Supreme Court recuses itself from judicial back wages lawsuit

The state's six Supreme Court justices on Monday recused themselves from an appellate decision that says some California judges and justices are owed $40 million in back pay, leaving a yet-to-be-named panel of superior court judges to review the years-long dispute.

The judges who will consider the petition for review must have taken the bench on or after July 1, 2017, according to the order, which is when the state raised salaries to comply with a trial court judgment. They will be appointed "as soon as possible," said Judicial Council spokesman Cathal Conneely.

The panel will have until Nov. 1 to grant or deny the review after the court extended the review period last week. Mallano v. Chiang et al., S250379.

At issue is the 2nd District Court of Appeal's June 26 affirmation of Los Angeles Superior Court Judge Elihu M. Berle's order that the state pay back wages, penalties and interest to about 3,400 active and retired judges for nine years' of miscalculated raises.

Attorneys for the state in August asked the high court to review the appellate decision, disputing the 10 percent interest rate and arguing it was unfairly prevented from litigating defenses to individual claims within the class action because they believed the lawsuit sought only declaratory relief.

"The awarding of $40 million of retrospective damages based on nothing more than a post-judgment motion, without allowing defendants to take discovery of, and litigate, valid affirmative defenses to these substantial monetary claims, cannot be reconciled with this Court's holding in Duran," according to the Aug. 3 petition for review filed by Jonathan E. Rich, a state deputy attorney general, citing Duran v. U.S. Bank Nat. Assn., 59 Cal. 4th 1 (Cal. 2014).

Rich declined comment Monday on the state Supreme Court's recusal, as did William J. Casey of Skadden, Arps, Slate, Meagher & Flom LLP and Affiliates, who represents a class of about 3,400 current and retired judges who were on the bench when the state halted its annual salary increases beginning in the 2008-09 fiscal year. The judges argue the move violated Government Code Section 68203, which governs judicial salaries.

In his answer to Rich's petition for review, Casey disputed the argument that the state didn't know the lawsuit sought payment of back wages.

"Defendants' real objection is not that they were prevented from asserting these affirmative defenses, it is that they did not prevail on them," Casey wrote.

Casey's lead plaintiff is Robert M. Mallano, who retired as presiding justice of the 2nd District Court of Appeal, Division One, shortly after filing suit in January 2014. Mallano spent 20 years as a Los Angeles County Superior Court judge before he was appointed to the appellate court in 2000. The two appeals have been decided by justices from the 2nd District's Division Two.

Berle certified the class in 2015, then in 2016 determined it was owed about $36 million as well as 10 percent interest and nearly $660,000 in attorney fees to Skadden Arps. The 2nd District upheld Berle's order in April 2017, affirming that about 1,600 active judges are owed $14,600 and $18,700 each in back salary and interest, or approximately $23 million, and about 1,800 retired judges are owed at least $13 million. , B272124 (Cal. App. 2nd Dist. June 26, 2018).

The state changed its salary increases to comply with the order going forward, but it refused to pay the retroactive raises detailed in Berle's judgment, so the Skadden Arps team, including Raoul D. Kennedy, obtained an enforcement order from Berle in July 2017. The 2nd District affirmed the order in June.

Neither the state nor the plaintiffs requested the high court recuse itself, but justices said in its order Monday they "determined recusal is appropriate" and cited three cases to support the decision.