San Bernardino Public Employees Assn. v. City of Fontana

• Decision Date: 16 November 1998
• Docket Number: No. E021207,E021207
• Citation: 67 Cal.App.4th 1215,79 Cal.Rptr.2d 634
• Court: California Court of Appeals Court of Appeals
• Parties: , 160 L.R.R.M. (BNA) 2179, 98 Daily Journal D.A.R. 11,843 SAN BERNARDINO PUBLIC EMPLOYEES ASSOCIATION, Plaintiff and Respondent, v. CITY OF FONTANA et al., Defendants and Appellants.

Page 634

79 Cal.Rptr.2d 634

67 Cal.App.4th 1215, 160 L.R.R.M. (BNA) 2179,

98 Daily Journal D.A.R. 11,843

SAN BERNARDINO PUBLIC EMPLOYEES ASSOCIATION, Plaintiff and Respondent, v. CITY OF FONTANA et al., Defendants and Appellants.

No. E021207.

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

Nov. 16, 1998.

[67 Cal.App.4th 1218] Best Best & Krieger, Jack B. Clarke, Jr., Bradley E. Neufeld, Riverside, and Kevin T. Collins for Defendants and Appellants.

Liebert, Cassidy & Frierson, Arthur A. Hartinger, San Francisco, and Alison C. Neufeld as Amici Curiae on behalf of Defendants and Appellants.

Olins, Foerster & Hayes, Barbara J. Ginsberg, Santa Ana, and Dennis Hayes, San Diego, for Plaintiff and Respondent.

OPINION

WARD, Associate Justice.

The City of Fontana (City) appeals from the grant of the petition for writ of mandate brought by San Bernardino Public Employees Association (SBPEA). SBPEA's petition, brought under Code of Civil Procedure section 1085, challenged various terms and conditions of employment under memoranda of understanding (MOU's) negotiated with the City. The City, supported by amici curiae, ¹ contends the trial court erred in concluding that the employees represented by the SBPEA possessed vested, contractual rights to personal leave accrual, longevity pay, and retirement health benefits, and such benefits could not be altered through collective bargaining. We agree, and we therefore reverse the judgment.

FACTS AND PROCEDURAL BACKGROUND

The SBPEA is a labor organization that represents certain employees of the City for purposes of bargaining under the Meyers-Milias-Brown Act (the Act) (Gov.Code, § 3500 et seq.) In 1995, the City and three bargaining units, the City Hall Unit, the City Yard Unit, and the Police Benefit Association, all acting through and represented by SBPEA, entered into new MOU's.

Before 1993, the MOU's for the three bargaining units all provided for longevity pay, leave accrual increases based on longevity, and paid retiree medical and dental insurance benefits (sometimes referred to hereafter as the longevity-based benefits). Those benefits had been agreed upon by the three bargaining units through the collective bargaining process.

During negotiations for the 1995-1997 MOU's, ² the City proposed to reduce accrual of personal leave, longevity pay, and retiree insurance benefits. The City warned that if the membership rejected the proposal to reduce those benefits, the City would implement a seven percent reduction in the City's contribution to PERS (Public Employees Retirement System) retirement. The SBPEA took the position that the longevity-based benefits were vested and could not be bargained away. However, the members of the three bargaining units ratified the MOU's that reduced the longevity-based benefits. The new MOU's reduced the personal leave accrual rate for employees having 10 or more years of service and changed longevity pay from a percentage of salary payable annually to a fixed amount payable only in the year of service the employee became eligible. Retirement insurance benefits were to be renegotiated.

On October 31, 1995, the SBPEA filed a petition for writ of mandate against the City and the City Manager seeking to set aside provisions in the MOU's relating to longevity pay, personal leave accrual, and retiree medical insurance. After conducting a hearing, the trial court granted the petition. The trial court found that personal leave and longevity pay benefits were fundamental vested rights that could not be bargained away through the collective bargaining process.

The 1990-1993 MOU's stated, "The terms and conditions of this Agreement shall be applicable to all employees set forth in Appendix A commencing July 1, 1990 and ending June 30, 1993." The 1990-1993 MOU's further stated, "Unless otherwise specifically changed or modified by this Memorandum of Understanding, all prevailing benefits existing from previous agreements between the parties and approved by the City Council shall be maintained at current levels."

DISCUSSION

I. Standard of Review

This case involves a question of law subject to de novo review on appeal. (See., e.g., Evans v. Unemployment Ins. Appeals Bd. (1985) 39 Cal.3d 398, 407, 216 Cal.Rptr. 782, 703 P.2d 122.)

II. Personal Leave and Longevity Pay Benefits Are Conditions of Employment Subject to the Collective Bargaining Process

The City contends the trial court erred in concluding that personal leave and longevity pay benefits were fundamental rights that could not be bargained away through the collective bargaining process. We first review the role of collective bargaining in public employment.

A. The Meyers-Milias-Brown Act

The Meyers-Milias-Brown Act (the Act) (Gov.Code, § 3500 et seq.) controls collective bargaining between public employers and their employees. The purpose of the Act is to "promote full communication between public employers and their employees by providing a reasonable method of resolving disputes regarding wages, hours, and other terms and conditions of employment between public employers and public employee organizations." (Gov.Code, § 3500.) To implement that purpose, employee collective bargaining units have the authority to represent their employees in "all matters relating to employment conditions and employer-employee relations, including, but not limited to, wages, hours, and other terms and conditions of employment, ..." (Gov.Code, § 3504; Relyea v. Ventura County Fire Protection Dist. (1992) 2 Cal.App.4th 875, 880, 3 Cal.Rptr.2d 614.)

The Act requires public agencies to negotiate exclusively with the collective bargaining units. Once an MOU has been negotiated, it is reviewed and approved by the governing body of the public entity and the membership of the bargaining unit. (Gov.Code, § 3505.) When an MOU has expired, however, the parties may negotiate changes to its provisions. (Gov.Code, § 3505.1.)

An MOU is binding on both parties for its duration. In Glendale City Employees' Assn., Inc. v. City of Glendale (1975) 15 Cal.3d 328, 124 Cal.Rptr. 513, 540 P.2d 609 (hereafter City of Glendale ), the court explained the operation of the Act: "Section 3505.1 ... provides that if agreement is reached it should be reduced to writing and presented to the governing body of the agency for determination. This statutory structure necessarily implies that an agreement, once approved by the agency, will be binding. The very alternative prescribed by the statute--that the memorandum 'shall not be binding' except upon presentation 'to the governing body or its statutory representative for determination,'--manifests that favorable 'determination' engenders a binding agreement." (Id. at p. 336, 124 Cal.Rptr. 513, 540 P.2d 609, original italics.)

In Relyea v. Ventura County Fire Protection Dist., supra, 2 Cal.App.4th 875, 3 Cal.Rptr.2d 614, the court rejected an argument that the Act permits individual employees to negotiate the terms of their employment with public employers. The court explained, "Appellant's interpretation of the [Act] would subvert the legislative scheme of providing for a structured collective bargaining system by requiring an employer to negotiate over working conditions with any number of employees. This could complicate employer-employee relations to the extent of undermining collective bargaining and its benefits, thereby defeating the Act's goals of ensuring stability in labor management relations and the right of employees to join and be represented by an employee organization. (§ 3500.)[p] Moreover, certain basic principles which govern a collective bargaining system contradict appellant's view that individual bargaining rights do not impede collective rights. Normally the employer has the duty to negotiate only with the chosen employee representative. [Citation.] It is also a fundamental principle that a member of an employee bargaining unit is bound by the terms of a valid collective bargaining agreement, though he is not formally a party to it and may not even belong to the union which negotiated it. [Citation.] Individual contracts, no matter what the circumstances which justify their execution, may not interfere with the terms of the collective agreement. [Citation.]" (Id. at p. 882, 3 Cal.Rptr.2d 614.)

B. The Contractual Protection for Pension Rights Does Not Extend to Vacation Leave and Longevity Pay Benefits Negotiated Under an MOU

As a general rule, the terms and conditions of public employment are controlled by statute or ordinance rather than by contract. (California League of City Employee Associations v. Palos Verdes Library Dist. (1978) 87 Cal.App.3d 135, 139, 150 Cal.Rptr. 739 (hereafter California League ).) However, " 'public employment gives rise to certain obligations which are protected by the contract clause of the Constitution, including the right to the payment of salary which has been earned.' " (Ibid., citing Kern v. City of Long Beach (1947) 29 Cal.2d 848, 852-853, 179 P.2d 799.) Such obligations include pension rights.

In Kern, the court explained the nature of a public employee's pension rights: "It is true that an employee does not earn the right to a full pension until he has completed the prescribed period of service, but he has actually earned some pension rights as soon as he has performed substantial services for his employer. [Citations.] He is not fully compensated upon receiving his salary payments because, in addition, he has then earned certain pension benefits, the payment of which is to be made at a future date. While payment of these benefits is deferred, and is subject to the condition that the employee continue to serve for the period required by the statute, the mere fact that performance is in whole or in part dependent upon certain contingencies does not prevent a contract from arising, and the employing governmental body may not deny or impair the contingent liability any more than it can refuse to make...