Metropolitan News-Enterprise


Thursday, October 16, 2003


Page 3


High Court Declines to Review Retroactivity Ruling in Pension Case


By DAVID WATSON, Staff Writer


The state Supreme Court yesterday declined to review a July decision by the First District Court of Appeal requiring retroactive application of the high court’s 1997ruling requiring all compensation paid in cash to county employees to be included in calculating pension benefits.

The July ruling in In re Retirement Cases, 110 Cal.App.4th 426, came in a consolidated case involving five counties tried before San Francisco Superior Court Judge Stuart R. Pollak and could cost the jurisdictions as much as $500 million in underpaid benefits, lawyers involved in the litigation told the MetNews at the time.

The Court of Appeal’s Div. Two upheld Pollak’s ruling that the application of Ventura County Deputy Sheriffs’ Assn. v. Board of Retirement 16 Cal.4th 483, is not limited to employees who retired after that case became final on Oct. 1, 1997.

Before Ventura, many counties had excluded compensation in calculating benefits if it was not earned by all employees in the same grade or class, relying on the Court of Appeal’s 1983 decision in Guelfi v. Marin County Employees’ Retirement Assn., 145 Cal.App.3d 297. The court in Guelfi said night shift differentials and extra pay for such specialized assignments as helicopter observer, desk duty, or investigative work did not have to be counted in determining “compensation earnable” and “final compensation” under the County Employees Retirement Law of 1937, codified in 1947 beginning at Government Code Sec. 31450.

Justice James Lambden, whose opinion for the First District was joined by Justices Ignazio Ruvolo and Paul R. Haerle, rejected arguments by retirement boards in Los Angeles, Sacramento, San Mateo, Stanislaus, and Tulare counties that Ventura changed existing law and should be applied only prospectively.

Lambden conceded that the state high court in Ventura “refused to decide whether its decision applied retroactively to any other county” than the one involved in that case, though it did require Ventura Country to pay increased benefits retroactively. But, citing County of Los Angeles v. Faus (1957) 48 Cal.2d 672, the justice said it was “well settled that that the general rule in California is that ‘a decision of a court of supreme jurisdiction overruling a former decision is retrospective in its operation and that the effect is not that the former decision was bad law but that it never was the law.’”

He explained:

 “Essential to counties’ position, and repeatedly asserted by them in their briefs and at oral argument, is that plan members received pensions calculated in accordance with the law then in effect and they cite Guelfi. However, as stressed throughout this opinion, the law in effect at the time the plan members received their pensions was CERL, and plan members agreed to have their ‘compensation earnable’ and ‘final compensation’ calculated pursuant to CERL. The calculations made for plan members may have complied with the holding in Guelfi, but they were calculated incorrectly under CERL. Guelfi misstated the law; it did not establish any law.”

Lawyers involved in the litigation said in July that over $200 million of the potential liability estimate was for Orange County, but that county’s retirement board—which was not involved any of the underlying consolidated cases—supported the arguments for retroactivity as an amicus.


Copyright 2003, Metropolitan News Company