On July 9, the California Public Employees’ Retirement System sued Moody’s Investor Service, McGraw-Hill’s Standard and Poor’s, and Fitch Ratings, the nation’s three largest credit-rating firms, in the San Francisco Superior Court over approximately $1 billion in losses on its investments.

According to recent news reports, Calpers alleges that the agencies’ ratings were based on “flawed assumptions” and “ultimately proved to be wildly inaccurate and unreasonably high.” On Wednesday, a spokesman for McGraw-Hill stated CalPers’ claim is “without legal or factual merit” and promised to “take action to have it dismissed.”

The Court’s notice to Calpers indicates that a case management conference has been scheduled for December 11, 2009.

In recent months, the ratings agencies have come under scrutiny from Congress for their perceived role in the current financial crisis. The agencies have since cooperated with the SEC in developing a plan to reform the financial industry and its practices.