California Court of Appeals, Third District, Sacramento
from judgments of the Superior Court of Sacramento County,
No. 34-2016-00196269-CU-MC-GDS David I. Brown, Steven H.
Rodda, Judges. Affirmed.
Becerra, Attorney General, Thomas S. Patterson and Marc
LeForestier, Assistant Attorneys General, Tamar Pachter and
Nelson R. Richards, Deputy Attorneys General for Plaintiff
Fabela and Richard North for Defendant and Respondent Santa
Clara Valley Transportation Authority.
Leonard Carder, Peter Saltzman, Kate Hallward, and Craig
Schechter for Defendant and Respondent Amalgamated Transit
Union Local 1555.
Public Employees' Retirement System (CalPERS) (Gov. Code,
§ 20002),  as opposed to the board that
administers the system (§ 9353), filed a
complaint seeking declaratory relief regarding the proper
interpretation of the effect of section 7522.02, subdivision
(a)(3) (hereafter section 7522.02(a)(3)) on the pension
benefits of transit workers. The CalPERS executive office had
announced its own interpretation, which resulted in over 400
pending administrative appeals. As representative parties,
the CalPERS executive office named as defendants a transit
agency (the Santa Clara Valley Transportation Authority
(Santa Clara Transit)) and an employee representative for a
different Bay Area transit agency (the Amalgamated Transit
Union Local 1555 (Local 1555)), which had been supporting the
arguments of their employees and members, and had filed
administrative appeals of their own.
Clara Transit filed a demurrer, which the trial court
sustained, entering judgment in its behalf. Local 1555 then
filed a motion for judgment on the pleadings, which the trial
court granted, entering a separate judgment in its behalf. In
each ruling, the trial court concluded that the CalPERS
executive office was subject to the procedural prerequisite
of the exhaustion of administrative remedies, as the issue
was pending in the appeals before the CalPERS board, and the
CalPERS executive office had not established any exception to
exhaustion in its allegations. The CalPERS executive office
separately appealed from each judgment. We have consolidated
the appeals for purposes of consideration and argument.
CalPERS executive office continues to assert it may bypass
the process in CalPERS regulations for administrative appeals
to the CalPERS board and proceed directly to the trial court
to obtain a declaratory judgment on its interpretation of
section 7522.02(a)(3). In its response to supplemental
briefing that we requested, it also contends that it is not
subject to the general rule that an action for declaratory
relief is not appropriate for the review of administrative
decisions in lieu of a petition for a writ of mandate.
(City of Pasadena v. Cohen (2014) 228 Cal.App.4th
1461, 1466-1467 (City of Pasadena).) Neither
position is tenable. We shall affirm the judgments.
AND PROCEDURAL BACKGROUND
is little we need to add to our introduction other than
procedural details. As fascinating as the underlying
substantive issue of pension benefits may be, it is not
before us. We provide a quick précis in order to
provide context for the dispute.
January 1, 2013, the Legislature revised public employee
pension benefits for new hires by enacting the California
Public Employees' Pension Reform Act of 2013 (PEPRA)
(§ 7522 et seq.), generally reducing benefits under the
existing structure in order to lower the cost of the pension
system. (See State of California v. U.S. Dept. of
Labor (E.D.Cal. 2016) 155 F.Supp.3d 1089, 1093
(State of California)). We are not concerned with
the details of the reform.
federal government disputed the application of the PEPRA to
transit workers as an interference with federal law, and
sought to withhold transportation grants. (State of
California, supra, 155 F.Supp.3d at p. 1094.)
In response, the Legislature enacted section 7522.02(a)(3) as
an urgency measure in October 2013, exempting transit workers
from the PEPRA until January 1, 2015, or until there was a
federal district court ruling that the PEPRA did not
interfere with federal law, whichever came first. (See Stats.
2013, ch. 527, §§ 1, 3.) The State of California
also brought suit against the federal Department of Labor in
a federal district court, obtaining summary judgment in its
behalf in a decision filed on December 30, 2014.
(California v. U.S. Dept. of Labor
(E.D.Cal. 2014) 76 F.Supp.3d 1125, 1148; see State of
California, supra, 155 F.Supp.3d at p. 1094.)
thereafter, the CalPERS executive office announced in a
circular letter dated February 25, 2015, that the
exemption in section 7522.02(a)(3) had expired by its own
terms. Hereafter, the CalPERS executive office would treat
all transit workers hired between January 1, 2013, and
December 29, 2014, as accruing benefits under the old system
during that period, and thereafter accruing the new limited
PEPRA pension benefits starting on December 30, 2014 (along
with those hired on or after Dec. 30).
surprisingly, “[o]ver 400 of those employees then filed
administrative appeals challenging [the] administrative
action and interpretation of PEPRA. Several [employee
representatives], including... Local 1555, raised the same
challenges... on behalf of their members[, as well as
assisting in their appeals]. [¶] [Santa Clara Transit]
also filed an administrative appeal [in December 2015] on