EDMON, P. J. —
These consolidated appeals concern the calculation of retirement benefits under the Public Employees' Retirement Law (PERL), Government Code section 20000 et seq.
This appeal involves two putative class actions in which plaintiffs contend that their purchase of additional service credit entitled them to enhanced retirement benefits under the PERL. They alleged CalPERS's failure to pay such enhanced benefits gave rise to a variety of causes of action, including breach of statutory duty, breach of contract, rescission, breach of fiduciary duty, and constitutional claims.
We affirm in part. As we discuss, neither the PERL nor plaintiffs' contracts entitle plaintiffs to the additional retirement benefits they seek, and thus the causes of action for breach of statutory duty and breach of contract fail as a matter of law. Plaintiffs' causes of action for constitutional torts also fail because, as a matter of law, CalPERS's interpretation of the applicable statutory provisions does not deny plaintiffs due process or equal protection of law and does not effect an unconstitutional impairment of contract.
We reverse, however, as to the causes of action for rescission and breach of fiduciary duty. Plaintiffs allege that CalPERS failed to disclose the potential loss of the value of purchased service credit if plaintiffs suffered a disability — a disclosure that CalPERS, as a fiduciary, is alleged to have been required to make. We conclude that plaintiffs' pleading in this regard is sufficient to survive demurrer, and thus the demurrer should have been overruled as to these causes of action.
CalPERS is a unit of the Government Operations Agency responsible for administering the retirement systems for the State of California and "contracting agencies" — local public agencies that have "elected to have all or part of [their] employees become members of this system and that ha[ve] contracted with [CalPERS] for that purpose." (See §§ 20001, 20002, 20004, 20022, 20028.) All of the plaintiffs in this action worked as police officers or firefighters for local public agencies that enrolled their employees in CalPERS. (§ 20420.)
(2) Industrial disability retirement benefit: If a member retires before age 50 because of an industrial (job-related) disability, he or she "shall receive a disability retirement allowance of 50 percent of his or her final compensation." (§ 21413.)
Each of the plaintiffs purchased additional service credit and subsequently took industrial disability retirement before age 50, as follows:
Plaintiff Rachel Healy worked as a police officer for the Stockton Police Department for approximately nine years. In 2005, she elected to purchase five years of ARSC by making a lump sum payment of $31,360, and rolling over an additional $46,000 from a deferred compensation account. After she suffered a job-related injury, Healy took an industrial retirement effective September 2009 and began receiving industrial retirement benefits of 50 percent of her final compensation.
Plaintiff Benjamin Esparza worked as a firefighter for the Monrovia Fire Department for approximately 25 years. In 2005, he elected to purchase five years of ARSC by rolling over $76,436 from his deferred compensation plan. He was injured on the job and took an industrial disability retirement in August 2009. At that time, he began receiving industrial retirement benefits of 50 percent of his final compensation.
Plaintiff Jeffrey Andert worked as a police officer for the Alhambra Police Department for six years. In 2004, he elected to purchase four years of military service credit through biweekly installment payments of $269.90, for a total of $77,190 in principal and interest. Andert was injured on the job in 2006, and in 2007 he asked for, and received, permission to suspend his installment payments. Andert took an industrial disability retirement in May 2008 and began receiving industrial retirement benefits of 50 percent of his final compensation. In August 2008, he permanently suspended all further installment payments.
Plaintiff Neil MacLaren was a firefighter for the Roseville Fire Department for more than 21 years. In 2005, MacLaren elected to purchase two years of ARSC by rolling over $29,977 from his retirement account. MacLaren was injured on the job and took an industrial disability retirement in 2009, at which time he began receiving industrial disability benefits of 50 percent of his final compensation.
Plaintiff Randy Slaughter was a police officer for the Newport Beach Police Department for approximately 17 years. In 2001, Slaughter elected to purchase four years of military service credit by making monthly installment payments of $6,977 and a lump sum payment of $44,652. Slaughter took an
Because each of the plaintiffs retired before age 50, none received a service retirement benefit, and none received any additional retirement benefits as a result of his or her purchase of MSC or ARSC.
Marzec, Healy, and Esparza filed an action on May 18, 2011 (the Marzec action), and filed the operative first amended class action complaint on February 28, 2012. Andert, MacLaren, and Slaughter filed a similar class action complaint (the Andert action) on March 12, 2012. Both actions asserted that plaintiffs were entitled, in addition to their industrial disability retirement allowances (sometimes referred to as "IDR"), to additional retirement benefits associated with their purchases of MSC or ARSC. The actions asserted that neither the PERL nor plaintiffs' purchase contracts authorized CalPERS to "seize" plaintiffs' MSC/ARSC investments as a condition of receiving disability benefits, that CalPERS did not adequately advise plaintiffs of this risk of seizure before they invested in MSC or ARSC, and that through its administration of disability and MSC/ARSC benefits, CalPERS treated plaintiffs differently than other similarly situated CalPERS members.
Plaintiffs allege that CalPERS's failure to pay additional retirement benefits or to return the MSC or ARSC investments gave rise to 12 causes of action: (1) breach of statutory duties; (2) breach of contract; (3) rescission/restitution; (4) breach of fiduciary duties; (5) denial of equal protection; (6) denial of due process; (7) equitable relief; (8) declaratory relief; (9) accounting; (10) constitutional impairment of contract; (11) estoppel; and (12) other relief, including attorney fees.
CalPERS demurred to the first amended complaint in the Marzec action. In a detailed written opinion, the trial court sustained the demurrer without leave to amend. Although the court said that plaintiffs' situation is "certainly sympathetic," it concluded that none of plaintiffs' causes of action stated a claim for relief. The court entered a judgment of dismissal, and plaintiffs timely appealed.
CalPERS filed a motion for judgment on the pleadings in the Andert action. The motion asserted that plaintiffs' claims were functionally identical to those in the Marzec case, and therefore the court should grant judgment on the pleadings for the same reasons it sustained the demurrer in Marzec.
The trial court granted the motion for judgment on the pleadings. Plaintiffs timely appealed, and this court ordered the Marzec and Andert appeals consolidated.
"We review an order sustaining a demurrer de novo, exercising our independent judgment as to whether a cause of action has been stated as a matter of law. (Moore v. Regents of University of California (1990) 51 Cal.3d 120, 125 [271 Cal.Rptr. 146, 793 P.2d 479].) Because a demurrer tests only the legal sufficiency of the pleading, the facts alleged in the pleading are deemed to be true. [Citation.] We do not review the validity of the trial court's reasoning, and therefore will affirm its ruling if it was correct on any theory. (Ibid.)" (Nasrawi v. Buck Consultants LLC (2014) 231 Cal.App.4th 328, 337 [179 Cal.Rptr.3d 813].)
Plaintiffs' first cause of action is for breach of statutory duty. Plaintiffs urge that CalPERS has violated California statutory law by "forc[ing] Plaintiffs to involuntarily relinquish all or part of their investment in [MSC and ARSC] which the Plaintiffs contributed for time or service outside their safety employment," and they ask the court to declare that CalPERS failed to pay them all the benefits to which they are entitled. Plaintiffs further ask the court either to "[o]rder CalPERS to pay disabled Plaintiffs a continuing [MSC or ARSC] benefit in addition to Plaintiffs' disability allowance ... in an amount that provides Plaintiffs the full additional value that CalPERS is obligated to pay under the relevant statutory provisions in the PERL," or in the alternative, to order CalPERS to refund to plaintiffs the sums they paid to purchase MSC or ARSC.
We note as a preliminary matter that although plaintiffs allege breach of a statutory duty — and although the complaint and plaintiffs' appellate briefs discuss myriad provisions of the PERL — we have had some difficulty ascertaining the particular provisions that plaintiffs believe CalPERS breached. That is, although plaintiffs assert that they have a statutory entitlement either to an additional retirement benefit or to a refund of the payments they made to purchase MSC or ARSC, they do not clearly identify the provision (or provisions) they contend entitle them to such additional benefits or to a refund.
Plaintiffs' failure to identify clearly the statutory basis for their claim appears to be an intentional choice, not an oversight. Plaintiffs urge that they have no duty to identify the statute they believe CalPERS violated, and they suggest that the trial court "erred when it placed the burden on [plaintiffs]" to "show statutory authority." Instead, plaintiffs say, the trial court "should have placed the burden on CalPERS to show statutory authority" to support their claims.
For these reasons, it is not enough for plaintiffs to allege the breach of an inchoate statutory duty; instead, they must identify the particular statutory provision they contend CalPERS violated. Moreover, as the parties challenging the trial court's determination, it is plaintiffs' burden "to affirmatively demonstrate error." (Consumer Advocacy Group, Inc. v. Kintetsu Enterprises of America (2007) 150 Cal.App.4th 953, 982 [58 Cal.Rptr.3d 778].) To do so, plaintiffs must do more than draw our attention to asserted errors in the trial court's reasoning — they must affirmatively demonstrate that they have adequately stated a claim for relief.
With the foregoing in mind, we now turn to the particular statutory section on which plaintiffs' cause of action for breach of statutory duty appears to be based.
Although plaintiffs discuss many provisions of the PERL, they identify only one that they contend requires CalPERS to provide them an ARSC or MSC benefit in addition to their disability allowances. That provision is section 21420, which states as follows: "If a member retired for industrial disability has made contributions in respect to service rendered in a category of membership other than the category in which he or she was at the time he or she suffered the disability or incurred the disease causing his or her retirement for industrial disability, in addition to the disability retirement allowance to which he or she is otherwise entitled under this article, he or she shall receive an annuity purchased with his or her accumulated normal contributions made in respect to service rendered in the other category of membership." (Italics added.)
Plaintiffs contend that their purchases of MSC and ARSC were "normal contributions made in respect to service rendered in [another] category of membership" within the meaning of section 21420. Plaintiffs thus urge that, in addition to their disability benefits, they are entitled to annuities purchased
CalPERS disagrees. It contends that "normal contributions made in respect to service rendered in [another] category of membership" (§ 21420) refers to contributions made while employed by a different CalPERS entity or in a different CalPERS classification, not to contributions made in connection with non-CalPERS employment. Thus, it urges, plaintiffs are not entitled under section 21420 to annuities purchased with MSC or ARSC payments. We consider these issues below.
The phrase "category of membership" appears throughout the PERL, but the PERL does not define it. The statute does, however, define "member" — "`Member' means an employee who has qualified for membership in this system and on whose behalf an employer has become obligated to pay contributions." (§ 20370, subd. (a), italics added.)
The statute also defines "member classification": "`Member classification' means either of the following: [¶] (a) Miscellaneous member classification, which includes state miscellaneous members, National Guard members, university members, local miscellaneous members, state industrial members, and school members[, or] [¶] (b) Safety member classification, which includes patrol members, state peace officer/firefighter members, state safety members, and local safety members." (§ 20371.) Subsequent sections of the PERL appear to refer to these classifications as "categor[ies] of membership" and "membership categor[ies]."
ARSC and MSC do not fall into any of the enumerated statutory categories and do not have either attribute of membership. As we have described, ARSC is a benefit that was offered to some individuals who were already members of CalPERS, not a means by which individuals could qualify for CalPERS membership. (§ 20909, subds. (e)(1) [option to purchase ARSC applies only to "members" who are "employed in state service" at the time of the ARSC election], (d) [ARSC "may not be counted to meet the minimum qualifications for service or disability retirement or for health care benefits, or any other benefits based upon years of service credited to the member"; see id., subd. (a)].) Moreover, an employee's purchase of ARSC did not obligate an employer to make CalPERS contributions on the employee's behalf. To the contrary, section 21052 provides that if an employee elects to purchase ARSC, it is the employee, not the employer, who is required to contribute "an amount equal to the increase in employer liability." (§ 21052.) ARSC, therefore, is not a "category of membership" because it neither qualified an individual for membership in CalPERS nor obligated an employer to make any contributions on that individual's behalf.
The statutory language, therefore, does not support the contention that plaintiffs were entitled to nondisability retirement benefits based on their investment in MSC or ARSC.
We find section 21037, amended in 2003 by Senate Bill 268 (2003-2004 Reg. Sess.), instructive. Section 21037, subdivision (a) provides that if a member has elected to purchase additional service credit through installment payments but retires due to disability while making those payments and the additional service credit does not increase the member's retirement allowance, he or she "may elect to cancel the installments prospectively." The section further provides that "[n]o refund of contributions paid in installments prior to the effective date of the member's election may be payable to a member or retired member as a result of an election made by a member pursuant to this section." (Ibid.)
The legislative history of this section explained that "[m]ost members who purchase additional service credit receive larger retirement allowances by doing so. However, some members who retire on disability do not realize any benefit increases from their purchases. Upon approval of their disability retirements, many members begin receiving a fixed percentage of final compensation regardless of age, retirement formula, or accrued service credit. In such cases, the additional service credit they purchased does not improve their retirement benefits." (Assem. Com. on Appropriations, Analysis of Sen. Bill No. 268 (2003-2004 Reg. Sess.) as amended June 2, 2003.) Nonetheless, under existing law, "[m]embers who elect, prior to becoming disabled, to purchase service credit using payment plans will be required to complete the payment plans regardless of the amounts owed or the fact that they will receive no additional benefits from their purchases." (Ibid.) Accordingly, the proposed bill "would ... allow disabled employees and survivors to stop paying for service credit purchases that will not benefit them .... Doing so will help to alleviate financial hardship for public employees and their survivors who have undergone tragedies." (Ibid.)
In the present case, plaintiffs concede that CalPERS has consistently interpreted the PERL to mean that if safety workers take industrial disability retirement before the age of 50, they will be paid "only the statutorily-mandated industrial disability retirement (IDR) allowance in the amount of 50% of their last salary" — whether or not they have previously purchased MSC or ARSC. Although CalPERS's construction of the statutory language at issue is not binding, because CalPERS is the administrative body charged with implementing the PERL, its interpretation is entitled to deference. (See Bernard, supra, 202 Cal.App.4th at p. 1565.)
Plaintiffs contend that their interpretation of the statute is required by the California Supreme Court's recent decision in In re Marriage of Green (2013)
In Marriage of Green, supra, 56 Cal.4th 1130, a firefighter (husband) elected during his marriage to purchase four years of military service credit. Husband had completed all of his military service before he married wife, but purchased the MSC through installment payments made with community funds. When husband and wife separated, more than $11,000 in community funds had been used to purchase the MSC, but the value of the MSC "substantially exceed[ed] the cost of obtaining it." (Id. at p. 1132.)
The court concluded that because the husband rendered his military service before the marriage, the four years of MSC, reduced by the amount of the community's contribution to the cost of purchasing it, were the husband's separate property. (Marriage of Green, supra, 56 Cal.4th at pp. 1132-1133.) The court explained: "To designate a portion of those four years of credit as community property — as did the Court of Appeal — solely due to the community's contribution towards the required payment gives no weight to husband's premarital service to his country. [Citation.] ... [¶] ... [¶] ... The [purchase of MSC] `was possible only as consideration for husband's service' in the United States military — service that predated the marriage. [Citation.] The difference in value [between the value of the MSC and the cost of obtaining it] was not due to what the community contributed — part of the installment payments — but to what the husband brought to the community — his military service. For these reasons, the difference in value between the four years' worth of credit and the cost of obtaining it is husband's separate property, subject to reimbursement for the community's contribution to the cost of obtaining the credit." (Id. at pp. 1138-1139.)
Marriage of Green is not relevant to any of the issues before us. It addressed the characterization of MSC as community or separate property, an issue not presented here, and it did not discuss either industrial disability benefits or section 21420. It therefore does not guide our analysis.
Plaintiffs urge that Marriage of Green is relevant because it "denies CalPERS any authority to transform the military/airtime investments into `service' or `normal contributions' in the safety job worked at the time of deposit." We do not agree. As we have said, the central issue before us is whether MSC or ARSC is a "category of membership" — a question that Marriage of Green neither addresses nor decides. We also reject plaintiffs' suggestion that Marriage of Green is relevant because it addresses "the question of when benefits attributable to purchased service credits arise."
For all of the reasons discussed above, we conclude that the trial court properly sustained CalPERS's demurrer to the first cause of action for breach of statutory duty.
Plaintiffs' second cause of action is for breach of contract. Plaintiffs allege that the MSC and ARSC contracts contained a promise by CalPERS "to provide Plaintiffs with increases in their future allowance if Plaintiffs purchased [MSC or ARSC]." Plaintiffs further allege that CalPERS breached those contracts "by failing to pay in full the [MSC or ARSC] benefit, including (i) failing to pay an additional benefit (including the contracted additional [MSC or ARSC] benefit) in the full amount above the disability entitlement and/or (ii) failing to refund the Plaintiffs' lump sum and installments payments, including with interest."
Although plaintiffs assert that the MSC and ARSC contracts contained CalPERS's promises to increase plaintiffs' future retirement benefits, plaintiffs do not identify the particular language they believe contains such promises. Accordingly, we have independently reviewed the entirety of each of plaintiffs' contracts.
Each plaintiff entered a slightly different contract, but the language of each contract is substantially similar. Each contract has two parts: (1) a letter from CalPERS to plaintiff, offering the option to purchase additional service credit, and (2) a letter from plaintiff to CalPERS, accepting the offer and identifying how the purchase would be made. Marzec's contract is illustrative. His offer letter states as follows:
"COST INFORMATION "Service Credit Type: Public Agency Military "Lump Sum Cost: $23,709.22 "ESTIMATED MONTHLY PENSION $642.30 if you retire at Age 50* INCREASE:
"Dear Robert Marzec:
"CalPERS has received confirmation of your intent to purchase your Public Agency Military. Upon further review of your request, it has been determined that you are eligible to purchase this additional service credit.... If elected, this service will be credited to your retirement account as shown below:
"Employer Name Retirement Formula Category Year(s) of Service Credit "City of Stockton 3% @ Age 50 (PA Local Police 4.000 Safety) "Total Service 4.000
"[¶] ... [¶]
"The estimated monthly pension increase information was calculated using the monthly payrate shown above based upon the highest monthly retirement pension option. This amount is only an
"For
"*If you are considering a
"• If you
"• If you wish to purchase the additional service credit, please complete, sign and return the enclosed Election to Purchase Service Credit form to the address shown above. The Election to Purchase Service Credit form is irrevocable and must be returned within 30 days."
Marzec accepted CalPERS's offer to purchase additional service credit by signing and returning an "Election to Purchase Service Credit" form. In relevant part, the election form said:
"You [(CalPERS)] informed me on September 17, 2004 of my right to elect to contribute and receive service credit for my Public Agency Military from CalPERS.... [¶] ... I hereby elect to purchase and receive additional service credit under the provisions of law and I enclose $23,709.22. ... [¶] ... [¶]
As we have said, plaintiffs allege that the contracts contained a promise by CalPERS "to provide Plaintiffs with increases in their future allowance if Plaintiffs purchased [MSC or ARSC]." In other words, plaintiffs seem to suggest that CalPERS offered, and plaintiffs accepted, a guaranteed future income stream in the amounts estimated in the offer letters. For example, as to plaintiff Marzec, plaintiffs assert that "CalPERS promised Marzec that he would increase his monthly retirement benefit by 12% by investing funds to obtain credit for 4 years he served in the U.S. Marines."
The contractual language does not support this construction. The offer letters told plaintiffs they were eligible to purchase "additional service credit," and that if they elected to do so, "this service will be credited to your retirement account as shown below ...." (Italics added.) Robert Marzec, for example, was advised that his additional service would be credited to his retirement account with the City of Stockton, in the category "local police," subject to the retirement formula "3% @ Age 50 ([Public Agency] Safety)." CalPERS's offer, therefore, was not for a guaranteed future income stream, as plaintiffs seem to suggest, but rather for "additional service credit" associated with a particular employer (City of Stockton), employment category (local police), and retirement formula ("3% @ Age 50").
Further, although the offer letters identify an "estimated monthly pension increase" for each plaintiff, they nowhere suggest that a pension increase is promised or guaranteed. To the contrary, the offer letters say that each projected increase "is only an
Taken together, therefore, this language is not reasonably susceptible to the meaning plaintiffs ascribe to it: That they were "promised" a pension increase if they purchased MSC or ARSC, even if they retired before age 50, and even if they took a disability retirement. Accordingly, plaintiffs have not stated a claim for breach of contract, and the demurrer to that cause of action was properly sustained.
Plaintiffs' third cause of action is for rescission. It asserts that plaintiffs are entitled to rescind their MSC/ARSC contracts because CalPERS "induce[d] Plaintiffs to contract ... on the explicit and implicit promise that their retirement benefits will increase" and "[did] not disclose the risk of loss if the Plaintiff [became] disabled." Plaintiffs assert that through a variety of member publications, CalPERS described MSC and ARSC as a way to "increase" a member's retirement benefit, without disclosing "a risk of loss of [MSC or ARSC] if a Member takes IDR." Further, CalPERS publications "do not disclose that because CalPERS accounts for, characterizes, or otherwise treats the Members' contributions or investment in [MSC or ARSC] as `normal contributions' associated with the job that the Member holds at the time that he or she purchases the optional benefit, CalPERS can seize or fail to credit the investment, fail to pay an additional annuity, and in effect transfer the investment to the employer." Plaintiffs allege that their consent therefore was given under a mistake of fact or law, or was induced by fraud, and the contracts are unlawful, contrary to public policy, and substantively and procedurally unconscionable. Plaintiffs "offer to restore everything of value which the Plaintiffs have received from CalPERS under the contract upon condition that CalPERS do likewise."
CalPERS's demurrer to the rescission cause of action conceded that a pension system has a duty to "`fully inform'" a member of retirement options. CalPERS urged, however, that the court should examine the language of CalPERS's disclosures "alleged in or attached to the FAC," and on that basis conclude that CalPERS "fully disclosed to Plaintiffs that they might not benefit from their service credit purchases."
The trial court sustained the demurrer to this cause of action, concluding that "[t]he service credit packets clearly disclosed that `this additional service credit may not benefit' employees who `are considering DISABILITY RETIREMENT' rather than service retirement.... Although Plaintiffs contend that the loss of their permissive service credits `violates their reasonable expectations at the time of contracting,' this is not possible because the contract discloses that the credits may be lost upon disability retirement."
The circumstances that entitle a party to rescind are set forth in Civil Code section 1689. Subdivision (b) provides that a contracting party may unilaterally rescind the contract if: (1) "the consent of the party rescinding ... was given by mistake, or obtained through duress, menace, fraud, or undue influence, exercised by or with the connivance of the party as to whom he rescinds, or of any other party to the contract jointly interested with such party," (2) "the consideration for the obligation of the rescinding party fails, in whole or in part, through the fault of the party as to whom he rescinds," (3) "the consideration for the obligation of the rescinding party becomes entirely void from any cause," (4) "the consideration for the obligation of the rescinding party, before it is rendered to him, fails in a material respect from any cause," (5) "the contract is unlawful for causes which do not appear in its terms or conditions, and the parties are not equally at fault," or (6) "the public interest will be prejudiced by permitting the contract to stand." (Civ. Code, § 1689, subd. (b).)
Contrary to the trial court, we conclude that plaintiffs have stated a cause of action for rescission. "In considering whether a demurrer should have been sustained, `we accept as true the well-pleaded facts in the operative complaint....'" (Beacon Residential Community Assn. v. Skidmore, Owings & Merrill LLP (2014) 59 Cal.4th 568, 571 [173 Cal.Rptr.3d 752, 327 P.3d 850].) Thus, at the demurrer stage plaintiffs were required only to plead — not to prove — a cause of action for rescission.
Plaintiffs' fourth cause of action alleges breach of fiduciary duty. The complaint alleges that CalPERS is a fiduciary and, as such, owed plaintiffs a duty to disclose the potential risks associated with purchasing MSC or ARSC. The complaint further alleges that CalPERS failed adequately to disclose those risks — i.e., that CalPERS's publications and other communications with plaintiffs did not advise them of the risk of forfeiting MSC or ARSC investments if plaintiffs took an industrial disability retirement, rather than a service retirement.
On appeal, plaintiffs contend that the trial court "wrongly made factual determinations on demurrer that the text in CalPERS'[s] military/airtime contracts was adequate to provide notice. If, as the lower court seemed to believe, the appropriate question was whether the contractual disclosures given were adequate to put a reasonable person on notice — even inquiry notice — then their adequacy was a question of fact."
CalPERS concedes that, as a public pension system, it owed plaintiffs fiduciary duties. It urges, however, that we should affirm the order sustaining the demurrer to this cause of action because plaintiffs' breach of fiduciary duty claim "cannot survive the disclosures set out in the exhibits attached to their Complaints."
There is no dispute that CalPERS is a fiduciary. As such it is "charged with the fiduciary relationship described in Civil Code section 2228: `In all matters connected with his trust, a trustee is bound to act in the highest good faith
In the present case, there appear to be factual disputes about what CalPERS disclosed or what representations were made. Indeed, although plaintiffs have attached to their complaint some of the communications between CalPERS and plaintiffs concerning their service credit purchases, there is no suggestion in the complaint that these are all of the relevant disclosures on which plaintiffs base their cause of action. Thus, the breach of fiduciary duty claim should not have been disposed of at the demurrer stage.
The fifth cause of action alleges denial of equal protection of the law. Plaintiffs assert that disabled retirees who purchased MSC or ARSC are treated differently than disabled retirees who did not: "[A]ppellants are treated unequally solely because they purchased military/airtime while other members did not. All safety members are entitled to a statutory IDR benefit of 50% of their highest compensation, at no cost to themselves .... But appellants are charged significantly more for their IDR benefits compared to those who never [bought] military/airtime solely because CalPERS characterizes the investment as time `in the safety job', transfers it to the employers, and thus decreases employer liability but increases appellants' costs and reduces their net IDR proceeds."
Plaintiffs give the following example: "Suppose twin brothers start as firefighters on the same date, earn the same pay and promotions, and make identical member contributions. Both are disabled at age 45 in the same fire and both retire on IDR. Suppose further that one bought 4 years of prior military time for $80,000 before being disabled while the other did not. Each will receive an identical IDR allowance of 50% of their final compensation. But the brother who bought $80,000 of military time will be discriminated
We agree with the trial court that the complaint fails to state an equal protection claim. The complaint assumes that two disability retirees — one who purchased MSC/ARSC, and one who did not — are similarly situated if they served in the same position, for an equivalent number of years, and retired at the same age. By this assumption plaintiffs err, because the disability retiree who purchased MSC/ARSC has more years of retirement credit, as the following example demonstrates:
Years of service Years of purchased TOTAL SERVICE
service CREDIT
credit (YEARS)
Member A 16 4 20
Member B 20 0 20
In the above example, although neither member gets a service retirement benefit if he retires before age 50, member A "loses" more years of service credit because he has accumulated more. This is not a violation of equal protection because the two members are not similarly situated: member A has accumulated 24 years of service credit, while member B has accumulated only 20.
Years of service Years of purchased TOTAL SERVICE
service CREDIT
credit (YEARS)
Member A 16 4 20
Member B 20 0 20
In this example, if member A and member B both take disability retirement at age 45, both "lose" 20 years of service credit. member A, who has purchased some of his retirement credit, is treated no differently than member B, who has earned all of his. There is no equal protection violation.
The sixth cause of action alleges denial of due process. Plaintiffs assert that CalPERS has denied them procedural due process by "seizing the [MSC or ARSC] benefits and investment without first giving Plaintiffs some adequate legal process." Plaintiffs also assert that CalPERS has denied them "substantive due process and the right to be free from arbitrary or unreasonable government action."
On appeal, plaintiffs cite no legal support for the assertion that CalPERS's action constitutes a violation of procedural or substantive due process. The argument therefore is forfeited. (E.g., Saltonstall v. City of Sacramento (2014) 231 Cal.App.4th 837, 858, fn. 10 [180 Cal.Rptr.3d 342] [appellate argument forfeited "for failure to make anything more than `only passing arguments, unsupported with citation to authority or evidence'"].)
The tenth cause of action alleges unconstitutional impairment of contract. It asserts: "Government Code sections 20909, 21006-21008, 21013, 21020.5,
Applying these principles, the Miller court held that the change in the plaintiff's pension rights was not an unconstitutional impairment of contract. It explained: "[U]pon acceptance of public employment plaintiff acquired a vested right to a pension based on the system then in effect. That system allowed him to earn successively higher levels of benefits based on his years of service and his highest average salary during three consecutive years of employment. Under that system, he could have achieved maximum benefits had he worked until age 70. Although his right to a pension based on this system was vested, plaintiff was not assured of receiving maximum pension
Plaintiffs make no contentions on appeal with regard to their seventh, eighth, ninth, 11th, and 12th causes of action, for equitable relief, declaratory relief, accounting, estoppel, and other relief. Therefore, we do not address them.
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In the Marzec action, the judgment is reversed as to the third and fourth causes of action and the class definition, and is otherwise affirmed. In the
Kitching, J., and Aldrich, J., concurred.
