Vallejo Cops Sue City — Big Payout Could Bankrupt Vallejo


By Marc Garman (with numbers help from Paul Norberg)

 

The Vallejo Police Officers Association is suing the City of Vallejo in Solano County Superior Court. Their complaint primarily seeks redress for cuts made to retiree medical benefits(among other things) during Vallejo’s Bankruptcy and asks the court to issue a writ of mandate to compel the city to act. The writ of mandate is a request by the VPOA to have the Judge order the city to change the terms it imposed during or after bankruptcy. The complaint from VPOA was initially filed in October 2013 and has been amended since then. There appears to have been a delay while a determination was made as to who would hear the case. A hearing date has finally been set for December 2014 in Fairfield in the courtroom of Judge Paul Beeman.

 

The VPOA Position (roughly)

 

The VPOA is seeking action from the court for the following reasons as they see it:

 

  1. The City violated the California State Constitution when retiree medical benefits were modified limiting them to $300 per month. (The cap of $300 per month was ultimately arrived at through negotiations with all bargaining units except police as a condition of the city’s 5 year Plan of Adjustment to exit bankruptcy. It was subsequently imposed on VPOA at the December 16, 2013 city council meeting.)
  2. The City violated the Meyers Milias Brown Act by declaring impasse in contract negotiations prematurely.
  3. The City violated the city charter when contract terms were imposed by city council on VPOA. VPOA feels that the failure to seat new councilmembers Malgapo, Dew and Verder-Aliga at the December 16, 2013 council meeting, during which the vote to impose occurred constitutes a “lapse of ministerial duties” on the part of the city as well as a charter violation.

 

Note: There are some questions regarding the standing of VPOA in representing retirees. The argument could be made that they cannot represent retired members because they are no longer part of the same bargaining group. This logic could also apply to new hires on a second tier benefit system leaving employees on the old 3%@50 system (some of the most highly paid municipal employees in the City of Vallejo, state and entire nation) as the only ones who would benefit. The arguments on both sides of this point are sure to be heard at length and expense in the courts.

 

Thoughts on the VPOA Position:

 

Point one: Recent events in Stockton’s bankruptcy case, while not precedent setting at this time have shaken some of the precepts surrounding protections afforded employee benefits by the California State Constitution. Judge Christopher Klein, presiding over Stockton’s Chapter 9 has opined that CalPERS (California Public Employee Retirement System) benefits are not sacrosanct in Bankruptcy and may be subject to modification. This position challenges the widely accepted definition of constitutionally protected (vested) benefits.

 

The circumstance in the Stockton case is very different from the Vallejo bankruptcy. Stockton does not want to modify the employee retirement benefits. It is instead creditor Franklin Templeton Investments, one of Stockton’s bond holders that is pushing against the protected standing of retirement benefits for the obvious reason of protecting their interests. Stockton’s lawyers (actually Marc Levinson…same lawyer Vallejo had) have argued that reducing promised pension obligations or breaking with CALPers would cause irreparable damage to Stockton’s ability to attract or retain employees. At any rate, unless Stockton acts based on Judge Klein’s position resulting in a ruling, there will be nothing here to set legal precedent. Interesting position with some interesting parallels to Vallejo, especially in light of the VPOA action. Add to this the fate of pensions in the Detroit bankruptcy and the water looks a little muddy.

 

Point two The city declared impasse in negotiations and imposed a $300 per month cap on the VPOA retirees in addition to reduced benefits for new hires. Claiming that the city declared impasse prematurely is pretty much de rigueur for these sort of things. Goes hand in hand with the claims of impairment the employees’ ability to exercise their rights and language cautioning public agencies not to “interfere, intimidate, restrain, coerce or discriminate public employees because of their exercise of rights.” Everyone who is unhappy about an imposed contract claims premature impasse.

 

Point three: The cops are pissed at their inability to get return on investment from the JumpStart candidates: Dew, Malgapo and Verder-Aliga. VPOA contributed $25,000 to the JumpStart slate, IAFF(International Association of Firefighters local 1186) contributed $19,500 and the Napa Solano Central Labor Council (Executive Director Jon Riley) contributed $10,510.

 

The liability for fully paid retiree medical was 40% of the VPOA payroll prior to bankruptcy. By reducing the payment to $300 per month the cost to the city was reduced to 7% of payroll. The unfunded actuarial valuation of the VPOA retiree medical benefit was $65 million under the old fully paid plan. By reducing the benefit to $300 the unfunded liability was reduced to $12.4 million. A reduction of $52.6 million.

 

The VPOA must have been pretty sure that Dew, Malgapo and Verder-Aliga would vote their way. A return of $52.6 million for an investment of $55,010 is pretty good by anyone’s estimation.

 

Final Thought

While the ethical questions surrounding the modification of promised benefits are not entirely without merit (Nobody really wants to do that.), there is also the question of how unfunded benefits got to be so absolutely positively huge as to swallow municipal budgets whole. The outright purchase of elected officials by any special interest group; union, corporate or otherwise is so broadly and systemically prevalent in American politics as to be unremarkable…which in itself is a sad statement on governance and democracy in this country. Buy the people who approve your wages and benefits and they will represent your interests rather than those they are elected to represent. And with a bigger pool of money to draw from you can grow a fatter war chest to buy more people in positions of influence who will return the favor by fattening your coffers and so on and so on yadda yadda yadda in a perpetual cycle of self enrichment protecting a selective gold plated socialism for the privileged few at the expense of the many. (Most of you reading this qualify as the many.) But this is old news and if you don’t get it, you’re not paying attention.

 

Make no mistake about it. This is likely to be expensive if the city wins, and a major push towards a second bankruptcy if we lose. The special interests need to chip away at the Vallejo decision in order to protect their status quo. That’s what this is really about.

 

Documents filed with the court are below. The city’s response is still pending at this time.

P Peition (First Amended) – R 20140117

P Petition – Exhibits 1-12

P Petition – Exhibits 13-23

P Petition – F 20131015

 

 You can also see case information on The Solano County Superior Courts website by entering case ID FCS042492

http://courtconnect.solano.courts.ca.gov/courtconnect/ck_public_qry_main.cp_main_idx


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'Vallejo Cops Sue City — Big Payout Could Bankrupt Vallejo' have 27 comments

  1. October 15, 2014 @ 7:54 pm I'M PEACHy

    Sigh, first the badge and pass “screw up” which was so overwhelmingly disastrous it makes one feel that it was willful negligence and now this. Will this city ever get ahead?

    Reply

  2. October 15, 2014 @ 8:31 pm I'm Not Peachy

    You badge & pass whiners are annoying. The badge & pass “screw up” (it costs more but still cheaper than estimated) is no where near the potential cost to the city if we were to lose the police lawsuit, according to the numbers in this report in the 50 million range.

    Reply

    • October 16, 2014 @ 11:28 am I'mM PEACHy

      What, I’m not allowed to complain about both?

      Reply

  3. Monica

    October 15, 2014 @ 9:15 pm Monica

    Just when we thought we could trust them again, they attempt to throw the people who pay them under the bus! When tax revenue drops drastically as another wave of citizens makes its exodus, where will VPOA be? Sorry, but some of us lost a hell of a lot more than a little bit of our medical benefits at retirement (and not when we are 55). Don’t talk to us about what’s “not fair.”

    Reply

  4. October 16, 2014 @ 9:26 am Lou Lou

    Monica, I’m curious why you thought you could trust the VPOA again? They helped pay for the nasty Jump-Back campaign to buy council members just last year. They have the same president. It’s just been quiet for awhile. I thought it was just a temporary lull. But by this article, it seems like it was just the eye of the storm. And with this lawsuit, the storm begins again and Vallejo will be facing bankruptcy if they prevail. The sad thing is Mus-tard is so stupid to push this. Because if the city loses, it’ll just have to make changes to the cops existing contract to try and pay the bill. If the bought council would impose it. But 2016 is just around the corner, isn’t it?

    Reply

    • Monica

      October 16, 2014 @ 12:19 pm Monica

      You’re right, Lou Lou. I forget that the Police Chief isn’t in charge of the police, a phenomenally short-sighted man is. I do hope the officers who came to law enforcement to serve the public get rid of him and instead earn our appreciation, trust, and a decent living.

      Silly me for being a chronic optimist. My house will be on the market soon…I think I’m done.

      Reply

    • Vallejo Voter

      October 16, 2014 @ 6:27 pm Vallejo Voter

      But VPOA ssems to be disregarding BK judge re Detroit…… pensions are to be handled the same as creditors…. pay pennies on the dollar. That ruling does not help VPOA or the fight to get returned benefits

      Reply

  5. October 16, 2014 @ 10:13 am Publicus

    At some point the rank and file police officers are going to have to turn around and side with the citizens not their bosses…that would be Union bosses not the new Chief. It has been done before when the police in Egypt refused orders to fire on the demonstrating citizens and turned their guns at the corrupt administration. And it has happened before in some other dictatorships. So, please….good police officers…remove your aggressive, vindictive Union leadership, vote in some leaders who care about the good of the whole not just how much money you can extract from a dying city and save us all from certain destruction. If you win, you will lose. A bankrupt city cannot pay any of your benefits because it will cease to exist and you will be like the smart guys at Enron left with nothing.

    Reply

  6. October 16, 2014 @ 4:05 pm benjamin

    This is a really stupid move on the part of the VPOA. But, perhaps their attorneys have not been reading the newspapers lately. The BK judge clearly said under federal law the pension plans are just another contract that can be nullified in BK. But, hay, who knows. Maybe that is what the older guys who call the shots want so they can retire before that happens and screw the younger ones.

    Reply

  7. October 16, 2014 @ 10:02 pm wharf rat

    Well seems the Chickens are coming home to roost .. It is a no brainier that the highest paid Police Department in Northern California ,Had A major impact on the , eventual Bankruptcy of this municipality And the spiral into bankruptcy , that has , branded this COMMUNITY for years to come … what is sad is that the few continue to try to milk a community that has major economic challenges , all while has NEVER thrown their , respected Police department under the BUS .. EVERY DEPARTMENT IN COV IS DEPENDANT ON THEIR FUNDING and should be held to quarterly performance evaluations , afterall private industry goes through this rigour , why should not COV departments , step up to the plate , and justify their existence and or effictivness or is membership of the club all that is needed …. Sounds like the School District all over again , another Morphed Self serving quasi institution , that furthers the demise of this once proud City ….

    Reply

  8. October 17, 2014 @ 7:20 am Justin Case

    CA CHING, CA CHING, CA CHING! YEAH, IT MUST BE THAT TIME OF YEAR AGAIN!
    My Union Boss down at the Town Hall emailed me yesterday and.
    Told me that this article was hitting the Papers today, and He told Me.
    to make it Look like I was Working till this Blows Over in a week. I
    know the routine! In a week, I’ll be back to my usual activity of.
    Collecting A Paycheck for Doing Nothing! Hey, Private Sector.
    Workers; You really gotta Pony Up more Taxes! I need at least a 10 %.
    raise! My Cabin Cruiser at the Dock behind my Vacation House in.
    Florida needs a New Engine. My wife has been after me for a new car.
    She wants a BMW X6 G-Power Typhoon S! I told her I can’t afford that.
    car. So then she says she will accept a Mercedes-Benz CL-Class and.
    Nothing else! I also got Private School Tuition of $ 40,000.00 due.
    in September. I got Credit Card Expenses coming out my AXX! That
    new 3000 sq ft extension on my house raised my property taxes $ 15,000.
    The maid and the housekeeper want raises. The gardener also wants a.
    raise. You see Bunky; It ain’t easy in the Public Sector! So come
    on Private Sector Worker; Pony Up and Pay More Taxes so I can afford to.
    live here! You See; Life Is Not Fair, and the DemoRats will take.
    care of Everything! HAPPY DAYS ARE HERE AGAIN!

    Reply

  9. October 17, 2014 @ 7:23 am Tough Love

    If they win the lawsuit, the City should immediately pursue bankruptcy and focus on complete elimination of the current DB pensions and retiree healthcare benefits. Going forward, they should get SS, 3% into a 401K, and ZERO employer-provided retiree healthcare ….. just like what the very TYPICAL Private Sector Taxpayers gets.

    Oh yea, and balance any prospective revenue vs expense shortfalls via reductions in the pensions of current retirees and the PAST service accruals of all “actives”. That’s exactly what Judge Klein said (in the Stockton Bankruptcy case) is allowed ……….. so pursue it. A new judge will likely come to the SAME conclusion.

    Time for payback for their insatiable greed.

    Reply

  10. October 17, 2014 @ 8:40 am Nom D Plume

    And still no coverage of this in the Times-Herald! What a ridiculous excuse for a newspaper.

    So if the VPOA “wins” the lawsuit and drives the city into bankruptcy again, would the city then have legal protection to cut VPOA benefits and pensions? Because that would be poetic justice.

    Reply

  11. October 17, 2014 @ 1:07 pm BuzzCut

    The VPOA is screwing themselves. There’s a finite pot of money. The City came out of bankruptcy and balanced that pot as best they could (after having an idiot majority gave the cops raises and free health care). Part of that balanced pot included cutting health care. Now the VPOA wants to sue the city to get their free health care back again. Where will the city get the money to make up for that $50 million price tag if they win? It’s a finite pot of money. (and HELL NO to a tax increase, VPOA so don’t even think about it). The City will have to declare bankruptcy again. And when they do, they will be able to cut VPOA’s pensions and decrease their healthcare. Stupid, stupid, stupid. Take the haircut now and accept the slightly higher healthcare cost (compared to your salaries and pensions, the increase is minimal). It’s far better than the complete buzz cut you’ll get in a second bankruptcy! There’s precedent being set right now. You won’t fare as well the second time around. And what about your union siblings, VPOA? If Vallejo goes bankrupt again, they’ll have to take more cuts again. Don’t you care about your siblings?

    Reply

  12. October 17, 2014 @ 4:36 pm Ravi Shankar

    THIS IS VERY DISTURBING, IF TRUE….
    =================================

    Dear Vallejo City Mayor & Council:

    This report in today’s Vallejo Independent Bulletin is extremely disturbing.
    IS THIS TRUE ?
    https://vibvallejo.com/editorial/vallejo-cops-sue-city-big-payout-could-bankrupt-vallejo/

    Will there be a discussion and/or verifying this news at the next City Council meeting?
    Thank you for keeping the transparency in-tact and keeping the citizens informed.

    Does this mean that the VPD is setting an “example” to its citizens and folks like the PB-delegates who were rejected due to controversial and inconsistent application and interpretation of rules can ALSO SUE THE CITY ?

    Unbelievable — the Tens of thousands of volunteers with their Hundreds of thousands of unpaid work + all the paid work by the entire well-paid city staff could be drained by one anti-people action of the Police who claim to PROTECT & SERVE the people on their vehicles? THAT would be some BAD, bad, BAAAAD KARMA for the Police, if they Sue — seriously, Ba, Ba, Ba Baaaaaaaaad !

    Reply

  13. October 17, 2014 @ 5:06 pm Ravi Shankar

    Unbelievable Report, Marc Garman — great facts;
    THANK YOU FOR OPENING THE EYES OF THE GENERALLY BLIND to POLITICS & PASSIVE PUBLIC ..
    What happens next ?

    Reply

  14. October 25, 2014 @ 11:46 pm Joanne Schivley

    In Vallejo’s BK case, the judge ruled that the VPOA did not represent retirees. The city had to pay more than $500K for a separate committee and legal representation for the retirees. Hope Beeman checks that out.

    Reply

  15. October 27, 2014 @ 9:47 am tramky

    The Vallejo police union plays HARDBALL, folks. Get a grip! In 1969 the police, the guys with guns and badges, went out on STRIKE against the taxpayers of Vallejo, refusing to provide police protection in this town. The union plays hardball–always have and always will.

    It is no coincidence that the new police chief comes on the scene and a lawsuit is filed by police against the City of Vallejo. This guy is apparently just a substitute for Nichelini, the police chief who, in a breathtaking bit of public honesty, told City Council that he didn’t care how many police officers were terminated in Vallejo, but those that would remain WANT TO BE PAID! If the police budget consumed 100% of the City budget, it’s all the same to them. Just as long as the cops are paid.

    THIS is what we are dealing with. It is a certainty that if strikes by public were still permitted in California, that the Vallejo police department would be out on strike. AND they’d demand to be paid.

    Reply

  16. October 27, 2014 @ 4:14 pm Patrick Henry

    This may be a blessing in disguise. The city government is vile, corrupt and irredeemable. A bankruptcy resulting in municipal disincorporation is just what we need for a Vallejo renaissance lead by free citizens pursuing their happiness unmolested by the thuggery of government. The process is simple:
    1) Terminate all the employees.
    2) Abrogate their contracts.
    3) Repudiate the debts including the CALPERS liability
    4) Disincorporate the city
    5) Liberate the free citizens.

    Reply

    • October 27, 2014 @ 4:53 pm Salty Dog

      1) Terminate all the employees.
      2) Abrogate their contracts.
      3) Repudiate the debts including the CALPERS liability
      4) Disincorporate the city
      5) Liberate the free citizens.

      Reply

      • October 27, 2014 @ 5:10 pm Salty Dog

        1) Terminate all the employees.
        2) Abrogate their contracts.
        3) Repudiate the debts including the CALPERS liability
        4) Disincorporate the city
        5) Liberate the free citizens.

        1. Fire ’em all? What about the good/effective employees? All are bad eh.

        2.Negate (abrogate) their contracts? What is this country based on, including the Constitution?

        3. Repudiate the debts? I know if I repudiate a legitimate debt, the full force of contractual law and a collections outfit will be dogging me.

        4. Dis incorporate? Will it be more effective to have a bureaucrat on Texas Street concerned with my pot hole on Maine Street?

        5. Liberation and freedom? Any more to have a stranger at the county or state level making decisions? The devil you know may be a bigger supporter of liberty.

        Lets keep the baby.

        Reply

        • October 27, 2014 @ 6:18 pm David

          Yes, deincorporation is a fantastic idea. However, district representation as is done in Sacramento would also help. Deincorporation is probably better because there is no further association to Vallejo, a city will 250-300 home invasions a month, a 40% high school drop out rate and Section 8 inhabitants making up 60% of the population downtown, scaring off any future business prospects. I am so thankful I have moved out of that city living in a far safer community with good public schools and low crime. The only thing good about Vallejo is the weather, the Empress Theatre and Mi Pueblo and maybe Farmers Market. I really can’t think of much else. I spent most of my time in Benicia since most of the city is a complete “ghetto” especially Sonoma Blvd, Springs Road, Lemon, Fairgrounds, etc. The School Board members are all alleged Black Panther radicals prejudiced against successful students who are not of color, against teachers safety, against discipline, defiance, theft, charter schools, etc. This is the most reversed discrimination city I have ever seen. This is because the majority of people who live there are in poverty and they have all the weight. The Section 8 crowd was dumped off from Oakland and Antioch and with covenants protecting them for 25-50 years along with Court Cases they can not be disproportionately affected in the loss of low income housing vouchers, gentrification will never happen in Vallejo. My advise to all, sell your homes while you can and move out. If you rent, walk away from your lease.

          Reply

        • October 28, 2014 @ 2:16 pm Patrick Henry

          SD,
          The process I describe happens every day in the private sector. It is a Constitutional alternative (Article 1, Section 8, Clause 4) to debtor’s’ prison. The reluctance of courts to force dis-incorporation of insolvent public entities is the moral equivalent of debtor’s prison. The prisoner is the productive citizen whose property is violently expropriated to service untenable public debts incurred by corrupt and incompetent politicians on his behalf.

          Reply

  17. October 27, 2014 @ 6:19 pm David

    Yes, deincorporation is a fantastic idea. However, district representation as is done in Sacramento would also help. Deincorporation is probably better because there is no further association to Vallejo, a city will 250-300 home invasions a month, a 40% high school drop out rate and Section 8 inhabitants making up 60% of the population downtown, scaring off any future business prospects. I am so thankful I have moved out of that city living in a far safer community with good public schools and low crime. The only thing good about Vallejo is the weather, the Empress Theatre and Mi Pueblo and maybe Farmers Market. I really can’t think of much else. I spent most of my time in Benicia since most of the city is a complete “ghetto” especially Sonoma Blvd, Springs Road, Lemon, Fairgrounds, etc. The School Board members are all alleged Black Panther radicals prejudiced against successful students who are not of color, against teachers safety, against discipline, defiance, theft, charter schools, etc. This is the most reversed discrimination city I have ever seen. This is because the majority of people who live there are in poverty and they have all the weight. The Section 8 crowd was dumped off from Oakland and Antioch and with covenants protecting them for 25-50 years along with Court Cases they can not be disproportionately affected in the loss of low income housing vouchers, gentrification will never happen in Vallejo. My advise to all, sell your homes while you can and move out. If you rent, walk away from your lease.

    Reply

  18. October 27, 2014 @ 6:21 pm David

    Deincorporation may be the best option as far as Vallejo is concerned. This is because there is no further association to Vallejo, a city will 150-300 home invasions a month, a 40% high school drop out rate and Section 8 inhabitants making up 60% of the population downtown, scaring off any future business prospects. I am so thankful I have moved out of that city living in a far safer community with good public schools and low crime. The only thing good about Vallejo is the weather, the Empress Theatre and Mi Pueblo and maybe Farmers Market. I really can’t think of much else. I spent most of my time in Benicia since most of the city is a complete “ghetto” especially Sonoma Blvd, Springs Road, Lemon, Fairgrounds, etc. The School Board members are all alleged Black Panther radicals prejudiced against successful students who are not of color, against teachers safety, against discipline, defiance, theft, charter schools, etc. This is the most reversed discrimination city I have ever seen. This is because the majority of people who live there are in poverty and they have all the weight. The Section 8 crowd was dumped off from Oakland and Antioch and with covenants protecting them for 25-50 years along with Court Cases they can not be disproportionately affected in the loss of low income housing vouchers, gentrification will never happen in Vallejo. My advise to all, sell your homes while you can and move out. If you rent, walk away from your lease.

    Reply

  19. November 14, 2014 @ 9:31 am Vallejo’s struggles capture CA city perils | CalWatchDog

    […] the case has yet to progress, the expenses faced by the city could, once again, threaten […]

    Reply

  20. November 18, 2014 @ 8:46 pm Vallejo in Danger of Bankruptcy Again–NO Pension Reform — California Political Review

    […] the case has yet to progress, the expenses faced by the city could, once again, threaten […]

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