San Diego was required to meet with unions before it allowed voters to weigh in on a proposal to switch newly hired city workers to a 401(k)-style retirement plan instead of a traditional pension plan, the California Supreme Court ruled unanimously.

“Allowing public officials to purposefully evade the meet-and-confer requirements” of state law “by officially sponsoring a citizens’ initiative would seriously undermine the policies served by the statute: fostering full communication between public employers and employees, as well as improving personnel management and employer-employee relations,” Justice Carol Corrigan wrote for the court.

The high court’s ruling likely won’t mean the city has to repeal Proposition B, which was put on the ballot by a group called San Diegans for Pension Reform. The high court left it to the appeals court to work out a state agency-ordered remedy for the workers who would receive lower benefits as a result of the change.

“We were able in this decision to completely reverse all the adverse effects of what the Court of Appeal had done here. And that’s really a good day for the public sector in the state of California,” attorney Ann M. Smith, told Bloomberg Law. Smith is a Smith Steiner Vanderpool & Wax APC shareholder, San Diego, representing the San Diego Municipal Employees Association.

The California Court of Appeal had annulled the Public Employment Relations Board finding that failing to meet and confer with the union was an unfair labor practice.

An attorney for San Diegans for Pension Reform dismissed the importance of the state high court’s decision.

“The immediate impact is nil,” Kenneth H. Lounsbery of Lounsbery Ferguson Altona & Peak LLP, Escondido, Calif., told Bloomberg Law Aug. 2. “The citizen’s initiative has been adopted. It remains in place. It’s in operation. It is not invalidated,” Lounsbery said. He represented Catherine A. Boling, treasurer of SDPR and other groups behind the initiative.

Warning to Other Cities

The outcome has implications for other California cities considering pension overhauls. San Diego estimated that the switch from a traditional pension to a 401(k)-like plan would save it nearly $1 billion over 30 years.

“This decision is a significant victory for working people,” Kerianne R. Steele, an attorney with Weinberg Roger & Rosenfeld LLP in Alamdea, Calif., representing Service Employees International Union California, told Bloomberg Law.

This decision will prevent government employers “from using sham ‘citizens initiatives’ to achieve through the ballot what they failed to achieve” through negotiating with unions, she said.

The SEIU--which represents 750,000 California workers, 300,000 of them in the public sector--filed a brief in support of the unions and PERB.

Initiative’s Author Weighs In

The remedy could range from a simple monetary fine for not meeting and conferring or it could be as wide-ranging as overturning part or all of Prop B, former San Diego City Councilmember Carl DeMaio said in a statement.

DeMaio wrote the measure in 2012 and led the coalition to pass it.

“If the Appeals Court in any way changes or reverses the voter-approved pension reforms in Prop B, we intend to appeal that violation of the People’s vote back to the Supreme Court,” DeMaio said.

A city representative wasn’t immediately available for comment.

Deferring to Agency

PERB has jurisdiction over public sector labor issues. The agency concluded that under the Meyers-Milias-Brown Act, the city needed to consult with the unions before putting Proposition B on its ballot in 2012.

PERB had found that former Mayor Jerry Sanders (R) was involved in getting the initiative on the ballot and therefore it wasn’t a citizen-led initiative that could go to the ballot without talks with the unions.

Sanders proposed the initiative in November 2010 and spoke of his support in the State of the City address in January 2011.

Proponents gathered more than 145,000 signatures to put the Citizens’ Pension Reform Initiative on the June 2012 ballot. The initiative passed with 65.81 percent of the vote.

Sanders met with community groups and refused to meet with unions. Unions representing municipal employees, deputy city attorneys, and firefighters contend that Sanders improperly placed the initiative on the ballot without first bargaining with affected unions as required by California law.

The mayor “consistently invoked his position as mayor and used city resources and employees to draft, promote, and support the Initiative. The city’s assertion that his support was merely that of a private citizen does not withstand objective scrutiny,” the court said.

Attorney Andrew J. Ziaja, who filed a brief for the unions, said the decision “simply reaffirms that California public employers can’t use the political process to bypass their duty to bargain with unions,” Ziaja is with Leonard Carder LLP in Oakland, Calif.

The case is Boling v. Pub. Emp’t Relations Bd., Cal., No. S242034, opinion filed 8/2/18.