely,Pefifionerdidnot reasonablyrelyon any
representations or omissions fromCalPERS. Rather, the facts show that he was aware that there
may be problemsassociatedwith
converting
non-pensionable items to
base
pay. Additionally,
the Court declines to exercise any equitable power after considering the equities on bothsides
of
the dispute.
{Cortezv.
PurolatorA ir
Filtration
Prods. (2000) 23 Cal.4 ' 163, 179-180.) The
Courtfinds
hat itwouldnot be equitable to award Petitioner the vastly increased pension that he
seeks.
vii.
Laches
Petifionerclaims that the doctrine
of
laches barsCalPERSfrom
reviewing
his amended
employment contract inevaluafinghisclaim
for
retirement benefits. The Court rejects this
argument. Laches may apply to apublicagency that unreasonably delays in taking action
against the party, and the party is prejudiced as a result
ofthat
delay. {Cityand
Countyof
San
Francisco v.Pacello (1978) 85Cal.App.3d637, 644-645.) Petitioner
asserts,
but has not shown
that the delay was unreasonable, nor has heassertedany prejudice arisingfromthe delay.
viii.
Other claims
Petitioner's otherclaims,that CalPERS has discriminated against him,that CalPERS' actions are
barred by the
statute
of
limitations,and Petitioner's
requestfor
attorneyfeespursuant to
Govemment Code section 800 or any other applicablefeesor
costs,
are
without
merit.
III .
D I S P O S I T I O N
The Petition is
DENIED.
CounselforRespondent is directed toprepareaformalorder,
incorporatingthe Court's
ruling
as an
exhibit
thereto, and a
separatejudgment,
submit them to
11
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counsel
for
the parties
for
approval as toform ,and thereafter submit them to the Court
for
signature,
in
accordancewith
Califomia
Rules ofCourt,Rule 3.1312.
R U L I N G A F T E R
H E A R I N G
The matter was argued and
submitted.
The Court
affirms
the tentativerulingwiththefollowing
modifications.
Atoralargument, the parties extensively argued whether Petitioner'shiringand compensation
negotiations were the product
of
underhanded dealings between Petitioner andVallejo.The
Courtreachedits decision on the merits by considering the applicable
law.
For thisreason,the
Court'srulingpurposely
does
not consider
address
any political considerations raised by the
parties, such as whetherVallejoviolatedtheBrown
Act.
The
fifth
and last paragraph, appearing at thebottom
of
page7, is stricken and replacedwiththe
following
paragraph:
First,
the value
of
thesecomponents
of
Petitioner's pay is excluded under the
PERL.
(Gov.
Code,20636, subd.(c).) Government Code section 20636,subdivision(c) excludesfromthe
definitionof special compensation
(A )Final
settlement
pay. (B)Payments
made
for
additional
servicesrendered outside
of
normalworkinghours, whether paid
in
lumpsum or otherwise [and]
(C)
Other payments the board has not
affirmatively
detemiined to be special compensation.
CalPERS has notaffirmafivelydetermined that
these
items are special compensation.
Thecitafionto Govemment Codesecfion20636, appearing
in
the last
line
ofthe second
full
paragraph onpage8, is stricken and changed to
(Gov.
Code,
20636, subd.
(c)(7)(A).)
At
the hearing. Counsel
for
CalPERS averred that Petitioner actually sought $349,356 in
pensionable compensation, but CalPERS
found
that Petitioner had compensationearnable of
$246,732 and retirement benefits
of
$216,446. Thesechanges
in
detaildo notaffectthe Court's
ruling.
Petitioner challenges CalPERS' decision,
which
the Court
upholds. Additionally,
the
parties
agree
that Petitioner claims that he isenfifiedto an annualunmodifiedretirement
allowance
of
approximately$305,000, rather than $216,446. (Opposition,2:14-16.)
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S U P E R I O R
C O U R T
O F
CALIFORNIA
C O U N T Y
O F
S A C R A M E N T O
J O S E P H
T A N N E R
C a s e
Number:
34-2013-80001492
vs .
C E R T I F I C A T E
O F S E R V I C E
CALIFORNIA PU B L IC
E M P L O Y E E S B Y M AILING
(C .C .P .
S e c .
1013a 4))
R E T I R E M E NT S Y S T E M
et al
CITY O F V A L L E J O
I, the Clerk of the Superior Court of California, County of Sacramento, certify that
I am not a party to this cause, and on the date shown below I served the foregoing
RULING ON SUBMITTED MATTER: PETITION FOR WRIT OF ADMINISTRATAIVE
MANDAMUS AND WRIT OF MANDATE by depositing true copies thereof, enclosed in
separate, sealed envelopes with the postage fully prepaid, in the United States Mail at
720 9 Street, S acram ento, California, each of which envelopes was addressed
respectively to the persons and addresses shown below:
John Jensen Jeffrey Rieger
11500 West Olympic
Blvd,
Suite 550 REED SMITH LLP
Los Ange les, CA 90064 101 Second Street, Suite 1800
San Francisco, CA 94105-3659
I, the undersigned Deputy Clerk, declare under penalty of perjury that the
foregoing is true and correct.
SUPERIOR COURT OF CALIFORNIA
COUNTY OF SACRAMENTO
Dated:
December 22, 2014 By: M. GAR CIA, /Vf^C
Deputy Clerk
55pos.doc