As the public pension community in California is well aware, on July 30, 2020, the California Supreme Court issued its landmark decision on vested rights and the constitutionality of legislative changes to public retirement statutes in Alameda County Deputy Sheriff's Association, et al. v. Alameda County Employees' Retirement Association, et al. (State Of California) (2020) 9 Cal.5th 1032 (“Alameda”). See our eAlert from July 31, 2020.
Soon after issuing Alameda, the Court dismissed two other petitions for review and sent the two felony forfeiture cases back to the courts of appeal with directions. One of the remanded felony forfeiture cases was Hipsher v. Los Angeles County Employees Retirement Assn. (2018) 24 Cal. App. 5th 740 (“Hipsher”). As to Hipsher, the Court directed the Second Appellate District “to vacate its decision and to reconsider the cause in light of [Alameda].” In response, the Second Appellate District has now summarily affirmed its prior decision upholding the constitutionality of the statute enacted as part of the Public Employees’ Pension Reform Act of 2013 (PEPRA), which requires forfeiture of a convicted felon’s pension when the felony arose in performance of official duties or was related to the felon’s application for pension benefits.
In sum, the Hipsher case involved (i) a determination by the County of Los Angeles (County) that an illegal gambling operation Hipsher was convicted of running arose in the performance of his official duties (i.e., was job-related) under California Government Code section 7522.72; (ii) a determination by the Los Angeles County Employees Retirement Association (LACERA) that, as provided by section 7522.72, Hipsher’s retirement allowance would be reduced by removing service credit he earned from the first date he committed that crime forward (and his corresponding member contributions would be returned); and (iii) Hipsher’s constitutional challenge to the reduction of the retirement benefits he already had earned and had begun receiving as a retiree.
In response to Hipsher’s challenge, the Court of Appeal for the Second District held that the felony forfeiture statute did not violate either the contract clause, or the ex post facto prohibition, of the federal or California Constitutions. The court did, however, conclude that Hipsher had a constitutional due process right to have the LACERA Board of Retirement, rather than the County, determine whether Hipsher committed the felony of which he was convicted on the job, such that it would be subject to the forfeiture statute. Additional analysis of the Hipsher decision is available in our eAlert from June 26, 2018.
On December 15, 2020 – subsequent to the California Supreme Court’s transfer order – the Second Appellate District docket reflects that the Court of Appeal ruled as follows: “The judgment [in Hipsher] is modified to reflect that LACERA, not the County, shall afford the requisite due process. This process shall conform with LACERA's existing administrative procedures and, at a minimum, provide Hipsher (1) notice of LACERA's intent to initiate forfeiture proceedings, and the reasons therefor, and (2) an opportunity to present his objections before LACERA's impartial decision maker, regarding whether he falls within the scope of section 7522.72. The judgment is affirmed as modified.”
Initially, the December 15 docket entry is puzzling because the original Court of Appeal opinion in Hipsher concluded that LACERA was responsible for providing a due process hearing...
