Spaccia v. California Public Employees' Retirement System CA2/3 ( 2023 )

Filed 7/21/23 Spaccia v. California Public Employees’ Retirement System CA2/3
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION THREE
PIER’ANGELA SPACCIA, B319774
Plaintiff and Appellant, Los Angeles County
Super. Ct. No. BS174401
v.
CALIFORNIA PUBLIC
EMPLOYEES’ RETIREMENT
SYSTEM,
Defendant and Respondent.
APPEAL from an order of the Superior Court of Los
Angeles County, James C. Chalfant, Judge. Affirmed.
Law Office of Robert F. Keehn and Robert F. Keehn for
Plaintiff and Appellant.
Mathew G. Jacobs, General Counsel, Elizabeth Yelland
Assistant Chief Counsel, and Preet Kaur, Senior Attorney, for
Defendant and Respondent.
_______________________________________
INTRODUCTION
Public pension systems exist to induce and reward faithful
public service and it is well established that public employee
pension rights are protected under the contract clause of the
California Constitution. In the wake of several incidents of
financial corruption involving public employees, the Legislature
adopted the California Public Employees’ Pension Reform Act of
2013 (PEPRA), designed to close certain loopholes, curb pension
abuse, and discourage corruption. Among other things, the
legislation provided that a public employee convicted of a job-
related felony forfeits pension benefits earned during the time of
the commission of the felony. (Gov. Code, § 7522.72, subds. (b)(1),
(c) (forfeiture provision).)1 Two recent court of appeal decisions2
have held that the forfeiture provision does not
unconstitutionally infringe on a public employee’s protected
pension rights, nor does it violate the prohibition against ex post
facto laws.
Plaintiff and appellant Pier’Angela Spaccia was convicted
in 2013 of numerous job-related felonies stemming from her
participation in schemes to defraud the citizens and city council
of the City of Bell.3 In this matter, Spaccia challenges the
application of the forfeiture provision to her pension benefit by
the California Public Employees’ Retirement System (CalPERS).
1 All undesignated statutory references are to the Government Code.
2Wilmot v. Contra Costa County Employees’ Retirement Assn. (2021) 60
Cal.App.5th 631 (Wilmot) and Hipsher v. Los Angeles County
Employees Retirement Assn. (2020) 58 Cal.App.5th 671 (Hipsher).
3We affirmed most of those convictions in People v. Spaccia (2017) 12
Cal.App.5th 1278 (Spaccia).
2
The trial court denied her petition for a writ of mandate and a
writ of administrative mandamus barring CalPERS from
applying the forfeiture provision. She appeals, asserting that the
forfeiture provision cannot be applied to her because she started
receiving her pension benefits before the forfeiture provision was
enacted. We find Spaccia’s argument unpersuasive. Instead, we
follow Wilmot and affirm.
FACTS AND PROCEDURAL BACKGROUND
1. Spaccia’s Criminal Convictions
Spaccia was employed by the City of Bell from 2003 to
2010, first as the assistant to the city manager and then as the
assistant city manager. The city council terminated her
employment in July 2010 amidst a highly publicized corruption
scandal involving Spaccia and others. Spaccia was arrested in
September 2010 and charged with more than 50 counts of job-
related criminal conduct.
In Spaccia, supra, 12 Cal.App.5th 1278, we summarized in
detail the evidence presented at the jury trial. For present
purposes, it is sufficient to say that from the outset of her
employment through her dismissal by the city council, Spaccia
participated in multiple schemes designed to increase beyond all
reasonable limits the salaries, fringe benefits, and retirement
benefits for herself and others employed by the City of Bell. For
example, Spaccia’s annual salary rose from approximately
$102,000 to more than $340,000 over just seven years with no
change in job responsibilities. In addition, the city funded her
retirement savings plan in the maximum allowable amount and
purchased additional service credit for her, she earned vacation
and sick leave accruals at an excessive rate and received monthly
3
checks cashing out the value of those accruals, and she received
multiple unauthorized loans from the city in amounts exceeding
$100,000 per loan. Spaccia also designed and implemented a
supplemental pension plan intended to provide substantial
retirement benefits for only herself and the city manager. (See id.at pp. 1282–1286.)
In December 2013, after a lengthy trial, a jury convicted
Spaccia of multiple felonies relating to the City of Bell scandal
including one count of conspiracy to misappropriate public funds
in violation of Penal Code section 182, subdivision (a)(1), four
counts of conflict of interest in violation of Government Code
sections 1090 and 1097, and one count of unlawful secretion of an
official record in violation of Government Code section 6200. We
affirmed those convictions and they are now final.4 (Spaccia,
supra, 12 Cal.App.5th at pp. 1281, 1298.)
2. Spaccia’s Retirement Benefits
In October 2010, Spaccia submitted a request for a service
retirement to CalPERS.5 She requested that CalPERS use her
final compensation at the City of Bell to calculate her retirement
benefit allowance. CalPERS declined and Spaccia requested an
administrative hearing. In the interim, Spaccia began receiving
retirement benefits in December 2010.
4The court sentenced Spaccia to an aggregate determinate term of
11 years eight months and imposed a victim restitution order in the
amount of $8,254,776.
5 She also submitted a request for an industrial disability retirement.
4
In July 2013, the Board of Administration of CalPERS
(Board) issued its final decision regarding Spaccia’s pension.6 In
sum, and for reasons not pertinent here, the Board determined
that Spaccia’s retirement allowance should be calculated using
her initial salary with the City of Bell and that the five years of
service credit purchased for her by the city should be excluded
from the benefit calculation.
In late April 2014, CalPERS contacted Spaccia to advise
her that it had become aware of her 2013 job-related felony
convictions and that a portion of her retirement benefit was
subject to forfeiture under section 7522.72.7 Specifically,
6Like the trial court, we take judicial notice of the Board’s decision.
(Evid. Code, §§ 452, subd. (c), 459, subd. (a).)
7 Subdivisions (b) and (c) of section 7522.72 provide, as pertinent here:
“(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 member shall
forfeit all the rights and benefits earned or accrued from the earliest
date of the commission of any felony described in subdivision (b) to the
forfeiture date, inclusive. The rights and benefits shall remain forfeited
notwithstanding any reduction in sentence or expungement of the
conviction following the date of the member’s conviction. Rights and
benefits attributable to service performed prior to the date of the first
commission of the felony for which the member was convicted shall not
be forfeited as a result of this section. [¶] (2) Paragraph (1) shall apply
to the extent permissible by law. [¶] (3) For purposes of this
subdivision, ‘forfeiture date’ means the date of the conviction.”
5
CalPERS had determined that the seven years of service credit
Spaccia accrued between February 1, 2003, the earliest date of
the commission of a felony, and September 29, 2010, her last date
on payroll, would be forfeited and would result in a reduction in
her monthly retirement benefit.
3. This Action
Spaccia initiated the present case in July 2018. The
operative verified amended petition asserts six causes of action
seeking a traditional writ of mandate (Code Civ. Proc., § 1085), a
writ of administrative mandamus (Id., § 1094.5), damages (Id.,
§ 1095), and asserting violations of the contracts clauses, takings
clauses, and due process clauses of the United States and
California Constitutions. Spaccia asked the court to direct
CalPERS to recalculate her retirement benefit by using her
highest 12-month salary (i.e., the inflated $340,123 salary she
was receiving when the city council terminated her employment)
and by including the service credit purchased for Spaccia by the
City of Bell. She also asked the court for an injunction barring
CalPERS from applying section 7522.72 to cause the forfeiture of
service credit earned during her tenure at the City of Bell.
The court stayed the proceedings until the California
Supreme Court ruled on the constitutionality of section 7522.72.
(See Alameda County Deputy Sheriff’s Assn. v. Alameda County
Employees’ Retirement Assn. (2020) 9 Cal.5th 1032 (Alameda).)
4. Motion for Judgment on the Pleadings
In August 2021, CalPERS moved for judgment on the
pleadings. Specifically, CalPERS noted that two recent appellate
court opinions applying Alameda, Wilmot and Hipsher, had held
that section 7522.72’s forfeiture provision could be applied
6
retroactively to retired public employees without running afoul of
either the contract clause of the California Constitution or the
constitutional prohibition on ex post facto laws. CalPERS argued,
therefore, that its retroactive application of section 7522.72 to
Spaccia’s retirement benefit, which resulted in the forfeiture of
approximately seven years of service credit, was permissible and
rendered her additional claims moot.
Spaccia opposed the motion, contending that neither
Hipsher nor Wilmot was controlling. Specifically, Spaccia argued
that section 7522.72 could not be applied in her situation
because, unlike the plaintiffs in Hipsher and Wilmot, she had
been receiving pension benefits for several years before the
forfeiture provision was adopted by the Legislature.
5. Order Granting CalPERS’s Motion
The court granted CalPERS’s motion for judgment on the
pleadings. After reciting the factual background, the court
summarized the controlling law as set forth in Alameda, Hipsher,
and Wilmot. In Alameda, the court had articulated a test for
analyzing constitutional contract claims in the pension context
and applied that test to a different provision of the 2013
legislation. Subsequently, Hipsher and Wilmot applied that test
to the forfeiture provision at issue and both courts concluded that
the forfeiture statute did not violate the contract clause of the
California Constitution. And in Wilmot, the Court of Appeal
concluded that the forfeiture law could be applied retroactively to
a former public employee who, like Spaccia, had retired before
the 2013 legislation’s effective date. Accordingly, the court found
that CalPERS permissibly applied the forfeiture provision in its
determination of Spaccia’s retirement benefits, resulting in the
7
forfeiture of all benefits earned during her tenure at the City of
Bell.
6. Dismissal and Appeal
By minute order dated December 16, 2021, the court noted
that it had granted a motion for judgment on the pleadings “on
the bulk of the case” and that Spaccia had agreed to dismiss the
remainder of the case without prejudice. The order also stated
that, “[p]ursuant to agreement of counsel, the case is ordered
dismissed this date.” No judgment of dismissal was signed or
entered by the court.
Spaccia subsequently filed a request for dismissal asking
the Clerk of the Court to dismiss the first and second causes of
action with prejudice and to dismiss the remaining causes of
action without prejudice, “in order to expedite a possible appeal.”
The clerk entered the dismissal as requested on February 4,
2022. Spaccia timely appeals. (See Flowers v. Prasad (2015) 238
Cal.App.4th 930, 935–936 [noting “ ‘ “appellate courts treat a
voluntary dismissal with prejudice as an appealable order if it
was entered after an adverse ruling by the trial court in order to
expedite an appeal of the ruling” ’ ”].)
DISCUSSION
Spaccia contends the forfeiture provision in section
7522.72, subdivision (c)(1), cannot be applied to her because she
began receiving pension benefits long before the passage of the
2013 legislation which enacted that provision. We conclude such
retroactive application is constitutionally permissible.
8
1. Standard of Review
A judgment on the pleadings in favor of the defendant is
appropriate when the complaint fails to allege facts sufficient to
state a cause of action. (Code Civ. Proc., § 438, subd. (c)(3)(B)(ii).)
A motion for judgment on the pleadings is equivalent to a
demurrer and is governed by the same de novo standard of
review. (Adams v. Bank of America, N.A. (2020) 51 Cal.App.5th
666, 670–671.) All properly pleaded, material facts are deemed
true, but not contentions, deductions, or conclusions of fact or
law. (Ibid.) Courts may consider judicially noticeable matters in
the motion as well. (Ibid.; People ex rel. Harris v. Pac Anchor
Transportation, Inc. (2014) 59 Cal.4th 772, 777.)
2. The court properly granted the motion for judgment
on the pleadings.
A public employee’s right to a pension is well established.
(Alameda, supra, 9 Cal. 5th at p. 1074.) The vested rights
doctrine, as it is known, is grounded in the federal and state
constitutions and significantly restricts a state’s ability to enact
laws that substantially impair an employee’s existing pension
rights. (Id. at pp. 1074–1075.) Although a public employee has no
express contractual rights in a pension plan created by statute,
“such plans create implied contractual rights that are protected
against legislative impairment by the contracts clause.” (Id. at
p. 1076; Cal. Const., art. 1, § 9.) Public employee pension systems
exist to induce and reward long and faithful public service. (See,
e.g., Hipsher, supra, 58 Cal.App.5th at p. 692.)
A public employee’s pension rights are not absolute,
however, as our Supreme Court has made clear over more than
60 years. As pertinent here, in 1955, the court articulated a test
9
to be applied to legislative measures affecting public employees’
pension rights. (Allen v. City of Long Beach (1955) 45 Cal.2d 128,
131 (Allen I).) Two years ago, in Alameda, the Court reaffirmed
that test with an added component: “In evaluating the
constitutionality of modifications to a public employee pension
plan, Allen I requires a court first to determine whether the
modification imposes disadvantages on affected employees,
relative to the preexisting pension plan, and, if so, whether the
disadvantages are accompanied by comparable new advantages.
Assuming the disadvantages are not offset, the court must then
determine whether the legislative body’s purpose in making the
changes was sufficient, for constitutional purposes, to justify an
impairment of pension rights. 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.’ (Allen I, supra, 45 Cal.2d at p. 131.)
Finally, assuming the changes were made for a proper purpose,
one further analytic step is necessary, as explicated below: 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 otherwise be inconsistent
with, the modification’s constitutionally permissible purpose.”
(Alameda, supra, 9 Cal. 5th at pp. 1092–1093.)
Effective January 1, 2013, PEPRA made numerous changes
to existing public employee pension rights. Those modifications
include, as pertinent here, the enactment of the pension
10
forfeiture provision in section 7522.72, which applies to
employees who, like Spaccia, were hired before the statute’s
effective date. (§ 7522.72, subd. (a).) In Cal Fire Local 2881 v.
California Public Employees’ Retirement System (2019) 6 Cal.5th
965, our Supreme Court rejected a constitutional challenge to
PEPRA’s elimination of the option for public employees to
purchase additional service time. The following year, in Alameda,
the court rejected a constitutional challenge to PEPRA’s
modification of the definition of “compensation earnable,” a key
component in the calculation of retirement benefits. After issuing
that opinion, the Court transferred two Court of Appeal cases
that had considered the constitutionality of the forfeiture
provision—Hipsher and Wilmot—back to the Courts of Appeal for
reconsideration in light of Alameda. Both Courts of Appeal held,
as they had initially, that the forfeiture provision is
constitutional. We find Wilmot to be of particular assistance.
Wilmot, like the present case, involved an employee whose
retirement was effective8 before January 1, 2013, and who was
convicted of a job-related felony after that date. When he was
advised that the conviction resulted in a partial forfeiture of his
pension rights under section 7522.72, the employee filed a
petition for writ of mandate to compel the reinstatement of his
full retirement benefits. (Wilmot, supra, 60 Cal.App.5th at
pp. 642–644.) The trial court found the forfeiture provision did
not violate either the contract clause or the ex post facto clause of
8The plaintiff retired in December 2012. Although he did not receive
pension benefits until April 2013, those benefits were retroactive to
December 2012. (Wilmot, supra, 60 Cal.App.5th at 641.)
11
the California Constitution and the Court of Appeal affirmed. (Id.
at pp. 645–648.)
On reconsideration after Alameda, the Court of Appeal
again upheld the constitutionality of the forfeiture provision as
applied to the employee. The employee argued that the forfeiture
provision could not be applied to him because he was retired
before PEPRA’s effective date, and therefore his pension rights
were fully vested, “by which Wilmot means fixed and generally
not subject to alteration without violating two provisions of our
state constitution.” (Wilmot, supra, 60 Cal.App.5th at p. 654.) The
court first addressed the employee’s contention that the forfeiture
provision could not be applied to him because the statute only
applied to “employees” and he was no longer an “employee”
because he was retired. For reasons not pertinent here, the court
largely rejected the employee’s distinction. But the court
assumed, for argument’s sake, that the employee was fully
retired before January 1, 2013, and went on to address the
constitutionality of the forfeiture provision. (Id. at pp. 655–656.)
The Court of Appeal explained the test set forth in the
Alameda, as follows: “First, the court determines whether the
legislative change of the status quo imposes ‘an economic
disadvantage on affected employees and, if so, 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
12
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.)” (Wilmot, supra, 60 Cal.App.5th at p. 656.)
Applying that test, the court noted that “[t]he 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.” (Wilmot,
supra, 60 Cal.App.5th at p. 656.)
As to the second step, the court considered several sources
including the legislative history of section 7752.72, a prior
Supreme Court case, and the public policy concerns underlying
pension forfeiture. The court summarized its analysis this way:
“The ultimate question is whether a modification of a pension is
reasonable, 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
13
[‘modifications must be reasonable’]; Wallace [v. City of Fresno
(1954)] 42 Cal.2d 180, 183–184 [(Wallace)] [courts must
‘determine whether the changes made come within the bounds of
a reasonable modification’].)
[¶] … [¶]
“To judge from earlier opinions, the most frequently
expressed sentiment [regarding pension forfeiture] was that ‘one
of the primary objectives in providing pensions for public
employees … is to induce competent persons to enter and remain
in public employment’ during which they will render ‘ “long-
continued and faithful services.” ’ (Kern v. City of Long Beach
[(1947)] 29 Cal.2d 848, 856; see Carman v. Alvord (1982) 31
Cal.3d 318, 325, fn. 4 [‘Pensions … help induce faithful public
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 the faithful performance of
future services’]; Klench v. Board of Pension Fd. Commrs. (1926)
79 Cal.App. 171 [speaking of persons ‘retired from a public
service to which they devoted many years of faithful adherence’];
cf. Haywood v. American Fire River Protection Dist. (1998) 67
Cal.App.4th 1292, 1296, 1304 [‘faithful performance of duty’];
MacIntyre [v. Retirement Board of City and County of San
Francisco (1941)] 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
14
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.” (Wilmot, supra, 60 Cal.App.5th at pp. 660–662.)
In sum, as to the second step of the Alameda analysis, the
court concluded that “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.)”
(Wilmot, supra, 60 Cal.App.5th at p. 662.)
Finally, as to the third step, the court easily concluded that
no comparable advantage was required to offset the forfeiture
provision: “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 unfairly enriching a malfeasant … employee
for engaging in the very sort of abusive practices section 7522.72
is intended to curb.’ (Hipsher, supra, 58 Cal.App.5th 671, 695,
683.)
15
“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 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 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.)” (Wilmot, supra, 60 Cal.App.5th at pp. 663–664.)
We agree with our colleagues in the First District and
adopt Wilmot’s well-reasoned analysis. Regarding the first step of
the Alameda test, it is plain that the forfeiture provision
diminished certain employees’ pension rights under CalPERS
and that PEPRA did not include any compensatory or comparable
advantage. (See Wilmot, supra, 60 Cal.App.5th at p. 656.) As to
the second step—whether the forfeiture provision relates to the
theory of a pension system and its successful operation—we agree
that withholding pension benefits earned during the time a
public employee commits an employment-related felony relates to
the central purpose of the pension system. Many cases have
observed that the primary purpose of a pension system for public
employees is to provide deferred compensation as a reward for
long and faithful public service. (E.g., Hipsher, supra, 58
Cal.App.5th at p. 692.) Those employees who commit
employment-related felonies have not faithfully served the
government or the taxpayers, and rewarding them with pension
benefits for the period of felonious conduct is antithetical to the
system’s purpose. Finally, and as to the third step of the Alameda
16
test, we agree that it would be absurd to offset the forfeiture
provision with some compensating measure. In adopting the
provision, the Legislature recognized that public employees who
commit job-related felonies have not fulfilled their employment
agreement and should therefore not be rewarded with deferred
compensation for a job well done. Any measure designed to offset
the negative impact of pension forfeiture would entirely
undermine the Legislature’s purpose.
We now turn to Spaccia’s contentions on appeal, which are
few and unavailing. Mainly, Spaccia argues that pension benefits
may only be modified before the benefits become payable. After
the first pension benefits payment is made, she asserts, the
benefits are untouchable and may not be modified for any reason.
Applying this principle, Spaccia urges that the forfeiture
provision cannot be applied to reduce her pension benefits
because she received her first payment in December 2010, several
years before PEPRA’s effective date of January 1, 2013.
Spaccia uses brief quotations from several Supreme Court
cases in support of her argument that this bright-line rule is well
established. In each of those cases, the Court stated the general
rule that “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 substantial or
reasonable pension.” (Miller v. State of California (1977) 18
Cal.3d 808, 816; see also Wallace, supra, 42 Cal.2d at p. 183
[summarizing prior holding “that a public pension system is
subject to the implied qualification that the governing body may
make reasonable modifications and changes before the pension
17
becomes payable and that until that time the employee does not
have a right to any fixed or definite benefits but only to a
substantial or reasonable pension”]; Terry v. City of Berkeley
(1953) 41 Cal.2d 698, 702–703 [same] (Terry); Packer v. Board of
Retirement (1950) 35 Cal.2d 212, 218 (Packer) [“It appears,
therefore, that both the cases and the policy underlying pensions
for public employees indicate that any one or more of the various
benefits offered, including interests created for third persons,
may be wholly eliminated prior to the time they become payable,
provided, of course, the employee retains the right to a
substantial pension.”].) This is, of course, a general rule to which
there are limited exceptions, as the Court explained in Allen I
and reaffirmed in Alameda. In any event, neither Packer nor
Miller considered issues relating to the post-retirement
modification of pension benefits. (See Wishnev v. The
Northwestern Mutual Life Ins. Co. (2019) 8 Cal.5th 199, 217 [“It
is, of course, ‘axiomatic that a decision does not stand for a
proposition not considered by the court.’ ”].)
Of the cases cited by Spaccia, only two (Wallace and Terry)
considered the modification of pension benefits for persons who
were already retired and receiving their benefits. Both cases are
distinguishable. In Terry, for example, the Supreme Court
explained why pension benefits should not generally be subject to
reduction after a public employee retires: “In the present case the
plaintiff had been retired; he had rendered the called-for
performance; he had done everything possible to entitle him to
the payment of his pension and all conditions precedent to the
obligation of the city were fulfilled upon the determination that
he be retired as a result of his service-connected disability. The
pension payments are in effect deferred compensation to which
18
the pensioner becomes entitled upon the fulfillment of the terms
of the contract which may not be changed to his detriment by
subsequent amendment.” (Terry, supra, 41 Cal.2d at p. 703.) As
we have already explained, however, PEPRA’s forfeiture
provision applies only to those employees who fail to fulfill the
terms of their employment by committing felonies related to their
official duties.
In Wallace, the Court considered—and struck down—a
measure that required the forfeiture of pension benefits by
former employees who committed felonies during retirement.
Unlike the present case, the measure at issue had been imposed
before the plaintiff’s retirement but it resulted in the post-
retirement forfeiture of all the plaintiff’s pension benefits when
he was convicted of felonious tax fraud. (Wallace, supra, 42
Cal.2d at pp. 181–182.) Noting the general rule stated above—
that reasonable modification of pension benefits is generally
permissible before retirement—the Court observed “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.” (Id. at pp. 184–185.) The Court concluded that
the measure was not a reasonable, and therefore permissible,
modification of pension benefits: “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
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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.” (Id. at p. 185.)
Again, the court invoked the language of contracts and prohibited
pension forfeiture by an employee who had fully performed his
obligations—a circumstance not present here. In sum, Spaccia’s
case citations and isolated quotations do not assist her, nor do
they persuade us to reject Wilmot.
Spaccia also attempts to distinguish her case from Wilmot,
and thus avoid its application, based on the timing of her first
pension benefits payment. She asserts, “Wilmot was not binding
because that case only reached the issue of whether PEPRA could
be applied to a retired public employee; Wilmot didn’t reach the
question of whether PEPRA can be applied to a former public
employee receiving benefits prior to PEPRA’s effective date.” In
Wilmot, as noted ante, the plaintiff submitted his application for
retirement benefits in December 2012, but he did not begin
receiving pension checks until April 2013, after the forfeiture
provision was in effect. Of course, the benefits were paid
retroactively to December 2012. (Wilmot, supra, 60 Cal.App.5th
at p. 641.) Spaccia emphasizes that she began receiving pension
checks in 2010, before the forfeiture provision was in effect,
unlike the plaintiff in Wilmot. We fail to see how this distinction
makes a difference and Spaccia provides no specific analysis on
this point. The cases she references make no distinction between
retirees who have received their first pension benefits check and
retirees who have not. And she cites no statutory provision
making such a distinction. Instead, Spaccia simply asserts that
this factual distinction is dispositive. We see no logical reason
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that this specific circumstance is relevant and in the absence of
substantive explanation from Spaccia, we reject the argument.
(E.g., Kurinij v. Hanna & Morton (1997) 55 Cal.App.4th 853, 867
[“[A]n appellant must present argument and authorities on each
point to which error is asserted or else the issue is waived.”].)
DISPOSITION
The order denying Spaccia’s petition for writs of mandate
and administrative mandamus is affirmed. CalPERS shall
recover its costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
LAVIN, J.
WE CONCUR:
EDMON, P. J.
HEIDEL, J.*
* Judge of the Los Angeles Superior Court, assigned by the Chief
Justice pursuant to article VI, section 6 of the California Constitution.
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