Bullock v. City of Antioch, A161029

• Court: California Court of Appeals
• Writing for the Court: Jackson, P. J.
• Citation: 78 Cal.App.5th 407,293 Cal.Rptr.3d 668
• Parties: Annette BULLOCK et al., Plaintiffs and Appellants, v. CITY OF ANTIOCH, Defendant and Respondent.
• Docket Number: A161029
• Decision Date: 06 May 2022

78 Cal.App.5th 407
293 Cal.Rptr.3d 668

Annette BULLOCK et al., Plaintiffs and Appellants,
v.
CITY OF ANTIOCH, Defendant and Respondent.

A161029

Court of Appeal, First District, Division 5, California.

Filed May 6, 2022

Law Office of David Wolf and David A. Wolf, Berkeley, for Plaintiffs and Appellants.

Jackson Lewis, Gina M. Roccanova, and Swaja Khanna, San Francisco, for Defendant and Respondent.

Jackson, P. J.

78 Cal.App.5th 411

Plaintiffs, retired employees of the City of Antioch (City), appeal from an order sustaining the City's demurrer to plaintiffs’ second amended complaint without leave to amend.¹ We review the decision de novo and find the trial court erred in sustaining the demurrer based upon collateral estoppel, also known as issue preclusion.² We reverse and remand.

78 Cal.App.5th 412

FACTUAL AND PROCEDURAL BACKGROUND

I. Second Amended Complaint

Seventeen plaintiffs filed a second amended complaint (SAC) alleging they are retired employees of the City who receive retiree health benefits through CalPERS under the City's Medical After Retirement (MAR) plan. The plaintiffs retired at various times from 2002 to 2017. The SAC alleges each plaintiff's date of retirement, job title, and unit or bargaining unit. Five of the 17 plaintiffs had been members of Operating Engineers Local 3 (Local 3) prior to their retirement.

The memorandums of understanding (MOU) and other benefits documents applicable to each of the units or bargaining units state: " ‘The City shall pay the PERS required Minimum Employer Contribution ("MEC") per month on behalf of each active and retired employee who participates in the City's health insurance plans.’ " The City pays the MEC to CalPERS and then deducts the MEC amount from the retiree's

293 Cal.Rptr.3d 673

premium reimbursement owed under the MAR plan. Plaintiffs allege the City's practice amounts to improper use of the plaintiffs’ MAR benefits to pay the CalPERS required MEC, results in an improper reduction of plaintiffs’ benefits, and violates Government Code section 22892³ and the applicable MOU's and/or other plan documents.

Plaintiffs allege ongoing and continuing violations of the operative documents and section 22892. The SAC attaches the plaintiffs’ December 19, 2018 claim letters submitted to the City and the City's January 29, 2019 notices of untimely claim. Plaintiffs allege they consider the City's notices to be a rejection of their claims, which continue to occur on a monthly basis.

Plaintiffs allege claims for declaratory relief, restitution/unjust enrichment, and negligence and breach of fiduciary duty. They assert that contrary to the "express language of the operative and controlling City documents," the City misappropriates a portion of the plaintiffs’ MAR benefit by deducting the MEC from the MAR reimbursement.

II. City's Demurrer

The City demurred to the SAC, arguing that the plaintiffs failed to state facts sufficient to constitute a cause of action because (1) the complaint is barred

78 Cal.App.5th 413

by issue preclusion based on a prior 2017 administrative proceeding between the City and Local 3, (2) the plaintiffs failed to allege exhaustion of their administrative remedies, and (3) the plaintiffs failed to comply with the claim presentation requirements under section 900 et seq.⁴ The City's issue preclusion argument was based on a union grievance proceeding filed by Local 3 in 2017, of which the City requested that the trial court take judicial notice.⁵

A. 2017 Local 3 Grievance

In 2017, Local 3 filed a grievance asserting that the City was violating section 12.1(B) of the MOU, which states: " ‘The City shall pay the PERS required Minimum Employer Contribution (MEC) per month on behalf of each active and retired employee who participates in the City's health insurance plans.’ " Local 3 alleged it had recently learned that the City was paying the MEC "but also deducting it out of the retirees [sic ] check only." The city manager denied the grievance, explaining that the MAR plan capped the total contributions paid by the City toward retiree health benefits and the City correctly paid the MEC directly to CalPERS and the City correctly paid the difference between the MAR cap and the MEC directly to the retirees.

Local 3 appealed the denial of the grievance to the City's Board of Administrative Appeals (Board), which conducted a hearing on the issue. The Board found that "the City is properly paying its Minimum Employer Contribution (MEC) under the Medical-After-Retirement cap for retirees and that the reasons given by Appellant

293 Cal.Rptr.3d 674

[Local 3] to allocate the full cap amount to a retiree, plus have the City pay the MEC to CalPERS, is not what is reflected in the signed MOUs and MARs going back to 1993." The Board's decision was referred to the city council for consideration and a final determination, and on November 14, 2017, the city council upheld the Board's determination. Local 3 did not seek judicial review of the final decision.

B. City's Argument in Support of Demurrer

The City's demurrer argued that issue preclusion bars the current plaintiffs’ claims because the identical issue was raised by Local 3 in the 2017 grievance proceeding, the issue was actually litigated with a final judgment on the merits, and the current plaintiffs are in privity with Local 3. It also

78 Cal.App.5th 414

argued, alternatively, that the plaintiffs failed to exhaust the mandatory grievance procedures in the MOU's and that plaintiffs failed to comply with the claims presentation requirements of section 945.4.

The plaintiffs’ opposition argued that issue preclusion does not apply because the issues were not identical. The 2017 grievance proceeding did not consider the City's ongoing violation of section 22892. Plaintiffs also argued they were not parties to the 2017 grievance or in privity with Local 3. Although the plaintiffs acknowledged the Board hearing involved witness testimony under oath, admission of exhibits, and opening and closing argument, they argued that the City had a strong financial interest to rule against Local 3 and that the 2017 proceeding lacked impartiality of an independent tribunal.

III. Order Sustaining Demurrer

After a hearing on the City's demurrer, the trial court adopted its tentative ruling sustaining the demurrer without leave to amend based upon issue preclusion. The trial court found the issue alleged in the SAC to be identical to the issue decided in Local 3's 2017 grievance proceeding and rejected the plaintiffs’ argument that the grievance proceeding did not address the issue of whether the City was violating section 22892. The trial court's ruling states: "The Court sees little difference between the issues. The gravamen of Local 3's dispute was the MEC was not being deducted from active members as it was being deducted from the retiree's [sic ] checks. Government Code section 22892 provides that the employer's monthly contribution (MEC) shall be the same for both employees and annuitants and this section sets the minimum amount the employer pays. Clearly, Government Code § 22892 was at issue in the Local 3 grievance." The ruling further found that Local 3's MOU and the MOU's at issue in the SAC contain similar language based on the requirement set forth in section 22892, and concluded: "Given the statutory bases for the MOUs, the Court sees little daylight between the issues raised in Local 3's grievance and the predominate issue in [the] SAC."

Regarding the privity requirement, the trial court's ruling states: "[T]he emphasis is not on a concept of identity of parties, but on the practical situation. The question is whether the non-party is sufficiently close to the original case to afford application of the principle of preclusion." [Citation.]’ (4 Cal.App.3d at p. 937.) ( Old Republic Ins. Co. v. Superior Court (1998) 66 Cal.App.4th 128, 152, 77 Cal.Rptr.2d 642.) ‘ "Due process requires that the nonparty have had an identity or community of interest with, and adequate representation by, the ... party in the first action. [Citations.] The circumstances must also have been such that the nonparty should reasonably have expected to be bound by the prior adjudication ..." [Citations.]’

293 Cal.Rptr.3d 675

(

78 Cal.App.5th 415

Citizens for Open Access etc. Tide, Inc. v. Seadrift Assn. (1998) 60 Cal.App.4th 1053, 1070, 71 Cal.Rptr.2d 77.) [¶] Collateral estoppel may be if due process requirements are satisfied. Here, the Court addressed the threshold requirements of identical issue and privity, finding their existence. As to the remaining requirements, the allegations in the SAC raised no real concerns as to whether the issues were actually litigated and whether the decision...