For almost 70 years, the settled law in the State of California has been that a public employee is entitled at retirement to receive the pension benefit promised to him upon beginning employment, as well as any increase in that formula during years of employment, and that any decrease in the formula must be accompanied by a comparative new benefit. This rule was so well understood that it was followed by numerous state courts around the country and is known as the "California Rule." In fact, even opponents of public employee pensions regarded this as well settled law, basing their criticism of the "
California Rule
" on the requirement that pension benefits for current employees could not be reduced without granting a comparable new benefit.
The appellate court decided that there was no requirement that a decreased formula "must" be accompanied by a new benefit; instead, it only "should" be accompanied by a new benefit but that such a tradeoff need not occur. As our letter urging review pointed out, "What is most astonishing about the Court of Appeal's decision is that it is based upon the insulting premise that this court [the Supreme Court] carelessly altered the applicable standard for modifying pension benefits by replacing the word 'should' with the word 'must' in a 1983 Supreme Court decision." Our letter then noted numerous cases before 1983 where the Supreme Court repeatedly reversed pension benefit changes because they were not accompanied by a comparable new advantage for the employees.
It is striking that while multiple letters have been submitted to the court urging review of this decision, not a single letter has been submitted in support of the appellate court's reasoning. Even the party that won before the appellate court, the Marin County Employees Retirement Association, did not defend the reasoning of the appellate court but instead urged the Supreme Court not grant review on other grounds.
Notably, the
State of California
has intervened in the case and also urged the Supreme Court to grant review because "the court of appeal's further holding that substantial modifications to pensions 'should' or 'ought to' be accompanied by comparable new benefits, but are not required to do so presents a conflict with other reported appellate decisions, and clarification from this Court on the continued viability of the 'California Rule' would be needed."
The Supreme Court can decide to grant review, depublish the case so that it cannot be cited as precedent, or deny review and allow the decision to stand. We believe we and the numerous other letters urging the Court to grant review have made persuasive arguments for the need to grant such a review. We should learn what the Supreme Court decides to do in the next few months.
