Court Opinion

ID: 9365038
Source: CourtListenerOpinion
Date Created: 2023-01-20 21:02:36.564381+00
Date Added: 2024-06-11T17:15:42.881899
License: Public Domain

Filed 1/20/23

                        CERTIFIED FOR PUBLICATION

                COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                 DIVISION ONE

                            STATE OF CALIFORNIA

 IMPERIAL COUNTY SHERIFF’S                 D079274
 ASSOCIATION et al.,

         Plaintiffs and Appellants,
                                           (Super. Ct. No. ECU000786)
         v.

 COUNTY OF IMPERIAL et al.,

         Defendants and Respondents.

       APPEAL from an order of the Superior Court of Imperial County,
Jeffrey Bruce Jones, Judge. Reversed and remanded with directions.
       Mastagni Holstedt, David E. Mastagni, Nathan Senderovich and
Melissa M. Thom for Plaintiffs and Appellants.
       Hanson Bridgett, Raymond F. Lynch, Adam W. Hofmann and
Matthew J. Peck for Defendant and Respondent County of Imperial.
       Olson Remcho, Christopher W. Waddell, Deborah B. Caplan and
Benjamin N. Gevercer for Defendants and Respondents Imperial County
Employees’ Retirement System and Board of the Imperial County Employees’
Retirement System.
      Plaintiffs, six individuals employed by the County of Imperial, and the
three unions representing them (the Imperial County Sheriff’s Association
(ICSA), the Imperial County Firefighter’s Association (ICFA), and the
Imperial County Probation and Corrections Peace Officers’ Association
(PCPOA)), brought a class action lawsuit against the County of Imperial, the
Imperial County Employees’ Retirement System, and the System’s Board
alleging that the defendants were systematically miscalculating employee
pension contributions.
      After two years of failed mediation, the plaintiffs filed a motion for
class certification under Code of Civil Procedure section 382. The trial court
denied the motion, finding that the conflicting interests of two primary
groups of employees, those hired before the effective date of the Public

Employee Pension Reform Act (Gov. Code, § 7522, et seq. 1, PEPRA) and
those hired after, precluded the court from certifying a class. The court found
that because the employees hired before PEPRA took effect were entitled to
an enhanced pension benefit unavailable to those hired after, the two groups’
interests were antagonistic and the community of interest among the
proposed class members required for certification could not be met. The trial
court also concluded the proposed class representatives had failed to show
they could adequately represent the class.
      On appeal from that order, the plaintiffs contend that insufficient
evidence supports the trial court’s finding that there was an inherent conflict
among the class members that precluded class certification and that the
court’s legal reasoning on this factor was flawed. The plaintiffs also argue

1     Subsequent undesignated statutory references are to the Government
Code.
                                        2
they should have been afforded an opportunity to show they can adequately
represent the interests of the class.
      As we shall explain, we disagree with the trial court’s reasoning
concerning the community of interest among the proposed class and agree
with the plaintiffs they should be provided an opportunity to demonstrate
their adequacy. Accordingly, we reverse the order denying class certification
and remand the matter to the trial court with directions to allow the
proposed class representatives to file supplemental declarations addressing
their adequacy to serve in this role. Thereafter, if the trial court approves of
the class representatives, the court is directed to grant the plaintiffs’ motion
for class certification, including the creation of the subclasses identified in
this opinion.
                FACTUAL AND PROCEDURAL BACKGROUND
1. Structure and Governance of the Imperial County Retirement System
      To understand the contours of the dispute, some background
concerning the pension system at issue is necessary. Imperial County
(County) is governed by a Board of Supervisors consisting of five elected
members. The Board of Supervisors possesses the exclusive legal authority
to provide for the compensation of its employees and must exercise that
authority by ordinance or resolution. (§ 25300; Cal. Const., art. XI, § 1,
subd. (b).) This authority includes the provision of retirement benefits to
county employees. Under this authority, the County established the Imperial
County Employees’ Retirement System (ICERS), which operates under the
County Employee Retirement Law of 1937 (§ 31450, et seq.; CERL).
(§ 31500; Alameda County Deputy Sheriff's Association v. Alameda County
Employees’ Retirement Association (2020) 9 Cal.5th 1032, 1066.)

                                        3
      ICERS, in turn, is administered by its own board, the ICERS Board of
Retirements (ICERS Board), which possesses “the sole and exclusive
fiduciary responsibility over the assets of” ICERS and the “sole and exclusive
responsibility to administer the system in a manner that will assure prompt
delivery of benefits and related services to the participants and their
beneficiaries.” (Cal. Const., art. XVI, § 17, subd. (a).) In addition, the ICERS
Board “ ‘has “the sole and exclusive power to provide for actuarial services in
order to assure the competency of the assets of the public pension or
retirement system.” (Cal. Const., art. XVI, § 17, subds. (a), (e).)’ ” (Mijares v.
Orange County Employees’ Retirement System (2019) 32 Cal.App.5th 316, 323
(Mijares).)
      The goal of defined benefit, public pension plans, like ICERS, is to
ensure payment of all vested, promised benefits to members, both those
currently retired and those who will retire in the future. (Cal. Const.,
art. XVI, § 17, subd. (a); Mijares, supra, 32 Cal.App.5th at p. 331.) Under
CERL, the employee’s fixed periodic payment is based on “the employee’s
accumulated contributions supplemented by a pension established with
county contributions sufficient to equal a specified fraction of the employee’s
‛final compensation.’ ” (Ventura County Deputy Sheriff’s Assn. v. Bd. of
Retirement (1997) 16 Cal.4th 483, 490.) The fixed retirement benefits are
funded from three sources: employer contributions, employee contributions,
and investment earnings and appreciation on the system’s trust fund. (79
Ops.Cal.Atty.Gen. 95, 96 (1996).)
      The ICERS Board has the power and fiduciary duty to retain an
actuary to ensure the actuarial sufficiency of these three sources of funding
can pay the promised pension benefits when due. (Cal. Const., art. XVI, § 17,
subd. (e).) Under CERL, the ICERS Board is required to conduct regular

                                        4
actuarial evaluations to determine whether the system’s assets and
contributions are sufficient to cover the costs of providing the promised
pension benefits, establish the employer and employee contributions
necessary to fund the retirement benefits of County employees, and to
“determine the extent to which prior assumptions must be changed.” (In re
Retirement Cases (2003) 110 Cal.App.4th 426, 459–460.)
      Two types of costs must be paid each year to fund the system
retirement benefits of County employees: normal cost and the amortized
payment of the unfunded actuarial accrued liability (UAAL). Normal cost is
the amount projected to be needed to pay retirement benefits for services
rendered by active members for the current year. The UAAL constitutes the
difference between the actuarial accrued liability—the difference between the
projected normal cost and the actual cost of benefits—and the actuarial value
of system assets. (County of Orange v. Assn. of Orange County Deputy
Sheriffs (2011) 192 Cal.App.4th 21, 34‒35 (County of Orange).) UAAL can
result from lower than expected investment returns on system assets, longer
than expected lifespans, and changes in contributions or benefits. For this
reason, changes in contributions or benefits impact system assets and
liabilities, potentially impacting all members. (Ibid.)
      Based on the actuarial evaluations, the ICERS Board annually
recommends the normal cost and UAAL contribution rates, expressed as a
percentage of payroll, for the County and its employees. (§§ 31453, 31453.5,
31553.6.) The normal cost contribution pays the normal cost and the UAAL
contribution amortizes the system’s UAAL over a set period. (§ 31453.5.)
Once the normal cost and UAAL contribution rates are determined and
communicated to the County, the County Board is then statutorily obligated

                                       5
to implement the contribution rates recommended by the ICERS Board.
(§ 31454, subd. (a).)
2. Enhanced Benefit for Safety Members Under the 2001 MOU
      ICERS divides its members into two categories, “safety” and “non-
safety” or “general” members. Safety members are County employees whose
duties consist of active law enforcement and fire suppression, and certain
probation officers. Non-safety/general members are all other employees.
Members in each category receive different benefits and are subject to
different contribution rate schemes. (§§ 31453, 31454, 31584, 31620–31631.5,
31639–31639.95, 31662–31664.5, 31670–31683.)
      ICERS safety members are represented by three unions, plaintiffs
ICSA, ICFA, and PCPOA. Under the Government Code, the County must
meet and confer with the unions regarding their members’ wages, hours, and
other terms and conditions of employment. (§ 3505.) If the meetings result
in an agreement, the parties to that agreement prepare a written
memorandum of understanding (MOU), that must be approved by the unions’
membership and the County Board. If the MOU is approved, it becomes
binding. (§ 3505.1.)
      “The benefits that an employee receives upon retirement are calculated
according to a statutory formula that takes into account the employee’s final
compensation, the number of credited years of service the employee had with
the County, and a statutory multiplier. CERL provides for a variety of
possible formulas for safety members.” (County of Orange, supra, 192
Cal.App.4th at p. 29, fn. omitted.) In 2000, the California Legislature
enacted section 31664.1, which “provide[d] for an ‘additional pension for
safety members,’ commonly called the “3% at 50” formula, which [provided
for] three percent of final compensation, multiplied by the number of service

                                       6
years, for employees retiring at the age of 50. (§ 31664.1, subd. (b).)” (Ibid.)
As a result of this change, in 2001, the County adopted Resolution 2001-76
approving MOUs with the unions representing ICERS safety members that
provided for the enhanced retirement benefit.
      According to ICERS, at the time of the agreements its system “was
nearly fully funded and there was no outstanding unfunded liability.” The
adoption of the enhanced benefit, however, “created a new unfunded
liability.” With respect to funding of this new liability, the resolution
provided that ICERS would contribute $4,914,844 and up to an additional
$1.7 million for the unfunded liability. In addition, the resolution stated that
“all safety members who are required to contribute to safety retirement shall
pay for any additional contributions due from both the County and the safety
member as a result of the enactment of this resolution on or after the
effective date of this resolution (currently about 3.63%), to be adjusted at
each subsequent actuarial study with rates set by the Board of Retirement
and to include any increases in the amount of the contributions of the safety
member and/or the County thereafter.”
      Likewise, the two underlying MOUs contained language addressing the
funding of the new liability. The first provided: “The unfunded liability for
this benefit which will result to the retirement fund because increased
contributions have not been … paid into the fund on behalf of … safety
members will be paid for by the Retirement Board. Safety members would
then pay the total prospective increased cost of this benefit. The current
increased cost is an added 3.63% of payroll increase in each individual
employee’s retirement contributions per month.” (Italics omitted.)
      The second stated: “Adoption of the resolution … shall also be
conditioned upon all safety members paying the full additional contributions

                                        7
of both the County and the safety member of the 3% at 50 benefit on or after
the effective date [of] said resolution, including any increases in the
contributions of the safety member and/or the County thereafter. … [¶]
Safety members shall not be required to pay any estimated unfunded liability
for the 3% at 50 benefit which accrued prior to the effective date of the
resolution whether known or unknown by the County. [¶] By executing this
Agreement, safety members waive any right or entitlement they might
otherwise have had to payment by the County of any increased employer
costs for the 3% at 50 benefit.” (Italics omitted.)
      ICERS asserts these provisions were intended to require it would
absorb the costs of unfunded liability for the time period before the resolution
was adopted, but that the provisions did not specifically address post-
agreement unfunded liability created by the enhanced benefit, “except to
state that the [s]afety members would pay the ‘total’ costs going forward,
including any increased employee and County contributions attributable to
this benefit.” The County maintains that under this agreement, the safety
member unions agreed that “as a condition of the County Board’s approval of
the Enhanced Benefit, ‘all Safety Members’ would pay the normal and UAAL
cost contributions attributable to the difference between the cost of the
Regular Benefit and the Enhanced Benefit.
      After the adoption of the enhanced benefits for the plaintiff unions and
their members, the County and the unions entered into subsequent MOUs
continuing the cost-sharing agreement set forth in the 2001 MOUs. Those
agreements called for the safety members to pay the “increased contribution”
to fund the enhanced benefit.

                                        8
3. Enactment of PEPRA
      When the U.S. economy went into recession in 2007, retirement
systems, including ICERS, were impacted. In response to weaknesses in the
state’s retirement programs revealed by the economic downturn, the
Legislature enacted the Public Employees’ Pension Reform Act (§§ 7522-
7522.74, PEPRA), which went into effect in 2013. PEPRA limited benefits in
various ways, including prohibiting retirement systems from offering the 3%
at age 50 benefit to employees after the law’s effective date. (§ 7522.02,
subd. (c)(1).) The new law capped new safety members’ benefits (which we
refer to as PEPRA members) at a formula of 2.7% at age 57, and required
members to pay at least 50% of the normal cost of their retirement benefit.
(§§ 7522.25, 7522.30.)
      According to ICERS, before and after the passage of PEPRA, the
unfunded liability attributable to the enhanced benefit for safety members
continued to grow. During this time both those safety members eligible for
the 3% at 50 benefit (Legacy members) and PEPRA members “were assessed
a pro-rata share of the UAAL cost associated” with that enhanced benefit.
Beginning in 2019, through MOUs ratified by the County, the County “agreed
to pay the UAAL cost for PEPRA members” while Legacy members were
“required to continue to pay for the UAAL cost associated with the benefit.”
4. Present Litigation
      Before the 2019 MOUs were entered, on February 25, 2019, plaintiffs
filed their complaint for declaratory and injunctive relief and petition for writ
of mandate initiating this action. The complaint sought certification of a
class of individuals employed by the County and who were members of
ICERS presently or at any time in the prior four years. The complaint also
proposed two subclasses, (1) individuals who became members of ICERS prior

                                        9
to the effective date of PEPRA, January 1, 2013, the Legacy members, and (2)
individuals who became members after that date, the PEPRA members.
      As the factual basis for its claims—for declaratory relief, mandamus,
and violation of the equal protection clauses of the California and U.S.
constitutions—the plaintiffs’ complaint alleges the County and ICERS,
including through the MOUs with the unions and their members, improperly
charged ICERS members for UAAL costs associated with the enhanced
benefit. Further, the complaint alleges that ICERS improperly imposed the
UAAL costs of the enhanced benefit on all safety members of ICERS, not just
those Legacy members eligible for the benefit, in violation of PEPRA.
      For example, the claim for declaratory relief asserts the County and
ICERS’s “imposition of the UAAL rate on [PEPRA members] constitutes
imposing a retirement cost-share percentage of greater than 50% of total
normal costs” in violation of PEPRA. Similarly, the plaintiffs assert that
ICERS and the County imposed costs of the UAAL related to the enhanced
benefit on PEPRA members in violation of their equal protection rights. In
their claim for mandamus relief, the plaintiffs assert that Legacy members
were also required to contribute greater amounts than they bargained for in
the MOUs and that such contributions were in violation of section 31631.5.
      After attempts at settlement failed, the plaintiffs brought the present
motion to certify a class comprised of: “All individuals who are employed by
Respondent County of Imperial and are members of ICERS, or who were
employed by Respondent County of Imperial and were members of ICERS at
any time four years prior to the filing of Petitioners’ complaint through the
date of a signed order certifying this class.” The motion did not specifically
request subclasses of Legacy and PEPRA members, but such subclasses were

                                       10
identified and requested in the petition and complaint. Plaintiffs also
requested the appointment of Mastagni Holstedt APC as class counsel.
      The County opposed the motion for class certification. It argued that
the motion should be denied because the plaintiffs failed to provide sufficient
evidence to demonstrate the requirements for class certification were met.
The County argued that because the motion attached no declarations from
the proposed class representatives, and was supported only by a declaration
from Counsel attesting that, “on information and belief,” each of the class
certification requirements were met, denial of the motion was required.
      Additionally, the County argued the plaintiffs could not satisfy the
community of interest requirement for certification because (1) the proposed
class representatives lacked standing to represent general, or non-safety,
members who receive different benefits; (2) irreconcilable conflicts existed
between the interests of Legacy and PEPRA members; (3) irreconcilable
conflicts existed between active and retired members of ICERS because
retired members no longer contribute to fund their benefits, whereas active-
employee members do; and (4) the existence of an irreconcilable conflict
between the proposed class and the individual and union plaintiffs, who the
County maintained agreed to the cost-sharing arrangement memorialized in
the MOUs, which the plaintiffs now sought to invalidate.
      The County’s opposition to class certification also argued that the
proposed class counsel was incapable of adequately representing the class
because it had acted as the chief negotiator for the union plaintiffs, and had
negotiated MOUs after the filing of the lawsuit. The County further asserted
the action was moot because the union plaintiffs and their members,
including the proposed class representatives, had agreed in the 2019 MOUs
that the contributions they now challenged were an obligation of Legacy and

                                      11
PEPRA members in perpetuity. Finally, the County argued the lawsuit could
not be maintained because the plaintiffs had not filed a timely governmental
claim before initiating the case.
      ICERS and its Board filed a response to the plaintiffs’ motion for class
certification. Therein, ICERS stated that the dispute in the case centered “on
the interpretation of language included in MOU’s between ‘safety members’
and the County going back to 2001, and the interpretation of that same
language in light of changes in the law that were enacted after the language
was adopted and arguably upset the expectations of the parties.” ICERS and
its Board recognized “the issues presented in this case are primarily issues of
law; once the contract is properly construed and the obligations of the parties
under the contract settled, those terms can likely be applied to any affected
individuals administratively with minimal judicial oversight. Indeed …
‘resolution of this action will uniformly apply to affected members’ and ‘all of
[plaintiffs’] claims are controlled by the same legal principles and basic
factual circumstances.’ ”
      ICERS stated it “believe[d] that declaratory relief might be sufficient as
a practical matter and that a class action may not be necessary or
appropriate.” It argued, however, that the proposed class was overly broad,
and that it should be limited to safety members. In addition, ICERS
acknowledged that the plaintiffs satisfied both the numerosity and
ascertainability requirements for class certification, but argued that conflicts
among the safety members, specifically between the Legacy and PEPRA
members, prevented plaintiffs from establishing a commonality of interest
within the class.
      ICERS contended that the resolution of the legal issues “might affect
current or retired Legacy safety members or active PEPRA members in

                                       12
different ways” and, therefore, their interests were potentially antagonistic to
each other in a way that foreclosed the class representatives from adequately
representing the proposed class. ICERS explained, “[a]ctive and retired
Legacy members are differently situated by virtue of the fact that Legacy
active members are still working and contributing to ICERS while retired
Legacy members are no longer working or contributing to the benefits they
are now receiving. In turn, all active and retired Legacy members are
differently situated from all PEPRA members, who are not eligible to receive
the 3% at 50 benefit but in the view of ICERS and the County are currently
obligated under the above provisions of the 2001 County Resolution and
underlying MOUs to contribute toward the UAAL.” ICERS contended that
because the resolution of the interpretation of the MOUs and relevant
statutes “has at least the potential to benefit certain groups of employees and
to disadvantage others,” representation by the same class representatives
and counsel was not adequate.
      In their reply brief in support of their motion for class certification, the
plaintiffs agreed that the class should include only safety members. With
respect to the County’s assertion that the plaintiffs failed to sufficiently
establish they satisfied the numerosity and ascertainability criteria for class
certification, the plaintiffs pointed to the MOUs contained in the record,
ICERS’ actuarial reports identifying over 300 safety members, and ICERs
concession that the numerosity and ascertainability requirements were
plainly satisfied.
      With respect to the issue of conflicts among the class members, the
plaintiffs responded that the community of interest requirement was satisfied
because both categories of ICERS safety members, Legacy and PEPRA, seek
to place the burden of paying for the liabilities created by the enhanced

                                        13
benefit on ICERS and the County. The plaintiffs explained that “the crux of
the claim in this matter is that [ICERS and the County] are forcing both
categories of Safety Members to pay for [UAAL] costs related to the
Enhanced Safety Benefit that are the sole responsibility of the County.”
Further, they asserted the rights of all of safety members turn on their
contractual rights under the 2001 MOUs. Plaintiffs argued that the conflict
between the two groups of safety members was manufactured by the County
“to avoid paying for the UAAL costs they contracted for in the 2001 MOU ….”
      With respect to adequacy, the plaintiffs asserted that the classes were
already well defined by the MOUs and ICERS annual actuarial reports, thus
the putative class representatives from each of the two groups of safety
members were adequate representatives of the proposed class. Finally,
plaintiffs noted that the proper remedy for any antagonism between the
groups of ICERS members would be the creation of subclasses for the Legacy
and PEPRA safety members, not denial of class certification altogether.
      At the hearing on the motion for class certification, the trial court
focused initially on the issue of whether the plaintiffs’ claims were precluded
by the Government Tort Claims Act. The court then turned to class
certification. After acknowledging that the numerosity requirement was
satisfied, the court expressed concern about the perceived conflict that
existed between Legacy and PEPRA members. The court focused on the
desires of both groups to have their own benefits fully funded, and
hypothesized that the Legacy members would want the PEPRA members to
fund their enhanced benefit, while the PEPRA members’ interests were
served by not contributing to the costs associated with the enhanced benefit
they would never receive.

                                       14
      Counsel for the plaintiffs responded that the conflict raised by the court
was not central to the lawsuit. Rather, the plaintiffs’ claims centered on the
County’s improper imposition of the UAAL liability for the enhanced benefit
on PEPRA members. In simple terms, both groups wanted each group to pay
for their own benefit normal costs and for the County to pay for the UAAL.
Counsel explained that the plaintiffs made no claim that the PEPRA
members should pay for the enhanced benefit. Counsel further pointed out
that such a hypothetical was not possible under the law and reiterated that
the primary issue in the lawsuit was whether the County or the members
(either Legacy or PEPRA) should be required to pay for the unfunded
liability. Counsel also asserted that subclasses were the proper remedy to
address the hypothetical conflict raised by the court, not denial of class
certification.
      The County’s counsel repeated its argument that the Legacy and
PEPRA members’ interests were directly antagonistic to each other, and also
argued that the union plaintiffs had agreed to the division of costs through
the MOUs, defeating their claims in the present lawsuit. ICERS counsel
stated that if the case were to move forward as a class action, the classes
should be divided into subclasses. ICERS counsel also told the court its
clients were “not interested in a resolution of this matter that would lead to a
multiplicity of lawsuits” and that it was “not completely adverse to this
moving forward as a class action, as long as all these various conflicts and
complications are resolved.” At the conclusion of the hearing the court took
the matter under submission.
      Thereafter, the court issued its order denying class certification. The
order found the “divergent interests of the class members” precluded
certification and that “an irreconcilable conflict between legacy safety

                                       15
members and PEPRA safety members” goes “to the very subject matter of the
case.” The court explained that the two groups’ interests conflicted because if
the cost-sharing agreement contained in the MOUs “is invalidated, as the
putative class representatives want, the benefit would no longer be funded at
all as the County’s contributions were conditioned upon the contribution of
the safety members.” The court also concluded that it could not find the
proposed class representatives were adequate because “none of the putative
class representatives submitted declarations in support of the motion.”
      The plaintiffs timely appealed from the order.
                                  DISCUSSION
                                         I
                            General Legal Principals
      “We review the trial court’s ruling for abuse of discretion. ‘Because
trial courts are ideally situated to evaluate the efficiencies and practicalities
of permitting group action, they are afforded great discretion in granting or
denying certification. ... [Accordingly,] a trial court ruling supported by
substantial evidence generally will not be disturbed “unless (1) improper
criteria were used [citation]; or (2) erroneous legal assumptions were made
…. (Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326–
327 (Sav-On).) “Under this standard, an order based upon improper criteria
or incorrect assumptions calls for reversal ‘ “even though there may be
substantial evidence to support the court’s order.” ’ ” (Linder v. Thrifty Oil
Co. (2000) 23 Cal.4th 429, 436.) “Nonetheless, for the underlying factual
issues, ‘[w]e must “[p]resum[e] in favor of the certification order ... the
existence of every fact the trial court could reasonably deduce from the

                                        16
record.” ’ ” (Wilson v. La Jolla Group (2021) 61 Cal.App.5th 897, 909
(Wilson).)
      Code of Civil Procedure section 382 authorizes a class action “whenever
‘the question [in a case] is one of a common or general interest, of many
persons, or when the parties are numerous, and it is impracticable to bring
them all before the court ….’ (Code Civ. Proc., § 382; see Fireside Bank v.
Superior Court (2007) 40 Cal.4th 1069, 1078; City of San Jose v. Superior
Court (1974) 12 Cal.3d 447, 458.)” (Brinker Restaurant Corp. v. Superior
Court (2012) 53 Cal.4th 1004, 1021 (Brinker).) The California Supreme Court
has “articulated clear requirements for the certification of a class. The party
advocating class treatment must demonstrate the existence of an
ascertainable and sufficiently numerous class, a well-defined community of
interest, and substantial benefits from certification that render proceeding as
a class superior to the alternatives.” (Brinker, at p. 1021.) “The ‘community
of interest’ requirement embodies three factors: (1) predominant common
questions of law or fact; (2) class representatives with claims or defenses
typical of the class; and (3) class representatives who can adequately
represent the class.” (Sav-On, supra, 34 Cal.4th at p. 326.)
      “The certification question is ‘essentially a procedural one that does not
ask whether an action is legally or factually meritorious.’ [Citation.] A trial
court ruling on a certification motion determines ‘whether … the issues which
may be jointly tried, when compared with those requiring separate
adjudication, are so numerous or substantial that the maintenance of a class
action would be advantageous to the judicial process and to the litigants.’ ”
(Sav-On, supra, 34 Cal.4th at p. 326.) “ ‘ “The answer hinges on ‘whether the
theory of recovery advanced by the proponents of certification is, as an
analytical matter, likely to prove amenable to class treatment.’ [Citation.] ...

                                       17
‘As a general rule, if the defendant’s liability can be determined by facts
common to all members of the class, a class will be certified even if the
members must individually prove their damages.’ ” ’ ” (Wilson, supra, 61
Cal.App.5th at p. 908.) Class treatment, however, “ ‘is not appropriate “if
every member of the alleged class would be required to litigate numerous and
substantial questions determining his individual right to recover following
the ‘class judgment’ ” on common issues.’ ” (Ibid.)
      To determine if the community of interest requirement is satisfied,
“ ‘[a] court must examine the allegations of the complaint and supporting
declarations [citation] and consider whether the legal and factual issues they
present are such that their resolution in a single class proceeding would be
both desirable and feasible.’ [Citation.] ‘As one commentator has put it,
“what really matters to class certification” is “not similarity at some
unspecified level of generality but, rather, dissimilarity that has the capacity
to undercut the prospects for joint resolution of class members’ claims
through a unified proceeding.” ’ ” (Wilson, supra, 61 Cal.App.5th at p. 908.)
      “The relevant comparison lies between the costs and benefits of
adjudicating plaintiffs’ claims in a class action and the costs and benefits of
proceeding by numerous separate actions—not between the complexity of a
class suit that must accommodate some individualized inquiries and the
absence of any remedial proceeding whatsoever.” (Sav-On, supra, 34 Cal.4th
at p. 339, fn. 10.) Further, “[c]ourts seeking to preserve efficiency and other
benefits of class actions routinely fashion methods to manage individual
questions. For decades ‘[our Supreme Court] has urged trial courts to be
procedurally innovative’ [citation] in managing class actions, and ‘the trial
court has an obligation to consider the use of … innovative procedural tools
proposed by a party to certify a manageable class.” (Ibid.) “Such devices

                                       18
permit defendants to ‘present their opposition, and to raise certain
affirmative defenses.’ ” (Id. at pp. 339–340.)
      In addition, the existence of a potential conflict among class members
does not defeat the superiority of the class mechanism. (See Daniels v.
Centennial Group, Inc. (1993) 16 Cal.App.4th 467, 471‒472 [unavailability of
recission for representative plaintiffs’ fraud claims created a potential conflict
with putative class members, but proper remedy for the potential conflict was
the creation of subclasses, not denial of class certification] (Daniels); National
Solar Equipment Owners’ Assn. v. Grumman Corp. (1991) 235 Cal.App.3d
1273, 1286 [“Even if a conflict should later appear, we believe denial of
certification was too drastic a remedy. ... [O]ur Supreme Court urged trial
courts to define classes in such a manner as to ‘permit utilization of the class
action procedure.’ [Citation.] For example, the trial court could have created
subclasses to deal with the conflict.”].) Only if the potential conflict “ ‘goes to
the very subject matter of the litigation,’ ” should class certification be
denied. (Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 470
(Richmond).) “ ‘[I]f the court can … divide the class into subclasses or …
separate those issues that merit class action treatment so as to remove any
antagonism, then the action need not be dismissed.’ ” (Id. at pp. 470–471.)
                                         II
                                     Analysis
                                         A
                              Community of Interest
      The unions and proposed class representatives challenge the trial
court’s conclusion that they did not satisfy the community of interest
requirement for class certification. They make two primary arguments.
First, the plaintiffs contend that insufficient evidence supported the court’s

                                        19
finding because it was based not on a factual conflict but on “assumptions
and inconsistencies.” Second, the plaintiffs argue the trial court engaged in
an incorrect legal analysis by focusing on “a hypothetical conflict between
Legacy members and PEPRA members,” rather than on the plaintiffs’ theory
of recovery.
      ICERS and its Board respond that the trial court’s conclusion should be
upheld because the court “reasonably inferred that the 2001 agreements
could be interpreted in various ways that would affect the economic interests
of different groups of employees differently and that each group would be
motivated to advance its own economic interest.” Further, they argue the
trial court was rightly concerned that the plaintiffs’ “claims will require the
court to construe the 2001 Agreement and the effect of PEPRA on that
agreement despite the fact that different employees groups are differently
situated with respect to that agreement ….”
      The County similarly argues that the plaintiffs’ theory of recovery
creates an inherent conflict between the different groups of class members
because an outcome that benefits PEPRA members will come at the expense
of the Legacy members. The county also argues the trial court’s order must
be affirmed because the plaintiffs failed to meet their evidentiary burden to
show the existence of an ascertainable class and a well-defined community of
interest. In addition, the County argues that contrary to the plaintiffs’
assertion, the trial court applied the proper legal criteria and based its
determination on the plaintiffs’ theory of recovery. Finally, the County
argues that the court’s failure to certify subclasses was proper because the
plaintiffs did not provide a workable proposal for subclasses.
      As discussed, a conflict among the members of a putative class that
goes to the subject matter of the dispute in a proposed class action can defeat

                                       20
certification. (Richmond, supra, 29 Cal.3d at p. 470.) By hypothesizing that
the claims held by the groups of ICERS safety members contained within the
proposed class were antagonistic, the trial court concluded such a conflict
exists in this case. However, the plaintiffs’ complaint as well as the
identification of the issues by ICERS and its Board, lead us to conclude the
trial court’s determination was not supported by the evidence and also based
on improper criteria because it failed to consider the use of subclasses to
address the potential conflict it identified. Thus, we hold the court’s denial of
class certification was error.
      As ICERS points out, the plaintiffs’ claims are based on their assertion
that the 2001 MOUs requiring safety members to pay the “total prospective
increased costs” of the enhanced benefit was intended to require those
members “to pay only the ‘normal costs’ associated with the benefit” and not
any UAAL arising therefrom. The County, in contrast, asserts that the MOU
requires the safety members to pay all costs, including any UAAL
attributable to the benefit. This dispute, as ICERS states, “is one of the core
issues in the underlying litigation.” We agree. The resolution of this issue of
contract and statutory interpretation is the central question presented by the
plaintiffs’ complaint.
      Similarly, the trial court will be tasked with determining whether
safety members hired after PEPRA became effective agreed to fund UAAL
costs associated with the enhanced benefit under the applicable MOUs and
law. As the plaintiffs explained in their motion for class certification, they
assert that ICERS and the County have required PEPRA safety members to
contribute to the UAAL for the 3% at 50 benefit in violation of section
7522.30, subdivision (c), and other state wage and hour laws. In addition, the
plaintiffs allege that PEPRA safety members are being unilaterally required

                                       21
to contribute more than 50% of the normal costs of their benefits in violation
of section 7522.30, subdivision (e).
      The determination of these additional issues of contract and statutory
interpretation are necessary to the adjudication of the claims of all members
of the proposed class. For example, as ICERS states, the plaintiffs “assert
that safety members hired after 2012 cannot be held responsible for any costs
associated with the 3% at 50 benefit, [but] there is no language in [the
MOUs] that would distinguish among various groups of Safety Members.”
This is a common “issue ultimately requiring resolution by the trial court.”
      Although the end result of these determinations may impact the groups
of class members differently depending on when they entered ICERS, these
questions of law that must be resolved are common to all members of the
proposed class, presenting the classic case for certification. “The one decisive
issue pervading the litigation, whether the class members have been
wrongfully deprived of pension benefits by an improper method of
computation, will not be decided on the basis of facts peculiar to each class
member, but rather, on the basis of a single set of facts applicable to all
members. ... Consolidation in a class action thereby creates substantial
benefits for both the parties and the courts[, averting] numerous and
repetitive administrative and judicial proceedings with the attendant
possibility of inconsistent adjudication.” (See Rose v. City of Hayward (1981)
126 Cal.App.3d 926, 933, disapproved on other grounds by Noel v. Thrifty
Payless, Inc. (2019) 7 Cal.5th 955.)
      The trial court concluded that the interests of the Legacy and PEPRA
members were in conflict because the Legacy members had an interest in
receiving the enhanced benefit at no cost and at the expense of the PEPRA
members. However, the claims asserted by the plaintiffs do not posit the

                                       22
members against each other in this way. Rather, both groups assert that the
pension system has required them to contribute to the UAAL costs in
violation of their agreements and the law. The plaintiffs do not contend, in
the manner advanced by the County and found by the trial court, that
PEPRA members are responsible for any UAAL costs, or any other costs,
associated with the enhanced benefit available to the Legacy members.
Rather, the plaintiffs seek a judicial determination that the MOUs allocated
all such UAAL costs to the County and not to either group of safety members.
In this way, the two groups of class members’ interests are, as the plaintiffs
argue, aligned.
      In contrast, the potential conflict the County asserts will arise from the
determination of these issues is only a hypothetical one. It argues that if the
cost-sharing agreements found in the MOUs are interpreted in the manner
the plaintiffs want, the Legacy members will suffer. However, no party
suggests such an outcome is required by the plaintiffs’ interpretation of the
agreements. Additionally, and importantly, this state’s class action
jurisprudence requires the court to use available “procedural tools proposed
by a party to certify a manageable class.” (Sav-on, supra, 34 Cal.4th at
p. 339.) The subclasses identified by the plaintiffs in their complaint, in their
reply to their class certification motion, and at the hearing on the motion are
just such a workable tool. The creation of subclasses for these groups can
address conflicts that might arise between them. Accordingly, we conclude
that the denial of class certification on this basis was not supported by the
evidence before the court and constituted an abuse of the court’s discretion.
      Further, the court failed to analyze the issue under the applicable legal
standard. The trial court was required to assess whether individual
questions impaired the benefits that are created by proceeding with a group

                                       23
action. (Wilson, supra, 61 Cal.App.5th at p. 908.) Here, although a potential
conflict might arise between the Legacy and PEPRA safety members, no
party contends that the individual issues of class members predominate over
common ones in a manner “ ‘ “that has the capacity to undercut the prospects
for joint resolution … through unified proceedings.” ’ ” (Ibid.) At most, the
County and ICERS contend that there are four groups of litigants, Legacy
and PEPRA members, and Legacy and PEPRA retirees, whose interests are
not totally aligned.
      For this reason, denial of class certification was not the proper
resolution of the motion. Rather, the creation of subclasses of the four groups
will address any disagreement that might arise in the litigation among them
as a result of the determination of the underlying agreements and
Government Code provisions. (Daniels, supra, 16 Cal.App.4th at p. 472
[“denying class certification for the entire action on [the basis of differences in
eligibility for rescission] is much like using a nuclear weapon to kill a fly”];
Sav-On, supra, 34 Cal.4th at p. 339 [“ ‘a class action cannot be maintained
where each member’s right to recover depends on facts peculiar to his case
….’ ” (italics added)].)
      The legal issues of contract and statutory interpretation that must be
resolved to determine who is responsible for the UAAL costs associated with
the enhanced benefit available to Legacy members are common among all
safety members of ICERS. As the plaintiffs asserted in their motion for class
certification, “even though some class members have been damaged more
than others, all of [the proposed class’s] claims are controlled by the same
legal principles and basic factual circumstances.” The trial court’s concerns,
i.e., that the law and agreements might be interpreted to require PEPRA
safety members to be held responsible for costs associated with the enhanced

                                        24
benefit they are not eligible for, can be addressed through subclasses of these
members.
      In addition, the trial court must determine the same legal questions for
purposes of the plaintiffs’ claims for mandamus, and declaratory and
injunctive relief. This fact further highlights the inefficiency and potential
for conflict created by denying class certification. All of the proposed class
members, regardless of when they joined ICERS or retired, are necessarily
affected by the outcome of these claims. (See, e.g., Probe v. State Teachers’
Retirement System (9th Cir. 1986) 780 F.2d 776, 780‒781 (Probe) [concluding
potential conflict between currently retired teachers and those still working
that might arise in litigation over pension benefits that could result in higher
contributions by working teachers did not render class certification

improper]. 2) The creation of subclasses for these groups addresses the
potential for conflict and provides each group with a voice in the litigation.
      We also note that in the trial court, even ICERS acknowledged that a
common form of relief, i.e., the declaratory relief sought by plaintiffs, was the
most expeditious resolution of the case because the dispute “centers on the
interpretation of language included in MOU’s between ‘safety members’ and
the County going back to 2001, and the interpretation of that same language

2      We agree with the County and ICERS that Probe does not directly
address the same potential conflict identified by the trial court in this case.
The claims, however, do bear some similarities to Probe, which concerned the
certification of a class of members of a pension plan that the plaintiffs alleged
was improperly calculating benefits in violation of federal equal protection
law. Probe supports the general proposition that a hypothetical conflict
between members is not a sufficient basis for denying class certification. In
particular, as the court in Probe concluded, the award of the injunctive and
declaratory relief sought by the class plaintiffs in the case will impact both
groups of ICERS members regardless of class certification. (Probe, supra, 780
F.2d at p. 781.)
                                       25
in light of changes in the law that were enacted after the language was
adopted and arguably upset the expectations of the parties.” ICERS also
recognized that “[w]hile the resolution of these issues may affect individual
employees differently (to the extent that all retirement benefits are affected
by individual circumstances), the issues presented in this case are primarily
issues of law; once the contract is properly construed and the obligations of
the parties under the contract settled, those terms can likely be applied to
any affected individuals administratively with minimal judicial oversight”
and that, “as [plaintiffs] acknowledge, ‘resolution of this action will uniformly
apply to affected members’ and ‘all of [their][ claims are controlled by the
same legal principles and basic factual circumstances.’ ” These statements
further support our conclusion that a common resolution of these issues is
superior to individual adjudication of the class members’ claims.
      Finally, in our view, the basis for the trial court’s ruling also
improperly reached into the merits of the legal questions presented in this
litigation. Rather than considering whether common questions predominate
over individual questions by focusing on the contours of the plaintiffs’ claims,
the court hypothesized how various outcomes would differently impact the
groups. As the plaintiffs point out, the court ignored their characterization of
the claims, which were based on the allegation that the County and ICERS
were requiring excessive contributions from both Legacy and PEPRA
members to fund the UAAL associated with the enhanced benefit.
      At class certification, the court considers the commonalities and
differences of the claims, but does not reach the merits of those claims unless
it is necessary to assess whether common issues predominate. “[A]ny ‘peek’ a
court takes into the merits at the certification stage must ‘be limited to those
aspects of the merits that affect the decisions essential’ to class certification.”

                                        26
(Brinker, supra, 53 Cal.4th at p. 1024.) Here, the court based its finding of
conflict on the interpretation of the agreements and the law that the County
argued would result if the court ultimately agreed with the plaintiffs’ claim.
The trial court, however, did not need to reach into these merits to determine
if there was a sufficient community of interest among the class members.
      As discussed, the plaintiffs’ class action complaint does not seek to
invalidate the MOUs or change the benefits promised to any ICERS safety
member. Rather, it asks the court to adjudicate the proper rates of
contribution under the law and to prevent the County from requiring safety
members to contribute to UAAL costs related to the enhanced safety benefit,
which plaintiffs contend is the sole responsibility of the County. In light of
the actual claims asserted, the trial court’s focus on the outcome advanced by
the County in its determination of whether common issues predominate over
any individual ones was improper.
      The trial court’s finding that there was not a sufficient community of

interest among the proposed class is reversed. 3 On remand, if the court

3      The County and ICERS and its Board do not argue that the plaintiffs
failed to establish that the class is sufficiently numerous or ascertainable.
The record before this court shows that there are more than 300 ICERS
safety members whose identities are easily ascertained from ICERS records,
satisfying these requirements.
                                       27
determines that the proposed class representatives are adequate (discussed
in the next section), the court is directed to grant the plaintiffs’ motion for
class certification and to create subclasses for the four groups of class
members identified during the certification proceedings—Legacy and PEPRA
safety members of ICERS and Legacy and PEPRA retirees—and to appoint
appropriate class counsel for each subclass.
                                         B
                           Adequacy of Representation
      In addition to finding that the community of interest requirement was
not satisfied, the trial court also concluded that the plaintiffs failed to meet
their burden of proof to show they were adequate representatives of the class.
Specifically, the court found that the putative class representatives had not
submitted declarations in support of the motion for class certification.
      The plaintiffs assert that denial of the motion on this ground was
improper, and instead the court should have provided the plaintiffs with the
opportunity to amend their submissions to show the proposed class
representatives were adequate. We agree with the County that the plaintiffs
failed to meet their burden of proof. However, the motion for class

       The County does argue that the plaintiffs failed to show that use of the
class procedure was superior to other forms of action, specifically declaratory
relief. However, because the plaintiffs seek the return of excess
contributions, the use solely of declaratory relief is insufficient. Further, it is
obvious that common adjudication of these common legal questions is
superior to a multitude of individual claims by the class members. (See In re
Cipro Cases I & II (2004) 121 Cal.App.4th 402, 410 [“The nature and
circumstances of the [agreements at issue]—and their legality under
California law—raise identical factual and legal issues as to every member of
the class. For every single class member to litigate these common issues
separately would impose a substantial burden on the courts and the
litigants.”].)
                                        28
certification should not have been denied on this basis, and instead the
plaintiffs should be afforded the opportunity to submit supplemental
declarations from the proposed class representatives to support their claims
of adequate representation.
      As the County argues, “[p]laintiffs seeking class certification have the
burden of proving the adequacy of their representation by a member of the
putative class.” (Jones v. Farmers Ins. Exchange (2013) 221 Cal.App.4th 986,
998 (Jones).) The class representatives “ ‘ “assume a fiduciary responsibility
to prosecute the action on behalf of the absent parties. [Citation.] The
representative parties not only make the decision to bring the case in the first
place, but even after class certification and notice, they are the ones
responsible for trying the case, appearing in court, and working with class
counsel on behalf of absent members.” ’ ” (Ibid.) To establish the proposed
class representatives are up to this important role, the plaintiffs must
provide evidence, typically declarations, showing their “desire[] to represent
the putative class or that they underst[and] the obligations of serving as class
representatives.” (Ibid.)
      Here, the plaintiffs did not provide declarations from the proposed class
representatives to support a finding that they could fulfill their obligations to
the class or subclasses. Thus, the court’s conclusion that the plaintiffs had
failed to meet their burden on this issue was supported by substantial
evidence. “The lack of an adequate class representative, however, does not
justify the denial of the class certification motion. Instead, the trial court
must allow plaintiffs an opportunity to amend their complaint to name a
suitable class representative,” or in this case submit declarations from the
proposed class representatives in support of their claim of adequate

                                        29
representation. (Jones, supra, 221 Cal.App.4th at p. 999; see also Jaimez v.
Daiohs USA, Inc. (2010) 181 Cal.App.4th 1286, 1309.).
      On remand, the trial court is directed to permit the plaintiffs to submit
supplemental declarations from the proposed class representatives for the

court’s consideration. 4
                                 DISPOSITION
      The order denying the plaintiffs’ class certification motion is reversed.
On remand, the trial court is directed to permit the plaintiffs to file
supplemental declarations of the proposed class representatives concerning
whether they are adequate representatives. Further, if the trial court
approves the class representatives, the court is directed to certify the class,
with subclasses for Legacy and PEPRA safety members, as well as retirees
falling into these two categories, and appoint appropriate class counsel for
each subclass. Plaintiffs are awarded the costs of appeal.

4      The County also argues that an independent basis for affirmance is the
inadequacy of the class counsel. It asserts that because the plaintiffs’
attorney represented the Unions in negotiations of the MOUs, class counsel is
conflicted from pursuing claims seeking to invalidate those agreements. As
discussed, the plaintiffs’ claims do not center on invalidating the MOUs.
Rather, they advance an interpretation of those agreements that places the
liability for UAAL associated with the enhanced safety benefit on the County,
not on any group of ICERS safety members. Further, given our direction to
the trial court to utilize subclasses and appoint class counsel for each, any
perceived conflict is eliminated.
                                       30
                              McCONNELL, P. J.

WE CONCUR:

                DO, J.

         BUCHANAN, J.

                         31