City of Oakland v. Police

• Citation: 29 Cal.App.5th 688,240 Cal.Rptr.3d 571
• Decision Date: 29 November 2018
• Docket Number: A144653
• Court: California Court of Appeals
• Parties: CITY OF OAKLAND, Plaintiff and Respondent, v. OAKLAND POLICE AND FIRE RETIREMENT SYSTEM et al., Defendants, Retired Oakland Police Officers Association et al., Interveners and Appellants.

29 Cal.App.5th 688

240 Cal.Rptr.3d 571

CITY OF OAKLAND, Plaintiff and Respondent,

v.OAKLAND POLICE AND FIRE RETIREMENT SYSTEM et al., Defendants,Retired Oakland Police Officers Association et al., Interveners and Appellants.

A144653

Court of Appeal, First District, Division 4, California.

Filed November 29, 2018

Counsel for Plaintiff and Respondent: Nossaman LLP, Stephen N. Roberts, James H. Vorhis, Jill N. Jaffe, San Francisco.

Counsel for Defendant: Olson Hagel & Fishburn, Richard C. Miadich.

Counsel for Interveners and Appellant: McCracken, Stemerman & Holsberry LLP, W. David Holsberry, Paul More, Sarah Grossman-Swenson, San Francisco.

REARDON, J.^*

Following this court’s published decision in City of Oakland v. Oakland Police & Fire Retirement System (2014) 224 Cal.App.4th 210, 169 Cal.Rptr.3d 51 ( OPFRS )—which involved the legitimacy of certain retirement benefits regularly paid by the Oakland Police and Fire Retirement Board (Board) to members and beneficiaries of the Oakland Police and Fire Retirement System (PFRS)—the Retired Oakland Police Officers Association, along with several individual PFRS pensioners (collectively, the "Association") sought attorney fees in the trial court. Specifically, the Association—interveners in the underlying action—claimed an entitlement to fees under both California’s private attorney general statute, Code of Civil Procedure section 1021.5 ( section 1021.5 ), and section 1988 of the federal Civil Rights Attorneys’ Fees Award Act of 1976, 42 U.S.C. § 1988 ( section 1988 ). After considering the matter at some length, the trial court determined that fees were not warranted under either statute. On appeal, many of the trial court’s numerous conclusions made in connection with its denial of fees are disputed either by the Association or by respondent City of Oakland (City). We have considered the arguments raised by both parties, and deem an award of attorney fees under section 1021.5 to be proper. We therefore reverse and remand the matter so that the trial court can determine the appropriate amount of such an award, consistent with our conclusions herein.¹

I. BACKGROUND

"PFRS was created in 1951 when separate police and fire retirement systems were merged pursuant to article XXVI of the Oakland City Charter (Charter). (Charter, art. XXVI, § 2600.) Only members of the Oakland Police Department (Department) or Oakland Fire Department hired prior to July 1, 1976, are eligible for coverage by PFRS." ( OPFRS , supra , 224 Cal.App.4th at p. 216, 169 Cal.Rptr.3d 51.) "Pursuant to the terms of the Charter, PFRS is managed and administered by the Board, which has ‘exclusive control of the administration and investment’ of all PFRS funds." ( Ibid. ) As we summarized in OPFRS : "In a fixed pension system, benefits are paid to a retiree based on the compensation paid to that retiree for a defined period of time prior to retirement. [Citation.] PFRS, in contrast, is a ‘fluctuating’ system under which pension benefits paid to retired members increase or decrease over time as the compensation paid to active members of the Department similarly rises or falls. [Citations.] The primary purpose of a fluctuating pension plan such as PFRS ‘is to guarantee the pensioner a fairly constant standard of living despite inflation, and to maintain equality of position between the retired member and the person (or persons) currently holding the rank the pensioner attained before his retirement.’ [Citation.] Thus, a PFRS retiree receives benefits based on the compensation currently paid to active sworn personnel who hold the rank that the member held prior to retirement. Stated in terms of the applicable Charter language, the retiree receives benefits based on the current compensation that is ‘attached to the average rank held’ by that retiree in the three years prior to retirement." ( Id. at pp. 216–217, 169 Cal.Rptr.3d 51.)

"On June 14, 2011, the City filed a petition for writ of mandate and complaint for declaratory relief against PFRS and the Board in Alameda County Superior Court.

In its papers, the City claimed that the Board was overcompensating PFRS retirees in four specific ways: (1) by paying retirees at an excessive rate for holidays; (2) by paying retirees for too many holidays; (3) by including shift differential pay in the calculation of retiree benefits; and (4) by paying retirees who retired above the rank of captain at an excessive rate for holidays." ( OPFRS , supra , 224 Cal.App.4th at pp. 224–225, 169 Cal.Rptr.3d 51.) The City later dropped its fourth contention. ( Id. at p. 225, fn. 6, 169 Cal.Rptr.3d 51.) "PFRS and the Board filed their answer on August 1, 2011, disputing all of the City’s overpayment claims. On August 24, 2011, the trial court granted the Association leave to intervene, and on August 29, 2011, the Association filed its complaint in intervention, joining PFRS and the Board in contesting the City’s allegations." ( Id. at p. 225, 169 Cal.Rptr.3d 51.) In August 2012, the trial court granted the City’s writ petition with respect to all three types of benefits described above. In particular, the court "ordered prospective relief and directed the Board to collect any overpayments, subject to the applicable statute of limitations." ( Ibid. ) The Board, PFRS, and the Association all appealed, but PFRS and the Board subsequently reached a settlement with the City and, at their request, were dismissed from this action. ( Id. at p. 215, fn. 1, 169 Cal.Rptr.3d 51.)

Our opinion in OPFRS largely reversed the trial court’s decision with respect to those questions that were brought before us for resolution. (See OPFRS , supra , 224 Cal.App.4th at pp. 227–249, 169 Cal.Rptr.3d 51.) On the holiday pay rate issue, we concluded that the trial court erred in finding that the holiday premium pay received by active members of the Department is not " ‘compensation attached to rank’ " for purposes of the calculation of PFRS retirement benefits. ( Id. at pp. 227–233, 169 Cal.Rptr.3d 51.) Specifically, we held that the doctrine of res judicata required the continued treatment of such pay as compensation attached to rank because prior litigation had reached this result and there were "no intervening changes in facts or law that would justify a reexamination of the same issue between the same parties." ( Id. at p. 233, 169 Cal.Rptr.3d 51.) In making this determination, we expressly rejected the City’s argument that certain changes to the language in the then-current memorandum of understanding (MOU) altered pensioners rights with respect to holiday premium pay and further concluded that "the fact that the right of active members to receive holiday premium pay for working on holidays has been contained in a series of salary ordinances and MOU’s over the years is essentially irrelevant." ( Id. at pp. 229–230, 169 Cal.Rptr.3d 51.) We also rejected the trial court’s conclusion, based on its broad reading of Kreeft v. City of Oakland (1998) 68 Cal.App.4th 46, 80 Cal.Rptr.2d 137 ( Kreeft ), that any variability in a benefit paid to active members of the Department disqualifies such benefit from being considered compensation attached to rank under the Charter. ( OPFRS , supra , 224 Cal.App.4th at p. 232 & fn. 12, 169 Cal.Rptr.3d 51.)

Although the Association declined to appeal the trial court’s determination that shift differential pay is not compensation attached to rank for pension purposes, it did argue: that the trial court should not have considered the question because the City had failed to exhaust available administrative remedies; that the trial court improperly considered extra-record evidence in making its shift differential decision; and that, regardless, the Board should be barred from collecting any past overpayments related to shift differential pay on equitable grounds. (See OPFRS , supra , 224 Cal.App.4th at pp. 234–246, 169 Cal.Rptr.3d 51.) While we rejected the Association’s procedural arguments, we agreed that equitable estoppel applied on the facts presented, barring recovery of significant overpayments related to the past inclusion of shift differential pay in compensation attached to rank. ( Ibid. ) In reaching this conclusion, we expressly held, that—under the terms of the Charter and to the extent permitted by section 17 of article XVI of the California Constitution —"the Board has discretion to decide whether, how and to what extent any overpayments made to PFRS retirees should be repayable to PFRS" and that a refusal to mandate the return of any overpayments under such circumstances would not constitute an unconstitutional gift of public funds. ( OPFRS , supra , 224 Cal.App.4th at pp. 243–246, 169 Cal.Rptr.3d 51.)

Finally, with respect to alleged pension overpayments related to the number of designated holidays included in compensation attached to rank for the 2009, 2010, and 2011 fiscal years, the Association, again, declined to appeal the underlying merits, asserting only that PFRS pensioners should not be required to return any overpayments they received based on this error for equitable reasons. (See OPFRS , supra , 224 Cal.App.4th at p. 247, 169 Cal.Rptr.3d 51.) Noting that the improper payments at issue were not substantial and were time-limited based on the terms of the applicable MOU, we found no grounds for equitable relief with respect to these overpayments. ( Id. at pp. 247–249, 169 Cal.Rptr.3d 51.) However, we further opined: "[T]he trial court in this case ordered the Board ‘to develop and implement a plan to recover the overpayments’ made to PFRS retirees. To the extent this order mandates that the Board act in a particular manner with respect to the identified overpayments, it was error. Rather, ... the Board has discretion regarding how its miscalculations should be handled. The matter should therefore be remanded to the Board so that it can exercise this discretion subject, if necessary, to additional judicial review." ( Id. at p. 249, 169 Cal.Rptr.3d 51.)

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