Metropolitan News-Enterprise


Tuesday, May 12, 2015


Page 1


C.A. Revives Claim CalPERS Breached Duties to Retirees


By a MetNews Staff Writer


Retired peace officers and firefighters who purchased additional service credit from the California Public Employees’ Retirement System, but received no benefit from those purchases because they took industrial disability retirement before reaching service retirement age, may sue CalPERS, the Court of Appeal for this district has ruled.

Div. Three Friday reinstated a portion of a putative class action, holding that the plaintiffs pled causes of action for breach of fiduciary duties and rescission by alleging that CalPERS never told them they would lose their additional service benefits if they took disability retirement.

“There is no dispute that CalPERS is a fiduciary,” Presiding Justice Lee S. Edmon wrote, bound to meet the highest duty of care in its dealings with beneficiaries, including public safety employees whose employing agencies pay their benefits through CalPERS.

“In the present case, there appear to be factual disputes about what CalPERS disclosed or what representations were made,” the presiding justice explained. “Indeed, although plaintiffs have attached to their complaint some of the communications between CalPERS and plaintiffs concerning their service credit purchases, there is no suggestion in the complaint that these are all of the relevant disclosures on which plaintiffs base their cause of action.  Thus, the breach of fiduciary duty claim should not have been disposed of at the demurrer stage.”

The Court of Appeal, however, did uphold Los Angeles Superior Court Judge Anthony Mohr’s  ruling to the extent it held that CalPERS has no statutory or constitutional obligation to pay any additional benefits to retirees’ in the plaintiffs’ position. Mohr properly sustained CalPERS’ demurrers to causes of action for violation of the Public Employees’ Retirement Law, breach of contract, and denial of equal protection, Edmon said.

The plaintiffs, she said, failed to identify any part of the PERL, or of any contract, that requires CalPERS to pay them any benefits above the 50 percent of salary that they are entitled to by reason of having retired prior to age 50 due to on-the-job injury. And as far as equal protection is concerned, the claim fails because plaintiffs are no similarly situated to employees who were eligible to purchase the same additional service credit but did not do so, Edmon concluded.

She explained:

“We agree with the trial court that the complaint fails to state an equal protection claim.  The complaint assumes that two disability retirees—one who purchased [additional service credit], and one who did not—are similarly situated if they served in the same position, for an equivalent number of years, and retired at the same age. By this assumption plaintiffs err, because the disability retiree who purchased [additional credit] has more years of retirement credit….”

Edmon reasoned that if employee A, with 20 years of actual service, purchased four years of additional credit, he or she would have 24 years of total credit, whereas if employee B, with the same 20 years of service, did not purchase additional credit, he or she would have 20 years of total credit, four years less than employee A, establishing that the two are not similarly situated.

Attorneys on appeal were John Michael Jensen for the plaintiffs and Steptoe & Johnson LLP’s Edward Gregory and Jason Levin for CalPERS.

The case is Marzec v. California Public Employees’ Retirement System, 15 S.O.S. 2327.


Copyright 2015, Metropolitan News Company