Thursday, April 28, 2011
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S.C. Turns Down Case on Retroactive Pension Benefits
By KENNETH OFGANG, Staff Writer
A Third District Court of Appeal ruling that rejected a bargained-for change in pension rules for certain law enforcement personnel was left standing yesterday by the state Supreme Court.
The justices, at their weekly conference in San Francisco, voted unanimously to deny review of the January ruling in California Statewide Law Enforcement Association v. California Department Of Personnel Administration (2011) 192 Cal.App.4th 1.
The Court of Appeal held that the change, expanding the number of state “safety members” eligible for higher benefits, cannot be applied retroactively without express legislative approval. The ruling will save the state, and cost the affected workers, millions of dollars unless legislators determine otherwise.
Retired Presiding Justice Arthur Scotland, who authored the Court of Appeal opinion while sitting on assignment, said it would be contrary to public policy to apply the change retroactively because the legislation approving the agreement between the state and the California State Law Enforcement Association was silent on the issue and the Legislature never considered the cost of retroactivity.
“At issue is the process by which a public employee labor union and the Governor negotiate benefits for state employees and then present their collective bargaining agreement to the Legislature for approval and funding,” Scotland explained. “Such agreements, which have been under the public’s radar in the past, are now coming to light due to the massive budget deficit the State is facing.”
The litigation grew out of an agreement reached in 2002 between CSLEA, which represents a combination of sworn personnel—police officers, firefighters, and correctional officers—and regulatory officers, such as Department of Motor Vehicles investigators, who enforce administrative rules.
The agreement designated most of a bargaining unit represented by CSLEA as safety members of the retirement system, entitling them to more generous pensions than other state workers, known as “miscellaneous members.”
The Legislature, which under the Ralph C. Dills Act must approve the monetary provisions of collective bargaining agreements between the state and its workers, gave its approval by passing SB 183.
A dispute between the DPA and the union, over whether those employed as of the agreement’s July 1, 2004 implementation date were entitled to credit as safety members for prior years of service, went to arbitration after the First District Court of Appeal rejected the department’s contention that the dispute was not embraced by the agreement’s arbitration clause.
An arbitrator, relying on extrinsic evidence, found that the parties intended such retroactivity and ruled in favor of the union. Sacramento Superior Court Judge Shellyanne Chang confirmed the award.
Scotland, however, said that while the arbitrator’s factual conclusion that retroactivity was intended is entitled to deference, that conclusion cannot be effectuated without express legislative approval. He rejected the argument that such approval was obtained by the passage of SB 183, saying lawmakers did not address the issue of retroactivity when debating the bill.
In other conference action, the justices:
•Agreed to decide whether Los Angeles Superior Court Judge Terry Green was correct in excluding, as speculative, evidence of lost profits in a breach-of-contract suit by Sargon Enterprises, Inc. against the University of Southern California. Sargon, a manufacturer of dental implants, claimed the university failed to provide academic support for Sargon implants, contrary to a clinical trial agreement.
The plaintiff alleged that it did not learn until after the contract expired that a USC professor working on the trials had a financial arrangement with one of Sargon’s competitors.
Sargon won a judgment for more than $400,000, but argued on appeal that the damages would have been in the hundreds of millions of dollars had the trial judge not excluded expert testimony regarding the anticipated share of the dental implant market that Sargon would have earned if USC had performed under the contract.
The Court of Appeal, in an unpublished Feb. 9 opinion by Presiding Justice Robert Mallano for Div. One, held that the exclusion of the expert testimony was an abuse of discretion because the inability of the plaintiff to prove its lost profits was a result of the defendant’s misconduct.
The Supreme Court yesterday voted 5-1 to review that ruling, with Chief Justice Tani Cantil-Sakauye and Justices Marvin Baxter, Kathryn M. Werdegar, Ming Chin, and Carol Corrigan voting in favor and Justice Joyce L. Kennard opposed.
The case is Sargon Enterprises, Inc. v. University of Southern California, B202789.
•Left standing a ruling by this district’s Div. Seven that upheld a $20 million products liability judgment against Land Rover North America Inc. in favor of a Simi Valley man rendered quadriplegic during a 2003 roll-over accident.
The panel held in Pannu v. Land Rover North America, Inc. (2011) 191 Cal.App.4th 1298, that Los Angeles Superior Court Judge Robert H. O’Brien’s finding of strict liability under the “risk-benefit” test was “amply supported” by evidence the Land Rover Discovery (Series 1) sport utility vehicle’s design presented an excessive preventable danger.
Presiding Justice Dennis Perluss said the plaintiff met his burden of showing that he “more probably than not” had been injured by a defect in the Discovery’s design. Perluss added that the plaintiff “proved not only the defects existed, but also that Land Rover knew of the dangers of rollover by the time his vehicle was manufactured in 1998 and corrected them in the resdesign of the Discovery...which debuted in the United States in 1999,” which established the auto maker’s liability for failure to warn.
•Agreed to decide whether a 2010 amendment to the California discovery law gives prosecutors the right to compel a mental examination of a defendant by a retained prosecution expert. The state Supreme Court held in Verdin v. Superior Court (2008) 43 Cal.4th 1096 that the prosecution had no such right, but this district’s Div. Six held in Sharp v. Superior Court (People) (2011) 191 Cal.App.4th 1280 that the prosecution has that right under the new Penal Code Sec. 1054.3(b).
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