On August 28, 1995, former police officers, correctional officers, and other "safety employees" of the State of California and local agencies filed a class action lawsuit in the Federal District Court for the Northern District of California. The suit was brought under 29 U.S.C. §§ 621-634 (ADEA) against the administrators of the California Public Employees Retirement System (CalPERS), the State of California, and various municipalities. The plaintiff class-representatives, represented by private counsel, sought for back pay and injunctive relief for future class members, alleging that California Government Code §21417 created a system of disparate treatment or impact based solely on age and without valid business necessity. Specifically, the plaintiffs contended that the way CalPER code treated municipal employees who retired pursuant to industrial injury was discriminatory based on age alone, since the age at time of hiring determined percentage of compensation regardless of length of service.
Employees of California's state agencies are automatically covered by CalPERS, and local agencies may elect to join CalPERS to provide benefits for their employees. The Plaintiff-Employees were "safety employees," defined by California Government Code §§ 20371(b), 20403, including patrol officers, state peace officers, and firefighters. All were hired at age 40 or later and retired from their jobs because of industrial disabilities. Until 1980, under California Government Code, any safety employee injured on the job received 50 percent of final compensation as a disability benefit, regardless of age or the number of years of actual service, and upon retirement he or she received a disability retirement allowance of 50 percent of his or her final compensation. In 1980, California changed the scheme to one where injured retirees received a percentage equal to twice what their years of service would have been if they had worked until age 55, not to exceed 50 percent. The effect was that regardless of the years of actual service, all employee's hired at or before age 30 would receive the 50 percent maximum and those hired after age 30 could never get to that level of compensation.
In their First Amended Complaint, Plaintiffs alleged that § 21417 violates the ADEA under a disparate treatment theory because it reduces disability benefits based solely upon workers' ages at hire. The District Court (Judge Charles R. Breyer) disagreed and granted defendants' motions to dismiss and for judgment on the pleadings, holding that the Employees failed to state a disparate treatment claim. The Court did, however, grant leave to amend the complaint to allege a disparate impact claim. The Court then dismissed that claim, finding that ADEA regulations authorized the statutory scheme in § 21417, and alternatively, that the benefit differential was justified by "business necessity. Arnett v. CalPERS, No. C95-03022 CRB, 1998 WL 118180 (N.D. Cal. Mar 02, 1998). The Plaintiff class appealed the dismissal.
On June 2, 1999, the United States Court of Appeals for the Ninth Circuit (Judge Mary Margaret McKeown) reversed and remanded to the District Court. Arnett v. CalPERS, 179 F.3d 690 (9th Cir. 1999). The Court of Appeals found that there was adequate evidence presented to make a prima facie case, and held that a defense of "business necessity" was inappropriate for judgment upon pleadings alone. The defendants sought certiorari review in the United States Supreme Court.
On January 18, 2000, the United States Supreme Court, by Memorandum, but without Justice Breyer (whose brother was the district court judge in the case), vacated the Ninth Circuit Court decision and remanded to the Ninth Circuit for further consideration in light of Kimel v. Florida Board of Regents, 528 U.S. 62 (2000), where the Court had earlier held that ADEA's abrogation of 11th Amendment State sovereign immunity was beyond the scope of Congress' enforcement powers under § 5 of the 14th Amendment. CalPERS v. Arnett, 528 U.S. 1111 (2000).
On March 16, 2000, on remand to the Ninth Circuit, the Court (Circuit Judges Mary Margaret McKeown, Ferdinand F. Fernandez, and Senior District Judge Charles R. Weiner of the Eastern District of Pennsylvania, sitting by designation) held that because California never raised 11th Amendment immunity before any court, the case was still proper for further remand to the District Court for consideration consistent with Kimel. Arnett v. CalPERS, 207 F.3d 565 (9th Cir. 2000). The Circuit Court also unanimously denied defendants' petition for rehearing. Id.
After final remand, on September 5, 2000, the District Court granted the EEOC's motion to intervene as a party plaintiff. On November 19, 2001, the Court (Judge Breyer) certified a defendant class consisting of local public government entities that contract with CalPERS to provide retirement benefits. Finally, on January 29, 2003, the Court (Judge Breyer) issued a Verdict and Settlement Summary, whereby CalPERS agreed to recalculate and pay the benefit entitlements of all industrial disability retirement recipients as of July 1, 2001. Arnett v. CalPERS, No. 95-03022CRB, 2003 WL 1855062 (Verdict and Settlement Summary) (N.D.Cal. Jan. 29, 2003). The docket shows subsequent squabbles about individual money damages, but no other class-wide proceedings.
Keri Livingston - 08/10/2008
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