Links of Interest

Dear Fellow Retirees,

We are sorry to report that Judge Wilken dismissed our amended complaint (lawsuit). This is not happy holiday news but we wanted to give you information about this and talk about the next steps SCARE will be taking.

The Dismissal Orders:

The First Dismissal Order: Judge Wilken’s first dismissal order held, in part, that vested rights to lifetime retiree medical benefits could not be formed through an implied contract in the public employment context. In other words, a County’s promises and actions for decades could not create an obligation to pay retiree medical benefits for life. The promise had to be made by formal action of the Board of Supervisors.

The Second Dismissal Order: We filed an amended complaint on July 6, 2010. On November 23, 2010, Judge Wilken issued an order dismissing the amended complaint. This order held that the allegations in the First Amended Complaint and the 68 resolutions and memoranda of understanding (“ MOUs”) attached to the complaint were not sufficient to create a binding contract. Judge Wilken reasoned that because no resolution or ordinance explicitly stated that retiree medical benefits were vested for life or promised in perpetuity, a binding contract was not formed between Sonoma County and its retirees. We intend to appeal both of those dismissal orders to the Ninth Circuit Court of Appeals, the federal appellate court that reviews orders such as the dismissal orders issued by Judge Wilken here. We believe that there are good grounds to appeal both of the dismissal orders, particularly in light of the pending Orange County case described below. Our lawyers disagree with both of the Judge’s decisions.

The Retired Employees Association of Orange County Appeal:

The Orange County retiree health care case is currently being litigated in the Ninth Circuit Court of Appeals (the federal appeals court) and the California Supreme Court (the State of California’s highest court). The Orange County case, like SCARE’s case, was filed in federal court.

In that case, the district court ruled in favor of Orange County. The retiree association appealed the district court’s order to the Ninth Circuit. Because California state law, rather than federal law, governs how a contract is formed in California, the Ninth Circuit asked the California Supreme Court for guidance on the following issue:

Whether, as a matter of California law, a California county and its employees can form an implied contract that confers vested rights to health benefits on retired county employees.

The California Supreme Court agreed to answer that question for the Ninth Circuit. We don’t know how broad or narrow the California Supreme Court’s ruling will be. However, if the California Supreme Court’s decision is decided in favor of the retirees, that could help SCARE’s case on appeal. As such, our attorneys are working with a number of retiree groups around the state to draft amicus briefs to support the retirees’ claim to benefits. An amicus brief, also called a “friend of the court” brief, is a brief from someone who is not a party to the litigation, but who believes that the court’s decision may affect its interest. Given the importance of the Supreme Court case, our Board has approved funding of the amicus brief and will be talking to other county retiree groups and to the California Retired County Employees Association (representing 20 counties) to get their support and to share the cost. Even if the California Supreme Court decides that question in the negative, that would not necessarily be fatal to our case because we might still be able to argue that Judge Wilken’s second dismissal order was wrong.

The Next Steps:

We have 30 days to file a notice of appeal. A notice of appeal simply provides notice to the Ninth Circuit that we will be appealing Judge Wilken’s two dismissal orders. Any filing of briefs and oral argument on the merits of the appeal will not take place for several months, at the earliest, even if we ask for an expedited review of the case. By filing a notice of appeal before that deadline, we fully preserve our rights while the Orange County case works its way through the California Supreme Court and the Ninth Circuit Court of Appeals. If the Orange County case comes out favorably, that may help our appeal before the Ninth Circuit. On the other hand, if we don’t file a notice of appeal within the 30 day period, our case is essentially over. The SCARE Board took a straw vote on this at Tuesday's General Membership Meeting and had unanimous support from our members for filing an appeal. The Board then officially approved the filing of an appeal.

While we know that many of you need this issue to be resolved now; as we have noted before, the legal system moves very slowly. Our attorneys still think we have a good case which would be strengthened by a Supreme Court decision in favor of the Orange County retirees. The issue of implied contracts is incredibly important since retirees in so many counties have received various health benefits without Board language that says it is a lifetime benefit. While there is no guarantee of winning this case, your Board believes that we must continue this fight in order to protect our benefits. Otherwise the erosion of our benefits is likely to continue.

We will continue to give you updates in our Newsletter and on our website.

Sincerely,

Your SCARE Board of Directors