United States District Court, N.D. California, San Jose Division
RICHARD A. KATZMAN, Plaintiff,
LOS ANGELES COUNTY METROPOLITAN TRANSPORTATION AUTHORITY; a special district, Defendant
[Copyrighted Material Omitted]
For Richard A. Katzman, Plaintiff: G. Whitney Leigh, LEAD ATTORNEY, Gonzalez & Leigh, LLP, San Francisco, CA.
For Los Angles County Metropolitan Transportation Authority, a special district, Defendant: Abraham Escareno, Gutierrez, Preciado and House, LLP, Pasadena, CA; Calvin Richard House, Gutierrez Preciado House, Pasadena, CA.
ORDER DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT, AND DENYING IN PART AND GRANTING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
LUCY H. KOH, United States District Judge.
Plaintiff Richard Katzman (" Plaintiff" ) brings this action under 42 U.S.C. § 1983 against defendant Los Angeles County Metropolitan Transportation Authority (" Defendant" ), alleging deprivation of property without due process of law, denial of equal protection of the law, conspiracy to deny him equal protection of the law, and impairment of contracts, in violation of his rights under the Fourteenth Amendment of the U.S. Constitution, Article 1, § 10 of the U.S. Constitution, and Article 1, § 9 of the California Constitution. Before the Court is Plaintiff's Motion for Summary Judgment (" Pl.'s Mot.), ECF. No. 45, and Defendant's Motion for Summary Judgment (" Def.'s Mot." ), ECF No. 63. Having considered the record in this case, applicable law, and the parties' briefs, the Court DENIES Plaintiff's Motion for Summary Judgment and DENIES IN PART AND GRANTS IN PART Defendant's Motion for Summary Judgment.
A. Factual Background
Plaintiff is a resident of Campbell, California, and a retired former employee of the Defendant. Declaration of Richard Katzman in Support of Plaintiff's Motion for Summary Judgment (" Katzman Decl." ), ECF No. 48, ¶ ¶ 1-2.
1. Plaintiff's Employment History With Defendant.
Defendant first hired Plaintiff in 1986. Katzman Decl. ¶ 3. Defendant subsequently re-hired Plaintiff in 1988. Katzman Decl. ¶ 3. As part of his employment contract with Defendant, Defendant promised to pay Plaintiff a pension. Katzman Decl. ¶ 4. In 1995, Plaintiff left his job with Defendant to take a job with the County of Los Angeles. Katzman Decl. ¶ 6. On June 30, 1995, Plaintiff received a letter from Defendant stating that under the terms of the Los Angeles County Metropolitan Transportation Authority Non-Contract Employees Retirement Income Plan (" Plan" ), any employee terminating employment with Defendant after 5 3/4 years of service had a vested interest in the Plan. Exhibit A to the Declaration of Richard Katzman in support of Motion for Summary Judgment (" Katzman Decl. Ex. A" ), ECF No. 49-1, at 1. The letter further advised Plaintiff that because he was vested in the Plan, Plaintiff needed to make an irrevocable selection to either have his contributions returned, or leave
his contributions in the Plan. Id. Plaintiff chose to do the latter. Katzman Decl. ¶ 6.
Plaintiff retired in 2007. Katzman Decl. ¶ 9. Upon retirement, Plaintiff received an application for deferred retirement benefits from Defendant titled, " LACMTA Non-Contract Employees Retirement Income (New) Plan." Id. The application informed Plaintiff that he could elect to receive his pension in monthly payments of $639.86, or a lump sum payment of $89,937.44. Exhibit B to the Declaration of Richard Katzman in Support of Motion for Summary Judgment (" Katzman Decl. Ex. B" ), ECF No. 49-1, at 1. Plaintiff elected to receive monthly payments. Id. On May 21, 2007, Plaintiff received a letter from Defendant regarding his " Retirement Estimate." Exhibit C to the Declaration of Richard Katzman in Support of Motion for Summary Judgment (" Katzman Decl. Ex. C" ), ECF No. 49-1, at 1. The letter informed him that he would receive a monthly pension of $639.86 per month for his lifetime. Id. At some point, Plaintiff received a booklet from Defendant that contained general information about Defendant's retirement income plan for non-contract employees. Katzman Decl. ¶ 9.
After Plaintiff retired, he received several other sources of income besides the Defendant's pension. Beginning in either 2008 or 2009, Plaintiff worked for a forensics accounting firm until December 2013. Deposition Excerpts of Plaintiff's Deposition in Support of Defendant's Opposition to Plaintiff's Motion for Summary Judgment (" Katzman Dep." ), ECF No. 52-2, Tr. 12:11-13:1. Plaintiff earned between $5,000 and $20,000 a year from this job, earning $7,000 in 2013. Katzman Dep. Tr. 14:1-15:1. Plaintiff also receives a pension from Los Angeles County that started at $729 per month, and is now approximately $780 a month. Katzman Dep. Tr. 15:21-16:3. Plaintiff also receives a pension from the California Public Employees' Retirement System of approximately $3,500 per month. Katzman Dep. Tr. 16:4-:17. Finally, Plaintiff receives approximately $30,000 per year in rental income from a single property. Katzman Dep. Tr. 56:17-:24.
2. Defendant's Bi-Annual Audit Policy of Pensioners
Currently, there are approximately 2,500 people who receive a pension from Defendant. Declaration of Janice Olsen in Support of Defendant's Motion for Summary Judgment (" Olsen Decl." ), ECF No. 63-2, ¶ 5. Defendant performs a bi-annual audit of its pensioners by mailing each pensioner an audit form letter every two years. Id. ¶ 4. The letter is sent via standard mail of the United States Post Office. Id. ¶ 6. The pensioners are required to fill out the letter, sign it, have it notarized, and return it to Defendant within 30 days. Id.; see also Exhibit D to the Declaration of Richard Katzman in Support of Motion for Summary Judgment (" Katzman Decl. Ex. D" ), ECF No. 49-1, at 1. If a pensioner fails to return the audit letter, Defendant suspends the pensioner's payments. Olsen Decl. ¶ 4. Should the pensioner subsequently fill out, notarize (or otherwise have the pensioner's signature verified), and return the letter, Defendant reinstates the pension and provides any missed payments in one lump sum. Id.
Defendant conducted its first bi-annual audit in approximately 1983, and it has conducted approximately 15 bi-annual audits to date. Exhibit B to the Declaration of G. Whitney Leigh in Support of Plaintiff's Reply in Support of Motion for Summary Judgment (" Whitley Decl. Ex. B" ), ECF No. 55-2, at 5. In a March 2, 2012 letter provided to Plaintiff, Defendant stated that the Joint Pension Plan Committee approved the bi-annual audit policy at an April 21, 1983 meeting. Exhibit 3 to Defendant's
Motion for Summary Judgment (" Def. Ex. 3" ), ECF No. 63-3, Ex. 3, at 1. Defendant's letter attached the minutes from the Southern California Rapid Transit District Joint Pension Committee Meeting of April 21, 1983. Exhibit 4 to Defendant's Motion for Summary Judgment (" Def. Ex. 4" ), ECF No. 63-3, at 2. The minutes stated that the " Committee approved the Audit of the Retirees as presented in a letter dated April 13, 1983." Id. at 4. There is no letter from April 13, 1983 attached, and Defendant stated it does not " have much hope of finding" this letter. Id. at 1.
Among the reasons Defendant conducts a bi-annual audit of its pensioners are: to prevent fraud by ensuring that the individuals who are receiving the pension payments are in fact the retirees who are entitled to them, Olsen Decl. ¶ 9; to ensure that Defendant has up-to-date contact information for its pensioners, id. ¶ 10; and to ensure that, if a pensioner dies, joint survivor benefits are paid, id. ¶ 12. In discovery, Defendant claimed the bi-annual audit had uncovered five instances of fraud. Whitley Decl. Ex. B at 6. In one instance, after Defendant suspended a pensioner's payments due to failure to return an audit letter, a man not authorized to receive pension payments contacted Defendant to inquire as to why his relative did not receive her monthly pension payment. Olsen Decl. ¶ 11. The man stated that the pensioner had died two years before Defendant suspended pension payments. Id. The man also said that prior to calling Defendant, he had closed the pensioner's account, thereby preventing Defendant from recovering payments. Id.
In 2011, Defendant sent bi-annual audit letters to approximately 2,300 pensioners. Id. ¶ 16. As a result of the audit, Defendant suspended 197 pensions. Id. Subsequently, " 191 of those suspended pensions were reinstated or the recipient was determined to be deceased." Id. In 2013, Defendant sent bi-annual audit letters to approximately 2,500 pensioners. Id. ¶ 15. As a result of that audit, Defendant suspended 186 pensions. Id. Subsequently, " 166 of those suspended pensions [were] reinstated or the recipient was determined to be deceased." Id.
Plaintiff claimed that none of the documents Defendant sent to Plaintiff informed him of a policy regarding bi-annual audits. See Katzman Decl., Exs. A, B, C. The booklet that Plaintiff said he received from Defendant containing general information about Defendant's pension policies similarly did not disclose such a policy. See Exhibit H to the Declaration of Richard Katzman in Support of Motion for Summary Judgment (" Katzman Decl. Ex. H" ), ECF No. 49-1.
Prior to implementing the audit procedure it uses currently, Defendant had a different procedure whereby it would send an initial audit letter to pensioners notifying them of the audit and the due date for a response. Id. ¶ 13. If a pensioner did not promptly respond, Defendant would send several reminders over several months that the audit form was due. Id. According to Defendant, this practice was
a " significant burden" to its staff and resulted in a " significant expense." Id. ¶ 13.
3. The Bi-Annual Audit As Applied to Plaintiff.
In June 2009, Plaintiff received a form from Defendant titled " 2009 Pension Recipient Audit Form." Katzman Decl. Ex. D. The form stated that in an " effort to protect the assets in [the] Pension Plan and to protect all the recipients of pension benefits, we are conducting our bi-annual audit of pension plan recipients." Id. The form instructed the recipient to complete the form, sign it, have the signature notarized, and return it before July 31, 2009. Id. The form further stated that if it is not convenient for the recipient to have his signature notarized, Defendant can verify the recipient's signature at the office of the Pension and Benefits Department, if the recipient brings the form in person and shows identification. Id. The form then stated: " Failure to return a properly completed audit form will result in the suspension of your pension benefits." Id. Plaintiff filled out the form and signed it, but did not have it notarized. Id.; see also Katzman Decl. ¶ 11. Around the time Defendant received Plaintiff's form, Plaintiff had several conversations with Defendant's staff regarding the notarization requirement. Olsen Decl. ¶ 19. Defendant decided to exempt Plaintiff from the notarization requirement for that audit period after a staff member verified Plaintiff's identity over the phone. Id.
Approximately two years later, around October 2011, Plaintiff noticed his pension payment had not been electronically-deposited into his bank account as usual. Katzman Decl. ¶ ¶ 12-13. Plaintiff contacted Defendant, and two of Defendant's staff told Plaintiff that he had failed to return an audit form Defendant mailed that year. Id. Plaintiff stated he never received the audit form mailed in 2011, id. ¶ 13, although during the course of this litigation Plaintiff obtained a copy of it, see Exhibit I to the Declaration of Richard Katzman in Support of Motion for Summary Judgment (" Katzman Decl. Ex. I" ), ECF No. 49-1. The 2011 audit form is similar to the 2009 audit form, except the 2011 form is preceded by a letter that states, among other things, that the pensioner can also have his or her signature verified by a bank. Id. at 1. In November 2011, Plaintiff notified Defendant's staff that he would not complete the 2011 audit form. Olsen Decl. ¶ 18. Plaintiff eventually provided a signed audit form in 2012. Id.
In August 2012, Plaintiff's attorney raised several concerns about the audit process with Defendant in an email. Exhibit E to the Declaration of Richard Katzman in Support of Motion for Summary Judgment (" Katzman Decl. Ex. E" ), ECF No. 49-1. Among the concerns was that Plaintiff traveled frequently and that mail service at his home was " spotty," and therefore a single audit letter provided insufficient notice to Plaintiff that his pension might be suspended. Id. at 2. The email suggested that Defendant put additional notice procedures in place before suspending pension payments due to a pensioner's failure to timely return an audit letter. Id. Plaintiff also objected that he be forced to pay the notarization fee. Id.
In a response to that email, Defendant stated that it sends audit letters in mid-April; therefore, Defendant advised Plaintiff that if he had not received an audit letter by the end of April, he should contact the Defendant's pension benefits department. Exhibit F to the Declaration
of Richard Katzman in Support of Motion for Summary Judgment (" Katzman Decl. Ex. F" ), ECF No. 49-1, at 2. Defendant further stated that it does not send out audit letters by certified mail because the time and expense of doing so would be " unduly burdensome." Id. Defendant also stated that it does not send multiple audit letters because to do so would likewise be " unduly burdensome." Id. Defendant also stated that it will not absorb the cost of notarization for all its pension benefit recipients, but that Defendant would accept a certification from Plaintiff's bank verifying ...