The City of San Diego maintains a retirement fund for its employees. The San Diego City Employees Retirement System (SDCERS) is a public employee retirement agency established under the City Charter. SDCERS is managed by a board, which is responsible for ensuring benefits are adequately funded through City and employee contributions. The retirement fund suffered a loss of more than $800 million. SDCERS allocated the shortfall solely to the City as it had done in the past, not to the employees. The City requested the shortfall be split between the City and the employees, but SDCERS rejected the request and adopted a rule assigning financial losses to the City.
The City filed a petition for writ of mandate to compel SDCERS to equalize employee contributions to match those of the City. SDCERS demurred, alleging that City employees or their union representations were necessary parties to the writ and therefore the court should dismiss the writ petition. The trial court overruled the demurrer. Four unions then sought to intervene on behalf of City employees, reiterating SDCERS' arguments.
The City moved for judgment on the pleadings, arguing that the City charter required SDCERS to allocate the unfunded liability equally between the employees and the City. The court denied the City's motion and the City then moved for summary judgment on similar grounds as the motion for judgment on the pleadings. SDCERS and the unions opposed and the City ultimately withdrew its motion, stating that it wanted to focus its resources on a trial.
The case settled and the unions moved to recover attorney fees of $1,785,147. The trial court denied the unions' motion, holding that the unions' involvement was unnecessary to achieve the result. The unions appealed, arguing that they were entitled to recover their fees even if their attorneys' services were unnecessary to the result and that the trial court abused its discretion by concluding that the attorney services were unnecessary. The Court of Appeal rejected the unions' arguments and upheld the trial court's ruling, finding that the unions had failed to establish their involvement was necessary given SDCERS' "parallel advocacy."
In other words, the Court held that the unions had failed to make a showing of necessity or materiality since the unions presented the same arguments as SDCERS. Therefore, they were not entitled to attorney's fees.
The unions attempted to rely on State Water Resources Bd. Cases (2008) 161 Cal.App.4th 304, which had held that, when there is no public agency available to act, the private party acts in its place and thus should be able to recoup attorney's fees under the Private Attorney General's Act (PAGA). The Court distinguished State Water from the present case since SDCERS was performing its public function—ensuring the retirement system functioned properly. This case serves to reiterate that a party seeking to intervene in a case using PAGA must bring a material benefit to the matter and show necessity of participation if the party hopes to recover attorney's fees for its involvement in the case. The necessity requirement will only be relaxed if there was no public agency available and participating in the case to protect the public's interests.
San Diego Municipal Employees Association v. City of San Diego (2016) 244 Cal.App.4th 906.