On 12/02/2016 AMERICAN FEDERATION OF STATE, ETC filed an Other - Other Judicial Review lawsuit against CITY OF L A. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The case status is Pending - Other Pending.
Pending - Other Pending
Los Angeles County Superior Courts
Stanley Mosk Courthouse
Los Angeles, California
INTERNTIONAL UNION OF OPERATING ENGINEERS
LABORERS INTERNATIONAL UNION OF NORTH
AMERICAN FEDERATION OF STATE COUNTY AND
TEAMSTERS UNION LOCAL 911
LOS ANGELES AND ORANGE COUNTY BUILDING &
BOARD OF ADMINISTRATION OF THE LOS
LOS ANGELES CITY OF
DOES 1 TO 50
CITY OF LOS ANGELES
SEGALL ANTHONY R. ESQ.
SEGALL ANTHONY ROBERT ESQ.
TYRA DAVID WILLIAM
GELLER JOSHUA MARC
12/7/2016: NOTICE OF TRIAL SETTING CONFERENCE & ATTACHED ORDERS THEREON
12/12/2016: PROOF OF SERVICE OF NOTICE OF TRIAL SETTING CONFERENCE & ATTACHED ORDERS THEREON
12/20/2016: PROOF OF SERVICE OF: (1) VERIFIED PETITION FOR WRIT OF MANDATE [C.C.P. 10851 FOR VIOLATION IOF CONSTITUTIONAL AND STATUTORY RIGHTS AND FOR DECLARATORY AND INJUNCTIVE RELIEF; (2) CIVIL CASE COVER SHEET
12/20/2016: PROOF OF SERVICE OF: (1) VERIFIED PETITION FOR WRIT OF MANDATE [C.C.P. 1085] FOR VIOLATION IOF CONSTITUTIONAL AND STATUTORY RIGHTS AND FOR DECLARATORY AND INJUNCTIVE RELIEF; (2) CIVIL CASE COVER SHEET
1/6/2017: ORDER RE: GOOD CAUSE EXTENSION OF TIME FOR RESPONSIVE PLEADINGS TO PETITION FOR WRIT OF MANDATE
1/6/2017: STIPULATION AND ORDER RE: EXTENSION OF TIME TO FILE RESPONSWE PLEADINGS TO PETITION FOR WRIT OF MANDATE
2/6/2017: STIPULATION AND ORDER RE: EXTENSION OF TIME TO FILE RESPONSIVE PLEADINGS TO PETITION FOR WRIT OF MANDATE, RESCHEDULING TRIAL SETTING CONFERENCE, AND SCHEDULING STATUS CONFERENCE
2/6/2017: Minute Order
3/15/2017: Minute Order
3/15/2017: STIPULATION AND [PROPOSED] ORDER RE: RESCHEDULING HEARING ON DEMURRER, TRIAL SETTING CONFERENCE AND STATUS CONFERENCE
6/2/2017: PETITIONER'S OPPOSITION TO DEMURRER OF RESPONDENT LOS ANGELES CITY EMPLOYEES' RETIREMENT SYSTEM (LACERS)
6/9/2017: PETITIONERS' STATUS CONFERENCE STATEMENT
8/28/2017: STIPULATION AND ORDER RE: CONTINUANCE OF HEARING ON DEMURRER, TRIAL SETTING CONFERENCE AND STATUS CONFERENCE
4/25/2018: Minute Order
8/16/2018: Minute Order
8/16/2018: STIPULATION AND ORDER RE: CONTINUANCE OF HEARING ON DEMURRER, TRIAL SETTING CONFERENCE AND STATUS CONFERENCE
5/16/2019: Stipulation and Order
at 1:30 PM in Department 82; Hearing on Demurrer - without Motion to Strike - Not Held - Continued - StipulationRead MoreRead Less
at 1:30 PM in Department 82; Status Conference - Not Held - Vacated by CourtRead MoreRead Less
at 1:30 PM in Department 82; Trial Setting Conference - Not Held - Vacated by CourtRead MoreRead Less
at 1:06 PM in Department 82; Non-Appearance Case ReviewRead MoreRead Less
Stipulation and Order (Re Continuance of Hearing on Demurrer, Trial Setting Conference and Status Conference); Filed by American Federation of State County and (Petitioner); Interntional Union of Operating Engineers (Petitioner); Laborers International Union of North (Petitioner) et al.Read MoreRead Less
Minute Order ( (NON-APPEARANCE CASE REVIEW)); Filed by ClerkRead MoreRead Less
at 09:30 AM in Department 82; Trial Setting Conference - Not Held - Continued - StipulationRead MoreRead Less
at 09:30 AM in Department 82; Hearing on Demurrer - without Motion to Strike - Not Held - Continued - StipulationRead MoreRead Less
at 09:30 AM in Department 82; Status Conference - Not Held - Continued - StipulationRead MoreRead Less
at 10:55 AM in Department 82; Non-Appearance Case ReviewRead MoreRead Less
Proof-Service/Summons; Filed by PetitionerRead MoreRead Less
PROOF OF SERVICE OF NOTICE OF TRIAL SETTING CONFERENCE & ATTACHED ORDERS THEREONRead MoreRead Less
Proof of Service (not Summons and Complaint); Filed by American Federation of State County and (Petitioner); Interntional Union of Operating Engineers (Petitioner); Laborers International Union of North (Petitioner) et al.Read MoreRead Less
NOTICE OF TRIAL SETTING CONFERENCE & ATTACHED ORDERS THEREONRead MoreRead Less
Notice of Trial Setting Conference and Attached Orders Thereon; Filed by ClerkRead MoreRead Less
Notice of Trial Setting Conference and Attached Orders Thereon; Filed by ClerkRead MoreRead Less
Complaint; Filed by American Federation of State County and (Petitioner); Interntional Union of Operating Engineers (Petitioner); Laborers International Union of North (Petitioner) et al.Read MoreRead Less
VERIFIED PETITION FOR WRIT OF MANDATE [C.C.P. 1085] FOR VIOLATION OF CONSTITUTIONAL AND STATUTORY RIGHTS AND FOR DECLARATORY AND INJUNCTIVE RELIEFRead MoreRead Less
at 4:30 PM in Department 82; Non-Appearance Case Review - HeldRead MoreRead Less
Minute order entered: 2016-03-15 00:00:00; Filed by ClerkRead MoreRead Less
Case Number: BS166535 Hearing Date: May 20, 2021 Dept: 82
American Federation of State, County, and Municipal Employees, et al.,
City of Los Angeles, et al.
Judge Mary Strobel
Hearing: May 20, 2021
Tentative Decision on Demurrer to Petition
Respondent Board of Administration of the Los Angeles City Employees’ Retirement System’s (“Respondent” or “LACERS”) generally demurs to the petition for writ of mandate of Petitioners American Federation of State, County, and Municipal Employees and its Local Unions 741, 901, 2006, 2626, 3090, and 3672; International Union of Operating Engineers, Local 501; Laborers International Union of North America, Local 777; Los Angeles and Orange County Building & Construction Trades Council; Service Employees International Union, Local 721; Teamsters Union Local 911; Veronica Salumbides, Albert Scott, and Charley Mims (“Petitioners.”)
Respondent’s Exhibits 1-8 – Granted. (Evid. Code § 451(a).)
Petitioners’ evidentiary objection to Respondent LACERS’ reply is SUSTAINED. Respondent did not request judicial notice of the IRS Determination letter with its reply filed June 8, 2017. On August 22, 2017, Respondent filed a request for judicial notice of the IRS Determination letter, as well as Los Angeles Administrative Code section 4.1102. The title page for the request did not specify a demurrer hearing, but rather a trial setting conference. Accordingly, Respondent did not properly notice the request for judicial notice for a demurrer hearing. (See Cal. Rules of Court, Rule 3.1306 and Evid. Code Sec. 453(a).) Moreover, Respondent improperly makes the request for judicial notice to support a new argument in reply. “The salutary rule is that points raised in a reply brief for the first time will not be considered unless good cause is shown for the failure to present them before.” (Balboa Ins. Co. v. Aguirre (1983) 149 Cal.App.3d 1002, 1010.) Respondent does not show good cause to raise a new argument based on the IRS Determination Letter in reply.
Statement of the Case
Individual Petitioners are current and former employees of the City of Los Angeles (“City”) who are or were participants in the Los Angeles City Employees’ Retirement System (“LACERS”). Employee Organization Petitioners represent for collective bargaining purposes more than 18,000 employees of Respondent City of Los Angeles ("City").
At issue is the suspension of a reciprocity arrangement (“Reciprocal Benefit Agreement”) between the retirement plans of the Department of Water and Power (“DWP”), called the Water and Power Employees’ Retirement Plan (“WPERP”), and LACERS, for civilian employees (i.e. non-police or fire employees) of City departments except for the DWP.
Prior to January 1, 2014, employees who transferred between the DWP and other City departments were entitled to keep their retirement benefits based on their total number of years of service with the City. (Pet. 1:24-2:28.) Service credit and funds were transferred between LACERS and WPERP. (Ibid.) This reciprocity depended on the number of employees transferring between LACERS and WPERP being approximately equivalent. (Id. at 2:1-3.) Prior to 1993, LACERS and WPERP paid each other for any imbalances between the number of employees transferring to each retirement plan. (Id. at 2:3-5.) In 1993, LACERS and WPERP decided to forego these payments for administrative convenience. (Id. at 2:5-7.)
In 2010, WPERP had an actuarial loss to its unfunded liability of $183 million, and LACERS had an equivalent actuarial gain. (Id. at 2:10-12.) The trustees of WPERP filed a lawsuit against the City over the loss. (Id. at 2:13.) Effective January 1, 2014, to settle WPERP’s lawsuit, the City agreed to WPERP’s suspension of its reciprocal benefit obligations to pay full benefits for LACERS service. (Id. at 2:13-17.) The City did not pay WPERP for the loss, but rather shifted the cost to LACERS members who transfer to and from the DWP by reducing their retirement benefits. (Ibid.)
Beginning January 1, 2014, employees who transfer from City departments to the DWP and vice versa were not able to keep their benefits based on the total number of years with the City, but were considered “new employees” for retirement benefit purposes. (Id. at 3:1-4.) To gain credit for prior service with the City, the employee who transferred must purchase a “service credit” by paying employer contributions already made on their behalf to the other retirements system, which was previously treated as having transferred with them under the Reciprocal Benefit Arrangement, plus an additional actuarial earnings value amount. (Id. at 3:7-11.)
Petitioners allege that these amendments to LACERS were made through an ordinance adopted by City Council in 2013, specifically Ordinance No, 182,824. (Pet. ¶¶ 81-99, Exh. J.) The parties refer to these amendments as the “Admin Code Amendment.” (See e.g. Oppo. 6, 16 and Reply 9.) The court adopts that terminology for purposes of this demurrer.
The introduction to the petition summarizes the harm Petitioners contend results from the Admin Code Amendments:
As alleged in this action, the City impaired vested and constitutionally protected retirement rights of LACERS participants and their beneficiaries. LACERS members who have transferred or will transfer to the DWP after January 1, 2014, will no longer retire with a retirement benefit based on their full accumulated service with the City and, as a result, will suffer a loss of vested retirement benefits. Likewise, DWP employees who become covered by LACERS after January 1, 2014, will no longer retire with a retirement benefit based on their full accumulated service with the City and will lose vested retirement benefits. City employees who transferred or transfer between the DWP and LACERS-covered positions after January 1, 2014, will be treated as "new employees" for retirement benefit purposes regardless of their prior, vested, full accumulated City service. LACERS members who return, by transfer from DWP, to LACERS service after January 1, 2014, will also no longer retire with a benefit based on their full accumulated service with the City, no matter how long their City service.
Instead, in order to gain credit for service previously automatically credited under the Reciprocal Benefit Arrangement, employees transferring after January 1, 2014, must buy it — by paying Employer Contributions already made on their behalf to the other retirement system/plan and previously treated as having transferred with them, plus an additional actuarial earnings value amount. As a result, employees who have Civil Service rights to transfer and promote between the DWP and other City departments based on competitive examination and merit are effectively barred from, or burdened in, transferring or promoting by City actions adversely affecting their retirement on bases other than merit. City employees who may be laid off involuntarily and without fault or who become ill or disabled and who thereby have accommodation rights under the Civil Service system to positions at the DWP will suffer an imposed reduction in their retirement benefits.
(Id. at 2:23-3:17.)
Petitioner Veronica Salumbides is an employee of the City and has been employed by the City continuously since November 14, 1994. She has been employed primarily in LACERS-covered positions, except for her time as Utility Administrator in the DWP from September 2013 to March 20, 2016. Petitioner Salumbides contends that she transferred to the DWP in reliance on the Reciprocal Benefit Agreement and transferred back to a LACERS-covered position in reliance on representations that her retirement benefits would not be affected because she transferred to the DWP before January 1, 2014 when the Reciprocal Benefit Agreement was still effective. (Id. at ¶¶ 4-6.)
Petitioner Albert Scott is an employee of the City and has been employed by the City continuously since March 1998. Petitioner Scott has worked in both the DWP and other City departments. Petitioner Scott’s career path involved promotions which required transfers between the DWP and other City departments. Petitioner Scott contends that he has been prevented from applying for a supervisor position at the DWP while employed at the Bureau of Sanitation because his years of service in LACERS-covered positions would not be honored by WPERP. Petitioner Scott also contends that, as Instrument Mechanic Supervisor at the Bureau of Sanitation, he has been unable to hire employees of the DWP since January 1, 2014 because promotion from DWP would reduce those employees’ pensions. (Id. at ¶¶ 7-11.)
Petitioner Charley Mims is a retired City employee who has been employed with the DWP and other City departments. He was employed with the DWP beginning on July 5, 1966, as a Field Engineering Aide. After resigning to attend university, Petitioner Mims returned to work on November 4, 1970 for the City as a Construction Inspector in the Bureau of Contract Administration. He was promoted to the position of Chief Construction Inspector and retired from that position in February 7, 2015. When Petitioner Mims left his employment with the DWP, he was a participant in WPERP. (Ibid.) He withdrew his employee contributions to WPERP when he left his position with the DWP. Upon returning to City employment, Petitioner Mims deposited an amount representing his employee contributions to WPERP. LACERS credited his participation with WPERP. (Id. at ¶¶ 12-13.0
On December 2, 2016, the individual Petitioners, along with employee organizations representing more than 18,000 employees of Respondent City of Los Angeles, filed a Petition for Writ of Mandate, asserting causes of action for: 1) Unconstitutional Impairment of Vested Contractual Rights in Violation of Article 1, Section 9 of the California Constitution, 2) Denial of Equal Protection and Due Process under Article 1, Section 7 of the California Constitution, 3) Breach of Fiduciary Duty in Violation of Article XVI, Section 17 of the California Constitution, 4) Breach of Fiduciary Duty in Violation of Los Angeles City Charter Section 1106, 5) Violation of LA Admin Code Section 4.1095, 6) Violation of LA Admin Code Sections 4.1102 and 4.1111, and 7) Promissory Estoppel.
Among other relief, Petitioners seek a writ of mandate commanding Respondents to
1. maintain the LA Admin Code provisions specifying that membership in LACERS shall entitle the LACERS member to all benefits for retirement, disability, and death for which he or she would qualify based upon his or her total service in both LACERS and WPERP, based on his or her initial date of commencement of employment and retirement tier with the City
2. compute, and pay from LACERS assets to, former, current, and future LACERS members with service at the DWP, full accumulated career City service retirement benefits calculated at the employee’s final compensation and retiree health benefits from LACERS for the employee’s aggregate City service with both the DWP and in LACERS-covered positions, less any WPERP benefits paid for the same period of service
3. treat Employee Contributions and Employer Contributions to WPERP consistent with the LA Admin Code definitions of "City Service" and "Service" such that former, current, and future LACERS members who transfer from the DWP are not required to purchase credit for such “City Service” or “Service” in order to be entitled to all benefits for retirement, disability, and death for which he or she would qualify based upon his or her total service in both LACERS and WPERP, based on his or her initial date of commencement of employment with the City and without treating such employee as a new employee for retirement system membership purposes by reason of such transfer.
The verified petition was filed on December 2, 2016.
Pursuant to stipulations to extend the time for Respondents to file responsive pleadings to the petition, Respondent City of Los Angeles filed and served an answer on February 23, 2017. Respondent LACERS filed and served a demurrer to the petition on February 23, 2017. The court has received Petitioners’ opposition and LACERS’ reply.
Pursuant to stipulation, the hearing for the demurrer has been continued multiple times to May 20, 2021.
Summary of Applicable Law
A demurrer is an appropriate vehicle to challenge the legal sufficiency of a petition for a writ of administrative mandamus. (CCP §1089; Hilton v. Board of Supervisors of Santa Barbara County (1970) 7 Cal.App.3d 708, 713, citing Temescal Water Co. v. Department of Public Works (1955) 44 Cal.2d 90, 106-107.) A demurrer tests the sufficiency of a pleading, and the grounds for a demurrer must appear on the face of the pleading or from judicially noticeable matters. (CCP §430.30(a); Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) A demurrer may be sustained without leave to amend when there is no reasonable possibility that the defect can be cured by amendment. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) Courts generally allow at least one time to amend a complaint, after sustaining a demurrer, even without any request for leave to amend. (McDonald v. Superior Court (1986) 180 Cal.App.3d 297, 303.)
Meet and Confer
“Before filing a demurrer ..., the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” (CCP §430.41(a).)
Respondent LACERS filed a meet and confer declaration as required by Code of Civil Procedure section 430.41(a)(3). (Geller Decl.)
Ministerial Duty of LACERS
Respondent LACERS demurs to all seven causes of action on the basis that Petitioners have not alleged that LACERS failed to perform a clear, present, and ministerial duty owed to Petitioners. Respondent contends that the Los Angeles City Charter (“LACC” or “Charter”) and the Los Angeles Administrative Code (“LA Admin Code”) establishes the City’s authority to provide retirement benefits to its employees, and that the City Council has exclusive authority to establish, via ordinance, retirement benefits for LACERS members. (Dem. 1-2.) Respondent contends that it has no authority to modify the retirement benefits granted by City, and that it is merely an agency that administers the benefits authorized by City. (Dem. 2.) In contrast, Petitioners contend that “a writ action is the proper vehicle to challenge legislation that unconstitutionally impairs contractual vested, accrued retirement benefits.” (Oppo. 12.)
Under CCP section 1085(a), “A writ of mandate may be issued by any court to any inferior tribunal, corporation, board, or person, to compel the performance of an act which the law specially enjoins, as a duty resulting from an office, trust, or station, or to compel the admission of a party to the use and enjoyment of a right or office to which the party is entitled, and from which the party is unlawfully precluded by that inferior tribunal, corporation, board, or person.”
“There are two essential requirements to the issuance of a traditional writ of mandate: (1) a clear, present and usually ministerial duty on the part of the respondent, and (2) a clear, present and beneficial right on the part of the petitioner to the performance of that duty.” (California Ass’n for Health Servs. at Home v. Dep’t of Health Servs. (2007) 148 Cal.App.4th 696, 704.) “Generally, a writ will lie when there is no plain, speedy, and adequate alternative remedy . . . .” (Pomona Police Officers’ Ass’n v. City of Pomona (1997) 58 Cal.App.4th 578, 583–584.)
“A ministerial act is one which a public officer is required to perform in a prescribed manner in obedience to the mandate of legal authority, without regard to his own judgement or opinion. [Citation.] Mandamus is also available to ‘correct those acts and decisions of administrative agencies which are in violation of the law . . . .’” (Morgan v. Board of Pension Comrs. (2000) 85 Cal.App.4th 836, 843 [“Morgan”].)
Here, as argued in the demurrer, the Los Angeles City Charter (“LACC” or “Charter”) and the Los Angeles Administrative Code (“LA Admin Code”) require LACERS to act in a prescribed manner. (Dem. 5.) Section 101 of the LACC grants the City the maximum allowed authority for a municipal entity. (RJN, Exh. 1, citing LACC §101.) Section 102 of the LACC grants the Board of Administration of LACERS the authority to manage and control LACERS. (RJN, Exh. 2, citing LACC §1102(a), 1102(c).) Under section 1106 of the LACC, the powers of the Board of LACERS are limited to administering LACERS for the purpose of providing benefits to participants, including adopting rules and regulations necessary to carry out administration of the system. (RJN, Exh. 3, citing LACC §1106(a)(1), (f).) The City, however, holds the obligation to pay benefits. (RJN, Exh. 5, citing LACC §1160(b).) The City Council is the body responsible for determining the amount of benefits. (RJN, Exh. 6, citing LACC §1168.)
As stated in opposition, the gravamen of the petition is that “[t]he City's amendment of the Admin Code … cut LACERS benefits for current employees with both LACERS and WPERP covered service after January 1, 2014, who retire from LACERS.” (Oppo. 6-7; see e.g. Pet. ¶¶ 81-99, 105-106, 115-117, 126-131, 138-144, 155-156, 164-165, 171-176.) Petitioner alleges that “the Admin Code Amendment reducing the LACERS benefits of employees who transfer from the DWP after January 1, 2014, is an unconstitutional impairment of contract.” (Oppo. 8 and Pet. ¶¶ 81-99, 105-106; see also Cal. Const., Art. I, § 9 and Allen v. Bd. of Admin. (1983) 34 Cal.3d 114, 120.) The sufficiency of such allegations against City have not been challenged by demurrer. For purposes of this demurrer, LACERS has not disputed that Petitioners have alleged that the Admin Code Amendment unconstitutionally impaired the accrued and vested retirement benefits of City employees, and members of LACERS, who accepted City employment before January 1, 2014.
LACERS cites various cases for the proposition that a retirement board cannot administer the retirement system in a manner that conflicts with the Charter or city ordinance. “[A] charter city may not act in conflict with its charter. [Citations.] Any act that is violative of or not in compliance with the charter is void.” (Domar Electric, Inc. v. City of Los Angeles (1994) 9 Cal.4th 161, 171.)
Both City of San Diego v. San Diego City Employees’ Retirement System (2010) 186 Cal.App.4th 69 and Westly v. Board of Administration (2003) 105 Cal.App.4th 1095, support the proposition that the board of a retirement system must act within its authorized power. However, neither case remotely stands for the proposition that the board of a retirement system is an improper party to a lawsuit challenging the board’s implementation of a statute or ordinance a petitioner contends is unlawful.
In opposition, Petitioners discuss cases finding statutes to violate the right under Article I, Section 9 of California Constitution against impairment of contract. Valdes v. Cory (1983) 139 Cal.App.3d 773, Board of Administration v. Wilson (1997) 52 Cal.App.4th 1109 (“Wilson”), n Betts v. Board of Administration (1978) 21 Cal.3d 859. None of the these cases find a retirement board to be an improper party where a petitioner challenges a statue or ordinance the board administers.
Here, Petitioners included the City of Los Angeles in this action, which legislated the amendment of the Reciprocal Benefit Arrangement from which this petition arises. (Pet. ¶¶ 81-88.) City has not demurred to the petition, and LACERS has not challenged the sufficiency of the allegation that City unconstitutionally impaired contract rights of some LACERS members.
LACERS argues, correctly, that it is has a legal duty to administer valid ordinances that the City enacts. Nonetheless, this argument ignores allegations in the petition that the “Admin Code Amendments” violate the California Constitution and are invalid to the extent that they reduce retirement benefits of LACERS members. (See Pet. ¶¶ 81-99, 105-106, 115-117, 126-131, 138-144, 155-156, 164-165, 171-176.) Petitioners seek a judicial declaration invalidating the challenged City ordinances. (Prayer ¶ 3.) Such allegations in the petition have not been challenged on demurrer. If Petitioners are correct that the challenged ordinances are invalid (which the court does not decide on demurrer), then Petitioners also allege that LACERS has a ministerial duty to not enforce the ordinances. (See Valdes, supra, 139 Cal.App.3d at 776-79; Betts, supra, 21 Cal.3d at 867-68; Wilson, supra, 52 Cal.App.4th at 1118, 1161.)
LACERS cites no authority that an administrative agency cannot be sued and enjoined in a section 1085 action from enforcing an invalid law. “Mandamus is … available to ‘correct those acts and decisions of administrative agencies which are in violation of the law . . . .’” (Morgan v. Board of Pension Comrs. (2000) 85 Cal.App.4th 836, 843 [emphasis added].) That LACERS did not enact the challenged law is not dispositive under section 1085.
Separate from allegations about City’s enactment of “Admin Code Amendments,” Petitioners also allege that “Respondents have made changes in LACERS benefits additional to the changes in the Ordinance … include[ing] changes in LACERS vested two-party retiree medical benefits and treating employees who transfer from DWP as new LACERS members.” (Pet. ¶ 88; see also Id. ¶¶ 89-93.) LACERS contends that “both changes, consistent with allegations in other parts of the petition, are the natural results of legislative action taken by the City.” (Dem. 8.) LACERS does not cite any allegations from the petition to support this assertion. While it seems possible that the two changes alleged in paragraph 88 were necessitated by the “Admin Code Amendments,” that appears to be a fact question outside the four corners of the pleading. The court cannot adjudicate such extrinsic issues on demurrer. In any event, as discussed, LACERS can be enjoined in a section 1085 action from administering an allegedly invalid law.
Based on the foregoing, the demurrer to all seven causes of action for failure to allege a clear, present, ministerial duty is unpersuasive. The court also addresses below the arguments LACERS asserts as to each cause of action.
First Cause of Action: Unconstitutional Impairment of Vested Contractual Rights in Violation of Article 1, Section 9 of the California Constitution
Petitioners assert that Respondents’ changes to LACERS, specifically the suspension of the Reciprocal Benefits Program, constitutes an impairment of LACERS’ participants vested constitutional rights. (Pet. ¶¶ 105, 107-08.) The first cause of action is based on allegations discussed above, specifically that the “Admin Code Amendment,” as phrased by Petitioners, violates the California Constitution. (Ibid.) The first cause of action is for writ of mandate pursuant to CCP section 1085. As discussed above, LACERS can be enjoined in a section 1085 action from administering an allegedly invalid law. Accordingly, the demurrer to the first cause of action is OVERRULED.
Second Cause of Action: Denial of Equal Protection and Due Process under Article 1, Section 7 of the California Constitution
The second cause of action is for writ of mandate and alleges that the “Admin Code Amendment” violates the California Constitution. (Pet. ¶¶ 115-118.) Petitioners contend that the suspension of the Reciprocal Benefit Program deprives employees who transfer between DWP and other LACERS-covered position of equal protection and due process because they are purportedly subject to reduced retirement benefits even though they have the same number of years of service as employees who never worked for the DWP. (Pet. ¶¶ 115-16.) Article 1, Section 7 of the California Constitution states, “A person may not be deprived of life, liberty, or property without due process of law or denied equal protection of the laws . . . .”
LACERS argues that the petition does not allege that LACERS violated Petitioners’ rights to equal protection or due process. (Dem. 9-10.) However, as discussed, LACERS ignores Petitioners’ allegation that the challenged City ordinances are invalid and thereby violate the California Constitution. As discussed above, LACERS can be enjoined in a section 1085 action from administering an allegedly invalid law. Accordingly, the demurrer to the second cause of action is OVERRULED.
Third Cause of Action: Breach of Fiduciary Duty in Violation of Article XVI, Section 17 of the California Constitution
Fourth Cause of Action: Breach of Fiduciary Duty in Violation of Los Angeles City Charter Section 110
Petitioners contend that LACERS violated Article XVI, Section 17 of the California Constitution by “acting in the interest of the City ahead of LACERS’ participants and beneficiaries to place the cost of past service liability and costs associated with changes in actuarial assumption caused by the WPERP Board’s suspension of WPERP Plan provisions of the Reciprocal Benefit Arrangement on employees who transfer between the DWP and other City departments . . . .” (Pet. ¶ 127.) Relatedly, Petitioners contend that LACERS placed the interests of the City ahead of LACERS’ participants and beneficiaries, in violation of LACC section 1106. (Pet. ¶ 141.)
Article XVI, Section 17 of the California Constitution states:
(a) The retirement board of a public pension or retirement system shall have the sole and exclusive fiduciary responsibility over the assets of the public pension or retirement system. The retirement board shall also have sole and exclusive responsibility to administer the system in a manner that will assure prompt delivery of benefits and related services to the participants and their beneficiaries. The assets of a public pension or retirement system are trust funds and shall be held for the exclusive purposes of providing benefits to participants in the pension or retirement system and their beneficiaries and defraying reasonable expenses of administering the system.
(b) The members of the retirement board of a public pension or retirement system shall discharge their duties with respect to the system solely in the interest of, and for the exclusive purposes of providing benefits to, participants and their beneficiaries, minimizing employer contributions thereto, and defraying reasonable expenses of administering the system. A retirement board’s duty to its participants and their beneficiaries shall take precedence over any other duty.
LACC section 1106 states that a retirement board has the sole and exclusive responsibility to administer the retirement system, and the duty to system participants and their beneficiaries takes precedence over any other duty. (RJN, Exh. 3, citing LACC §1106(a)(3).)
LACERS contends that it “has no independent legal authority to ignore facially valid statutory provisions.” (Dem. 13.) However, the demurrer is unpersuasive because LACERS ignores the allegations that the challenged ordinances are invalid.
LACERS hypothesize that Petitioners may allege that LACERS should have filed suit to prevent actuarial loss or should have intervened in the litigation between City and WPERP. (Dem. 11.) LACERS contends that such discretionary acts would be exempt from legal challenge under government immunity provided by Government Code section 820.2. Because Petitioners do not plead such allegations, LACERS’ contention is irrelevant for this demurrer.
The third and fourth causes of action seek writ of mandate under CCP section 1085. (Pet. ¶¶ 135, 149.) As discussed above, LACERS can be enjoined in a section 1085 action from administering an allegedly invalid law.
The demurrer to the third and fourth causes of action are OVERRULED.
Fifth Cause of Action: Violation of LA Admin Code Section 4.1095
Sixth Cause of Action: Violation of LA Admin Code Sections 4.1002 and 4.1111
In the fifth cause of action, Petitioners allege that “[i]n amending the LACERS provisions of the LA Admin Code by Ordinance 182,824 and making other changes in LACERS as alleged herein, Respondents abrogated section 4.1095(a) through (j) and, thereby, violated section 4.1095(k), because Respondents nullified provisions of section 4.1095 which remained possible to implement and achievable notwithstanding WPERP's actions.” (Pet. ¶ 155.)
Section 4.1095 describes reciprocal retirement benefits of city employees upon their change of membership from WPERP to LACERS, and vice versa. (See Pet. Exh. I.) Subdivision (k) provides in full: “Reciprocity of Benefit Provisions and Conditions Affecting this Section. It is the intent and purpose of this section to provide, or help to provide, portability between the LACERS and the WPERP. The achievement of complete portability of benefits is dependent upon appropriate action by the governing body of the WPERP. Should the implementation of any provisions of this section be possible only if some specific action is taken by the WPERP, then, and as to such provisions only, the effect of this section shall be suspended until appropriate action has been taken by the WPERP.” (Ibid.)
In the sixth cause of action, Petitioners allege that LACERS violated Sections 4.1002 and 4.1111 of the Los Angeles Administrative Code because LACERS purportedly required employees to use a 4% vested employee retiree health contribution to purchase service credits from LACERS for service with the DWP, which resulted in the employees forfeiting of vested retiree health benefits. (Pet. ¶¶ 163-166.)
LACERS contends that Petitioners fail to allege what actions LACERS took to cause the injuries alleged in the fifth and sixth causes of action. LACERS contends that the allegations are vague and conclusory. (Dem. 13-14.) With respect to the sixth cause of action, LACERS also contends that “administering the purchase process according to the terms of the statute would be a ministerial duty which LACERS has no discretion to ignore.” (Dem. 14.)
In opposition, Petitioners contend that the fifth cause of action “alleges that the Admin Code Amendment and attendant actions did not render impossible nor unachievable Respondents' abilities to continue to implement and adhere to section 4.1095, subsections (a) through (j), and to calculate and pay LACERS benefits based on full career City service from the LACERS fund in the same amounts as it paid under the Reciprocal Benefits Arrangement — and so by not calculating benefits on full career service, Petitioners contend that LACERS is violating section 4.1095.” (Oppo. 16.) For the sixth cause of action, Petitioners contend that the petition “describe[s] in depth how Respondents' actions cause certain employees to forfeit a vested retiree health benefit, which is not and never was part of the Reciprocal Benefit Arrangement.” (Oppo. 17.)
The fifth and sixth causes of action, which are for writ of ordinary mandate, incorporate earlier allegations in the petition and must be read in context of those allegations. (Pet. ¶¶ 150, 162.) As discussed above, Petitioners allege that the Admin Code Amendment violates the California Constitution because it impermissibly impairs vested contract rights, among other reasons. In the fifth and sixth causes of action, Petitioners sufficiently allege that the Admin Code Amendment resulted in LACERS (1) “denying City employees with service under both LACERS and WPERP retirement benefits payable by LACERS at the level required by LA Admin Code section 4.1095(a) through (j) based on total combined accumulated service and crediting of contributions in both LACERS and WPERP”; and (2) requiring certain “employees to use the 4% vested employee retiree health contribution to purchase retirement service credit from LACERS for WPERP service.” (Pet. ¶¶ 161,166-167.) In context, the allegations are not vague or conclusory. LACERS can understand and respond to such allegations.
The Employee Organization Petitioners also sufficiently allege that at least some of its members were harmed by LACERS’ alleged failure to comply with sections 4.1095, 4.1102, and 4.1111. (Pet. ¶¶ 1-3.) LACERS has not challenged the allegation of standing of the Employee Organization Petitioners. (See also Id. ¶¶ 158, 167 [alleging beneficial interest].)
As discussed above, it is not persuasive on demurrer for LACERS to assert that it was required to take certain action by the Admin Code Amendment. Petitioners allege that this ordinance is invalid. If Petitioners’ legal theory is correct (an issue the court need not decide for this demurrer), then LACERS could have a ministerial duty to comply with sections 4.1095, 4.1102, and 4.1111, as alleged.
In reply, LACERS makes new arguments based on the definition of “appropriations” from section 4.1102(b) and from language in section 4.1020.1, neither of which was cited or discussed in the demurrer. (Reply 7-8; cf. Dem. 13-14.) “The salutary rule is that points raised in a reply brief for the first time will not be considered unless good cause is shown for the failure to present them before.” (Balboa Ins. Co. v. Aguirre (1983) 149 Cal.App.3d 1002, 1010.) LACERS does not show good cause to raise these new arguments in reply. Moreover, by asserting such arguments, LACERS contradicts its assertion that the pleading is too vague. LACERS may assert its contrary interpretation of the ordinances at the writ hearing.
The demurrer to the fifth and sixth causes of action is OVERRULED.
Seventh Cause of Action: Promissory Estoppel
LACERS contends that it only has the authority to administer the benefits of the retirement system in accordance with the ordinances enacted by the City. Thus, LACERS contends that promissory estoppel “is not available” because Petitioners seek to have LACERS act in contravention of the authority of the City. (Dem. 14-15, citing Medina v. Board of Retirement (2003) 112 Cal.App.4th 864, 870 [“[E]stoppel is barred where the government agency to be estopped does not possess the authority to do what it appeared to be doing.”].) LACERS contends that granting the writ based on the promissory estoppel claim would require the court to order LACERS to engage in illegal actions. (Dem. 15.)
LACERS’ demurrer to the seventh cause of action is unpersuasive for the same reasons discussed above. Petitioners allege that the Admin Code Amendment is invalid. If that theory is correct (an issue the court need not decide for this demurrer), then applying estoppel would not necessarily require LACERS to perform an illegal act.
LACERS does not otherwise challenge Petitioners’ allegation promissory estoppel. (See Pet. ¶¶ 170-176; Nelson v. Avondale HOA (2009) 172 Cal.App.4th 857, 862-863 [argument waived if not raised or adequately briefed]; Pfeifer v. Countrywide Home Loans, Inc. (2012) 211 Cal.App.4th 1250, 1282 [same]; CRC 3.1113(b); Quantum Cooking Concepts, Inc. v. LV Associates, Inc. (2011) 197 Cal.App.4th 927, 934 [Cal. Rules of Court, Rule 3.1113 “rests on a policy-based allocation of resources, preventing the trial court from being cast as a tacit advocate for the moving party's theories”].)
The demurrer to the seventh cause of action is OVERRULED.
Ripeness / Standing
LACERS argues that Petitioners’ claims are speculative because they purportedly have not been harmed by changes to the Reciprocal Benefit Arrangement. (Dem. 15.) LACERS may also raise arguments about the Individual Petitioners’ standing. (Ibid.)
To have standing to seek a writ of mandate, a party must be “beneficially interested.” (CCP § 1086.) “A petitioner is beneficially interested if he or she has some special interest to be served or some particular right to be preserved or protected over and above the interest held in common with the public at large.” (Rialto Citizens for Responsible Growth v. City of Rialto (2012) 208 Cal. App. 4th 899, 913.) “To establish associational standing, [Petitioner] must demonstrate that its members would otherwise have standing to sue in their own right.” (Associated Builders and Contractors, Inc. v. San Francisco (1999) 21 Cal.4th 352, 361-362.)
“A controversy is ‘ripe’ when it has reached, but has not passed, the point that the facts have sufficiently congealed to permit an intelligent and useful decision to be made.” (Teachers' Retirement Bd. v. Genest (2007) 154 Cal.App.4th 1012, 1040.)
Petitioners sufficiently plead that the changes to the Reciprocal Benefit Arrangement have burdened employees in LACERS-covered positions by not crediting service with the DWP, among other alleged harms. (See e.g. Pet. ¶¶ 6-13, 83, 85(c), 85(d).) Accordingly, Petitioners plead a ripe controversy. Based on the allegations related to employee members, Petitioners sufficiently allege that the Employee Organization Petitioners have a beneficial interest in the writ. No argument to the contrary is made in the demurrer.
Petitioners also allege harm to the Individual Petitioners Salumbides and Scott that, at the pleading stage, supports a conclusion that those Petitioners have a special interest to be served or some particular right to be preserved or protected over and above the interest held in common with the public at large. (See e.g. Pet. ¶¶ 6-13, 83, 85(c), 85(d).) Respondent tersely argues that "Mims is already retired, so he cannot be harmed by any changes to the reciprocal benefit." (Dem. 15.) The petition alleges, in some detail, how Mims has a beneficial interest as a LACERS member in challenging the retirement changes discussed in the petition, including with respect to the "operation of LACERS as a retirement system." (Pet. ¶ 12.) The court is not persuaded from Respondent's terse argument that the allegations in paragraph 12 are insufficient, at the pleading stage, to allege a beneficial interest.
The demurrer based on ripeness and standing is unpersuasive.
Pursuant to the local rules which designate that Department 82 is a specialized Writs and Receivers department and not a general civil department, only a cause of action for writ of mandate is properly assigned to this department. (LASC Local Rules 2.8(d) and 2.9. Local Rules 2.8(d) and 2.9 do not include a claim for declaratory relief as a special proceeding assigned to the writs departments
Petitioners’ request for declaratory relief is stayed pending resolution of the writ causes of action. (See Pet. Prayer ¶ 3.) If any claim for declaratory relief remains after the court rules on the writ petition, the court will transfer that claim to Department 1 for assignment to a general civil department.
The demurrer is OVERRULED.
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