The city of San Diego’s landmark pension lawsuit will move ahead to the trial stage in a week and a half following a judge’s ruling today that struck down an attempt by employee unions to have the case decided on their behalf before trial.
As he did for a similar attempt by City Attorney Mike Aguirre in July, Superior Court Judge Jeffrey Barton said too many factual disputes remained in the complex case to rule in favor of the unions’ move to throw the case out ahead of the Oct. 25 trial date.
And, further clarifying a tentative ruling issued last month, Barton left in tact for the time being a key portion of Aguirre’s challenge, allowing hundreds of millions of dollars of contested benefits to be left on the table for trial. He, however, remained skeptical to the city’s arguments on the issue.
Aguirre claims pension deals struck in 1996 and 2002 are corrupt and therefore void, hoping to wipe away $500 million from a pension deficit that’s estimated to be at least $1.4 billion.
In September, Barton tentatively ruled that a 2000 legal settlement that further boosted employee benefits couldn’t be contested as part of the case. However, attorneys disagreed on the true financial impact of the tentative ruling, with some saying that it essentially protected the 1996 deal from being contested. That would have driven the stakes of the case down significantly – from $500 million to an estimated $40 million.
Today’s final ruling from Barton stated that factual disputes remain and no determination on the 1996 deal could be made immediately, leaving those issues to be worked out in trial. However, Barton remained skeptical to Aguirre’s claims that only the seven-percent boost provided by the Corbett settlement should be removed from the challenge. Unions’ argue that all pre-2000 benefits should be untouchable because of the settlement.
“The City’s position in support is weak,” Barton wrote. He added: “However, the court cannot resolve these issues at this stage of the litigation” because of other factual issues to be worked out.
Barton continued to struggle with the uniqueness and complexity of the case.
Unions argue that the benefits can’t be repealed because of labor laws that protect vested pension benefits. Also, they argue that the judge would is forbidden by the separation of powers doctrine from repealing the benefits – something they argue is a legislative duty, not a judicial one.
However, the city argues that all such arguments are rendered moot by the alleged violation of state Government Code 1090, which forbids public officials from financially benefiting from governmental actions in which they take part. The law, according to Barton’s ruling, “allow(s) contracts improperly made by such public officials to be set aside under appropriate circumstances.”
Barton notes that there doesn’t appear to be any case history to help him guide his way through the conflict.
“The use of section 1090 under these facts and circumstances for the relief sought by the City is unique. Therefore, the analysis is legally complex and fact dependent,” he wrote.
Barton notes that the success of the city’s application of 1090 in this case will be decided by whether the city can prove its theory that the pension deals were one deal or two. The city claims they are one deal in which the City Council voted to boost employee benefits and, in turn, the pension board allowed the city to shortchange the pension fund.
Attorneys for the unions and pension system argue that the actions were independently undertaken by the city and the pension system and aren’t connected.