Judge Hands Down Ruling on Measure B

A ruling on San Jose’s controversial pension reform initiative, Measure B, became public Monday, and both the city and union leaders claimed victory. Santa Clara County Superior Court Judge Patricia Lucas wrote in her decision that the “legal question is whether and to extent Measure B violates vested rights.” The tentative decision was signed on Dec. 19 and given to city law firm Meyers Nave on Monday morning. Attorneys for the city are currently conducting an analysis of the decision.

Jim Unland, president of the Police Officers Association, told San Jose Inside that he hasn’t read the full decision but the outcome was apparent: “We won, they lost,” he said.

City Attorney Rich Doyle sent an email informing the Mayor Chuck Reed and the City Council of the decision, and he included the following bullet points: 

• The provision requiring voter approval for any increases in retirement benefits was found to be valid.

• The 4% increase in employee pension contributions towards the unfunded accrued actuarial liabilities [UAAL], up to a maximum of 16 percent (or 50 percent of the total liability, whichever is less), impairs a vested right and is invalid.

• The VEP is invalid (it appears that this determination by the Judge may be, at least in part, due to the lack of IRS approval).

• It appears that the disability retirement provisions have been upheld in full.

• The elimination of the SRBR was upheld.

• The ability to suspend the retirement COLA provisions for up to five years in a fiscal and service level emergency was found to be unlawful and invalid.

• The minimum contributions towards retiree healthcare was found to be not invalid with respect to the inclusion of unfunded liabilities, but would impair a vested right to have the City pay “one to one”.

• There is no vested right in a particular health care plan in retirement. However, under the Federated plan, the change to take away the right to have access to healthcare benefits that are fully paid for violates a vested right and is invalid. For police and fire, the argument that they had a vested right in a specific plan when they retired was rejected.

• The decision upholds the alternative of a mandatory wage reduction to offset the finding that the increase in employee pension contributions was invalid.

• The severability provisions of the Measure, meaning sections that were found to be valid would go into effect even if other sections were found to be invalid was upheld.

Councilman Pete Constant, a former police officer and Measure B backer, said about two-thirds of Measure B’s changes were upheld.

“The important thing is it preserves the $21 million in savings that we’ve already put in place,” Constant said. “That’s really important, because we now move into next year’s budget with certainty.

“It upheld the rule of voter authority over any future pension changes.”

Unland disagreed. “The vested right doctrine once again held up again,” he said. “[City officials] can play their cute numbers game, but the core of what measure B was was invalidated.”

Click here to read the full Measure B court ruling.

UPDATE: Mayor Chuck Reed released the following statement:

“I am pleased that Judge Lucas has upheld a majority of the Measure B provisions and has protected a vast majority of the targeted fiscal savings that will help rebuild essential public services and protect the long-term sustainability of our employee retirement systems.

“In particular, this ruling protects $20 million in annual savings the City is already reaping due to the elimination of bonus pension checks and changes to our retiree healthcare plans. Those savings have allowed us to slowly begin restoring services to the public and slowly begin restoring pay to our employees.

“Unfortunately, the Judge’s decision to invalidate certain portions of Measure B also highlights the fact that current California law provides cities, counties and other government agencies with very little flexibility in controlling their retirement costs. That’s why I believe that we need a constitutional amendment that will empower government leaders to tackle their massive pension problems and negotiate fair and reasonable changes to employees’ future pension benefits.”

Josh Koehn is the managing editor for San Jose Inside and Metro Silicon Valley. Email tips to [email protected] or follow him on Twitter at @Josh_Koehn.

19 Comments

  1. For those not inclined to sift through the details of a judicial decision, the court ruling can be summed up thusly: nothing was gained or lost that required costly and divisive litigation. Had Mayor Reed chosen to negotiate his way through the fiscal crisis rather than abuse employees, the electorate, and the courts, hundreds of trained and proven city workers would have not equated self-preservation with fleeing city service.

    Chalk up another failure for Chuck Reed. What’s he going to ruin next?

  2. Face it Chuck and clown council lost.  Thanks for taking us from safest city to one of the worst.  This ruling will not stop the exuos of officers who will continue to live in fear if the city tries to cut pay which they just granted.

    Chuck (and Constant) will continue with the BS measure B and waste millions more on a appeal.  Chuck could can lease, he will be long gone and Constant the same.  He is termed out and forget about being the next mayor Pete.

  3. Reed, Constant and friends are not ready to stop.  They should be congratulated on getting us relieved of the title of “Safest Large City in the USA”.  The people of San Jose were duped and should not feel safe while these people are in office.

  4. “While I would not be voting to put a measure on the ballot if I did not feel confident of its lawfulness, it is obviously not a view shared by all of my colleagues. I propose that we approve a resolution to ensure that we seek a legal blessing from a state Superior Court or a U.S. District Court immediately upon passage of the measure”——Sam Liccardo (want to be Mayor of San Jose) Memo 3-6-12

    Millions of lost savings and millions in attorney fees….Thanks Sam.  You are well equipped to be mayor.

    • Lickardo is Delirious , R. Doyle the city attorney warned them that this act was illegal , Many out side attorneys told Mayor/Council it was illegal. Reeds/Lickardo/Constant/Nguyen/Hererra/Oliverio Sheer Arrogance would not listen to logic. its going to be fun watching them blame each other for the millions in wasted tax dollars

  5. For those who do not want to read the entire opinion. The City has no ability to claim victory. What was upheld was the city’s ability to lawfully reduce compensation. Does that sound like a victory for sweeping pension change.
    On the crux of Measure B “reforms” the Judge was unmistakeably annoyed by the City and its unsupportable positions.  She found that there was “no authority to support” the City’s “remarbkable” proposition.  The City’s position “distorts” the law.  Its position is contrary to California Supreme Court rulings. She found that the City is taking a position contrary to its past positions. Finally she found the City’s argument on the issue of whether the matter was ripe is “not well taken.”
    The City should be ashamed of itself.

    • You have to remember that everytime they lose something, they turn it around to the public saying they have a victory. They say it everytime. Trying to save face? Or…trying to keep the public off of their azzez for the millions and millions of the taxpayer money they have blown?

    • First off , the reduction in pay(compensation)  has to be negotiated , its in the MOA. Secondly , if pay is reduced then pension has to be increased. if pension is decreased then pay must be increased. it is a balance . You can Not take anything without offering something of equal or greater value in exchange. Thats the Law.
          This Mayor and Council are delusional ! There will be appeals on both sides , this will cost the residents Millions of dollars more , and City workers will win again.

  6. Police work is a very violent job sometimes. Anybody who has been a street cop for any length of time knows this well. Cops often get hurt dealing with very violent people and situations. Cops took an oath to protect the citizens from these very violent people. Sometimes these injuries are crippling. Part of the deal was that if a cop was permanently crippled in doing their job, they would not have to worry about being destitute and out of work after a year. Unfortunately, as Measure B stands now in regards to this provision, that is exactly what would happen. This was orchestrated by Mayor Reed, Sam Liccardo, Pier Oliverio, Madison Ngyuen, and the biggest hypocrite of all, Pete Constant. They are responsible for taking away a SJPD cop’s safety net if they are permanently disabled. This is the most draconian system in California, if not the United States, in dealing with injured officers. If implemented, the disability provision of Measure B will force SJPD officers to other departments in order to insure their family is taken care of if they are permanently disabled at work. Sam Liccardo says he has created and implemented the start of a plan to hire 200 more officers in the next couple years. He is delusional if he thinks this department will retain these new officers. Does Sam ever wonder why NO experienced officers ever come to San Jose from other departments?? The door only opens one way, and that is out of San Jose. SJPD use to attract hundreds of experienced lateral officers from other departments. This is such a glaring symptom of how the SJPD is on life support due to the injures this current bunch in city hall, excluding a few people, have inflicted upon the department. People in San Jose are fools if they vote for Sam, or anybody else running for mayor from the city council. Please, please ask yourself why NO other experienced lateral officer ever comes to SJPD.

  7. Ladies and gentleman, let’s give a round of applause to the real winners of Measure B! The law offices of Meyers Nave. The Principals at Meyers and Nave would like to extend tremendous thanks and gratitude to their most prolific benefactor, Charles Rufus Reed and the San Jose Silly Council team of Liccardo, Oliverio, Constant, Herrera, and Nguyen. Honorable mention goes to Johnny Khamis for his myopic subsequent support and his continued employment of perpetual council jumper aide Shane Patrick Connolly.

    The firm of Meyers and Nave would like to thank you now for the future revenue they will generate with their gracious proposal to appeal the loss of Measure B.
    Thank you all and Happy Holidays.

  8. The bankers criminal behavior caused the economic meltdown in 2008, leaving Municipal government budgets and the City of San Jose’s retirement trust fund greatly reduced.

    The Federal Government opened the doors of the people’s treasury and allowed the wealthy bankers to take hundreds of Billions of the peoples money. The greatest redistribution of wealth ever.

    What is left for the wealthiest to take from the middle class? You guessed it? PENSIONS.

    Yup, take away the pensions, redistribute the pension money to benefit the wealthiest and break the back of Unions while your at it. Go big….do it at the state level and Federal level if you can. After all, this is a redistribution of wealth and power movement and not an honest attempt to balance the budget.

    But, how….and then the light bulb went on and the darkness began to reign.

    A mere slight of hand. Turn the middle and lower class working Americans against each other so they forget the wealthiest among us have caused the financial crisis and have gained unprecedented wealth by taking it from the people’s treasury in the form of bank bailouts. Going at each other’s throats so we forget the foreclosures, job loss and the millions of lives ruined.

    Instead, blame the teachers, nurses, firefighters and police for having pensions that are too costly. Make those Americans who do not have such pensions turn on the workers who do.

    While union workers are demonized, many in San Jose are left trying to argue small points about police officer retention and the rise of crime in San Jose. But, the wealthiest among us remain unseen and unaffected by the rise in crime in their high rise estates with private security. They will just wait it out and eventually the Pension money will be redistributed to them one way or another by their man, Mr. Mayor Reed, or the next Mayor they elect if you do not fight them.

    Don’t be fooled, this is a movement to undue the contractual promise of a pension throughout the state of California for the purpose of redistributing the wealth once again and creating a subjugated class of American Citizens.

    Remember, however it goes in California so goes the Nation!

    • Public employee pensions upheld by public employee judge. Public employee commenters agree with decision of their teammate the public employee judge. Government job benefits too attractive to resist and Big Government grows bigger. Big Government continues to raid Social Security private sector pension fund to subsidize public employee pensions.
      Big Koolaid rules.
      Big surprise.

      • Big Business robber barons, backing Big Business Lawyers, supporting big business-bought politicians, with a track record of screwing the middle class.  Business and Lawyer kickbacks too attractive to resist, and Big Business grows bigger.  Big Business and crooked politicians continue to screw the middle class and raid retirement and pension funds to subsidize CEO and wealthy business retirements and personal junkets.
        Big Business Koolaid rules.
        Big surprise.

        Just depends on what side of the tracks you are looking from.