Livermore Independent 12/1/11
Court ruling encourages retirees
The California Supreme Court has ruled that an implied contract may exist requiring a public agency to continue providing benefits to its retirees even when there is no written document explicitly promising the benefits.
The ruling is encouraging to the University of California Livermore Retiree Group, which claims that the University of California has just that kind of implicit obligation to provide them the same health benefits that it offers active employees and campus retirees.
The Livermore Lab retirees were removed from the UC benefits system in 2008, when a for-profit consortium replaced UC in managing Lawrence Livermore National Laboratory. The Retiree Group formed, raised money and filed suit in Superior Court in Oakland last year to force UC to restore the benefits.
The Supreme Court ruling last month resulted from a suit filed in federal court against Orange County after the county, seeking to reduce costs, refused to continue benefits for its retirees.
The Orange County retirees claimed the benefits should continue.
"There was nothing promised in writing," said Dov Grunschlag, attorney for the Livermore retirees. "So the (Orange County) retirees claimed, 'Maybe there's nothing in writing, but there was still an implied contract. We relied on that. We worked for the County and retired in reliance on that under an implicit contract.'"
The federal court determined that it could not rule on the Orange County case until the California Supreme Court decided whether state law even allows an implicit contract under those circumstances.
In a unanimous decision, the state Supreme Court affirmed that it does, that an implicit contract may exist under California law.
The ruling does not mean that the Orange County retirees get their benefits. It does mean that they can proceed in federal court to try to demonstrate the implicit contract in their specific instance.
That will also be the challenge for Livermore retirees. However, at least they should now get the chance to make their case, said Joe Requa, head of the UC Livermore Retiree Group.
UC had moved to dismiss the suit, and "this should be enough" to overcome that motion, he said.
"This (Orange County) case, which some employers must have been hoping would shut the door, instead leaves the door open" for retirees to collect benefits, said attorney Grunschlag.
Requa is optimistic about prospects for the Livermore Retiree Group's case. "Now we've got a fairly good chance," he said. "Of course it's up to the courts, but I think we can show that we had an implicit contract."