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ARNETT v. CA. PUBLIC EMPLOYEES' RETIREMENT SYSTEM

United States District Court, Northern District of California


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, notify Raymond Cheung of the EEOC, or such person as the EEOC may later designate, of the failure, to allow the EEOC to institute timely action to enforce the ADEA against such reductions. Reports made to the EEOC under paragraphs 2 and 3 of this Supplemental Consent Decree shall also be made to private plaintiffs' counsel, with said counsel agreeing not to use any information so divulged about any individual for any purpose other than ensuring compliance with this Decree. Notice of this settlement, in the form of Attachment B, shall be prominently posted on CaIPERS' website, including a prominent link to it displayed on the initially displaying screen of the home page.

4. Plaintiffs and the EEOC waive any interest on the payment of JDR benefits required by this decree up until July 1, 2003. Any benefits (retroactive or prospective) not paid by August 1, 2003 shall bear interest at the rate of 10 percent from July 1, 2003. If, despite CalPERS' reasonable best efforts, circumstances not within CaIPERS' control prevent payments by August 1, 2003, CalPERS may apply to this Court for relief from paying this interest.

5. All parties agree that this Supplemental Consent Decree shall be effective, as provided herein, notwithstanding that some local public entities have opted out of the defendant class and have not been joined as defendants. CaIPERS represents that none of the entities who remain opted out of the defendant class have, or have had since 1980, any public safety officer employees.

6. CalPERS shall amortize the costs of this case over thirteen years and pass them on to State of California employers and local public entity employers through the rate process.

7. The parties agree that the State of California, including those California entities for whom the IDR recipients worked, shall not be liable for any obligation of any local public entity arising out of this Decree, including obligations attributable to the defendant class.

8. This Supplemental Consent Decree is contingent on the defendant class executing and filing a full and final waiver, in the form of Attachment A, of its right, if any, to appeal all decisions made in this case, and applying to the Court for guidance concerning whether any notice to members of the defendant class should be given. This Supplemental Consent Decree shall not be effective to any degree, and shall have no force and effect whatsoever, if a court finally determines that the defendant class did not completely waive its right, if any, to appeal all issues determined by the district court in this case. Notwithstanding the foregoing, this Decree shall be fully effective and in force, or restored to full effectiveness, if(a) the district court's August 2, 2002 order and the prior orders defining the scope of the class are upheld on appeal in their entirety, or (b) the August 2, 2002 order is finally determined to be binding on all local public entity employers who contracted with PERS for IDR benefits limited by Section 21417.

9. This Supplemental Consent Decree shall be filed with and entered as an Order reviewed and approved by the Court, and the Court shall for five years retain jurisdiction to enforce its provisions as set forth below. If any party believes that another party is violating its obligations under this agreement, or believes a dispute has arisen as to the meaning of the agreement, then the party shall give written detailed notice describing the claimed violation or dispute to the other parties. The parties shall then attempt, within thirty days or such other time as may be agreed to in writing, to resolve their differences over the claimed violation or disputed meaning. If after such time the parties are unable to resolve said dispute, any party may file a motion with the Court seeking a declaration determining whether there has been a violation, or determining the meaning of the agreement, or both, and may simultaneously seek an appropriate enforcement order. Any other party shall respond to the motion within the time allowed by the Local Rules, unless the time is extended by agreement or court order. Upon the Court's declaration and any enforcement order, the parties shall have a reasonable time, or such time as the Court may direct, to perform their obligations as declared and ordered.

IT IS SO ORDERED AND APPROVED:

ATTACHMENT A

HENRY S. HEWITT, No. 40851 ALICE M. BEASLEY, No. 56523 ERICKSO, BEASLEY, HEWITT & WILSON, LLP 483 Ninth Street, Suite 200 Oakland, California 94607 Telephone: (510) 839-3448 Facsimile: (510) 839-1622

Attorneys for Defendant Class Representative CITY OF FREMONT

JEFFREY WERTIHIEJIMER, No. 120378 RUTAN & TUCKER, LLP 611 Anton Boulevard, Fourteenth Floor Costa Mesa, California 92626-1950 Telephone: (714) 641-5100 Facsimile: (714) 546-9035

Attorneys for Defendant Class Representative CITY OF WEST COVINA

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

RONALD ARNETT, et aL, ) No. C 95 3022 CRB Plaintiffs, ) ) V. ) DEFENDANT CLASS' WAIVER OF) ALL APPEAL RIGHTS CALIFORNIA PUBLIC EMPLOYEES' ) RETIREMENT SYSTEM (PERS), et al., ) ) Defendants. ) ) ) ______________________________________ )
WAIVER OF ALL APPEAL RIGHTS BY ThE DEFENDANT CLASS FACTUAL RECITALS
This Waiver of All Appeal Rights by the Defendant Class is based on the following facts:

1. 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").
2. The City of Fremont and the City of West Covina have been designated as representatives of the defendant class ("class representatives").
3. The defendant class was joined for the purpose of deciding two issues: (I) whether CalIPERS 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 CalIPERS has the authority to pass on to defendant class members the costs of the increased DR benefits mandated by the settlement set forth in the consent decrees entered in this case ("the defendant class issues"). 4. The court on August 22, 2002 granted summary judgment in favor of CalIPERS and against the defendant class on the defendant class issues. 5. The EEOC, the private plaintiffs, CaIPERS and the State defendants have made the waiver by the class of all appeal rights a condition for settling the remaining issues in this case pursuant to a Supplemental Consent Decree. 6. The class representatives have concluded that the settlement terms in the Supplemental Consent Decree, including setting the restorative pay claim for $0.50 on the dollar and the plaintiffs' waiver of all interest claims, is in the best interest of the class members. 7. Final settlement of this case with the resulting savings of the cost and expense of continued litigation benefits the class members.
TERMS OF THE AGREEMENT

Based on the foregoing recitals and subject to the conditions set forth below, the class representatives, on behalf of the defendant class, hereby fully and finally waive the class's right to appeal the decisions made in this case, including, without limitation, the ruling on the. defendant class issues, the ruling defining and certifying the class, and the ruling joining the class as a defendant.

This agreement to waive all appeal rights is null and void and of no force and effect unless:

A. The court issues an order that there is no requirement under Rule 23(e) that notice be given to the class members; or
B. the court orders that notice, in a form approved by the court, be given to the class members under Rule 23(e); and that after notice is given and any objections are considered by the court, the court approves this waiver of appeal and any other matters covered by the notice.
This agreement to waive all appeal rights is also null and void and of no force and effect if the court does not approve a Supplemental Consent Decree containing the terms set forth on the record at the November 21, 2002 settlement conference with Magistrate Judge Joseph C. Spero.

Dated: January 3, 2003 RUTAN & TUCKER LLP By Jeffery Wertheimer
Attorneys for Defendant Class Representative CITY OF WEST COVINA
Dated: January 2, 2003 ERICKSON BEASLEY HEWITT & WILSON, LLP

By Henry S. Hewitt

Attorneys for Defendant Class Representative CITY OF FREMONT
defendant class issues, the ruling defining and certifying the class, and the ruling joining the class as a defendant.

This agreement to waive all appeal rights is null and void and of no force and effect unless:

A. The court issues an order that there is no requirement under Rule 23(e) that notice be given to the class members; or B. the court orders that notice, in a form approved by the court, be given to the class members under Rule 23(e); and that after notice is given and any objections are considered by the court, the court approves this waiver of appeal and any other matters covered by the notice.
This agreement to waive all appeal rights is also null and void and of no force and effect if the court does not approve a Supplemental Consent Decree containing the terms set forth on the record at the November 21, 2002 settlement conference with Magistrate Judge Joseph C. Spero.

Dated: January___ 2003 RUTAN & TUCKER LLP

By_______________________________ Jeffery Wertheimer
Attorneys for Defendant Class Representative CITY OF WEST COVINA
Dated: January 13, 2003 ERICKSON BEASLEY HEWITT & WILSON, LLP

By_______________________________ Henry S. Hewitt
Attorneys for Defendant Class Representative CITY OF FREMONT
ATTACHMENT B

NOTICE TO "PUBLIC SAFETY" EMPLOYEES WHO ARE RECEIVING INDUSTRIAL DISABILITY RETIREMENT (IDR) BENEFITS THAT HAVE BEEN REDUCED UNDER CALIFORNIA GOVERNMENT CODE SECTION 21417.
As a result of litigation between the California Public Employees' Retirement System (CaIPERS), the U.S. Equal Employment Opportunity Commission (EEOC), private plaintiffs, and a class of local public entities, a consent decree (settlement) has been reached which may entitle you to a recalculation of the Industrial Disability Retirement (IDR) benefits you have been receiving from CaIPERS and, possibly, to retroactive benefits. In the past, your IDR benefits may have been reduced by the operation of California Government Code section 21417. The parties have agreed to a permanent injunction prohibiting the enforcement of section 21417 because the U.S. Court of Appeals for the Ninth Circuit has held that the statute may violate the federal Age Discrimination in Employment Act.

If your benefits were reduced because of Section 21417, the consent decree will affect you in one of the following ways:

1. If you are a state employee:

A. Your DR benefits should have been recalculated effective July 1, 2001. By now you should be receiving a higher level of DR benefits based on an allowance of 50 percent of your final compensation.

B. If your recalculation occurred after July 1, 2001, you should have been reimbursed so that your IDR payments since July 1, 2001 are based on an allowance of 50 percent of your final compensation.

C. If you first began receiving IDR benefits on or after October 16, 1992, you are entitled to retroactive relief for the period from October 16, 1992 or your effective retirement date, whichever is later, to July 1, 2001. Retroactive relief will be fifty (50) percent of the difference between the benefits you actually received and those you should have received if section 21417 had not been in effect. CaIPERS will pay you this retroactive relief no later than July 1, 2003.

2. If you are a local public entity employee:

A. Your IDR benefits will be recalculated so that you will be receiving a higher level of IDR benefits based on an allowance of 50 percent of your final compensation. CalPERS will complete this recalculation by April 1, 2003. Although this recalculation will occur in the future, it will be effective as of July 1, 2001. Accordingly, if you began receiving IDR benefits before July 1, 2001 or after July 1, 2001 but before the recalculation of your benefits, you will be reimbursed so that your IDR payments since July 1, 2001 are based on an allowance of 50 percent of your final compensation.

B. If you first began receiving IDR benefits on or after October 16, 1992, you are entitled to retroactive relief for the period from October 16, 1992 or your effective retirement date, whichever is later, to July 1, 2001. Retroactive relief will be fifty (50) percent of the difference between the benefits you actually received and those you should have received if section 21417 had not been in effect. CaIPERS will pay you this retroactive relief no later than July 1, 2003.

If you have any questions about your rights under the consent decree, contact: EEOC: David Skillman, Paralegal, 415/356-5087; Private plaintiffs counsel: Steven Pingel, 562/467-8908. If you have any questions regarding the method of calculation or the amount of your benefits, contact CaIPERS at 1-800-352-2238.
20030129

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