Opinion
E073549
10-21-2020
VAKIYA FEW et al., Plaintiffs and Appellants, v. DEPARTMENT OF JUSTICE BUREAU OF FIREARMS Defendant and Respondent.
Law office of John L. Palmer and John L. Palmer for Plaintiffs and Appellants. Xavier Becerra, Attorney General, Chris A. Knudsen, Assistant Attorney General, Jodi L. Cleesattle and Karen L. Donald, Deputy Attorneys General, for Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super.Ct.No. RIC1709436) OPINION APPEAL from the Superior Court of Riverside County. Randall S. Stamen, Judge. Affirmed. Law office of John L. Palmer and John L. Palmer for Plaintiffs and Appellants. Xavier Becerra, Attorney General, Chris A. Knudsen, Assistant Attorney General, Jodi L. Cleesattle and Karen L. Donald, Deputy Attorneys General, for Defendant and Respondent.
Plaintiffs and appellants Vakiya Few and James Johantgen were local police officers before they took positions with a state law enforcement agency. They allege that before they began as state employees, they were misinformed about what defined benefit formula would apply in determining their pension benefits. Since this was an unwelcome surprise—the formula they expected to apply was more generous—litigation ensued.
Defendant and respondent California Department of Justice, Bureau of Firearms (DOJ) demurred to plaintiffs' Third Amended Complaint (complaint). Plaintiffs appeal from the trial court's order sustaining that demurrer without leave to amend. We affirm.
I. BACKGROUND
This summary of the facts relies on the factual allegations of the complaint, presumed to be true, since the appeal arises from an order sustaining a demurrer. (See Shaeffer v. Califa Farms, LLC. (2020) 44 Cal.App.5th 1125, 1132 fn. 1.)
Prior to beginning employment as a State Special Agent for the DOJ on May 1, 2016, Few had been a police officer with the City of Oakland since December 2006. Johantgen started as a State Special Agent for the DOJ on April 12, 2017. Before that, he had been a police officer with the Pinole Police Department for nine years. Both plaintiffs transferred to state employment with no break in service.
During their previous employment with local agencies, plaintiffs both were members of the California Public Employees' Retirement System (CalPERS). Few was subject to a defined benefit formula commonly referred to as 3% at 50, which refers to 3% of final compensation, multiplied by the number of service years, for employees retiring at the age of 50. Johantgen's defined benefit formula as a local police officer was 3% at 55.
Plaintiffs continued to be members of CalPERS when they transferred to state employment. Prior to accepting their new positions at the DOJ, both Few and Johantgen were led to believe that their defined benefit formula as state peace officers would be 3% at 50. Few alleges that during the telephone call when a DOJ employee made her a "final job offer," that employee "confirmed" that Few would "keep" her 3% at 50 formula. Johantgen alleges that, before he was hired by the state, he received an email from a representative of the DOJ's "hiring unit" attaching information about "pension formulas for those who transfer into state service." The information included a table showing three possible formulas, applicable to different categories of employees, and the only one that seemed that it could apply was the 3% at 50 formula. Johantgen called the DOJ employee who sent the email for clarification, and she referred him to CalPERS (as did the text of the attached information). A CalPERS representative told Johantgen by phone that indeed the 3% at 50 formula did apply to him.
Few further alleges that she received the same misinformation from "human resources personnel" who conducted a presentation regarding employment benefits for new agents, conducted after she began in her new position.
Few and Johantgen also interpret the Memorandum of Understanding (MOU) between their union (Bargaining Unit 7 of the California Statewide Law Enforcement Association) and the state in effect at the time of their respective hirings to support their understanding that the 3% at 50 formula applies to them. The MOU was amended after Few's hiring and before Johantgen's, so slightly different text is applicable to each. Those differences will be discussed below, as relevant.
After Few and Johantgen began work as state employees, they each were informed that in fact the defined benefit formula that applied to them was 2.5% at 55. Both brought administrative appeals, contending that they were entitled to the 3% at 50 formula, but those appeals were unsuccessful.
As relevant here, Few and Johantgen alleged against the DOJ causes of action for breach of contract, breach of the implied covenant of good faith and fair dealing, and promissory estoppel. The trial court sustained the DOJ's demurrer to the complaint without leave to amend.
Several other causes of action in the complaint were not asserted against the DOJ and are not at issue here. The complaint also includes allegations relating to several other plaintiffs, who are not participating in this appeal.
II. DISCUSSION
A. Standard of Review
On appeal from a judgment based on an order sustaining a demurrer, we assume the facts alleged in the complaint are true. (Pineda v. Williams-Sonoma Stores, Inc. (2011) 51 Cal.4th 524, 528.) We accept all properly pleaded material facts, but not contentions, deductions, or conclusions of fact or law. (Evans v. City of Berkeley (2006) 38 Cal.4th 1, 6.)
We determine de novo if the complaint alleges facts sufficient to state a cause of action under any legal theory. (Committee for Green Foothills v. Santa Clara County Bd. of Supervisors (2010) 48 Cal.4th 32, 42.) "'Where the complaint's allegations or judicially noticeable facts reveal the existence of an affirmative defense, the "plaintiff must 'plead around' the defense, by alleging specific facts that would avoid the apparent defense. Absent such allegations, the complaint is subject to demurrer for failure to state a cause of action . . . ."'" (Doe II v. MySpace, Inc. (2009) 175 Cal.App.4th 561, 566.) We read the complaint as a whole and its parts in context to give the complaint a reasonable interpretation. (Evans v. City of Berkeley, supra, 38 Cal.4th at p. 6.)
When the trial court has sustained a demurrer without leave to amend, "we decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse; if not, there has been no abuse of discretion and we affirm." (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) "The burden of proving such reasonable possibility is squarely on the plaintiff." (Ibid.) "[U]nless failure to grant leave to amend was an abuse of discretion, the appellate court must affirm the judgment if it is correct on any theory." (Hendy v. Losse (1991) 54 Cal.3d 723, 742.) B. Public Employees' Retirement Law
"The terms and conditions of public employment—unlike those of private employment—are generally established by statute or ordinance, rather than by contract." (Fry v. City of Los Angeles (2016) 245 Cal.App.4th 539, 549.) The Public Employees' Retirement Law (PERL) (Gov. Code, § 20000 et seq.) "established a retirement system (now known as the California Public Employees' Retirement System or CalPERS) for employees of the state as well as participating counties and other local agencies." (Sonoma County Employees' Retirement Assn. v. Superior Court (2011) 198 Cal.App.4th 986, 995, fn. 4.)
Further undesignated statutory references are to the Government Code.
PERL was amended by the Public Employees' Pension Reform Act of 2013 (PEPRA) (§ 7522 et seq.), which made a number of significant changes, including to limit the defined benefit formulas available to new members of any state and local government retirement plans. (See §§ 7522.15, 20004; Deputy Sheriffs' Assn of San Diego County v. County of San Diego (2015) 233 Cal.App.4th 573, 577.) PEPRA became effective on January 1, 2013. (§ 7522.02, subd. (a)(1).)
Under PERL, as amended by PEPRA, the defined benefit formula for a state peace officer represented by State Bargaining Unit 7—the category that includes both Few and Johantgen—differs depending on when the officer first entered state service. There are three potentially applicable formulas. First, a "state peace officer/firefighter member" who is (1) "represented by State Bargaining Unit 7," (2) is "employed by the state for the first time and becomes a state peace officer/firefighter member of the system" before January 15, 2011, and (3) retires or dies on or after January 1, 2004, is entitled to a 3% at 50 formula. (§ 21363.8, subds. (a), (g); see also § 21251.13, subd. (c) [emphasizing that certain retirement formulas, including those described in section 21363.8, "shall only apply to state employees who were first employed and subject to those sections before January 15, 2011," and "shall not apply to any state employee member first employed on or after January 15, 2011"].)
Second, state peace officers represented by Bargaining Unit 7 who entered state service on or after January 15, 2011, but before PEPRA went into effect on January 1, 2013, are entitled to a 2.5% at 55 formula. (§§ 21363, subd. (a), (i); 7522.25, subd. (e).)
Third, such employees who entered state service on or after January 1, 2013, are generally entitled to a 2.5% at 57 formula. (§ 7522.25, subd. (c), (e).)
The third category, however, has an exception that, when it applies, essentially places the employee into the second category. This exception applies to employees, such as Few and Johantgen, who have reciprocal service with "any public employer before January 1, 2013," and who later "became employed by a subsequent public employer for the first time on or after January 1, 2013." (§ 7522.02, subd. (c)(1).) The exception provides that such employees are treated as if they were hired by the state on December 31, 2012 for purposes of determining their retirement plan. (Ibid.)
The exception states: "Individuals who were employed by any public employer before January 1, 2013, and who became employed by a subsequent public employer for the first time on or after January 1, 2013, shall be subject to the retirement plan that would have been available to employees of the subsequent employer who were first employed by the subsequent employer on or before December 31, 2012, if the individual was subject to concurrent membership for which creditable service was performed in the previous six months or reciprocity established under any [of certain provisions of the Government Code]." (§ 7522.02, subd. (c)(1).)
Thus, under PERL as amended by PEPRA, the defined benefit formula applicable to Few and Johantgen is the one described in section 21363, subdivision (a): 2.5% at 55. C. The MOUs
The MOUs in effect at the time Few and Johantgen each began working as state law enforcement officers both include in section 11.4 an explanation of which defined benefit formulas apply to various categories of "Unit 7 employees of the Peace Officer/Firefighter (PO/FF) retirement plan." The three possibly applicable formulas are included in the title of the section, which reads in relevant part: "Retirement: PO/FF A Formula (3% at age 50), PO/FF B Formula (2.5% at age 55), and Public Employees' Pension Reform Act (PEPRA) (PO/FF Retirement Formula (2.5% at age 57)." (Bolding omitted.) A table, included in section 11.4(D) of the MOUs, that juxtaposes three separate categories of employees described in section 11.4(A), (B), and (C), further compresses this description to "Employees hired prior to January 15, 2011."
Few and Johantgen contend that they fall within the category of employees described in section 11.4(A) because they were "employed" and members of CalPERS—albeit in their capacity as local law enforcement officers—on or after January 1, 2004 and prior to January 15, 2011. Even if the language of the MOUs' section 11.4(A) might be open to such an interpretation, however, the language of section 21363.8 is not, since the Government Code specifies that the date at issue is when the employee was "employed by the state for the first time" and became "a state peace officer/firefighter member of the system." (§ 21363.8, subd. (g).)
The MOUs further state in section 11.4(B) that "PO/FF retirement members first employed by the State on or after January 15, 2011 and prior to January 1, 2013 and qualify for CalPERS membership are subject to the [2.5% at 55] formula." In bullet points, section 11.4(B) also lists certain categories of employees, to whom the 3% at 50 formula, and not the 2.5% at 55 formula, applies. In the MOU in effect when Few was hired, one of these bullet points is: "Persons who are already members or annuitants of the California Public Employee Retirement System prior to January 15, 2011." Shortly after Few was hired, the MOU was changed to "clarify" that a peace officer/fighter member "must have been hired in to State service prior to January 15, 2011 in order to be eligible" for the 3% at 50 formula. Thus, the analogous bullet point of the MOU in effect when Johantgen was hired reads: "Persons who are already members or annuitants of the California Public Employee Retirement System as a State employee prior to January 15, 2011." (Italics added.)
In both MOUs, the 2.5% at 55 category is included in the section 11.4(D) table, under the heading "Employees first hired on and after January 15, 2011 and prior to January 1, 2013."
The descriptions in section 11.4(B) of the MOUs, and the associated column of the table in section 11.4(D), include no mention of the section 7522.02, subdivision (c)(1) exception, requiring that employees first hired by the state after January 1, 2013, but with reciprocal service with another public employer from before January 1, 2013, be treated as if hired on December 31, 2012 for purposes of determining their retirement plan.
In section 11.4(C), the MOUs describe a third category of employees, subject to the 2.5% at 57 formula, as follows: "Employees who are brought into CalPERS membership for the first time on or after January 1, 2013 and who are not eligible for reciprocity with another California public employer as provided in Government Code Section 7522.02(c)." In the section 11.4(D) table, such employees are described as "Employees eligible for CalPERS Membership for the first time on and after January 1, 2013." Again, these descriptions are imprecise or incomplete, as they do not account for those hired by the State for the first time after January 1, 2013, but who were previously CalPERS members through employment with local agencies.
Thus, although the Government Code unambiguously requires that the 2.5% at 55 formula apply to Few and Johantgen, it is much more difficult to reach that conclusion (or indeed any conclusion) from the text of the MOUs alone. D. Analysis
Few and Johantgen contend that the "most reasonable interpretation" of the MOUs is that they are entitled to the 3% at 50 formula. We disagree.
We must interpret the MOUs to execute the mutual intent and purpose of their parties. (See Retired Employees Assn. of Orange County, Inc. v. County of Orange (2011) 52 Cal.4th 1171, 1183 ["'all modern California decisions treat labor-management agreements whether in public employment or private as enforceable contracts [citation] which should be interpreted to execute the mutual intent and purpose of the parties'"].)
Here, the relevant portions of the MOUs did nothing other than incorporate and summarize the Government Code provisions setting out the applicable defined benefit formulas. The MOUs nowhere indicate an intention that their discussion of benefit formulas depart from the Government Code. To the contrary, the Government Code is repeatedly cited as the source of the information presented.
Furthermore, as a general matter, the "statutory compensation rights of public employees are strictly limited and cannot be altered or enlarged by conflicting agreements between the public agency and its employee." (Longshore v. County of Ventura (1979) 25 Cal.3d 14, 22-23.) The Government Code provides a number of exceptions to this general rule, listing statutes that would be superseded by conflicting terms in a MOU without any further legislative approval. (§ 3517.6.) None of these exceptions, however, are applicable here.
Plaintiffs propose that the Legislature can, and in this case did, approve a collectively bargained agreement that departs from the statutory defined benefit formulas. The notion that the DOJ could enter into such an agreement and have the agreement validated through later ratification by the Legislature is questionable. (See § 7522.15 [with exceptions not relevant here, "each public employer and each public retirement system that offers a defined benefit plan shall offer only the defined benefit formulas established pursuant to Sections 7522.20 and 7522.25 to new members]; Medina v. Board of Retirement (2003) 112 Cal.App.4th 864, 871 ["Any purported contract" giving pension benefits employees do not qualify for under Government Code is "invalid"].) But even assuming the DOJ could enter into such an agreement, for it to take effect the Legislature would have to "(1) be informed explicitly that [the parties] did enter into such an agreement, (2) be provided with a fiscal analysis of the cost of [the agreement], and (3) with said knowledge, vote to approve or disapprove the agreement and the expenditure." (California Statewide Law Enforcement Assn. v. Department of Personnel Administration (2011) 192 Cal.App.4th 1, 19; see § 7507, subd. (b)(1) ["before authorizing changes in public retirement plan benefits" the Legislature shall have a "statement of [their] actuarial impact upon future annual costs, including normal cost and any additional accrued liability"]; California Assn. of Professional Scientists v. Schwarzenegger (2006) 137 Cal.App.4th 371, 383-384 [Legislature's sovereign power governs all contracts subject to its jurisdiction and remains intact unless surrendered in unmistakable terms].) Though the Legislature approved the MOUs at issue here, none of these three requirements for legislatively approving a change to statutorily defined retirement benefits were satisfied. Thus, even if the parties to the MOUs had intended to enter into a contract departing from the statutory requirements regarding defined benefit formulas—a proposition we find exceedingly unlikely—the departure would be invalid and unenforceable.
We conclude that the only reasonably plausible interpretation of section 11.4 of the MOUs is that the parties intended to incorporate and summarize the Government Code provisions regarding defined benefit formulas for state peace officers. The MOUs therefore do not support plaintiffs' claims that they were entitled to the 3% at 50 formula.
Few and Johantgen further contend that the alleged misrepresentations by DOJ "agents" that the 3% at 50 formula would apply to them as state employees are enforceable as a matter of equity. Again, we are not persuaded.
It is well established that "misrepresentations by a public officer as to the terms and conditions of civil service employment generally will not estop the public entity from asserting the true statutory provisions." (Longshore v. County of Ventura (1979) 25 Cal.3d 14, 28 (Longshore).) There are cases that have applied the doctrine of equitable estoppel in the area of public employee pensions, but only where employees "were induced to accept and maintain employment on the basis of expectations fostered by widespread, long-continuing misrepresentations by their employers." (Ibid. (italics added).) Here, plaintiffs have alleged only several isolated instances of misrepresentations, corrected soon after they began their employment.
Moreover, "no court has expressly invoked principles of estoppel to contravene directly any statutory or constitutional limitations." (Longshore, supra, 25 Cal.3d at p. 28; see City of Oakland v. Oakland Police & Fire Retirement System (2014) 224 Cal.App.4th 210, 243 [citing "line of cases," beginning with Longshore, "holding that estoppel cannot lie to contravene any statutory limitation on an agency's authority"].) PEPRA requires that public employers and public retirement systems offer new members only the defined benefit formula established by statute. (§ 7522.15.) Applying estoppel to require the DOJ to offer Few and Johantgen a different defined benefit formula from the one they are entitled to by statute would directly contravene this statutory limitation.
Put another way: "' [N]either the doctrine of estoppel nor any other equitable principle may be invoked against a governmental body where it would operate to defeat the effective operation of a policy adopted to protect the public.'" (San Diego City Firefighters, Local 145 v. Board of Administration etc. (2012) 206 Cal.App.4th 594, 610.) "PEPRA was designed to limit public employee retirement compensation—within constitutional bounds—in the face of concern over unfunded liabilities." (San Joaquin County Correctional Officers Assn. v. County of San Joaquin (2016) 6 Cal.App.5th 1090, 1095.) The specific application of this policy that is relevant to this case was plainly expressed in the Government Code: the 3% at 50 defined benefit formula described in section 21363.8 "shall only apply to state employees who were first employed and subject to [that section] before January 15, 2011," and "shall not apply to any state employee member first employed on and after January 15, 2011." (§ 21251.13, subd. (c).) Few and Johantgen's invocation of equitable principles therefore fails.
Finally, Few and Johantgen argue (for the first time on appeal) that the misrepresentations made to them are enforceable as "implied-in-fact unilateral contract[s]." They are not. (See Retired Employees Assn. of Orange County, Inc. v. County of Orange, supra, 52 Cal.4th at p. 1181 ["'the law does not recognize implied contract terms that are at variance with the terms of the contract as expressly agreed or as prescribed by statute'"] (italics added).)
In short, even assuming the complaint's allegations of fact to be true, neither principles of contract nor equity entitle Few and Johantgen to the relief they seek against the DOJ. We offer no opinion regarding what relief might be available to them against other entities or individuals. The trial court correctly sustained the DOJ's demurrer without leave to amend.
III. DISPOSITION
The judgment is affirmed. The DOJ is awarded its costs on appeal.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
RAPHAEL
J. We concur: MCKINSTER
Acting P. J. FIELDS
J.