The Big Picture
On August 11, 2010, Joe Requa and three other Petitioners (Jay Davis, Wendell Moen and Sharon Wood) filed a Petition for Writ of Mandate in the Alameda Superior Court. The Petition alleged that the Regents entered into an implied contract based on the promise to provide University-sponsored group health plan coverage during retirement
The Alameda Superior Court dismissed the lawsuit holding there was no contract. Petitioners appealed. On December 31, 2012, the Court of Appeal reversed the Alameda Superior Court and reinstated the lawsuit. Requa v. Regents of Univ. of Cal., 213 Cal.App.4th 213 (2012).
The Court of Appeal found that the Petitioners had alleged sufficient facts to state a valid claim for impairment of implied contract. The Court of Appeal remanded the case to the Alameda Superior Court with directions to allow Petitioners to proceed with their claim.
After remand, several new Petitioners were added (Greg Bianchini, Alan Hindmarsh, Steve Hornstein, Calvin Wood and Sharon Wood). The Petition was also amended to add “class action” allegations.
On October 30, 2014, the Alameda Superior Court “certified” a class of retirees who had worked at LLNL and retired before the change in management to LLNS in October 2007. The class consists of more than 9,000 retirees and dependents whose University-sponsored health care was terminated by the Regents in 2007. We estimate that approximately 2,000 class members have passed away (the heirs and estates of deceased class members may still be entitled to damages for the time the deceased class member was living).
The Superior Court decided that five separate issues should be adjudicated: (1) Were the Regents authorized to enter into bilateral contracts regarding retiree health care benefits? (2) Did the Regents intend to create contract rights in health care benefits? (3) Did the parties’ conduct show that an implied contract had been formed? (4) If so, did the implied contract include a promise that retirees would remain in the University-sponsored “risk pool?” And (5) Did the Regents unconstitutionally “impair” the contract when they terminated University-sponsored health care benefits?
The first two issues were heard in the Phase I trial on September 11, 2015. On December 8, 2015, the Superior Court issued a Statement of Decision ruling in favor or Petitioners on both issues. The Court found that the Regents had the authority to enter into contracts (Issue # 1); and that the Regents intended to create binding contractual rights to health care benefits (Issue # 2).
For the next two years, Petitioners engaged in “discovery” collecting evidence about the health care plans provided by LLNS compared to those provided by UC.
In mid-2017, both sides made motions for “summary adjudication” arguing, in effect, that the court should rule in their favor without a trial. The Court denied both motions.
At about the same time, the Regents made a motion to “de-certify” the class, arguing that Petitioners could not prove actual monetary damage on a classwide basis. On November 17, 2017, the Court granted the motion and “de-certified” the class. The effect was to terminate the lawsuit as a class action – meaning only the ten named Petitioners could proceed.
Petitioners appealed a second time, arguing that the Court had applied the wrong legal standard because, among other things, “impairment” of an implied contract does not require actual monetary loss - diminishing the security of the benefit is enough Petitioners pointed out that, under LLNS Plan, “LLNS, in its sole discretion, reserves the right to amend or terminate in writing at any time the Plan … and/or any Benefit Program.” University-sponsored retiree health care benefits, on the other hand, constitute vested contractual rights that cannot be amended or terminated at any time.
On August 1, 2018, the Court of Appeal agreed with Petitioners that the loss of security in their retiree health care constituted impairment of their contractual rights. The Court reversed the order “de-certifying” the class and sent the case back to the Alameda Superior Court with directions to allow Petitioners and the class to proceed to trial. See Moen v. Regents of Univ. of Cal., 25 Cal.App.5th 845 (2018).
Petitioners asked the Alameda Superior Court for an early trial date. By this time, the case had been assigned to Judge Winifred Smith. Judge Smith set a trial date of February 11, 2019.
The parties also began discussing settlement. The Regents asked to continue the trial date so they would consider settlement. Petitioners agreed to an extension to May 6, 2019. Since Judge Smith has another trial underway, the Court notified the parties that the May 6 date will have to be changed. No new date has been set but a Case Management Conference is scheduled for May 14, 2019.
Here is a link to the most important documents in the case, including the trial exhibits from Phase I. There are numerous documents so we have only included the most significant. All documents that have been filed can be found on the Alameda Superior Court Domain Web. Go to http://www.alameda.courts.ca.gov/pages.aspx/domainweb, and click “Go to Domain Web.” You will be directed to the Domain Web, where you will see a choice for “Search by Case Number.” Enter RG10530492 (the case number). This will take you to “Case Details” where you will see a tab for “Register of Actions.” This tab contains almost all of the documents that have been filed since the beginning of the case in 2010. Unfortunately, there is a charge for downloading documents (you can view a half-page free). If there are particular documents on the Web Domain that you would like to see, our attorneys can usually forward them to you. Please send any requests to UCLRG.
In 2006, DOE issued a Request for Proposal (RFP) which stated: “The Contractor shall become the operator and shall be responsible for management and administration of a retiree medical benefit plan that will provide medical insurance (including dental) substantially equivalent to those provided by the predecessor contract.”
In getting ready for trial, we have done more research about what happened to our retiree health care benefits.
As noted above, the RFP said, ““The Contractor . . . shall be responsible for management and administration of a retiree medical benefit plan that will provide medical insurance (including dental) substantially equivalent to those provided by the predecessor contractor.” This was incorporated into the contract to manage the Laboratory.
In September 2008, DOE amended the contract with LLNS to say retiree health care benefits did not have to be “substantially equivalent” but could be determined “based on a comparison and analysis to industry practices.” This allowed LLNS to provide health care benefits that were more expensive and covered less.
What we did not know is that LLNS had been making substantial “cash distributions” to UC based on the joint venture agreement. These payments are noted in the UC Annual Financial Reports, which are available at https://www.ucop.edu/financial-accounting/financial-reports/annual-financial-reports.html. These reports show the following:
|UC Annual Financial Report||UC Equity in LLNS Earnings||LLNS Cash Distributions to UC|
|2007-2008||$10 million||$5.5 million|
|2008-2009||$12 million||$13.8 million|
|2009-2010||$14.5 million||$14.5 million|
|2010-2011||$14.6 million||$14.2 million|
|2011-2012||$14.7 million||$15.0 million|
|2012-2013||$12.3 million||$12.8 million|
|2013-2014||$12.4 million||$12.0 million|
|2014-2015||$11.4 million||$11.55 million|
|2015-2016||$12.2 million||$11.6 million|
|2016-2017||$11.5 million||$11.1 million|
|2017-2018||$12.2 million||$12.2 million|
|TOTAL||$137.8 million||$134.2 million|
There is no evidence that LLNS but back health care benefit in order to make the cash distributions to UC.
But the fact remains that the cash distributions are close to the difference in health care coverage provided by UC compared to LLNS. For example, we estimate that the it would cost UC approximately $37,529,107 to provide health care benefit to the class. By comparison, we estimate that LLNS spent approximately $15,048,732 for health care coverage for the class in the preceding year (2018). The difference is approximately $15,048,732. For 2017-2018, UC received a cash contribution of $12,200,000.
Thus, at the same time the Regents are telling the Court they have no money available to make up the difference and provide UC health care benefits, the University is receiving over $12 million as a cash distribution for LLNS.
Efforts to Settle the Case
Petitioners are making every effort to find a way to settle the case.
At a Case Management Conference on August 20, 2018, Petitioners asked Judge Robert McGuiness to set a mandatory settlement conference. Judge McGuiness agreed and scheduled a settlement conference with Judge Patrick Zika on September 7, 2018. Judge Zika met with the parties and scheduled a follow-up settlement conference for October 12, 2018.
The parties were unable to settle the case in the limited time Judge Zika had available. Judge Zika recommended a private mediator, and the parties agreed on Hon. Judge Maria-Elena James, a retired federal magistrate-judge, through ADR Services.
Petitioners and the Regents have been making slow but steady progress and are hopeful that a settlement will be reached. Petitioners are ready to go forward to trial if a settlement is not reached.