Trust Counsel: California Pensions More Secure Than Detroit's

After a Michigan bankruptcy judge opened the door to cutting public employees' pensions as part of the City of Detroit's bankruptcy, some observers suggested the ruling opens the door to similar tactics in California. But as Harvey Leiderman, the well-regarded trust counsel to CalPERS and other retirement systems, recently explained, California's pensions are very different from - and more secure than - Detroit's.

Leiderman explained Michigan's pension system hinges on a contractual relationship between two groups: retirees and employers, making it more vulnerable to impairment in bankruptcy.  That's because bankruptcy courts (unlike employers themselves) have special powers to impair contracts.  California's system, however, has three groups: retirees, employers, and pension trusts, such as CalPERS.

Leiderman explains that California's system includes legal duties between employers and pensions trusts on the one hand, and pension trusts and retirees on the other.  These duties are the product of state laws, not contracts.  He used this chart to illustrate the relationship:

Thus, even without contracts, California public employers have a duty to pay CalPERS and CalPERS has a duty to pay retirees.  Read the full article here.

Poll Shows Californians Oppose Reed Initiative

A recently survey conducted December 5-9, 2013 shows Californians coming out against the Reed Initiative by a margin of 49% to 35%.  The poll shows an overwhelming majority of Californians oppose efforts to eliminate public servants' pensions.  Specifically, the poll noted that 54% of California strongly oppose "Eliminating Police, Firefighters, and Other Public Employees Vested Pension Benefits."  Read the report on the new poll here.

Ninth Circuit: Reporting Safety Concerns to Supervisor May Not Be Protected by First Amendment

In Hagen v. City of Eugene (9th Cir. 12-35492 12/3/13), the Court of Appeals held when an employee makes statements within the chain of command, regarding an issue of employment, and has a duty to make those statements, they do not first amendment protections.

Officer Hagen was a K-9 Officer who worked on the SWAT team. Over ten years, the SWAT team had 4 accidental discharges, two of which injured a fellow officer. Ofc. Hagen brought up his concerns about safety several times to his supervisor, Sgt. Eichorn, but no one told him of any proposed remedies. When Ofc. Hagen continued to press the issue, Sgt. Eichorn became irritated and annoyed. Then, the Department suspended the K-9 team two months and Ofc. Hagen was removed from the K-9 team permanently in retaliation.

Ofc. Hagen filed lawsuit, saying the Department retaliated against him for an exercise of his First Amendment right to free speech. But, the Ninth Circuit said when Hagen reported the Department safety concerns, he was acting as an employee, not a private citizen, and therefore had no First Amendment protections. The court based its decision on the Department being a highly hierarchical employment setting, and said his statements were within the chain of command concerning his employment and safety. Furthermore, Hagen was required to report all safety concerns under Human Resources Policies and Procedures. Therefore, Hagen’s speech was made within the employment setting, pursuant to a duty to do so, and was not protected by the first amendment.

This case was just about First Amendment protection.  Employees have additional protections when they concertedly complain or engage with their union about workplace issues.

Stockton POA President, Officer Vindicated of Insubordination Charges

As reported in LRIS, an arbitrator reversed the suspensions of Stockton's POA president and a board member after the City retaliated against them for participating in a POA charitable fundraiser and ordered full back pay.  The decision vindicates the officers and makes clear they did nothing wrong.  Indeed, according to the Stockton Record, "the dispute ended with an arbitrator finding that [the chief] mishandled the situation."

In the lead up to Stockton's bankruptcy, the City and the POA engaged in several legal battles, including the City’s unconstitutional attempt to void the POA contract through a declaration of fiscal emergency.  As the city manager tried to discredit the POA and blunt their public relations efforts, his chief of police claimed POA members couldn't do charitable work because it violated the Department's outside employment policy. 

Then he issued a vague order to "SPOA members" to not "directly or indirectly" participate in the selling/bartending of alcohol. The POA fought back and went forward with a charitable fundraiser, having members' families sell beer instead of the officers.  Then, after the POA made a vote of no confidence against the chief, he suspended SPOA President Stephen Leonesio and Director Mark McLaughlin for insubordination based on their participation in the charitable fundraiser.

The arbitrator ruled the suspensions unjustified.  The arbitrator ruled the chief's order was vague and confusing.  The order did not spell out what counted as selling/bartending and what it could even mean to "indirectly" bartend.  The arbitrator found that "they attempted to comply with the order as they reasonably understood it based on Leonesio’s discussions with Ulring and the language of the order itself.  It bears repeating that, before the event began, SPOA recruited family members and friends to staff the booths and sell alcohol in the place of SPOA members."

The order also didn't make sense because the POA had served alcohol at several charitable events in the past and "In fact, [the chief] himself has served and purchased alcohol at such events."  “If [the chief] truly had the concerns, … he should have said so in clear and unambiguous language,” the arbitrator said. “Instead, he issued an ambiguous and confusing order."  Since the order was unclear and the officers made a reasonable effort to comply with it, they should never have been suspended.

“The taint the city tried to put on their careers has been erased,” David Mastagni said. “The city insisted on going forward with the discipline on these two guys. … It was certainly personal on the city’s end.”  Mastagni attorneys David E. Mastagni and Jeffrey R. A. Edwards represented Officers Leonesio and McLaughlin.

Court of Appeal: POBR Violation Voids Dishonesty Charge

In Ruiz v. City of Bell Gardens (2013) Case No. B244395, the Court of Appeal affirmed a superior court ruling voiding a dishonesty allegation because of a POBR violation.  Officer Ruiz was on administrative leave pending the outcome of an IA investigation.  When his department put him on administrative leave, it ordered him not to enter any city property not open to the general public.  Then, a lieutenant came across him in police trailer not open to the general public and asked him about why he was there.  The court found that the lieutenant's questions constituted an interrogation under POBR.  Since the department did not give him notice of the interrogation in advance, it violated POBR and Officer Ruiz statements were suppressed.  Without his statements, there was no basis to support the dishonesty allegation.