Harron v. Bd. Of Admin. Of CalPERS
Filed 12/4/13 Harron v. Bd. Of Admin. Of CalPERS CA4/1
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COURT
OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION
ONE
STATE
OF CALIFORNIA
THOMAS J. HARRON,
Plaintiff and Respondent,
v.
BOARD OF ADMINISTRATION OF CALIFORNIA
PUBLIC EMPLOYEES RETIREMENT SYSTEM,
Defendant and Appellant.
D063248
(Super. Ct.
No.
37-2012-000919890-CU-WM-CTL)
APPEAL from
a judgment of the Superior Court
of
County, Richard E. L. Strauss, Judge. Reversed and remanded with directions.
Peter H.
Mixon and Wesley E. Kennedy for Defendant and Appellant.
Lounsberry
Ferguson Altona & Peak and James P. Lough for Plaintiff and Respondent.
The Board
of Administration of California Public Employees' Retirement System (PERS)
appeals a judgment granting Thomas Harron's petition for writ of administrative
mandamus ordering PERS to include in its calculation of his retirement benefits
$222,000 in compensation he received from the Otay Water District (District)
during a one-year leave of absence pursuant to a wrongful termination action
erred because (1) Harron was not excused from work during his leave of absence
as required under the Public Employees' Retirement Law (PERL) (Gov. Code,
§ 20000 et seq.),
name="_ftnref1" title="">[1]
(2) his settlement payments did not constitute "compensation earnable"
under section 20636, (3) he was not in the employ of the District during his
leave of absence, and (4) his settlement payments were "final settlement
pay," not "compensation earnable" pursuant to section 20636,
subdivisions (c)(7)(A) and (f). Because
we conclude Harron's settlement payments did not, as a matter of law,
constitute "compensation earnable" under section 20636, the trial
court erred by granting his petition.
FACTUAL
AND PROCEDURAL BACKGROUND
Harron was
employed by various entities that had retirement benefit contracts with PERS
from 1977 until 2001. From 1991 to 2001,
he was District's general counsel. Under
the District's contract with PERS, Harron was a member of PERS.
In
September 2001, Harron filed an action against the District for wrongful
termination. On September 26, 2007, Harron and the District
entered into a settlement agreement and general release of claims (Settlement
Agreement). In addition to a mutual
release of all claims, the Settlement Agreement provided in part:
"The District shall employ Harron for a one-year
period commencing on February 10, 2008,
and ending February 9, 2009. During this one-year period of employment
with the District, Harron shall be on inactive or leave status, shall not be
physically present at the District, and shall not take any action as an
employee of the District unless expressly authorized to do so in writing by the
Board of Directors of the District; the District will not object to Harron
being employed by another employer during this one-year period of employment
with the District. For this one-year
period of employment, the District shall pay Harron an annual salary of Two
Hundred Twenty-Two Thousand Dollars ($222,000.00), payable in accordance with
the District's regular payroll practices and subject to all required
withholdings and deductions."
On February 9, 2009,
Harron's employment with the District would be deemed terminated and he would
have no further employment rights. The
Settlement Agreement also provided: "The District shall use reasonable and
lawful efforts to ensure that Harron's annual salary for this one-year period
of employment with the District (i.e., $222,000) is accepted and/or used by
[PERS] in the calculation of Harron's retirement benefits under the District's
retirement plan, but Harron represents and acknowledges that the Defendants
have made no representations about whether Harron's annual salary for this
one-year period of employment with the District will be accepted and/or used by
[PERS] in the calculation of his retirement benefits under the District's
retirement plan and, further, that he is not relying on and has not relied on
any such representations."
On November 21, 2008, Harron submitted
applications for service retirement, effective February 9, 2009, from the District under PERL and the County
of San Diego, his employer after
2001, under the San Diego County Employees' Retirement System. In August 2009, PERS informed Harron and the
District that the settlement proceeds he received under the Settlement
Agreement (i.e., $18,500 per month) could not be used as his final compensation
in calculating his retirement benefits because they constituted "final
settlement pay" under section 20636, subdivision (f). PERS initially used Harron's $10,326.57
monthly salary prior to his 2001 termination by the District as his final
compensation, but later used his higher salary ($176,000 annually, or $14,666
per month) while employed with the County
of San Diego based on reciprocity
provisions between PERS and the County's retirement system.
Harron
filed an administrative appeal challenging PERS's decision. Following a two-day administrative hearing,
the administrative law judge (ALJ) issued a proposed decision (Proposed
Decision) denying Harron's appeal and concluding PERS would not include the
$222,000 amount paid him pursuant to the Settlement Agreement in determining
his retirement benefits. In November
2011, the PERS Board of Administration issued a final decision (Final Decision)
substantially adopting the Proposed Decision.
In February
2012, Harron filed a petition for writ of administrative mandamus challenging
the Final Decision. PERS filed an answer
opposing the petition. The trial court
issued a tentative ruling granting the petition and then issued a written order
granting the petition and adopting its tentative ruling as its final
ruling. On November 27, 2012, the court entered a judgment for
Harron granting his petition. The judgment
set aside PERS's decision that Harron's $222,000 salary was not compensation
and/or was final settlement pay, and directed PERS to include that amount in
calculating Harron's retirement benefits.
PERS timely filed a notice of appeal challenging the judgment.
DISCUSSION
I
"Code
of Civil Procedure section 1094.5 is the administrative mandamus provision
providing the procedure for judicial
review of adjudicatory decisions rendered by administrative agencies. [Citation.]
[That statute] does not specify which cases are subject to independent
review, leaving that issue to the courts.
[Citation.] In cases reviewing
decisions which affect a vested, fundamental right, the trial court exercises
independent judgment on the evidence.
[Citation.] Retirement benefits
of the nature involved here have long been held to be a vested and fundamental
right." (Molina v. Board of Administration, etc. (2011) 200 Cal.App.4th 53,
60 (Molina).) If the administrative decision "substantially
affects a fundamental vested right, the trial court, in determining under [Code
of Civil Procedure] section 1094.5 whether there has been an abuse of
discretion because the findings are not supported by the evidence, must
exercise its independent judgment on the evidence and find an abuse of
discretion if the findings are not supported by the weight of the evidence." (Strumsky
v. San Diego County Employees Retirement Assn. (1974) 11 Cal.3d 28, 32.)
"On
appeal, . . . the standard for review of the trial court's factual
determinations is whether they are supported by substantial evidence. [Citations.]
'[A]n appellate court must uphold administrative findings unless the
findings are so lacking in evidentiary support as to render them
unreasonable. [Citations.] A reviewing court will not uphold a finding based
on evidence which is inherently improbable [citation], or a finding based upon
evidence which is irrelevant to the issues.
[Citations.]' [Citation.] The reviewing court, like the trial court,
may not reweigh the evidence, and is 'bound to consider the facts in the light
most favorable to the Board, giving it every reasonable inference and resolving
all conflicts in its favor. [Citations.]' " (Jaramillo
v. State Bd. for Geologists & Geophysicists (2006) 136 Cal.App.4th 880,
889.)
On
questions of law, we review the trial court's (and administrative agency's)
conclusions de novo, or independently. (
(2007) 157 Cal.App.4th 983, 989 (Prentice);
Crocker National Bank v. City and County
of San Francisco (1989) 49 Cal.3d 881, 888-889; O'Connor v. State Teachers' Retirement System (1996) 43 Cal.App.4th
1610, 1620.) "Interpretation of a
statute is a question of law." (
we interpret the PERL or a PERS regulation, the court accords great weight to
PERS['s] interpretation." (
interpretation of a statute and the validity of an administrative regulation,
the administrative agency's construction is entitled to great weight, and if
there appears to be a reasonable basis for it, a court will not substitute its
judgment for that of the administrative body.'
[Citations.] In addition, an
administrative ruling ' "comes before the court with a presumption of
correctness and regularity, which places the burden of demonstrating invalidity
upon the assailant . . . ." ' " (Campbell
Industries v. State Bd. of Equalization (1985) 167 Cal.App.3d 863, 868.)
However,
the above rule " 'should not blindly be followed so as to eradicate
the clear language and purpose of the statute. . . . [Citations.]'
[Citation.] . . . 'The ultimate interpretation of a statute is
of course an exercise of judicial power and it is the responsibility of the
courts to declare its true meaning even if it requires rejection of an earlier
erroneous administrative interpretation. [Citations.]' " (Wheeler
v. Board of Administration (1979) 25 Cal.3d 600, 605.) Issues of statutory interpretation are
reviewed de novo on appeal where there are no disputed factual issues. (Alesi
v. Board of Retirement (2000) 84 Cal.App.4th 597, 601.) Our primary goal in interpreting a statute is
to determine its legislative intent. (
727, 735.) Legislative intent should be
determined from the language of the statute, if possible. (Ibid.) "If
there is no ambiguity in the language of the statute, 'then the Legislature
is presumed to have meant what it said, and the
plain meaning of the language governs.' " (Lennane
v. Franchise Tax Bd. (1994) 9 Cal.4th 263, 268, italics added.)
In
interpreting a statute, "our first task . . . is to ascertain
the intent of the Legislature so as to effectuate the purpose of the law. In determining such intent, a court must look
first to the words of the statute themselves, giving to the language its usual,
ordinary import and according significance, if possible, to every word, phrase
and sentence in pursuance of the legislative purpose. A construction making some words surplusage
is to be avoided. The words of the
statute must be construed in context, keeping in mind the statutory purpose,
and statutes or statutory sections relating to the same subject must be
harmonized, both internally and with each other, to the extent possible. [Citations.]
Where uncertainty exists consideration should be given to the
consequences that will flow from a particular interpretation. [Citation.]
Both the legislative history of the statute and the wider historical
circumstances of its enactment may be considered in ascertaining the
legislative intent." (
Housing Com. (1987) 43 Cal.3d 1379, 1386-1387.) Finally, "[a]ny ambiguity or uncertainty
in the meaning of pension legislation must be resolved in favor of the
pensioner, but such construction must be consistent with the clear language and
purpose of the statute." (
Board of Retirement (1997) 16 Cal.4th 483, 490.)
II
The PERL "establishes
PERS, a retirement system for employees of the state and participating local
public agencies. PERS is a prefunded,
defined benefit plan which sets an employee's retirement benefit upon the
factors of retirement age, length of service, and final compensation. [Citation.]
Retirement allowances are therefore partially based upon an employee's
compensation. An employee's compensation
is not simply the cash remuneration received, but is exactingly defined to
include or exclude various employment benefits and items of pay." (Oden
v. Board of Administration (1994) 23 Cal.App.4th 194, 198, fn. omitted.) "Under the PERL, the determination of
what benefits and items of pay constitute 'compensation' is crucial to the
computation of an employee's ultimate pension benefits. The pension is calculated to equal a certain
fraction of the employee's 'final compensation' which is multiplied by a
fraction based on age and length of service.
[Citations.] 'Final compensation'
is the 'highest average annual compensation earnable by a member during the
three consecutive years of employment immediately preceding the effective date
of his retirement' or other designated consecutive three-year period." (City
of Sacramento v. Public Employees Retirement System (1991) 229 Cal.App.3d
1470, 1478, fns. omitted.) Final
compensation for local miscellaneous members, including Harron, is based on the
highest average compensation earnable over a consecutive 12-month period. (§§ 20037, 20042.)
Section 20630,
subdivision (a), defines "compensation" under the PERL as "the
controlled by the employer in payment for the member's services performed
during normal working hours or for time
during which the member is excused from work because of any of the
following: [¶] (1) Holidays. [¶] (2) Sick leave. [¶] (3) Industrial disability leave . . . .
[¶] (4) Vacation. [¶] (5) Compensatory time off. [¶] (6) Leave
of absence." (Italics
added.) However, "[c]
compensation earnable . . . ." (§ 20630, subd. (b), italics added.)
Section
20636, subdivision (a), defines "[c]
member, as defined by subdivisions (b), (c), and (g), and as limited by Section
21752.5." (Italics added.) Section 20636, subdivision (b)(1), provides: "
'Payrate' means the
of the member paid in cash
group or class of employment for services rendered on a full-time basis
during normal working hours, pursuant to
publicly available pay schedules. 'Payrate,'
for a member who is not in a group or
class, means the monthly rate of pay
or base pay of the member, paid in cash and pursuant to publicly available pay schedules, for services rendered
on a full-time basis during normal working hours, subject to the limitations of
paragraph (2) of subdivision (e)."
(Italics added.) Section 20636,
subdivision (c), provides:
"(1)
includes a payment received for special skills, knowledge, abilities, work
assignment, workdays or hours, or other work conditions.
"(2)
that which is received by a member pursuant to a labor policy or agreement . . .
, to similarly situated members of a group or class of employment that is in
addition to payrate. If an individual is
not part of a group or class, special
compensation shall be limited to that which the board determines is
received by similarly situated members in the closest related group or class
that is in addition to payrate, subject to the limitations of paragraph (2) of
subdivision (e)." (Italics added.)
However, "special compensation" does not include
final settlement pay. (§ 20636,
subd. (c)(7)(A).)
Section
20636, subdivision (e), provides:
"(1) As used
in this part, 'group or class of employment' means a number of employees
considered together because they share similarities in job duties, work
location, collective bargaining unit, or other logical work-related
grouping. One employee may not be
considered a group or class.
"(2)
Increases in compensation earnable granted to an employee who is not in
a group or class shall be limited during the final compensation period
applicable to the employee[], as well as the two years immediately preceding
the final compensation period, to the average increase in compensation earnable
during the same period reported by the employer for all employees who are in
the same membership classification, except as may otherwise be determined
pursuant to regulations adopted by the board that establish reasonable
standards for granting exceptions."
Section 20636, subdivision (f), defines "final
settlement pay" as "pay or
cash conversions of employee benefits that are in excess of compensation earnable, that are granted or awarded to
a member in connection with, or in anticipation of, a separation from
employment. The board shall promulgate
regulations that delineate more specifically what constitutes final settlement
pay." (Italics added.)
Pursuant to
section 20636, subdivision (e), PERS adopted a regulation allowing employers to
request an exception to the "average increase" limitation on "compensation
earnable." (Cal. Code Regs., tit.
2, § 572.) That regulation provides
in part:
"An employee who is not in a 'group or class of
employment' within the meaning of the [PERL], may request an exception from the
'average increase' procedure set forth in Sections 20636 and 20636.1. . . .
[¶] . . . [¶]
" . . . PERS' decision to grant or deny
the request will be based on a comparison between increased compensation
earnable, as reported for the employee during his or her period of final
compensation and compensation earnable reported for the group or class of
employees in his or her same membership classification.
" . . .
In no case will an exception be granted if PERS determines that the
comparative increase in compensation earnable by the employee fails to conform
with the following standards set forth in subsections (a) and (b) below as well
as other applicable provisions of the law.
"(a) If
reported in payrate, the increased compensation must be:
"(1)
Contained in a written labor agreement; [¶] . . . [¶]
"(5)
for the membership classification; and
"(6) Not
final settlement pay." (Cal. Code
Regs., tit. 2, § 572, italics added.)
Operative as
of August 10, 2011, PERS also adopted the following regulation setting forth
requirements for a "publicly available pay schedule," as that phrase
is used in the definition of "compensation earnable" under section
20636:
"(a) For
purposes of determining the amount of 'compensation
earnable' pursuant to Government Code Sections 20630, 20636, and 20636.1,
listed on a pay schedule that meets all of the following requirements:
"(1)
employer's governing body in accordance with requirements of applicable
public meeting laws;
"(2)
employee position;
"(3)
position, which may be stated as a single amount or as multiple amounts
within a range;
"(4)
Indicates the time base . . . ;
"(5)
immediately accessible and available for public review from the employer during
normal business hours or posted on the employer's internet website;
"(6)
Indicates an effective date and date of any revisions;
"(7) Is
retained by the employer and available for public inspection for not less than
five years; and
"(8) Does
not reference another document in lieu of disclosing the payrate. . . ." (Cal. Code Regs., tit. 2, § 570.5,
italics added.)
Therefore,
under the PERL and its underlying regulations, "[c]alculation of 'compensation
earnable' is not based on individual efforts . . . ." (City
of Sacramento v. Public Employees Retirement System, supra, 229 Cal.App.3d at p. 1479.)
"Rather, both components of 'compensation earnable,' an employee's
payrate and special compensation, are measured by the amounts provided by the
employer to similarly situated employees."
(Prentice,
class of employment, his or her "compensation earnable" is generally
measured and limited by what similarly situated members in the closest related
group or class receives and/or by the average increase in compensation earnable
for all employees in the same membership classification. (See § 20636, subds. (b)(1), (c)(2), (e)(2).) In Prentice,
we stated: "[W]e perceive as the central role of the limitations on
compensation earnable [to be]: preventing
local agencies from artificially increasing a preferred employee's retirement
benefits by providing the employee with compensation increases which are not
available to other similarly situated employees." (Prentice,
at p. 993, italics added.)
III
Earnable"
PERS
contends the trial court erred by granting Harron's petition because the
payments he received under the Settlement Agreement did not constitute "compensation
earnable" under section 20636. Based
on the undisputed facts in the administrative record, the payments Harron
received under the Settlement Agreement were not, as a matter of law, made
pursuant to a "publicly available pay schedule"; we conclude they did
not constitute "compensation earnable" under section 20636 and
therefore must be excluded from the calculation of his retirement benefits
under the PERL. Harron concedes his pay
under the Settlement Agreement cannot be considered "special compensation"
as defined in section 20636, subdivision (c).
Therefore, for Harron's settlement pay to be "compensation"
and "compensation earnable" under sections 20630 and 20636, it must
constitute "payrate" under section 20636, subdivision (b). (§§ 20630, subd. (b), 20636, subd. (a).) We further conclude, contrary to Harron's
assertion, his settlement payments were not based on the normal monthly rate or
base pay paid to similarly situated members of the same group or class of
employment within the definition of "payrate" under section 20636,
subdivision (b)(1).
A
Based on
our review of the administrative record, the only document that arguably could
constitute the "publicly available pay schedule" required for Harron's
"payrate," and therefore "compensation earnable," under
section 20636 is the Settlement Agreement.
A copy of that document is contained in the administrative record and
testimony regarding it was provided at the administrative hearing. There is no
evidence to support a finding that Harron's pay under the Settlement Agreement
was pursuant to a "pay schedule," or was "publicly available,"
as required by section 20636, subdivision (b)(1), for a "payrate." Even without considering the PERS regulation
(Cal. Code Regs., tit. 2, § 570.5) that sets forth requirements for a "publicly
available pay schedule" (which regulation was adopted after the operative
facts in this case), we conclude the Settlement Agreement cannot be considered
a "publicly available pay schedule" under section 20636, subdivision
(b)(1).
First, the
Settlement Agreement cannot be considered a "pay schedule." The Settlement Agreement is a 14-page
document that sets forth, in great detail, the terms and conditions of the
settlement of Harron's wrongful termination action against the District. It affects only one former employee, Harron,
and no other employees. It does not set
forth any pay "schedule" for any group or class of employees of the
District, whether described by job title, classification, or otherwise. As PERS asserts, the Settlement Agreement
does not even describe the job title or position Harron would have as an "employee"
of the District from February 10, 2008, through February 9, 2009. At most, the Settlement Agreement sets forth
compensation Harron would receive as an ostensible employee during that period. That document, therefore, is the antithesis
of a "pay schedule." Although
we do not rely on it in deciding this appeal, PERS's regulation (Cal. Code
Regs., tit. 2, § 570.5) that sets forth the requirements for a "publicly
available pay schedule" describes what generally is considered to be a "pay
schedule." That regulation requires
the document to identify the position title for every employee position and
show the payrate for each identified position.
Harron does not, and could not reasonably, assert the Settlement Agreement
satisfies those requirements. Therefore,
the Settlement Agreement does not constitute a "pay schedule" within
the meaning of section 20636, subdivision (b)(1).
Second, the
Settlement Agreement does not constitute a "publicly available" pay
schedule within the meaning of section 20636, subdivision (b)(1). The term "publicly available" in
this context has an obvious meaning--i.e., the pay schedule must be posted,
published, or otherwise easily obtainable by the public. A confidential
settlement agreement or other document cannot be considered "publicly
available," even if that confidential document may ultimately, through a
public records request or otherwise, be obtained from the governmental
agency. In this case, the Settlement
Agreement contained a confidentiality provision, requiring Harron and his
counsel to "keep strictly
confidential the existence,
terms, and conditions of the Settlement Agreement." (Italics added.) A provision requiring a document to be kept
strictly confidential is the antithesis of a "publicly available" pay
schedule. Even if the Settlement
Agreement does not expressly require the District
to likewise keep its existence, terms, and conditions strictly confidential, a
truly "publicly available" pay schedule would not prohibit an
employee from disclosing its existence, terms, and conditions. Rather, the intent underlying the "publicly
available" requirement is to allow the public to freely access and obtain
the terms of a pay schedule and allow employees and other interested persons to
obtain and disclose the pay schedule to whomever they choose. A confidentiality provision necessarily
precludes a document from constituting a "publicly available" pay
schedule under section 20636, subdivision (b)(1).
Although we
do not rely on it in deciding this appeal, PERS's regulation (Cal. Code Regs.,
tit. 2, § 570.5) that sets forth the requirements for a "publicly
available pay schedule" describes what generally is considered to be a "publicly
available" pay schedule. That
regulation requires the document to have been approved and adopted by the
employer's governing body per applicable public meeting law requirements, be
posted at the employer's office or immediately accessible and available for
public review during normal business hours or posted on the employer's website,
and be retained by the employer and available for public inspection for at
least five years. (Cal. Code Regs., tit.
2, § 570.5, subd. (a).) Harron
cannot reasonably assert the District satisfied those requirements regarding
the Settlement Agreement. Contrary to
Harron's assertion, the mere fact the Settlement Agreement may have been
approved by the District's governing board at a public meeting and thereafter made
available to an interested person through a public records request does not
satisfy the clear legislative intent underlying the requirement that a pay
schedule be "publicly available."
The Settlement Agreement does not constitute a "publicly available
pay schedule" within the meaning of section 20636, subdivision (b)(1).
In
situation in which an increase in a manager's salary was not pursuant to a "publicly
available pay schedule." In that
case, Prentice was the director of the water department for the City of Corona when
in 2001 it asked him to become the general manager of its new department of
water and power. (Prentice, supra, 157
Cal.App.4th at p. 987.) The city gave
him a 10.49 percent pay raise because of the new responsibilities in his new
position. (Ibid.) In 2003, Prentice
retired. (Ibid.) His successor as the
general manager of the department of water and power was not paid the 10.49
percent increase in pay that Prentice had received. (Id.
at p. 988.) PERS denied Prentice's
request that his final compensation for calculating his retirement benefits
include the 10.49 percent pay raise. (
On appeal after the trial court denied Prentice's petition for writ of
mandate, we reviewed applicable statutes and regulations and concluded:
"In sum, '[c]alculation of "compensation
earnable" is not based on individual efforts . . . .' [Citation.]
Rather, both components of 'compensation earnable,' an employee's
payrate and special compensation, are measured by the amounts provided by the
employer to similarly situated employees.
(See § 20636, subds. (b)(1), (2), (c), (e)(2).)" (Prentice,
supra, 157 Cal.App.4th at p. 992.)
After finding Prentice was a member of the city's class of
managers and assistant managers of city departments, we concluded: "Prentice's
[10.49 percent salary] increase was not part of his 'payrate' within the
meaning of section 20636, subdivision (b)(1).
Contrary to Prentice's contention on appeal, his increased pay was never made part of a publicly available pay
schedule, as required by the statute."
(Prentice,
italics added.) The pay range for the
management group that included Prentice's general manager position did not
include the pay increase. (
in the city's annual budget did not make that salary available to any other
person holding the position of general manager.
(Id. at p. 994.) We concluded:
"Because, as we view the entire statutory scheme,
the limitations on salary are designed to require that retirement benefits be
based on the salary paid to similarly situated employees, PERS acted properly in looking at the published salary range rather
than the exceptional arrangement the city made with Prentice and reflected in
the city's budget documents.
interpretation of 'pay schedule' is that it would permit an agency to provide
additional compensation to a particular individual without making the
compensation available to other similarly situated employees." (Prentice,
supra, 157 Cal.App.4th at p. 994,
italics added.)
In addition
to concluding Prentice's salary increase was not part of his "payrate"
under section 20636, subdivision (b)(1), we concluded his salary increase also
did not constitute "special compensation" under section 20636,
subdivision (c)(2), because it was not set forth in a written labor policy or
agreement and was not available to all members of his class. (Prentice,
supra, 157 Cal.App.4th at pp.
994-996.) In so concluding, we stated: "[T]he
fact his raise was the subject of a written memorandum from the city manager to
the human resources department did not satisfy the requirement that it be set
forth in a written labor policy or agreement.
A written employment agreement
with an individual employee is not a labor
policy or agreement within the meaning of the regulation [i.e., Cal. Code
Regs., tit. 2, § 571, subd. (b)]. . . . [Our] restricted and more literal reading of
the regulation is required because the broad interpretation offered by Prentice
would essentially provide no limit on the compensation a local agency could
provide to individual employees by way of individual agreements."
supra, 157 Cal.App.4th at p. 995.) Because
Prentice's salary increase was not part of his "payrate" or "special
compensation," we concluded it was not part of his final compensation for
calculating his retirement benefits and affirmed the trial court's
judgment. (Id. at p. 996.)
Contrary to
Harron's assertion, Molina,
similar to the circumstances in this case and provides support for our
conclusion. In Molina, a former employee filed a wrongful termination action
against his former employer. (
agreement, the former employee was paid $875,000 and rehired for one day for
the sole purpose of allowing him to purchase service credits from PERS. (Id.
at p. 57.) PERS denied his
subsequent request for it to consider all or part (i.e., $200,000) of his
settlement pay as earnable compensation.
supra, 200 Cal.App.4th at p. 58.)
The trial court denied his petition for writ of administrative
mandate. (Id. at pp. 59-60.) On
appeal, Molina, citing our decision
in Prentice, concluded that even if
$200,000 of the settlement proceeds was considered "back pay," that
would not necessarily increase his retirement benefits because the "payrate"
for the position he held was $8,527.98 per month and "was not affected by
the settlement payout." (
stated: "Because, under PERL, even if a portion of the settlement amount
had been labeled back pay and was includible in taxable income, it could not be
included in Molina's 'payrate' because there was no evidence that the amount
was either (1) paid to similarly situated employees or (2) paid in accordance
with a 'publicly available pay schedule[] . . . for services rendered
on a full time basis during normal working hours.' (Gov. Code, § 20636, subd. (b)(1).)" (Id.
at p. 67.) The factual differences
between Molina and this case do not
require a different application of the statutory definition of "payrate"
in this case than that applied by Molina. Because the facts in Prentice and Molina are
sufficiently similar to this case, they provide support for our conclusion that
Harron's pay under the Settlement Agreement was not pursuant to a "publicly
available pay schedule" and thus not part of his "payrate" or "compensation
earnable" within the meaning of section 20636, subdivisions (a) and
(b)(1).
B
We further
conclude Harron's settlement payments were not based on the normal monthly rate
or base pay paid to similarly situated members of the same group or class of
employment and therefore not included within the definition of "payrate"
and "compensation earnable" under section 20636, subdivisions (a) and
(b)(1). In support of his assertion that
other similarly situated members of his group or class received the base pay
that he did, Harron argues that "his successor General Counsel didn't
share 'similar' job duties; they shared the exact same job duties." Harron then notes his successor as the
District's general counsel was paid $514,421.52 during the same 12-month period
that he was paid $222,000 while on a leave of absence. Based on Harron's argument, we infer he
argues the only similarly situated member of his group or class is the District's
general counsel during the 2008 to 2009 period.
However, Harron omits from his argument that the general counsel during
that period was a law firm and not an individual and, more importantly, was
member of PERS. Our review of the
administrative record shows it is undisputed that the District's general
counsel during that period was the outside law firm of "Garcia Calderon
Ruiz." Therefore, under the PERL an
outside law firm cannot be considered a "similarly situated
or class of employment" within the meaning of section 20636, subdivision
(b)(1).
Furthermore,
as PERS contends, the Settlement Agreement did not identify any particular
position or job title from which Harron would be on a leave of absence during
the one-year period. It did not identify
Harron as the District's general counsel.
In any event, the record shows its general counsel was an outside law
firm and not Harron or any other person.
Because the record does not show Harron was a member of any group or
class of similarly situated members, his pay pursuant to the Settlement
Agreement cannot constitute the "normal monthly rate of pay or base pay of
the member paid in cash to similarly situated members of the same group or
class of employment" within the meaning of section 20636, subdivision
(b)(1). For this additional reason,
Harron's Settlement Agreement pay does not constitute "payrate" or "compensation
earnable" within the meaning of section 20636, subdivisions (a) and
(b)(1).
Based on
the above reasoning, the payments Harron received under the Settlement Agreement
did not, as a matter of law, constitute "compensation earnable" under
section 20636 and therefore may not be included in the calculation of his
retirement benefits under the PERL.
Accordingly, the trial court erred by finding those payments must be included
in calculating Harron's PERS retirement benefits.
IV
Because we
dispose of PERS's appeal on the above ground, we need not, and do not, address
its alternative contentions for reversal of the judgment. Also, to the extent Harron implicitly asserts
the judgment should be affirmed based on estoppel grounds, the trial court did
not find PERS was estopped from concluding Harron's Settlement Agreement pay
should excluded in calculating his retirement benefits and, in any event, Harron
has not presented any substantive legal and factual analysis persuading us PERS
should be so estopped. In any event, we
strongly doubt a government agency, such as PERS, can be estopped in the
circumstances of this case where it does not have authority to pay retirement
benefits in excess of that prescribed by statute. (Cf. City
of Pleasanton v. Board of Administration (2012) 211 Cal.App.4th 522, 543 ["Because
we . . . find section 20636 did
at all times preclude PERS from treating Linhart's standby pay as pensionable
compensation, we hold any award of benefits to Linhart based on estoppel is
barred as a matter of law."]; Medina
v. Board of Retirement (2003) 112 Cal.App.4th 864, 870 [estoppel is not
available against government agency without authority to do what it appeared to
do]; Fleice v. Chualar Union Elementary
School Dist. (1988) 206 Cal.App.3d 886, 893 ["principles of estoppel
are not invoked to contravene statutes and constitutional provisions that
define an agency's powers"].)
DISPOSITION
The
judgment is reversed and the matter is remanded to the trial court with
directions the court vacate its order granting Harron's petition for writ of
administrative mandamus and issue a new order denying that petition. PERS is entitled to costs on appeal.
McDONALD,
J.
WE CONCUR:
BENKE,
Acting P. J.
McINTYRE,
J.
name="_ftn1" title="">[1] All statutory references are to the Government Code unless
otherwise specified.
name="_ftn2" title="">[2] In deciding this appeal, we need not, and do not, decide
whether PERS's regulation (Cal. Code Regs., tit. 2, § 570.5, operative August
10, 2011) applies retroactively to determinations of "payrate" and "compensation
earnable" for pay received prior to the operative date of that regulation.
