On December 20, 2013, the Santa Clara County Superior Court overturned the heart of Measure B, San Jose's attack on employees' pensions. In doing so, the court followed the Monterey and Los Angeles superior court which have overturned similar attacks on employees' vested rights.
The court overturned part of Measure B that shifted financial responsibility for unfunded liabilities from the City to employees. That section would have dramatically increased employees' contributions into the system. The court found that employees had a vested right to have the City pay that portion. As a result, Measure B unconstitutionally impaired their vested rights.
The court also overturned a provision that allowed the City council to suspend retirement Cost-Of-Living-Adjustments (COLAs) by "declaring a fiscal emergency." COLAs are not always vested rights, but the court found that retirees in this system had a vested right to COLAs. The court overturned this section, noting it is not enough for a city council to declare an emergency. Instead, there has to really be an emergency. Further, an impairment to a vested right on emergency grounds has to be temporary. Since this section did not require a real emergency and impaired vested rights in a permanent way, the court ruled it was unconstitutional.
The court upheld other portions of Measure B related to disability retirement, supplemental payments to retirees, retiree medical, and wage cuts. The court also found "that the Measure B sections at issue in this case can proceed as to new employees."
