Attorneys in the city of San Diego’s high-stakes battle over a decade’s worth of employee pension benefits returned to court this morning to argue the impacts a recent appeals court decision could have City Attorney Mike Aguirre’s attempts to have a series benefit boosts wiped from the city’s books.

Aguirre argued that the appeals court ruling, in which a government contract in Carson tinged by corruption was voided, buttressed his argument that the court cannot be asked to enforce an illegal contract. Attorneys for the San Diego City Employees’ Retirement System, unions and a group of retirees claimed the case had few similarities to the pension lawsuit. They maintained that their original arguments, made in court on July 26, still stood.

The appeals court decision in Carson came down suddenly last week, throwing a new twist into the case. Judge Jeffrey Barton was in the midst of ruling on Aguirre’s motion asking him to forgo a jury trial and rule that pension deals struck in 1996 and 2002 were void. He called the special hearing for this morning in order to hear both sides’ takes on how the ruling impacted the pension case.

Click here to read the specifics of the Carson case. The heart of the case: the court determined that a third party can lose the benefits of a contract even if it isn’t the one that broke the state’s conflict-of-interest statute.

“Carson changes nothing,” said Michael Leone, attorney for the pension system.

He maintained that the court cannot void the contract because doing so would be overstepping its bounds in inferring intent and motive in the making of legislation. If anything, Leone said, the Carson ruling would force the city to have to make up for its annual underfunding of the pension system – a right it was granted in the 1996 and 2002 pension deals.

Aguirre argues that the city gained that right as a result of offering city employees – who comprised a majority of pension board trustees – increased benefits. As a result, he argues the benefits given to all employees should be voided. Doing so, he said, could halve the estimated $1.4 billion pension deficit.

“This is not about a punishment. It’s about recovering public goods,” Aguirre said.

He said voiding the contract would allow unions and the City Council to return to the bargaining table and craft a new labor contract free of the taint of the previous contract.

Ann Smith, a labor union attorney, said the third party in the Carson case was hardly an innocent party like city employees. The third party in the Carson case had paid a bribe to the public official in order to get the contract approved.

Aguirre added the attorney who argued the Carson case on behalf of the city of Carson, Anthony Taylor, to his legal team over the holiday break. Taylor argued this morning on behalf of the city of San Diego.


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