U.S. Supreme Court declines to hear San Diego pension case
State justices’ ruling that city skipped key step in placing cuts on ballot stays intact.
SAN DIEGO — The U.S. Supreme Court announced Monday that it won’t intervene in San Diego’s pension cuts case, leaving in place a California Supreme Court ruling that the city skipped a key legal step when the cuts were placed on the ballot in 2012.
The decision means state courts will resolve the case, including a decision about how to financially compensate 4,000 city employees who don’t have pensions because of the voter-approved measure called Proposition B.
Estimates of how much that could cost the city have ranged from $20 million to $100 million, depending on a variety of factors.
In its appeal to the U.S. Supreme Court in October, the city argued that the state court ruling ignored the federal free speech rights of former Mayor Jerry Sanders, who had claimed to be operating as an ordinary citizen, not as mayor, when he championed Proposition B.
The state Supreme Court ruled in August that Sanders violated California’s collective bargaining law by not negotiating with labor unions before pursuing the pension measure. The state court said that because Sanders used his power and influence as mayor to support the measure, he was obligated to meet with city union leaders before placing it on the ballot.
San Diego asked the U.S. Supreme Court to intervene, arguing that Sanders’ vocal support of the measure is protected speech and that it’s a violation of his 1st Amendment rights for the state court to rule that such speech comes with an obligation to negotiate with unions.
In documents posted on its website Monday morning, the U.S. Supreme Court listed the San Diego case among dozens of cases it had decided not to take. The court did not provide a reason.
The decision vindicates leaders of the four city labor unions who filed suit, alleging the pension cuts were not legally placed on the ballot.
The unions argued last fall that San Diego’s free speech claims had no chance to succeed in court because the case was based on collective bargaining law, not on the 1st Amendment.
Proposition B was approved by 65% of city voters in June 2012.
It made San Diego the only California city to discontinue traditional pensions for new hires, who instead have 401(k)-style retirement plans. Proposition B did not apply to new police officers, who still get traditional pensions.
Four city labor unions quickly challenged the legality of the pension cuts based on Sanders’ participation.
The state labor board ruled in favor of the unions in 2015.
But the 4th District Court of Appeal overturned that in 2017, ruling that the pension cuts were valid and that Sanders acted appropriately.
In August, the state Supreme Court overturned the appeals court, agreeing with the unions that the city skipped a key legal step and ordering the appeals court to take the case back and resolve the situation.
The appeals court began that process last week with a hearing in downtown San Diego.
Although its ruling won’t come for several weeks, the appellate judges expressed support for requiring San Diego to financially compensate city employees who don’t have pensions because of Proposition B.
The three-judge panel expressed reluctance to invalidate Proposition B, indicating a separate legal process is needed to allow participation by citizen proponents of the measure. That process, which could delay resolution of the case for months or even years, would begin in state Superior Court.
On Monday morning the lead attorney for the labor unions, Ann Smith, said it is not a surprise that the U.S. Supreme Court decided not to take the case.
“We knew this case was never about the 1st Amendment and no public officials’ free speech rights have been affected by the California Supreme Court when upholding the rights guaranteed to public employees under state law,” Smith said.
Former San Diego Councilman Carl DeMaio, who helped write Proposition B, said in a statement Monday that the decision was somewhat expected.
“The Supreme Court accepts only 100 to 150 cases of over 7,000 it receives each year, so while we are disappointed, we are not too surprised that the U.S. Supreme Court did not weigh in,” he said.
The city cannot restore pensions for new hires until Proposition B has been removed from the city charter, either by a public vote or a court ruling.
Union leaders and city officials have discussed potentially settling the case, but union leaders are expected to demand restoring pensions for new hires as part of any settlement. If they make such a demand, the case couldn’t be settled until Proposition B is removed from the charter.
Financial compensation for the employees without pensions is expected to be based on a state labor board recommendation from 2015 that those employees be made “whole.”
The labor board said they should receive the equivalent value of a pension, plus 7% interest, but the city could factor into that the value of the 401(k)style plans the employees received instead of pensions.