APPEAL from a judgment of the Superior Court of Shasta County, Bradley L. Boeckman, Judge. (Super. Ct. No. 169985)
The opinion of the court was delivered by: Nicholson , Acting P. J.
CERTIFIED FOR PUBLICATION
Reversed with directions.
Local 1245 of the International Brotherhood of Electrical Workers (IBEW) filed a petition for writ of mandate after the City of Redding unilaterally retracted its promise to pay 50 percent of City employees' medical insurance premiums after retirement. The City demurred, and the superior court sustained the demurrer without leave to amend and dismissed IBEW's petition, deciding that (1) the right of active employees to receive future medical insurance benefits cannot be vested because it is subject to the collective bargaining process and (2) the memorandum of understanding (MOU) between the parties cannot be deemed to provide vested rights because the MOU remains in force only until its expiration.
After IBEW appealed the superior court's dismissal of its petition, the California Supreme Court filed its opinion in Retired Employees Assn. of Orange County, Inc. v. County of Orange (2011) 52 Cal.4th 1171 (Retired Employees). In that case, the Supreme Court held that "under California law, a vested right to health benefits for retired county employees can be implied under certain circumstances from a county ordinance or resolution." (Id. at p. 1194.)
Applying Retired Employees, we conclude the trial court erred by sustaining the demurrer because the petition alleged that the MOUs ratified by the city council promised active employees that the City would pay 50 percent of their future retiree medical insurance premiums. We therefore reverse and remand for further proceedings.
In a first amended petition, IBEW alleged:
"Since 1979, in its memorandum of understanding with [IBEW] and in other communications with Local 1245 and City employees, the City has promised to all Electric Department employees represented by Local 1245 that the City would pay 50% of the group medical insurance premium for retirees and their dependents. This obligation, communicated repeatedly by the City, was used as an inducement to recruit and retain employees as well as to convince them to accept lower wages in return for the benefit."
"Nevertheless, in March 2010, [the City] unilaterally cut the retiree health benefit to provide a subsidy of only 2% per year of service, up to a maximum of 50%. By cutting employees' retiree health benefits, the City violated its promise to maintain the benefit unless the parties mutually agreed otherwise. This impaired the City's clearly established contractual obligations, in violation of the California and federal constitutions."
More specifically, the petition alleged that, in 1978, the City agreed to participate in paying employees' future health insurance premiums. Since 1979, the MOUs between IBEW and the City contained the following provision (or one substantially the same in form):
"The City will pay fifty percent (50%) of the group medical insurance program premium for each retiree and dependents, if any, presently enrolled and for each retiree in the future who goes directly from active status to retirement and continues the group medical insurance without a break in coverage. For those employees who retire on or after July 1, 2000, dental and vision insurance coverage may be continued as a package under the fifty percent (50%) cost sharing basis provided the retiree also maintains the medical coverage." (Italics omitted.)
The MOUs also provided that they "'will remain in full force and effect, unless modified by mutual agreement.'" (Italics omitted.) And the promises made in ...