United States District Court, E.D. California
retirees association is suing a city for injunctive and
declaratory relief for the allegedly unlawful changes the
city made to the retirees' health benefits in 2015. The
city's second motion to dismiss is before the court.
Mot., ECF No. 32. The association opposes. Opp'n, ECF No.
36. On December 2, 2016, the court heard the motion. Mins.,
ECF No. 38. As explained below, the court DENIES the
city's motion to dismiss.
City of South Lake Tahoe Retirees Association (the
“Association”) is a nonprofit California
corporation comprising approximately 160 public employee
retirees of the City. First Am. Compl., ECF No. 29, ¶ 4
(“FAC”). The Association represents and advocates
for retirees regarding “retiree hospitalization,
medical, pharmaceutical, dental, vision, and retirement
benefits” and communicates information to and from its
members regarding the City of South Lake Tahoe's
(“the City”) vested post-employment health
claims derive from changes the City made to retiree health
benefits through adoption of a January 1, 2015 City Council
Resolution (“the Resolution”). Id.
¶ 12. The Association alleges that by adopting the
Resolution, the City violated the collective bargaining
agreements it reached with retiree labor organizations.
Id. ¶ 22. Through these agreements, or
Memorandums of Understanding (“MOUs”), retirees
were guaranteed the right to continue membership in the
City's health care plan. Id. ¶ 10. The MOUs
establish that “[retirees] will receive the same level
of benefits [the City] provide[s] for active employees,
” and “[retirees] may elect to continue the same
medical and dental coverage as active employees . . .
.” Id. ¶ 18. The MOUs memorialize a
uniform “vesting schedule” for the health
benefits of both active employees and retirees, and provide
“no maximum duration on this coverage.”
Id. ¶¶ 11, 17. The City allegedly agreed
to allow the retirees to “continue these benefits for
as long as [the City's] plan continues and [the retirees]
continue payment of [their] monthly premiums in a timely
manner.” Id. ¶ 17
Association alleges the retirees fully performed all MOU
preconditions for their rights in the retirement health
benefits program to vest, yet the Resolution affords retirees
“a much lower level of coverage than they were
contractually promised.” Id. ¶¶ 21,
23. The Resolution allegedly treats the active employees more
favorably than retirees, assigns the retirees to the lowest
coverage level, and removes retirees entirely from the
City's dental plan unless they pay the premium.
Id. ¶¶ 23, 25, 26. The negotiations
leading to the Resolution's adoption also allegedly
included only labor organizations for active employees, not
retirees. Id. ¶ 29.
Initial Complaint and First Motion to Dismiss
Association filed an initial complaint in December 2015,
contending the City's unilateral changes to retirees'
health benefits violate various MOUs and violate the
retirees' due process rights. Compl., ECF No. 1.
Association brought seven claims: (1) Breach of contract; (2)
promissory estoppel; (3) federal due process violations; (4)
state due process violations; (5) impairment of contract
under the U.S. Constitution; (6) impairment of contract under
the state constitution; and (7) violations of the California
Pension Protection Act. Id. ¶¶ 35-52. The
initial complaint sought injunctive relief to restore the
pre-Resolution status quo, declaratory relief, and monetary
damages. Id. at 12.
City moved to dismiss for lack of standing, failure to
exhaust administrative remedies, and failure to join
necessary parties. ECF No. 8 at 1. The court granted the
motion only as to associational standing, giving leave to
amend. Order, July 26, 2016 (“Prior Order”), ECF
Amended Complaint and Second Motion to Dismiss
August 15, 2016, the Association filed an amended complaint
repeating six of the initial claims, but dropping the seventh
claim for violations of the California Pension Protection
Act, and seeking the same injunctive and declaratory relief,
but expressly renouncing monetary damages. FAC ¶¶
9-11, 32-35. On September 6, 2016, the City again moved to
dismiss for lack of associational standing and failure to
state a claim. Mot. at 1.
City first attacks the Association's standing to sue on
behalf of its members. Id. at 1-4. The burden is on
the Association to establish subject matter jurisdiction, of
which standing is a component. Chandler v. State Farm
Mut. Auto. Ins. Co., 598 F.3d 1115, 1122 (9th Cir. 2010)
(citing Kokkonen v. Guardian Life Ins. Co., 511 U.S.
375, 377 (1994)). “Standing addresses whether the
plaintiff is the proper party to bring the matter to the
court for adjudication.” Id. (citations
omitted). An association has standing to sue on its
members' behalf when (1) its members would have standing
to sue in their own right, (2) the interest the association
is vindicating relates to its purpose, ...