November 2011

Pension Reform Group’s Proposals Could Galvanize Support for Governor Brown’s Plan

November 3, 2011, by Jesse Lad, Matthew C. Lewis

Two new proposals for fixing the state’s pension system were filed yesterday with the Attorney General’s Office by the pension reform group, Californians for Pension Reform. The group will apparently decide in January which of the two proposals will be circulated in an attempt to place it on the November 2012 ballot. The two potential measures include drastic changes to pensions for public employees, including requiring employees with underfunded pension plans to contribute towards resolving the unfunded liabilities that continue to grow throughout the state. The San Jose Mercury News reports the prospect of seeing one of these proposals on the November 2012 ballot could serve to bolster support for Governor Jerry Brown’s recent pension reform proposal, which was initially met with an unenthusiastic—if not outright hostile—reception by many Democrats and labor unions. It is unclear how or to what extent these proposals would affect local public agencies.

For more information about the two recent proposals, click here.

San Francisco Voters Pass Pension Reform Measure Developed Jointly by City Officials and Labor Unions

November 10, 2011, by Matthew C. Lewis

The November 8 ballot presented San Francisco voters with two competing pension reform measures. Proposition C, developed by Mayor Ed Lee in collaboration with City labor unions, passed with (as of this writing) approximately 68% approval from voters, according to the San Francisco Chronicle. Proposition D—now the second failed pension reform effort of Public Defender Jeff Adachi, defeated after receiving only 34% approval—would have required higher worker contributions and was estimated to save more money.

Prop C is estimated to save between approximately $1 billion and $1.3 billion over the next decade. The measure will require workers to contribute 7.5% of their salaries to the pension fund, though that percentage would rise and fall depending on the economic climate and financial condition of the City. The measure also modifies retirement ages for future retirees by increasing the minimum retirement age for non-safety retirees from 50 to 53 (for partial benefits), and from 60 to 65 (for full benefits). Safety employees may still retire at 50 for partial benefits, but the retirement age for those wishing to obtain full benefits will increase from 55 to 58.

Prop C has been closely watched by California cities that are similarly in need of pension reform in order to reduce unfunded liabilities. Its passage could spur local public officials and labor unions across the state to work together to support similar measures in an effort to avoid potentially more controversial unilateral solutions.

One-Time Contract For Tree Pruning Considered “Maintenance Work” Subject to Prevailing Wages

November 11, 2011, by Eric S. Casher

In Reliable Tree Experts v. Baker (California Department of Transportation), the First Appellate District affirmed an order holding that the pruning and removal of diseased trees along state highways was both a public work and “maintenance” work necessitating the payment of prevailing wages under the Labor Code.

The Court of Appeals found that public works are not limited to “[c]onstruction, alteration, demolition, installation, or repair work,” as set forth in §1720(a)(1) of the Labor Code. A public work also includes “maintenance,” as set forth in §1771. Both sections, the court found, §1720 and §1771, define the scope of what constitutes a “public work.”

In a dispute between the California Department of Transportation (“Caltrans”) and Reliable Tree Experts (“Reliable”), Reliable argued that the work it did for Caltrans was not “maintenance” work” requiring prevailing wages because maintenance is work that must be performed on a regular basis and its contract with Caltrans was for a one-time job only.

The Court of Appeals disagreed, finding that whether or not the job constituted maintenance work did not depend on how often any particular contractor was hired to perform the job. State highways are bordered by thousands of trees that must be maintained on a routine, recurring and usual basis. Tree work on a Caltrans right-of-way is not a “one time project” but an on-going task requiring the use of many contracts throughout the state. Thus tree work, in this instance, would be maintenance work regardless of how many times any individual contractor is hired to perform it.

Court of Appeals Limits the Applicability of Heck v. Humphrey

November 14, 2011, by Meyers Nave

The California Court of Appeals held on November 9, 2011 that the heirs of an individual killed by police while engaged in a crime are not precluded from bringing an excessive force lawsuit by the resisting arrest conviction of a co-participant in the crime. In Beets v. County of Los Angeles, L.A. County Sheriff's deputies were chasing a car driven by the plaintiffs' son. The son and his passenger bailed from the car and got into a nearby truck, which was then surrounded by the deputies on foot. The two suspects engaged the deputies in a fight from inside the truck, and the plaintiffs' son started the truck and drove it into a police car and then towards one of the deputies, who shot and killed the son. The passenger was tried and convicted of assault with a deadly weapon on a police officer. Thereafter, the plaintiffs brought suit against the County, alleging that the Deputies had used excessive force against their son. The trial court granted the County's demurrer and dismissed the case, finding that the passenger's conviction precluded the plaintiffs' lawsuit.

The Court of Appeal reversed on November 9, 2011, finding that the U.S. Supreme Court decision in Heck v. Humphrey, which prohibits a civil rights lawsuit that would necessarily invalidate a previous criminal conviction of the plaintiff, did not apply because the plaintiffs' son was not represented in the passenger's criminal trial. Although these set of facts are not likely to arise frequently, the Beets decision does limit the availability of the Heckpreclusion defense in similar circumstances. It is also important to note that this a California Court of Appeal decision, and not binding on federal courts, which often determine issues arising under the Heck case.

Take Advantage of the Opportunity to Provide PERB with Feedback Regarding AB 646

November 14, 2011, by Arthur A. Hartinger, Jesse Lad

Signed by Governor Brown on October 9, 2011, AB 646 amends the collective bargaining process for local public agencies by requiring the parties to proceed to fact finding after mediation and before a local public agency may unilaterally implement its last, best, and final offer. Several commentators have pointed out ambiguities with respect to the scope and application of the fact finding process. On November 8, 2011, the California Public Employment Relations Board ("PERB") held the first of two meetings to introduce drafts of proposed emergency regulations for implementing AB 646 and to seek feedback regarding issues that might require regulatory action by PERB in advance of January 1, 2012, when the legislation takes effect.

The meeting was attended by attorneys and employees representing both labor and management for public agencies throughout the state. Multiple issues were discussed during the meeting, including: (1) whether local public agencies are allowed to adopt reasonable local rules to tackle issues that were not addressed by the legislation; (2) whether peace officers and managers are covered by AB 646; (3) what process is going to be used by PERB for appointing fact finders; (4) whether mediation after impasse is now mandatory; (5) whether fact finding is required if the parties do not proceed to mediation; and (6) how long the fact finding process typically takes. While PERB representatives did not provide much feedback or insight regarding these issues and questions, they did introduce proposed emergency regulations that they hope to adopt before January 1 and invited general feedback regarding issues that might require regulatory action.

To view the current drafts of PERB's proposed emergency regulations click here. PERB has asked that feedback be sent by email to Division Chief Les Chisholm (lchisholm@perb.ca.gov) or General Counsel Suzanne Murphy (smurphy@perb.ca.gov) by no later than November 18, 2011. Mr. Chisholm indicated that all comments may be posted publicly on PERB's website, so please keep that in mind if you decide to provide feedback. We would urge all public agency representatives to take advantage of this opportunity to provide feedback to PERB on this very important issue. To read a detailed explanation of AB 646 and some of the substantial ambiguities that exist within the legislation click here.

Cities and Counties May Ban Medical Marijuana Dispensaries

November 15, 2011, by Meyers Nave

On November 9, 2011, the California Court of Appeal, Fourth Appellate District, issued a ruling holding that state law does not preempt the City of Riverside's ("City") ordinance banning medical marijuana dispensaries ("MMD"). (City of Riverside v. Inland Empire Patient's Health and Wellness Center, Inc., et al. (2011 Cal. App. LEXIS 1406).)

California Supreme Court Holds Counties May be Bound by Implied Contracts to Provide Health Benefits to Retired Employees

November 22, 2011, by Arthur A. Hartinger, Matthew C. Lewis

In Retired Employees Association of Orange County, Inc. v. County of Orange (“REAOC”), the California Supreme Court addressed a question posed to it by the Ninth Circuit: “Whether, as a matter of California law, a California county and its employees can form an implied contract that confers vested rights to health benefits on retired county employees.” REAOC, No. S184059, at *1 (Cal., filed Nov. 21, 2011).

In REAOC, retired employees challenged the County’s 2007 decision to split active employees and retirees into separate pools for purposes of calculating health insurance premiums. REAOC argued that the County’s decision constituted an impairment of contract, and that the long-standing practice of pooling had created an implied contractual right to a continuation of a single unified pool for retirees and actives.

The California Supreme Court held “that a county may be bound by an implied contract under California law if there is no legislative prohibition against such arrangements, such as a statute or ordinance.” REAOC, at *1. The Court did not address the question of whether an implied vested right existed for Orange County retirees. Accordingly, the case now returns to the Ninth Circuit for that determination.

For further analysis, click here. To read the Court’s full decision in REAOC v. County of Orange, click here.

After July 1, 2012, Local Agencies Have Limited Ability to Require Solid Waste Enterprises to Indemnify Them for Violations of Proposition 218

November 30, 2011, by Jennifer E. Faught

Some local agencies require garbage franchisees or permittees to indemnify them for liabilities related to Proposition 218. Agencies entering into or renewing solid waste franchise agreements on or after July 1, 2012 may take note that SB 841, signed by Governor Brown on October 9, 2011, limits the ability to enforce such requirements.

SB 841 adds new section of the California Public Resources Code (40059.2), which makes unenforceable the provisions of any local agency contract, permit or ordinance entered into or effective after July 1, 2012 that require a solid waste enterprise to indemnify the local agency for the agency's "failure to obtain voter or property owner approval" of a fee in violation of Article XIIIC or XIIID of the California Constitution. Similarly unenforceable will be any indemnity obligation that would require a solid waste enterpriseto refund to its customers fees that were collected on behalf of or remitted to the local agency, where the fees were imposed in violation of the above constitutional provisions, as determined by a court. Such indemnity provisions in current permits or agreements remain enforceable.

The new prohibition targets specific indemnity requirements; other forms of indemnification related to fees for solid waste services may still be permissible.

The text of SB 841 may be found here.