SCREA DROPS LAWSUIT AGAINST COUNTY

We lost, they won and it wasn’t fun!

By Mike DeBord

The SCREA Board of Directors decided not to appeal a Summary Judgment ruling regarding our lawsuit against the County to retain retiree medical subsidies.   A Federal Judge ruled on September 30, 2013 that there was insufficient evidence that the County intended to provide retiree subsidies in perpetuity.

SCREA had provided the court with significant supporting documentation and many declarations by former County employees.  What we were unable to provide to the court (and the primary reason that we did not appeal the judge’s decision) were Board of Supervisors resolutions or other written communications that clearly documented the County’s intent to provide retiree subsidies in perpetuity (forever).  Employees and retirees had relied on verbal understandings, three decades of past practice, statements by County employees, and “trust”.

We trusted the County and the County let us down!

Our lawsuit wasn’t the first legal action related to the loss of retiree medical subsidies.  Back in 2007, the County eliminated the retiree medical subsidies for employees who retired after June 1, 2007.  But the County refused to bargain this issue with the unions.  Some of the unions then filed charges of unfair labor practices with the Public Employment Relations Board (PERB).  These unions won their case on June 30, 2009.  The County was required to re-instate the retiree subsidies and pay interest (make whole anyone who was impacted by the unlawful change).  The County did so, but only for those members of unions that had filed formal charges against the County.  All of the management, administrative and other unrepresented employees, as well as all of the members of bargaining units that didn’t file formal charges against the County, got nothing.  They received no reinstatement of the retiree subsidies.  This action by the County sent a strong message to the unions, its workforce and to SCREA.

We then met with the Interim County Executive and he refused to allow discussion of this topic and threatened to end the meeting with SCREA representatives if we brought it up again.  When the County subsequently terminated the retiree subsides, SCREA Board members met with our attorney and our attorney requested the opportunity to discuss these issues with County Counsel.  We received no response.  We then drafted a lawsuit related to our retiree subsidies and provided a copy of the lawsuit to County Counsel and asked him again for the opportunity to discuss the matter before we filed it with the court.  Again we received no response.  SCREA then filed the lawsuit.  It is unfortunate that all opportunities to discuss this topic prior to court action were not accommodated.

It is important to note that in 2010, the Management employees felt strongly that it was necessary to unionize and voted overwhelmingly to become an exclusive bargaining unit.  The following year, the Administrative employees also did the same.   These previously unrepresented Management and Administrative employees are now in bargaining units like the other County unions and are now covered by formal labor contracts rather than just trusting the County.

SCREA Board Members have painfully learned in the past few years that long-term “past practice” and “trust” cannot be relied on.  Important policy issues like retiree health and dental subsidies should be reduced to writing in understandable language by the County and distributed to all employees and retirees, and there should to be a formal process to address these kinds of issues.  The County Management and Administrative employees now have that kind of formal process since they became exclusive bargaining units, but SCREA cannot formally bargain on behalf of County retirees.

In the past, we have achieved success by meeting with County officials and Members of the Board of Supervisors, and have presented at the Board of Supervisors meetings when retiree related topics were on the agenda.  On more than one occasion, the Board of Supervisors even voted in favor of our position on retiree issues rather than approving the County Executive’s recommendations. But more recently, as illustrated above, discussions with County officials have become more difficult.

The loss of the retiree health subsidies doesn’t just affect current retirees, it also affects current employees (future retirees), many of whom were hoping we would prevail.  In the end, I think employees, retirees and County all lost something important in the last few years….the element of ”trust”.   I hope that in the future there will be opportunities to re-build the trust between the County and those who work, or have worked, for them.  In the meantime, your SCREA Board will continue to represent all County retirees to the best of our abilities.

Other Related Court Decisions

SCREA wasn’t the only retiree organization to recently get disappointing news regarding legal decisions involving the loss of retiree medical benefits.  The Retired Employee Association of Orange County, on February 13, 2014, lost their appeal on a case involving the elimination of “pooled health premiums”.  After decades of past practice and much supporting evidence, the California Court of Appeals ruled against retirees who had filed suit against San Diego County after the County eliminated blended insurance premiums for retirees under 65 years old, an action that increased retirees’ medical premiums dramatically.

Legal issues in this lawsuit against Orange County had previously been to the California State Supreme Court in 2011 where a unanimous decision had been issued that 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 statue or ordinance”.  Further, the State Supreme Court stated that “a contract is either express or implied”.  In other words, a contract can be formed by either words or conduct.  However, the recent legal rulings show that decades of “past practice” and other supporting evidence do not protect County retirees’ rights regarding the loss of their medical benefits.

Yet another appeal was lost involving Sonoma County retirees – a case similar to Orange County retirees.

Also, a lawsuit was filed and won in Court on behalf of a retired police officer who sued the City of San Diego because it placed a cap on the premiums it would pay on her retiree health benefits.  While the retirees initially won their lawsuit, they recently lost on the City’s appeal to the California Court of Appeals.  A press report in San Diego reads: “Potentially precedent setting ruling opens the door for governments statewide to slash worker benefits”.

Court Files Order Granting County’s “Motion for Summary Judgment” Retiree Health Subsidy Lawsuit Dismissed by Judge

By Mike DeBord

On September 30, 2013, the Federal Judge who conducted a hearing on the County’s “Motion for Summary Judgment” found in favor of the County and entered a Judgment granting the motion and closing the case.  SCREA has 30 days to file a Notice of Appeal of this judgment and we are working with our attorney to preserve that option.

Click Here To Download & Read Summary Judgement:  LINK

The following provides some key dates and actions related to our lawsuit:

• February 8, 2011- SCREA filed a lawsuit against the County for violations of contract clauses and violations of equal treatment clauses contained in California and U.S. constitutions.
• April 1, 2011- County filed a “Motion to Dismiss” the lawsuit.
• November 21, 2011- Supreme Court of California ruled on a question that had been posed in an appeal for another California county lawsuit: “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 county employees.”  The unanimous decision by the court was “Yes”.
• March 31, 2012- The Federal Judge denied the County’s “Motion to Dismiss” the lawsuit, citing in part the Supreme Court decision.
• May 24, 2013 – County filed a “Motion for Summary Judgment” of the lawsuit.
• September 30, 2013- The same Federal Judge granted County’s “Motion for Summary Judgment”.

The retirees of Sacramento County received health and dental subsidies for more than three decades and now those subsidies are gone for nearly all retirees.  In 1980, when the annual subsidies began on a continuous basis for every year thereafter, the cost of health and dental premiums were relatively low.  As annual health premiums increased by double digit percentages during the most recent decade, these pre-tax health subsidies for retirees became far more valuable.  We know by reading more than 1,000 survey responses that most all of those responding to the SCREA survey indicated that they believed that they were entitled to a health insurance subsidy upon their retirement (as is the case for retirees of the State and many other local jurisdictions).  This belief was shared by front line workers up to the very top management positions in the County and as reported through survey responses, the retiree health subsidies played a role in recruitment, longevity in County service, and job choice decisions to either stay with the County or work for another jurisdiction.  As the County reduced the subsidies and then took actions to eliminate these subsidies in total, many retirees felt betrayed by their former employer.  The financial impact of the subsidy loss was hard felt by our retirees.  After many years of trying to work with the County and the Board of Supervisors to continue the retiree subsidies, in 2011, SCREA filed a lawsuit to try and protect the long standing past practice by the County.  The SCREA Board Directors and our attorney Mark Merin dedicated a tremendous amount of time and energy over the last several years working with County retirees to build our case.  The ruling on the “Summary Judgment” prior to a jury trial was a real disappointment to say the least.

This lawsuit process has demonstrated several things to me.  First, what is “legal” vs. what is “right” are two different things, i.e. legality vs. morality.  As prior career employees, we know much about the dedication, commitment and loyalty we provided to the County and the tremendous value we collectively provided to the community.  The pride and job satisfaction we felt as employees will always reside within each of us.  What the County has done by dropping our subsidies after we retired and the way the County continued to provide health and dental subsidies to some groups of retirees while eliminating it for others is simply not right, even if it is determined by the court not to be a violation of the law.

In closing, whether or not we are successful on the appeal process, I want to thank the SCREA Board of Directors for unanimously voting to take the action of filing and supporting this lawsuit on behalf of all retirees, our attorney Mark Merin for his tremendous effort on this case, the retirees for supporting our effort and especially those who responded to our survey, provided documents, contributed to declarations, and helped us build our case.  The SCREA Board of Directors and membership came together to fight the good fight on behalf of all County retirees, and for that I am very proud.

By Mike DeBord

On September 30, 2013, the Federal Judge who conducted a hearing on the County’s “Motion for Summary Judgment” found in favor of the County and entered a Judgment granting the motion and closing the case.  SCREA has 30 days to file a Notice of Appeal of this judgment and we are working with our attorney to preserve that option.

Click Here To Download & Read Summary Judgement: LINK

The following provides some key dates and actions related to our lawsuit:

• February 8, 2011- SCREA filed a lawsuit against the County for violations of contract clauses and violations of equal treatment clauses contained in California and U.S. constitutions.
• April 1, 2011- County filed a “Motion to Dismiss” the lawsuit.
• November 21, 2011- Supreme Court of California ruled on a question that had been posed in an appeal for another California county lawsuit: “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 county employees.”  The unanimous decision by the court was “Yes”.
• March 31, 2012- The Federal Judge denied the County’s “Motion to Dismiss” the lawsuit, citing in part the Supreme Court decision.
• May 24, 2013 – County filed a “Motion for Summary Judgment” of the lawsuit.
• September 30, 2013- The same Federal Judge granted County’s “Motion for Summary Judgment”.

The retirees of Sacramento County received health and dental subsidies for more than three decades and now those subsidies are gone for nearly all retirees.  In 1980, when the annual subsidies began on a continuous basis for every year thereafter, the cost of health and dental premiums were relatively low.  As annual health premiums increased by double digit percentages during the most recent decade, these pre-tax health subsidies for retirees became far more valuable.  We know by reading more than 1,000 survey responses that most all of those responding to the SCREA survey indicated that they believed that they were entitled to a health insurance subsidy upon their retirement (as is the case for retirees of the State and many other local jurisdictions).  This belief was shared by front line workers up to the very top management positions in the County and as reported through survey responses, the retiree health subsidies played a role in recruitment, longevity in County service, and job choice decisions to either stay with the County or work for another jurisdiction.  As the County reduced the subsidies and then took actions to eliminate these subsidies in total, many retirees felt betrayed by their former employer.  The financial impact of the subsidy loss was hard felt by our retirees.  After many years of trying to work with the County and the Board of Supervisors to continue the retiree subsidies, in 2011, SCREA filed a lawsuit to try and protect the long standing past practice by the County.  The SCREA Board Directors and our attorney Mark Merin dedicated a tremendous amount of time and energy over the last several years working with County retirees to build our case.  The ruling on the “Summary Judgment” prior to a jury trial was a real disappointment to say the least.

This lawsuit process has demonstrated several things to me.  First, what is “legal” vs. what is “right” are two different things, i.e. legality vs. morality.  As prior career employees, we know much about the dedication, commitment and loyalty we provided to the County and the tremendous value we collectively provided to the community.  The pride and job satisfaction we felt as employees will always reside within each of us.  What the County has done by dropping our subsidies after we retired and the way the County continued to provide health and dental subsidies to some groups of retirees while eliminating it for others is simply not right, even if it is determined by the court not to be a violation of the law.

In closing, whether or not we are successful on the appeal process, I want to thank the SCREA Board of Directors for unanimously voting to take the action of filing and supporting this lawsuit on behalf of all retirees, our attorney Mark Merin for his tremendous effort on this case, the retirees for supporting our effort and especially those who responded to our survey, provided documents, contributed to declarations, and helped us build our case.  The SCREA Board of Directors and membership came together to fight the good fight on behalf of all County retirees, and for that I am very proud.

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.

Below is a new update on the SCREA lawsuit against Sacramento County retiree health and dental subsidies.  Click the image below to view/download the update:

On March 31, 2012, the Federal Judge denied the County of Sacramento’s “Motion to Dismiss” the lawsuit filed by SCREA related to health and dental subsidies for retirees. The judge also ordered the County to answer SCREA’s complaint (lawsuit) within 21 days of the March 31, 2012 decision on the “Motion to Dismiss”. On April 17, 2012, the County provided an “Answer To Complaint”. The County responded very briefly to each of the 66 paragraphs, mostly denying the allegations. The next step is a status (pretrial scheduling) conference that is set for June 28, 2012.

The Sacramento County Retired Employees Association (SCREA) filed a class action lawsuit in Federal Court against the County of Sacramento on February 2, 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”.