San Diego Police v. San Diego Retirement System
| Decision Date | 10 June 2009 |
| Docket Number | No. 07-56004.,No. 07-56512.,No. 07-56483.,07-56004.,07-56483.,07-56512. |
| Parties | SAN DIEGO POLICE OFFICERS' ASSOCIATION, on behalf of itself and on behalf of all of its members, Plaintiff-Appellant, v. SAN DIEGO CITY EMPLOYEES' RETIREMENT SYSTEM; City of San Diego; Scott Peters; Jim Madaffer; Ralph Inzunza; Toni Atkins; Tony Young; Brian Maienschein; Donna Frye; Michael Zucchet; Cathy Lexin; Mary Vattimo; Terri Webster; Ed Ryan; P. Lamont Ewell; Michael Uberuarga; Bruce Herring, Defendants-Appellees. San Diego Police Officers' Association, on behalf of itself and on behalf of all of its members, Plaintiff-Appellant, v. San Diego City Employees' Retirement System; City Of San Diego; Scott Peters; Jim Madaffer;Ralph Inzunza; Toni Atkins; Tony Young; Brian Maienschein; Donna Frye; Michael Zucchet; Cathy Lexin; Mary Vattimo; Terri Webster; Ed Ryan; P. Lamont Ewell; Michael Uberuarga; Bruce Herring, Defendants-Appellees. San Diego Police Officers' Association, on behalf of itself and on behalf of all of its members, Plaintiff-Appellee, v. San Diego City Employees' Retirement System, Defendant, Scott Peters; Jim Madaffer; Ralph Inzunza; Toni Atkins; Tony Young; Brian Maienschein; Donna Frye; Michael Zucchet; Cathy Lexin; Mary Vattimo; Terri Webster; Ed Ryan; P. Lamont Ewell; Michael Uberuarga; Bruce Herring, Defendants, and City of San Diego, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Christopher D. Nissen, Susan M. Wilson and M. Alim Malik, Law Offices of Jackson, DeMarco, Tidus, Petersen & Peckenpaugh, Irvine, CA, for San Diego Police Officers' Association, plaintiff-appellant/cross-appellee.
Peter H. Benzian and Colleen C. Smith, Law Offices of Latham & Watkins LLP, San Diego, CA, for City of San Diego, Scott Peters, Jim Madaffer, Ralph Inzunza, Toni Atkins, Tony Young, Brian Maienschein, Donna Frye, Michael Zucchet, Cathy Lexin, Mary Vattimo, Terri Webster, Ed Ryan, P. Lamont Ewell, Michael Uberuaga and Bruce Herring, defendants-appellees/cross-appellants.
Matthew M. Mahoney, Law Offices of Seltzer Caplan McMahon Vitek, San Diego, CA, for San Diego City Employees' Retirement System, defendants-appellees/cross-appellants.
Appeal from the United States District Court for the Southern District of California, Marilyn L. Huff, United States District Court Judge. D.C. No. CV-05-01581-MLH.
Before: CONSUELO M. CALLAHAN and SANDRA S. IKUTA, Circuit Judges, and MILTON I. SHADUR,* Senior District Judge.
San Diego Police Officers' Association ("Association") appeals the district court's orders granting summary judgment to the City of San Diego ("City"), San Diego City Employees' Retirement System ("Retirement System") and various individuals ("Individual Defendants")1 (collectively ") on Association's constitutional claims. In addition, Association and Appellees cross-appeal from the district court's final order addressing the possible award of attorneys' fees.
Association's lawsuit charged that (1) Appellees' involvement in approving and enacting a city ordinance that reduced City's contributions to the employees' retirement fund violated Association's contractual right to an actuarially sound pension system and (2) City's imposition of its last, best and final offer ("Final Offer") after the breakdown of 2005 labor negotiations between City and Association violated the latter's vested contractual rights. After extensive briefing by the parties, the district court found that none of the alleged actions affected Association's constitutionally protected rights. It therefore granted summary judgment to Appellees and relatedly entered a final order in which it awarded costs to Appellees as prevailing parties but denied an award of attorneys' fees to any party. We affirm in all respects except for the attorneys' fees issue, which we remand to the district court.
Pursuant to the San Diego City Charter, the San Diego City Council is empowered to set benefits and establish a retirement plan for its employees. That City Charter vests the Board of the Retirement System ("Board") with the power to determine eligibility for receipt of retirement benefits under the system, which establishes a defined benefit pension plan. In that role the Board administers the retirement system and performs various functions related to the plan, including the calculation of annual employer and employee contributions, the management and investment of the plan's funds and the distribution of pension benefits to retired City employees. Membership in the Retirement System is compulsory and a condition of employment for City employees. Retirement benefits under the plan are funded by contributions from both the pension system's members and City, which contributions are in turn invested for the benefit of the Retirement System members. Before 1996 City's annual contribution to the Retirement System was determined by a Retirement System actuary, who set the contribution rate based on actuarial calculations. In its collective bargaining agreement City agreed to subsidize or "pick up" a portion of the employee contribution, in addition to making its employer contribution. Determination of the Retirement System's funded ratio is based upon the current value of the system's assets compared to its future liabilities as calculated by the actuary—any difference between the two constitutes the "unfunded accrued actuarial liability."
In 1996 the Board and City Council approved an Employer Contribution Rate Stabilization Plan, known as "MP1," that changed the way in which City's employer contributions were calculated. According to the terms of MP1, City's annual contribution to the Retirement System was set at an agreed-upon rate that was lower than its actuarially determined contribution rate. In the event the Retirement System's funded ratio fell below a 82.3% "trigger percentage," MP1 required City's contribution rate to be "increased on July 1 of the year following the date of the actuarial valuation in which the shortfall in funded ratio is calculated . . . to restore a funded ratio" back to the 82.3% trigger level.2
As a result of declining financial conditions and losses to the Retirement System fund in 2001, the system's funded ratio dropped and began to approach the 82.3% trigger percentage. To avoid having to pay the full amount to restore the funded ratio to the trigger level by the following year, City sought relief from its contribution obligations as part of the 2002 labor negotiations between City and Association. It sought to condition any increase in benefits and compensation to Association's members on the Board's approval of a proposal easing City's contribution burden under MP1. That new proposal, aptly named MP2, retained the 82.3% trigger percentage but extended City's fixed contribution rate for another five years, during which time City would increase its payment 1% per year. Despite opposition from Association's representative on the Board, MP2 was approved by the Board on November 15, 2002, and three days later City Council adopted an ordinance specifying that City's contributions were to be made at the agreed-upon rate.
In early 2005 City undertook labor negotiations with Association and three other unions, all of whose collective bargaining agreements, each known as a Memorandum of Understanding ("MOU"), were scheduled to expire on June 30, 2005. Acting through its outside labor relations attorney, City engaged in bargaining sessions with the unions over several months with an eye toward a May 16, 2005 deadline for reaching an agreement. Given its financial condition and the pension funding crisis, City's primary goal during negotiations was to obtain financial concessions from the unions to achieve recurring budgetary savings. To that end City originally proposed two options to the unions: a reduction in members' salaries or a reduction of City's subsidy, or "pickup," of the employees' pension contribution.
During the negotiations City discussed different proposals with each of the unions, and the agreements ultimately reached between City and the unions other than Association contained variations as to each union. For example, because some of the unions' members participate in the Deferred Retirement Option Program ("DROP")3 and therefore do not make pension contributions subject to the reduction in pickup, City's proposals to some of the unions, including Association, contained a salary reduction for DROP employees in lieu of a reduction in pickup.
Bargaining sessions between City and Association were unsuccessful. After their last formal bargaining session on May 5, 2005, City and Association met again on May 11, at which time Association requested a final offer from City to present to its members. Despite its expression of reluctance, City presented a Final Offer containing a one year proposal with a 3.2% reduction in the amount of the employees' pickup and an equivalent reduction in the salary of DROP employees, as well as certain changes in the service eligibility requirements for retiree health benefits. On the following day Association formally declared an impasse and requested a formal hearing before City Council. Then on May 16 City Council held an impasse hearing and voted to impose the terms of the Final Offer on Association. On May 17 City voted to enact the Salary Ordinance for Fiscal Year 2005-06, which included the terms of City's Final Offer.
On August 9, 2005 Association filed its Complaint against Appellees, asserting various state law claims as well as federal claims under 42 U.S.C. § 1983.4 On March 21, 2006 Association filed its Third Amended Complaint. On January 3, 2007 Retirement System filed a motion for partial summary judgment, which...
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