CAL FIRE LOCAL 2881 v. CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM

Intervener and Respondent, State of California, Response to Amicus Curiae Brief

Cal.April 24, 2018

In the Supreme Court ofthe State ofCalifornia CalFire Local 2881,etal., Petitioners and Appellants, Case No. $239958 Vv. California Public Employees’ Retirement System (CalPERS), SUPREME COURT Defendant and Respondent, FIL ED and APR 2 4 2018 TheState of California, Jorge Navarrete Clerk Intervener and Respondent. Deputy First Appellate District Division Three, Case No. A142793 Alameda County Superior Court, Case No. RG12661622 The Honorable Evelio Martin Grillo, Presiding Judge INTERVENER AND RESPONDENTSTATE OF CALIFORNIA’S CONSOLIDATED ANSWER TO AMICI CURIAE BRIEFS PETER A. KRAUSE Legal Affairs Secretary *REI R. ONISHI Deputy Legal Affairs Secretary State Bar No. 283946 Office of Governor Edmund G.BrownJr. State Capitol, Suite 1173 Sacramento, CA 95814 (916) 445-0873 Rei.Onishi@gov.ca.gov Attorneysfor Intervener and Respondent State ofCalifornia ANSWER TO AMICUS CURIAE BRIEFS The arguments of amici supporting Cal Fire Local 2881 and several of its members (together, the Union) are oddly untethered to the issues presented in this case. Mostare solely dedicated to urging this Court to reverse Marin Association ofPublic Employees v. Marin County Employees’ Retirement Association (2016) 2 Cal.App.5th 674, review granted Nov. 22, 2016 (S237460). References to “Marin” and the Marin court’s reasoning are far more numerousthanto “airtime”or to the actual reasoning of the Court of Appealin this case. Indeed, with the exception of two ofthe briefs, amici supportive of the Union do not even address the threshold issue of whetherthe option to purchaseairtime is a vested pension right in the first instance, let alone argue in favor of the Union’s position on that issue. (See, e.g., CalSTRS Br. at p. 1 [“The Board does not express an opinion as to the threshold question of whether the option to purchaseairtime service credit is a vested pension benefit”].) As a result, the analysis of those amici regarding whether the contract clause allowed the Legislature to withdraw the option to purchase airtime is conspicuously divorced from any assessment of what the Legislature actually intended and promised to employeesin this case. In the context of arguing a contract clauseviolation, this defect is fundamental. (Cf. Allen v. Board ofAdministration (1983) 34 Cal.3d 114, 124 [noviolation of contract clause in absence of impairmentofparties’ reasonable expectations].) In the end, amici invite this Court to embrace dogma,not careful legal analysis. For the reasonsgivenin the State’s merits briefs, the Court should decline this invitation. Within the last twoyearsalone, three separate appellate panels have expressly rejected the strict comparative advantages test advancedbythe unions. (See Alameda County Deputy Sheriffs’ Association v. Alameda County Employees’ Retirement Assn. (2018) 19 Cal.App.5th 61, 121 [“Much ofMarin’s vested rights analysis—including its rejection of the absolute need for comparable new advantages whenpensionrightsare eliminated or reduced—isnot controversial, and we do not disagree with it]; Cal Fire Local 2881 v. CalPERS (2016) 7 Cal.App.Sth 115, 130-131; Marin County, supra, 2 Cal.App.Sth at pp. 697-699.) After searching for and failing to find where this Court has adopted such an inflexible rule, these courts have all recognized that the so-called “California Rule” is more incantation than established legal principle. These courts have also noted the detrimental effects of adopting far-reaching rules that wouldtie the Legislature’s hands for decades and bar lawmakers from responding to changing circumstances. In response to these arguments, amici spend hundreds of pages decrying the supposed abandonmentofthe “California Rule.” Yet, for all those hundreds of pages andcase citations, amici—like the Union—cannot identify a single case in which this Court rejected a modification rationally related to the theory and successful operation of a pension system solely on the ground that it did not provide comparative new advantages. This underscores the hollowness of amici’s “California Rule” arguments. As amici supportive of the State methodically demonstrate, California’s public pension systems require flexibility to address crisis that is increasingly crowding out funding for education, accessto justice, affordable housing, and the state’s infrastructure, while also reducing the salaries and benefits of newer generations of public employees. (See, €.g., California League of Cities Br. at pp. 18-24; California Business Roundtable Br. at pp. 57-60.) Adopting someversion of the “California Rule,” as amici in support of the Union urge, would only divest lawmakers of the powerto safeguardcritical investments and maintain the pension system for the benefit of future generations of workers. Nor, as amici inadvertently show, is such an extremerule necessary to protect public employee pensions from unreasonable reductions,in light of both political safeguards and competitive market forces. (See AFSCMEBr.at pp. 34-35 [pointing out strong incentives leaders in even bankruptcities have to preserve pension benefits].) For the reasonsstated in its answerbrief on the merits, this Court should affirm the Court ofAppeal’s judgment. Dated: April 23, 2018 Respectfully submitted, PETER A. KRAUSE Legal Affairs Secretary R -_ Onis: REI R. ONISHI Deputy Legal Affairs Secretary Attorneysfor Intervener and Respondent State ofCalifornia CERTIFICATE OF COMPLIANCE I certify that the attached Intervener and RespondentState of California’s Answer Brief on the Merits uses a 13 point Times New Roman font and contains 684 words. Dated: April 23, 2018 PETER A. KRAUSE Legal Affairs Secretary Ror (Jnwral. REI R. ONISHI Deputy Legal Affairs Secretary Attorneysfor Intervener and RespondentState ofCalifornia DECLARATION OF SERVICE BY U.S. MAIL Case Name: Cal Fire Local 2881 v. California Public Employees' Retirement System No.: S$239958 I declare: I am employedin the Office of Governor Edmund G. BrownJr. I am 18 years of age or older and nota party to this matter. I am familiar with the businesspracticeat the Office of Governor Brownfor collecting and processing electronic and physical correspondence. In accordance with that practice, correspondenceplacedin the internal mail collection system at the Office of Governor Brownis deposited with the United States Postal Service with postage thereon fully prepaid that same day in the ordinary course of business. On April 23, 2018, I served the attached INTERVENER AND RESPONDENT STATE OF CALIFORNIA’S CONSOLIDATED ANSWER TO AMICI CURIAE BRIEFSbyplacing a true copy thereof enclosed in a sealed envelopein the internal mail collection system at the Office of Governor Brownat State Capitol, CA 95814, addressed as follows: Gary M. Messing Gregg McLean Adam Messing Adam & Jasmine LLP Clerk 235 Montgomery Street, Suite 828 California Court of Appeal San Francisco, CA 94104 First Appellate District, Division 3 350 McAllister Street Preet Kaur San Francisco, CA 94102 CalPERS Legal Office P.O. Box 942707 County of Alameda Sacramento, CA 94229-2707 Administration Building Superior Court of California Nelson R. Richards County Administration Building California Attorney General’s Office 1221 Oak Street 2550 Mariposa Mall, Room 5090 Oakland, CA 94612 Fresno, CA 93721 { declare under penalty of perjury under the laws of the State of California the foregoing is true and correctandthat this declaration was executed on April 23, 2018,in Sacramento California. Claire Sullivan-Halperin Z — Declarant ~~ Sighature