Appellate Court Upholds Officer’s Five Day Suspension for Inappropriate Facebook Comments

In a recent unpublished decision, a police officers’ five day suspension for posting an off-duty Facebook comment regarding a matter of public concern was upheld. The case serves as an important reminder of the limited First Amendment rights afforded public employees and that public safety officers must always be cautions when utilizing social media.

In Zucker v. City of Los Angeles, LAPD Sergeant Benjamin Zucker contested a written reprimand, as well as, a five-day unpaid suspension for posting a comment on a third party’s Facebook page. His comment lambasted a civil action filed against the LAPD by a female officer claiming gender and religious discrimination.

Zucker’s comment was posted on the Facebook page of fellow Officer Mark Cronin. Officer Cronin’s page provided a link to a news article discussing a recent lawsuit filed against the city of Los Angeles by fellow Officer Victoria DeBellis. In that lawsuit, Officer DeBellis claimed she suffered workplace discrimination based on her gender and religion.

In response to the newspaper link, Zucker commented:

“I was born Jewish, raised Mormon and married to a catholic that is Japanese, Portuguese & German. NOW WHERES MY MONEY?

“Kiss my ass ya greedy house mouse!”

The term “house mouse” in law enforcement nomenclature refers to members of the department not working in the field.

Zucker did not identify himself as LAPD in his comments. Rather, Debellis was able to determine that Zucker was employed by LAPD because his Facebook page showed himself dressed in full uniform. After determining Zucker was an LAPD employee, Debellis filed a personnel complaint against him.

During the disciplinary process, Zucker was found guilty of “conduct unbecoming an officer.” He received an official reprimand and a five-day unpaid suspension. The Department found that Zucker’s Facebook profile showed “a clear nexus to the department” because it displayed a picture of him wearing his LAPD uniform and representing himself as an LAPD sergeant. The Department also concluded that: “Although in an off-duty capacity, he placed himself in a position where his actions were subject to on-duty scrutiny by other department employees, and may have some influence on the outcome of an unresolved litigation.”

Zucker challenged the reprimand and unpaid suspension in court. Specifically, he argued the imposed discipline violated his First Amendment rights because he was a citizen speaking on a matter of public concern—i.e. civil litigation/a news story. Moreover, he claimed that there was no nexus between his speech and his role in the department.

Applying the Garcetti v. Ceballos standard established by the Supreme Court, the Appellate Court made two crucial inquiries. First, it determined whether Zucker “spoke as a citizen on a matter of public concern.” However, it determined if the LAPD “had an adequate justification for treating [Zucker] differently from any other member of the general public.”

In a significant setback for the Constitutional rights of police officers, the court held the agency's interest avoiding Zuckers’s potentially disruptive Facebook comment outweighed his First Amendment rights. Though the court conceded his speech, i.e. commenting on a news article, involved a matter of public concern, it refused to afford him First Amendment protections largely because it also included a derogatory statement directed at Debellis.  The potential disruptiveness of this derogatory statement was adequate justification for treating Zucker different from any other member of the general public.

The Court highlighted that Zucker made the comments on Cronin’s Facebook profile—arguably knowing other LAPD employees would review the post. In fact, the Court specifically noted that Debellis actually saw Zucker’s comment and then filed a personnel complaint against him only after determining he was an LAPD employee. Accordingly, her complaint about his derogatory statement proved that Zucker’s comment “impaired harmony among co-workers and caused potential disruption to department operations.” For that reason, the Court concluded Zucker’s Facebook comment was not protected by the First Amendment and upheld Zucker’s suspension.

 

Interestingly, the appellate decision did not address whether the communications were protected under the MMBA as concerted actions. In Hispanics United of Buffalo, 359 NLRB No. 37 (Dec. 14, 2012), the NLRB overturned the discipline of five employees and found that the employees’ Facebook postings criticizing one of their co-workers was protected, concerted activity and that their discipline constituted retaliation for engaging in the protected activity.  Nevertheless, this surprising decision constitutes a stark warning that public cannot always rely on the First Amendment to protect their social media comments regarding matters of public concern that relate to their employment.  Public employee First Amendment cases are often decided by the factual nuances; had Zucker not referred to Debellis as a house mouse, the court likely would have reached a different conclusion. 

Judge Strikes Down "Right to Work" Law as Unconstitutional

On April 8, 2016, a Circuit Court in Wisconsin held its “right to work” law was an unconstitutional taking of the Plaintiff-Union’s property without just compensation. (International Association of Machinists District 10, Local Lodge 1061 v. State of Wisconsin (Apr.8, 2016) Case No. 2015CV000628.)

Approximately 26 states have adopted “right to work” laws, which prohibit union security agreements requiring employees to pay union dues as a condition of employment. As the Wisconsin court noted, the “duty of fair representation” prevents a union from declining to represent non-paying members.

The Wisconsin Constitution, like the California and federal Constitutions, prevents the taking of property for public use without just compensation. A taking requires (1) a property interest (2) that has been taken (3) for the public use (4) without just compensation.

The Wisconsin court found the Unions had a property interest in the services they perform for their members and non-members and that the “right to work” statute was a regulatory taking. While the “right to work” laws were determined to be for the “public use,” the court found the State had not compensated the Unions with money for their services. The State argued the Unions had been justly compensated for their compelled labor with the privilege of “exclusive representation.” However, the court rejected this argument, noting “just compensation” requires the payment of money, not a grant of special privileges or other non-monetary benefits.

In a recent California case, Friedrichs v. California Teachers Association, plaintiffs argued that requiring union dues as a condition of employment violated their First Amendment right to free speech. Had the lawsuit been successful, California would have become a “right to work” state, barring agency-shop agreements and "fair share fees." After the death of Justice Scalia, however, the Supreme Court issued a 4-4 decision in the case. With no majority holding, California “fair share fees” were safe. Plaintiffs have already filed a petition for rehearing asking the Supreme Court to reconsider the case when a new, ninth Justice is confirmed.

Under the takings rationale, however, right to work states would either have to pay unions to provide services to all employees or allow unions to decline representation for non-paying members. 

California Attorney General Releases Title and Summary for Pension Busting Initiative

On August 11, 2015, the Office of the Attorney General released its title and summary for former San Jose Mayor Chuck Reed's pension busting initiative. The highly divisive initiative would strip pensions from public employees and allow voters to modify compensation packages at will. Fortunately, the Office of the Attorney General's title and summary highlight the problems with this initiative.

 

All ballot initiatives must be submitted to the Office of the Attorney General prior to being placed on the ballot. The Office of the Attorney General creates a title and summary of the initiative to appear on the actual ballot. 

 

The title the Office of the Attorney General gave Reed's initiative is "Public Employees. Pension and Retiree Healthcare Benefits. Initiative and Constitutional Amendment." The summary aptly states the initiative, "[e]liminates constitutional protections for vested pension and retiree healthcare benefits for current public employees." This language demonstrates how drastic this reform is and how it will prejudice California's public employees. The summary also notes the long term effects of the initiative are unknown and "depend heavily on future decisions made by voters, governmental employers, and the courts."

 

Mastagni Holstedt, APC has used the Contracts Clause in California’s Constitution to protect vested employee benefits in several high profile court battles: Stockton (fiscal emergency declaration does not authorize City to renegotiate a closed labor contract), Los Angeles (fiscal emergency declaration does not permit freezing retiree medical benefits or imposing furloughs), Pacific Grove (Ballot measure capping PERS pension contributions unconstitutional).  Similar rulings were obtained by the police and fire unions in San Jose invalidating in substantial measure Reed’s San Jose pension impairments.

 

This pension "reform" effort is led by Democrat Chuck Reed and his lawyers. As we blogged previously, the initiative amends the California Constitution to allow voters to impair employment contracts. While Reed claims his measure will not impair current employees' pensions, even Daniel Borenstein of the Contra Costa Times has acknowledged "the initiative would amend the state Constitution to give voters the right through an initiative or referendum to reduce the future pension accrual rate for current employees…Reed and DeMaio should be honest about it, or abandon the measure."

 

Additionally, the Constitutional amendment would abolish pensions for employees hired after January 1, 2019 and replace them with a "defined-contribution" system unless changes to benefits are approved in an election.  In a defined-contribution system, employees have to pay in a fixed amount with no guarantee of what their retirement income would be.  As a result, this approach shifts the risk and could prevent thousands of public employees from retiring.

 

The proposal is not limited to retirement benefits.  It provides, "Voters have the right to use the power of initiative or referendum... to determine the amount of and manner in which compensation and retirement benefits are provided to employees of a government employer."  As a result, the Constitutional Amendment would likely be used to pursue local voter initiatives to bypass collective bargaining to reduce public safety compensation or due process rights.

 

The proposal also seriously jeopardizes death and disability benefits for public safety employees. The new proposal states it shall not be “interpreted to modify or limit any disability benefits provided for government employees or death benefits for families.” But death and disability benefits are often an integral part of a pension plan. As noted by the Legislative Analyst's Office, death and disability benefits are usually prefunded through a pension plan's normal cost. If voters can modify, or even eliminate, pensions for public employees, this necessarily means the funding for death and disability benefits will be cut.  The measure does not provide any means of securing those benefits.

 

The proposal also seeks to insulate future measures from legal challenge by eliminating the jurisdiction of the Public Employment Relations Board to hear unfair practice charges regarding future measures which impair vested rights or collective bargaining agreements. 

 

Now that the initiative has a summary, the proponents must furnish the required number of signatures in order to make the November 2016 ballot. You can help stop this initiative by educating your family, friends, and community members about the drastic and detrimental effects of this initiative and encourage them not to sign any petition supporting the initiative. You can help stop future attempts to impair retirement benefits by opposing all candidates who endorse this imitative.

Mastagni Holstedt, APC Protects Retirement Rights in the Court of Appeal

Mastagni Holstedt, APC filed an amicus brief with the California Second Appellate District, Division One. At issue are adjustable retirement health subsidies under the City of Los Angeles’ retirement system. In 2006, the City of Los Angeles passed an ordinance which allowed the Board of the Los Angeles Fire and Police Pension System to provide an adjustable retirement health subsidy. This adjustable rate would allow the City to increase contributions as costs increased over time.

However, in 2011, the City of Los Angeles passed an ordinance freezing future increases to the subsidy. Los Angeles employee organizations brought suit alleging this violated their vested right to a variable subsidy. The trial court agreed and ordered the City to increase the subsidy pursuant to the 2006 ordinance.

The City appealed the decision arguing it had plenary authority to modify the pension subsidy as it was a type of “employee compensation.” In its brief, Mastagni Holstedt, APC argues a pension subsidy is not salary, but is instead a vested benefit. The California courts have already held on numerous occasions a pension benefit, once vested, cannot be revoked. The California Constitution’s Contracts Clause prohibits such an action. Thus, the City cannot arbitrarily revoke a benefit by reforming it as “employee compensation.”

Mastagni Holstedt, APC thanks the employee organizations who joined the firm in fighting back against the destruction of employee benefits.  Mastagni Holstedt attorneys David E. Mastagni, Isaac S. Stevens, and Ian B. Sangster represent the amici in the matter.

Chuck Reed Provides a Preview of His Threatened Assault on the California Constitution

On April 10, 2015, the Reason Foundation held their third annual Pension Summit. The Summit focused on a recent report by the Foundation which concluded the 2012 Public Employees' Pension Reform Act failed to fix California's pension problems. The keynote speaker for the event was former San Jose Mayor Chuck Reed. Reed presented his 2016 ballot initiative aimed at dismantling California pensions at the event. IAFF Local 522, along with other public employee organizations, picketed the event, letting Reed know his pension busting efforts are not welcome in Sacramento.

Pat Cook, in blue,
Local 522
Secretary-Treasurer

After a string of court losses invalidating local governments' efforts to break their contractual obligations, Reed seeks to undermine Californians' constitutional rights by eliminating or altering the Contracts Clause in California’s Constitution. Currently, both the United States' Constitution and California’s Constitution include a Contracts Clause barring public entities from taking actions impairing contracts. The courts have construed the Contracts Clause as requiring the state, counties, and cities to provide promised pension benefits. In Allen v. City of Long Beach the California Supreme Court held an employee has a vested (i.e. contractual) right to receive the pension benefits his public employer promised him.

Mike Feyh, in green, Local 522 Director of Membership Services

The Contracts Clause prevents public entities from walking away from all their contractual obligations, not just pension obligations. The Contracts Clause protects all Californians from legislation that impairs contracts with public entities, such as bond repayment obligations and commercial contracts. Without it, public entities would likely not even be able to borrow from the bond market, because financial institutions would not be able to rely on agencies' promises to repay their debts. While Reed's goal is to attack public employees' property rights in their pension, his efforts could undermine governments' contracts with private citizens, vendors, businesses, and lenders.

In recent years, California courts have rejected local governments’ attempts to impair employees’ vested benefits to address supposed “fiscal emergencies.” Our office vindicated both the U.S. and California Contracts Clauses in several high profile court battles: Stockton (fiscal emergency declaration does not authorize City to renegotiate a closed labor contract), Los Angeles (fiscal emergency declaration does not permit freezing retiree medical benefits or imposing furloughs), Pacific Grove (Ballot measure capping PERS pension contributions unconstitutional).  Similar rulings were obtained by the police and fire unions in San Jose invalidating in substantial measure Reed’s San Jose pension impairments.

To circumvent these Constitutional protections, Reed's initiative would grant public entities Chapter 9 Bankruptcy type powers to unilaterally modify their contractual obligations, but without the creditor protections and judicial oversight of bankruptcy proceedings. Reed abandoned a similar initiative on the ballot for the 2014 election after unsuccessfully suing Attorney General Kamala Harris over the title and summary her office assigned to it.



Chris Andrew, Local 522
 City Vice President

Reed’s initiative would modify the Contracts Clause to allow public entities to impair their contractual obligations by majority vote of their governing body. Reed’s new initiative would likely accomplish this by repealing the California Contracts Clause altogether or singling out public employees for elimination of their Constitutional rights. Either approach is repugnant. Excluding public employees’ contracts from the Contracts Clause would allow governments to redirect money promised to public safety employees for politicians' personal spending priorities (politicians rarely return savings to the tax payers). Eliminating the Contracts Clause altogether would threaten everyone's contracts with the government.

 
 

Reed’s new initiative also fails to account for the Contracts Clause of the U.S.  Constitution which provides the same protection against impairments of contract. Even if Reed succeeds in altering the California Constitution, future attacks on vested pension benefits will likely remain unconstitutional under the U.S. Constitution.  California courts have held that the California and United States Contracts Clauses are construed the same. (See for example San Bernardino Public Employees Assn. v. City of Fontana and Kern v. City of Long Beach.) In the last 47 years, no court in the Ninth Circuit has upheld a public agency’s attempt to impair its own contractual obligations. (See So. Cal. Gas Co. v. Santa Ana.) Thus, damaging the California Constitution will not insulate Mr. Reed’s agenda from Constitutional protection.

Public employees are already working to expose Reed’s new initiative for what it is: an attempt to use the ballot box to accomplish what the courts already prohibited governments from doing. Keep an eye on this blog for continuing updates on Reed’s efforts to rewrite our Constitution.



Supreme Court Addresses Private Sector Vested Rights

On Monday the Supreme Court struck a blow to vested health-care benefit rights under collective-bargaining agreements in the private sector. Previously, courts assumed health-care benefits in a collective-bargaining agreement vested for life absent language to the contrary. This case changes that presumption. Now, health care benefits will not vest for life unless clearly stated in the collective-bargaining agreement. 

The issue in M&G Polymers USA, LLC v. Tackett is how health-care benefits vest under a collective-bargaining agreement. The Court of Appeals for the Sixth Circuit said health-care benefits are vested unless the collective-bargaining agreement say they are not. This presumption protects the vested benefit right.

The Supreme Court reversed that presumption. The Court said the presumption had no basis in contract law. Thus, when a contract is silent as to the duration of benefits, a court may not infer that the parties intended for those benefits to vest for life. The Court did not reinterpret the contract.  Instead, it asked the Sixth Circuit to review the case under “ordinary principals of contract law.”

This opinion does not reflect California law in the public sector. Article 1, Section 9 of the California Constitution prohibits the legislature from passing a law which impairs the obligation of contracts. The California Supreme Court has clearly stated that once a public employee accepts employment and works for an employer, the employee’s rights are protected by the Contract Clause. (White v. Davis (2003) 30 Cal.4th 528, 566.) Among these protected rights are vested pension rights. (Betts v. Board of Administration of Public Employees’ Retirement System, (1978) 21 Cal.3d 859, 863.)

Additionally, this ruling does not change the presumption in California that a public employee’s right to health benefits may be based on the implied terms of a collective bargaining agreement. (Retired Employees Association of Orange County, Inc. v. County of Orange (2011) 52 Cal.4th 1171.) However, an implied right to health-care benefits will only be inferred if there is a clear basis in the contract or convincing extrinsic evidence supporting the vested right.

Mastagni Firm Wins Landmark Decision on Vested Rights in Los Angeles

The Mastagni Firm won a landmark decision from the Los Angeles Superior Court invalidating the City of Los Angeles’ attempt to cap employees’ retiree medical benefits.   In an order issued last week, the court held that the cap impaired Deputy City Attorneys’ vested rights to a retiree medical subsidy. The court granted LACAA’s petition for a writ directing the City to compute and provide the health insurance subsidy without regard to the freeze ordinance. The impact of this decision has been estimated at approximately $71,000,000.  The ruling follows the Mastagni Firm’s similar victories in Pacific Grove and Stockton defending employees’ constitutionally protected vested rights against contract impairments.

In 1973, the City enacted a retiree medical premium subsidy to provide its retirees no-cost or low-cost health insurance.  Over the years, the City amended the program to ensure the subsidy kept pace with increases in retiree medical costs. In 2011, the City froze the retiree medical subsidy at $1,190 per month, claiming employees did not have a vested right to increases and that the savings were needed to address the City’s supposed “fiscal emergency.”

The Los Angeles City Attorneys’ Association (“LACAA”) sought a writ of mandate to prevent the City from enforcing the freeze ordinance and requiring the City to set the subsidy without reference to the freeze. The City denied the existence of any vested right, asserting that it had the legislative authority to make whatever changes to retirement benefits it wanted.   

The court ruled the freeze unconstitutionally impaired a vested right to receive the subsidy. The court found that the City’s Administrative Code “evidence[d] a clear legislative intent to create private contractual rights in the provision of a medical subsidy that covers all or part of the cost of an employee’s medical plan.” The court further found the Administrative Code “create[d] a vested right in a medical subsidy that covers part or all of the costs of a medical plan to eligible employees.”  The court rejected the City’s defense, ruling the “reservation of rights” did not defeat the finding.

To survive constitutional scrutiny, any changes in pension benefits must be materially related to the theory of a pension system, and any change that results in disadvantages to the affected employees must be accompanied by comparable new advantages.

The court found that the freeze resulted in a disadvantage to LACAA’s members because “a fixed benefit system is disadvantageous when compared to fluctuating or fluid benefit system.”  The court then found the freeze ordinance “merely establishes a disadvantage – a frozen subsidy amount of $1,190 – and fails to establish any comparable new advantages.” Rejecting the City’s claim that the disadvantages resulting from the freeze ordinance were offset by the subsidy the City created for employees whose unions agreed to increase their pension contributions, the court noted that “getting the same benefit as before, at the expense of contributing an extra 4%, hardly constitutes a comparable new advantage.”

The court further found that the freeze ordinance was not materially related to the theory of the pension system.  According to the court, “because the apparent goal of the freeze ordinance is to resolve the City’s pending fiscal emergency, the ordinance is not materially related to the theory of a pension/medical subsidy system and its operation.” The court was also troubled that the freeze was not a temporary measure, stating “it is a permanent and progressively more onerous impairment of a vested right to a medical premium subsidy.”

The court affirmed that retirement benefits are constitutionally protected, and cannot be impaired to address fiscal woes.  In these difficult economic times, employee organizations must be vigilant in protecting the benefits their members earned through years of public service. We strongly urge every employee organization to promptly consult qualified legal counsel to determine the legality of any attempt to cut employees’ retirement benefits.

The Los Angeles City Attorneys' Association is the exclusive employee organization representing over 400 attorneys in the City of Los Angeles’ Office of the City Attorney.  Mastagni attorneys David E. Mastagni and Isaac S. Stevens represented LACAA in this litigation.

Court Issues Injunction, Statement of Decision Affirming Constitutional Protection For Pensions

In May, the Monterey Superior Court overturned a voter initiative that tried to impair police officers' pensions.  The judge in that case, Pacific Grove Police Officers Association et al. v. City of Pacific Grove, has now issued a permanent injunction and statement of decision.  The injunction prohibits the city from "taking any action to implement, enforce, or give any effect" to the initiative.

The statement of decision explains the Court's ruling.  The Court explained the initiative violated the California Constitution by capping the City's contribution toward police officers' pensions.  "The employees were told that they were to receive retirement benefits under a CalPERS administered plan with an employee cost set at a fixed percentage of their salary.  The fluctuating portion would be borne by the employer."  The City violated the constitutional prohibition on impairment of contracts by effectively flipping those roles.

The Court stressed employees' vested rights.  The Court said, "the Court reiterates that what is vested in the employee is the right to earn a pension on the terms promised to him or her upon employment."  As a result, "no subsequent legislation by the city, whether by Charter amendment, ordinance, or Council resolution, or voter initiative, can take these rights away once given..."

The Court also explained officers' pensions could not be decided by initiative and therefore the "Citizen's Initiative is invalid because it delegates the responsibility of the ultimate decision for fixing compensation to the voters."  The Court said under the city's Charter, which mirrored the general law, the city council had to set all compensation.

The Pacific Grove Police Officers Association and Police Management Association were represented by Mastagni Law attorney Jeffrey R. A. Edwards in the matter.

Court Rules Pension Impairments Unconstitutional Under Contract Clause

In a major ruling with statewide implications, the Monterey Superior Court ruled Friday that the City of Pacific Grove’s 2010 voter initiative and charter amendment capping the City’s contributions to CalPERS are unconstitutional. The Court’s ruling follows a challenge to the measures brought by the Pacific Grove Police Officers Association and Pacific Grove Police Management Association and supported by PORAC LDF. The Court also ruled that the measures violated the City Charter and the general law because voters cannot set employee compensation by initiative.

According to Pacific Grove Police Officers Association President Jeff Fenton, “Today’s ruling is about fairness. We went to court to ensure the City keeps the promises it made to employees and today the court said they have to.” The Court struck down the ordinance and charter amendment because they violate the Contract Clause of the California Constitution. The Contract Clause requires local governments to keep the promises they make to public employees. It also forbids them from impairing contracts with labor associations.

The case has major implications statewide because it establishes that cities and counties can’t go back on the pension promises they made to employees.  PORAC LDF contributed significant resources toward the police officers’ efforts. “We are deeply thankful for the help from our brothers and sisters in the law enforcement community and PORAC LDF toward achieving this victory,” Fenton said.

The Pacific Grove Police Officers Association and Police Management Association were represented by Mastagni Law attorney Jeffrey R. A. Edwards in the matter.

Michigan Voters Considering Constitutional Right to Collective Bargaining

After a string of stinging defeats at the ballot box, labor leaders in Michigan are trying to turn the tide by establishing a state constitutional right to collective bargaining.  Next Tuesday, Michigan voters will go to the polls to decide Proposal 2, which would create a state constitutional amendment locking in union rights in the state.  Proposal 2 would:

• allow police officers and firefighters to negotiate safe staffing levels
• establish a constitutional right to form a union and bargain collectively
• invalidate any attempts by the state legislature to limit collective bargaining rights
• override state laws about employees hours and conditions of employment 
• mandate binding arbitration for some police groups

If passed, Proposal 2 would be the first of its kind in the country.  The campaign to pass Proposal 2 got a big boost earlier today, when President Clinton endorses the measure.  

Court Finds Impairment of Pension Benefits Unconstitutional Under Contract Clause

In Cherry, Jr. et al. v. Mayor and City Council of Baltimore City, et al., (D. Md., September 20, 2012), Case No. MJG-10-1447, a federal judge ruled Baltimore's plan to impair firefighters' and police officers' pensions is unconstitutional under the Contract Clause of the federal Constitution.  The Contract Clause provides that "No State shall...pass any...Law impairing the Obligation of Contracts..."  The Clause frequently comes into play when the government tries to pass laws to get out of its own contractual obligations, including collective bargaining agreements.

To pass muster under the Contract Clause, a law that impacts the government's contracts has to pass several tests.  The test at the center of the Cherry decision is the "reasonable and necessary" test.  To pass this test, there have to be unforeseeable consequences to the contract and the law impairing the contract must be the least drastic impairment.  In Cherry, the Court ruled the City failed this test because the unions offered more balanced approaches.

While the ruling in Cherry decision vindicates public employees in Baltimore, several California cities are trying to impair their contractual obligations.  Mastagni Law attorneys David E. Mastagni, Isaac S. Stevens, and Jeffrey R. A. Edwards are litigating similar challenges against the cities of Los Angeles, Stockton, and Pacific Grove.

Tom Sullivan Interviews David P. Mastagni on Why Cities Scapegoat Cops and Firefighters

Mastagni Law partner David P. Mastagni recently appeared on the Fox's Tom Sullivan Show to explain why California cities, including Stockton, are trying to scapegoat public safety professionals and violate their contractual obligations.  He explained that in light of what cities are doing with their contracts, "you dont have to be an Apache Indian or Geronimo to understand what the government thinks of its contractual obligations."

The real problem is that cities made "bad business judgments" by approaching infrastructure projects like it was "college lab class," investing other people's money in ventures they knew little about.  Now that cities are seeing red, they're blaming police officers and firefighters, but "blaming the police is nothing but a red hering." 

Watch the whole video here.

Lawsuits Filed to Stop Attacks on Retirement Security

Legal challenges are already underway to local pension initiatives passed by voters Tuesday in San Diego and San Jose.  The initiatives, both named "Measure B", attack public employees' pensions in those cities.

San Diego's Measure B creates a new retirement tier replacing defined benefits with a 401(k) and lowers public safety's maximum retirement benefit to 80% of salary.  The measure also caps city payroll at 2011 for five years, risking massive layoffs for the city.  

The legal challenge to the San Diego measure started even before the election.  Unions filed an unfair practice charge with PERB in February because city leaders refused to meet and confer about the changes.  PERB quickly granted their request for injunctive relief and filed a lawsuit in San Diego to stop the measure from going before voters.  While the court initially ruled against PERB, the case was promptly appealed and oral arguments are scheduled for June 13, 2012.  PERB also issued a complaint against the city.

The San Jose measure seeks to shift the city's contributions to the pension system to employees, likely 16% of their salaries.  It also provides that if the cost-shifting provision is struck down, as many expect it will be, the city can dramatically slash salaries to make up the difference.  The plan also limits disability retirements, lets the city council take away retirees' cost-of-living-adjustments, and prices retirees out of the city health insurance plan.

San Jose police and firefighters immediately filed lawsuits in state court to stop enforcement of the measure.  The firefighters lawsuit, Robert Sapien et al. v. City of San Jose et al. seeks declaratory and injunctive relief and a writ of mandate prohibiting enforcement of Measure B.  It argues the measure violates California state constitutional protections related to due process, the prohibition on breaking public contracts, and restrictions on seizing property.  The POA's lawsuit, San Jose Police Officers' Association v. City of San Jose et al. makes similar claims and also alleges violations of freedom of speech, separation of powers, the MMBA, the parties' MOU, and the California Pension Protection Act.  The City of San Jose also filed a preemptive lawsuit in federal court seeking a declaration that the measure is not unconstitutional.

San Francisco Mayor Starts Proceedings to Remove Convicted Sheriff from Office

On Tuesday, March 20, 2012, San Francisco Mayor Ed Lee announced he was suspending San Francisco Sheriff Ross Mirkarimi after the latter refused to resign following his guilty plea Monday to misdemeanor false imprisonment charges.

Article 11 of California's state constitution requires every county have an elected sheriff.  It also allows charter counties, such as San Francisco, to set their own rules for the removal of sheriffs and other officials.  San Francisco's Charter, in turn, proscribes a 5-step process for removal of elected officials guilty of "official misconduct":

1.   The mayor starts the process by suspending the official and appointing a temporary replacement.
2.   The mayor sends formal charges to the San Francisco's Ethics Commission.
3.   The Ethics Commission holds a hearing.
4.   The Ethics Commission makes a recommendation on removal to the Board of Supervisors.
5.   The Board of Supervisors has 30 days to vote on whether to remove the sheriff.  Removal requires a three fourths vote to pass.  Supervisors do not have to follow the Ethics Commission's recommendation.

Because these rules are set by San Francisco's Charter, other rules apply for removal of sheriffs in other counties.

Florida Police, Teachers Win Major Contract Clause Victory on Pensions

In George Williams et al. v. Rick Scott et al. (March 6, 2012, Fl. Cir. Ct.) Case No. 2011-CA-1584, Florida police officers, teachers and other public employees defeated attempts to unilaterally increase their employee contributions to Florida's pension system.  Read the full decision here.

On May 26, 2011, Florida's governor, Rick Scott, signed a bill unilaterally increasing public employees' contribution to that state's pension system by three percent (3%) and changing cost-of-living adjustments.  The bill effectively lowered all employees salaries and provided no new benefits to employees.  Florida's public employee labor unions never agreed to the changes and quickly filed a lawsuit challenging the constitutionality of the unilateral change to employees' pension benefits on Contract Clause grounds.  After initially losing an injunction, the employees' unions moved for summary judgment in late 2011.

The court found "the legislature is precluded... from abridging in any way the unconditional contract rights of the plaintiffs."  The court also found the three percent increase was "substantial as a matter of law" and noted the lifetime costs of employees ranged from tens to hundreds of thousands of dollars.  The court further stressed the state of Florida failed to prove a "compelling state interest" for the increase, noting "They merely produced evidence that the state faced a significant budget shortfall; this is not enough."  Indeed, the court noted the legislature could have made the same savings without violating its contract, but "All indications are that the Florida Legislature chose to effectuate the challenged provisions... in order to make funds available for other purposes."

As a result, the Court ordered the State to stop deducting the additional three percent from employees' salaries and reimburse millions of dollars withheld from employees since July 1, 2011.

California Supreme Court Upholds Abolition of Redevelopment Agencies

In an opinion sure to have state-wide impact on the nearly 400 existing redevelopment agencies, the California Supreme Court held, “Redevelopment agencies ... do not have protected right to exist that immunizes them from statutory dissolution by the legislature.”  The ruling in California Redevelopment Assn. v. Matosantos (Cal., Dec. 29, 2011, S194861) 2011 WL 6822391, has broad implications for for public safety services.  Redevelopment agencies had been used to siphon local revenue away from core services, such as law enforcement and fire protection, but Thursday’s ruling makes it much more difficult for cities and counties to continue the practice.

The Court ruled on two state laws addressing so-called “Redevelopment Agencies.”  The Court held, “Assembly Bill 1X26, the Dissolution Measure, is a proper exercise of the legislative power vested in the legislature by the State Constitution.”  The Court explained that the power to create entities such as redevelopment agencies carried with it the corollary power to dissolve those entities.  However, the Court invalidated the measure’ companion bill, A.B. 1X27, which conditioned further redevelopment agency operations on additional payments by the agencies’ community sponsors to state funds benefitting schools and special districts.  The Court found this mandate violated Proposition 22, which amended the Constitution to prevent the state from redirecting redevelopment funds.

The opinion also chronicles how community redevelopment agencies, formed to combat urban decay, developed into the principal instrument of economic development for most cities.  These agencies principally acquire and transfer property on favorable terms for residential or commercial development.  Unable to levy taxes, the agencies rely on tax increment financing, whereby the property tax revenues for government entities other than the redevelopment agency are frozen, while revenues from any increase in values are awarded to the redevelopment agency on the theory that the increase is the result of redevelopment. The tax increment financing has, “sometimes been misused to subsidize the city’s economic development through the diversion of property tax revenue for other tax entities.”  The agencies are used to shield property tax revenue from other governmental agencies and create a shell game amongst local governments with respect to property tax funds.

The tax increment financing is a hot political issue because of the arguable unfair advantage it provides cities over school districts and local taxing agencies, and the loss of revenue to the state’s general fund.  While Governor Brown considered eliminating redevelopment agencies altogether as a partial mean of closing the state’s projected budget deficit, the legislation enacted “freezes” conditions by placing restrictions on modification of existing plans and barring creation of new agencies.  The legislation was intended to preserve redevelopment assets and revenues to fund core local services, i.e. public safety and education.  The dissolution component transfers control of redevelopment agency assets to the local public entity that created the agency and requires performance of existing obligations.  The Court invalidated the provision that created an exemption for agencies that agreed to make specified payments to other governmental funds.

Paper: Police vs. Stockton, Round 1

The Stockton POA was in court Friday trying to block the city's attempt to impair their MOU based on a purported fiscal emergency.  The city claims it can impair existing labor contracts because the city council passed a resolution declaring a fiscal emergency.  Mastagni Law attorneys David P. Mastagni, David E. Mastagni, William M. Briggs, Isaac S. Stevens and B.J. Pierce represent Stockton POA in the action.  A ruling is expected before the end of the year.  Read more about the case in the Stockton Record's article Police vs. Stockton, Round 1.

DOJ Special Agents Sue to Stop Budget Cuts

The Association of Special Agents - Department of Justice filed a Verified Petition for Writ of Mandamus and Complaint to stop the state from laying off approximately 200 special agents.  The layoffs threaten to close over two thirds of BNE task forces.  According to the petition, the layoffs are an infringement of the Attorney General's constitutional and statutory authority to determine the DOJ's functions and allocate resources within the Department.  The complaint seeks injunctive and declaratory relief.  Mastagni Law attorneys David P. Mastagni, David E. Mastagni and Isaac S. Stevens represent ASA-DOJ in the action.

California Supreme Court Issues Landmark Decision Affirming Public Employees' Vested Rights

In Retired Employees Association of Orange County, Inc. v. County of Orange (November 21, 2011) 2011 WL 5829598, a unanimous California Supreme Court ruled public employees can receive constitutionally-protected vested rights by way of implied contract terms.  The holding means public employers can be liable for promises made to employees, even if they do not formally adopt them by ordinance.  The case has been closely watched for its broad implications on labor relations, employee compensation, and pension benefits.

The case arose after Orange County substantially increased the cost of retirees' health insurance premiums by splitting retirees into a separate pool from active employees for calculating premiums.  The retirees filed suit in federal court, arguing they have a vested right to premiums calculated from a joint pool.  The County claimed the retirees have no vested rights because the MOUs under which they retired did not expressly indicate how the cost of retiree health benefits would be calculated.  The District Court sided with County, finding the County could not be liable because it did not explicitly confer vested rights through an ordinance.  The retirees appealed and the federal Court of Appeals asked the California Supreme Court to decide the issue.

The Court held the County could be held liable for its promises to employees, regardless of whether it expressly adopted them through an ordinance.  The Court reasoned employees could hold their employer accountable for the implied terms of a contract, such as the duration of a benefit.  As a result, the Court concluded, "[w]hether an implied term creates vested rights... is a matter of the parties' intent" and general contract principles apply to determine the intent.

The Court went on to reject the County's argument that vesting should be treated differently, noting "[n]either County nor amici curiae [] offer any legal authority for this distinction."  As a result, the Court concluded, "[v]esting remains a matter of the parties' intent."  Once intent is established, the implied terms are treated as part of the contract and are protected by the Contract Clause of the California and federal constitutions.

Governor Releases "Twelve Point Pension Reform Plan"

On October 27, 2011, Governor Edmund G. Brown Jr. released his 12 proposed major reforms for state and local pension systems. The governor stated the proposals “would end system-wide abuses and reduce taxpayer costs by billions of dollars over the long term” and cut in half the cost to tax payers of state employee pensions.

The “Twelve Point Pension Reform Plan” and its explanation are set forth as follows:

1. Equal Sharing of Pension Costs: All Employees and Employers: Will require that all new and current employees transition to a contribution level of at least 50 percent of the annual cost of their pension benefits.

2. “Hybrid” Risk-Sharing Pension Plan: New Employees: The “hybrid” plan will include a reduced defined benefit component and a defined contribution component. The hybrid plan will be combined with Social Security to provide an annual retirement benefit of about 75 percent of an employee’s salary. The 75 percent target is based on 30 years for safety employees and 35 years for non-safety.

3. Increase Retirement Ages: New Employees: For most new employees, retirement ages will be set at the Social Security retirement age, now 67. The retirement age for new safety employees will be less than 67, but commensurate with the ability of those employees to perform their jobs.

4. Require Three-Year Final Compensation to Stop Spiking: New Employees: Eliminates one-year rule to discourage efforts in the last year of employment to increase the compensation used to determine pension benefits.

5. Calculate Benefits Based on Regular, Recurring Pay to Stop Spiking: New Employees: Will require that compensation be defined as the normal rate of base pay, excluding special bonuses, unplanned overtime, payouts for unused vacation or sick leave, and other pay perks.

6. Limit Post-Retirement Employment: All Employees: Will limit all employees who retire from public service to working 960 hours or 120 days per year for a public employer. It also will prohibit all retired employees who serve on public boards and commissions from earning any retirement benefits for that service.

7. Felons Forfeit Pension Benefits: All Employees: Will require that public officials and employees forfeit pension and related benefits if convicted of a felony in carrying out official duties, in seeking an elected office or appointment, or in connection with obtaining salary or pension benefits.

8. Prohibit Retroactive Pension Increases: All Employees: Will eliminate unfunded liability from increased pension benefits.

9. Prohibit Pension Holidays: All Employees and Employers: Will prohibit all employers from suspending employer and/or employee contributions necessary to fund annual pension costs to avoid repeat of past where many public employers stopped making annual pension contributions during wall street boom years.

10. Prohibit Purchases of Service Credit: All Employees: Will avoid the investment risk associated with allowing purchase of service credit for time not actually worked.

11. Increase Pension Board Independence and Expertise: Will add two “independent” persons with financial expertise to the CalPERS Board and require that persons and their family are not eligible for CalPERS pension. Will also replace State Personnel Board representative on the CalPERS board with the Director of the California Department of Finance. Intended to achieve greater independence and greater sophistication.

12. Reduce Retiree Health Care Costs: State Employees: New state employees will be required to work for 15 years to become eligible any retiree health care and required to work for 25 years to become eligible for the maximum state contribution. Will encourage local governments to make similar changes.

These proposals will have to be debated and passed by the California Legislature before Governor Brown can sign them into law.