Facts

Petitioners Anne Broome and William Harvey Gurtner were both former employees of respondent, the Regents of University of California. Both petitioners were member participants of the University of California Retirement Plan (UCRP), which was to provide "lifetime retirement income, disability income, death benefits and postretirement and preretirement survivor benefits" to eligible employees. In the late 1990s, two provisions of the Internal Revenue Code applied to the UCRP. Section 401(a)(17) limited the maximum amount of compensation plans may use to calculate retirement benefits and Section 415(b) limited the amount of annual benefits payable to participants of a qualified plan. Recognizing the negative impact of these limitations on public employers such as respondent, Congress revised the Internal Revenue Code to allow public institutions to restore the benefits that would otherwise be lost by applying Sections 401(a)(17) and 415(b). In response, respondent adopted the "Restoration Plan" to restore the aforementioned benefits. Specifically, an amendment to the restoration plan known as Appendix E, designed to restore Section 415(b) benefits was approved by the IRS. However, respondent decided not to implement Appendix E. When petitioners submitted a claim for benefits under Appendix E, respondent denied petitioners' claim. Petitioners filed a class action complaint against respondent seeking the increased benefits under Appendix E of the Restoration Plan.

PETITIONERS' CONTENTIONS: Petitioners contended that respondent impaired contractual obligations owed to petitioners by refusing to provide petitioners of the Restoration Plan benefits in violation of the Contract Clause of the California Constitution. Petitioners also contended that respondent also breached their fiduciary duties to petitioners, breached an implied and express contract with petitioners and breached the covenant of good faith and fair dealing by refusing to calculate petitioners' retirement benefits under Appendix E.

RESPONDENT'S CONTENTIONS: Respondent denied petitioners' contentions.

Result

After a four day bench trial, the court ruled in favor of respondent.

Length

4 days