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 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”.

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