Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_05-cv-01581/USCOURTS-casd-3_05-cv-01581-2/pdf.json

Nature of Suit Code: 440
Nature of Suit: Other Civil Rights
Cause of Action: 42:1983 Civil Rights Act

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

05cv1581

- 1 -

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

SAN DIEGO POLICE OFFICERS’

ASSOCIATION, on behalf of itself and

behalf of all of its members,

Plaintiff,

CASE NO. 05-CV-1581 H (POR)

vs. ORDER DENYING WITHOUT

PREJUDICE PLAINTIFF’S

MOTIONS FOR PARTIAL

SUMMARY JUDGMENT

[Docket Nos. 465 & 466]

MICHAEL AGUIRRE; CITY OF SAN

DIEGO; SAN DIEGO CITY

EMPLOYEES’ RETIREMENT

SYSTEM, et al.,

 Defendants.

On October 13, 2006, the Court convened a hearing on Plaintiff’s motions for partial

summary judgment on the vested nature of the pension benefits and for an accounting.

Christopher Nissen, Esq. appeared on behalf of Plaintiff San Diego Police Officers’ Association

(“SDPOA”); Rodney Perlman, Esq. appeared on behalf of Defendant Aguirre; Peter Benzian,

Esq. appeared on behalf of Defendant City of San Diego and the Individual Defendants; and

Matthew Mahoney, Esq. appeared on behalf of Defendant San Diego City Employees’

Retirement System (“SDCERS”). The Court announced its decision to deny both motions

without prejudice at the conclusion of the hearing, and hereby incorporates those oral remarks

into this written Order. 

Case 3:05-cv-01581-H-POR Document 527 Filed 10/24/06 Page 1 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

The police officers have filed a separate action in their individual capacities. Aaron v.

Aguirre, 06-CV-1451-H. 

05cv1581

- 2 -

A party is entitled to summary judgment if the pleadings and other documents show that

there is no genuine issue as to any material fact. Fed. R. Civ. P. 56(c); Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 250 (1986). 

I. “Vested” Retirement Benefits

In Plaintiff’s first motion, it seeks a partial summary adjudication that the contractual

right to pension benefits is vested in SDPOA’s members upon joining the City of San Diego’s

police force. Plaintiff SDPOA is the employee organization, and its membership includes the

active and retired police officers (holding the rank of lieutenant and below) who belong to the

union.1

 Plaintiff SDPOA annually negotiates the labor contract with the Defendant City,

including retirement and healthcare benefits. E.g., Pls.’ Ex. C (Memorandum of Understanding

for July 1, 2003 to June 30, 2004). Defendant SDCERS is the public employee retirement plan.

Plaintiff SDPOA argues that participation in the municipal pension plan is mandatory and that

the benefits are vested immediately upon accepting public employment. San Diego Charter, art.

IX, §§ 141, 143 (Pls.’ Ex. E at 106-07); San Diego, Cal., Code ch. II, art.4, § 24.0104(a) (1982)

(Pls.’ Ex. D at 103). At the hearing and in its reply brief, Plaintiff clarified its position and

argued that it is appropriate to resolve this first step in the analytical process even though the

amount of the benefits may be undetermined at this time. Plaintiff contends that it must first

prove that the members of the SDPOA have existing pension rights in order to then prove their

claims that the defendants have violated the civil rights protected by the contracts and takings

clauses of the United States Constitution (among other claims) by reducing those protected

pension rights. Plaintiff SDPOA argues that its motion is analogous to an entry of partial

summary judgment to a precursor issue, such as liability when the amount of damages is

disputed. 

The Court denies the motion because Plaintiff is essentially asking for a declaration of

governing law that is divorced from particular facts. The Court rejects Plaintiff’s analogy to

cases where entry of partial summary judgment was appropriate, because a statement from the

Case 3:05-cv-01581-H-POR Document 527 Filed 10/24/06 Page 2 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

05cv1581

- 3 -

Court that abstract pension rights are “vested” will not “isolate and dispose” of a claim or a

separate “part thereof” in this complex litigation. Fed. R. Civ. P. 56(b), (d); Celotex Corp. v.

Catrett, 477 U.S. 317, 323-24 (1986); cf. Lies v. Farrell Lines, Inc., 641 F.2d 765, 768-69 & n.3

(9th Cir. 1981) (considering whether defendant was liable as owner of vessel for seaman’s Jones

Act claim). In the context of the City’s pension crisis, Plaintiff’s motion will not materially

advance the resolution of this federal lawsuit, and indeed, may hinder the resolution of the

several lawsuits pending in state court. None of the parties dispute that, under controlling

California Supreme Court authority, a public employee’s pension “right” is vested at time of

employment. But this case does not involve a situation in which a municipality has tried to

“entirely destroy” an employee’s pension. Kern v. City of Long Beach, 29 Cal.2d 848, 853

(1947); Dryden v. Board of Pension Commrs., 6 Cal.2d 575, 579 (1936). SDCERS is

functioning and is currently making its required payments to retirees, and the City has not

announced any intention to “unilaterally repudiate” the pension plan. In re Marriage of Brown,

15 Cal.3d 838, 842-45 (1976). The critical issue in the alleged underfunding of the pension

relate to whether the City and SDCERS have jeopardized future benefits for its employees. But

the amount of the benefit depends on the particular facts of each employee’s history in relation

to his or her employment contract. California law is clear that pension benefits can be modified

to insure the integrity of the entire system. Allen v. City of Long Beach, 45 Cal.2d 128, 131

(1955); Wisely v. City of San Diego, 188 Cal.App.2d 482, 486-87 (1961). The extent of

modification is subject to a “reasonableness” standard but this is an intensely factual question

that cannot be determined in a vacuum. Carmen v. Alvord, 31 Cal.3d 318, 325 (1982)

(substantially similar terms); Kern, 29 Cal.2d at 854-56. This case raises serious factual

questions, and it would be premature, and slightly misleading, to declare that members of

SDPOA have a “vested” right of some kind in the midst of ongoing civil, criminal, and

administrative proceedings regarding a significant fiscal problem. Cf. Lies, 641 F.2d at 769 n.3

(explaining use of partial summary judgment “procedure was intended to avoid a useless trial

of facts and issues over which there was really never any controversy and which would tend to

confuse and complicate a lawsuit”) (quoting Luria Steel & Trading Corp. v. Ford, 9 F.R.D. 479,

Case 3:05-cv-01581-H-POR Document 527 Filed 10/24/06 Page 3 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

05cv1581

- 4 -

481 (D. Neb. 1949)).

 The Court also denies the motion because Defendants have identified factual disputes.

Defendant Aguirre has asserted that conflict of interest problems invalidate some of the

promised benefits. These allegations are contained in the same reports that Plaintiff relies upon

to show that various defendants acted improperly. E.g. Third Am. Compl. ¶ 6 (citing Exs. C,

D, G, & H), ¶¶ 19-22 (citing Manager’s Proposal 2), ¶ 30, ¶ 39. It would not make sense to

declare that Plaintiff’s members have “vested” pension rights when the City Attorney is

challenging the legality of some of those benefits. See Ochiltree v. Iowa R.R. Contracting Co.,

88 U.S. (21 Wall.) 249, 252-53 (1874) (“the obligation of a contract within the meaning of the

Constitution is a valid subsisting obligation”) (emphasis added); Finnegan v. Schrader, 91 Cal.

App. 4th 572 (2001) (public employment contract void due to conflict of interest). The Court

is also cognizant that an entry of partial summary judgment could interfere with the on-going

state court cases that will adjudicate the underlying factual and legal issues. Similarly,

Defendant City disputes whether some of the asserted benefits are properly classified as

“pension rights,” which would be protected by the contracts clause. For example, the City points

to language that police officers enrolled in the DROP program are asserting elements of their

salary – not their pension benefits – because they have not yet “retired.” E.g., City’s Ex. E at

1,2, 9, 26; see Pls.’ Ex. C at 129. The existence of factual issues as to the extent of any

particular police officer’s pension benefits further illustrates why it would be imprudent for the

Court to grant a motion for summary judgment that members of SDPOA have nebulous “vested”

rights. 

Accordingly, the Court DENIES without prejudice Plaintiff’s motion for partial

adjudication of “vested” pension rights.

II. Accounting Claim

Plaintiff’s seventeenth cause of action seeks an accounting from the City of San Diego

and SDCERS (and various individual defendants). Third Amended Compl. ¶ 176 [Docket No.

353]. Plaintiff SDPOA asserts that it is “necessary to determine the location of assets and trace

the assets that otherwise should be the property of SDCERS and the beneficiaries of the

Case 3:05-cv-01581-H-POR Document 527 Filed 10/24/06 Page 4 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

05cv1581

- 5 -

Pension.” Id. (emphasis added). In its second motion for a partial summary judgment, Plaintiff

moves for a complete, accurate accounting of SDCERS from 1996 to present, including the

amounts the City was obligated to pay into the fund, and the amounts of disbursements from

SDCERS. Plaintiff asks the Court to appoint a special master to monitor the process (including

the production of financial documents) and to appoint an independent accounting expert to

conduct the financial analysis to determine the extent of the underfunding as well to determine

whether there are sufficient funds to cover the police officers in the DROP program and all of

the police officers’ health care benefits. Plaintiff SDPOA seeks to determine if the accounts

were kept accurately, to ascertain a reliable calculation of funds missing, and to show whether

there was a conversion.

The Court agrees with Defendants that Plaintiff has not shown that a determination of an

unknown balance due cannot be ascertained without an accounting. Kritzer v. Lancaster, 96

Cal.App.2d 1, 6-7 (1950) (listing elements of accounting claim). This lawsuit does not allege

that retired police officers are not receiving their pension checks. Instead, Plaintiff is claiming

that SDCERS is actuarially unsound and the City will not have sufficient funds in the future.

To the extent that Plaintiff relies on the troubling evidence that the City has underfunded the

pension, three independent and extensive reports have been issued on that problem. Pls.’ Exs.

K, L, & M. It would be expensive to require the City and SDCERS to undertake another labor

intensive project of determining how the pension underfunding might affect the police officers

in the future. An accounting is an equitable remedy. San Pedro Lumber Co. v. Reynolds, 111

Cal. 588, 596 (1896); Kritzer, 96 Cal. App. 2d at 6. The Court finds that it would be inequitable

to require another accounting at the expense of the system as a whole and the other beneficiaries.

The Court also agrees with Defendants that Plaintiff is seeking a determination of the damages

remedy before liability has been established. (As noted above, the state court trial may soon

determine whether and to what extent the pension has been improperly underfunded; and

whether the City Attorney is correct that certain pension benefits were illegal and void.)

In addition, Plaintiff SDPOA has access to at least some elements of the underlying

financial information. As SDCERS points out, several of the specific items requested are

Case 3:05-cv-01581-H-POR Document 527 Filed 10/24/06 Page 5 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

05cv1581

- 6 -

contained in the annual financial reports issued by SDCERS and the City of San Diego. For

example, the amount of the City’s annual “Employer Contributions Reserve,” the City’s

contributions into the healthcare reserve, and the total disbursement of realized earnings pursuant

to the “waterfall” provision. Thus, Plaintiff SDPOA has access to much of the data that it seeks.

SDCERS does not track many of the other requested items. For example, SDCERS does not

separate the funds for employees in the DROP program, let alone the police officers enrolled in

that deferred retirement program (as compared to all municipal employees). As to these

calculations, Plaintiff could retain experts to calculate the potential, sum certain damages.

Everyone is waiting for the current financial reports. Independent auditors are in the process of

preparing Comprehensive Annual Financial Reports for the City for fiscal years 2003 and 2004.

It would not make sense to order an accounting until this process is complete.

Accordingly, the Court DENIES without prejudice Plaintiff’s motion for summary

adjudication of its Accounting cause of action. Because the Court denies Plaintiff’s motion for

an accounting at this time, the Court also denies Plaintiff’s related request to enjoin the state

court proceedings in McGuigan to maintain the status quo during the accounting. 

CONCLUSION

Upon due consideration of the parties' memoranda and exhibits, the arguments advanced

at hearing, and for the reasons set forth above, the Court hereby DENIES without prejudice

Plaintiff’s (1) motion for partial summary adjudication that the contractual right to pension

benefits is “vested” in SDPOA’s members [Docket No. 465] and (2) motion for partial summary

judgment for an accounting [Docket No. 466]. The Court permits the various joinders by

Defendants in the opposition briefs. [Docket Nos. 486, 499]. The Court denies as moot

Plaintiff’s ex parte application. [Docket No. 505]

IT IS SO ORDERED.

DATED: October 24, 2006

MARILYN L. HUFF, District Judge

UNITED STATES DISTRICT COURT

Case 3:05-cv-01581-H-POR Document 527 Filed 10/24/06 Page 6 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

05cv1581

- 7 -

CC: All Counsel of Record

Case 3:05-cv-01581-H-POR Document 527 Filed 10/24/06 Page 7 of 7