Appellate Court Upholds City of San Diego’s Pension Reform Measure Against Unfair Labor Practices Charge

by Reed Smith

Reed Smith

In City of San Diego v. Public Employee Relations Board (April 11, 2017), the Fourth District Court of Appeal considered an unfair labor practices challenge brought by unions against the city of San Diego under the state’s Meyers-Milias-Brown Act (“MMBA”). The unions alleged that the city’s mayor’s involvement with a 2012 pension reform initiative converted a citizen-sponsored initiative (“CPRI”) to a city-sponsored measure, thereby requiring the city to engage in meet-and-confer under MMBA before placing the measure on the ballot, which the city failed to do. The initiative mandated that new city employees, except police officers, be provided with a 401(k)-style defined contribution plan, rather than the city’s traditional defined benefit retirement plan.

The mayor was involved in initiating, sponsoring, promoting, and implementing the CPRI. The union’s challenge was originally filed in the state Public Employee Relations Board (“PERB”), with jurisdiction over public employee labor disputes. The PERB issued an administrative decision siding with the unions, finding that the initiative qualified as a city-sponsored measure, and that the city had violated its meet-and-confer obligations. On appeal, the Fourth District Court of Appeal disagreed with nearly every factual and legal determination made by the PERB, and reversed the agency’s determination. The court concluded:

[A] city has no obligation under the MMBA to meet and confer before placing a duly qualified citizen sponsored initiative on the ballot, and only owes such obligations before placing a governing-body-sponsored ballot proposal on the ballot. We further conclude PERB's fundamental premise—that under agency principles [Mayor] Sanders's support for the CPRI converted it from a citizen-sponsored initiative on which no meet-and-confer obligations were imposed into a City Council-sponsored ballot proposal to which section 3504.5's meet-and-confer obligations became applicable—is legally erroneous. Opinion at 65.

The court found that the City Council was not bound by the mayor’s actions despite his apparent authority to speak on behalf of the city in labor matters, and despite the fact that the mayor announced his plans for a citizens’ initiative at a press conference at City Hall; sent out emails as mayor to voters; gave media interviews; formed a support committee to raise campaign contributions; attended strategy sessions with proponents for another similar pension reform ballot measure; and publicly campaigned for the measure. He often identified himself not as a private citizen but as mayor, and used the services of city staff to promote the measure. Nevertheless, the court determined that these actions were within his rights as a private citizen and an elected official, and could not be attributed to the City Council as official acts of that governing body.

Although several people occupying elected and nonelected positions in City's government did provide support for the CPRI, we conclude PERB erred when it applied agency principles to transform the CPRI into a governing-body-sponsored ballot proposal. Because we conclude that, notwithstanding the support given to the CPRI by Sanders and others, there is no evidence the CPRI was ever approved by City's governing body (the City Council), we hold PERB erred when it concluded City was required to satisfy the concomitant "meet-and-confer" obligations imposed by Seal Beach for governing-body-sponsored charter amendment ballot proposals.” Opinion at 6.


The decision plows no new ground in California pension law—it has always been the case that a state or local legislative body is free to offer prospective new employees any retirement benefits it wants, or none at all. The decision is also unremarkable in its interpretation of the California labor laws.

What is remarkable, and portentous, is the court’s parsing of the degree to which courts should defer to the determinations of state and local administrative agencies, like our retirement boards. For disputed factual questions, the court applied the most deferential standard of review (Opinion at 22), but in this case found the material facts largely undisputed. For questions of law, however, the court referred to this as a “complicated question” that requires a court to “distinguish between two classes of interpretive actions by the administrative body—those that are ‘quasi-legislative’ in nature and those that represent interpretation of the applicable law.” Opinion at 23-24. For the former, the court sustained the level of deference afforded under the prevailing Yamaha standard, stating that its scope of review is narrow and limited to the question of whether the administrative rule lay within the lawmaking authority delegated to the agency by the Legislature. When engaged in rule-making, an agency is acting as a legislative body creating rules with the dignity of statutes, and courts regularly defer to the discretionary actions of the legislative branch. Not so, however, when the agency is “construing a controlling statute” that governs the agency’s activities. Opinion at 24-25. For an agency’s interpretation of the laws it is charged with enforcing, the court departed from the Yamaha standard, and held that the standard of judicial review is independent judgment. Opinion at 24. With legal interpretations, the judicial branch is afforded ultimate authority. Because an interpretation of law is only an agency's legal opinion, however "expert" the agency may be in the field, the court held that it commands a commensurably lesser degree of judicial deference.

Where dispositive facts are undisputed and purely legal issues remain requiring interpretation of a statute an administrative agency is responsible for enforcing, courts exercise independent judgment, and an agency's interpretation is one of several interpretive tools that may be helpful. In the end, however, the court must independently judge the text of the statute, citing Azusa Land Partners v. Department of Indus. Relations (2010) 191 Cal.App.4th 1, 14 (internal marks omitted). Opinion at 27.

In affording scant deference to the determinations of the state administrative agency charged with primary responsibility for interpreting the state’s labor laws, the Fourth District Court of Appeal erodes a key aspect of the long-respected Yamaha doctrine. The ruling is sharply at odds with that of the First District Court of Appeal in City of Pleasanton v. Board of Administration (2012) 211 Cal.App.4th 522, 539:

Where our review requires that we interpret the PERL [Public Employees Retirement Law] or a PERS regulation, the court accords great weight to PERS interpretation….This is in recognition of the fact that as the agency charged with administering PERL, PERS has expertise and technical knowledge as well as an intimate knowledge of the problems dealt with in the statute and the various administrative consequences arising from particular interpretations. (internal marks and citations omitted).

Click here to view the decision.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Reed Smith | Attorney Advertising

Written by:

Reed Smith

Reed Smith on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.