Martinez v. Pub. Employees' Ret. Sys.

• Citation: 33 Cal.App.5th 1156,245 Cal.Rptr.3d 693
• Decision Date: 04 April 2019
• Docket Number: A153679
• Court: California Court of Appeals
• Parties: Linda C. MARTINEZ et al., Plaintiffs and Appellants, v. PUBLIC EMPLOYEES’ RETIREMENT SYSTEM, Defendant and Respondent.

33 Cal.App.5th 1156

245 Cal.Rptr.3d 693

Linda C. MARTINEZ et al., Plaintiffs and Appellants,

v.PUBLIC EMPLOYEES’ RETIREMENT SYSTEM, Defendant and Respondent.

A153679

Court of Appeal, First District, Division 2, California.

Filed April 4, 2019

Attorney for Plaintiff and Appellant Linda Martinez: Weinberg, Roger & Rosenfeld, Emily P. Rich, Kerianne R. Steele, Paul K. Pfeilschiefter, Alameda;

Attorney for Plaintiff and Appellant Service Employees International Union, Local 1000: SEIU Local 1000, Anne Maria Giese, Sacramento, Theresa C. Witherspoon, Nicole Heeder, San Diego;

Attorney Defendant and Respondent Public Employees’ Retirement System: Public Employees’ Retirement System, Matthew G. Jacobs, Sacramento, Austa Wakily.

Richman, J. Government Code¹ section 21156, part of the Public Employees Retirement Law, has always equated disability with a state employee being "incapacitated physically or mentally for the performance of his or her duties." And ordinarily, a governmental employee loses the right to claim disability benefits if terminated for cause. A pair of decisions from the Third Appellate District carved out three exceptions to this general rule. First, under Haywood v. American River Protection Dist . (1998) 67 Cal.App.4th 1292, 79 Cal.Rptr.2d 749 ( Haywood ), a terminated-for-cause employee can still qualify for disability retirement when the conduct which prompted the termination was the result of the employee’s disability. Second, under Smith v. City of Napa (2004) 120 Cal.App.4th 194, 14 Cal.Rptr.3d 908 ( Smith ), a terminated employee may qualify for disability retirement if he or she had a "matured right" to a disability retirement prior to the conduct which prompted the termination. Third, Smith further recognized that there might be instances where "a court, applying principles of equity, will deem an employee’s right to a disability retirement to be matured and thus survive a dismissal for cause." ( Id . at pp. 206–207, 14 Cal.Rptr.3d 908.)

Applying Haywood and Smith , the Board of Administration of the California Public Employees Retirement System (CalPERS) adopted a precedential decision² that, when an employee settles a pending termination for cause and agrees not to seek reemployment, this is "tantamount to a dismissal," thus precluding a disability retirement. (In the Matter of Application for Disability Retirement of Vandergoot (2013) CalPERS Precedential Dec. No. 12–01 (Vandergoot ).)

Linda Martinez, a former state employee, settled the termination for cause action against her, and agreed to resign and not re-apply for employment with the agency she was leaving. Her application for disability retirement was denied by the CalPERS Board of Administration (Board). Joined by her union, the Service Employees International Union, Local 1000 (SEIU), Martinez challenged the soundness and continued validity of Haywood and Smith , particularly as extended in Vandergoot . Her challenge failed during her administrative appeal, and was rejected by the trial court that denied her petition for mandate relief, which concluded that Haywood and Smith "set out the relevant law" and were binding as stare decisis. The trial court further concluded that "Vandergoot is a reasonable extension of Haywood and Smith ," and, moreover, was entitled to "substantial weight" due to "the agency’s area of expertise." We agree with both of these conclusions, and in doing so we reject the contention of Martinez and SEIU that a 2008 enactment tacitly "superseded" Haywood and Smith .

BACKGROUND

The salient details are without dispute.

Martinez began work for the State in 1985. In 2001, she commenced working at the State Department of Social Services (DSS); she also served in various positions with SEIU, eventually becoming Secretary-Treasurer of the regional District Labor Council. In 2014, DSS moved to terminate her employment with a Notice of Adverse Action (NOAA), citing numerous grounds for her dismissal.³ Believing this action "was taken in retaliation for her union activities," and having already filed an unfair labor practices complaint, Martinez prepared to contest the dismissal.

In September 2014, the parties negotiated a settlement, under which DSS agreed to pay Martinez $30,000, withdraw the NOAA, and remove certain matters from her personnel file. Martinez agreed to "voluntarily resign from her position ... effective at the close of business on September 30, 2014. [DSS] hereby accepts Martinez’s voluntary resignation as of the day of the execution of this settlement agreement [September 22, 2014]." Martinez agreed "she will never again apply for or accept any employment position" with DSS, which "agree[d] to cooperate with any application for disability retirement filed by Martinez within the next six months."

Martinez duly filed her disability retirement application, claiming she could no longer function as a "disability eval[uation] analyst" because of various job-related conditions. In June 2015 CalPERS notified her "Your application has been cancelled." Citing Haywood , Smith , and Vandergoot , CalPERS explained: "We have determined that you were dismissed from employment for reasons which were not the result of a disabling medical condition. Additionally, the dismissal does not appear to be for the purpose of preventing a claim for disability retirement. Therefore, you are not eligible for disability retirement."

Martinez appealed the denial to the Board. Her appeal was heard by an Administrative Law Judge, who concluded "the decision made by CalPERS to cancel [Martinez’s] application for disability retirement was correct." The Board adopted the Administrative Law Judge’s proposed decision, and denied Martinez’s petition for reconsideration.

Martinez and SEIU filed a petition against CalPERS, its Board, and DSS (named as "real party in interest") for a writ of mandate (both traditional and administrative) ordering the Board to "set aside and reverse" its decision. Reiterating the position they took before the Board, Martinez and SEIU sought to have the trial court "overrule" Vandergoot and "disavow" Haywood and Smith because they "misconstrue and misapply the California Public Employees’ Retirement Law ... and result in the harsh forfeiture of public employees’ disability retirement rights, in contravention of the California Constitution and principles of equity."

Perhaps recognizing that asking a trial court to flout stare decisis by "disavowing" higher court decisions was, to say the least, a long-shot, Martinez and SEIU’s alternate approach was to get the court "to distinguish Martinez’s case from the Haywood , Smith and Vandergoot cases on the grounds that ... DSS contractually promised in a Settlement Agreement to ... cooperate with the disability retirement application ... DSS was aware ... Martinez intended to imminently file. ... State of California ... agencies, their employees, and the labor unions that represent employees will be discouraged from settling disputes if, despite the parties’ express contractual stipulations, [the] Board prohibits employees from pursuing disability retirement on the basis of Haywood / Smith /Vandergoot the precedents."

Martinez and SEIU further alleged that "CalPERS members, such as Petitioner Martinez and other SEIU Local 1000 unit members, have the vested right to retirement benefits including ... disability retirement benefits." And, they alleged, in denying Martinez’s application for those benefits, the Board violated the Contract Clauses of the state and federal constitutions ( Cal. Const., art. I, § 9 ; U.S. Const., art. I, § 10, cl. 1 ) and its duty to administer the CalPERS system "in a manner that will assure prompt delivery of benefits ... to the participants." (See Cal. Const., art. XVI, § 17, subds. (a)-(b).)

The petition’s concluding allegation was that the Board has "a duty to comply with Article XVI, section 17 of the California Constitution and ... to process disability retirement applications on the merits even where an employer has issued the applicant a notice ... terminating their employment," which overrode the Board’s "practice of cancelling the disability retirement applications of SEIU Local 1000’s members such as [ ] Martinez on the sole ground that the applicants have at one point received a notice of termination from their employer."

The trial court denied the petition with a 31-page written order. Although it expressed considerable disagreement and unease with the reasoning of Haywood and Smith , the court concluded they "set out the relevant law" and must be followed. In addition to concluding that "Vandergoot is a reasonable extension of Haywood and Smith ," the court stated it "gives substantial weight to administrative decisions interpreting statutes and case law within the agency’s area of expertise," and thus "will give effect to Vandergoot ."

DISCUSSION

Standard Of Review

"A public employee has a fundamental vested right to a disability pension if he or she is in fact disabled. [Citation.] Accordingly, the trial court was authorized to apply its independent judgment as to the weight of the evidence." ( Beckley v. Board of Administration etc . (2013) 222 Cal.App.4th 691, 697, 166 Cal.Rptr.3d 51.) The trial court in this case did so. Ordinarily, a reviewing court would examine the record to determine if substantial evidence supported the trial court’s judgment. (E.g., Fukuda v. City of Angels (1999) 20 Cal.4th 805, 824, 85 Cal.Rptr.2d 696, 977 P.2d 693 ; City of Fontana v. California Dept. of Tax & Fee Administration (2017) 17 Cal.App.5th 899, 920, 226 Cal.Rptr.3d 21.) However, with undisputed facts, this appeal presents only issues of law, which will receive our independent review. (E.g., Yuba City Unified School Dist. v. State Teachers’ Retirement System (2017) 18 Cal.App.5th 648, 654, 227 Cal.Rptr.3d 130 ; California Correctional Peace Officers’ Assn. v. State of California (2010) 188 Cal.App.4th 646, 650, 115 Cal.Rptr.3d 361.) Even so, courts...