Wednesday, February 10, 2016
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Lawyers Lose Bid for Fees in Suit Over Pension Contributions
By KENNETH OFGANG, Staff Writer
Attorneys for several San Diego city employee unions are not entitled to fees for their successful intervention in a suit over pension fund contributions, the Fourth District Court of Appeal ruled yesterday.
Div. One concluded that an award of fees to an intervenor under the private attorney general statute may be conditioned on a showing that the services rendered were material and necessary. The panel also concluded that a San Diego Superior Court judge did not abuse his discretion in finding that the union lawyers’ services were unnecessary, and denying their requests for a total of more than $1.7 million in fees.
The litigation began in 2010, when the city asked the board that governs the San Diego City Employees Retirement System to apportion one-half of the system’s $800 million in actuarial losses for the previous year to the employees through increases in their fund contributions. The board rejected the request, and the city brought a petition for writ of mandate.
The retirement system demurred on various grounds, including that the employees or their unions were necessary parties. The trial judge overruled the demurrer, but subsequently allowed four unions to intervene.
The judge later denied the city’s motion for judgment on the pleadings. The city then moved for summary judgment, but withdrew the motion in anticipation of taking the case to trial, after the retirement system and the unions filed extensive opposition.
Settlement Reached
The parties subsequently settled, with the city withdrawing its bid for increased contributions but reserving the right to seek such contributions in the future, provided it met and conferred with the unions under the Meyers-Milias-Brown Act. The parties also agreed to a five-year freeze on “pensionable pay,” substantially reducing the city’s future obligations.
Judgment approving the settlement was entered February 2014. The unions then filed their fee motions under Government Code §1021.5.
The city, which noted it had paid more than $4 million in attorney fees to the retirement system, opposed the unions’ motions on the grounds they were not successful in the litigation, their members had a significant financial stake in the litigation, and their participation was not necessary to the result.
Judge Joseph Zimmerman ruled for the city, but solely on the ground of lack of necessity.
Unions’ Arguments Rejected
San Diego Superior Court Judge Ronald Prager, on assignment to the Court of Appeal, rejected the unions’ argument that no showing of necessity was required.
Prager distinguished State Water Resources Bd. Cases (2008) 161 Cal.App.4th 304, in which the court held that a private party litigating alongside a public entity need not make a showing of necessity to obtain private attorney general fees, “unless the public entity functioned like an attorney general.”
Prager explained:
“Unlike the public water agencies in State Water [which the court held were functioning as private attorneys genera] SDCERS was the public agency whose job and function it was to ensure the soundness of the city retirement system and thus it was not acting as a volunteer in responding to this litigation brought by the City….Because SDCERS was carrying out its required public function, the Unions must show their intervention was material to the ultimate result to recover public interest attorney fees.”
Judge’s Conclusion
The jurist went on to conclude that Zimmerman did not abuse his discretion in finding the union lawyers’ efforts unnecessary. After presiding over the case for more than two years and conducting hearings that consumed 700 pages of transcript, the trial judge was in the best position to determine the effect of union lawyers’ representation on the outcome, Prager said.
“[T]he mere fact that witnesses or evidence available to the public agency were examined or introduced by counsel for a private party does not suffice to establish that their efforts were necessary for purposes of section 1021.5,” Prager wrote.
Attorneys on appeal included Joel N. Klevens of Glaser Weil Fink Howard Avchen & Shapiro for San Diego City Firefighters, Local 145; Ann M. Smith of Smith, Steiner, Vanderpool & Wax for the San Diego Municipal Employees Association; Michael A. Conger for the San Diego Police Officers Association; Ellen Greenstone of Rothner, Segall & Greenstone for AFSCME, Local 127, and Deputy City Attorney Walter C. Chung for the defendants.
The case is San Diego Municipal Employees Association v. City of San Diego, 16 S.O.S. 783.
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