reed v. harris amicus brief

8/12/2019 Reed v. Harris Amicus Brief

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____________________________________________________________________________________________________AMICUS CURIAEBRIEF ISO RESPONDENTS

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5CAPITOLMALL,SUITE1425,SACRAMEN

TO,CA

95814

Deborah B. Caplan [SBN 196606]Lance H. Olson [SBN 077634]Richard C. Miadich [SBN 224873]OLSON HAGEL & FISHBURN LLP555 Capitol Mall, Suite 1425

Sacramento, CA 95814Telephone: (916) 442-2952Facsimile: (916) 442-1280Email: [email protected]

Attorneys for Amicus Curiae

National Conference of Public EmployeeRetirement Systems

IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF SACRAMENTO

CHARLES R. CHUCK REED; WILLIAMKAMPE; TOM TAIT; PATRICK MORRIS; andSTEPHANIE GOMES, in their capacities asindividual voters and proponents of the subjectstatewide ballot measure,

Petitioners,

v.

DEBRA BOWEN, in her capacity as Secretary ofState of California, and KAMALA HARRIS, in hercapacity as Attorney General of California, andDOES 1 through 10,

Respondents.

CASE NO.: 34-2014-80001758

NATIONAL CONFERENCE ON PUBLIC

EMPLOYEE RETIREMENT SYSTEMS

(NCPERS)AMICUS CURIAEBRIEF IN

SUPPORT OF RESPONDENTS

DATE: March 14, 2014TIME: 10:30 a.m.

ASSIGNED FOR ALL PURPOSES TO:JUDGE: Hon. Allen H. SumnerDEPT.: 42

PETITION FILED: February 6, 2014
mailto:[email protected]:[email protected]:[email protected]


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INTRODUCTION

Petitioners in this case, who are the proponents of a proposed state constitutional amendment

initiative measure entitled the Pension Reform Act of 2014 (hereafter the Initiative), request that the

Court take the extraordinary step of red-penciling the circulating title and summary that Respondent

California Attorney General prepared for the Initiative.1 Pursuant to Rule 8.200(c)(1) of the California

Rules of Court, the National Conference on Public Employee Retirement Systems (NCPERS) submits

this amicus curiaebrief in support of the Attorney Generals title and summary and in opposition to the

Petitioners requested relief.

Founded in 1941, NCPERS is the largest trade association for public sector pension funds,

representing more than 550 funds in the United States and Canada. It is a unique non-profit network of

trustees, administrators, public officials, and investment professionals who collectively manage nearly

$3 trillion in pension trust assets for active and retired public employees across the nation. NCPERS

members include virtually all of Californias state and county public employee retirement systems and

several major city retirement systems, including the California Public Employee Retirement System, the

California State Teachers Retirement System, the Los Angeles County Employees Retirement

Association, and the Los Angeles City Employees Retirement System. Combined, NCPERS California

members administer retirement benefits for approximately 2.5 million current and retired public

employees in California.

As discussed herein, NCPERS believes the circulating title and summary accurately and fairly

informs voters that the Initiative would eliminate existing state constitutional protections that the

California Supreme Court has long held apply to state and local public employees. Under the Courts

prior decisions, currentpublic employees possess a vested right to accrue retirement benefits for

futurework based on the benefits promised at the time they commenced employment a right the Court

has held is protected from impairment by the Contract Clause of the California Constitution. This is

commonly referred to as the California Rule.

The Initiative proposes two amendments to the California Constitution that would

1Debra Bowen, in her capacity as Secretary of State of California, is also named as Respondent in this action, buttakes no position on the merits of Petitioners claims.


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unquestionably eliminate the constitutional protections that the California Rule affords current public

employees. First, it would add new section 12 to Article VII mandating that, henceforth, public

employee retirement benefits shall be earned and vested incrementally, only as the recipient actually

performs work, and only in proportion to work performed. (Initiative at p. 4 [4].)2

Second, the

Initiative would amend existing section 9 of Article I the State Contract Clause to explicitly provide

that new Section 12 of Article VII is not deemed to impair the obligation of contracts. (Ibid.) The

Purpose and Intent section of the Initiative states that the intent of these constitutional amendments is

to supersede the California Supreme Courts prior decisions which have been construed as limiting

the ability to prospectively modify pension and retiree healthcare benefits for work not yet performed by

government employees.3(Initiative at p. 3 [3].)

After filing the Initiative and requesting that the Attorney General prepare a circulating title and

summary, the Petitioners publicly touted that the Initiative is their effort to eliminate the existing legal

roadblocks that prevent state and local governments from reducing (or wiping out altogether) the

retirement benefits that current public employees may earn for future work performed.4 Given the

unmistakable purpose and effect of the Initiative as even Petitioners previously described it, there

should have been no surprise when the circulating title and summary issued by the Attorney General

contained the following sentence:

Eliminates constitutional protections for vested pension and retiree health care benefitsfor current public employees, including teachers, nurses, and peace officers, for futurework performed.

Approximately a month after the title and summary issued, however, Petitioners commenced this

lawsuit objecting to use of the words/phrases eliminates constitutional protections, vested, and

teachers, nurses, and peace officers. The arguments that Petitioners invoke in support of these

objections are disingenuous, to say the least. Rather than candidly acknowledging that the California

2A copy of the full text of the Initiative is attached as Exhibit A to the Verified Petition for Writ of Mandate, filedFebruary 6, 2014.

3The Initiative also proposes constitutional amendments that would require state and local government agencies tocreate a report if the funding level of the retirement and healthcare plan they provide falls below a specified level. (Initiativeat p. 6-7.) However, the most significant and notable constitutional amendments being proposed are those that wouldmake incremental vesting of pension and retiree health care benefits constitutionally permissible, and thereby allowgovernment agencies to modify or even eliminate such benefits for future years of service. (See MPA at 1:19-25.)

4(Exh. A to OBrien Decl. in support of Respondents Opposition, discussed infra at p. 11.)


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Rule is the settled law of this State they disavow it as mere language in prior cases. They deny that

current public employees really possess a vested right to the future accrual of retirement benefits or

that this vested right is constitutionally protected from impairment by the State Contracts Clause, even

though that is precisely what California Rule holds. And, perhaps most crassly of all, Petitioners now

contend that the word eliminates is false, misleading, and/or prejudicial even though they used that

same word themselves and even though Attorney Generals use of that word in the title and summary of

a similar initiative was deemed appropriate by a prior court.

NCPERS submits this amicus curiaebrief primarily to assist the Court in understanding the

origins and extent of the California Rule, and in evaluating how the Initiative would affect the vested

rights and constitutional protections enjoyed by California public employees under this existing state

law. As much as Petitioners would like to muddy the waters, the reality of what the Initiative seeks to

do is crystal clear. If adopted, current public employees in this State would no longer possess the

vested, constitutionally protected right that existing state law provides to the future accrual of retirement

benefits. Accordingly, NCPERS urges the Court to find that the Attorney Generals title and summary

accurately and fairly describes the dramatic changes that the Initiative proposes to existing state law

applicable to public employee retirement benefits and to deny Petitioners requested relief.

ARGUMENT

I. THE ATTORNEY GENERALS TITLE AND SUMMARY IS ENTITLED TODEFERENCE AND MAY ONLY BE CHANGED BASED ON CLEAR ANDCONVINCING EVIDENCE THAT THE TITLE AND SUMMARY IS FALSE,MISLEADING, OR OTHERWISE CONTRARY TO LAW

The California Elections Code requires the Attorney General to prepare a title and summary

that must appear on each page of a statewide initiative petition that is circulated among the voters for

purposes of obtaining the requisite number of signatures to qualify for placement on the ballot. (Elec.

Code, 9001.) The purpose of the Attorney Generals title and summary is to inform voters of the chief

purpose and points of the proposed measure. (Elec. Code, 9001.) Limited to just 100 words, the

Attorney Generals determination as to how to best summarize a measure in the circulating title and

summary is entitled to great deference. A court may take the extraordinary step of modifying the


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Attorney Generals title and summary onlywhere it is established by clear and convincing evidence

the highest standard of proof available in civil cases that the title and summary is false, misleading, or

otherwise inconsistent with the requirements of law . (See Elec. Code, 9092;Lungren v. Super. Ct.

(1996) 48 Cal.App.4th 435, 439-41.)

As discussed next, Petitioners objections to the circulating title and summary issued for the

Initiative fail to meet this high standard.

II. THE ATTORNEY GENERALS TITLE AND SUMMARY ACCURATELY ANDFAIRLY DESCRIBES HOW THE INITIATIVE PROPOSES TO CHANGE EXISTINGSTATE LAW APPLICABLE TO PUBLIC EMPLOYEE RETIREMENT BENEFITS

Petitioners preface their challenge to the Attorney Generals title and summary by explaining

that the Initiative does not propose to allow employers to change or alter retirement benefits that have

already vested based on prior years of service. (MPA at 6:22-23.) Rather, the Initiative proposes to

amend the state constitution to allow state and local government employers . . . to modify future

pension benefits based on future work which these employees have not yet performed. (Id.at 6:20-21.)

This distinction, they tell the Court, is central to the Initiative and makes untrue the suggestion that

the Initiative would eliminate vested, constitutional rights. (Id.at 7:2.)

This distinction is irrelevant, however, and only highlights how Petitioners challenge is no more

than an effort to mislead this Court and ultimately, the voters, about the Initiatives purpose and effect

with respect to existing state law. As explained in this section, state law does not limit vested

retirement benefits to those earned based on work already performed. Long-settled and binding

decisions of the California Supreme Court hold that the contract clause of the California Constitution

also protects current public employees vested right to earnfutureretirement benefits based on the

benefits promised when they began employment forfuture work performed. Moreover, it is

indisputable that public employees who will be most affected by the Initiatives elimination of these

vested rights are teachers, nurses, and peace officers. Given these facts, there is simply no clear and

convincing evidence showing that the challenged portions of the Attorney Generals title and summary

are false, misleading, or otherwise prejudicial.


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A. Contrary to What Petitioners Suggest, It is Settled Law in California that theCurrentPublic Employees Possess a Constitutionally Protected, Vested Right toEarn Retirement Benefits forFuture WorkBased on the Benefits Promised WhenThey Began Employment

For nearly a century, the California Supreme Court has consistently held that state and local

public employees possess a constitutionally protected vested right to promised retirement benefits.

The California Supreme Court first discussed the nature of vested retirement benefit rights in ODea v.

Cook(1917) 176 Cal. 659. There, it held that the offer of pension in exchange for work not yet

performed is not a gratuity or a gift, but rather a part of the contemplated compensation for those

services and . . . a part of the contract of employment itself. (ODea, supra, 176 Cal. at 661-62; see

alsoDryden v. Board of Pension Commrs. (1936) 6 Cal.2d 575, 579.) The Court explained that state

constitutional lawcompelled this holding because the California Constitution expressly prohibits

making gifts of public funds. (See ODea, supra, 176 Cal. at 661 [citing then Cal. Const., art. IV, 6,

which is now part of Cal. Const., art. XVI, 6].) The Court later reaffirmed this concept inIn re

Marriage of Brown(1976) 15 Cal.3d 838, stating that [a]lthough some jurisdictions classify retirement

pensions as gratuities, it has long been settled that under California law such benefits do not derive

from the beneficence of the employer, but are properly part of the consideration earned by the

employee. (Id. at 845.)

In Kern v. City of Long Beach(1947) 29 Cal.2d 848 one of the two decisions the Initiative

explicitly seeks to supersede the California Supreme Court expounded upon the nature and extent of

California public employees pension rights. There, a public employee of the City of Long Beach began

work at a time when the city charter provided that after 20 years of service, a city employee would

receive a pension equal to 50 percent of his/her pay. Just 32 days before petitioners retirement,

however, the citys voters repealed the city charters pension provisions in their entirety. After the City

denied his application for pension benefits on the basis of this charter amendment, petitioner sought

issuance of a writ of mandate compelling the city to grant his application. The question before the Kern

Court was whether petitioner acquired a vested rightto a pension which the city could not abrogate by

repealing the charter provisions without impairing its obligation of contract. (Kern, supra, 29 Cal.2d at


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850, italics added.)

The KernCourt answered this question in favor of the petitioner and granted his requested relief.

Under its prior holdings, the Court explained, public employee pensions (1) are an element of the

promised compensation for public employment, (2) are an integral part of the employment

contract, and (3) that the employees right to a pension vests upon acceptance of employment.

(Kern, supra, 29 Cal.2d at 851-52 [citing ODea, supraandDryden, supra], italics added.) This vested

right to a pension constitutes a binding obligation to which constitutionalprotectionsapply, including

the protections against impairment of contract.

Although there may be no right to tenure [public employment],public employment givesrise to certain obligations which are protected by the contract clause of the Constitution,including the right to the payment of salary which has been earned. Since a pension right

is an integral portion of contemplated compensation [citation omitted], it cannot bedestroyed, once it has vested, without impairing a contractual obligation.

(Id. at 853, italics added.)

Application of constitutional protections to public employees vested right to retirement

benefits does not, the Court noted, depend on whether the public employee is still on active status (i.e.

still working and not yet receiving benefits) or retired.

Insofar as the timeof vesting is concerned, there is little reason to make a distinctionbetween the periods before and after the pension payments are due. It is true that anemployee does not earn the right to full pension until he has completed the prescribedperiod of service, but he has actually earned some pension rights as soon as he hasperformed substantial services for his employer.

(Id. at 855, italics added.)

This is so because pension benefits are a form of deferred compensation. 5That is, public

employees are not fully compensated when upon receipt of their regular salary because, in addition,

[they] have then earned certain pension benefits, the payment of which is to be made a future date.

(Kern, supra, 29 Cal.2d at 855.) Granted, a public employee does not earn the right topaymentof

pension benefits until he or she has satisfied the requisite conditions for such payment (e.g., years in

service, etc). However, the mere fact that performance is in whole or in part dependent on certain

contingencies does not prevent a contract from arising a contract that is subject to constitutional

5Cases re pension benefits as deferred compensation.


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Proposition 140 proposed to add a new section to Article IV of the California Constitution concerning

pension benefits for state legislators. (Eu, supra, 54 Cal.3d at 502.) This new section provided that the

State would contribute only the employers share to the federal Social Security System on behalf of

participating legislators elected to or serving in the Legislature on or after November 1, 1990, but no

other pension or retirement benefit shall accrue as a result of service in the Legislature. (Ibid.) The new

section further stated that it shall not be construed to abrogate or diminish any vested pension or

retirement benefit which may have accrued under existing law []. (Id. at 502-3.)

Petitioners inEucontended that this change to legislators pension benefits constituted an

unconstitutional impairment of contract. (Eu,supra, 54 Cal.3d at 527.) As to incumbent legislators

who continued to serve after November 1, 1990, petitioners argued that Proposition 140

unconstitutionally impaired their vested rights to continued participation in the pension program . . .

[and] to continue to earn pension benefits so long as they remain qualified to receive such benefits

through continued state service. (Id.at 528.) Petitioners grounded their argument in the principle

espoused by the Court inMillerthat, upon acceptance of public employment, a public employee

acquires a vested right to a pension based on the system then in effect. (Id. at 529, [quotingMiller,

supra, 18 Cal.3d at 817], italics added.) This principle, petitioners argued, encompasses two distinct

vested rights: a primary right to receiveany vested pension benefits upon retirement, as well as the

collateral right to earn future pension benefits through continued service, on terms substantially

equivalent to those then offered. (Id.at 528-29.)

The California Supreme Court inEu agreed. Incumbent legislators possessed a vested rightto

earn additional pension benefits through continued service. (Eu, supra, 54 Cal.3d at 530, italics

added.) Through the retirement system made available to legislators, the state had elected to treat

legislators in a manner similar to other state employees, providing them with a plan whereby pension

benefits could be acquired through continued service beyond their initial term of office. (Id. at 531.)

Having done so, the state could not constitutionally abandon that plan with providing some comparative

new advantage. Thus, the Court held that, underCalifornia law, all incumbent legislators acquired a

vested rightto earn additional pension benefits through continued service, a right which Proposition 140


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clearly impairs.7 (Id.at 532, italics added.)

The California Supreme Courts holding inEu that currentpublic officials and employees

possess a constitutionally protected vested right to pension benefits based onfuturework, is

commonly referred to as the California Rule.8

(See Exh. F to Hertz Decl. at p. 1046 [Monahan

article].) Subsequent decisions have made clear that the constitutional protections the California Rule

guarantees to pension benefits also applies to promised retiree health care benefits. (See, e.g., Thorning

v. Hollister School District(1993) 11 Cal.App.4th 1598, 1606-8 [the principle that an employee begins

earning pension rights from the day he starts employment is not limited simply to pension cases but

extends to other types of benefits, including retiree health care benefits], 83 Ops. Cal. Atty. Gen. 14

(2000) [same].) It is therefore settled law in California today, that currentpublic employees possess a

constitutionally protected, vested right to thefuture accrualof retirement benefits (i.e., pension, retiree

health care, etc) based on the benefits promised at the start of employment.

Petitioners repeatedly seek to obfuscate the fact that the California Rule is the law of the land

today. For example, they refer to the California Supreme Courts articulation of the California Rule in

Eu as languagein certain appellate court decisions suggestingthat the state statutes governing public

pensions create a contract between government agencies and their employees, language, they tell us,

that has made government employers reluctant to propose change to how current employees will

accrue pension benefits for future work. (MPA at 8:20-23, italics added.) Citing University of

7Even beforeEu, some courts of appeal had already begun interpretingMillerto recognize that current employeescould possess a constitutionally protected vested right to retirement benefits forfuture work. For example, in UnitedFirefighters of Los Angeles City v. City of Los Angeles(1989) 210 Cal.App.3d 1095, the Court of Appeal for the SecondAppellate District invalidated a city charter amendment that proposed to create a three percent cap on the cost of livingadjustments to the pensions of current city firefighters and policemen. Prior to the amendment, the charter provided no limiton the cost of living increases these employees pensions. In defense of the charter amendment, the city argued that cityemployees vested rights to retirement benefits are set by the law in effect at the time service is actually rendered i.e., that

such rights vest on an ongoing basis, and are not fixed at the outset of employment. The Court of Appeal rejected thisargument as contrary to the California Supreme Courts holding inMillerthat a public employee acquires a vested right topension benefits based on the system in effect when he accepted public employment. (Id. at 1105, citingMiller, supra, 18Cal.3d at 814, 817.) Since current city police and firefighters had entered employment under a system in which cost of livingincreases to their pensions were not capped, the charter amendment unconstitutionally impaired their vested rights to earnpension benefits forfuture workperformed that were substantially the same as the benefits promised when they commencedemployment. (Id.at 1107-8.)

8Currently, XXXXX other states recognize that, as a matter of state law, their respective public employees possess aconstitutionally protected vested right to XXXXXXXXXXX.


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Minnesota law professor Amy Monahans article that criticizesthe California Rule, Petitioners

represent that the effect of this line of cases is not clear, but that the language inthese caseshas been

used to arguethat state local government employees are guaranteed to earn pension benefits based on

the formula in place for their job classification . . . on the date they are hired. (Id. at 8:25- 9:4.)

These statements grossly misrepresent the status of the California Rule. The California Rule is

not merely language in appellate cases that has been used to argue an otherwise unsettled legal

proposition. The California Supreme Courts articulation of the California Rule inEu is binding, settled

law in this state. Local governments are not simply reluctant to modify how retirement benefits will

accrue for future work, the California Rule legallyprohibitsthem from doing so. Nor does the law

review article by Professor Monahan, as Petitioners represent, lend any support for the view that the

effects of the California Rule are unclear with respect to the application of constitutional protections

for vested rights to accrue future benefits. To the contrary, Professor Monahan candidly (and correctly)

cites the California Supreme Courts decision inEufor the proposition that:

[c]urrent California law holds that pension statutes not only create a contract betweenthe state and its employees, but also that the contract is formed on the first day ofemployment and is of open duration, thereby protecting both past and future pensionaccruals.

(Exh. F to Hertz Decl. at 1046.)

What Petitioners really mean to say, of course, is that they (like Professor Monahan) disagree

with the California Rule. Indeed, as discussed infra, the whole point of the Initiative that Petitioners are

proposing is to eliminate the California Rule. While Petitioners may freely disagree with existing legal

rules and propose their elimination, this does not alter the reality that, today, the California Rule is the

settled and binding law of this State.

As discussed next, the Attorney Generals title and summary accurately and fairly describes the

chief points and purposes of the Initiative relative to existing state law.

B. The Phrase Eliminates Constitutional Protections is Neither False Nor MisleadingPetitioners challenge to the phrase eliminates constitutional protections in the title and

summary is both disingenuous and contrary to express purpose of the Initiative to supersede the

California Rule by constitutional amendment.


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1. Petitioners Themselves Have Publicly Touted the Fact that the Initiative WouldEliminate Existing Law Applicable to Future Accruals

Preliminarily, two of the Petitioners in this litigation have publicly touted the fact that the

Initiative would eliminate the state constitutional roadblocks that currently prevent government

employers from modifying how employees accrue retirement benefits for future work. On January 2,

2014, Petitioners Charles R. Chuck Reed and William Kampe, the mayors of the cities of San Jose and

Pacific Grove, respectively, published an article online entitled Pension Reform Will Remove

Roadblocks to Reform. (Exh. A to OBrien Decl. in Support of Respondents Opposition.) The article

asserts that government leaders have had their hands tied by the California Rule on vested rights.

(Id.) As alleged examples of this, Petitioners Reed and Kampe describe how superior court decisions in

their respective jurisdictions have invalidated efforts to change employees pension rights for future

work performed on the basis that they violate existing constitutional protections applicable to vested

rights. (Ibid. See also Exhs. 1 and 2 to Miadich Decl.) Petitioners then state in bolded text, no less

that they have authored a ballot initiative [t]o eliminate these roadblocks that currently prohibit

disadvantageous changes to employees future retirement benefit accruals. (Exh. A to OBrien

Decl.) Petitioners Reed and Kampes use of the word eliminate to describe the Initiative constitutes is

admission by a party opponents that may be considered by this Court for the truth of the matter asserted.

(See Evid. Code, 1220; see also [CASE CITE].)

2. Use of the Word Eliminate Is Not Advocacy, as Petitioners Now Contend, ButRather an Accurate Description of What the Initiative Proposes to Do

More fundamentally, the Attorney Generals (and Petitioners) use of the term eliminate is

appropriate because it precisely describes the purpose and intended effect of the Initiative. The Purpose

and Intent language states that the Initiative is intended to supersede those portions of the California

Supreme Courts decisions in Kern,Miller, and their progeny which have been construed as limiting

the ability to prospectively modify pension and retiree health care benefits for work not yet performed

by government employees. (Initiative, 3(d).) The word supersede is a legal term of art that means

to void or annul. (See Blacks Law Dictionary, XXXX.) But the Attorney Generals title and

summary must be written using plain language, not technical legal terms. (See, e.g.,Martinez v. Super.

Ct. (2006) 142 Cal.App.4th 1245, 1248 [Check this case cite].) In lay terms, by superseding the


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California Supreme Courts holdings that recognize the existence of the California Rule, the Initiative

eliminates the constitutional protections that rule guarantees to public employees vested rights to earn

future retirement benefit accruals. (Compare Blacks Law Dictionary, XX [definition of supersede]

with Meriam-Webster Dictionary and Thesaurus entries for eliminate.)

The constitutional changes that the Initiative proposes also demonstrate why the use of the word

eliminate is accurate. Recall that, under the Kern,Miller, and their progeny, the California Supreme

Court has interpreted Article I, section 9 to protect from impairment current employees vested right to

accrue retirement benefits for future work. (See, e.g.,Eu, supra, 54 Cal.3d at 528 [the state contract

clause[] protect[s] the vested pension rights of public officers and employees].) The Initiative would

eliminate these existing constitutional protections by explicitly amending Article I, 9 to provide that

modifications of employees retirement benefits for future worked shall not be deemed to impair the

obligations of contracts. (Initiative at p. 4 [4].) Having previously used the word eliminates to tout

this very aspect of the Initiative to their constituency, Petitioners now apparently fear that the voters at

large will not embrace such a dramatic elimination of constitutional protections. That fear does not,

however, justify this Courts intervention to replace a perfectly accurate word eliminates with

something that polls better for Petitioners.

Indeed, what Petitioners appear to really be arguing is that the word eliminate is always

impermissible advocacy unless a measure proposes taking a provision out of the Constitution. (MPA

at 7:16-19.) But this argument finds no support in statute or decisional law. Rather, prior decisions

have approved the Attorney Generals use of the term eliminate in the title and summary issued for

other statewide initiative measures that, like the Initiative, would supersede a decision of the California

Supreme Court which had previously interpreted the state constitution to protect the rights of certain

citizens.

Proposition 8 on the November 2008 statewide general election ballot proposed to amend the

state constitution to provide that [o]nly the marriage between a man and woman is valid or recognized

in California. (See Exh. 4 to Respondents RJN at p. 2.) Prior to issuance of the ballot title and

summary for Proposition 8, the California Supreme Court held that same-sex couples possessed a right,

under the state constitution, to enter into marriage. The Attorney General included the phrase


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Eliminates Right of Same-Sex Couples to Marry in the ballot title and summary. The proponents of

Proposition 8 filed a lawsuit challenging this phrase on the grounds that it was misleading and

argumentative. (Id. at 4-5.)

The Sacramento Superior Court rejected the proponents arguments and upheld the title and

summary. The court found that there was nothing inherently argumentative or prejudicial about the

word eliminate. (Exh. 4 to Respondents RJN at 4-6.) Nor was the Attorney Generals use of the

word misleading under the circumstances.

The California Supreme Court has unequivocally held that same-sex couples have aconstitutional right to marry under the State Constitution. It is undisputed that ifProposition 8 is approved, marriage would be limited to individuals of opposite sex, andindividuals of same sex would no longer have the right to marry in California. TheAttorney Generals statement that the initiative would eliminate the right of same-sex

couples to marry in California is therefore not false or misleading.

(Id. at 5-6.)

While this prior ruling of the superior court does is not binding precedent, this Court can and

should consider it for its persuasive value. (SeeBrown v. Franchise Tax Bd.(1987) 197 Cal.App.3d

300, 306 fn. 6.) As the superior court implicitly recognized, the state constitutional protections that

Californians enjoy are not limited to those explicitly stated in the California Constitution, but also

include those which the California Supreme Court has interpretedthe State Constitution to provide.

Both types of constitutional protections, of course, are susceptible to elimination through subsequent

constitutional amendments. (See, e.g., Strauss v. Horton(2009) 46 Cal.4th 364 [upholding Proposition

8 as permissible constitutional amendment, the effect of which was to eliminate the constitutional right

of same-sex couples to marry which the Court had interpreted the California Constitution to provide in

its earlier decision ofIn re Marriage Cases(2008) 43 Cal.4th 757].)

The Initiative is no different from Proposition 8 in this regard. Today, the decisions of the

California Supreme Court hold that current public employees possess a vested right to earn retirement

benefits for future work which is protected by the Contracts Clause of the State Constitution. If the

Initiative is adopted, these protections would cease to exist. Just as the Attorney Generals use of

eliminate in the title and summary for Proposition 8 was upheld, this Court should hold that the term

eliminate is neither false nor misleading with respect to the Initiative.


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McDonough v. Superior Court(2012) 204 Cal.App.4th 1169, upon which Petitioners heavily

rely, is readily distinguishable from the instant case. The main issue inMcDonoughwas whether it was

argumentative or prejudicial for the ballot title of a San Jose City initiative to use the phrase Pension

Reform. The court of appeal held that the word reform was inappropriate because the word in both

definition and connotation suggested that the existing pension system was subjectively defective or

wrong and in need of improvement. (Id.at 1174-75 & fn. 7.) The word eliminates does not create the

same impression of subjective judgment. That is, unlike the reform, eliminate does not imply

whether its object is subjectively positive or negative; it merely indicates that the object will cease to

exist. Thus, the rationale on whichMcDonoughstruck the word reform does not apply to eliminate

here.

It bears noting that Petitioner Reed was one of the driving forces behind the proposed city

initiative at issue inMcDonough, much as he is with the Initiative here. Petitioners, therefore, are

obviously familiar with the court of appeals holding that the word reform is argumentative and

therefore inappropriate for inclusion in the ballot title for a proposed initiative. Despite this, on or about

October 10, 2013, Petitioners submitted to the Attorney General a proposed title and summary for the

Initiative which used the phrase Public Employee Retirement Benefits SystemReform. (Exh. C Pet.,

italics added.) While not directly relevant to the merits of the claims presented here, the fact that

Petitioners advocated the usage of a word which they knew the court of appeal had recently deemed

argumentativecertainly bears on the credibility.

3. Petitioners Separate Challenges to Constitutionally Protected and VestedLikewise Lack Merit

Petitioners separately challenge the phrase constitutionally protected and the word vested as

being false and/or misleading in their own right. These contentions also lack merit.

First, there can be no serious dispute following the California Supreme Courts decision inEu

that public employees (1) possess a vested right in the accrual of future retirement benefits that (2) is

constitutionally protected against impairment vis--vis the State Contracts Clause. To suggest

otherwise, as Petitioners do, simply ignores the explicit holding inEu. (See, e.g.,Eu, supra, 54 Cal. 3d

at 528 [both the federal and state contract clausesprotected vested rights of public officers and


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employees from unreasonable impairment] and 532 [under California law, all incumbent legislators

acquired a vested rightto earn additional pension benefits through continued service, a right which

Proposition 140 clearly impairs], italics added.)

Second, Petitioners contention that the California Rule does not stem from the state

Constitution, but rather from common law is misleading at best. (See MPA at 9:19-20.) As a threshold

matter, the vested rights that current employees possess in their retirement benefits are only rooted in

contract law because, as a matter of state constitutional law, they cannot be treated as gifts or

gratuities. (ODea, supra, 176 Cal. at 661, discussed supraat p. 5.) Thus, it is not wholly accurate to

suggest that the California Rule does not stem from state constitutional law.

Third, even if one assumes the point that the vested right to which the California Rule applies

i.e., the right to earn accrue retirement benefits for future work is purely a creature of contract law, that

still does not make the phrase constitutionally protected false or misleading. This is because

Petitioners argument conflates constitutional protections with constitutional rights. (See, e.g.,

P&As at 10:6 [we are not dealing with a constitutional right], italics added.) Rights arise from

various sources, including statutes, contracts, the common law, or constitutional law. Some of these

rights are constitutionally protected while others are not. A classic example concerns welfare benefits

Recipients of welfare benefits acquire a property right to such benefits as a matter of statutory law, but

that right is subject to constitutional protections. (See, e.g., Goldberg v. Kelly (1970) 397 U.S. 254,

262-263.) That is, while it would not be accurate to say that a receipt of welfare benefits has a

constitutional right to those benefits, it wouldbe accurate to say that the recipient has a statutorily

conferred property right in welfare benefits that is constitutionally protected. (Ibid.)

The California Rule is no different. Employees vested right to accrue retirement benefits for

future work is conceptually distinct from the constitutional protections that apply to that right. The

Attorney Generals title and summary does notsay that the Initiative would eliminate a constitutional

right to accrue future benefits; in fact, the word right does not even appear in the title and summary.

What the title and summary says is that the Initiative would eliminate the constitutionalprotections

applicable to vested pension and retiree healthcare benefits . . . for future work performed. (Exh. B to

Pet., italics added.) Thus, assuming arguendoPetitioners position that employees vested rights to


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accrue retirement benefits for future work stems from common law contract principles, that observation

bears nothing at all on the question of whether the phrase constitutional protections is false or

misleading. Whatever the source of those vested rights, the California Supreme Court has made clear

they are constitutionally protected from impairment by the State Contracts Clause. (See, e.g.,Eu,

supra, 54 Cal.3d at 528-532.)

Lastly, in addition to ignoring the fact that the California Supreme Courts decisions have

consistently used the term vested to modify public employees right to accrue retirement benefits for

future work, Petitioners affirmatively misrepresent how that term was used in the Courts decision in

Retired Employees Assn. of Orange County v. County of Orange (2011) 52 Cal.4th 1171 [REAOC].

Citing alleged footnote 14,Petitioners represent that the Court in that case stated that employee

benefits do not vest until they are actually earned. (MPA at 11:6-8.) But theREAOCdecision

contains neither a footnote 14 nor any such holding concerning the meaning of the term vest.

Rather, in footnote 3, theREAOCcourt states just the opposite:

[a] benefit is deemed vested when the employee acquires an irrevocable interest in thebenefit. The vesting of retirement benefits must be distinguished from the maturing ofthose benefits, which occurs after the conditions precedent to the payment of benefitshave taken place or the benefits are otherwise in control of the employee. [citationsomitted]

These sentences in footnote 3 are consistent with the Courts several earlier decisions holding

that public employees acquire a vested right i.e., an irrevocable interest in promised retirement

benefits from the date they commence public employment. (See, e.g., Kern, supra, 29 Cal.2d at 851-55;

Miller, supra, 18 Cal.3d at 815-17;Eu, supra, 54 Cal.3d at XX.) Moreover, the irrevocable interest that

vests under existing law extends to retirement benefits earned for work already performed, as well as

the continued accrual of retirement benefits based on future work. (Eu, supra, XXXX.) Nothing in

footnote 3 suggests that the Court has retreated from these prior statements using the term vested to

describe the nature of irrevocable interest to retirement benefits that public employees acquire from the

moment they begin work.9

9Perhaps Petitioners are confused by the last sentence of footnote 3 which, does not describe the Courts usage ofthe term vest but instead merely describes that one of the parties to the case contendsthat a retirees right to the benefits [at


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Instead, Petitioners again appear to be conflating two distinct concepts when they assert that

although the formula for retirement benefits may be set at the start of employment, the individual

benefit does not actually vest until the employee actually works at the government agency for 20 or 30

years. (MPA at 11:14-15.) While it is true that the right topaymentof retirement benefits does not

vest or mature until the completion of service, the Courts decisions in Kern,Miller, and their

progeny recognize a separate vested right to earnretirement benefits based on the system in place at

the time they commence employment. Under the California Rule, the latter vested right includes the

right to earn retirement benefits for future work. Since, as Petitioners themselves state, the purpose of

the Initiative is to take the California Rule head-on, the Attorney Generals use of the term vested in

the title and summary is neither false nor misleading.

In sum, the phrase eliminates constitutional protections for vested pension and retiree healthcare

benefits for current public employees . . . for future work performed in the Attorney Generals title and

summary is accurate and fair, not false or misleading. That phrase precisely describes the Initiatives

purpose and effect on existing state law. The Court should therefore entirely reject Petitioners

objections to that phrase.

C. The Phrase Teachers, Nurses and Peace Officers Accurately Informs VotersWhich Public Employees Will Be Most Impacted by the Constitutional Changes theInitiative Proposes

Similarly, the Court should reject Petitioners objection to the phrase teachers, nurses, and

peace officers. Contrary to what Petitioners contend, there is an obvious logical basis why the

Attorney General has used that phrase. Teachers, nurses, and peace officers are indisputably among

the largest group of public employees who will be affected by the constitutional changes the Initiative

proposes.

According to recent United State Census Bureau data, there are approximately 2.1 million state

and local public employees in California. (See Exh. 6 to Respondents RJN.) This group includes

624,885 instructional employees i.e., teachers in elementary, secondary, and higher education,

who together account for roughly 30 percent of all state and local public employees. There are 181, 341

issue] vested at the time of retirement, and explicitly disavows any claim that the benefits vested when the employee beganhis or her service. (REAOC, supra, 52 Cal.4th at 1189, fn. 3.)


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health and hospital public employees, most of whom are nurses, constituting about eight percent of all

state and local public employees. (Ibid.) Finally, peace officers is an umbrella category that, contrary

to what Petitioners suggest, includes city police officers, officers in the county sheriffs offices,

Highway Patrol officers, specific officers and employees in the Department of Corrections, specified

employees in the offices of the Attorney General and State Controller, the Inspector General and his/her

designated employees, etc. (See, e.g., Penal Code 830.1, 830.2, & 830.3.) There are approximately

202,576 such peace officers, who together constitute about nine percent of all state and local

employees in California. (Exh. 6 to Respondents RJN.)

Combined, the three sub-groups of teachers, nurses, and peace officers comprise about half of

all state and local public employees in California. Given this, it is entirely reasonable and appropriate

for the Attorney General to specifically mention these groups so that voters are given a full picture of

which public employees will be most impacted by the Initiative. The Court should therefore reject

Petitioners challenge to the phrase teachers, nurses, and peace officers.

CONCLUSION

Under existing California law, current public employees possess a vested right to accrue

retirement benefits for future work performed based on the benefits promised to them at the time of

employment. The California Supreme Court has consistently interpreted the Contract Clause of the

California Constitution to protect this vested right to future accrual of retirement benefits from

impairment. This is known as the California Rule and is the settled, binding law of our state today.

Petitioners are free to disagree with California Rule and, as they have done with the Initiative,

propose constitutional amendments that would eliminate the California Rule. What Petitioners are not

free to do is to propose such a significant change to our state constitution, then shield the voters from

knowing the truth about what it is that Petitioners seek to accomplish. The Attorney Generals title and

summary accurately and fairly informs the voters precisely what the Initiative will do. Petitioners

objections to the title and summary are not supported by clear and convincing evidence far from it.

Instead, they are merely an effort to hide the truth about the Initiative from voters. The Court should

therefore deny the Petition in its entirety.


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Dated: March 6, 2014

Respectfully submitted,

OLSON HAGEL & FISHBURN LLPDeborah B. CaplanLance H. OlsonRichard C. Miadich

By: ____________________________________RICHARD C. MIADICHAttorneys for amicus curiae

reed v. harris amicus brief

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