Wilmot v. Contra Costa County Employees' Retirement Assn. ( 2018 )

Filed 11/1/18; Certified for Publication 12/3/18 (order attached)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION TWO
JON WILMOT,
Plaintiff and Appellant,
A152100
v.
CONTRA COSTA COUNTY (Contra Costa County Super.
EMPLOYEES’ RETIREMENT Ct. No. MSN161730)
ASSOCIATION et al.,
Defendants and Respondents.
A long-time county employee decided to retire, and in December 2012, he
submitted his application for retirement to the county’s retirement authority. On January
1, 2013, the California Public Employees’ Pension Reform Act of 2013 (Pension Reform
Act or PEPRA) took effect. Included in that measure is a provision that mandates the
complete or partial forfeiture of pension benefits/payments if a public employee is
convicted of “any felony under state or federal law for conduct arising out of or in the
performance of his or her official duties.” (Gov. Code, 1 § 7522.72, subd. (b)(1).) In
February 2013, the employee was indicted for stealing from the county for more than a
decade. In April 2013, the county pension authority approved the employee’s retirement
application, fixing the employee’s actual retirement on the day he submitted that
application in December 2012. Also in April 2013, the employee began receiving
monthly pension checks starting from December 2012. In December 2015, the employee
1
Statutory references are to this code unless otherwise indicated.
1
pled guilty to embezzling county funds for a 12-year period ending in December 2012.
Thereafter, the county pension authority reduced the employee’s monthly check in
accordance with the forfeiture provision.
Among the questions presented are whether applying the forfeiture provision
applies to the employee at all, and whether reduction of his pension benefits amounts to
an unconstitutional impairment of his employment contract with the county, or also
constitutes imposition of an ex post facto law. We conclude the provision does apply to
the former employee. Because we decide this as a matter of statutory construction, there
is no need to consider the possibility of a constitutional violation for someone in a
different situation.
BACKGROUND
The salient facts are without dispute.
Plaintiff Jon Wilmot commenced employment with the Contra Costa County Fire
Protection District in 1985. By 2012, he had risen to the rank of captain. During this
period, he was a member of the retirement program established by Contra Costa County
in accordance with the County Employees Retirement Law of 1937 (CERL) (Stats. 1937,
ch. 677, codified in 1947, § 31450 et seq.), which is administered by the Board of
Retirement of the Contra Costa County Employees’ Retirement Association. The
association and its governing board will hereafter be designated as CCERA.
By the end of 2012, Wilmot had decided to retire. His final day on the job was
December 12, and he submitted his “application for a service retirement” (§§ 31663.25–
31663.26) to CCERA the following day.
On January 1, 2013, the Pension Reform Act became effective, thus adding
section 7522.72. The relevant language is subdivisions (b)(1) and (c)(1), which
originally provided in pertinent part:
“(b)(1) If a public employee is convicted by a state or federal trial court of any
felony under state or federal law for conduct arising out of or in the performance of his or
her official duties, in pursuit of the office or appointment, or in connection with obtaining
salary, disability retirement, service retirement, or other benefits, he or she shall forfeit all
2
accrued rights and benefits in any public retirement system in which he or she is a
member to the extent provided in subdivision (c) and shall not accrue further benefits in
that public retirement system, effective on the date of the conviction. [¶] . . . [¶]
“(c)(1) A public employee shall forfeit all the retirement benefits earned or
accrued from the earliest date of the commission of any felony described in subdivision
(b) to the forfeiture date, inclusive. The retirement benefits shall remain forfeited
notwithstanding any reduction in sentence or expungement of the conviction following
the date of the public employee’s conviction. Retirement benefits attributable to service
performed prior to the date of the first commission of the felony for which the public
employee was convicted shall not be forfeited as a result of this section.” (Stats. 2012,
ch. 296, § 15. 2)
On March 19, 2013, CCERA received Wilmot’s “Choice of Retirement
Allowance.” The following month CCERA sent him his first monthly pension check for
$8,758.46. In April 2013, CCERA formally approved Wilmot’s retirement application,
fixing his date of retirement as December 13, 2012.
But Nemesis was already on her way.
At some point not established by the record, authorities learned that Wilmot had,
for a considerable part of his tenure, been stealing property and equipment from the
Contra Costa County Fire Protection District. 3 In February 2013, the District Attorney
filed four felony charges. In December 2015, Wilmot entered a plea of no contest to a
single charge that was alleged in the information as follows:
2
Two 2013 amendments made the language nongender-specific (Stats. 2013, ch.
528, § 76) and expanded the forfeiture in subdivision (c)(1) to “rights” as well as benefits
(Stats. 2013, ch. 528, § 13).
3
Wilmot was subsequently ordered to pay almost $33,000 to the district as
criminal restitution. Included in the materials submitted to CCERA in connection with
reducing Wilmot’s monthly pension check was a two-page inventory of the “CCCFPD
Property Recovered from Wilmot Truck Date: 12/12/12,” together with an 11-page
undated inventory of “Property Recovered from Houses.” The alert reader will note that
at least one of these “recoveries” occurred the day before Wilmot submitted his
retirement application.
3
“The District Attorney of the County of Contra Costa hereby further accuses JON
WILMOT, Defendant, of the crime of felony, a violation of PENAL CODE SECTION
503/508 (EMBEZZLEMENT BY CLERK, AGENT, OR SERVANT), committed as
follows: [¶] On or about January 1, 2000 through December 31, 2012, at Alamo, Orinda
and Concord, in Contra Costa County, the Defendant, JON WILMOT, did willfully,
unlawfully and fraudulently appropriate property from Contra Costa Fire Protection
District.”
Upon learning of Wilmot’s conviction, CCERA advised him: “In accordance with
the . . . Pension Reform Act . . . , [CCERA] is required to make adjustments to your
member account.” Wilmot was informed that, by reason of his conviction, “Section
7522.72 therefore requires that you forfeit all [CCERA] rights and benefits accrued from
January 1, 2000, the date of the first commission of the felony.” The specified
consequences were: (1) “Service credit from January 1, 2000 through December 13,
2012, totaling 13 years and 0 months, has been expunged”; (2) $249,937.64 of plaintiff’s
total “employee contributions” of $288,857.74 would be refunded; and (3) these changes
to his “Final Average Compensation Adjustment” would reduce plaintiff’s monthly check
from $8,758.61 to $2,858.56.
These changes were adopted in August 2016, following a contested public
hearing. Wilmot was advised by letter that “the [CCERA] Board of Retirement”
“determined pursuant to . . . Section 7522.72 to adjust your retirement allowance
effective September 1, 2016.” 4
The next month Wilmot commenced this action with a petition for a writ of
traditional mandate and declaratory relief. The basis of Wilmot’s position—in the trial
and on appeal—was succinctly stated in his petition: “Respondents’ application of the
felony forfeiture provision appearing in . . . section 7522.72 to Petitioner is improper
4
It appears that Wilmot was also receiving benefits from CalPERS for a period of
service with a different public employer. After CCERA informed CalPERS of its action,
CalPERS followed and “amended” Wilmot’s “retirement benefit” downward. The
decision by CalPERS has never been at issue in this litigation.
4
because the statute does not apply retroactively to persons such as Petitioner who retired
prior to its effective date. Moreover, even if . . . section 7522.72 was intended to apply
retroactively to persons who retired prior to its effective date, the statute cannot lawfully
do so because Petitioner’s pension benefit became due and payable upon his retirement
and the Legislature cannot lawfully alter an existing retiree’s pension benefit once the
benefit came due and payable. The Legislature also lacks authority to enhance the
punishment for past conduct by enacting an ex post facto law. By applying . . . section
7522.72’s forfeiture provision to Petitioner, Respondents ignored the terms of the statute
itself, unlawfully impaired Petitioner’s constitutionally protected pension benefits, and
violated Petitioner’s constitutional right to be free from an ex post facto application of the
law.” The Attorney General was allowed to intervene to defend the constitutionality of
section 7522.72.
Following extensive briefing and argument, the trial court (Hon. Charles Treat)
denied the petition with a thoughtful order that merits quotation at length:
“Wilmot asserts a number of interconnected arguments why the Board’s
determination is incorrect, and he cannot be subjected to PEPRA’s forfeiture provisions.
First, he argues that he is not a ‘public employee,’ or ‘member’ subject to § 7522.72. It is
undisputed that § 7522.72 did not come into effect until January 1, 2013. As of that date
(Wilmot argues), he was no longer a ‘public employee,’ because he had retired effective
the preceding December 13. That, he reasons, made him a retiree, not a ‘public
employee’ (and hence also not a ‘member’). Accordingly, by its own textual definition
of its coverage, § 7522.72 does not apply to him, and does not authorize or work any
forfeiture of his pension rights.
“Wilmot’s following arguments are variations on the same theme. His second
argument is that if § 7522.72 could be read as applying to a person who had retired before
2013, it would be at best ambiguous in that respect. Thus, he invokes the principle of
refusing to read a statute to apply retroactively—meaning, as Wilmot uses the term, as
applicable to a person already retired as of the effective date of the statute. Third, he
argues that if the statute did dictate a forfeiture as to pension rights that had accrued prior
5
to the statute’s enactment, it would represent an unconstitutional interference with vested
pension rights already in existence on the statute’s first effective date.
“Wilmot’s arguments potentially raise a number of textual and logical difficulties.
The Court need not decide all these difficulties, however, because all of Wilmot’s
arguments (except his ex post facto argument, discussed below) all fail at their critical
initial premise. All of the above arguments assume that as of January 1, 2013, Wilmot
was already formally retired. It is from this premise that he argues (1) that as of that date
he was not a ‘public employee’ or ‘member’, (2) that application of the statute to him
would be retroactive, and (3) that his pension rights were constitutionally vested. If, to
the contrary, Wilmot was not yet retired but still employed as of January 1, 2013, the
preceding arguments all fall apart. It was for this reason that the Court called for
supplemental briefing as to whether [Wilmot] was ‘retired’ on December 13, 2012, the
date he selected as his retirement date, or on April 10, 2013, the date the [CCERA] Board
acted on [Wilmot’s] application.
“In his supplemental brief, Wilmot argues: [¶] ‘Under [CERL], a member who
has provided the qualifying number of years of service and has attained the required age
is ‘retired upon filing with the board a written application setting forth the date upon
which the member desires his or her retirement to become effective . . . .’
(. . . §§ 31672(a), 31663.25(a), 31663.26(a). . . .) Thus, a qualifying member is ‘retired’
as of the effective date identified on the submitted application. [CERL] grants the
member—not the retirement board or the employer—the right to select their own date of
“retirement” . . . .’ [¶] . . . [¶]
“But these Government Code provisions do not say that the member is retired
upon his application. They say that he may be retired. (See . . . § 31672(a) [‘A
member . . . may be retired upon filing with the board a written application . . . .’];
§ 31663.25(a) [‘Except as provided in Section 31663.26, a safety member[5] . . . may be
5
A “safety member” is defined in CERL as “[a]ny person employed by a
county . . . whose principal duties consist of active law enforcement or active fire
6
retired upon filing with the board a written application . . . .’]; § 31663.26
[‘Notwithstanding Section 31663.25, a safety member . . . may be retired upon filing with
the board a written application . . . .’] [emphasis added].) Wilmot selectively quotes
around the actual verb.
“The entity that retires the member is the Board. (See . . . § 31670 (‘Retirement of
a member who has met the requirements for age and service shall be made by the board
pursuant to this article . . . .’) (emphasis added). Wilmot argues that this is a mere
ministerial act. But no matter how ministerial that act may be, in that the Board merely
confirms [Wilmot’s] age and service, under the plain statutory language retirement
cannot occur until the Board so acts. Moreover, while the formal act of retirement is no
doubt more or less ministerial in most cases, it may not always be so. For example,
suppose that Wilmot’s embezzlement conviction had occurred in March 2013 rather than
December 2015. In that case, at the time the Board acted on Wilmot’s retirement, it
would have been obligated to assess whether Wilmot’s conviction subjected him to the
forfeiture provisions of § 7522.72, and to carry out those provisions if applicable. That is
not the actual timing of this case—but it points out why the official date of the Board’s
action matters, and why a member cannot be deemed formally retired until the Board
does act. Here, that did not occur until after January 1, 2013.
“The only case law that any party has cited as closely on point is MacIntyre v.
Retirement Board of S.F. (1941) 42 Cal. App. 2d 734 [(MacIntyre)]. There, two police
officers filed applications for retirement. After the first application (but before the
second), a verified complaint was filed, charging both officers with various forms of
misconduct. The charges resulted in the officers’ dismissals, and the denial of any
pension rights to them. The court rejected their argument that their pension rights had
vested when they met the requisites for retirement—age, years of service, and
contribution—so that their pension rights could not be denied due to any subsequent
suppression . . . or active lifeguard service . . . or juvenile hall group counseling and
group supervision . . . .” (§ 31469.3, subd. (b).)
7
determinations. And more specifically, the court rejected the argument that either officer
was already retired by the time of his dismissal, because of the filing of their applications
for retirement. ‘The filing of an application does not ipso facto retire the applicant. It is
necessary that an order of retirement be duly made.’ (Id. at 736.) MacIntyre is not
directly controlling here, as the city and officers there were operating under different
applicable statutes (and the decision does not delve into the statutory language). The case
illustrates, however, that where the relevant statutory language dictates that ‘retirement’
occurs upon board action and not simply upon the filing of an application, that formality
must be taken seriously.
“Accordingly, even assuming arguendo that § 7522.72 applies only to persons
who were not yet retired as of January 1, 2013, the undisputed facts here show that
Wilmot himself was not yet formally retired as of that date. The act that (by Wilmot’s
logic) transformed him from a ‘public employee’ and ‘member’ into a retiree/former
employee was not his selection of December 13, 2012 as the effective date of his
retirement, but the Board’s approval of that retirement on April 10, 2013.
“That leaves Wilmot’s ex post facto argument, which is not dependent on the
timing of his retirement. Rather, the contention looks only to the dates of the commission
of Wilmot’s crime (2000 to 2012) and the date of the effectiveness of PEPRA ([January
1,] 2013). The argument is that a crime, committed no later than 2012, is being penalized
by a forfeiture statute enacted only after the crime had been committed and completed.
“On its face, § 7522.72 is a civil statute, not subject to the prohibition on ex post
facto laws. See Cal. Const. art. 1, § 9; Conservatorship of Hofferber (1980) 28 Cal. 3d
161, 180 (‘The ex post facto clauses [of the U.S and California Constitutions] apply only
to penal statutes.’). The State concedes that civil penalties can in some cases violate the
ex post facto clause if the punishment amounts to a criminal proceeding. (See People v.
25651 Minoa Dr. (1992) 2 Cal. App. 4th 787, 796–797.) But the test for such a finding is
two-fold and not in Wilmot’s favor: 1) Did the state intend to establish a criminal or
civil penalty?; And 2) If the intent was a civil penalty, was the statutory scheme so
8
punitive in purpose or effect as to negate that intention? (See [United States] v. One
Assortment of 89 Firearms (1984) 465 U.S. 354, 362.)
“The Court is satisfied that there is no ex post facto violation here. Wilmot
concedes that the Legislature intended to enact a civil penalty, not a criminal one. The
statutory scheme is not so punitive as to negate that intention. PEPRA’s forfeiture
provisions do not function to impose a punitive fine on Wilmot, let alone to subject him
to imprisonment or the like. Rather, what PEPRA accomplishes is to take back from
Wilmot what he never rightly earned in the first place—namely pension rights for a
period when he was violating his trust as an employee by embezzling from his employer.
(See also MacIntyre[, supra], 42 Cal.App.2d at [pp.] 735–[7]36.)
“This ruling makes it unnecessary to rule on objections to the parties’ respective
requests for judicial notice. The proffered documents are adduced only as bearing on the
proper construction of § 7522.72, in particular as to whether it does or does not apply to
a person who was already retired as of the end of 2012. That is the question that the
Court has declined to decide, because it turns out that Wilmot himself was not retired as
of the end of 2012. For the sake of completeness, however, the Court will sustain the
Board’s and State’s objections. There is no sufficient foundation that the documents
objected to represented a considered, official, and final position from the agencies they
came from—let alone any indication that they have anything to do with the intention of
the Legislature when it enacted § 7522.72. Moreover, the CALPERS documents do not
purport to say anything one way or the other as to the question at issue here—the
applicability of PEPRA’s felony forfeiture provisions to pre-enactment retirees.”
DISCUSSION
Legal Principles
This Appellate District is no stranger to the Pension Reform Act. Three of its five
divisions have given their opinion on whether its application to current employees
constitutes an unconstitutional impairment of their contracts of employment. Our
Supreme Court will have the last word on this subject. (Marin Assn. of Public Employees
v. Marin County Employees’ Retirement Assn. (2016) 2 Cal.App.5th 674 (Marin), review
9
granted Nov. 22, 2016, S237460; Cal. Fire Local 2881 v. California Public Employees’
Retirement System (2016) 7 Cal.App.5th 115, review granted Apr. 12, 2017, S239958;
Alameda County Deputy Sheriff’s Assn. v. Alameda County Employees’ Retirement Assn.
(2018) 19 Cal.App.5th 61, review granted Mar. 28, 2018, S247095.)
Here, we return to the Pension Reform Act, particularly as it applies to public
employees covered by a pension system administered under CERL. We have already
examined the genesis of the Pension Reform Act, and the general operation of CERL
programs in Marin, supra, 2 Cal.App.5th 674, 680–683. Unlike the rather generalized
and abstract setting we found there, we must now get involved with the actual particulars
of the pension application process.
In Marin, we addressed one specific change in the Pension Reform Act, namely,
the Legislature’s goal of curbing the perceived abuse of “pension spiking.” It is another
perceived abuse at issue here—the first statewide adoption of what is known as a
“pension forfeiture” provision (see generally Jacobs, Friel, O’Callaghan, Pension
Forfeiture: A Problematic Sanction for Public Corruption (1997) 35 Am.Crim.L.Rev.
57) to public employees. Such measures were an early feature of municipal pension
schemes, and the general principle that pension rights could be lost by criminal behavior
had been judicially ratified by California courts. 6 However, there was a qualification:
crimes committed after retirement were excluded. (E.g., Wallace v. City of Fresno
(1954) 42 Cal. 2d 180; Lawrence v. City of Los Angeles (1942) 53 Cal. App. 2d 6;
MacIntyre v. Retirement Board of S.F. (1941) 42 Cal. App. 2d 734.)
6
The United States has had such a provision since 1954. (See Hiss v. Hampton
(D.D.C.) 338 F. Supp. 1141, 1142, fn. 1.) In the private sector, “employee pensions that
have vested (i.e., the employee has satisfied the statutory age and/or years-of-service
requirements) are protected from forfeiture for misconduct under the anti-alienation and
anti-forfeiture provisions of ERISA . . . as interpreted by the United States Supreme
Court in Guidry v. Sheet Metal Workers Nat’l Pension Fund [(1990) 493 U.S. 365].”
(Jacobs, Friel, O’Callaghan, Pension Forfeiture: A Problematic Sanction for Public
Corruption, supra, 35 Am.Crim.L.Rev. 57, 58–59.)
10
In 2005, in the wake of several notorious incidents of financial corruption and
mismanagement, the Legislature passed a measure allowing for the limited forfeiture of
pension benefits for “any elected public officer who takes public office, or is reelected to
public office, on or after January 1, 2006” upon conviction of a specified crime. (Stats.
2005, ch. 322 [adding former § 1243]; see Little Hoover Com., Public Pensions for
Retirement Security (Feb. 2011) p. 39.) 7 Section 7522.72 applies to “a public employee
first employed by a public employer . . . before January 1, 2013.” Section 7522.74
applies to those persons whose employment commenced “on or after January 1, 2013.”
As pension forfeiture provisions go, California’s is rather temperate. It is not
triggered by just any conviction, or even any felony conviction, but only a felony
conviction that is job-related. Pension benefits are not lost entirely, but only for the
period of the felonious behavior. The employee’s contributions for that period are not
kept, but are returned. (§ 7522.72, subd. (d)(1).) If the conviction is reversed, the
employee may redeposit her contributions and “[r]ecover the forfeited rights and
benefits.” (Id., subd. (h).)
Application
Wilmot asserts in effect there is but a single legal error, namely, after December
13, 2012, he was retired, no longer an active, working public employee, and therefore
beyond the reach of section 7522.72.
This case is a perfect example of how a word can have an everyday meaning. and
a very different legal definition. Most people would ordinarily think if a person who has
7
The Legislature had already provided that “Any person who is receiving an
allowance from a public retirement system, who is charged by indictment or complaint,
either in a court of this state or a federal court whose jurisdiction encompasses all or any
portion of the state, with the commission of any felony involving or accepting or giving,
or offering to give, any bribe, the embezzlement of public money, extortion or theft of
public money, perjury, or conspiracy to commit any of those crimes arising directly out
of his or her official duties as a public officer, who has a legal obligation not to leave the
jurisdiction of the court, but does leave, shall have his or her retirement allowance
suspended while absent the jurisdiction of the court.” (§ 1235, subd. (a), added by Stats,
1994, ch. 991, § 2.)
11
worked at the same job for 30 years or so, submits the appropriate paperwork for
retirement and completes the last day of work, then that person can legitimately think of
himself as retired. However, for public employees in California, particularly employees
covered by CERL, retirement is hardly that simple.
Judge Treat’s ruling was quoted almost in full because it addresses the points
raised here—and because it is correct. Finishing the last day of work does not
automatically make a public employee a “retired” former employee. Submitting your
application for pension benefits does not make you retired for purposes of CERL. We
only briefly augment Judge Treat’s reasoning.
Wilmot attacks that reasoning as “fundamentally flawed” because Judge Treat
“failed to appreciate the distinction between an individual’s employment status and their
retirement status.” In his words, these are “separate and distinct conditions”
“acknowledged by Section 7522.72 itself.” However, resort to the language of a single
provision may be deceptive and misleading. It also goes against the sensible principle
cautioning courts that they should not “ ‘ “construe statutes in isolation, but rather read
every statute ‘with reference to the entire scheme of law of which it is a part so that the
whole may be harmonized and retain effectiveness.’ ” ’ ” (People v. Valencia (2017)
3 Cal.5th 347, 384.) Given that we are dealing with an extensive statutory scheme of
almost fiendish complexity, it is appropriate to take this canon of statutory construction to
heart, particularly because section 7522.72 is not even in CERL (which commences with
section 31450 and concludes with section 31898, and which occupies the better part of
two volumes of West’s Annotated California Codes).
At first glance, Wilmot’s distinction between “employment status” and “retirement
status” has a natural attraction because it accords with the common understanding of
what retirement means. It might also appear that CCERA unwittingly bolstered Wilmot’s
position by dating his retirement to December 13, 2012 and, eventually, paying him
pension benefits from that date. Thus, Wilmot can in effect say: “See, even CCERA
accepts that I retired on December 13th.” Wilmot’s reasoning is sound, but conditionally
so, being subject to the proviso identified by Judge Treat.
12
The person who has stopped working naturally would no longer think of herself as
being a public employee, but as a former public employee, a retired public employee.
But this is a false dichotomy. The issue is not how such a person characterizes herself,
but how CERL does.
Submitting retirement papers is only the start of the retirement process under
CERL. The application is then reviewed, and, if correct in form, sent to the county
retirement board for its approval. The need for this hiatus is obvious. It allows for a
change of mind by the employee. The retirement board has to verify the employee’s
history. (Flethez v. San Bernardino County Employees Retirement Assn. (2017) 2 Cal.5th
630, 636 [“a county retirement board . . . must ‘investigate[] applications and pay[]
benefits only to those members who are eligible for them’ ”]; cf. § 31541, subd. (a)
[retirement board may “correct the errors or omissions of any active or retired
member”].) The employee’s “final compensation” (see § 31462.05, subd. (d)) must be
computed. Whether the employee has a “prior service pension” (see §§ 31664, 31664.1,
31664.2, 31676, 31677) with another employer, or was employed as a safety member by
a different agency (§§ 31664.5, 31672.5), may also have to be considered. Depending on
the agency involved, there may be a policy requiring that the employee’s vacation or
leave time be exhausted (if only for accounting purposes) before a replacement may be
hired. 8 (Cf. § 21163 [“the retirement of a [CalPERS] member who . . . is entitled to sick
leave . . . shall not become effective until the expiration of the sick leave”].) The
retirement board would also be “ ‘required to determine whether items of remuneration
paid to employees qualify as “compensation” under section 31460 and “compensation
earnable” pursuant to section 31461, and therefore must be included as part of a retiring
employee’s “final compensation” (§ 31462 or § 31462.1) for purposes of calculating the
amount of a pension.’ ” (Marin, supra, 2 Cal.App.5th 674, 680, quoting In re Retirement
Cases (2003) 110 Cal. App. 4th 426, 433.) There may be other factors reflected in the
8
This may be especially true if the employee is seeking disability retirement.
(See Katosh v. Sonoma County Employees’ Retirement Assn. (2008) 163 Cal. App. 4th 56
[employee’s disability retirement effective when accrued sick leave exhausted].)
13
memorandum of understanding negotiated between public agencies and employees under
the Meyers-Milias-Brown Act (§ 3500 et seq.), which often address points relevant to
compensation and pensions and might therefore have to be consulted. All this takes time.
Judge Treat cited a number of statutes establishing that the employee’s application
is merely pending until approved by a retirement board. Other statutes are more
emphatic, leaving no doubt that the decisive retirement event is that approval. (See
§ 31497.3, subd. (a) [“Retirement of a member . . . who has met the requirements for age
and service shall be made by the board, at which time the member . . . becomes a retired
member,” italics added], § 31499.4, subd. (a) [same], § 31511.4, subd. (a) [same],
§ 31486.4, subd. (a) [“Retirement of a member or former member who has met the
requirements for age and service shall be made by the board, at which time the member
or former member becomes a retired member,” italics added], § 31491, subd. (a) [same],
§ 31499.14, subd. (a) [same].) Wilmot is simply wrong in stating “No CERL provision
states that retirement occurs ‘upon board action.’ ”
True, there are statutes with language that a vested employee “may be retired upon
filing with the board a written application” (e.g., §§ 31491, subds. (c), (d); 31497.3,
subds. (c), (d); 31499.4, subds. (c), (d)), but the same statutes also specify that the
decisive act is approval of that application by the board: “Retirement of a
member . . . shall be made by the board, at which time the member or former member
becomes a retired member.” (§ 31491, subd. (a), italics added, § 31497.3, subd. (a),
31499.4, subd. (a).) Wilmot attacks as “incorrect[]” and a “misconstru[ction]” Judge
Treat’s conclusion that it was CCERA’s approval of his retirement application that
“transformed him from a ‘public employee’ and ‘member’ into a retiree/former
employee.” The verb may not fit perfectly, but it does capture the essence of the process.
Wilmot notes that “[t]he distinction between an individual’s employment status
and retirement status makes sense.” It is but a truism to say that employment and
retirement are different things. It does not follow that CCERA was, in plaintiff’s
characterization, “dictat[ing]” his status. CCERA was merely following established
procedures, admittedly one with a new wrinkle. If there was any dictating, it was done
14
by CERL, and the Legislature. Indeed, by insisting that he “was in fact retired” when he
submitted his retirement application, it is Wilmot who is doing the dictating by deciding
which parts of CERL apply to him.
Wilmot asserts that MacIntyre involved a municipal charter pension system, and
thus does not give guidance to how CERL should be construed. We do not agree. As
already shown, the municipal pension system in MacIntyre operates in much the same
manner as does CERL. The excerpt from MacIntyre quoted by Judge Treat—“The filing
of the [pension] application does not ipso facto retire the applicant. It is necessary that an
order of retirement be duly made” (MacIntyre, supra, 42 Cal. App. 2d 734, 736)—is a
spot-on description of how CERL operates. If anything, section 7522.72 is more
measured than the San Francisco provision, for where the police officers committed only
“conduct unbecoming an officer, disobedience of orders and insubordination”
(MacIntyre, at p. 735), Wilmot was convicted by his own admission of long-term
felonious thievery from his employer. Also, unlike the dismissed officers in MacIntyre,
Wilmot was not stripped of all pension benefits.
Wilmot is simply mistaken when stating “the Supreme Court has made it clear
that, in accordance with a retirement system’s relevant governing provisions, an
employee is entitled to a pension at the moment the employee has submitted an
application for it after attaining the minimum age and completing the prescribed period
of service.” (Italics added.) He points to no decision with such a holding. 9 Neither the
9
The only real expression on the subject by our Supreme Court is Wallace v. City
of Fresno, supra, 42 Cal. 2d 180. Wallace, who retired as chief of police, had his pension
payments stopped when he was convicted of a federal crime. The forfeiture provision
was added after Wallace entered the police department, but long before he retired. In a
relatively brief opinion, the Supreme Court concluded the termination of Wallace’s
pension was invalid.
“No case in this state has passed upon the specific question of the reasonableness
of an amendment, made before an employee is eligible to retire, which provides for
termination of pension rights if he is convicted of a felony after retirement. In order to
determine this question we must look to the general principles set forth in the Kern [v.
City of Long Beach (1947) 29 Cal. 2d 848] and Packer [v. Board of Retirement (1950)
15
language of section 7522.72 in particular, nor CERL in general, lends the slightest
support to the idea that a corrupt public employee, knowing that law enforcement is
closing in, has only to throw his retirement application in a mailbox to make accrued
pension benefits untouchable. (Cf. Kerner v. State Emp. Retirement System (Ill. 1978)
382 N.E.2d 243, 246 [“under plaintiff’s theory, an employee need only retire prior to his
35 Cal. 2d 212] cases where it was pointed out that a city may make reasonable
modifications of pensions, prior to retirement, for the purpose of keeping the pension
system flexible to permit adjustments in accord with changing conditions and at the same
time maintain the integrity of the system and carry out its beneficent policy. [Citations.]
We must also keep in mind the facts that pension payments are deferred compensation to
which a pensioner becomes entitled upon performing all services required under the
contract and that his retirement because of age ordinarily shows that he has done
everything necessary to entitle him to payment of the pension. [Citations.]
“Application of these principles in the present case leads to the conclusion that the
amendment does not constitute a reasonable modification as to Wallace. The termination
of all pension rights upon conviction of a felony after retirement does not appear to have
any material relation to the theory of the pension system or to its successful operation.
Rather, the change was designed to benefit the city and, as stated in the city’s brief, to
meet the objections of taxpayers who would be opposed to contributing funds for the
maintenance of a pensioner who had been convicted of a felony. At the time of the
amendment, Wallace had obtained substantial rights by reason of his services, and the
amendment in effect operated as a condition subsequent to terminate a pension which he
had fully earned. A city has no more right to adopt an amendment which does not come
within the purposes of the rule permitting modifications than a private insurance carrier
would have to change an annuity policy by making a unilateral amendment under which
the insured’s interest might be terminated upon his conviction of a felony.” (Wallace v.
City of Fresno, supra, 42 Cal. 2d 180, 184–185; see id. at p. 183 [“a public pension
system is subject to the implied qualification that the governing body may make
reasonable modifications and changes before the pension becomes payable,” italics
added].)
The court was not clear as to whether the decisive factor was (a) that a complete
forfeiture of pension rights was not a “reasonable modification” or (b) the forfeiture
language could not reach a person who was actually and formally retired. Likely it was
both. (See Skaggs v. City of Los Angeles (1954) 43 Cal. 2d 497, 503 [Wallace “held that
the amendment constituted an unreasonable impairment of plaintiff’s contract with the
city and could not operate to deprive him of his pension rights upon his conviction of a
felony some three years after he retired.”].) Parenthetically, Wilmot’s reliance on Skaggs
is misplaced for the simple reason that the employee was ultimately acquitted of the
service-related criminal charge. (Id. at p. 499.)
16
conviction . . . to render the entire [forfeiture] statute meaningless”]; accord, Woods v.
City of Lawton (Okla. 1992) 845 P.2d 880, 883; Public Emp. Retirement System v.
Dodd (W.Va. 1990) 396 S.E.2d 725, 731; Garay v. Dept. of Management Services
(Fla.Dist.Ct.App. 2010) 46 So. 3d 1227, 1228.)
To sum up: a public employee who has submitted application for retirement, and
who is no longer actually working, is in a state of limbo until the application is approved
by the retirement board. It is only with that approval that the employee 10 can be
considered “a retired member” for purposes of CERL. On January 1, 2013, when the
Pension Reform Act and section 7522.72 took effect, Wilmot’s application had been
submitted but not yet approved by CCERA. Because Wilmot did not become officially
retired until April 2013, he was subject to the new forfeiture provision. Because he was
still an employee, there can be no question of retroactive application.
Wilmot’s position that he is being “divested” of his vested pension benefits is built
on two assumptions. The first is that he was “retired” when he sent in his pension
application and no longer went to work. The preceding discussion has established that
this initial conclusion is faulty. The second assumption is that pension benefits,
whenever acquired during the course of employment, thereupon become “vested,” by
which Wilmot means fixed and not subject to alteration. However, our Supreme Court
has repeatedly held that anticipated pension benefits are subject to “ ‘reasonable
modifications and changes before the pension becomes payable and that until that time
the employee does not have a right to any fixed or definite benefits . . . .’ ” (Miller v.
State of California (1977) 18 Cal. 3d 808, 816 [emphasis added], quoting Wallace v. City
of Fresno, supra, 42 Cal. 2d 180, 183; accord, e.g., Betts v. Board of Administration
(1978) 21 Cal. 3d 859, 863; Packer v. Board of Retirement, supra, 35 Cal. 2d 212, 218;
10
A fetish should not be made of the precise terminology of status. As we pointed
out, a person who stops going to the office may well consider herself a former employee.
Whether one is an “active” employee, a “legacy” employee, a former employee, or an
about-to-be-retired employee is essentially immaterial. The only relevant status, the one
which is used by CERL, is whether one is or is not a “retired member,” and CERL is
explicit on how that status is acquired.
17
Kern v. City of Long Beach, supra, 29 Cal. 2d 848, 854–855; cf. Terry v. City of Berkeley
(1953) 41 Cal. 2d 698, 702 [citing Packer as “authority for the proposition that reasonable
changes detrimental to [a public employee] may be made” up to the time “the pension [is]
due and payable.”].)
Although the Attorney General clearly wants to have the constitutionality of the
Pension Reform Act vindicated, he and CCERA acknowledge the case can be resolved as
a matter of straightforward statutory construction. With due regard for Wilmot’s
apparently unique set of circumstances, we see no need to go further and explore the
possibility of a constitutional violation. 11
DISPOSITION
The judgment is affirmed.
11
At the end of his brief, Wilmot argues that Judge Treat “improperly excluded
relevant evidence showing that section 7522.72 was intended to apply solely to current
public employees’ on PEPRA’s operative date.” “We apply the abuse of discretion
standard in reviewing a trial court’s ruling denying a request for judicial notice (i.e., we
affirm the ruling unless the information . . . was so persuasive that no reasonable judge
would have denied the request for judicial notice).” (CREED-21 v. City of San Diego
(2015) 234 Cal. App. 4th 488, 520.) Wilmot makes no genuine effort to disprove Judge
Treat’s ruling that the proffered “documents do not purport to say anything one way or
the other as to the question at issue here—the applicability of PEPRA’s felony forfeiture
provisions to pre-enactment retirees.” The documents are therefore not so persuasive on
that issue that any reasonable judge would have granted Wilmot’s request.
18
_________________________
Richman, Acting P.J.
We concur:
_________________________
Stewart, J.
_________________________
Miller, J.
A152100; Wilmot v. CC County Employees’ Retirement Assn.
19
Filed 12/3/18
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION TWO
JON WILMOT,
Plaintiff and Appellant,
A152100
v.
CONTRA COSTA COUNTY (Contra Costa County Super.
EMPLOYEES’ RETIREMENT Ct. No. MSN161730)
ASSOCIATION et al.,
ORDER CERTIFYING OPINION
Defendants and Respondents. FOR PUBLICATION
THE COURT:
The opinion in the above-entitled matter filed on November 1, 2018, was not
certified for publication in the Official Reports. For good cause, the request for
publication by Intervener, State of California is granted.
Pursuant to California Rules of Court, rules 8.1105 and 8.1120, the opinion in the
above-entitled matter is ordered certified for publication in the Official Reports
Dated: _____________________ ___________________________
Acting P.J.
1
Trial Judge: Hon. Charles S. Treat
Trial Court: Contra Costa County Superior Court
Attorneys for Appellant: Rains Lucia Stern St. Phalle & Sliver
Timothy K. Talbot
Zachery A. Lopez
Attorneys for Respondents: Reed Smith LLP
Harvey L. Liederman
Maytak Chin
Attorney General of California
Xavier Becerra
Thomas S. Patterson
Senior Assistant Attorney General
Constance L. LeLouis
Supervising Deputy Attorney General
Anthony P. O’Brien
Deputy Attorney General
2