Wilmot v. Contra Costa County Employee's Retirement Association ( 2021 )

Filed 2/5/21; Opinion on transfer from Supreme Court
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION TWO
JON WILMOT,
Petitioner and Appellant,
A152100
v.
CONTRA COSTA COUNTY (Contra Costa County
EMPLOYEES’ RETIREMENT Super. Ct. No. N16-1730)
ASSOCIATION et al.,
Defendants and Respondents,
STATE OF CALIFORNIA,
Intervener.
A veteran 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 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)(l) (section 7522.72).) In February 2013, the
employee was indicted for stealing county property. 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
1 Statutory references are to this code unless otherwise indicated.
1
December 2012. Also in April 2013, the employee began receiving monthly
pension checks starting from December 2012. In December 2015, the
employee pled guilty to embezzling county property over a 13-year period
ending in December 2012. Thereafter, the county pension authority reduced
the employee’s monthly check in accordance with the forfeiture provision.
The question presented is whether the forfeiture provision applies to
the employee. We conclude the provision does apply to the employee because,
as a matter of statutory construction, the employee had merely initiated the
process of retiring. We also conclude that even if the employee was retired,
and the forfeiture provision was applied to him, there would be no violation of
the California Constitution’s provision against the undue impairment of the
employee’s contract with his governmental employer, nor would that
application constitute an ex post facto law.
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.
2
On January 1, 2013, the Pension Reform Act became effective, thus
adding section 7522.72. Subdivision (a) states that it “shall apply to a public
employee first employed by a public employer . . . before January 1, 2013.”
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 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.)2
2 Two 2013 amendments made the language nongender-specific (Stats. 2013,
ch. 528, § 76) and expanded the scope of subdivision (c)(l) in two ways: (1) it
henceforth would apply to “rights” as well as benefits, and (2) it substituted
“member” for “public employee” (Stats. 2013, ch. 528, § 13). “Member” is a
broader term that includes retirees. (See, e.g., §§ 20164, 20230, 20281,
20370, 20371.) We have previously said: “In plain English, and excluding
3
On March 19, 2013, CCERA received Wilmot’s “Choice of Retirement
Allowance.” The following month CCERA formally approved Wilmot’s
retirement application, fixing his date of retirement as December 13, 2012,
and sent him his first monthly pension check for $8,758.46.
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:
“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
survivor beneficiaries, a ‘member’ is a past or present ‘employee’ (§ 31469) of
a ‘public agency’ (§ 31478) who did or is rendering ‘public service’ for
compensation to that public agency (§ 31479).” (Marin Assn. of Public
Employees v. Marin County Employees’ Retirement Assn. (2016) 2 Cal.App.5th
674, 683, fn. 4, review granted Nov. 22, 2016, S237460, review dismissed
Sept. 23, 2020 (Marin County).)
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.” Among the hundreds of items listed were hand
tools, clothing, blankets, chainsaws, binoculars, dozens of boxes of batteries,
lightbulbs, bars of soap, toilet paper, and United States and California state
flags. The alert reader will note that at least one of these “recoveries”
occurred the day before Wilmot submitted his retirement application.
4
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 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 Wilmot’s total
“employee contributions” of $288,857.74 would be refunded; and (3) these
changes to his “Final Average Compensation Adjustment” would reduce
Wilmot’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 because the statute does not apply
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.
5
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 State of California 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, with minor,
nonsubstantive modifications, 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.
6
“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
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
7
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 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 . . . § 316.70
(‘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.
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 suppression . . .or active lifeguard serviced . . . or a juvenile hall group
counseling and group supervision . . . .” (§ 31469.3, subd. (b).)
8
“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 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
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.
9
“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 l,] 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 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
10
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 rightfully 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. 735–736.)
“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
When we first decided the appeal, we had already decided in Marin
County that application of PEPRA to serving county employees did not
substantially impair their contracts of employment, an action forbidden by
the federal and state constitutions. (U.S. Const., art. I, § 10; Cal. Const.,
11
art. I, § 9.) The California Supreme Court used a slightly different analysis
to come to the same conclusion. (Alameda County Deputy Sheriff’s Assn. v.
Alameda County Employees’ Retirement Assn. (2020) 9 Cal.5th 1032(Alameda County).) It then transferred Wilmot back to us with directions to
vacate our prior decision and reconsider the cause in light of the Supreme
Court’s opinion. The order ended with the following: “In doing so, the court
is directed to address and resolve petitioner’s claim under the contract clause
of the California Constitution.”
In Marin County 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 (Pension
Forfeiture)) 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 generally assumed qualification: crimes
committed after retirement were excluded. (See, e.g., Wallace v. City of
Fresno (1954) 42 Cal.2d 180 (Wallace); Lawrence v. City of Los Angeles (1942)
53 Cal.App.2d 6; MacIntyre, supra, 42 Cal.App.2d 734.)
6 The United States has had such a provision since 1954. (See Hiss v.
Hampton (D.D.C. (1972) 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].”
(Pension Forfeiture, supra, 35 Am.Crim.L.Rev. 57, 58–59.)
12
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, which was re-enacted as § 7522.70]; see Little Hoover Com.,
Public Pensions for Retirement Security (Feb. 2011) p. 39.) 7 Following the
recommendations of the Little Hoover Commission and Governor Brown, the
Legislature expanded the principal to public employees. (Little Hoover Com.,
Public Pensions for Retirement Security (Feb. 2011) p. 39; “Governor Brown
Releases Twelve-Point Pension Reform Plan,” March 31, 2011,
https://www.ca.gov/archive/gov39/2011 [as of Dec. 14, 2020].) 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.
(See generally, Annot., Misconduct as Affecting Right to Pension or Retention
of Position in Retirement System (1961) 76 A.L.R.2d 566; cf. Corvelli v. Board
of Trustees (N.J. 1992) 617 A.2d 1189 [conviction for theft of police shotgun
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.)
13
supported forfeiture of all pension benefits after 30 years of service]; Woods v.
City of Lawton (Okla. 1992) 845 P.2d 880 [employee with 29 years’ service
lost all pension rights following conviction for defrauding employer].) It is not
triggered by just any conviction, or even any felony conviction, but only a
felony conviction that is job-related.8 Pension benefits are not lost entirely,
but only for the period of the felonious behavior. 9 The employee’s
contributions for that period are not kept, but are returned. (§ 7522.72, subd.
(d)(1).) And if the conviction is reversed, the employee may redeposit her
contributions and “[r]ecover the forfeited rights and benefits.” (Id., subd. (h).)
Statutory Analysis
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 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.
8 By way of contrast, a judge will forfeit pension benefits if convicted of a
felony “while holding judicial office . . . and which either involves moral
turpitude . . . or was committed in the course performing the judge’s duties[.]”
(§ 75526, added by Stats. 1994, ch. 879, § 11.)
9 Unless the job-related felony involves offenses committed against children,
in which case the public employee “shall forfeit all accrued rights and benefit
in any public retirement system.” (§ 7522.72, subd. (b)(2), italics added.)
14
Judge Treat’s ruling was quoted almost in full because it addresses two
of the three 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
15
retired on December 13th.” Wilmot’s reasoning is sound, but only
conditionally so, being subject to the proviso identified by Judge Treat.
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 to the county retirement agency 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 “compensation
earnable” and “final compensation” (see §§ 31461, 31462, 31462.05, 31462.2)
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.10 (Cf. § 21163 [“the retirement of a [CalPERS] member who . . . is
10 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].)
16
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” under 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 County, 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 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.’ ” We believe our Supreme Court would agree. (See
Flethez v. San Bernardino County Employees Retirement Assn. supra,
2 Cal.5th 630, 643 [“SBCERA argues that county employees have only an
17
inchoate right to a disability retirement pension, which vests only when the
last contingency to the pension is removed. Specifically, SBCERA asserts
that under CERL, the right to a disability retirement . . . is not vested until
the retirement board to which an application is submitted has reviewed the
submitted evidence and finally acts on the application . . . . [¶] SBCERA has
the better argument,” italics added].)
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 Wilmot’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 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.
18
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 there 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. And,
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. Neither the 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 language of to throw his retirement application in a mailbox to
make accrued pension benefits conviction . . . to render the entire [forfeiture]
19
statute meaningless”]; accord, Woods v. City of Lawton, supra, 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 employee11 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.
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 as a matter of
statutory construction.12
11 A fetish should not be made of the precise terminology of status: As we
have noted, 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 that is used by CERL, is
whether one is or is not a “retired member,” and CERL is explicit on how that
status is acquired.
12 At the end of his opening 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
20
The second assumption is that pension benefits, whenever acquired
during the course of employment, thereupon become “vested,” by which
Wilmot means fixed and generally not subject to alteration without violating
two provisions of our state constitution. As previously noted, we had already
rejected a largely identical claim in Marin County.
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, 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 (1953) 35 Cal.2d 212, 218;
Kern v. City of Long Beach (1947) 29 Cal.2d 8 48, 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”].) “ ‘The right to a
pension is a vested right; the amount of the pension may not always be
ascertained until the last contingency has occurred.’ ” (Dickey v. Retirement
Bd. Of S.F. (1976) 16 Cal.3d 745, 750, fn. 3, quoting Brooks v. Pension Board
(1938) 30 Cal.App.2d 118, 123; cf. Carr v. Fire Commission of San Francisco
(1938) 30 Cal.App.2d 208, 211 [“A pension law may be changed or modified so
long as the vital contingency has not happened upon which an employee may
(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.
21
predicate his right to a pension”].) Approval by the retirement board is
among the last contingencies.
We now revisit the issue in light of our Supreme Court’s decision in
Alameda County. We will also address another constitutional claim advanced
by Wilmot that we found initially unnecessary to resolve—that application of
section 7522.72 to him would be a violation of the California Constitution’s
prohibition against ex post fact laws.
Constitutional Analysis
“A[n] . . . ex post facto law, or law impairing the obligation of contracts
may not be passed.” (Cal. Const., art. I, § 9.) Wilmot invokes both of these
clauses. Pursuant to the Supreme Court’s directive, we begin with the
contract claim.
The Contract Clause Claim
Wilmot’s belief that he was actually retired before section 7522.72 took
effect is the foundation of his contention that he is the victim of an
unconstitutional attempt to reduce his pension. Although the preceding
statutory analysis has proved otherwise, this does not harm his position. For
purposes of the following analysis, we shall treat him as fully retired on
January 1, 2013, when the Pension Reform took effect. As a separate and
independent ground for our decision (see Bank of Italy Nat. Trust & Sav.
Assn. v. Bentley (1933) 217 Cal. 644, 650), we conclude application of section
7522.72 to a retired employee is not prohibited by the Contract Clause of the
California Constitution.
The analytical matrix was spelled out in Alameda County.
First, the court determines whether the legislative change of the status
quo imposes “an economic disadvantage on affected employees and, if so,
22
whether those disadvantages are offset in some manner by comparable new
advantages.” (Alameda County, supra, 9 Cal.5th 1032, 1082, 1092.)
Second, the court “must then determine whether the government’s
articulated purpose in making the changes [is] sufficient, for constitutional
purposes, to justify any impairment of pension rights.” (Alameda County,
supra, 9 Cal.5th 1032, 1082.) Constitutionally, “modifications of public
pension plans are permissible only if they relate to the operation of the plan
and are intended to improve its functioning or adjust to changing conditions.”
(Id. at p. 1094.) Stated in other terms, “ ‘alterations of employees’ pension
rights must bear some material relation to the theory of a pension system
and its successful operation.’ ” (Ibid.)
Third, even if the changes were made for a proper purpose, “[t]he
Legislature’s decision to impose financial disadvantages on public employees
without providing comparable advantages will be upheld under the contract
clause only if providing comparable advantages would undermine, or would
otherwise be inconsistent with, the modification’s constitutionally permissible
purpose.” (Alameda County, supra, 9 Cal.5th 1032, 1093.)
The first step is quickly resolved, for there is no dispute that section
7522.72 diminished county employees’ pension rights in that no longer could
an employee commit job-related felonies and face no adverse financial
consequence. The Pension Reform Act did not include any compensatory or
comparable advantage. The State does not attempt to argue otherwise.13
13 CCERA declined to address the constitutionality of section 7522.72,
believing this was an issue beyond its jurisdiction. (See Cal. Const., art. III,
§ 3.5, subd. (a) [administrative agencies have no power “[t]o declare a statute
unenforceable, or refuse to enforce a statute, on the basis of it being
unconstitutional”].)
23
The second step has already been largely addressed by our Supreme
Court in Alameda County.
In general, the Pension Reform Act was enacted for the purpose “of
closing loopholes and preventing abuse of the pension system in a manner
consistent with CERL’s preexisting structure.” (Alameda County, supra,
9 Cal.5th 1032, 1054, 1102 [“the Legislature was attempting to reduce
manipulation”].) The specific provision examined there was a provision in
the Pension Reform Act that narrowed the definition of “compensation
earnable” (§ 31461), a key factor in calculating an employee’s pension
benefits, to combat the practice of “pension spiking”—the manipulation of
pattern of work time and pay to produce an artificially inflated compensation
earnable during the final compensation period used to calculate an
employee’s pension. (Alameda County, supra, at pp. 1061, 1098.) The state
of affairs before the Pension Reform Act redefinition allowed “distorting the
pension calculation and increasing pension benefits beyond the amount
anticipated by the underlying theory of compensation earnable.” (Id. at
p. 1096.)
“The purpose of PEPRA’s amendment of section 31461 . . . was to bring
administrative practice . . . into closer alignment with the system’s
underlying theory by excluding income designed to artificially inflate a
pension.” (Alameda County, supra, 9 Cal.5th 1032, 1102.) This, the court
held, was a legitimate motivation: “A legislative intent to align the express
language of a pension statute more closely with its intended manner of
functioning directly relates to both the theory of a pension system and its
successful operation.”14 (Id. at p. 1095.)
14 In its discussion of a municipal pension system, the MacIntyre court
stated: “ ‘[I]t would be an absurd construction of the language creating it to
hold that the intention of the Legislature was to give a life annuity to persons
24
Pension forfeiture provisions have a number of rationales that dovetail
with “the theory of a pension system.” The leading commentary identifies
four: (1) because “pensions are a reward for faithful service,” “the corrupt
public servant is not entitled to a public pension”; (2) “pension forfeiture is
‘just deserts’ for breach of the public trust” and “ ‘the public’s right to
conscientious service from those in government’ ” (quoting Kerner v. State
Employees Retirement Sys., supra, 382 N.E.2d 243, 246); (3) forfeiture “deters
public corruption” and “will discourage official malfeasance”; and
(4) “forfeiture has symbolic importance” because “public outrage and
cynicism . . . greet the revelation that a wrongdoer will receive his pension
despite his wrongdoing.” (Pension Forfeiture, supra, 35 Am.Crim.L.Rev. 57,
76–79.)
The only decision from our Supreme Court considering a pension
forfeiture does not discuss when it is proper, but only when it is not.
In Wallace, supra, 42 Cal.2d 180, a retired chief of police had his
pension payments stopped when he was convicted of a federal crime
committed after his retirement. 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
who, on their merits, as distinguished from mere time of service, might be
dismissed . . . for misbehavior.’ ” (MacIntyre, supra, 42 Cal.App.2d 734, 736.)
It is a reasonable inference that section 7522.72 was enacted because the
Legislature discovered that the feared absurdity had come to pass and ought
to be stopped.
25
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, supra,
29 Cal.2d 848] and Packer [v. Board of Retirement, supra, 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
26
felony.” (Wallace, 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 Wallace 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”]; cf. Kern v. City of Long Beach,
supra, 29 Cal.2d 848, 853 [pension system modification “does not [allow] that
an employee may be deprived of all pension benefits” “no decision has been
found holding that an employee’s pension rights may be entirely destroyed,”
italics added].)15
In Alameda County the Supreme Court indicated that appeasing public
opinion, a proffered defense in Wallace, was an “essentially political reason”
that is not a permissible purpose in modifying a pension system. (Alameda
County, supra, 9 Cal.5th 1032, 1094–1095.) From this, Wilmot argues that
section 7522.72 was not enacted for a constitutionally permissible purpose,
that is, “a valid justification for changing a pension system ‘must relate to
considerations internal to the pension system.’ ” (Alameda County, supra,
9 Cal.5th 1032, 1098, quoting Claypool v. Wilson (1992) 4 Cal.App.4th 646,
15 Wilmot’s reliance on Skaggs is misplaced for the simple reason that the
employee there was ultimately acquitted of the service-related criminal
charge. (Skaggs v. City of Los Angeles, supra, 43 Cal.2d 497, 499.)
27
666.) Rather, he argues, he is being punished for a political reason external
to the effective operation of CERL, namely, the Legislature’s attempt to
assuage public outrage at a convicted felon collecting a taxpayer-funded
pension. Wilmot insists the impropriety of this motivation is established by
what the Supreme Court said in Alameda County about the earlier Wallace
opinion.
Thus, Wilmot contends, with considerable earnestness and cogency:
“This constitutionally impermissible purpose is made clear by the disparate
impact Section 7522.72 has on Wilmot, relative to the harm caused by his
conduct. Wilmot’s employer suffered damages in the amount of $32,966.36.
Wilmot has made the District whole by paying that amount as restitution.
Wilmot has also served 88 days of home detention, and was placed on formal
probation for five years. . . . [¶] The application of section 7522.72, however,
has imposed a financial forfeiture of tens of thousands of dollars per year for
the rest of his life. Using CCERA’s calculations, Wilmot will forfeit over
$70,000 each year, which in a single year is more than double the total
financial harm suffered by the District. The application of Section 7522.72
imposes a grossly disproportionate financial penalty that has absolutely no
relation to the harm caused.” (Bolding and underscoring omitted.)
It is true, as already shown, that “public outrage . . . that a wrongdoer
will receive his pension despite his wrongdoing” (Pension Forfeiture, supra,
35 Am.Crim.L.Rev. 57, 79) is one of the traditional justifications for the
forfeiture principle. It is also true that in Wallace the attempt to forfeit the
retiree’s entire pension was rebuffed because it did “not appear to have any
material relation to the theory of the pension system.” (Wallace, supra,
42 Cal.2d 180, 185.) Referring to Wallace, the court in Alameda County
discounted public outrage as an “essentially political reason” that was not a
28
permissible or “proper purpose,” and thus was insufficient to justify the
forfeiture. (Alameda County, supra, 9 Cal.5th 1032, 1093–1094.) Another
justification, that pension forfeiture is “just desert” for breach of the public
trust, sounds like punishment, a point Wilmot also develops in his ex post
facto argument.
Wilmot lays repeated emphasis on the idea that pension benefits are a
form of deferred compensation for services performed. It is this concept that
caused the Supreme Court to “hold them protected under the contract
clause.” (Alameda County, supra, 9 Cal.5th 1032, 1077.) Yet the rule is
subject to a major proviso.
In the very same decision that first extended constitutional protection,
the court cautioned: “The rule permitting modification of pensions is a
necessary one since pension systems must be kept flexible to permit
adjustments in accord with changing conditions . . . . [¶] Thus it appears . . .
that an employee may acquire a vested contractual right to a pension but
that this right is not rigidly fixed by the specific terms of the legislation in
effect during any particular period in which he serves.” (Kern v. City of Long
Beach, supra, 29 Cal.2d 848, 854–855.) This point was reiterated in Wallace,
when the court went on to say: “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 . . . ordinarily shows that he has done everything necessary to
entitle him to payment of the pension.” (Wallace, supra, 42 Cal.2d 180, 184–
185, italics added.) “[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 and that until that time the
employee does not have a right to any fixed or definite benefits but only to a
29
substantial or reasonable pension.” (Id. at p. 183.) This thinking was
prominent in Alameda County and in Marin County. (See Alameda County,
supra, 9 Cal.5th 1032, 1078–1080; Marin County, supra, 2 Cal.App.5th 674,
706–707.)
The ultimate question is whether a modification of a pension is
reasonableness, in terms of the parties’ expectations and the measure’s
necessity, in serving an important public purpose. (See Alameda County,
supra, 9 Cal.5th 1032, 1075–1077, 1089, 1100; Allen v. City of Long Beach
(1955) 45 Cal.2d 128, 131 [“modifications must be reasonable”]; Wallace,
supra, 42 Cal.2d 180, 183–184 [courts must “determine whether the changes
made come with the bounds of a reasonable modification”].)
Because state-wide forfeiture provisions are a fairly recent feature of
pension schemes, we looked first at the plain language of section 7522.72, but
there is nothing showing a declared purpose. Our examination of the
legislative history found nothing providing an express motivation for the
forfeiture provision. There are references to “abusive practices,” which are
invariably mentioned as “pension spiking” and “double-dipping,”16 but we
16 The following language was repeated many times:
“ ‘California’s public pension systems were established to provide
retirement security for those who give their lives in public service. Recently,
the benefits provided by those systems have been tainted by a few individuals
who have taken advantage of the system. This is in part due to the ‘37 Act’s
very broad and general definition of “compensation earnable” (the amount of
which a member’s pension is calculated). In these counties some public
employees, most of them in upper-level positions, have taken advantage of
this situation to include items in their compensation that “spike” their final
compensation to create vastly increased pension checks for themselves.’
“ ‘The abusive practices engaged in by a few individuals have put
retirement benefits at risk for the vast majority of honest, hard-working
public servants. Additionally, the practice of having someone retire on
Friday and come back to work on Monday and being able to collect a full
30
found no express intent behind section 7522.72. There is only one reported
decision on it. Nevertheless, like the court in Hipsher v. Los Angeles County
Employees Retirement Assn. (2020) 58 Cal.App.5th 671 (Hipsher), we have no
difficulty in discerning the point of the law.
To judge from earlier opinions, the most frequently expressed
sentiment was that “one of the primary objectives in providing pensions to
public employees . . . is to induce competent persons enter and remain in
public employment” during which they will render “ ‘long-continued and
faithful service.’ ” (Kern v. City of Long Beach, supra, 29 Cal.2d 848, 856,
852; see Carman v. Alvord (1982) 31 Cal.3d 318, 325, fn. 4 [“Pensions . . . help
induce faithful service”]; Lix v. Edwards (1978) 82 Cal.App.3d 573, 578
[“Pension plans . . . induce continued faithful service by the employee”];
McCarthy v. City of Oakland (1943) 60 Cal.App.2d 546, 550 [“Many of the
pension laws in this state are based primarily upon the rule that rewards will
be given for faithful performance of future services”]; Klench v. Board of
Pension Fd, Commrs. (1926) 79 Cal.App. 171, 190 [speaking of persons
“retired from a public service to which they devoted many years of faithful
service”]; cf. Hayward v. American Fire River Protection Dist. (1998)
retirement benefit along with a full paycheck, is something the public simply
will not tolerate any longer. Allowing this ‘double-dipping’ to continue only
adds to the growing public concern over the pension being received by public
employees.’
“ ‘This measure will address these abusive practices by giving the ‘37 Act
retirement boards the authority and the obligation to deny compensation
items that are provided to an employee for the principal purpose of enhancing
a member’s retirement, specifically excluding certain payments from the
definition of ‘compensation earnable,’ and requiring an employee to ‘sit out’
for 180 days after retirement before returning to service.’ ” (Sen. Rules Com.,
Off. of Sen. Floor Analyses, 3d reading analysis of Assem. Bill No. 340,
(2011–2012 Reg. Sess.), as amended Sept. 2, 2011, p. 6.)
31
67 Cal.App.4th 1292, 1296, 1304 [“faithful performance of duty”]; MacIntyre,
supra, 42 Cal.App.2d 734, 736 [“it is an implied condition of employment, and
hence a condition of [the vesting of pension rights] that the duties of the
employee shall have been faithfully employed”].)
Withholding that inducement if the employee’s performance is not
faithful is an entirely logical response. An employee who draws public pay
while stealing public property, or embezzling public funds, or who uses public
facilities or equipment to run an illegal business (which is what occurred in
Hipsher), is the antithesis of a “faithful” servant of the public trust. When
misconduct turns into outright criminality, it is beyond dispute that public
service is not being faithfully performed. To give such a person a pension
would further reward misconduct. This state of affairs clearly amounted to a
“loophole” that the Legislature moved to close because it “distort[ed] the
pension calculation.” (Alameda County, supra, 9 Cal.5th 1032, 1054, 1096.)
Although section 7522.72 might be thought to be a departure from CERL’s
“preexisting structure” in that there was no prior provision for forfeiting an
employee’s pension rights or benefits, the removal of this loophole would
clearly “align [CERL] . . . more closely with its intended functioning.” (Id. at
pp. 1054, 1095.) Like pension spiking, discouraging felonious conduct on the
job qualifies as a measure aimed at “preventing abuse of the pension system.”
(Alameda County, supra, 9 Cal.5th 1032, 1054.)
“Experience with the implementation of a statutory pension system will
inevitably reveal the need for change to close loopholes and foreclose
opportunities for abuse.” (Alameda County, supra, 9 Cal.5th 1032, 1103.) By
enacting section 7522.72, the Legislative moved to close an egregious loophole
that allowed public funds to reward criminality.
32
The third and final step of the analysis is to examine whether section
7522.72 can satisfy this test: “The Legislature’s decision to impose financial
disadvantages on public employees without providing comparable advantages
will be upheld under the contract clause only if providing comparable
advantages would undermine, or would other otherwise be inconsistent with
the modification’s constitutionally permissible purpose.” (Alameda County,
supra, 9 Cal.5th 1032 at p. 1093.) Our task is not difficult.
As already mentioned, the Pension Reform Act was enacted for the
purpose “of closing loopholes and preventing abuse of the pension system in a
manner consistent with CERL’s preexisting structure” and to “align [CERL] .
. . more closely with its intended functioning.” (Alameda County, supra,
9 Cal.5th 1032 at pp. 1054, 1095.) “Although public employee pension plans
may be modified ‘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,’ to survive contract clause scrutiny such
changes ‘must bear some material relation to the theory of a pension system
and its successful operation.’ ” (Id. at p. 1093.)
The matter of job-related misconduct was deemed sufficiently wide-
spread to be included in the Little Hoover Commission Report and the
Governor’s pension reform proposal to the Legislature. It has already been
established that the Pension Reform Act had a constitutionally permissible
purpose, and collecting public pay for criminality certainly qualifies an abuse
or loophole that the Legislature could end. Although it was not positively
expressed before the Pension Reform Act, the prohibition on publicly-financed
criminality would make a correction by restricting pension benefits to those
employees who do not betray the public trust. Such would be “consistent
with CERL’s preexisting structure” of impliedly rewarding only faithful
33
service (see MacIntyre, supra, 42 Cal.App.2d 734, 736), and would thus “align
[it] . . . more closely with its intended functioning.” (Alameda County, supra,
9 Cal.5th 1032, 1054, 1095.) Calling a halt to having the public pay for job-
related criminality unquestionably “bear[s] some material relation to the
theory of a pension system and its successful operation.’ ” (Id. at pp. 1093–
1094.) Thus, the enactment of section 7522.72 does “ ‘relate to considerations
internal to the pension system.’ ” (MacIntyre, at p. 1098)
We have been unable to imagine how the Legislature could have
provided “comparable new advantages to offset” this particular
disadvantageous modification because to do so “would undermine [and
would] . . . be inconsistent with[] the constitutionally permissible purpose
underlying the modification.” (Alameda County, supra, 9 Cal.5th 1032,
1099.) Put bluntly, why should the Legislature be required to come up with
another way to reward criminality by public employees? Why should the
Legislature be prevented from attacking public employee criminality unless it
came up with another way for job-related crimes to be paid for with public
money? Why should the Legislature have to compensate public employees
not to commit crimes? With eloquent understatement, the Hipsher court
concluded that accepting Wilmot’s reasoning would “yield perverse results,”
“would do nothing to disincentivize the very abuse the [Pension Reform Act]
is intended to curb, . . . would erode public trust,” and “would be antithetical
to the statute’s purpose by unjustly enriching a malfeasant . . . employee for
engaging in the very sort of abusive e practices section 7522.72 is intended to
curb.” (Hipsher, supra, 57 Cal.App.5th 671.)
With minimal change, language from the Supreme Court closes the
matter: “It would be anomalous, at best, to hold that the Constitution
requires current employees to be provided an equivalent advantage to
34
mitigate the effect of [pension forfeiture] that, in the view of the Legislature,
are inconsistent with the theory underlying the pension system. Requiring
comparable advantages would be wholly inconsistent with the Legislature’s
purpose by restoring some form of advantages that, in the view of the
Legislature, should not have been available to county employees in the first
place.” (Alameda County, supra, 9 Cal.5th 1032, 1102.)
“ ‘The party asserting a contract clause claim has the burden of
“mak[ing] out a clear case, free from all reasonable ambiguity,” [that] a
constitutional violation occurred. [Citation.]’ [Citation.]” (Marin County,
supra, 2 Cal.App.5th 674, 703.) Wilmot has not done so. Just as the
Supreme Court concluded with pension spiking, so do we with limited
pension forfeiture: “the PEPRA amendment did not violate the contract
clause of our Constitution, notwithstanding the failure of the Legislature to
provide new features to offset the financial disadvantages of the PEPRA
amendment.” (Alameda County, supra, 9 Cal.5th 1032, 1054, 1101–1102)
The Ex Post Facto Claim
Wilmot also contends that if section 7522.72 is applied to reduce his
pension benefits, such will amount to an ex post facto law. His argument
hinges on the belief that the statute subjects him to greater punishment. He
is mistaken.
“Although the Latin term ‘ex post facto’ literally extends to any statute
passed ‘ “after the fact” ’ [citation], ‘no statute falls within the ex post facto
prohibition unless “two critical elements” exist.’ [Citation.] The statute must
be retroactive, and must implicate at least one of the four categories
described in Calder v. Bull (1798) 3 U.S. (3 Dall.) 386, 390. [Citation.] To be
considered retroactive, the law must ‘ “change[] the legal consequences of an
act completed before [the law’s] effective date,” namely the defendant’s
35
criminal behavior.’ [Citations.] ‘In other words, the operative event for
retroactivity purposes, and the necessary reference point for any ex post facto
analysis, is criminal conduct committed before the disputed law took effect.’
[Citation.] As to the second element, the four Calder categories encompass
laws that (1) criminalize conduct that was innocent when done; (2) aggravate
or make greater a crime than when committed; (3) change and increase the
punishment; and (4) alter the rules of evidence to reduce the legal sufficiency
necessary to support a finding of guilt. [Citations.]” (People v. Trujeque
(2015) 61 Cal.4th 227, 256.
For present purposes, we shall assume—as we did with Wilmot’s other
constitutional claim—that he was well and truly retired when section
7522.72 took effect. Thus, he satisfied the first of the “critical elements,” that
section 7522.72 is retroactive.
As for the second element, he focuses on the third of the four Calder
categories. Wilmot argues that although section 7522.72 is “not facially
penal,” requiring him to “forfeit his retirement rights and benefits based on
[his] conviction serves no purpose, but to increase his punishment for the
same crime.” He reasons: “Forcing Wilmot to forfeit his pension benefits as
well as for the same offense does not make the public or the District more
whole for harms caused by his conduct. There are no uncompensated victims
or ongoing harm that can be remedied by Wilmot losing his pension benefits.
Any harm that Wilmot caused to the District does not extend to CCERA or its
pension system’s ability and obligation to provide Wilmot with his earned and
funded pension benefit. PEPRA’s felony forfeiture provisions do not require a
nexus between the pension benefits disgorged and the economic harm caused
by the criminal conduct, nor is it designed to reimburse the retirement
36
system for any harm caused to it. Section 7522.72 has no remedial purpose—
it is designed to punish.”
Wilmot’s attitude is understandable. Many years ago, Presiding
Justice Peters observed: “Every civil sanction, such as forfeiture . . . , can be
considered in various ways. Obviously, so far as the wrongdoer is concerned,
such a sanction, in a very real sense, is an additional punishment to that
provided by the penal laws.” (People v. One 1950 Cadillac 2-Door Club Coupe
(1955) 133 Cal.App.2d 311, 317–318.) But the relevant legal analysis is
hardly so simple.
The immediate difficulty is that “punishment” has no single meaning,
but draws meaning of the particular context. “Commonly understood
definitions of punishment are intuitive . . . . [P]unishment has historically
included a variety of methods limited only by human imagination, yet in
situations going beyond traditional notions of punishment intuition alone
does not provide adequate guidance.” (People v. McVickers (1992) 4 Cal.4th
81, 84.)
Our Supreme Court recently explored the complexity of the concept:
“ ‘[T]he traditional aims of punishment’ are ‘retribution or deterrence.’
[Citation.] However, a sanction does not constitute punishment merely
because it has some ‘deterrent or retributive effect.’ [Citation.] As we have
explained in the context of applying the state and federal protections against
cruel and/or unusual punishment, ‘a sanction designed and intended only to
serve legitimate nonpenal objectives is not punishment . . . simply because it
may burden inconvenience, restrict, or deter in fact.’ [Citation.] On the other
hand, that a given sanction may ‘serve[] remedial purposes,’ does not
establish that it is not ‘punishment.’ [Citations.] In short, because ‘sanctions
frequently serve more than one purpose’ [citation] and have multiple effects,
37
determining whether a given sanction constitutes ‘punishment’ is often
difficult.” (People v. Ruiz (2018) 4 Cal.5th 1100, 1107–1108.)
The courts employ a two-stage analysis.
“[1] Whether a particular punishment is criminal or civil is, at least
initially, a matter of statutory construction. [Citation.] A court must first
ask whether the legislature, ‘in establishing the penalizing mechanism,
indicated either expressly or impliedly a preference for one label or the other.’
[Citation.] [2] Even in those cases where the legislature ‘has indicated an
intention to establish a civil penalty, we have inquired further whether the
statutory scheme was so punitive either in purpose or effect,’ [citation], as to
transform what was clearly intended as a civil remedy into a criminal
penalty,’ [citation].
“In making this latter determination, the factors listed in Kennedy v.
Mendoza–Martinez, [(1963)] 372 U.S. 144, 168–169 . . . , provide useful
guideposts, including: (1) ‘[w]hether the sanction involves an affirmative
disability or restraint’; (2) ‘whether it has historically been regarded as a
punishment’; (3) ‘whether it comes into play only on a finding of scienter’;
(4) ‘whether its operation will promote the traditional aims of punishment—
retribution and deterrence’; (5) ‘whether the behavior to which it applies is
already a crime’; (6) ‘whether an alternative purpose to which it may
rationally be connected is assignable for it’; and (7) ‘whether it appears
excessive in relation to the alternative purpose assigned.’ It is important to
note, however, that ‘these factors must be considered in relation to the
statute on its face,’ id., at 169, and ‘only the clearest proof’ will suffice to
override legislative intent and transform what has been denominated a civil
remedy into a criminal penalty, Hudson v. United States (1997) 522 U.S. 93,
99–100 [monetary penalty not violative of double jeopardy]; accord, Smith v.
38
Doe (2003) 538 U.S. 84, 92 [Hudson analysis used for ex post facto claim];
United States v. Ward (1980) 448 U.S. 242, 248–249 [analysis used for civil
penalty claim].)17
We are fortunate in the first stage of analysis because the Legislature
made it very clear how it viewed the sanction established by section 7522.72.
It may not mean much, but the provision is in the Government Code, not the
Penal Code. (See People v. McVickers, supra, 4 Cal.4th 81, 88; Smith v. Doe,
supra, 538 U.S. 84, 94, 108 (conc. opn. of Souter, J.).) What is far more
significant is that, in employing the concept of forfeiture, the Legislature
adopted a measure that has a considerable history and body of law behind it.
And civil forfeiture is unambiguously—and almost universally classified as—
not a criminal penalty.
Civil forfeitures were authorized by one of the earliest statutes enacted
by the first Congress. (See Calero-Toldeo v. Pearson Yacht Leasing Co. (1974)
416 U.S. 663, 683.) From the perspective of almost 150 years, Justice
Brandeis would summarize: “Forfeiture of goods or their value and the
payment of fixed or variable sums of money are other sanctions which have
been recognized as enforceable by civil proceedings since the original revenue
law of 1789. [Citation.] In spite of their comparative severity, such sanctions
have been upheld against the contention that they are essentially criminal
and subject to the procedural rules governing criminal prosecutions.”
17 Our Supreme Court has held that the California ex post facto provision is
to be “analyzed identically” with its federal counterpart (People v. McVickers,
supra, 4 Cal.4th 81, 84), and decisions of the United States Supreme Court
are routinely cited in California decisions construing the state provision.
California also follows the two-stage approach. (See, e.g., People v. Hanson
(2000) 23 Cal.4th 355, 361–362; People v. Castellanos (1999) 21 Cal.4th 785,
795 [plur. opn.], 801–802 [conc. opn. of Kennard J., quoting Hudson];
People v. Wallace (2004) 120 Cal.App.4th 867, 874–875.)
39
(Helvering v. Mitchell (1938) 303 U.S. 391, 400.) In 1877 the court would
simply state “the remedy of forfeiture . . . is plainly one of a civil nature.”
(Dobbins’s Distillery v. United States (1877) 96 U.S. 395, 399.)
The issue in Helvering v. Mitchell, supra, 303 U.S. 391 was the 1928
enactment adding a familiar feature of federal tax law—the 50 percent
penalty for unreported income “due to fraud with intent to evade tax.”
Proceeding from the proposition that “Congress may impose both a criminal
and a civil sanction in respect to the same act or omission” (id. at pp. 398–
399), Justice Brandeis explained why imposition of sanction was not
punishment in the criminal, constitutional sense:
“The fact that the Revenue Act of 1928 contains two separate and
distinct provisions imposing sanctions, and that these appear in different
parts of the statute, helps to make clear the character of that here invoked.
The sanction of fine and imprisonment prescribed by section 146(b) for willful
attempts ‘in any manner to evade or defeat any (income) tax,’ introduced into
the Act under the heading ‘Penalties,’ is obviously a criminal one. The
sanction of 50 per centum addition ‘if any part of any deficiency is due to
fraud with intent to evade tax,’ prescribed by section 293(b), introduced into
the Act under the heading ‘Additions to the tax,’ was clearly intended as a
civil one. This sanction, and other additions to the tax are set forth in
Supplement M, entitled ‘Interest and Additions to the Tax.’ The supplement
includes, besides section 293(b), sections 291, 292, 293(a), and 294
[26 U.S.C.A. §§ 291, 292, 293(a), 294.] Section 291 prescribes a 25 per
centum addition for failure to make and file a return; section 292 prescribes
interest at the rate of 6 per centum per annum upon the deficiency from the
date prescribed for payment of the tax; section 293(a), an addition of 5 per
centum if the deficiency ‘is due to negligence, or intentional disregard of rules
40
and regulations but without intent to defraud’; and section 294 prescribes an
addition to the tax of 1 per centum per month in case of non-payment.
Obviously, all of these ‘Additions to the Tax’ were intended by Congress as
civil incidents of the assessment and collection of the income tax.”
(Helvering v. Mitchell, supra, 303 U.S. 391, 404–405, fns. omitted.)
“That Congress provided a distinctly civil procedure for the collection of
the additional 50 per centum indicates clearly that it intended a civil, not a
criminal, sanction. Civil procedure is incompatible with the accepted rules
and constitutional guaranties governing the trial of criminal prosecutions,
and where civil procedure is prescribed for the enforcement of remedial
sanctions, those rules and guaranties do not apply. Thus the determination
of the facts upon which liability is based may be by an administrative agency
instead of a jury . . . and . . . in the civil enforcement of a remedial sanction
there can be no double jeopardy.” (Helvering v. Mitchell, supra, 303 U.S. 391,
402, fns. omitted.)
Ex post facto analysis looks to punishment. So does double jeopardy
analysis. In United States v. Ursery (1996) 518 U.S. 267, the United States
Supreme Court surveyed the history of in rem forfeiture18 actions, and
reiterated that they were civil in nature, not criminal, and did not violate
double jeopardy even after acquittal on the criminal charge. The test
18 “Traditionally, forfeiture was an action against the tainted property itself
and thus proceeded in rem; that is, proceedings in which ‘[t]he thing [was]
primarily considered as the offender, or rather the offence [was] attached
primarily to the thing.’ [Citation.] The forfeiture ‘proceeding in rem st[ood]
independent of, and wholly unaffected by any criminal proceeding in
personam’ against the defendant.” (Honeycutt v. United States (2017)
___ U.S. ___ [137 S. Ct. 1626, 1634–1635.) Although this was never a true in
rem action, the name does convey the essence of this dispute—a fight over
property, specifically, a portion of Wilmot’s pension.
41
employed to resolve the civil versus criminal issue had two parts:
(1) Congressional intent, which the court concluded, showed that forfeiture
was intended “ ‘as a remedial civil sanction,” and (2) “ ‘ “whether the
statutory scheme was so punitive either in purpose or effect as to negate”
Congress’s intention to establish a civil remedial mechanism,’ ” the answer to
which was no. (Id. at pp. 277–278.) Thus, even when connected to a criminal
proceeding, forfeiture was not punishment for a criminal act. (See id. at
p. 292 [“though [forfeitures] are tied to criminal activity, . . . this fact is
insufficient to render the statutes punitive”].) Moreover, the court noted,
civil forfeitures, “while perhaps having certain punitive aspects, serve
important nonpunitive goals.” (Id. at p. 290.) One such goal is deterrence,
and “we long have held that this purpose may serve civil as well as criminal
goals.” (Id. at p. 292, citing Bennis v. Michigan (1996) 516 U.S. 442, 452
[“forfeiture . . . serves a deterrent purpose distinct from any punitive
purpose”].)
California law is generally in accord. (See, e.g., People v. Nazem (1996)
51 Cal.App.4th 1225 [holding drug-related forfeiture law not penal according
to Ursery]; People v. Shanndoah (1996) 49 Cal.App.4th 1187 [same]; People v.
One 1950 Cadillac 2-Door Club Coupe, supra, 133 Cal.App.2d 311, 318.)
Although deterrence may be intended, it does not neutralize or outweigh a
nonpunitive purpose. (Hudson v. United States, supra, 522 U.S. 93, 105
[deterrence as purpose “is insufficient to render a sanction criminal, as
deterrence ‘may serve civil as well as criminal goals’ ”]; People v. Nazem,
supra, at pp. 1232–1233 [“forfeiture serves the nonpunitive purpose of
discouraging property owners from using or allowing the use of their property
in illegal activity”].) While “all civil penalties have some deterrent effect”
42
(Hudson v. United States, supra, 522 U.S. 93 at p. 102), it does not follow that
“all deterrence is penal in nature.” (In re Alva (2004) 33 Cal.4th 254, 288.)
We think it self-evident that section 7522.72 was meant to have the
deterrent effect of preventing job-related criminality out of fear of losing
pension benefits. A classic definition of forfeiture is a “divestiture . . .
because of a . . . breach of obligation, or neglect of duty.” (Black’s Law Dict.
(11th ed. 2009) p. 792, col. 2, italics added; accord, 36 Am.Jur.2d (2011)
Forfeitures and Penalties, §§ 1, 3, pp. 500, 502; cf. County of San Diego v.
Milotz (1956) 46 Cal.2d 761, 766 [“ ‘Forfeiture’ imports a ‘penalty’ . . . ‘. . . for
a default or wrong’ ”].) California accepts and applies this definition tying
forfeiture to “ ‘ “misconduct or breach of duty.” ’ ” (Warner v. Public
Employees’ Retirement System (2015) 239 Cal.App.4th 659, 669, quoting
Kuhlemeier v. Lack (1942) 50 Cal.App.2d 802, 808.) It is a long-standing
statutory principle of law in this state that relief against forfeiture may be
granted “except in case of a grossly negligent, willful, or fraudulent breach of
duty.” (Civ. Code, § 3275; see Gonzalez v. Hirose (1948) 33 Cal.2d 213, 217
[“courts may grant relief against a forfeiture in the absence of a breach of
duty”].) Rewarding only faithful public service is an important nonpunitive
goal.
One of the goals of forfeiture is to make criminal activity unprofitable.
(36 Am.Jur.2d , supra, Forfeitures and Penalties, §§ 1, 14, pp. 500, 510;
Health & Saf. Code, § 11469, subd. (j) [“civil forfeiture is intended to be
remedial by removing the tools and profits from those engaged in the illicit
drug trade”].) This appears to have been what Judge Treat had in mind
when he cited MacIntyre in support of his conclusion that “what PEPRA
accomplishes is to take back from Wilmot what he never rightfully earned in
43
the first place-namely pension rights for a period when he was violating his
trust as an employee by embezzling from his employer.” 19
As the MacIntyre court put it: “It is assumed that upon acceptance of a
position as an officer or employee of a governmental agency, an appointee will
perform his duties conscientiously and faithfully. . . . [E]fficiency and fidelity
in the performance of duty are . . . paramount considerations. It is never
contemplated that an officer or employee guilty of conduct warranting
dismissal should continue in office or be permitted to receive other
emoluments offered as an inducement to honesty and efficiency. The right to
a pension is not indefeasible, and an employee, though otherwise entitled
thereto, may not be guilty of misconduct in his position and maintain his
rights notwithstanding such dereliction of duty.” (MacIntyre, supra,
42 Cal.App.2d 734, 735.)
We conclude the Legislature intended the forfeiture mandated by
section 7522.72 to be a remedial civil measure. Wilmot points to nothing
suggesting the Legislature meant this kind of forfeiture to depart from the
historical understanding that it was not a punitive measure.
Now we “consider whether the proceedings are so punitive in fact as to
‘persuade us that the forfeiture proceeding may not legitimately be viewed as
19 This also appears to be the view of the Attorney General: “By committing
a felony in connection with his job as a county firefighter, [Wilmot] did not
uphold his duties under the contract [of employment], and was therefore not
entitled to receive the corresponding pension benefits. . . . The pension
penalty is closely calibrated to the failure to perform faithful service. [¶] By
associating the amount of pension forfeited with the time period in which a
pensioner engaged in criminal conduct, the Legislature ensured that the
pension benefit remains a reward for faithful service. . . . [¶] Section
7522.72 merely enforces the contract terms providing for the pension benefit,
and ensures that [public employees] provide the consideration of faithful
service.”
44
civil in nature,’ despite [the Legislature’s] intent.” (United States v. Ursery,
supra, 518 U.S. 267, 288.) This too is not difficult. As already noted, section
7522.72 is not draconian. It does not call for the loss of all pension benefits.
It is triggered only by felonies that are job-related. The employee’s
contributions are not kept, but are returned to the employee. Thus, section
7522.72 has three particulars where the Legislature restrained its forfeiture
power, and did not display “a thirst for revenge.” (People v. McVickers, supra,4 Cal.4th 81, 89.) If real punishment was intended, it was an opportunity
missed.
As for the seven Mendoza-Martinez factors, only two—forfeiture comes
into play only upon a finding of scienter, and the behavior to which it applies
is already a crime—break in Wilmot’s favor.20 The latter factor is of small
significance. (See United States v. Ursery, supra, 518 U.S. 267, 278 [“By
itself . . . the fact that the behavior proscribed by the forfeiture was already a
crime [is] insufficient to turn the forfeiture into a punishment”]; Murphy v.
United States (1926) 272 U.S. 630, 632 [“The mere fact that it [a forfeiture,] is
20 The Attorney General contests the first factor, arguing that “section
7522.72 does not require that CCERA make a finding of scienter before
reducing an employee’s pension.” (Cf. United States v. Ursery, supra,518 U.S. 267, 291 [“there is no requirement in the statutes . . . that the
Government demonstrate scienter in order to establish that the property is
subject to forfeiture”].) It is true that a pension-administering body is not
required to make an independent finding of scienter but it does not have to
because the finding of scienter has already been furnished by the employee’s
job-related felony conviction, at which point the pension-administering body
commences the near-ministerial administrative process specified in section
7522.72. (Cf. People v. 25651 Minoa Dr., supra, 2 Cal.App.4th 787, 796
[“under [Health & Saf. Code] section 11470 a criminal conviction . . . is not a
prerequisite to forfeiture, so there is no question of scienter in the forfeiture
action”].)
45
imposed in consequence of a crime is not conclusive”].) These factors are
clearly outweighed by those supporting a nonpunitive determination.
Forfeiture entails no affirmative disability or restraint, i.e., a
restriction on personal liberty; as already shown, forfeitures have historically
not been viewed as punishment. Section 7522.72 was not enacted as a stand-
alone statute. Instead, it was part of a comprehensive measure
fundamentally altering the basis on which pensions for a large number of
public employees will be calculated and paid-out. The Pension Reform Act
was enacted for the purpose “of closing loopholes and preventing abuse of the
pension system in a manner consistent with CERL’s preexisting structure”
and to “align [CERL] . . . more closely with its intended functioning.”
(Alameda County, supra, 9 Cal.5th 1032, 1054, 1095.) As we have
determined in connection with Wilmot’s contract impairment claim,
discouraging felonious conduct on the job qualifies as a measure aimed at
“preventing abuse of the pension system.” (Alameda County, supra, 9 Cal.5th
1032, 1054.) Rewarding only faithful public service is an important
nonpunitive purpose. Although there is an element of deterrence, there is a
clear purpose other than punishment for section 7522.72, one which does
serve a legitimate nonpunitive end. “The Act’s rational connection to a
nonpunitive purpose is a ‘most significant’ factor in our determination that
the statute’s effects are not punitive.” (Smith v. Doe, supra, 538 U.S. 84,
102.)
We have repeatedly emphasized the ways in which the statute could
have been far more harsh in application and we thus conclude that the
limited forfeiture called for by section 7522.72 does not appear excessive in
relation to its nonpunitive purposes.
46
Moreover, section 7522.72 provides for forfeiture through an
administrative agency, hardly a characteristic of a criminal procedure. (See
United States v. One Assortment of 89 Firearms, supra, 465 U.S. 354, 363
[governing statute “authorizes a summary administrative proceeding” which
the court termed a “distinctly civil procedure”]; Helvering v. Mitchell, supra,303 U.S. 391, 402; People v. Nazem, supra, 51 Cal.App.4th 1225, 1231; cf.
Smith v. Doe, supra, 538 U.S. 84, 96 [“The Act itself does not require the
procedures adopted to contain any safeguards associated with the criminal
process. That leads us to infer that the legislature envisioned the Act’s
implementation to be civil and administrative”].) Indeed, the United States
Supreme Court stated that giving the exaction authority to an administrative
agency “is prima facie evidence that Congress intended to provide for a civil
sanction.” (Hudson v. United States, supra, 522 U.S. 93, 103.) Finally, proof
beyond a reasonable doubt is not required.
Although Wilmot lays much stress on the financial hardship he will
endure, such is irrelevant to our inquiry, “as we look only to ‘the statute on
its face.’ ” (Hudson v. United States, supra, 522 U.S. 93, 104, quoting
Kennedy v. Mendoza-Martinez, supra, 372 U.S. 144, 169.) Proportionality has
never been a consideration. Solicit an act of prostitution from your car, and
you may lose the car. (Veh. Code, § 22659.5.) Violate the California Uniform
Controlled Substances Act, and you risk losing your car, real property, or
business, as well as “[a]ll moneys, negotiable instruments, securities, or other
things of value . . . , all proceeds traceable [that] is . . . used or intended to be
used to facilitate any violation . . . .” (Health & Saf. Code, § 11470, subds. (e),
(f), & (g).) Lie about how much whiskey is being produced at your distillery,
and the Government can take the distillery. (Dobbins’s Distillery v. United
States, supra, 96 U.S. 395.) As Justice Brandeis put it, the severity of a
47
forfeiture’s application has no impact on its established legality. (See
Helvering v. Mitchell, supra, 303 U.S. 391, 400.)
Our research uncovered a United States Supreme Court decision of
unusual relevance. In Flemming v. Nestor (1960) 363 U.S. 603, the court
considered whether a person could be denied Social Security benefits
following deportation. A bare majority held, over powerful dissents, that the
statute authorizing the denial did not subject the deportee to punishment
and thus there was no ex post facto violation. Although the interest there
was called an “accrued property right,” the similarity to Wilmot’s claimed
“vested pension rights” is too obvious to require comment.
To prevail, Wilmot is required to bring forth “ ‘the clearest proof ’ ” to
demonstrate that what has traditionally been accepted as a civil remedy has
been transmuted into an ex post facto criminal penalty People v. Alford
(2007) 42 Cal.4th 749, 755; Coats v. New Haven Unified School Dist. (2020)
46 Cal.App.5th 415, 425.) He has failed to carry that burden.
Conclusions and Disposition
In summary, we conclude as a matter of statutory construction that
Wilmot was not “retired” for purposes of CERL when he submitted his
application for retirement benefits on December 13, 2012. And as a separate
and independent ground for our decision, we also conclude that if Wilmot was
retired on January 1, 2013, the date the Pension Reform Act took effect, the
partial forfeiture of his pension benefits pursuant to section 7522.72 did not
violate either the impairment of contract or the ex post facto clauses of the
California Constitution.
The judgment is affirmed.
48
_________________________
Richman, Acting P.J.
We concur:
_________________________
Stewart, J.
_________________________
Miller, J.
Wilmot v. Contra Costa County Employees’ Retirement Assn. (A152100)
49
Trial Court: Contra Costa County Superior Court
Trial Judge: Honorable Charles S. Treat
Attorney for Plaintiff and Appellant Rains Lucia Stern St. Phalle &
Jon Wilmot: Silver PC, Timothy K. Talbot,
Zachery A. Lopes.
Attorney for Defendant and Reed Smith LLP, Harvey L.
Respondent Contra Costa County Liederman, May-tak Chin.
Employees’ Retirement Association:
Attorney for Intervener State of Xavier Becerra, Attorney General of
California: California, Thomas S. Patterson,
Senior Assistant Attorney General,
Benjamin M. Glickman, Supervising
Deputy Attorney General, Anna T.
Ferrari, Deputy Attorney General,
Anthony P. O’Brien, Deputy
Attorney General
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