LITIGATION UPDATE DECEMBER 2011

Our lawsuit was remanded by the Supreme Court back to the district court in Santa Ana. The Supreme Court encouraged the district court to act promptly on the case. The district court set a date for a procedural hearing that was held on Monday, January 9th. Our attorney, Michael Brown, represented REAOC at this hearing. Judge Guilford scheduled a Monday, March 19, 2012 hearing date. Initial briefs related to this hearing are due in four weeks from both the County and our attorney. When they are available for publication, these briefs will be posted on the REAOC website.

 
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The following is the REAOC Board of Directors’ response to an editorial appearing in the Orange County Register newspaper on November 30th. To date, our response has not been printed; however, we wanted to inform you of our opposition to the media’s interpretation of the California Supreme Court’s November 21st ruling regarding our retiree medical lawsuit.  A link to the original editorial precedes this response.

Retiree Health Benefits:  Matters of Fact

The late Senator Daniel Patrick Moynihan famously said that everyone is entitled to their own opinion, but not their own facts.  Your editorial “Court sides with retirees, against taxpayers” (November 30, 2011) is replete with assertions that bear no relation to the truth of the matter in dispute in the litigation between Orange County and its retired employees.   

First, the California Supreme Court’s recent ruling in Retired Employees Association of Orange County v. County of Orange was anything but “bizarre.”  Indeed, this unanimous decision, reached by a Court made up of six Republican-appointed justices and just one Democratic appointee, merely confirmed a long-established principle of contract law:  that contracts, whether in the public or private sector, may include “implied” terms, in addition to their express written terms. 

Second, the Court did not limit government’s ability to alter “nonvested” benefits of its employees or retirees.  Rather, it held, unremarkably, that the question whether a benefit is vested or nonvested is answered by looking to traditional, settled principles of contract interpretation.
 
Third, you assert that the benefit at issue in this case—retirees’ right to participate in the same premium “pool” as active employees—imposed “enormous liabilities” on the County.  But the fact is that the County’s cost of providing that benefit was infinitesimal –approximately .03% (that’s three one-hundredths of one percent) of its annual budget.  In fact, the County admitted, in sworn testimony, that its decision to segregate retirees into a separate pool was not motivated by financial concerns.
 
Finally, you say it is “absurd” to suggest that County retirees are suffering any hardship as a result of the County’s creation of the retiree-only premium pool in 2008.  But the fact is this:  premium inflation for Orange County retirees has tripled since the County made that drastic change in 2008.  In 2007, a retiree with one dependent enrolled in the County’s indemnity health plan paid an annual premium of $14,000; for 2011 that premium has skyrocketed to $25,000.  To deny that these increases impose hardship, when they come out of the pockets of a retiree population with an average annual pension income of just $30,000 is, to use your word, absurd.
 
The Editorial Board of the Register is certainly entitled to its opinion regarding this dispute.  But the Register’s readers deserve better than an editorial that shows so little understanding of, or concern for, the facts of this important case.
   
Retired Employees Association of Orange County
Linda Robinson and Doug Storm, Co-presidents

Please use the link below to read the original editorial that was published by the Orange County Register on November 30, 2011.

http://www.ocregister.com/articles/county-329359-benefits-retirees.html

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                                          LITIGATION UPDATE

On behalf of the entire REAOC Board of Directors, we are very pleased to report crucial information regarding your association’s retiree medical lawsuit.  Yesterday, November 21, 2011, the California Supreme Court ruled unanimously in favor of REAOC, holding that under California law an implied contract can arise between a county and its employees, under which the county can be required to pay retirement benefits that employees earned while they were working for the county.  As you recall, the trial court had previously dismissed REAOC's lawsuit, finding that there can be no implied contracts in public employment.  We always believed strongly that the trial court's ruling was incorrect, and now all seven of the Supreme Court justices have agreed with our position.  The Supreme Court's opinion is attached for you to read if you would like. 

This ruling means we have cleared the largest hurdle in our case, but there remains more work to do.  The Supreme Court returned the case to the Ninth Circuit Court of Appeals, where that court will apply the Supreme Court's statement of state law to the facts of our case.  We will keep you apprised as this case proceeds to the next phase.   

We want to express our sincere thanks to our attorneys Michael Brown and Ernest ("Ernie") Galvan for their efforts and expertise.  Also, thank you, REAOC members, for your continued support and commitment to our legal efforts to protect the benefits you earned while providing service to the public for so many years.  May you all enjoy a thankful and Happy Thanksgiving.

Linda Robinson and Doug Storm

To read the entire Supreme Court decision, click on the link below.

 

Supreme Court Decision

 
For a chronological listing of the major activities and updates during the past several years regarding the litigation, please click on the "Legal Update" tab located under the American flag.

                   
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