Attorneys expect narrow high court ruling in state employees pension case

Following arguments in a case where firefighters say their right to purchase pension service time was unconstitutionally revoked, attorneys expect a narrow ruling though opinions vary on which side made the winning pitch.

Attorneys for CalFire Local 2881 and Gov. Jerry Brown's office argued against each other before the California Supreme Court on Dec. 5 over the legality of the Legislature's rollback of a pension increase benefit called "airtime purchase." The benefit, introduced in 2003, allowed certain public employees to purchase up to five years of extra pension time and was eliminated by a new law in 2013.

Gregg McLean Adam of Messing Adam & Jasmine LLP argued that airtime purchase is a vested right promised to workers when they begin employment, and cannot be eliminated under the California Constitution's contract clause.

Rei Onishi, Brown's deputy legal affairs secretary, argued that without clear evidence the Legislature intended that the benefit be vested, the revocation was legal.

Echoing Adam's argument, Myron Moskovitz of Moskovitz Appellate Team commented that airtime purchase likely gave some people an incentive to work for the state, and thus it represents a promise that must be kept. He predicted a narrow ruling for the plaintiffs.

"The problem, as I see it with this kind of situation, is the government uses a pension bump to try to incentivize employees to work for and stay with the government," Moskovitz said. "The overriding justice argument here is that we tend to favor these pensioners, that they were lured into something. Maybe not all of them, but that's not the point."

"They made this employment decision to get something, and I'm not sure it's fair to just take that away," he said.

Rex S. Heinke of Akin Gump Strauss Hauer & Feld LLP predicted a narrow ruling for the state, and pointed to one of Onishi's arguments. Onishi said that since airtime is not purchasable until a year of employment is completed and must be paid for by the worker, an employee is only entitled to it once the conditions are fulfilled.

"I think it's most likely there's going to be a narrow ruling, not a broad ruling, and it will favor the constitutionality of" the California Public Employees' Pension Reform Act, he said.

That act is the law that eliminated airtime.

"I think it's hard to see how airtime is a vested right," Heinke said. "It's conditional. The employee has to do something to be entitled to it and until they've done that, they don't have any entitlement."

The act was a major component of efforts to make changes in California's public pension system, an issue that Brown outlined in a 12-point plan in 2011. The rescission of airtime, which he called an "abusive practice," was one of those points.

Airtime, according to several attorneys, was intended to allow public employees to take time off for their families or private sector work while accruing pension time at their own cost. In reality, the state says, it led to early retirement and was not cost-neutral as planned. Cal Fire Local 2881 et al. v. California Public Employees' Retirement System et al., S239958.

Either way, potential rulings would have an effect on a longstanding precedent laid down in the 1955 case Allen v. City of Long Beach, which said pension benefits promised at the outset of employment are vested and cannot be diminished without an equivalent replacement.

An overly broad ruling outlawing airtime could upend that six-decade old precedent, often referred to as the "California Rule." According to Steven M. Berliner of Liebert Cassidy Whitmore, it would pave the way for big changes at the whim of the Legislature.

"If we get [a decision] saying the California rule is no longer valid and future benefits can be reduced in what people earn, that in and of itself isn't going to make a big change," he said. "They would need to be legislative changes because the codes establishing benefits are fixed."

However, because of airtime's unique status as a sort of "add on," Berliner said the court could issue a ruling that would not answer the California Rule question.

"Based on CalFire, you could have a decision just limited to airtime, and courts tend to take narrow positions that allow other cases to be argued," he noted. "It's not a change in the calculation of benefits; it's an add-on. It's something you buy."

Berliner also said, as Onishi did in arguments, that airtime was purchasable for a 15-week period after the law eliminating it was passed, so it was not simply taken away outright.

Moskovitz found that argument unconvincing.

"If they had set it up originally with the 15-week escape hatch, then fine. What if some people couldn't come up with the money in 15 weeks? That's not right," he said.