Opinion ID: 3066141
Heading Depth: 2
Heading Rank: 1

Heading: framework for evaluating an implied

Text: CONTRACT RIGHT In REAOC III, the California Supreme Court provided guidance on assessing implied contract rights in the context of municipal employee benefits under California law. It held that “a vested right to health benefits for retired county employees can be implied . . . from a county ordinance or REAOC V. COUNTY OF ORANGE 9 resolution,” when “the statutory language or circumstances accompanying its passage clearly . . . evince a legislative intent to create private rights of a contractual nature enforceable against the [governmental body].” REAOC III, 266 P.3d at 296, 301 (omission and alteration in original) (internal quotation marks omitted). The court cautioned that “implied rights to vested benefits should not be inferred without a clear basis in the contract or convincing extrinsic evidence.” Id. at 299. The opinion provided no further explanation of the distinction, if any, between extrinsic evidence and accompanying circumstances. The court did emphasize, however, that any additional evidence must flow from a resolution or ordinance and “clearly evince” the parties’ intent to create an implied contractual right. Id. at 289. Following REAOC III, we had occasion to consider an implied contract term in another case involving retired municipal employees. In Sonoma Retired Employees, we determined that “where [a] County intended to create a contractual obligation by resolution or ordinance, such a contract may include implied terms that can be inferred from [e]vidence derived from experience and practice.” 708 F.3d at 1116 n.4 (second alteration in original) (internal quotation marks omitted). We explained that if the retiree association “plausibly allege[d] that the County created a contract by means of a formally enacted resolution which ratified an MOU, for instance, then the Association may introduce evidence of that contract’s implied terms, including testimony regarding the County’s intent.” Id. Consideration of extrinsic evidence does not have a burden-shifting effect, despite the County’s protestations and the district court’s suggestion otherwise. “[I]t is presumed 10 REAOC V. COUNTY OF ORANGE that a statutory scheme is not intended to create private contractual or vested rights.” REAOC III, 266 P.3d at 295 (internal quotation marks omitted). The Retired Employees—not the County—ultimately bear the “heavy burden” of overcoming the presumption against a legislative enactment creating a private contractual or vested right. See id. at 295, 298; see also Walsh v. Bd. of Admin., 4 Cal. App. 4th 682, 697 (1992). To suspend legislative control in favor of an implied contract right, the evidence must be “unmistakable” so “that neither the governing body nor the public will be blindsided by unexpected obligations.” REAOC III, 266 P.3d at 296–97 (internal quotation marks omitted). Here, REAOC must bear this “heavy burden” in its effort to raise a genuine issue of material fact that the County intended to create an implied, vested contract right. See id. at 295–98.