City of Oakland v. Pers

• Decision Date: 09 January 2002
• Docket Number: No. C035486.,C035486.
• Citation: 115 Cal.Rptr.2d 151,95 Cal.App.4th 29
• Parties: CITY OF OAKLAND, Plaintiff and Appellant, v. PUBLIC EMPLOYEES' RETIREMENT SYSTEM et al., Defendants and Appellants. United Public Employees' Local 790 etc., Real Party in Interest and Appellant.
• Court: California Court of Appeals

115 Cal.Rptr.2d 151

95 Cal.App.4th 29

CITY OF OAKLAND, Plaintiff and Appellant, v. PUBLIC EMPLOYEES' RETIREMENT SYSTEM et al., Defendants and Appellants United Public Employees' Local 790 etc., Real Party in Interest and Appellant.

No. C035486.

Court of Appeal, Third District.

January 9, 2002.

Rehearing Denied February 7, 2002.

Review Denied March 27, 2002.^*

Liebert, Cassidy and Whitmore, Cynthia O'Neill and Michael N. Westheimer, Mountain View, for Plaintiff and Appellant.

Richard B. Maness, Sacramento, for Defendant and appellant.

VanBourg, Weinberg, Roger & Rosenfeld, W. Daniel Boone, Oakland, Eric Borgerson, and M. Suzanne Murphy, for Real Party in Interest and Appellant.

MORRISON, J.

This case involves the retroactive reclassification of local government employees from "miscellaneous" to "firefighter," a safety membership which earns better pension benefits. (See Gov.Code, §§ 20370, subd. (c), 20420, 20433; further undesignated section references are to this code.)

We agree with the trial court that the employees in this case were "firefighters" as defined by statute. We also agree with the trial court's view it was bound by one of our prior decisions to conclude the employees were entitled to no relief because of a statute of limitations purportedly applicable to reclassification of employees subject to the Public Employees' Retirement Law (PERL). (§ 20000 et seq.) (Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455, 20 Cal.Rptr. 321, 369 P.2d 937.) The trial court exercised its right to explain why it believed our prior opinion was incorrect. (See People v. Musante (1980) 102 Cal.App.3d 156, 159, 162 Cal.Rptr. 158 (cone. opn. of Gardner, P.J.).) We agree with the trial judge that our prior opinion was in error. Accordingly, we shall reverse with directions.

BACKGROUND

"The Public Employees' Retirement Law (Gov.Code, § 20000 et seq.) establishes a retirement system for certain state and local government employees. PERS was enacted `to effect economy and efficiency in the public service by providing a means whereby employees who became superannuated or otherwise incapacitated may, without hardship or prejudice, be replaced by more capable employees, and to that end provide a retirement system consisting of retirement compensation and death benefits.' (§ 20001.) City employees become members of PERS when their employing city elects, via contract with the PERS Board, to have them covered by PERS. [Citations.] [¶] Under PERS, a city employee who is a member of the system may be classified as either `local miscellaneous' [citation] or `local safety' [citation], depending on the nature of the principal tasks and duties of the employee's position. The distinction between the two classifications is important, as local safety members receive superior retirement benefits compared to those received by local miscellaneous members." (City of Huntington Beach v. Board of Administration (1992) 4 Cal.4th 462, 466, 14 Cal. Rptr.2d 514, 841 P.2d 1034, fn. omitted.)

In 1976, the City of Oakland (City) contracted with the California Public Employees' Retirement System (PERS) to expand its PERS membership to include "local safety" members. The City operates the Oakland Fire Department. A City agency, the Port of Oakland, operates Oakland International Airport. As a condition of federal aviation regulations, the airport operated a unit of employees called "Airport Servicemen" (Servicemen), who were classified as "local miscellaneous" members. In 1995, based on certain duties they perform, the Servicemen, through their labor organization, sought to be reclassified as "safety" members, especially for the purposes of this appeal, as "local firefighters." (See § 20433.) If successful, this application shall entitle the Servicemen to better pension benefits. The City opposed the request for reclassification. Pursuant to a Memorandum of Understanding (MOU), the position was abolished in 1997 and existing incumbents either transferred into the Oakland Fire Department or into a new classification.

The City employed Servicemen since 1953.

It appears the 1997 MOU and the 1995 reclassification application were inspired by a February 1995 labor arbitration decision (confirmed by the Alameda County Superior Court) which concluded the City failed to provide necessary safety equipment and training to the Servicemen. The award concluded that by virtue of their duties and federal aviation regulations, the Servicemen were safety employees. Based in part on this award, the Servicemen filed an application for reclassification in August 1995.

The City at first opposed the application on two—and only two—grounds: First, because the Servicemen were not part of the Oakland Fire Department, they were not firefighters; second, because they did not fight fires except occasionally, they were not firefighters.

PERS opposed the application, but only in part. PERS agreed with the Servicemen that an employee did not have to be called a firefighter, nor work for a "fire department" in order to be a firefighter as defined by statute. PERS urged the Servicemen were not firefighters, at least not before 1993, when they spent a lot of time fueling aircraft. PERS argued: "After the fueling duties were abandoned, it appears that the principal duties of this position constituted active firefighting, and that since they had no other principal duties, they can be deemed to be in a de facto fire department which makes them eligible for coverage as local firefighter members of CalPERS under section 20433 for that period."

A nine-day administrative hearing took place.

In a closing brief, the City raised some new issues: First, prior requests for reclassification had not been appealed to the PERS Board; second, any reclassification could not be retroactive beyond 1988 (the date of a telephonic denial of reclassification); and third, reclassification could not apply to labor performed before 1993, due to the three-year mistake statute, as well as a statute limiting actions for payments into and out of the PERS fund.

In January 1998, an administrative law judge (ALJ) concluded the Servicemen were "entitled to CalPERS `local firefighter' safety status under section 20433, retroactive to July 1, 1976."

The ALJ addressed timeliness issues as follows:

"10. The City suggests that the right of Airport Servicemen to retroactive adjustment of their benefits is limited. This is because they earlier petitioned Cal-PERS for safety status and were denied. No appeal was taken of these earlier decisions. It is argued that Local 790 is foreclosed from challenging PERS previous decisions since it failed to exhaust its administrative remedies in prior proceedings. (Nicholson v. Lucas (1994) 21 Cal.App.4th 1657 [26 Cal.Rptr.2d 778]; Los Angeles County Employee Association v[.] County of Los Angeles (1976) 61 Cal.App.3d 926 [132 Cal.Rptr. 807]; Hittle v. Santa Barbara County Employees Retirement Assn. (1985) 39 Cal.3d 374 [216 Cal.Rptr. 733, 703 P.2d 73].)

"While there may have been separate inquiries by individual Airport Servicemen in the past, some retired, Local 790's application for safety status was not formally made until August 1995. An inquiry to CalPERS made by an attorney on behalf of retired Airport Servicemen would not preclude the instant application for change in status.

"Nicholson is inapplicable to these facts, and both the Los Angeles County and Hittle decisions can be distinguished. In the former case, petitions for writ of mandate were dismissed on the ground that the employees had not exhausted administrative remedies prior to seeking relief in the courts. Here, neither Airport Servicemen nor Local 790 have sought judicial review. Hittle found that there was no failure to exhaust administrative remedies where the notice to the employee informing him of his rights was ambiguous and uninformative. Local 790 suggests that here, in the absence of a formal decision and notice of appeal rights, Airport Servicemen are not precluded from seeking reclassification to local firefighter status because of earlier inquiries. Local 790 is not precluded from applying for reclassification in these proceedings.

"11. The City further argues that this action is subject to a three-year statute of limitation because it essentially seeks to enforce a statutory duty and/or to obtain relief on ground of mistake.

"The statute of limitations contained in Government Code section 20164(b) applies to erroneous payments into or out of the retirement fund not to reclassifications. The three[-]year statute of limitations in the Code of Civil Procedure is also inapplicable. Government Code section 20164(a) provides that CalPERS' obligations to its members "continue throughout their respective memberships" and its obligations to retired members continue throughout the lives of the retired members, and thereafter until all obligations to their respective beneficiaries, if any, have been discharged. To the extent that the two statutes conflict, the more specific language in the retirement statute should govern. CalPERS also notes that section 20164 is a substantive statute creating an ongoing duty to properly discharge its obligations. The procedural statute of limitations does not appear to override this duty.

"12. Airport Servicemen are not entitled to prospective safety status classification. As a result of the reorganization, this position will no longer exist. Incumbents will be given a choice of applying as entry-level firefighters, or assuming a newly developed position entitled "Airport Operations Specialist." Those becoming entry-level firefighters will be entitled to PERS safety status. Airport Operations Specialists will have no basis for claiming PERS safety status. After review of all the evidence and legal arguments, and by reason of the foregoing discussion, it is determined that Airport Servicemen are entitled to CalPERS "local firefighter"...