respondent's argument regarding the · telephone (510) 337-1001 fax (510) 337-1023 e-mail:...

ATTACHMENT C

RESPONDENT'S ARGUMENT REGARDING THEPETITION FOR RECONSIDERATION

ATTACHMENT C

STEWART WEINBERGDAVIOA.ROSENFELOWILLIAM A SOKOL

BLYTHE MICKELSONBARRY E. HINKLE

JAMES J WESSERANTONIO RUIZ

MATTHEW J. QAUGER

ASHLEY K.IKEDA .

LINOA BALDWIN JONES

PATRICIA A. DAVIS

ALANO CROWLEY

KRISTINAL HILLMAN»

EMILY P. RICH

BRUCE A HARLANO

CONCEPCiON E. L02ANO-BATISTACARENP. SENCER

ANNE I. YEN

KRISTINAM ZINNEN

JANNAHV MANANSALA

MANUELA BOlOUES~«KERIANNE R. STEELE"OARY P. PROVENCHER

EZEKIELD CARDER

MONICA T. GUIZAR

SHARON A SEIDENSTEIN

LISL R SOTO

WEINBERG, ROGER & ROSENFELDA Professional Corporation

1001 Marina Village Parkway, Suite 200Alameda, CA 94501

TELEPHONE (510) 337-1001FAX (510) 337-1023

WWW.UNIONCOUNSELNET

December 9,2016

VIA FASCIMILE AND U.S. MAIL - EXPRESS MAIL

Ms. Cheree SwedenskyAssistant to the Board

CalPERS Executive Office

P.O. Box 942701

Sacramento, CA 94229-2701Fax: (916) 795-3972

SEAN D. GRAHAM

JOLENE KRAMER

ANTHONY J. TUCCI

ROBERT E SZYKOWNY

MICHAEL D BURSTEINALEJ«JDRO DELGADO

MINSU D. LONGIARU .....

CAROLINE N COHEN

XOCHITLA LOPEZ

CAJTLIN E.GRAY

TIPPANY CRAIN ALTAUIRANO —

RYANB KADEVARI

VINCENT A HARRINGTON, Of CounssIPATRICIA M. GATES. 01 CounselROBERTA D. PERKINS. Of Counsel

NINA FENDEL Of Counsel

TRACY L. MAINGUY. Of Counsel

CHRISTIAN L. RAISNER. Of Counsel

THEODORE FRANKLIN. Of Counsel

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DEC 1 2 2016

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Re: Linda C. Martinez (Department of Social Services)CalPERS/Agency No. 15-0918; OAH No. 2016-031210

Dear Ms. Swedensky:

We are attomeys for the Service Employees International Union, Local 1000 ("SEIU Local 1000"),which is the exclusive representative of Ms. Linda C. Martinez. Enclosed for your information andrecords is a of Respondent Linda C. Martinez's Written Argument.

Sincerely,

nanne R. Steele ^KRS:sm

opeiu 29 afl-cio(l)Enclosure

cc: Ms. Austa Wakily, Deputy General Counsel (via U.S. Mail only)

141702\893639

LOS ANGELES OFFICE

800 Wilstiire Boulevard. Suite 1320Los Angeles, CA 90017-2607

TEL 213.380.2344 FAX 213.443.5098

SACRAMENTO OFFICE428 J Street, Suite 520

Sacramento. CA 95814-2341TEL 916.443.6600 FAX 916.442.0244

HONOLULU OFFICE

Union Raza

1136 Union Mall. Suite 402

Honolulu. HI 96813-4500

TEL 808.528.8880 FAX 808.526.8881

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VEINBERG, ROGER d

ROSENFELDA ProfcssiotuI Corponiton

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JANNAH V. MANANSALA, Bar No. 249376KERIANNE R. STEELE, Bar No. 250897GARY P. PROVENCHER, Bar No. 250923WEINBERG, ROGER & ROSENFELDA Professional Corporation1001 Marina Village Parkway, Suite 200Alameda, California 94501Telephone (510) 337-1001Fax (510) 337-1023E-Mail: [email protected]

Attorneys for SEIU Local 1000, the exclusive representative ofRespondent LINDA MARTINEZ

BEFORE THE BOARD OF ADMINISTRATION

CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM

LINDA MARTINEZ,

Respondent,

Agency Case No. 2015-0918

DEPARTMENT OF SOCIAL SERVICES

Respondent.

/ OAH No.2016-031210

MARTINEZ'S ARGUMENT/I a4/A;9rADOPTION OF PROPOSED

DECISION

Hearing Date: July 27, 2016Time: 9:00 a.m.

Linda C. Martinez ("Martinez"), through her representative the Service Employees

International Union, Local 1000 ("SEIU"), hereby requests that the Board of Administration

("Board") for the California Public Employees' Retirement System ("CalPERS") reject the

Administrative Law Judge's ("ALJ") Proposed Decision. We ask the Board to review the entirety

of the post-hearing brief that we submitted to the ALJ. We incorporate by reference into this

document all arguments and evidence presented in our post-hearing brief. We urge the Board to

take this opportunity to overrule its precedential decision In the Matter of the Application for

Industrial Disability Retirement of ROBERT VANDERGOOT ("Vandergoot") and to disavow the

wrongly-decided Third District Court of Appeals decisions Haywood v. American River Fire

Protection District G'Haywood") (1999) 67 Cal.App.4th 1292 ecad Smith v. City of Napa

("Smith") (2004) 120 Cal.App. 194. Those decisions misconstrue and misapply the California

Public Employees' Retirement Law ("PERL") and result in the harsh forfeiture of public

employees' disability retirement rights, in contravention of the California Constitution and

principles of equity. Alternately, the Board should distinguish Martinez's case from the Haywood,

Smith, and Vandergoot cases on the grounds that the California Department of Social Services1

Respondent's Argument Against Proposed Decision No. 2015-0918 / OAH No. 2016-031210

ROGER &

ROSENFELDA ProfcttiOful Corporaiton

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1 ("DSS") contractually promised in a Settlement Agreement to withdraw the Notice of Adverse

2 Action for termination, piermit Martinez to resign in lieu of termination, and cooperate with the

3 disability retirement application that DSS was aware Martinez intended to imminently file.

4 Martinez's disability pension rights cannot lawfully be forfeited given that she expressly reserved

5 her right in the Settlement Agreement to pursue disability retirement and her employer pledged to

6 support that application. Martinez's case should be further distinguished from the Haywood,

1 Smith, and Vandergoot decisions on the grounds that, in exchange for Martinez promising to

8 resign and not to reapply or be reemployed with the DSS, the DSS received consideration of

9 substantial value, including but not limited to Martinez's withdrawal of a pending State Personnel

10 Board ("SPB") appeal and a Public Employment Relations Board ("PERB") unfair practice

11 complaint, in which Martinez alleged that the DSS retaliated and discriminated against her for

12 engaging in protected concerted activity under the Dills Act (Government Code § 3512 et seq.).

13 The DSS avoided the expense and uncertainty of litigation by resolving in one single Settlement

14 Agreement not only an SPB appeal but also a PERB complaint. State of California ("State")

15 agencies, their employees, and the labor unions that represent employees will be discouraged

16 from settling disputes if, despite the parties' express contractual stipulations, the Board prohibits

17 employees from pursuing disability retirement on the basis of the HaywoodlSmithlVandergoot

18 precedents.

19 Martinez began working for the State on or about December 15, 1985, when she was only

20 eighteen (18) years old. (Transcript ("Tr.") 61.) Beginning in approximately January 2009,

21 Martinez participated in protected concerted activity under the Dills Act in a variety of ways. (See

22 Exh. 6, p. 1.) Soon after participating in protected concerted activity, the DSS began to retaliate

23 and discriminate against Martinez. SEIU filed an unfair practice charge with the PERB on or

24 about April 30, 2013. (See Exh. 6.) On or about January 8, 2014, the DSS issued Martinez a

25 Notice of Adverse Action terminating her employment. This action was in retaliation for

26 Martinez's protected concerted activity under the Dills Act. (See Exh. 8.) SEIU filed an amended

27 unfair practice charge, which added this new adverse action as further evidence of the DSS's

28 violations of the Dills Act. (Id.) PERB issued an amended unfair practice complaint, which

2Respondent's Argument Against Proposed Decision No. 2015-0918 / OAH No. 2016-031210

i^EINBERG* ROGERS

ROSENFELDA Profcssioiml Corporaitoii

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1 included the additional allegation that Martinez was terminated in retaliation for protected

2 concerted activity under the Dills Act. (See Exh. 8.) In addition to Martinez challenging the

3 Notice of Adverse Action at PERB with the assistance of SEIU, Martinez also timely appealed

4 from the Notice of Adverse Action with the SPB. (See Exh. 10.) The SPB issued an order staying

5 the SPB appeal hearing during the pendency of the above-referenced PERB proceeding, given

6 that Martinez raised in her SPB appeal the affirmative defense of discrimination/retaliation on

7 account of Union activity and PERB was going to adjudicate that same claim in the unfair

8 practice proceeding. (See Exh. 11.)

9 On September 22,2014, after several days of hearing, the parties engaged in arms-length

10 settlement discussions at a PERB regional office. The DSS initiated the settlement efforts. (Tr.

11 79.) A Settlement Agreement was fully-executed at PERB's offices that day, September 22, 2014.

12 (See Exh. 12.) The DSS representatives who engaged in settlement discussions were Mark

13 Magee, Labor Relations Specialist for the DSS, and Hannah Yu, Labor Relations Counsel for

14 CalHR. (Id., p. 5; Tr. 25, 40.) Magee and Yu were both aware that Martinez suffered from

15 significant medical conditions causing her to take leave from work, and that she intended to apply

16 for disability retirement with CalPERS. Evidence of this knowledge is found in the Settlement

17 Agreement itself - specifically in Paragraphs 4 and 5 - in which the DSS acknowledges that

18 Martinez is on an "unpaid medical leave of absence" from September 1 -30, 2014, and the DSS

19 "agrees to cooperate with any application for disability retirement filed by Martinez within the

20 next six months." (Id., p. 2.) Additionally, the DSS agreed to allow Martinez to preserve the

21 pending "FMLA complaint filed by Martinez with the Department of Labor." (See Exh. 12, p. 3;

22 see also Exhs. C, D.) Numerous other DSS representatives were aware of Martinez's medical

23 conditions, and more specifically of her intention to file for disability retirement. (Tr. 80, 82-84.)

24 She had repeatedly informed her supervisors and managers of this for the past six (6) or so years.

25 (Id.).

26 On September 22, 2014, the DSS committed contractually in the Settlement Agreement to

27 withdraw the Notice of Adverse Action relating to Martinez's termination, as well as an earlier

28 Corrective Memorandum, and remove such documents from Martinez's Official Personnel File.


f EINBERG, ROGER &ROSENFELD

A Piorcnional Cotpontioa42« I Xtna. Jill

N»vr«Nwnlo. CkitftifiM 99114

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1 (See Exh. 12, pp. 1-2.) The DSS further agreed to inform the SPB that the Notice of Adverse

2 Action had been withdrawn, (Id., p. 1.) By operation of the Settlement Agreement, the two

3 disciplinary actions were treated as having never occurred. (Tr. 49-51.) Pursuant to Paragraph 7

4 of the Settlement Agreement, Martinez resigned her employment effective September 30,2014.

5 (Id., p. 2.) Martinez promised not to return to the DSS. (Id.) Magee and Yu told Martinez that this

6 was boilerplate language that is in all State settlement agreements. (Tr. 102.) She did not waive

7 her right to apply for or to work for the State however. (See Exh. 12, pp. 1-2.) In fact, after

8 signing the Settlement Agreement, beginning on or about October 1, 2015, Martinez worked for

9 approximately two (2) months for the California Department of Rehabilitation as a Program

10 Technician II. (See Exh. 1.)

11 Magee and Yu contacted a CalPERS representative named Yolanda on September 22,

12 2014, in the midst of the parties' settlement discussions, to ask her how to best structure the

13 Settlement Agreement so that Martinez's disability retirement application would be timely. (Tr.

14 57-58, 87, 96.) Paragraphs 3 and 4 of the Settlement Agreement, which provided for retroactive

15 periods of leave of absence from work, were specifically designed to ensure that Martinez would

16 be able to file for disability retirement within 120 days of ending State service. (Tr. 52-54, 99-

17 100.) In the Settlement Agreement, Martinez did not waive her right to apply for disability

18 retirement. (Tr. 86, 88, 106; see also Exh. 12.) The DSS committed contractually in the

19 Settlement Agreement to cooperate with her disability application so long as it was filed within

20 six (6) months of the signing of the Settlement Agreement. (See Exh. 12, p. 2.) Magee testified

21 that this meant the DSS "would cooperate with any actions required by the Department." (Tr. 55.)

22 The DSS received significant consideration in exchange for Martinez resigning from her

23 employment and agreeing to withdraw the SPB appeal and the PERB unfair practice charge. The

24 DSS avoided the risk and uncertainty of litigation before two tribunals (the PERB and the SPB).

25 Both administrative agencies have the remedial power to order an employee reinstated with

26 backpay and interest.

27 Martinez first filed a disability retirement application on or about November 17, 2014.

28 (See Exh. 3.) Martinez later submitted supplemental information to CalPERS upon request. Kevin


k'EINBERG. ROGER &

ROSENFELDA Professional Coipontion

421J suihii. Sua< $2u

.Wrsanmli* Cftliromas

1 Fine, an individual who identified himself as a Manager in the CalPERS disability unit, told

2 Martinez over the phone that she was medically eligible for disability retirement but that he had

3 to deny the application for technical reasons only. (Tr. 104.) On or about June 22, 2015, CalPERS

4 issued Martinez a notice that it cancelled her application on the ground that she was terminated

5 for cause and the discharge was neither the ultimate result of a disabling medical condition nor

6 preemptive of an otherwise valid claim for disability retirement. (See Exh. 4, p. 1, citing

7 Haywood and Smith.) Martinez, through her SEIU representative, filed a notice of appeal from

8 that determination on or about July 14,2015. (See Exh. 5.) After a hearing, on September 13,

9 2016, the OAH ALJ ruled that the decision made by CalPERS to cancel Martinez's November 17,

10 2014 application for disability retirement was correct. She relied on Haywood, Smith, and

11 Vandergoot as the basis for her ruling.

12 Those three decisions are grounded in an incorrect interpretation of PERL. PERL,

13 Government Code § 21150 et seq., provides employees three rights: (1) freedom from unilateral

14 medical separation; (2) payment by CalPERS of a disability retirement allowance at an actuarially

15 reduced rate, and (3) reinstatement to employment with the State should their medical condition

16 subside. (Government Code §§ 21150, 21153 and 21192-93.) These three substantive rights of

17 employees are interrelated, but they are not interdependent. Nothing in the statute requires an

18 employee to be eligible for reinstatement with the employer as a condition precedent to receiving

19 a monthly disability retirement allowance. When evaluating an individual's qualification for

20 disability retirement, the Board is not authorized to consider whether the individual is eligible for

21 reinstatement to her former agency. The Board's authority is limited to determining (1) whether

22 the application was timely, (2) whether the employee has the minimum service required for

23 eligibility, and (3) whether the individual is medically incapacitated for the performance of duty.

24 (Government Code § 21154.) The right to a disability allowance and the right of reinstatement

25 need not go hand-in-hand. Government Code section 21193 states that if the Board determines,

26 pursuant to a medical examination conducted by a Board-appointed physician or surgeon, that the

27 individual is no longer so incapacitated for duty in the position held when retired for disability or

28 in a position in the same classification, the individual's ''disability retirement allowance shall be


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t'UNBCRG, ROGER &ROSENKELD

A Profcsstoiutl Corporaiton42liSir««i a;««c S20

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(9tA)44.%«66a>

cancelled immediately^ and he or she shall become a member of this system." (Government Code

section 21193, emphasis supplied.) If the individual has prospectively waived her right to

reinstatement, by promising she will never again apply for or accept any employment position

with her prior State agency, the Board will not compel reinstatement and will nonetheless cancel

her disability allowance immediately. (Id.) The Haywood and Smith decisions incorrectly

interpret provisions of the PERL, rely on a provision of the PERL not relevant to State

employees, and ignore the fundamental public policy that pension laws are intended to benefit

and not penalize an employee.

It is time for this Board to overrule its Vandergoot decision, which relies entirely on

Haywood and Smith, The following statement in Vandergoot is patently incorrect - "Were

respondent to receive a disability retirement allowance, he would have no employer who could

require him to undergo a medical examination under Government Code § 21192." {Vandergoot,

p. 8.) The portion of the statute authorizing an employer to subject an individual receiving a

disability allowance to a medical examination to determine whether her incapacity persists is

inapplicable to the State. Only the Board can compel the individual to be medically examined

under Government Code § 21192. The Vandergoot decision is also legally flawed because no

termination action has actually occurred when the State agency and the employee (such as

Vandergoot or Martinez) settle a pending SPB appeal by permitting the employee to resign his or

her employment in lieu of termination. There is no actual dismissal for cause. If affirmed, the

Vandergoot decision will discourage parties from settling pending SPB appeals or other legal

proceedings, as the employee will have a greater chance of being entitled to disability retirement

if she prevails in an SPB or PERB case than if she signs a State agency's typical waiver of the

right to reemployment. The Vandergoot decision must therefore be overruled.

Dated: November 4, 2016 WEINBERG, ROGER & ROSENFELDA Professional Corporation

14I702\8864I0

erianne R. SteeleAttorneys for SEIU, the exclusive representative of

ondent LINDA MARTINEZ

6

Respondent's Argument Against Proposed Decision No. 2015-0918 /OAH No. 2016-031210

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PROOF OF SERVICE

(CCP §1013)

I am a citizen of the United States and resident of the State of California. I am employed

in the County of Alameda, State of California, in the office of a member of the bar of this Court,

at whose direction the service was made. I am over the age of eighteen years and not a party to

the within action.

On November 4, 2016,1 served the following documents in the manner described below:

RESPONDENT'S ARGUMENT AGAINST ADOPTION OF PROPOSED DECISION

IZI (BY U.S. MAIL) I am personally and readily familiar with the business practice ofWeinberg, Roger & Rosenfeld for collection and processing of correspondence formailing with the United States Parcel Service, and I caused such envelope(s) withpostage thereon fully prepaid to be placed in the United States Postal Service atAlameda, California.

□ (BY FACSIMILE) I am personally and readily familiar with the business practice ofWeinberg, Roger & Rosenfeld for collection and processing of document(s) to betransmitted by facsimile and I caused such document(s) on this date to be transmitted byfacsimile to the offices of addressee(s) at the numbers listed below.

□ (BY OVERNIGHT MAIL) I am personally and readily familiar with the businesspractice of Weinberg, Roger & Rosenfeld for collection and processing ofcorrespondence for overnight delivery, and I caused such document(s) described hereinto be deposited for delivery to a facility regularly maintained by United Parcel Servicefor overnight delivery.

0 (BY ELECTRONIC SERVICE) By electronically mailing a true and correct copythrough Weinberg, Roger & Roseirfeld's electronic mail system [email protected] to the email addresses set forth below.

On the following part(ies) in this action:

Ms. Austa WakilyCalifornia Public Employees Retirement SystemCalPERS Legal Office400 Q StreetSacramento, CA [email protected]

I declare under penalty of perjury under the laws afê Unite^,St3lesofAqierica that theforegoing is true and correct. Executed on November 4, 2016, at .^^êda, Califoâ.

Stepm

141702\886410

WEINBERG, ROGER &ROSENFELD

A Professional Corporaiion42t JSbut.SiulcS20

Sacraacoto, CUifera(*9)ti4(91«)44346«00 Respondent's Argument Against Proposed Decision No. 2015-0918 / OAH No. 2016-031210

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WEINBERG, ROGER AROSENFELD

A Prefctticoa] Coipontioo1091 Mwtoi VOtf* Fukwty. SmIM 100

AlMM4i.CaUftnto 94501(510)337-100I

JANNAH V. MANANSALA, Bar No. 249376KERIANNE R. STEELE, Bar No. 250897GARY P. PROVENCHER, Bar No. 250923WEINBERG, ROGER & ROSENFELDA Professional Corporation1001 Marina Village Parkway, Suite 200Alameda, California 94501Telephone (510) 337-1001Fax (510) 337-1023E-Mail: [email protected]

[email protected]@unioncounsel.net

Attorneys for SEIU Local 1000, the exclusive representative ofRespondent LINDA MARTINEZ

BEFORE THE BOARD OF ADMINISTRATION

CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM

LINDA MARTINEZ,

Respondent,

DEPARTMENT OF SOCIAL SERVICES,

Respondent.

AGENCY CASE NO. 2015-0918 / OAHNO. 2016-031210

POST-HEARING BRIEF

Date: July 27,2016Time: 9:00 a.m.

POST-HEARING BRIEF

Case No. 2015-0918 / OAH NO. 2016-031210

TABLE OF CONTENTS

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A Proftuiootl Copontiatool Mute VtBti* Mwtr, Mm 2«

Abate, CiUfcteMSOlO19)S974001

Page

1. INTRODUCTION 1

n. SUMMARY OF FACTS 2

ni. LEGAL ARGUMENT 7

A. PERL, GOVERNMENT CODE SECTION 21150 ET SEQ.,PROVIDES EMPLOYEES THREE RIGHTS: (1) FREEDOMFROM UNILATERAL MEDICAL SEPARATION; (2)PAYMENT BY CALPERS OF A DISABILITY

RETIREMENT ALLOWANCE AT AN ACTUARIALLY

REDUCED RATE, AND (3) REINSTATEMENT TOEMPLOYMENT WITH THE STATE SHOULD THEIR

MEDICAL CONDITION SUBSIDE 7

1. The employee has a right not to be medically separatedby the employer 7

2. The employee has a right to a monthly retirementallowance 8

3. The employee has a right to reinstatement to her formerposition or to a position in the same classification 9

B. THE THREE SUBSTANTIVE RIGHTS OF EMPLOYEES

PROVIDED FOR IN PERL, DESCRIBED ABOVE, AREINTERRELATED BUT NOT INTERDEPENDENT 11

C. THE HAYWOOD AND SMITH DECISIONS WEREWRONGLY-DECIDED AND MUST BE OVERRULED 14

1. Summary of Haywood and Smith decisions 15

2. An employee is not disqualified for disability retirementif she is terminated for disciplinary reasons 18

D. THE BOARD SHOULD NOT HAVE EXTENDED THE

HAYWOOD AND SMITH DECISIONS TO THE STATE

EMPLOYMENT CONTEXT, AND CERTAINLY NOT TOCASES INVOLVING SETTLEMENT OF A PENDING

DISCPLINARY APPEAL 20

1. Summary of the Vandergoot decision 20

2. At a minimum, the Vandergoot holding may only beapplied prospectively to employees hired on or afterOctober 16,2013 (the effective date of the precedentialdecision) 21

iPOST HEARING BRIEFCase No. 2015-0918 / OAK NO. 2016-031210

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WEINBERG, ROGERSROSENFEU)

A Profc»iasd CoipoRttoDloot Mtfte

Ahmt6t,C^kcAf4S0\(510)»%I001

IV.

TABLE OF CONTENTS Icont'dl

Page

E. THE BOARD SHOULD APPLY PRINCIPLES OF EQUITYAND DETERMINE THAT MARTINEZ'S DISABILTY

RETIREMENT APPLICATION IS NOT BARRED BY

HAYWOOD/SMmWANDERGOOT 25

F. THE BOARD VIOLATED THE ADMINISTRATIVE

PROCEDURES ACT WHEN IT ADOPTED, THROUGH THEPRECEDENTIAL VANDERGOOT DECISION, THE RULETHAT AN EMPLOYEE TERMINATED IS BARRED FROM

RECEIVING DISABILITY RETIREMENT 26

CONCLUSION 27

11

POST HEARING BRIEFCase No. 2015-0918 /OAKNO. 2016-031210

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WEINBERG, ROGER &ROSENFEU)

A Prolcsttcot) CofpmticDIMl PBk«ty. Mm 200

AlwKCtfUbnisHieiCSIO) 3374001

TABLE OF AUTHORITIES

Page

State Cases

Abbott V. City of Los Angeles.

(1958) 50 Cal.2d438 23,24

Allen V. City of Long Beach.(1955) 45 Cal.2d 128 23,24

Association of Blue Collar Workers et al. v. Ted Wills.et al. (1986) 187 Cal.App.3d 780 24

Bellus V. City of Eureka.

(1968) 69 Cal.2d336 22

Betts V. Board of Administratinn,(1978) 21 eal.3d 859 23

California Department of Justice v. Board of Administration of California Public Employees*Retirement System.

(2015) 242 Cal.App.4th 133 9,10

California League of City Emnlovee Associations v. Palos Verdes Library District.(1978) 87 Cal.App.3d 135 22

California Ontometric Assn. v. Lackner.(1976) 60 Cal.App.3d 500 27

Carman v. Alvord.

(1982)31 Cal.3d318 22

Goddard v. South Bay Union High School District.(1978) 79 Cal.App.3d 98 22

Havwood V. American River Fire Protection District.(1999) 67 Cal.App.4th 1292 passim

Houghton V. City of Long Beach.(1958) 164 Cal.App.2d 298 24

International Association of Firefighters v. Citv of San Diego.(1983) 34 Cal.3d 292 22

International Brotherhood of Electrical Workers. Local 1245 v. Citv of Redding.(2012) 210 Cal.App.4th 1114 25

Kern v. Citv of Long Beach.

(1947) 29 Cal.2d 848 21,22,23

Legislature v. Eu.(1991)54 Cal.3d492 22

Mansnerger V. Public Employees* Retirement System.(1970) 6 Cal.App.3d 873 12

iiiPOST HEARING BRIEFCase No. 2015-0918 / OAH NO. 2016-031210

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A ProfiMioot] Corpontiao1001 Maite VQ^t S^lOO

AkiM^OdiCniiMMIC5IO)UMOei

TABLE OF AUTHORITIES (confdl

Page

Miller v. State of California.(1977) 18Cal.3d 808 22

Pasadena Police Officers Association v. City of Pasadena.(1983) 147 Cal.App.3d 695 25

Protect Our Benefits v. Citv and County of San Francisco.(2015) 235 Cal.App.4th 619 25

Retired Employees Association of Orange County v. County of Orange.(2011) 52 Cal.4thll71 25

Smith V. Citv of Napa.

(2004) 120 Cal.App.4th 194 7,10,16,18,19

Tidewater Marine Western. Inc. v. Bradshaw.

(1996) 14 Cal.4th 557 26

Voss V. Superior Court.(1996) 46 Cal.App.4th 900 26

Wallace v. Citv of Fresno.(1954)42 Cal.2dl80 23

Wislev V. Citv of San Diego.(1961) 188 Cal.App.2d 482 25

Regulations

Government Code section 19583.1 19

Government Code section 20021 8

Government Code section 20026 12,13

Government Code section 21150 7, 8,12,22


Government Code section 21153 7, 8,19

Government Code section 21154 12,13,20


Government Code section 21192 9,10

Government Code section 21193 9,10,14,19

Government Code section 21400 et seq 18


Government Code sections 11340-11351 26

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1 I. INTRODUCTION

2 On behalf of its member, Linda C. Martinez ("Martinez"), the Service Employees

3 hitemational Union, Local 1000 ("SEIU Local 1000"), which is the exclusive representative of

4 Martinez, hereby files this Post-Hearing Brief.

5 We urge the California Public Employees' Retirement System Board of Administration

6 ("Board") to take this opportunity to overrule its precedential decision In the Matter of the

7 Application for Industrial Disability Retirement ofROBERT VANDERGOOT ("Vandergoot")

8 and to disavow the wrongly-decided Third District Court of Appeals decisions Haywood v.

9 American River Fire Protection District ("Haywood") (1999) 67 Cal.App.4th 1292 and Smith v.

10 City ofNapa ("Smith ") (2004) 120 Cal.App. 194. Those decisions misconstrue and misapply the

11 California Public Employees' Retirement Law ("PERL") and result in the harsh forfeiture of

12 public employees' disability retirement rights, in contravention of the California Constitution and

13 principles of equity.

14 Alternately, the Board should distinguish Martinez's case from the Haywood^ Smith, and

15 Vandergoot cases on the grounds that the California Department of Social Services ("DSS")

16 contractually promised in a Settlement Agreement to withdraw the Notice of Adverse Action for

17 termination, permit Martinez to resign in lieu of termination, and cooperate with the disability

18 retirement application that DSS was aware Martinez intended to imminently file. Martinez's

19 disability pension rights cannot lawfully be forfeited given that she expressly reserved her right in

20 the Settlement Agreement to pursue disability retirement and her employer pledged to support

21 that application. Martinez's case should be further distinguished fi om the Haywood, Smith, and

22 Vandergoot decisions on the grounds that, in exchange for Martinez promising to resign and not

23 to reapply or be reemployed with the DSS, the DSS received consideration of substantial value,

24 including but not limited to Martinez's withdrawal of a pending State Personnel Board appeal and

25 a Public Employment Relations Board unfair practice complaint, in which Martinez alleged that

26 the DSS retaliated and discriminated against her for engaging in protected concerted activity

27 imder the Dills Act (Government Code section 3512 et seq,). The DSS avoided the expense and

28 uncertainty of litigation by resolving in one single Settlement Agreement not only an SPB appeal

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but also a PERB complaint. State of California ("State") agencies, their employees, and the labor

unions that represent employees will be discouraged from settling disputes if, despite the parties'

express contractual stipulations, the Board prohibits employees from pursuing disability

retirement on the basis of the Haywood!Smith! Vandergoot precedents.

n. SUMMARY OF FACTS

On or about December 31,1985, when she was only eighteen (18) years old, Martinez

began working for the State as a Psychiatric Technician Trainee Candidate for the California

Department of Mental Health at Agnew State Hospital. (Exhibit 8, Notice of Adverse Action, p.

2, which is Exhibit C to the Amended Unfair Practice Charge; Transcript ("Tr.") 61, in which

Martinez testifies to a start date of December 15,1985.) She sustained a number of injuries on

the job, caused by the assaultive client population she worked with. (Tr. 62-63.) Martinez later

worked for the Department of Transportation. (Tr. 64.) On or about October 1, 2001, Martinez

transferred to the DSS and began to work as a Disability Evaluation Analyst. (Id.) She already

possessed injuries at the time she began her employment with the DSS. (Tr. 66.) Martinez was

promoted to the Disability Evaluation Analyst HI position on or about June 4,2007. (Exhibit 8,

Notice of Adverse Action, p. 2, which is Exhibit C to the Amended Unfair Practice Charge.)

Martinez was demoted from that position back to Disability Evaluation Analyst, effective August

22,2012, pursuant to a settlement agreement. (Id. and Exhibit 6, Unfair Practice Charge,

Statement of the Charge, p. 1.)

Martinez was a member of State Bargaining Unit 1 (Professional, Administrative,

Financial and Staff Services), which is represented by SEIU Local 1000. Beginning in

approximately January 2009, Martinez participated in protected concerted activity under the Dills

Act, by serving as a member of SEIU Local lOOO's Disability Determination Services Division

Statewide Campaign Committee. (See Exhibit 6, Unfair Practice Charge, Statement of the

Charge, p. 1.) She further engaged in protected concerted activity by becoming an SEIU Local


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We agreed to offer the Notice of Adverse Action into evidence despite the DSS promising in aSettlement Agreement dated September 22,2014 to withdraw it and remove it from Martinez's OfficialPersonnel File, (see Exhibit 12, Settlement Agreement, p. 1), as this document is inexplicably contained inMartinez's CalPER5 file and CalPERS already impermissibly reviewed this document when evaluatingMartinez's disability retirement application.


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1000 job steward in or around April 2010. (Id.) In June 2011, she was elected to the position of

Secretary/Treasiu'er of the Union's regional District Labor Council 744. (Id.)

Soon after participating in protected concerted activity, the DSS began to retaliate and

discriminate against Martinez in a variety of ways. The DSS issued her a Notice of Adverse

Action for dismissal, which was subsequently appealed and settled. (Id.) Through the settlement,

Martinez agreed to be demoted to the Disability Evaluation Analyst classification. (Id.) In

December 2012, the DSS issued Martinez a Counseling Memorandum, which was in retaliation

for Martinez's protected concerted activity of speaking out and threatening to file grievances on

behalf of co-workers. (Id., pp. 2-3.)

SEIU Local 1000 filed an unfair practice charge with the PERB on or about April 30,

2013. (See Exhibit 6, Unfair Practice Charge, filed April 30, 2013.) The DSS filed a position

statement with PERB, denying the material allegations of the charge. (See Exhibit A, DSS

Position Statement, dated June 13,2013.)

Martinez also applied for Family Medical Leave Act leave for her own serious medical

condition on a number of occasions. The DSS granted three (3) such requests in 2013. (Tr. 73;

see also Exhibit C.) On July 2,2013, the DSS denied one of Martinez's FMLA requests.

(Exhibit D.) Martinez was concemed that the DSS did not comply with the law with respect to

calculating hours for FMLA purposes, and by enforcing call in requirements to report FMLA-

related absences. Martinez made three (3) complaints to the Department of Labor ("DDL")

regarding such DSS's violations. (Tr. 74; see also Tr. 43.) The DOL investigated the matter.

(Tr. 37.)

On or about March 25, 2014, PERB issued a complaint alleging that Martinez engaged in

protected activity and that the DSS issued Martinez discipline in retaliation for such activity, in

violation of various provisions of the Dills Act. (See Exhibit 7, PERB Complaint, dated March

25,2014.)

On or about January 8, 2014, the DSS issued Martinez a Notice of Adverse Action

terminating her employment, again on account of Martinez's protected concerted activity under

the Dills Act. (See Exhibit 8, Amended Unfair Practice Charge, Exhibit C thereof: Notice of

3POST HEARING BRIEF

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Adverse Action, dated January 8,2014.) SEIU Local 1000 filed an amended unfair practice

charge, which added this new adverse action as further evidence of the DSS's violations of the

Dills Act. (See Exhibit 8, First Amended Unfair Practice Charge, filed March 28,2014.) Again

the DSS denied the material allegations in the charge. (See Exhibit B, Position Statement in

Response to Amended Charge.)

PERB issued an amended unfair practice complaint, which included the additional

allegation that Martinez was terminated in retaliation for protected concerted activity under the

Dills Act. (See Exhibit 8, Amended Unfair Practice Complaint, dated June 4,2014.)

The parties were unable to settle the dispute at the PERB Informal Conference, and PERB

set the matter for three (3) days of Formal Hearing before PERB Administrative Law Judge

Alicia Clement.

In addition to Martinez challenging the Notice of Adverse Action at PERB with the

assistance of SEIU Local 1000, Martinez also timely appealed from the Notice of Adverse Action

with the SPB. (See Exhibit 10, SPB Appeal, dated January 24,2014.)

The SPB issued an order staying the SPB appeal hearing during the pendency of the

above-referenced PERB proceeding, given that Martinez raised in her SPB appeal the affirmative

defense of discrimination/retaliation on account of Union activity and PERB was going to

adjudicate that same claim in the unfair practice proceeding. (See Exhibit 11, Order for

Abeyance, dated July 24, 2014.)

The PERB Formal Hearing occurred on August 12-14, 2014. The parties did not conclude

the hearing in three (3) days, and SEIU Local 1000 still intended to present rebuttal testimony on

a subsequent hearing date. Judge Clement set the matter for a fourth day of Formal Hearing, for

September 22,2014.

The parties reconvened at the PERB San Francisco Regional Office for a fourth day of

hearing on September 22,2014. Instead of concluding the Formal Hearing, the parties engaged in

arms-length settlement discussions. The DSS initiated the settlement efforts. (Tr. 79.) After an

extensive back-and-forth, which included the DSS representatives calling a CalPERS

representative to ascertain the pension-related consequences of the contemplated Settlement

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Agreement, the parties entered into a formal Settlement Agreement. The Settlement Agreement

was fully-executed at PERB's offices that day, September 22,2014. (See Exhibit 12, Settlement

Agreement.)

The DSS representatives who engaged in settlement discussions were Mark Magee, Labor

Relations Specialist for the DSS, and Hannah Yu, Labor Relations Counsel for CalHR. (Id., p. 5;

Tr. 25,40.) Magee and Yu were both aware that Martinez suffered from significant medical

conditions causing her to take leave from work, and that she intended to apply for disability

retirement with CalPERS. Evidence of this knowledge is foimd in the Settlement Agreement

itself - specifically in Paragraphs 4 and 5 - in which the DSS acknowledges that Martinez is on

an **unpaid medical leave of absence" from September 1-30,2014, and the DSS "agrees to

cooperate with any application for disability retirement filed by Martinez within the next six

months." (Id., p. 2.) Additionally, the DSS agreed to allow Martinez to preserve the pending

"FMLA complaint filed by Martinez with the Department of Labor." (See Exhibit 12, p. 3; see

also Exhibits C and D, which is Family Medical Leave Act-related correspondence the DSS

issued to Martinez in 2013.)

Numerous other DSS representatives were aware of Martinez's medical conditions, and

more specifically of her intention to file for disability retirement. (Tr. 80, 82-84.) She had

repeatedly informed her supervisors and managers of this for the past six (6) or so years. (Id.)

On September 22,2014, the DSS committed contractually in the Settlement Agreement to

withdraw the Notice of Adverse Action relating to Martinez's termination, as well as an earlier

Corrective Memorandum, and remove such documents from Martinez's Official Personnel File.

(See Exhibit 12, Settlement Agreement, pp. 1-2.) The DSS further agreed to inform the SPB that

the Notice of Adverse Action had been withdrawn. (Id., p. 1.) By operation of the Settlement

Agreement, the two disciplinary actions were treated as having never occurred. (Tr. 49-51.)

Pursuant to Paragraph 7 of the Settlement Agreement, Martinez resigned her employment

effective September 30, 2014. (Id., p. 2.) Martinez promised not to return to the DSS. (Id.)

Magee and Yu told Martinez that this was boilerplate language that is in all State settlement

agreements. (Tr. 102.) She did not waive her right to apply for or to work for the State however.


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(See Exhibit 12, Settlement Agreement, pp. 1-2.) In fact, after signing the Settlement Agreement,

beginning on or about October 1,2015, Martinez worked for approximately two (2) months for

the California Department of Rehabilitation as a Program Technician n. (See Exhibit 1,

CalPERS Statement of Issues.)

Magee and Yu contacted a CalPERS representative named Yolanda on September 22,

2014, in the midst of the parties' settlement discussions, to ask her how to best structure the

Settlement Agreement so that Martinez's disability retirement application would be timely. (Tr.

57-58, 87, 96.) Paragraphs 3 and 4 of the Settlement Agreement, which provided for retroactive

periods of leave of absence from work, were specifically designed to ensure that Martinez would

be able to file for disability retirement within 120 days of ending State service. (Tr. 52-54,99-

100.)

In the Settlement Agreement, Martinez did not waive her right to apply for disability

retirement. (Tr. 86, 88,106; see also Exhibit 12.) Nor did the DSS ask for such a waiver. To the

contrary, the DSS committed contractually in the Settlement Agreement to cooperate with her

disability application so long as it was filed within six (6) months of the signing of the Settlement

Agreement. (See Exhibit 12, Settlement Agreement, p. 2.) Magee interpreted this to mean that

the DSS "would cooperate with any actions required by the Department." (Tr. 55.)

No one who participated in the settlement discussions expected CalPERS to deny

Martinez's disability retirement application on the grounds that Martinez was terminated for

cause and ineligible to return to employment with the DSS.

The DSS received significant consideration in exchange for Martinez resigning from her

employment and agreeing to withdraw the SPB appeal and the PERB unfair practice charge. The

DSS avoided the risk and uncertainty of litigation before two tribunals (the PERB and the SPB).

Both administrative agencies have the remedial power to order an employee reinstated with

backpay and interest.

Martinez first filed a disability retirement application on or about November 17,2014 (not

January 21,2015, as counsel for CalPERS seems to contend in the Statement of Issues). (See

Exhibit 3, Disability Retirement Election Application, file stamp-dated November 17,2014.)

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Martinez later submitted supplemental information to CalPERS upon request. Kevin Fine, an

individual who identified himself as a Manager in the CalPERS disability unit, told Martinez over

the phone that she was medically eligible for disability retirement but that he had to deny the

application for technical reasons only. (Tr. 104.)

On or about June 22,2015, CalPERS issued Martinez a notice that it cancelled her

application on the ground that she was terminated for cause and the discharge was neither the

ultimate result of a disabling medical condition nor preemptive of an otherwise valid claim for

disability retirement. (See Exhibit 4, p. 1, citing Haywood, supra, 67 Cal.App.4th 1292 and

Smith, supra, 120 Cal.App.4th 194.)

Martinez, through her SEIU Local 1000 representative, filed a notice of appeal from that

determination on or about July 14,2015. (See Exhibit 5.) This matter was set for hearing on July

27,2016 before an Administrative Law Judge of the Office of Administrative Hearings.

ni. LEGAL ARGUMENT

A. PERL, GOVERNMENT CODE SECTION 21150 ET SEQ., PROVIDESEMPLOYEES THREE RIGHTS: (1) FREEDOM FROM UNILATERALMEDICAL SEPARATION; (2) PAYMENT BY CALPERS OF ADISABILITY RETIREMENT ALLOWANCE AT AN ACTUARIALLYREDUCED RATE, AND (3) REINSTATEMENT TO EMPLOYMENTWITH THE STATE SHOULD THEIR MEDICAL CONDITION SUBSIDE

The following segment of this brief provides an overview of the purpose of the disability

retirement provisions of the PERL.

1. The employee has a right not to be medically separated bv theemployer

The disability retirement provisions of the PERL, Government Code section 21150 et seq.,

prohibit the State from unilaterally medically separating an employee who the State believes is

disabled. (Government Code section 21153.) Instead, the State "shall apply" for disability

retirement of any member it believes is disabled, unless the member waives the right to retire for

disability retirement. (Government Code section 21153 (^'Notwithstanding any other provision of

law, an employer may not separate because of disability a member otherwise eligible to retire for

disability but shall apply for disability retirement of any member believed to be disabled, unless

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the member waives the right to retire for disability and elects to withdraw contributions or to

permit contributions to remain in the fund with rights to service retirement as provided in Section

20731."); see also Government Code section 21152(a) ("Application to the board for retirement

of a member for disability may be made by "(a) The head of the office or department in which the

member is or was last employed, if the member is a state member. see Government Code

section 20021, defining "Board" as "the Board of Administration of the Public Employees'

Retirement System.") The State employer can never be sure whether an employee is "otherwise

eligible to retire for disability," as that term is used in 21153, given that CalPERS is the entity

that determines an applicant's eligibility. Therefore, practically speaking. Government Code

section 21153 serves as an absolute prohibition on the right of the State to unilaterally medically

separate an employee.

2. The employee has a right to a monthly retirement allowance

If a State employee has a disabling injury or illness that prevents her fi-om performing her

usual job duties with her current employer, she may be eligible for disability or industrial

disability retirement. A State First Tier member must have at least five (5) years of service credit

to be eligible. (Government Code section 21150(a) ("A member incapacitated for the

performance of duty shall be retired for disability pursuant to this chapter if he or she is credited

with five years of state service, regardless of age...").)

If her disability or industrial disability retirement application is approved, she will receive

a reduced monthly retirement payment for the rest of her life until she recovers from her injury or

illness (or until she is eligible for service retirement). (See Government Code section 21150 et

seq.. Article 5 (Disability Retirement Benefits).) An actuarially reduced benefit factor is applied

to the disabled employee, which results in a reduced monthly retirement allowance.

The disability retirement benefit is particularly important for employees, like Martinez,

who are incapacitated for the performance of duty, but are too young to be eligible for service

retirement. To be eligible for service retirement, the employee must be at least age fifty (50).

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3. The employee has a right to reinstatement to her former position or toa position in the same classification

If the CalPERS Board of Administration ("Board") determines that an individual who is

receiving disability retirement is no longer incapacitated for duty in the position she held when

retired for disability or in a position in the same classification, her disability retirement allowance

will be cancelled immediately and she "shall be reinstated" to the State position she held when

retired for disability, or in a position in the same class, at her option. (Government Code section

21193.)

The Board is able to determine whether the individual is no longer incapacitated by

compelling that individual to submit to an examination by a physician or surgeon, who the Board

appoints. (Government Code section 21192.) The Board may order such an examination sua

sponte or if the individual applies for reinstatement. (Government Code section 21192.) The

responsibility of the Board-appointed physician or surgeon is to evaluate whether the individual is

still incapacitated, physically or mentally, for duty in the state agency where she was employed

and in the position held by her when retired for disability or in a position in the same

classification. (Id.) The term "still incapacitated" suggests the scope of the Board's evaluation is

limited to determining whether the conditions for which disability retirement was granted

continue to exist, not whether new physical, mental or emotional conditions exist which might

adversely affect the exercise of her duties. {California Department of Justice v. Board of

Administration of California Public Employees' Retirement System (2015) 242 Cal.App.4th 133,

141.)

The State department from which the individual retired is not permitted to order the

individual to submit to such an examination. If the individual receiving the disability allowance

retired from State employment, only the CalPERS Board may order the examination. The

passage in Government Code section 21192 that refers to the "governing body of the employer

from whose employment the person was retired" having the ability to order this medical

examination does not apply to the State or its employees; rather, it applies only to school districts

or other contracting agencies such as cities, counties or special districts. (Government Code


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section 21192 ("The board, or in case of a local safety member, other than a school safety

member, the governing body of the employer jfrom whose employment the person was retired,

may require any recipient of a disability retirement allowance imder the minimum age for

voluntary retirement for service applicable to members of his or her class to undergo medical

examination.. The employers inHaywood, supra, 67 Cal.App.4th 1292 (a special district

called the American River Fire Protection District, which contracts with CalPERS) and Smith,

supra, 120 Cal.App.4th 194 (the City of Napa, which contracts with CalPERS) possess the

statutory ability to require a recipient of disability retirement allowance to submit to a medical

examination to identify the individual's continued eligibility for that allowance. {Haywood,

supra, 67 Cal.App.4th at 1305, citing Government Code section 21192.) In contrast, a State

agency possesses no such right. (Government Code section 21192.)

In the case of a State employee, if the Board-appointed physician or surgeon determines

that the employee is not so incapacitated for duty in the position held when retired for disability

or in a position in the same classification, the State must reinstate the individual to such positions

with no conditions. (Government Code section 21193.) In California Department of Justice,

supra, 242 Cal.App.4th 133, the Second District Court of Appeal has described Government

Code sections 21192 and 21193 as creating a right on the part of the employee to "reinstatement

without conditions," and a duty on the part of the employer to make a "mandatory reemployment

offer." {California Department of Justice, supra, 242 Cal.App.4th at 142-43.)

The employee possesses the right of reinstatement, and she can elect to waive that right by

declining an offer of reinstatement or by accepting another position. (Government Code section

21192) ("If the recipient was an employee of the state or of the university and is so determined to

be not incapacitated for duty in the position held when retired for disability or in a position in the

same class, he or she shall be reinstated, at his or her option, to that position. However, in that

case, acceptance of any other position shall immediately terminate any right to reinstatement."


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The statute also contemplates a voluntary reinstatement scenario that is not relevant here. (GovernmentCode section 21193 ("If the determination pursuant to Section 21192 is that die recipient is not soincapacitated for duty.. .in the position with regard to which he or she has applied for reinstatement and hisor her employer offers to reinstate the employee...").)

10POST HEARING BRIEF

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Emphasis supplied.) As described later in this brief, it is logical that the employee - the holder of

the privilege of reinstatement - can also waive the right of reinstatement either by being

terminated for cause and not pursuing or prevailing in an SPB appeal or other legal proceeding, or

by expressing waiving the right in a settlement agreement. As is true with regard to all

substantive aspects of the PERL, the right of reinstatement is designed to benefit employees, not

the State.

B. THE THREE SUBSTANTIVE RIGHTS OF EMPLOYEES PROVIDEDFOR IN PERL, DESCRIBED ABOVE, ARE INTERRELATED BUT NOTINTERDEPENDENT

The three substantive rights of employees described above - (1) freedom from unilateral

medical separation by the State; (2) payment by CalPERS of a disability retirement allowance at

an actuarially-reduced rate, and (3) reinstatement to their employment with the state should their

medical condition subside - are interrelated, but they are not interdependent. Below, we explain

how this is so, addressing each statutory right in turn.

First, the freedom from unilateral medical separation, while related to the employee's

rights to a monthly disability retirement allowance and reinstatement from disability retirement,

exists independently of the other two rights. In short, the employer must not unilaterally

medically separate the employee, and instead must apply for disability retirement on the

employee's behalf. That prohibition exists regardless of whether CalPERS will ultimately deem

the individual qualified for disability retirement, or whether CalPERS will ultimately deem the

individual entitled to reinstatement from disability retirement.

Second, nothing in the statute requires an employee to be eligible for reinstatement with

the employer as a condition precedent to receiving a monthly disability retirement allowance.

The statutory sections pertaining to disability retirement, disability retirement benefits, and

reinstatement from retirement are located in three difference Articles of the PERL, and they do

not cross-reference one another. (Compare Government Code section 21400 et seq. (Article 5.

Disability Retirement Benefits), Government Code section 21150 et seq. (Article 6. Disability

Retirement) and Government Code section 21190 et seq. (Article 7. Reinstatement from

Retirement).)

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When evaluating an individuars qualification for disability retirement, the Board is not

authorized to consider whether the individual is eligible for reinstatement to her former agency.

The Board's authority is limited to determining (1) whether the application was timely, (2)

whether the employee has the minimum service required for eligibility, and (3) whether the

individual is medically incapacitated for the performance of duty. The employee's application is

timely if it is made "(a) while the member is in state service, or (b) while the member for whom

contributions will be made under Section 20997, is absent on military service, or (c) within four

months after the discontinuance of state service, or while on an approved leave of absence, or (d)

while the member is physically or mentally incapacitated to perform duties firom the date of

discontinuance of state service to the time of application or motion." (Government Code section

21154.) The Board determines whether the individual achieved the requisite level of service

credit by reviewing the individual's CalPERS service credit report. (Government Code section

21150.) The Board determines whether the individual is medically incapacitated for duty by

reviewing the medical records the individual has submitted with her application and/or ordering

the individual to submit to a medical examination. (Government Code section 21154.) If the

medical examination and other available information show to the satisfaction of the Board that

the individual in State service is incapacitated physically and mentally for the performance of her

duties and is eligible to retire for disability, the board shall immediately retire her for disability

(unless she is entitled to service retirement, in which case she may be entitled instead to that

higher benefit). (Government Code section 21156(a)(1).) It is clear fi*om the statutory context

that the phrase "and is eligible to retire for disability" means only that the member has accrued

the minimum required service credit described in Government Code section 21150. The PERL

defines "disability" or "incapacity for performance of duty" as a basis for retirement as "disability

of permanent or extended and uncertain duration, as determined by the board,.. .on the basis of

competent medical opinion." (Government Code section 20026; see also Mansperger v. Public

Employees' Retirement System (1970) 6 Cal.App.3d 873, 876 (construing that term to mean the

substantial inability of the applicant to perform his usual duties).) In two separate places in the

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PERL, the Legislature stated that the Board is restricted to basing its eligibility determination

upon "competent medical opinion." (Government Code sections 20026 and 21156(a)(2).)

Further, the Board may not use disability retirement as a substitute for the disciplinary

process. (Id.) That sentence in the statute suggests that the Board shall not look at an employee's

disciplinary record, or any other personnel-related documents such as a Settlement Agreement, to

determine the applicant's eligibility for disability retirement. All that is relevant for the Board's

determination is the individual's medical fitness for the performance of his or her duties. It is

appropriate that the Board may require an applicant to submit a job duty statement/job description

and a completed Physical Requirements of Position/Occupational Title form, given that those

documents directly relate to the question of the applicant's medical fitness to perform the duties

of the last position she held. (A Guide to Completing Your CalPERS Disability Retirement

Election Application, p. 23, emphasis added.) The applicant need not prove to CalPERS that the

State agency would permit her to return to that last position held, should she elect to accept it.

Third, nothing in the statute requires the employee to be perpetually eligible for

reinstatement to employment with her prior State agency in order to qualify to receive disability

retirement benefits. It is clear from the statute that an employee need not be employed with the

State at the time she applies for disability retirement. (Government Code section 21154.) An

application is still deemed timely if it is filed within four (4) months after the discontinuance of

the State service of the member or while the member is physically or mentally incapacitated to

perform duties from the date of discontinuance of state service to the time of application or

motion. (Id., subsections (c) and (d).) Government Code section 21154, which expressly permits

a former State employee to file a disability retirement application, certainly does not disqualify a

terminated employee (or an employee who settled a termination action) from applying for or

receiving disability retirement. CalPERS commonly requests that an applicant for disability

retirement or industrial disability retirement furnish a job duty statement/job description and

completed Physical Requirements of Position/Occupational Title form, reflecting the apphcant's

last position, to determine whether she is incapacitated physically or mentally to perform the

duties of that position. (See Exhibit E, A Guide to Completing Your CalPERS Disability


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Retirement Election Application, p. 23.) The Guide refers to the applicant's last position,

because it is common for an applicant to no longer hold the position at the time she applies.

The right to a disability allowance and the right of reinstatement need not go hand-in-

hand. Government Code section 21193 states that if the Board determines, pursuant to a medical

examination conducted by a Board-appointed physician or surgeon, that the individual is no

longer so incapacitated for duty in the position held when retired for disability or in a position in

the same classification, the individual's "disability retirement allowance shall be cancelled

immediately, and he or she shall become a member of this system." (Government Code section

21193, emphasis supplied.) However, Government Code section 21193 does not require the

employee to reinstate to her prior employment. If the individual has waived her right to

reinstatement either by declining the opportunity, or accepting another position, (Government

Code section 21193), the Board will not compel reinstatement and will nonetheless cancel her

disability allowance immediately. (Id.) The same result would occur where, as here, an

employee has prospectively waived her right to reinstatement by promising "she will never again

apply for or accept any employment position with" her prior State agency. (Quoting Exhibit 12,

Settlement Agreement, pp. 2-3, paragraph 12.)

In summary, an individual's ability to reinstate fi"om disability retirement to a position

with her prior State agency is not a condition precedent to receiving a disability allowance.

C. THE HAYWOOD AND SMITH DECISIONS WERE WRONGLY-DECIDED AND MUST BE OVERRULED

As evidenced by the CalPERS notice of cancellation of Martinez's disability application,

(Exhibit 4), CalPERS has promulgated a rule (through its Board's precedential decision

Vandergoot) adopting the legally-flawed court precedent Haywood and Smith. Those court

decisions incorrectly interpret provisions of the PERL, rely on a provision of the PERL not

relevant to State employees, and ignore the fundamental public policy that pension laws are

intended to benefit and not penalize an employee.

We urge the Administrative Law Judge and Board to overturn Vandergoot and disavow

Haywood and Smith.

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A ProftssiooftlCcfpotstkDleoi Mada

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1. Summary of Havwood and Smith decisions

In Haywoody suproy 61 Cal.App.4th 1292, a firefighter named Haywood was frequently

disciplined for failing to follow instructions. {Haywoody suprOy 67 Cal.App. 4th at pp. 1298-

1299.) In 1992, Haywood applied for workers' compensation benefits claiming that his fear of

constantly being scrutinized by supervisors had caused him to suffer "psychic injury." (Id. at p.

1299.) He was evaluated by doctors. Ultimately, he was charged with jeopardizing the health

and safety of the public and inexcusable neglect of duty and was terminated effective April 30,

1993. (Id.) He filed grievances challenging the discipline, but was unable to set the disciplinary

actions aside. (Id.) Approximately eleven (11) months later, Haywood applied for disability

retirement. CalPERS denied his application. (Id.)

At the CalPERS administrative hearing, there was evidence that Haywood was

incapacitated from returning to work at the particular fire district, due to problems with his

supervisors causing him depression; however, it appeared he would be able to perform the duties

of a fu-efighter at a different fire district. (Id, at p. 1302.)

On appeal, the Third District Court of Appeal considered whether, in order to obtain a

disability retirement, an employee had to be disabled from working at the exact last department

where the employee worked, or whether an employee had to be disabled from working at any

similar department in the state. (Id. at pp. 1302-1303.) The Court gave a variety of reasons why

Haywood was not eligible for a disability retirement. The Court interpreted a variety of statutes

as requiring that a person may only be eligible for disability retirement if the person would be

permitted to return to work if the disability were alleviated. (Id.y at p. 1305.) The Court

concluded that since Haywood was terminated from his job, there was no longer the potential of

him being reinstated as a firefighter with the District, and therefore, it was proper to deny his

application for disability retirement. (Id.y at p. 1306.)

Secondarily, the Court noted that awarding Haywood "disability retirement would

interfere with the District's authority to discipline recalcitrant employees." Therefore, the Court

reasoned that Haywood's application should be rejected so that the District's authority was not

"overrid[d]e[n]." (Id.) In short, the Court concluded, in part, that "eligible to retire for disability"

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meant that the person was an active employee, who would be able to return to his job if he

overcame his disability. {Id. at p. 1307.)

The Smith opinion later built upon the Haywood opinion. In Smithy a firefighter named

Smith suffered a back injury, but also had ongoing disciplinary issues with the City of Napa.

{Smithy suprOy 120 Cal.App.4th at 199.) As part of the disciplinary issues. Smith was required to

complete certification tests in four (4) different areas of his job. {Id., at 199-200.) Smith made

critical errors during one (1) of the tests, and was informed that he would be dismissed effective

December 15,2000. That same day - December 15,2000 - Smith filed a claim for disability

retirement. {Id.y at 201.) Relying on Haywoody the City of Napa concluded that Smith was

ineligible for disability retirement due to dismissal from his job. {Id.y at 201-201.) Smith

challenged the disciplinary action before the City of Napa's City Civil Service Commission, but

the City Council affumed his dismissal. {Id,y at 199.)

On appeal, the Third District Court of Appeal revisited its prior decision in Haywood.

{Id.y at 203.) The Court explained that the Haywood holding is that "if an applicant is no longer

eligible for reinstatement because of a dismissal for cause, this also disqualifies the applicant for a

disability retirement." {Id.). The Court explained "[t]o interpret the statutes otherwise overrides

the power of public agencies to discipline employees, and would reward poor employees with

early retirement. [Citation to//qyvvoot/.]" (/(/., at 203-204.) In iSmfrA, the Court rejected Smith's

argument that the Haywood holding was "an *unenacted' rule of law." {Id., at 204.) The Court

explained that the Haywood decision was based on an interpretation of the statutes governing

disability retirement. Further, the Court noted that if the Legislature disapproved of the Haywood

holding, then it had five (5) years to "scuttle" the opinion. The Court concluded that the lack of

legislative action supported its earlier i/qyvvooc? holding. {Id.y at 204.)

In Smithy the Court explained, however, that the Haywood "holding would not apply

where the cause for dismissal was the result of a disabling medical condition, or where the

dismissal would be 'preemptive of an otherwise valid claim for disability retirement.' [Citation to

Haywood.Y {Id.y at 205.) The Court explained that "if an agency dismisses an employee solely

for a cause umelated to a disabling medical condition, [such as dismissal] cannot result in the


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forfeiture of a matured right to a pension absent express legislative direction to that effect.

[Citations to Haywood.'\ Thus, if a plaintiff were able to prove that the right to a disability

retirement matured before the date of the event giving cause to dismiss, the dismissal cannot

preempt the right to receive a disability pension for the duration of the disabiUty. [Citation to

Haywood.l Conversely, the 'right may be lost upon occurrence of a condition subsequent such as

lawful termination of employment before it matures...' [Citation to Haywood.y (Id, at 206.)

As a result of the foregoing rules, the Smith court concluded that the key issue in the case

is whether Smith's disability retirement matured before his effective date of termination. (Id., at

206.) The Court concluded that a "vested right matures when there is an unconditional right to

immediate payment." The Court then also concluded that a duty to provide a disability payment

only arises once CalPERS has determined that the employee is no longer capable of performing

his duties. In other words, a right to a pension payment is considered "matured" once CalPERS

approves the disability retirement application. Therefore, the Court reasoned that if a plaintiff

were able to prove that CalPERS determined the plaintiff was no longer capable of performing his

duties before the date of the event giving creating cause to dismiss, then dismissal cannot preempt

the right to receive a disability pension for the duration of the disability. Based upon this mle, the

Court determined that Smith's disability retirement claim was correctly denied, because Smith

was terminated before CalPERS made a determination about his abilities to perform his job. (Id.)

Nevertheless, the Smith court noted, "there may be facts under which a court, applying

principles of equity, will deem an employee's right to a disability retirement to be matured and

thus survive a dismissal for cause." (Id., at 206-207.) For example, equity might require a

different result if there were undisputed evidence that a plaintiff was eligible for a disability

retirement, such that a favorable decision on his claim would have been a foregone conclusion,

such as a loss of limb case. (Id., at 207.) The Court concluded that principles of equity did not

mandate a different outcome in Smith's case, as his medical evidence was equivocal. (Id.)

///

///

///

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2. An employee is not disqualified for disability retirement if she isterminated for disciplinary reasons

The relevant provisions in the PERL - Government Code section 21400 et seq. (Article 5.

Disability Retirement Benefits), Government Code section 21150 et seq. (Article 6. Disability

Retirement) and Government Code section 21190 et seq. (Article 7. Reinstatement from

Retirement) - do not say anything about ineligibility of an individual for disability retirement if

she has been terminated from employment. The Third District Court of Appeal's committed clear

error when it ruled that that the phrase "eligible to retire for disability" that appears in

Government Code section 21154 means that the person must have been an active employee who

would be able to retum to his job if he overcame his disability. {Haywood, supra^ 67 Cal.App.4th

at 1307.) The Third District Court of Appeal further perpetuated its earlier error when it

reaffirmed the Haywood holding in its later Smith decision. {Smith, supra, 120 Cal.App.4th at

913-14.)

There is no statutory basis for the Haywood and Smith decisions. In Haywood, the Third

District Court of Appeal stated that there is an "obvious distinction" in public employment

retirement laws between an employee who has become medically unable to perform his usual

duties and one who has become unwilling to do so. {Haywood, supra, 67 CaLApp. 4th at 1296.

Emphasis in original.) Yet, the Court of Appeal did not provide a statutory basis for this

supposedly "obvious distinction." The Haywood Court did not recognize that the rights to a

disability retirement allowance and reinstatement from a disability retirement are independent of

one another. It ignored the fact that an employee may receive a disability retirement allowance,

and if the Board determines that the employee is no longer incapacitated for duty in the position

held when retired for disability or in a position in the same classification, the Board may

immediately cut-off the disability retirement allowance, even if the employee does not reinstate

her employment. A more logical, legally supportable conclusion is the following: if the employee

has been terminated for cause from her last position, and she has not succeeded in reversing that

adverse action through an appeal or other proceeding or she has signed a settlement agreement

expressly waiving her right to retum to that position or agency, her right to reinstatement under


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Government Code section 21193 shall be forfeited. Such unchallenged or final disciplinary

action or such express waiver of the right to reinstatement shall not, however, disqualify her fi-om

receiving an actuarially-reduced retirement allowance under the PERL's disability retirement

provisions.

If the Haywood Court would have applied the logical, legally supportable approach set

forth immediately above, its secondary concern that an employer's disciplinary authority is

undermined if a terminated employee is granted disability retirement would be addressed (or

would be moot). Contrary to the Haywood Court's assertion, under the PERL, the public

employer is fi ee to permanently end the employment relationship by way of a valid termination

action, so long as the termination action is not motivated **because of the employee's disability,

(Government Code section 21153), and so long as that action is not reversed by the SPB, PERB,

or other tribunal, or through a settlement agreement.

Our proffered interpretation of PERL is harmonious with other provisions applying to

State employment, such as Government Code section 19583.1, which states that dismissal of an

employee firom State service shall result in the automatic removal of the employee's name fi"om

any and all employment lists on which it may appear. (Government Code section 19583.1.) An

unchallenged or otherwise final termination action will waive the employee's right to

reinstatement imder Government Code section 21193 (and remove her from a re-employment list,

so to speak) yet will not waive her right to a disability allowance under Government Code section

21150 et seq.

The Smith decision suffers from an additional logical and legal defect. The Third District

Court of Appeal acknowledged in that decision that equity mandates consideration of mitigating

factors, such as whether the employee would have been entitled to disability retirement prior to

being terminated. {Smithy supra^ 120 Cal.App.4th at 206-07.) Yet the Court was only willing to

apply the principles of equity to the narrow circumstance of there being undisputed evidence that

the plaintiff was eligible for disability retirement such that a favorable decision on his claim

would have been a foregone conclusion. (Id.y at 207.) The sole equitable excq)tion that the Smith

Court recognized makes no sense in the context of the PERL. A person can apply for disability

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retirement up to four (4) months after discontinuing service, and even later if her physical or

mental incapacity persists after the date of discontinuance of state service up to the time of her

application. (Government Code section 21154.) CalPERS may not have received a disability

retirement application, or may not have adjudicated it yet, prior to the employee's termination

date.

The Smith Court should not have viewed notions of equity so narrowly. Rather, it should

have acknowledged other extenuating circumstances that excuse the disability retirement

applicant from the harsh consequences of the Haywood holding - such as the circumstance of an

employee agreeing in a settlement agreement to waive the right to reinstatement but expressly or

impliedly preserving her right to pursue disability retirement.

D. THE BOARD SHOULD NOT HAVE EXTENDED THE HAYWOOD ANDSMITH DECISIONS TO THE STATE EMPLOYMENT CONTEXT, ANDCERTAINLY NOT TO CASES INVOLVING SETTLEMENT OF APENDING DISCIPLINARY APPEAL

The Haywood and Smith decisions are problematic, in both a legal and public policy

sense, and the CalPERS Board exacerbated the problem by extending those holdings to the State

employment setting and settlement context.

1. Summary of the Vandereoot decision

In Vandergooty Precedential Decision 13-01, the Board approved the proposed decision of

an Administrative Law Judge of the Office of Administrative Hearings. {Vandergooty

Precedential Decision No. 13-01, p. 1.) The Board adopted the proposed decision as a

precedential decision, effective October 16,2013. {Id.)

In Vandergooty the State employee, Vandergoot, was issued a Notice of Adverse Action

terminating his employment with the California Department of Forestry and Fire Protection. {Id.y

at p. 2 of proposed decision.) Vandergoot challenged the Notice of Adverse Action with the SPB.

He also filed an application for industrial disability retirement. By operation of a settlement

agreement, Vandergoot's termination was converted into a resignation. Vandergoot agreed in the

settlement agreement not to reapply for or accept employment with the California Department of

Forestry and Fire Protection again. {Id.y at p. 4.)


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WQNBERG, ROGER &ROSENFEU)

A Pro&ssioaxl CccponticDtCOl Mttb* VSbctritkny.MttttO

010)»7-IQei

In the proposed decision, the Administrative Law Judge extended the holdings of

Haywood and Smith to the State employment context. As described above, the Haywood and

Smith decisions are legally erroneous. Additionally, the portion of the statute authorizing an

employer to subject an individual receiving a disability allowance to a medical examination to

determine whether her incapacity persists is inapplicable to the State. Only the Board can compel

the individual to be medically examined under Government Code section 21192. The following

statement in Vandergoot is patently incorrect - "Were respondent to receive a disability

retirement allowance, he would have no employer who could require him to undergo a medical

examination under Government Code section 21192." {Vandergoot, proposed decision p. 8.)

Perhaps most importantly, the Vandergoot decision is legally flawed because no

termination action has actually occurred when the State agency and the employee (such as

Vandergoot or Martinez) settle a pending SPB appeal by permitting the employee to resign his or

her employment in lieu of termination. The Administrative Law Judge applied the Haywood and

Smith holdings to Vandergoot despite acknowledging "the absence of an actual dismissal for

cause." {Id., at p. 6 of proposed decision.) The Vandergoot decision will discourage parties from

settling pending SPB appeals or other legal proceedings, as the employee will have a greater

chance of being entitled to disability retirement if she prevails in an SPB or PERB case than if she

signs a State agency's typical waiver of the right to reemployment.

2. At fl minimum, the Vandereoot holding mav only be appliedDrospectivelv to employees hired on or after October 16.2013 (theeffective date of the precedential decision)

The Haywood, Smith, and Vandergoot decisions may not be applied to employees who

were employed with the State prior to the date the CalPERS Board deemed the Vandergoot

decision precedential (October 16,2013). To apply the harsh Haywood*^ penalty to employees

hired on or before October 16, 2013 would infringe upon their vested retirement rights.

Public employees have a right to the payment of salary that has been earned. {Kem v. City

of Long Beach (1947) 29 Cal.2d 848, 852-853 ("[ajlthough there may be no right to tenure, public

employment gives rise to certain obligations which are protected by the Contract Clause of the

Constitution, including the ri^t to the payment of salary which has been earned.") Pension

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benefits are a form of deferred compensation. Pensions may not be denied to an employee once

vested and accrued. see also Miller v. State of California (1977) 18 Cal.3d 808, 815.)

An employee's contractual right to earn pension benefits on the terms offered is vested

on the first day of employment. {California League of City Employee Associations v. Palos

Verdes Library District (1978) 87 Cal.App.3d 135,139; Miller^ supra, 18 Cal.3d at 817.) Said

otherwise, upon acceptance of public employment, the employee acquires a vested right to a

pension on terms substantially equivalent to those offered by the employer as of the first day of

her employment, or as of the time the promise was made or improved upon while she was

employed. {Miller, supra, 18 Cal.3d at 817; see also Carman v. Alvord (1982) 31 Cal.3d 318,

325; Legislature v. Eu (1991) 54 Cal.3d 492,528-529.)

A benefit cannot be considered 'Vested" if the employee had no reasonable expectation

that the benefit could continue. (See Bellus v. City of Eureka (1968) 69 Cal.2d 336, 352 (stating

that the city will not be obligated to continue a pension benefit if the pension documents, or

ordinance or statutory scheme clearly and explicitly limit the city's liability to the pension fund).)

For example, if a change in contribution is implicit in the operation of the public employer's

system, and is expressly authorized by the system, no vested right is created or impaired when the

public employer effects such a change. {International Association ofFirefighters v. City of San

Diego (1983) 34 Cal.3d 292,303.)

Even where a benefit is "vested," the employee, of course, must fulfill her obligations and

meet all conditions necessary to mature the pension. The fact that a pension right is vested will

not prevent its loss if the employee's employment terminates before completion of the period of

service designated in the pension plan. {Kem, supra, 29 Cal.2d at 844.)

Under Government Code section 21150, a State Tier I employee must be credited with at

least five (5) years of service credit before becoming eligible for disability retirement.

(Government Code 21150.) Martinez worked for the State for many decades, and thus possesses

a vested disability pension right. CalPERS shall grant her disability retirement application so

WEINBERG, ROGER &ROSEMFELD

A Profttdeatl Coporttiootool M«lMVBft|«?iik«t7.MM200

Alim<*i.cafcgfc»430i(Sio)))Meei

Even unilaterally created employer policies are regarded as "contracts" under this analysis. (See e.g.,Goddard v. South Bay Union High School District (1978) 79 Cal.App.3d 98,105.)


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long as she files a timely application and is deemed medically incapacitated as defined in the

PERL.

The language of a pension plan is subject to the implied disclaimer that the governing

body may make modifications and changes in the system. (Kertiy supra, 29 Cal.2d at 855.) The

employee does not have a right to any fixed or definite benefits, but only to a substantial and

reasonable pension. (Id.) The California Supreme Court has held that there "is no inconsistency

[] in holding that he has a vested right to a pension but that the amount, terms and conditions of

the benefits may be altered." (Id.)

Prior to an employee retiring, her vested contractual pension rights may be modified for

the limited purpose of keeping the pension system flexible to permit adjustments in accord with

changing conditions and at the same time to maintain integrity of the system. (Wallace v. City of

Fresno (1954) 42 Cal.2d 180,184.) There are strict limitations on the conditions which may

modify the pension system in effect during employment. (Belts v. Board of Administration

(1978) 21 Cal.3d 859, 864.) Such modifications to pension benefits must be "reasonable." It is

for the courts to determine, upon the facts of each case, what constitutes a reasonable and

therefore permissible change. (Allen v. City of Long Beach (1955) 45 Cal.2d 128,131.) To

qualify as "reasonable," the alterations of the employees' pension rights must 1) bear some

material relation to the theory of the pension system and its successful operation, and 2) changes

in a pension plan which result in disadvantage to employees should be accompanied by

comparable new advantages. (Wallace, supra, 42 Cal.2d at 185.)

As for the first element of this test, vague claims of financial insecurity are insufficient.

Changes made to the pension benefit on that basis alone do not have "some material relation to

the theory of the pension system and its successful operation." (See Abbott v. City of Los Angeles

(1958) 50 Cal.2d 438,455 ("[djefendants' only plea in this respect appears to be that if the

amendments had not been made 'the costs to the City and its taxpayers would have reached such

staggering proportions that, in all probability, the system would have ceased to exist." This plea,

based on speculation alone is without merit. Rising costs alone will not excuse the city fi'om

meeting its contractual obligations, the consideration for which has already been received by


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it..."); see also Allen, supra, 45 Cal.2d at 133 (court rejected city's excuse that the changes made

the pension system more equitable for persons employed prior to a certain date and for those

employed after a certain date, and so would ameliorate "personal problems" between the two

groups.)

Now to the second element of the test. Before employee pension rights can be

detrimentally affected, commensurate benefits must be given to the employee to prevent

unconstitutional impairment of contractual obligations between the public employer and the

employee.^ For example, an increase in an employee's contribution to a pension fund fi*om two

(2) percent to ten (10) percent of salary without comparable, offsetting benefits is unreasonable.

{Allen, supra, 45 Cal.2d at 132-133.) See dXso Association of Blue Collar Workers et al. v. Ted

Wills et al (1986) 187 Cal.App.3d 780 (holding that city's action of requiring employees to fully

fund a system that had been partially funded since its inception by levying contributions for past

services rendered by the employee was an impairment of a vested pension right without any

corresponding benefit. The court rejected the city's claim that its action was necessary to

preserve the "fiscal integrity" of the system.)

For an example of a court upholding the change in the pension benefit under the above-

stated test see Houghton v. City of Long Beach (1958) 164 Cal.App.2d 298. In Houghton, the

California Court of Appeal found that a revamping of an existing system so as to eliminate

shortages in the available fund, by substituting a general obligation of the city for a "mere" two

percent of the general levy, has direct relation to the integrity of the system and keeping it flexible

to permit adjustments in accord with changing conditions. This is so because the "imposition of a

member's contribution of two per cent of his salary toward a solventfund, in substitution for an

insolvent one, is a 'disadvantage' which is 'manifestly accompanied by comparable new

advantages." {Houghton, supra, 164 Cal.App.2d at 306, emphasis supplied.)

WEINBERG, R0GE31 &ROSENFELD

A Pmftitiopil CgpCCTtkntool MuimVSBHirKtMy.SciM309

Abe*. Cafadi 04501(S10)»7'I09I

The commensurate benefit must be given to the employee who suffers the detriment, not to some otheremployee. Benefits subsequently obtained by other employees will not be considered an "of&ef' fordetriment incurred by the employee whose pension rights have accmed. {Abbott, supra, 50 Cal.2d at453.)


Case No. 2015-0918 / OAH NO. 2016-031210

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WEINBERG, ROGER StROSENFELD

A Pro&ssioaAl CofpontiflotMI Mutai fiftMvjr. fl(dM 200

otoiuum

Where the employee's contribution rate is a fixed element of the pension system, the rate

may not be increased unless the employee receives comparable new advantages for the increased

contribution. {Pasadena Police Officers Association v. City of Pasadena (1983) 147 Cal.App.3d

695 citing to Wisley v. City ofSan Diego (1961) 188 Cal.App.2d 482,486-487.) Indeed, an

increase in the employee's contribution rate operates prospectively only. Yet, even a prospective

change may be struck down by a court if the employer does not provide the employee any

comparable new advantage to offset the disadvantage. {Wisley^ supra, 188 Cal.App.2d at 703.)

The above-described principles pertaining to vested rights of public employees have been

repeatedly affirmed by courts in recent years. (See Retired Employees Association of Orange

County V. County of Orange (2011) 52 Cal.4th 1171; see also International Brotherhood of

Electrical Workers, Local 1245 v. City of Redding (2012) 210 Cal.App.4th 1114; see also Protect

Our Benefits v. City and County of San Francisco (2015) 235 Cal.App.4th 619.)

The CalPERS Board cannot demonstrate that Martinez or other State employees received

comparable new advantages in exchange for the CalPERS Board applying the punitive

*'Haywood" rule to employees already employed as of October 16,2013. The fact that CalPERS

may experience some cost savings as a consequence of applying the Haywood rule, and that such

cost savings may make the CalPERS pension plan more solvent in the long-run, is not a

justification for impairing State employees' disability retirement rights.

E. THE BOARD SHOULD APPLY PRINCIPLES OF EQUITY ANDDETERMINE THAT MARTINEZ'S DISABILTY RETIREMENTAPPLICATION IS NOT BARRED BYHAYWOOD/SMTTHTVANDERGOOT

For the many reasons described above, the Haywood, Smith and Vandergoot decisions

cannot be applied to Martinez. Applying notions of equity (that even the Smith Court

acknowledged to some degree), CalPERS must consider Martinez's disability retirement

application on the merits of a medical examination or other medical documentation. Martinez

was issued a Counseling Memorandum and Notice of Adverse Action for termination. SEIU

Local 1000 alleged that the disciplinary actions constituted retaliation and discrimination on

account of Martinez's protected concerted activity under the Dills Act. Twice, SEIU Local 1000


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A ProftirioDil Corpcntioo1001 ItelM Vintt«rMlm7. Sail* 200

Ckttfecifa MMI010)}l7.tOO]

stated a prima facie case of retaliation and discrimination, causing PERB to issue an original and

later an amended unfair practice complaint. By entering into the settlement, the DSS received the

valuable consideration of withdrawal of the PERB complaint and the SPB appeal, and Martinez's

waiver of reemployment rights with the agency. In exchange for that material consideration, the

DSS committed to cooperating with the disability retirement application that the DSS knew

Martinez would imminently file, the basis of which would be her severe and persistent medical

conditions.

Applying principles of equity to the foregoing facts, CalPERS cannot be permitted to

cancel Martinez's application.

F. THE BOARD VIOLATED THE ADMINISTRATIVE PROCEDURES ACT

WHEN IT ADOPTED, THROUGH THE PRECEDENTIALVANDERGOOT DECISION, THE RULE THAT AN EMPLOYEETERMINATED IS BARRED FROM RECEIVING DISABILITYRETIREMENT

By adopting the Third District Court of Appeal's holding of Haywood in the precedential

decision VandergooU the Board engaged in underground rulemaking in violation of the

Administrative Procedure Act ("APA"). It is beyond dispute that the Board is subject to the

rulemaking requirements (e.g., public notice and opportunity to comment) of the APA's Chapter

3.5 (Government Code sections 11340-11351) and must follow those requirements if it wants to

adopt a regulation of general application. {Tidewater Marine Western, Inc. v. Bradshaw (1996)

14 Cal.4th 557, 568-577 (Department of Labor Standards Enforcement's policy for determining

whether Industrial Welfare Commission's wage orders applied to maritime employers was void

for failure to follow APA rulemaking requirements).

It is well settled that the purpose of the APA is to provide for meaningful public

participation in the process by which state agencies adopt administrative regulations, and to create

an administrative record which assures effective judicial review. (Voss v. Superior Court (1996)

46 Cal.App.4th 900, 908-909.) In order to carry out these dual objectives, the APA (1)

establishes '*basic minimum procedural requirements for the adoption, amendment or repeal of

administrative regulations" which give all interested parties a fair and equal opportunity to

present statements and arguments at the time and place specified in the notice and calls upon the


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WEINBERG, ROGER &ROSEMFELD

A Profinioat] CoiponticDl001Mti!aiVISit« M«i7.S«£tt300

AhaaAsCkUtebMSOt(9l0)»7*t001

agency to consider all relevant matter presented to it; and (2) provides that any interested person

may obtain a judicial declaration as to the validity of any regulation by bringing a superior court

action for declaratory relief. {California Optometric Assn. v. Lackner (1976) 60 Cal.App.3d 500,

506; see also Government Code sections 11346.3(a), 11346.4(a), 11346.8(a) and 11346.9(a)(3).)

By devising a rule that terminated employees are ineligible for disability retirement, the

Board violated its mandatory duties to be scrupulously fair and even-handed in providing

opportunities for meaningful public participation and comment in the APA rulemaking process,

and in considering all comments submitted in writing or in a public hearing on the proposal.

Indeed Government Code section 11425.60 permits an administrative agency to deem a

decision precedential if certain factors are met. Although the Board appears to have followed the

procedural requirements of Government Code section 11425.60 before declaring Vandergoot

precedential, it should have instead engaged in the more transparent process of formal rule-

making. Even if its chosen avenue of adopting a precedential decision were permissible, the

Board still violated the APA by failing to reveal to the public that the Vandgergoot decision did

not include a clear, correct or complete analysis of the PERL. The Board was required to disclose

to the public that Vandergoot constituted a new rule that had never before acknowledged by a

California court, and that it was not grounded in any statute the Board is charged with

administering.

In summary, the Board should not impose the prohibitions embodied in

Haywood!Smith! Vandergoot unless it follows the formal rulemaking procedures set forth in the

APA.

IV. CONCLUSION

We urge the Board to overrule its prior precedential decision Vandergoot. The

underground regulation the Board adopted through Vandergoot must be rescinded.

We urge the Board to distinguish the present matter from the Third District Court of

Appeal decisions Haywood and Smith. As explained in this brief, those cases were wrongly-

decided and should be overturned. Additionally, the facts of those cases are distinguishable in

that the employees were not State employees, the employees were disciplined for cause, lost their

27POST HEARING BRIEFCase No. 2015-0918/CAR NO. 2016-031210

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WEINBERG, ROGER StROSENFELD

A Frafinionil Copoixtiaa1001 Uute VtQ»|« takVRjp, Mm 2M

AluMd^Oitlta<*MSOI(St0)S)M091

appeals challenging the disciplinary actions, did not enter into a settlement that conferred material

benefits upon the employer, and did not enter into a settlement that expressly reserved the right to

apply for disability retirement and that mandated the employer to cooperate with such application.

If the Board considers itself bound by the Haywoody Smithy and Vandergoot precedents,

then alternately, the Board should order the DSS to retroactively excise from the Settlement

Agreement the provision barring Martinez from reemployment with the DSS, and retroactively

expunge and seal all termination-related documents.

We urge the Board to remand this matter to CalPERS's benefits department to make a

determination under Government Code section 21156 of Martinez's medical eligibility for

disability retirement. CalPERS should not have cancelled Martinez's application.

Alternately, we respectfully request that the Administrative Law Judge set an additional

day of hearing to allow Martinez time to present proof that the DSS's dismissal of her was

"preemptive of an otherwise valid claim for disability retirement." {Haywoody suprOy 67

Cal.App.4th at 1307.)

Dated: August 26,2016 Respectfully Submitted

WEINBERG, ROGER & ROSENFELDA Professional Corporation

By: lah V. ManansalaKeriamie R. SteeleGary P. Provencher

Attorneys for SEIU Local 1000, the exclusiverepresentative of Respondent LINDA MARTINEZ

28

POST HEARING BRIEFCase No. 2015-0918 /OAH NO. 2016-031210

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WEINBERG, ROGER&ROSENFELD

A FroftniaDft] CctpcRtotool ktete Vtaic* Piik«t7. m

rtlirmTi riWftni'itlini(5io»m»i

PROOF OF SERVICE(CCP §1013)




the within action.

On August 26,2016,1 served the following documents in the manner described below:

POST HEARING BRIEF

0 (BY U.S. MAIL) I am personally and readily familiar with the business practice ofWeinberg, Roger & Rosenfeld for collection and processing of correspondence formailing with the United States Parcel Service, and I caused such envelope(s) withpostage thereon fully prepaid to be placed in Ae United States Postal Service atAlameda, California.



0 (BY ELECTRONIC SERVICE) By electronically mailing a true and correct copythrough Weinberg, Roger & Rosenfeld's electronic mail system [email protected] to the email addresses set forth below.


Ms. Awesta WakilyCalifornia Public Employees Retirement SystemCalPERS Legal Office400 Q StreetSacramento, CA [email protected]

I declare under penalty of peijury under the laws of the United States of America that theforegoing is true and correct. Executed on August 26, jM16, Al§meda,'Caljfomia.

141702X878028

PROOF OF SERVICE

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JANNAH V. MANANSALA, Bar No. 249376KERIANNE R. STEELE, Bar No. 250897GARY P. PROVENCHER, Bar No. 250923WEINBERG, ROGER & ROSENFELDA Profession^ Corporation1001 Marina Village Parkway, Suite 200Alameda, California 94501Telephone (510) 337-1001Fax (510)337-1023E-Mail: [email protected]

[email protected]@unioncounsel.net

Attomeys for SEIU Local 1000, the exclusive representative ofRespondent LINDA MARTINEZ

PUBLIC EMPLOYMENT RELATIONS BOARD

STATE OF CALIFORNIA

LINDA MARTINEZ,

Respondent,

V.

DEPARTMENT OF SOCIAL SERVICES,

Respondent.

Agency Case No. 2015-0918 / OAH No.2016-031210

RESPONDENT MARTINEZ'S

PETITION FOR RECONSIDERATION

Date:

Time:

July 27, 20169:00 a.m.

Linda C. Martinez ("Martinez"), through her representative the Service Employees

Intemational Union, Local 1000 ("SEIU"), hereby petitions the Board of Administration of the

California Public Employees Retirement System for reconsideration of its decision in this matter

dated November 21,2016 as follows:

1. The Administrative Law Judge erred in concluding that Martinez was terminated

from employment. Consistent with its obligations under a Settlement Agreement, the Department

of Social Services ("DSS") requested that the State Personnel Board withdraw the Notice of

Adverse Action it had previously issued to Martinez. Therefore, the termination did not ever

occur. Martinez instead resigned from employment in good standing. The CalPERS Board

("Board") must determine whether Martinez is medically unable to perform the duties of the

1RESPONDENT MARTINEZ'S PETITION FOR RECONSIDERATIONHaseNn 201 S-OQl R / DAH Nn 2016-0^1910

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position from which she resigned. The Board has no right or authority to consider the Notice of

Adverse Action that was rescinded.

2. The Board should reject the Court of Appeal decisions Haywood v. American

River Fire Protection District ("Haywood") (1999) 67 Cal.App.4th 1292 and Smith v. City of

Napa ("Smith") (2004) 120 Cal.App. 194, and its own dQcision Application for Industrial

Disability Retirement of ROBERT VANDERGOOT ("Vandergoot"), Precedential Decision 13-01,

on the ground that the decisions misinterpret and misapply the PERL, and involve facts

distinguishable from the present case.

3. Under the California Public Employees' Retirement Law ("PERL"), Martinez

need not be eligible for reinstatement to her former position with the DSS. If the Board

determines that an employee is no longer incapacitated for duty in the position held when retired

for disability or in a position in the same classification, the Board may immediately cut-off the

disability retirement allowance, even if the employee does not reinstate her employment.

4. The Board must distinguish the instant matter from the above-cited decisions

because in the instant matter the DSS expressly agreed in a Settlement Agreement to preserve and

assist with Martinez's disability retirement application. It violates PERL and public policy for the

CalPERS Board to interpret the Settlement Agreement as forfeiting Martinez's right to disability

retirement, when the DSS had no such intention.

For the above reasons. Respondent Martinez petitions the Board of Administration to

reconsider the adoption of the Proposed Decision dated September 13,2016, and/or remand the

matter for further hearing before the administrative law judge.

We reserve the right to present additional arguments to a superior court in support of a

writ of mandate.

Dated: December 2, 2016 WEINBERG, ROGER & ROSENFELDA Profession^ Corporation

By: R. STEELE

fomeys for SEIU Local 100representative of Respondent

exclusive)A MARTINEZ

WI3NBERG, ROGER &ROSENFELD

A Profcnlosal Corpontion1001 M«riM VilUgi hclc««y, tdiuSOQ

Aluattfi. Catilec^ MM!(5I0)U9.|001

RESPONDENT MARTINEZ'S PETITIGN FOR RECONSIDERATIONCase No. 1015-0918 / OAH No. 2016-031210

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PROOF OF SERVICE

(CCP §1013)




the within action.

On December 2,2016,1 served the following documents in the manner described below:

RESPONDENT MARTINEZ'S PETITION FOR RECONSIDERATION

IZI (BY U.S. MAIL) I am personally and readily familiar with the business practice ofWeinberg, Roger & Rosenfeld for collection and processing of correspondence formailing wi& e United States Postal Service, and I caused such envelope(s) withpostage thereon fully prepaid to be placed in the United States Postal Service atAlameda, California,

□ (BY FACSIMILE) I am personally and readily familiar with the business practice ofWeinberg, Roger & Rosenfeld for collection and processing of document(s) to befransmitted by facsimile and I caused such document(s) on this date to be transmitted byfacsimile to the offices of addressee(s) at the numbers listed below.


□ (BY ELECTRONIC SERVICE) By electronically mailing a true and correct copythrough Weinberg, Roger & Rosenfeld's electronic mail system from;[email protected] to the email addresses set forth below.


Ms. Austa WakilyCalPERS400 Q StreetSacramento, CA 95814

I declare under penalty of perjury under the lawsforegoing is true and correct. Executed on December 2,

s of America that the{ California.

141702\891546

Stephame

WEINBERG. ROGER StROSENFELD

A PrefcssisQkl Corpotitioa1001 Wariai ViBatc fvkmy. PiMm 200

AluMdi. MJCl(310) 337-1001

PROOF OF SERVICE

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PROOF OF SERVICE

(CCF §1013)




the within action.

On December 9,2016,1 served the following documents in the manner described below:

RESPONDENT'S WRITTEN ARGUMENT

0 (BY U.S. MAIL) I am personally and readily familiar with the business practice ofWeinberg, Roger & Rosenfeld for collection and processing of correspondence formailing with the United States Postal Service, and I caused such envelope(s) withpostage thereon fully prepaid to be placed in the United States Postal Service atAlameda, California.



0 (BY ELECTRONIC SERVICE) By electronically mailing a true and correct copythrough Weinberg, Roger & Rosenfeld's electronic mail system [email protected] to the email addresses set forth below.


Ms. Austa WakilyCalifornia Public Employees Retirement SystemCalPERS Legal Office400 Q StreetSacramento, CA [email protected]

I declare under penalty of perjury under the lawa of the U:foregoing is true and correct. Executed on December 91 2016<^A1

tates of America that theda, California.

Stephanie


A Pisfcnontl Corpomiontoot MariM Vittifi Fiitwey, Skm 200

Alameda, Calilbrnia 94S0i(5tO)»7-tOOI

PROOF OF SERVICE

respondent's argument regarding the · telephone (510) 337-1001 fax (510) 337-1023 e-mail:...

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