The County of Sacramento established a long term past practice of providing a health and dental subsidy to County retirees. However, in 2003, the subsidies were frozen at the 2002 level and the Board of Supervisors has since taken several actions to reduce or eliminate the subsidies. In 2007, the County eliminated the health and dental subsidies for all employees who retired after May 31, 2007. As a result, several unions filed an action with the Public Employment Relations Board against the County. Subsequently the unions prevailed and the County reinstated the subsidy that was in effect in 2007 for just those retirees who continued to meet certain County requirements and were previously members of one of these unions who filed an action against the County.
On February 8, 2011, SCREA filed a lawsuit in federal court (see below) against the County for “impermissible interference with a contract in violation of the Contract Clauses in the Federal and State Constitutions and for violation of Plaintiffs’ right to equal protection under the law in violation of the Equal Protection clause contained in the Fourteenth Amendment to the United States Constitution and the California Constitution”.
Basically, the County broke their long term past practice of providing health and dental subsidies to County retirees. In addition, groups of retirees are being treated differently with respect to these subsidies.
On November 21, 2011, the Supreme Court of California ruled on another lawsuit (see below)that may have bearing on the SCREA lawsuit. The Retired Employees Association of Orange County, Inc. had filed a lawsuit against the County of Orange following a change in a long term past practice of combining active and retired employees into a single unified pool for purposes of calculating health insurance premiums. In 2007, the Orange County Board of Supervisors had passed a resolution splitting the pool of active and retired employees. The premiums for retired employees went up dramatically. The retiree association filed a lawsuit in Federal court and lost their case. The retiree association filed an appeal and the appellant court asked the State Supreme Court to address the following question: “Whether, as a matter of California law, a California county and its employees can form an implied contract that confers vested rights to health benefits on retired employees.” The State Supreme Court unanimously found that “a county may be bound by an implied contract under California law if there is no legislative prohibition against such arrangements, such as a statute or ordinance.” Further, the Court stated that “a contract is either express or implied. The terms of an express contract are stated in words. The existence and terms of an implied contract are manifested by conduct. The distinction reflects no difference in legal effect but merely the mode of manifesting assent.”
SCREA is continuing its efforts to represent all County retirees with respect to health subsidies and will keep you informed of the progress of our lawsuit.
Click Below To Download The Sacramento County Retiree Association Lawsuit Against The County Of Sacramento:
Click Below To Download The Supreme Court Of California Opinion Regarding The REAOC Lawsuit:
UPDATE 04/02/2012 – SCREA Lawsuit Against County to Move Forward
The Sacramento County Retired Employees Association (SCREA) filed a class action lawsuit in Federal Court against the County of Sacramento on February 8, 2011. The causes of action included violation of the contract clause of both the U.S. and California Constitution, and violation of the equal protection clause of both the U.S. and California Constitution. All causes of action relate to the County’s actions that reduced or eliminated retiree medical and dental subsidies, and unequal treatment of County retirees.
On April 1, 2011, the County filed a “Motion to Dismiss” the case, and both SCREA and the County filed a series of documents that led to a hearing in Federal Court by a United States District Judge.
On March 31, 2012, the judge denied the County’s “Motion to Dismiss”.
The court ordered the County to file an answer to SCREA’s complaint within twenty-one (21) days of the entry of this order. A status (pretrial scheduling) conference is set for June 28, 2012.
As stated in the Court’s decision, there has been a development in the common law that governs plaintiffs’ contract-based claims. The California Supreme Court recently found “under California law, a vested right to health benefits for retired county employees can be implied under certain circumstances from a county ordinance or resolution.”
Accordingly, the Court found that the County’s argument that counties cannot be bound by implied contracts to provide compensation has been rejected, as have its arguments that “retiree health benefits are not vested”. On this topic, the question of vested rights is one of fact that is not appropriate for review on a Motion to Dismiss for failure to state a claim.
With respect to equal protection causes of action, SCREA alleges that after the California Public Employment Relations Board (PERB) decision, for the first time, the County created distinct classifications amongst its retirees (not based on age or length of service) absent any rational basis or legitimate governmental interest. This violated retirees’ right to equal protection of the law and discriminated against those who either were not members of a County union or who were members of unions who did not join with the…other unions in the PERB litigation. Construing these facts … in the light most favorable to (plaintiffs, the court) must ascertain whether they state a claim on which relief can be granted. The court stated “Here, they do.”
The Federal Court Decision can be viewed below “Order Denying Motion to Dismiss”.
UPDATE 05/24/2013 – SCREA vs. County of Sacramento Litigation Update
On May 24, 2013, the County of Sacramento filed a “Motion for Summary Judgment” with the United States District Court. A “Summary Judgment” is a procedural device used in civil litigation to promptly and expeditiously dispose of a case without trial when there is no dispute as to the material facts of the case.
Back on April 1, 2011, the County filed a “Motion to Dismiss” in the same court and lost. The judge denied the County’s “Motion to Dismiss” on March 31, 2012. The current “Motion for Summary Judgment” by the County is scheduled for a hearing on June 28, 2013 in federal court with Judge Kimberly J. Mueller. Usually a court will hold oral arguments on a “Summary Judgment” motion, although it may decide the motion on the parties’ briefs and supporting documentation alone.
In response to the County’s “Motion for a Summary Judgment”, Mark Merin, attorney for SCREA, filed several documents in opposition to the County’s statement of undisputed facts and supporting evidence. Included in SCREA’s response are several written declarations including a declaration by Mark Merin, as well as a prior County Executive, a prior Chief Deputy County Executive, a prior Agency Administrator, a prior Deputy Director, a widow of a Supervising Probation Officer, a prior Board of Director of SCERS, a prior Sheriff’s Captain, and a prior Chief Deputy Sheriff who was on the County’s bargaining team. Overall, these declarations provide many strong supporting statements why County employees and retirees believed that they were entitled to the continuation of retiree health and dental subsidies.