United Firefighters of Los Angeles City v. City of Los Angeles

• Decision Date: 26 April 1989
• Docket Number: No. B027960,B027960
• Citation: 210 Cal.App.3d 1095,259 Cal.Rptr. 65
• Parties: UNITED FIREFIGHTERS OF LOS ANGELES CITY, etc., Los Angeles Police Protective League et al., Plaintiffs and Respondents, v. CITY OF LOS ANGELES, Board of Pension Commissioners of the City of Los Angeles, Defendants and Appellants.
• Court: California Court of Appeals Court of Appeals

Page 65

259 Cal.Rptr. 65

210 Cal.App.3d 1095

UNITED FIREFIGHTERS OF LOS ANGELES CITY, etc., Los Angeles Police Protective League et al., Plaintiffs and Respondents, v. CITY OF LOS ANGELES, Board of Pension Commissioners of the City of Los Angeles, Defendants and Appellants.

No. B027960.

Court of Appeal, Second District, Division 1, California.

April 26, 1989.

As Modified on Denial of Rehearing

May 22, 1989.

Review Denied July 19, 1989.

James K. Hahn, City Atty., Frederick N. Merkin, Senior Asst. City Atty., O'Melveny & Myers and John F. Daum, Holly E. Kendig, John A. Case, Jr., and Karen R. Growdon, Los Angeles, for defendants and appellants.

Ball, Hunt, Hart, Brown & Baerwitz, John R. McDonough, J. Steven Greenfeld, Fogel, Feldman, Ostrov, Ringler & Klevens and Lester G. Ostrov, Los Angeles, for plaintiffs and respondents.

SPENCER, Presiding Justice.

INTRODUCTION

Defendants City of Los Angeles and Board of Pension Commissioners appeal from a judgment entered in favor of plaintiffs

United Firefighters of Los Angeles City, Los Angeles Police Protective League and individual members thereof.

STATEMENT OF FACTS ¹

Prior to 1966, the police and firefighter pension systems made no provision for the adjustment of benefits to reflect inflation. In that year, voters adopted a charter amendment which provided for such adjustments, based on the Consumer Price Index, but imposed a yearly cap of two percent on the adjustments. In 1971, voters approved another charter amendment which removed the cap on cost of living adjustments, permitting them instead to fully reflect the rate of inflation each year.

In June 1982, defendants placed charter amendment H on the ballot. It was passed by the voters and thenceforward became part of the city charter. The amendment placed a three percent cap on police and firefighter pension benefit cost of living adjustments based on the Consumer Price Index. As to presently employed members of the pension system, the amendment applied only prospectively to future years of service credited toward retirement. Each of the plaintiffs in the instant action accepted employment as a police officer or firefighter before or after the passage of the 1971 charter amendment, but in every instance before December 1980. ²

CONTENTIONS

I

Defendants contend the trial court erred in viewing the change effected by charter amendment H as an impairment of the vested contractual pension rights of plaintiffs.

II

Defendants further contend the trial court applied the wrong legal standard in determining whether charter amendment H impermissibly violated the contract clause.

DISCUSSION

I

Defendants contend the trial court erred in viewing the change effected by charter amendment H as an impairment of the vested contractual pension rights of plaintiffs. We disagree.

As defendants acknowledge, this issue was decided adversely to their position in Pasadena Police Officers Assn. v. City of Pasadena (1983) 147 Cal.App.3d 695, 195 Cal.Rptr. 339. They suggest, however, that this court disregard Pasadena Police Officers Assn., in that the decision directly conflicts with preexisting law, is anomalous and is contrary to the law as expressed in California Supreme Court opinions. This is, as Presiding Justice Scoville said in another context, "a paradigm of disingenuousness." (People v. Sellers (1988) 203 Cal.App.3d 1042, 1051, 250 Cal.Rptr. 345.)

A public employee's entitlement to a pension "is among those rights clearly 'favored' by the law." (Hittle v. Santa Barbara County Employees Retirement Assn. (1985) 39 Cal.3d 374, 390, 216 Cal.Rptr. 733, 703 P.2d 73.) Accordingly, pension laws are to be liberally construed to protect pensioners and their dependents from economic insecurity. (Ibid.) Unlike other terms of public employment, which are wholly a matter of statute, pension rights are obligations protected by the contract clause of the federal and state Constitutions (U.S. Const., art. I, § 10, cl. 1; Cal. Const., art. I, § 9). (Miller v. State of California (1977) 18 Cal.3d 808, 814, 135 Cal.Rptr. 386, 557 P.2d 970; see also Hittle v. Santa Barbara County Employees Retirement Assn., supra, 39 Cal.3d at p. 390, 216 Cal.Rptr. 733, 703 P.2d 73.)

Miller nicely recapitulates the modern law of public employment pension rights. As the Supreme Court notes, "upon acceptance of public employment [one] acquire[s] a vested right to a pension based on the system then in effect." (18 Cal.3d at p. 817, 135 Cal.Rptr. 386, 557 P.2d 970, emphasis added; accord, Carman v. Alvord (1982) 31 Cal.3d 318, 325, 182 Cal.Rptr. 506, 644 P.2d 192.) ³ "The scope of permissible modifications of vested pension rights was established in Allen v. City of Long Beach (1955) 45 Cal.2d 128 ..., and Abbott v. City of Los Angeles (1958) 50 Cal.2d 438 ...: 'Such modifications must be reasonable, and it is for the courts to determine upon the facts of each case what constitutes a permissible change. To be sustained as reasonable, alterations of employees' pension rights must bear some material relation to the theory of a pension system and its successful operation, and changes in a pension plan which result in disadvantage to employees should be accompanied by comparable new advantages.' [Citation.] '[I]t is advantage or disadvantage to the particular employees whose own contractual pension rights, already earned, are involved which are the criteria by which modifications to pension plans must be measured.' [Citation.]" (Miller, supra, 18 Cal.3d at p. 816, 135 Cal.Rptr. 386, 557 P.2d 970.)

Miller reaches the conclusion the plaintiff had, under the system in effect when he accepted public employment, acquired a vested right to achieve maximum benefits by working to age 70. (Id., at p. 817, 135 Cal.Rptr. 386, 557 P.2d 970.) Before he reached that age, the state changed the mandatory retirement age from 70 to 67. It was free to do so, since the duration of public employment is a matter of statute rather than contract. (Id., at pp. 813-814, 135 Cal.Rptr. 386, 557 P.2d 970.)

The Supreme Court then holds: "Although [plaintiff's] right to a pension based on this system was vested, plaintiff was not assured of receiving maximum pension benefits. His right to receive such benefits was subject to conditions and contingencies; specifically, that he remain in state employment until age 70. Plaintiff failed to satisfy that condition since he lawfully was placed on retirement at age 67. Thus, his right to a maximum pension based on retirement at age 70 never matured.... Although [plaintiff] was entitled to earn increased pension benefits so long as he remained in state employment ..., plaintiff had no vested contractual right to continue working for any specified period of time.... 'The fact that a pension right is vested will not, of course, prevent its loss upon the occurrence of a condition subsequent such as lawful termination of employment before completion of the period of service designated in the pension plan.' [Citation.]" (Miller, supra, 18 Cal.3d at p. 817, 135 Cal.Rptr. 386, 557 P.2d 970, emphasis added.) In such a situation, it is unnecessary to "undertake the method of analysis required by Allen and Abbott for determining whether the changes in the state's pension system were reasonable." (Id., at p. 818, 135 Cal.Rptr. 386, 557 P.2d 970.)

Pasadena Police Officers Assn. accurately states the law as expressed in Miller and Betts, supra, 21 Cal.3d 859, 148 Cal.Rptr. 158, 582 P.2d 614. (147 Cal.App.3d at pp. 701-702, 195 Cal.Rptr. 339.) In both Pasadena Police Officers Assn. and the instant matter, there is no question of a change in the duration or any term of employment except the pension benefits to be afforded the plaintiffs. Without question, a reduction in the cost of living adjustments to pension benefits does not impose a condition subsequent which affects the maturation of the plaintiffs' pension rights, but burdens them with a disadvantage. It is equally clear charter amendment H affords plaintiffs no comparable advantage. It neither reduces the contributions they must make from their salaries (see, e.g., Houghton v. City of Long Beach (1958) 164 Cal.App.2d 298, 311-312, 330 P.2d 918) nor confers on them any new advantage. This, too, is the conclusion reached in Pasadena Police Officers Assn. supra, 147 Cal.App.3d at p. 702, 195 Cal.Rptr. 339.)

Notwithstanding the clarity of the law as expressed in Miller v. State of California, supra, 18 Cal.3d 808, 135 Cal.Rptr. 386, 557 P.2d 970 and Betts v. Board of Administration, supra, 21 Cal.3d 859, 148 Cal.Rptr. 158, 582 P.2d 614 and accurately applied in Pasadena Police Officers Assn., defendants insist preexisting law is contrary to that expressed in Pasadena Police Officers Assn. and is instead embodied in Houghton v. City of Long Beach, supra, 164 Cal.App.2d 298, 330 P.2d 918. Houghton considers a 1945 charter amendment by which the city attempted to repeal all police and firefighter pensions. The amendment permitted a member of the pension system who, on its effective date, had served for 20 years (the first point at which a pension was payable) or more to retire within five years and receive a pension based on his years of service to the effective date of the amendment. (Id., at pp. 306-307, 330 P.2d 918.) This particular aspect of the amendment had been held valid in three previous decisions, beginning with Palaske v. City of Long Beach (1949) 93 Cal.App.2d 120, 208 P.2d 764 and continuing through Allen v. City of Long Beach (1950) 101 Cal.App.2d 15, 224 P.2d 792 and Allstot v. City of Long Beach (1951) 104 Cal.App.2d 441, 231 P.2d 498.

In Houghton, plaintiffs argued the preceding decisions had been implicitly overruled by Allen v. City of Long Beach, supra, 45 Cal.2d 128, 287 P.2d 765. Houghton rejects this position, correctly noting the Supreme Court case dealt with entirely separate portions of the amendment and distinguished the earlier appellate cases. (164 Cal.App.2d at...