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ARNETT v. CA. PUBLIC EMPLOYEES' RETIREMENT SYSTEM

January 29, 2003

RONALD ARNETT, PLAINTIFFS, AND EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, PLAINTIFF-INTERVENOR,
v.
CA. PUBLIC EMPLOYEES' RETIREMENT SYSTEM (PERS), DEFENDANTS.



The opinion of the court was delivered by: Charles Breyer, Judge, United States District Court

SUPPLEMENTAL CONSENT DECREE

WHEREAS the United States Court of Appeals for the Ninth Circuit issued a decision in this case remanding the issues of liability for consideration by the District Court; and

WHEREAS the Equal Employment Opportunity Commission ("EEOC") intervened in this action following the remand; and

WHEREAS the court joined all those local public entity employers that are "contracting agencies," as defined by California Government Code section 20022 ("local public entity employers"), as defendants through the formation of a Federal Rule of Civil Procedure 23(b)(3) opt-out class ("the defendant class"); and

WHEREAS the defendant class was joined for the purpose of deciding two issues: (1) whether CalPERS has the authority to enter into a settlement agreement pursuant to which the industrial disability retirement ("IDR") benefits of employees of local public entity employers are increased, and (2) whether CalPERS has the authority to pass on to defendant class members the costs of the increased IDR benefits mandated by the settlement ("the defendant class issues"); and

WHEREAS, the Court on August 2, 2002 granted summary judgment in favor of CalPERS and against the defendant class on the defendant class issues (the August 2, 2002 order); and

WHEREAS, by a separate stipulation in the form of Attachment A, the defendant class will seek to waive its right to appeal the Court's rulings on the defendant class issues and any other rulings made by the Court, including, without limitation, the rulings defining and certifying the defendant class and the ruling joining the class; and

WHEREAS the EEOC, the private plaintiffs, CalPERS, and the State defendants ("the parties") entered in a Consent Decree in Partial Resolution of Lawsuit filed on August 3, 2001, and now wish to pursue further settlement of this action on the terms and conditions described below; and

WHEREAS the parties wish to resolve the rights and obligations of all interested parties, including all local public entity employers and employees, fully and finally in this proceeding, thereby avoiding further litigation; and

WHEREAS the parties to this action wish to settle all issues in this Age Discrimination in Employment Act ("ADEA") litigation in a prompt and cost-effective manner that promotes judicial economy; and

WHEREAS the parties desire that the Court maintain jurisdiction over this matter to resolve any disputes that may arise under this Consent Decree;

THEREFORE, the parties stipulate to and submit this Supplemental Consent Decree for approval by the Court, as follows:

1. This Supplemental Consent Decree states the terms and conditions of a further settlement agreement among the parties in addition to those described in the Consent Decree in Partial Resolution of Lawsuit entered in this case on August 3, 2001. The Consent Decree in Partial Resolution of Lawsuit shall remain in effect, except to the extent otherwise provided in this Supplemental Consent Decree. If this Supplemental Consent Decree is rendered ineffective, the Consent Decree in Partial Resolution of Lawsuit shall continue to govern this litigation.

2. The parties hereby agree that retroactive relief for beneficiaries who commenced industrial disability retirements at any time on or after October 16, 1992 and their survivors as provided by law for payment of IDR benefits upon a beneficiary's demise ("IDR survivors") shall be fifty percent (50%) of the difference between their benefits received from October 16, 1992 through July 1, 2001 as limited by Section 21417 and the benefits they would have received during that period if Section 21417 had not limited their benefits. This retroactive relief shall be paid by CalPERS to these beneficiaries, or to their survivors as provided by law applicable to such benefits, as quickly as reasonably possible, but no later than July 1, 2003. Charging Party Diane Militano will be treated as though her entitlement began on October 16, 1992, and her retroactive relief will be limited to the time period of October 16, 1992 to July 1, 2001 and shall be paid by CalPERS as quickly as reasonably possible, but no later than July 1, 2003. CalPERS shall by July 1, 2003 provide the EEOC with a list of the names of all individuals entitled to this retroactive relief, their Social Security Numbers, the amount of relief for each and when paid, the old allowance, the new allowance, the effective date, a copy of the letter sent at the time of payment explaining what the payment is and how the calculation was made, the roll CalPERS paid the new allowance in, and any further information as is necessary to establish that the required benefit adjustments were made and paid. This information (except for the copy of the letter) shall be provided in Excel spreadsheet form and in hard copy. CalPERS shall communicate directly with plaintiffs' expert Barthius Prien and Associates ("Prien"), including but not limited to making Chris Nishioka available to talk with Prien, as is reasonable to enable Prien to assist plaintiffs in determining that the requirements of this paragraph have been accomplished.

3. CalPERS shall recalculate and pay the benefit entitlements of Charging Party Diane Militano and all industrial disability retirement recipients as of July 1, 2001 who commenced industrial disability retirements from January 1, 1980 to July 1, 2001 and whose benefits have been limited by Section 21417; this recalculation shall increase said benefits by not limiting them as provided by Section 21417. Payments shall be made to IDR beneficiaries or their IDR survivors. Said payments will take effect as of July 1, 2001. CalPERS shall also so recalculate and pay IDR entitlements for all recipients who became recipients after July 1, 2001 without regard to current Section 21417. Recalculated payments for industrial disability retirement recipients who became recipients between July 1, 2001 and the present will take effect as of when they first became recipients. CalPERS shall apply such recalculations to payments of all future IDR benefits to recipients for whom recalculations were performed. CalPERS will proceed in good faith to process these recalculations and pay these benefits as quickly as reasonably possible, but shall complete them by April 1, 2003. These payments shall be paid by CalPERS to these beneficiaries, or to their IDR survivors. CalPERS shall by April 1, 2003 provide the EEOC with a list of the names of all individuals affected by the recalculation of benefit payments, their Social Security Numbers, the amount of relief for each and when paid, the old allowance, the new allowance, the effective date, a copy of the letter sent at the time of payment explaining what the payment is, the roll CalPERS paid the new allowance in, and any further information as is necessary to established that the required benefit adjustments were made and paid. This information, except the letter, shall be provided in Excel spreadsheet form and in hard copy. CalPERS shall also calculate the industrial disability retirement benefits for all future recipients of such benefits without regard to current Section 21417, except with regard to those recipients employed by local public entities that opted out of the defendant class in this case. CalPERS shall communicate with plaintiffs' expert Prien, including but not limited to making Chris Nishioka available to talk with Prien, as is reasonable to enable Prien to assist plaintiffs in determining that the requirements of this paragraph have been accomplished. CalPERS agrees to negotiate in good faith with those entities who have opted out to attempt to bar any reductions mandated by current Section 21417. Should these negotiations fail, CalPERS shall, by the effective date of any such contract for DR coverage, ...


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