The opinion
Filed 7/10/24
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
JAMES B. MORELL, B331080
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. 22STCP02345)
v.
BOARD OF RETIREMENT OF
THE ORANGE COUNTY
EMPLOYEES’ RETIREMENT
SYSTEM,
Defendant and Appellant.
APPEAL from a judgment of the Superior Court of Los
Angeles County, Mary H. Strobel, Judge. Reversed and
remanded with directions.
Reed Smith, Maytak Chin, Mariah K. Fairley, and Kathryn
M. Bayes for Defendant and Appellant.
James B. Morell, in propria persona, for Plaintiff and
Respondent.
__________________________________
When respondent James Morell retired from his position as
a research attorney for the Orange County Superior Court, he
was entitled to a pension under the County Employees
Retirement Law of 1937 (CERL). To determine the amount of his
pension, the appellant board of retirement of the Orange County
Employees’ Retirement System (OCERS) needed to first calculate
Morell’s “compensation,” a legal term codified in Government
Code section 31460.1 At issue in this appeal is whether the board
correctly excluded certain amounts from the calculation of
“compensation.”
In the years relevant to this appeal, research attorneys
working for the Orange County Superior Court could participate
in an “Optional Benefit Program” (OBP). The OBP provided a
$3,500 benefit that an attorney could allocate in a variety of
ways, such as taxable cash (paid to the attorney in their first
paycheck of the year) or a healthcare reimbursement account
from which the attorney could be reimbursed on a pre-tax basis
for certain medical expenses not covered by insurance. If no
election were made, the entire $3,500 would be paid to the
attorney as taxable cash. In each year relevant to this appeal,
Morell allocated a portion of the $3,500 OBP benefit to a
healthcare reimbursement account and the remainder to cash.
When the board of retirement calculated Morell’s “compensation”
in 2014, it omitted the $3,500 OBP payments. In the decade
since, the parties have been litigating whether the board was
right to do so.
1 Undesignated statutory references are to the Government
Code.
2
In 2022, the board denied Morell’s latest appeal, citing
Orange County Resolution 90-1551, which the board contended
required exclusion of the OBP payment from the calculation of
“compensation.” During a brief window in which the Legislature
enacted the now-repealed section 31460.1—which expressly
excluded payments made by an employer to an employee who
elected to participate in a flexible benefits program—the Orange
County board of supervisors passed Resolution 90-1551, adopting
the statute’s provisions. When the Legislature later repealed
section 31460.1 in 1992, it also provided that “Nothing in this act
is intended to, or shall be construed to, affect the validity of any
action taken by a county pursuant to Section 31460.1 of the
Government Code, prior to the effective date of this act.” In
granting Morell’s latest petition for writ of mandate, the trial
court ordered the board to set aside and reconsider its decision
without relying on Resolution 90-1551, because the court found
the resolution had been invalidated.
In this appeal, the board of retirement advances three
separate arguments on why it believes the trial court erred: (1)
including the OBP payments in the pension calculation would
constitute “pension-spiking,” which the Legislature sought to
eliminate with the Public Employees’ Pension Reform Act of
2013; (2) Resolution 90-1551 is still valid even though section
31460.1 has since been repealed; and (3) in 2002, as part of a
settlement agreement between OCERS and a settlement class of
which Morell was a member, the parties agreed that OBP
payments would not be included in pension calculations.
Because we conclude that Resolution 90-1551 is still valid
despite the repeal of section 31460.1, we need not consider the
3
board’s other arguments. We reverse the trial court’s judgment
and remand with directions to deny Morell’s petition.
FACTUAL AND PROCEDURAL BACKGROUND2
A. The Definition of Compensation
“Counties maintain employee retirement plans under
CERL. (§ 31450 et seq.) CERL requires retirement boards to
determine whether the remuneration paid in cash qualifies as
‘compensation’ under section 31460 and ‘compensation earnable’
pursuant to section 31461, and therefore must be included as
part of a retiring employee’s ‘final compensation’ (§ 31462 or
31462.1) for purposes of calculating the amount of a pension.” (In
re Ret. Cases (2003) 110 Cal.App.4th 426, 435.)
1. The Legislature Enacts Section 31460.1
Section 31460.1—enacted in 1990 and effective at the
beginning of 1991—read: “ ‘Compensation’ shall not include
employer payments, including cash payments, made to, or on
behalf of, their employees who have elected to participate in a
flexible benefits program, where those payments reflect amounts
that exceed[] their employees’ salaries. [¶] This section shall not
be operative in any county until the time the board of supervisors
shall, by resolution adopted by a majority vote, makes this
section applicable in that county.”
In December 1990, the Orange County board of supervisors
passed Resolution 90-1551, which read in pertinent part: “BE IT
RESOLVED this Board does hereby adopt the provisions of
2 We limit our summary to the facts and procedural history
relevant to the issues raised on appeal.
4
Government Code section 31460.1 pertaining to the definition of
Compensation in the County Employees Retirement Law of 1937,
effective January 1, 1991.”
2. The Legislature Repeals Section 31460.1
In 1992, the Legislature passed Senate Bill 193, repealing
section 31460.1. Section 3 of the bill explained that “The County
Employees Retirement Law has, since its original enactment . . . ,
conferred upon the county retirement boards the duty and power
to determine which of the items of compensation paid to county
employees . . . would constitute ‘compensation earnable,’ ” and
that section 31460.1 “has been erroneously construed as
implicitly requiring counties maintaining retirement systems . . .
to include in ‘compensation’ those flexible benefits payments until
the board of supervisors elect pursuant to that section to exclude
those flexible benefits payments from ‘compensation.’ ” The
Legislature proclaimed that the intent of enacting section
31460.1 was “merely to accord to each county board of
supervisors, at its option, the power either to preclude its county
retirement board from including those flexible benefits payments
in ‘compensation,’ if the county retirement board had not
previously taken such action, or to supersede any previous
decision of their county retirement board to include those flexible
benefits payments in ‘compensation.’ ”
Therefore, “[i]n order that the source of misconstruction of
legislative intent regarding the enactment of Section 31460.1 of
the Government Code may be eliminated at the earliest possible
time, and that any county actions taken on the basis of that
misconstruction may be reversed or terminated at the earliest
possible time, the Legislature finds that it is necessary to repeal
Section 31460.1 of the Government Code.” However, Section 2 of
5
Senate Bill 193 provided that “Nothing in this act is intended to,
or shall be construed to, affect the validity of any action taken by
a county pursuant to Section 31460.1 of the Government Code,
prior to the effective date of this act.” The act took effect in May
1992.
3. Resolution No. 98-001
In February 1998, OCERS’s Board of Retirement adopted
Resolution 98-001, which provided in pertinent part that
“Flexible Benefits (‘Cafeteria Plan’) to the Extent paid in Cash
(applicable to members retiring before January 1, 1991)” would
be included in the calculation of “compensation earnable” but
that “Flexible Benefits (‘Cafeteria Plan’) provided in-kind” and
“Flexible Benefits (‘Cafeteria Plan’) paid in cash to the extent
paid to members retiring on and after January 1, 1991” would be
excluded from the calculation, as would be items “substantially
similar.” (Emphasis in original.) It also provided that the board
of retirement “shall apply these policies and guidelines . . .
automatically for all members retiring” after October 1, 1997.
B. The 2002 Settlement Agreement
In 2002, a settlement agreement was entered into by
Orange County Employees’ Association; Retired Employees’
Association of Orange County, Inc.; Orange County Attorneys’
Association; Jan J. Nolan and Eric W. Snethen (collectively the
“Class Representatives”), individually and as members and
representatives of a class consisting of all past, present, and
future members of the OCERS; the County of Orange; and
OCERS. The agreement stated that the Class Representatives
had been selected by the Superior Court of San Francisco “to
represent a certified no-opt-out class . . . consisting of all Class
6
Members.” The agreement provided, in pertinent part, that each
party thereto “agrees to accept as final and binding the inclusions
in and exclusions from compensation, compensation earnable,
and final compensation as more particularly set forth in
OCERS’[s] Resolution 98-001, as amended by OCERS’[s]
Resolution 98-009, and as further amended by OCERS’[s] action
adopting its Resolution 00-003 on or about December 18, 2000.3
It further provided that the agreement was “intended to be
complete and final with respect to the issues that it has resolved,
and that the terms or applicability of the Agreement will not be
changed on behalf of any of the Parties, including the Class
Members, in response to later court decisions, whether favorable
or unfavorable, to any of the Parties hereto” and that any future
cases “that enlarge, define, narrow or in any other way relate to
the scope of the decision of the California Supreme Court in
Ventura County Deputy Sheriffs’ Association v. Board of
Retirement, 16 Cal. 4th 483 (1997) (‘Ventura County’) or the items
of compensation to be included or excluded for benefit purposes
under CERL shall have no effect on the terms or applicability of
this Agreement.”
In November 2002, the San Francisco Superior Court
approved the settlement agreement and entered a judgment
expressly providing that “all of the terms and provisions of the
approved Settlement Agreement . . . shall be binding upon and
implemented by all parties to these actions, including all
members of the class consisting of all past, present and future
members of the Orange County Employees Retirement System.”
3 Resolution 98-009 deleted portions of Resolution 98-001
irrelevant to this appeal. Resolution 00-003 does not appear to be
in the record.
7
C. The Optional Benefit Plan
The purpose of “Third Amended and Restated County of
Orange Section 125 Plan”—which was effective as of June 1,
2011—was “to offer the eligible employees of the Employer an
opportunity to forgo taxable income in exchange for paying
premiums for health care coverage on a tax-free basis and for
paying for certain health care and dependent care on a tax-free
basis.”
In the Plan, “OBP” was defined as an “Optional Benefits
Program” that was “offered to judges, attorneys who are
employed in the ‘Attorney Unit’, elected officials, executive
management, and administrative management where OBP
credits can be allocated to pay for certain benefits, including
Benefits offered under this Section 125 Plan.” Section 3.1 of the
plan provided that once an employee elected to participate in the
Section 125 Plan, “his or her OBP will be allocated and his or her
Compensation will be reduced in an amount equal to the amount
of contributions elected pursuant to Section 4.” “Compensation”
was defined as “the total cash payment received by the
Participant from the Employer during a Contribution Period
prior to any reductions pursuant to a Salary Redirection
Agreement authorized hereunder.”
Section 4.3 provided that an “OBP Eligible Employee may
elect to receive in taxable cash compensation, the total amount or
any portion of OBP Dollars if such OBP Eligible Employee elects
to receive all or part of his or her OBP Dollars as taxable cash in
his or her Enrollment Documentation each year. Additionally, if
an OBP Eligible Employee fails to complete and submit
Enrollment Documentation, such OBP Eligible Employee shall be
deemed to have elected all of his or her OBP Dollars as taxable
8
cash. Taxable Cash Benefits shall be paid in one lump sum
amount on the first paycheck of the Plan Year.” These provisions
remained unchanged in the Fourth Amended and Restated
County of Orange Section 125 Plan, which was effective as of
January 1, 2013.
In a 2007 version of the Orange County Superior Court
Personnel Policies and Regulations, Article X was entitled
“Reimbursement Programs,” and Section 4 thereunder was
entitled “Optional Benefit Plan.” This section stated that
“Effective January 1, 2008, each eligible employee shall be
entitled to select benefits from those listed below not to exceed
three thousand five hundred (3,500) dollars” and provided the
following options: (1) “cash”; (2) “professional conferences which
are job related (employee only) including fees and other expenses
while attending”; (3) “professional memberships, licenses and
certificates which are job related (employee only);” (4)
“professional journals and periodicals (employee only) which are
job related”; (5) “health/accident” (which included health
programs not completely covered by insurance, the employee’s
share of health insurance premiums including accidental death
and dismemberment coverage, and other health care expenses
not completely covered by insurance); and (6) the county-
administered “457 Deferred Compensation Plan.” To participate,
an eligible employee was required to file an “Intent to
Participate” statement. If the employee did not file such a form
before the plan began, “the employee may only receive cash for
any period prior to the first of the month following the date the
employee files an Intent to Participate.” The section provided
that the “purpose of the plan is to provide options to individual
employees to best meet the needs of themselves and dependents
9
while enhancing the employee’s expertise and skills on the job.”
A 2013 version of the plan contained the same provisions, except
that the professional conference, membership, and journals
options were removed.
D. The Board of Retirement Excludes OBP
Payments From Morell’s Pension Calculation
In the beginning of 2014, Morell filed an application for
service retirement and received a “Retirement Benefit Estimate,”
setting forth his monthly pension amount and how that amount
was calculated. In June 2014, he disputed the calculation,
claiming “a $3,500 annual ‘optional benefit’ was erroneously
excluded from the calculation of ‘compensation’ and/or
‘compensation earnable’ in determining [his] monthly retirement
allowance.” Morell explained that the $3,500 was a benefit made
available to attorneys working for the Orange County Superior
Court and, at the attorney’s election, could be allocated in
several, non-exclusive ways during an “open enrollment” period:
it could be (1) included in the attorney’s first paycheck of the
year; (2) used to reimburse the attorney for certain medical
expenses not covered by insurance on a pre-tax basis; (3) used to
pay for supplemental accidental death and dismemberment
coverage on a pre-tax basis; or (4) allocated to the attorney’s
section 457 deferred compensation plan. Should the attorney fail
to allocate any part of the funds during open enrollment, the
unallocated portion would automatically be paid to the employee
in their first paycheck of the year. He argued that regardless of
how the $3,500 was allocated, it should be included in the
definition of “compensation” for purposes of calculating the
employee’s retirement benefit.
10
In September 2014, OCERS denied Morell’s claim,
asserting that “Resolution No. 98-001 as adopted by the Board of
Retirement in February 1998 specifically identifies the categories
of pay that are included and excluded from a retiring member’s
compensation earnable” and “specifically excludes flexible benefit
payments for employees retiring after January 1, 1991 from
being considered compensation earnable.” The letter asserted
that the OBP payments Morell received constituted a flexible
benefit payment and thus was properly excluded from the
calculation of compensation earnable.
In a letter that Morell sent in late 2014, he countered that
Resolution 98-001’s exclusion of the $3,500 OBP payment was at
odds with Ventura County Deputy Sheriffs’ Assn. v. Board of
Retirement (1997) 16 Cal.4th 483 (Ventura County) and other
decisional law. He argued that inasmuch as the resolution was
based on former section 31460.1—providing that the definition of
“compensation” would “not include employer payments, including
cash payments, made to, or on behalf of, their employees who
have elected to participate in a flexible benefits program”—that
language was inapplicable because the OBP was not a program
that he had “elected to participate in.” Morell contended the OBP
was an “integral part of the overall compensation package
provided to research attorneys at the Superior Court” and was
not a plan that was “elective and which provided payments in
excess of employees’ normal compensation.” Morell also pointed
out that section 31460.1 had been repealed.
In a March 2015 letter, OCERS reiterated its stance that
the OBP payments were properly excluded under the resolution.
It added that because “the Board of Retirement did not anticipate
inclusion of flexible benefits in compensation earnable, . . .
11
OCERS did not collect employee or employer contributions based
on those benefits” and therefore including the OBP in the
calculation of compensation earnable “would have a negative
effect on OCERS’[s] actuarial soundness.” OCERS also
referenced the 2002 settlement agreement in which the
settlement class agreed to Resolution 98-001 and argued that
“the class represented in the Settlement Agreement includes all
past, present, and future members of OCERS,” including Morell.
In June 2015, Morell sent another letter to OCERS, asking
that his appeal be placed on the board of retirement’s agenda to
be discussed at a future meeting. The matter was heard at the
August 2015 meeting where the board unanimously denied
Morell’s appeal. Morell appealed this decision and his appeal
was heard by a hearing officer in May 2017.
In late 2017, the hearing officer recommended that Morell’s
appeal be denied, finding that the board of retirement’s
calculations were correct “in light of the 2002 agreement that
settled the litigation between OCERS and its membership class
and associations.” While the hearing officer found that many of
Morell’s arguments had merit regarding whether the legal
definition of “compensation earnable” should include OBP
payments and whether the definition could be changed by a
settlement agreement, he concluded that “the Hearing Officer is
not empowered to void the settlement agreement in a manner
that would enable the Board to recalculate Applicant’s retirement
benefit allowance in his favor.” The hearing officer recommended
the board of retirement “reexamine the portion of the settlement
that excludes from pensionability flexible benefits received by
employees as taxable cash, and that the Board consider pursuing
an amendment of the Superior Court judgment on the basis that
12
it precludes taxable cash received under the Optional Benefit
Plan from counting in the determination of final compensation.”
In an August 2018 meeting, the board of retirement
unanimously voted to set aside the Hearing Officer’s report and
recommendation and directed its staff to prepare “Proposed
Findings, Conclusions of Law and Recommended Decision”
limited to the board’s determination that: (a) OCERS and Morell
were bound by the 2002 settlement agreement and judgment; and
(b) Morell’s retirement allowance was correctly calculated in
accordance with the settlement agreement. In an October 2018
meeting, the board adopted the prepared findings and
conclusions.
E. Morell Files a Petition for Writ of Mandate
In January 2019, Morell filed a petition for writ of mandate
under Code of Civil Procedure section 1094.5.4 In May 2021, the
court granted Morell’s petition in part. It found that “[blecause
retirement boards and systems have no authority to enter an
agreement that would require them to pursue a policy that
conflicts with CERL, Petitioner [Morell] could not waive—in a
settlement agreement with OCERS—an argument that
OCERS’[s] calculation of Petitioner’s pensionable compensation
contravenes CERL” and therefore the “Board prejudicially abused
4 The petition was originally filed in Orange County
Superior Court. In June 2019, the Orange County Superior
Court transferred it to Los Angeles Superior Court pursuant to
section 69740, subdivision (b), which provides in pertinent part:
“In appropriate circumstances, upon agreement of the presiding
judges of the courts, and in the discretion of the court, the
location of a session may be outside the county . . . .”
13
its discretion by upholding OCERS’[s] calculation of Petitioner’s
retirement allowance based solely on the Settlement Agreement
and Judgment.” The court ordered the board of retirement “to set
aside its decision dated October 18, 2018, and to reconsider the
case in light of this court’s ruling and judgment.” The court also
ordered that the “Board shall not limit the issues for
consideration to (1) whether OCERS and Petitioner were bound
by the 2002 Settlement Agreement and the judgment entered
thereon, and (2) whether Petitioner’s retirement allowance had
been calculated in accordance with the Settlement Agreement
and judgment” but instead should “decide Petitioner’s contentions
that OCERS improperly excluded OBP benefits from the
calculation of his final compensation separate and apart from the
Settlement Agreement.” In July 2021, the court issued a
judgment and a writ to this effect. The board did not appeal.
F. The Board Again Denies Morell’s Appeal
At a December 2021 meeting, in arguing that the OBP
payments should be included in the calculation of compensation,
Morell contended that he did not “elect” to participate in the
OBP. He explained that the OBP payments were a “benefit,” that
when he was hired, he was told, “you get this salary plus you get
this $3500.” He also admitted that if he had not chosen to
allocate the $3,500 to various categories, he would have received
the $3,500 “as cash.”
After hearing argument presented by both Morell and the
OCERS staff attorney, the board of retirement again
unanimously voted to find that it properly excluded all OBP
payments from the calculation of Morell’s compensation and
directed its staff to prepare proposed findings and a decision to
14
that effect. In a January 2022 meeting, the board adopted the
prepared findings and conclusions.
The board found that “the Orange County Board of
Supervisor’s [sic] Resolution 90-1551 . . . remains valid and
continues the validity of Section 31460.1 currently in the County
of Orange” and that “[b]y adopting Section 31460.1 by Resolution
90-1551, the County precluded the OCERS Board from including
flexible benefit payments such as OBP benefits in a member’s
compensation, compensation earnable and final average salary.”
It also found that Morell “elected to participate in the OBP
program by allocating the $ 3,500 OBP Dollars to the Health
Care Reimbursement Account and to lump sum taxable cash
payments each year during his measuring period.” It therefore
concluded that OCERS’s “exclusion of OBP benefits (both for
health and dental reimbursements and taxable cash payments
within the three year measuring period) from the Applicant’s
compensation and compensation earnable complied with the
CERL at the time the Applicant retired in 2014, according to
Section 31460.1, the County’s Resolution 90-1551, SB 193’s
savings clause, and the Board’s Resolution 98-001 (which is based
in part on County’s Resolution 90-1551), notwithstanding the
2002 Settlement Agreement.”
G. Morell Files a Second Petition for Writ of
Mandate
In April 2022, Morell filed a second petition for writ of
mandate against the board of retirement.5 He alleged that he
worked for the Orange County Superior Court from August 1992
5 The petition was again filed in Orange County and
transferred to Los Angeles County.
15
to February 2014, during which time he participated in the OBP.
In 2012, Morell allocated $700 to a healthcare reimbursement
account and $2,800 to cash; in 2013, he allocated $2,500 to the
healthcare reimbursement account and $1,000 to cash; and in
2014, he allocated $1,100 to the healthcare reimbursement
account and $2,400 to cash. However, when Morell retired in
2014, the entire $3,500 benefit was excluded from “compensation”
and “compensation earnable” in determining Morell’s pension
payments. Morell asked the court to order the board “to perform
its duty to include all cash OBP payments in ‘compensation
earnable’ and ‘final compensation,’ and to recalculate Petitioner’s
retirement allowance accordingly.” The board answered the
petition in November 2022.
In January 2023, Morell filed his opening brief, arguing
that CERL required the inclusion of flexible benefit payments
paid in cash into the calculation of a retirement benefit
allowance. Morell disagreed that the exclusion of the OBP
payments could be justified by Resolutions 90-1551 or 98-001
because the Legislature had repealed section 31460.1 on which
those two resolutions were based, and the “savings clause” of
Senate Bill 193 did not “save” either resolution. Morell also
pointed out that section 31460.1 was applicable only to employees
who “elected to participate in a flexible benefits program,” and
that he had not done so.
In its opposition, the board maintained that the “Orange
County Board of Supervisors’ Resolution 90-1551 adopted the
exclusion of OBP payments from the definition of ‘compensation’
pursuant to former Government Code § 31460.1’s ‘carve-out’
provision and the 1992 Senate Bill 193’s savings clause, and that
resolution remains valid and enforceable to this day.” It also
16
argued that, by submitting enrollment documentation and
electing how to allocate his OBP money, Morell elected to
participate in the program. In his reply, Morell countered that
electing how to allocate the OBP benefit was not the same as
electing to participate in the OBP—he maintained that he had no
choice but to participate in the OBP, he did not elect to do so.
In March 2023, the court granted Morell’s second petition
for writ of mandate. It found that the phrase “any action taken
by a county” in section 2 of Senate Bill 193 referred to “the
processing and payment of retirement benefits” and not, as
OCERS insisted, to the Board of Supervisors’ passing of
Resolution 90-1551. The court rejected OCERS’s argument that
“the county board of supervisors, at its option, retained the power
either to preclude its county retirement board from including
flexible benefits payments in ‘compensation,’ ” finding that such
an interpretation “cannot be squared with the subsequent
holdings in Ventura, supra, 16 Cal.4th at 487, requiring items of
compensation paid in cash to be included in the final
compensation on which an employee’s pension is based, and
Alameda [County Deputy Sheriff’s Association v. Alameda
County Employees’ Retirement Association (2002)] . . . 9 Cal.5th .
. . [1032,] 1067, finding that it is the Legislature that has final
authority to establish the provisions governing the award of
pension benefits under CERL.”
The court therefore found that OCERS “prejudicially
abused its discretion in concluding that ‘Resolution 90-1551, as
action taken by the county prior to May 11, 1992, remains valid
and continues the validity of Section 31460.1 currently in the
County of Orange’ ” and “also prejudicially abused its discretion
in finding that ‘OCERS’[s] staff’s exclusion of OBP benefits . . .
17
complied with the CERL at the time the Applicant retired in
2014, according to Section 31460.1, the County’s Resolution 90-
1551, SB 193’s savings clause, and the Board’s Resolution 98-001
(which is based in part on County’s Resolution 90-1551).’ ”6 The
court stated it would issue a writ “directing [the OCERS] Board
to set aside its final decision dated January 20, 2022, and to
reconsider that decision in light of this court’s ruling.” It
specified that “[o]n reconsideration, Board shall not rely on
repealed Government Code section 31460.1, County Resolution
90-1551, or Board Resolution 98-001 in its calculation of
Petitioner’s ‘compensation’ and ‘compensation earnable’ ” and
“shall recalculate Petitioner’s retirement allowance in
conformance with the definitions of ‘compensation earnable’ and
‘final compensation’ in CERL, as interpreted in Ventura County
Deputy Sheriffs’ Association v. Board of Retirement (1997) 16
Cal.4th 483, and in a manner not inconsistent with this court’s
ruling.” In April 2023, the court issued such a writ. The board
timely appealed.
6 The inquiry in a petition for writ of mandate brought
under Code of Civil Procedure section 1094.5 “shall extend to the
questions whether the respondent has proceeded without, or in
excess of, jurisdiction; whether there was a fair trial; and
whether there was any prejudicial abuse of discretion.” (Code
Civ. Proc., § 1094.5, subd. (b).)
18
DISCUSSION
A. Senate Bill 193’s Savings Clause Includes
Actions Taken by the Board of Supervisors
In addition to repealing section 31460.1, Senate Bill 193
also provided that “[n]othing in this act is intended to, or shall be
construed to, affect the validity of any action taken by a county
pursuant to Section 31460.1 of the Government Code, prior to the
effective date of this act.”
OCERS contends that “any action taken by a county
pursuant to Section 31460.1” included the board of supervisors’
passing of Resolution 90-1551. It argues that because section 2 of
Senate Bill 193 referred to actions taken pursuant to section
31460.1 and “the only action stated in the statute was for the
county board of supervisors, not the county board of retirement,”
the “county” in the clause must refer to actions taken by the
board of supervisors.
The trial court rejected this view, finding that when section
3 of Senate Bill 193 was “read in full,” it demonstrated that “the
Legislature equated ‘county actions,’ at least in some instances,
with the processing and payment of retirement benefits.”
Presumably, the court found that “county actions” therefore did
not include the board of supervisors’ passing of Resolution 90-
1551.
Morell argues that “county” “cannot be read exclusively as
‘county board of supervisors’ when ‘county’ is clearly given other
meanings in subsections (1) and (4) of Section 3” in Senate Bill
19
193.7 He points out that the “Legislature chose to omit ‘board of
supervisors’ from Section 2 even though that term had been
employed in section 31460.1, utilizing instead the broader terms
‘any action’ and ‘county’ and thereby indicating an intent for the
saving clause to include actions other than a board of supervisors’
prior adoption of the statute.”
The question of whether section 2 of Senate Bill 193
“saved” Resolution 90-1551 is a question of law that we review de
novo. (Molina v. Board of Administration, etc. (2011) 200
Cal.App.4th 53, 61.) We agree with Morell that the term “county”
in section 2 is not limited to the “county board of supervisors.”
However, we do not see why the term must exclude “county board
7 Subdivision (1) of section 3 in Senate Bill 193 reads: “The
County Employees Retirement Law has, since its original
enactment in 1937 by Chapter 677 of the Statutes of 1937,
conferred upon the county retirement boards the duty and power
to determine which of the items of compensation paid to county
employees who are members of the county retirement
associations or systems would constitute ‘compensation earnable,’
which, in turn, generally determines the amounts of the
retirement allowances of retiring members (see Guelfi v. Marin
County Employees’ Retirement Assn., 145 Cal.App.3d 297 at
pages 303, 305, and 307 fn. [sic]).”
Subdivision (4) of section 3 in Senate Bill 193 reads: “That
interpretation was not intended by the Legislature when it
enacted that section. Had that been the intent of the Legislature
when it enacted Assembly Bill 3146, it would have been a
substantial departure from the long-standing practice of the
Legislature of not intruding into the county decisionmaking
process regarding compensation determinations with respect to
those county retirement systems (see Sections 31460 and
following, Government Code).”
20
of supervisors” or be limited to “county board of retirement,” as
the trial court seems to have found. Indeed, subdivision (6) of
section 3 of Senate Bill 193 provides that the Legislature’s intent
in enacting section 31460.1 was “merely to accord to each county
board of supervisors, at its option, the power either to preclude its
county retirement board from including those flexible benefits
payments in ‘compensation,’ if the county retirement board had
not previously taken such action, or to supersede any previous
decision of their county retirement board to include those flexible
benefits payments in ‘compensation.’ ” (Italics added.) Given
that the Legislature referred both to the “county board of
supervisors” and the “county retirement board” in Senate Bill 193
and thus clearly knew how to delineate a specific entity when it
wished, we conclude that the term “county” in section 2 includes
both the county board of supervisors and the county retirement
board. As such, it includes actions taken by the board of
supervisors pursuant to section 31460.1.
B. Resolution 90-1551 Preserves Section 31460.1’s
Definition of “Compensation”
Morell “has never disputed that SB 193 preserved the
validity of Resolution 90-1551.” Instead, citing Ransome-
Crummey Co. v. Bennett (1918) 177 Cal. 560, Morell argues that
“the OBP exclusion authorized by former Government Code
section 31460.1 became inoperative in Orange County following
the repeal of section 31460.1 in 1992, even though Resolution 90-
1551 itself may have remained retrospectively.” We find
Ransome-Crummey inapposite.
San Jose’s city charter incorporated a state statute; a
portion of that statute was later repealed. Ransome-Crummey
dealt—in part—with whether the city’s charter still included the
21
repealed portion. Specifically, San Jose’s city charter had
incorporated the “general street law, commonly known as the
Vrooman Act,” where not inconsistent with the charter itself.
(Ransome-Crummey Co. v. Bennett, supra, 177 Cal. at p. 563.)
Section 20 of the Vrooman Act “substantially provided that
whenever any street or portion thereof has been or shall be fully
constructed to the satisfaction of the superintendent of streets
and of the city council, and is in good condition throughout, etc.,
the same shall be accepted by the city council, by ordinance, and
thereafter shall be kept in repair and improved by the city.”
(Ransome-Crummey Co., at p. 566.) Our Supreme Court found
that the Legislature’s repealing of section 20 of the Vrooman Act
“struck dead the ordinance of acceptance.” (Ransome-Crummey
Co., at p. 567.)
The respondent in Ransome-Crummey argued that because
“the charter of San Jose in 1897 adopted the Vrooman Act as part
of itself, that act became a part of the charter, beyond legislative
control, and that consequently the repeal by the legislature of
section 20 did not affect the validity and vitality of that section,
so made a part of the charter, which continued to be the
subsisting law of San Jose.” (Ransome-Crummey Co. v. Bennett,
supra, 177 Cal. at p. 567.) Our Supreme Court rejected this
argument. While acknowledging that San Jose’s charter was
amendable only as provided by the California Constitution, it
noted that San Jose’s charter had adopted the Vrooman Act “ ‘as
since amended and as hereafter shall be amended.’ ” (Ibid., italics
added.) Thus, because the charter “expressly provides that that
enactment as thereafter it may be modified by the general
legislature shall still be the controlling law of the municipality,
such modification by way of amendment of the general law which
22
the legislature may enact is not within the prohibition of the
constitution, . . . and it is therefore held that the legislative
repeal of section 20 of the Vrooman Act operated to repeal the
power conferred upon the city of San Jose in the matter under
consideration.” (Ibid.)
There was no mention in Ransome-Crummey that the bill
repealing section 20 of the Vrooman Act contained a savings
clause as was in Senate Bill 193. Moreover, Resolution 90-1551
adopted the “provisions of Government Code section 31460.1
pertaining to the definition of Compensation”—not those
provisions “as hereafter shall be amended.” In other words,
unlike San Jose’s city charter that made clear it was adopting not
only the Vrooman Act as it existed at that time but also any
future modifications, the Orange County board of supervisors
adopted only the definition of “Compensation” contained in
section 31460.1 at the time the resolution was passed. And,
because Senate Bill 193 provided that nothing in the bill would
affect actions taken by a county under section 31460.1—such as
the adoption of the definition of compensation provided therein—
that definition survived the repeal of section 31460.1 itself.8
8 Morell argues that the “savings clause” of Senate Bill 193
“cannot reasonably be construed in a manner consistent with
statutory amendment, when the remainder of SB 193 clearly
reflects an intent to repeal.” We do not see why it would be
unreasonable for the Legislature to permit counties who had
enacted resolutions adopting section 31460.1’s definition of
“Compensation” to keep such resolutions. Such an action would
be precisely in line with the stated intent behind enacting section
31460.1: “[T]o accord to each county board of supervisors, at its
option, the power . . . to preclude its county retirement board
from including those flexible benefits payments in
(Fn. is continued on the next page.)
23
Ventura County does not state otherwise. There, our
Supreme Court distinguished between benefits provided “in-kind”
and those paid in cash and generally held that, “[t]he Legislature
has recognized that some employees receive remuneration other
than wages or salary but has concluded that if those ‘advantages’
are not paid in cash, their value need not be included in
‘compensation’ for purposes of computing a pension. It has not
done so for cash payments made in lieu of providing the same
advantages in kind. When paid in cash, the payment is
remuneration and, as it is not excluded, it is ‘compensation’
under section 31460.” (Ventura County, supra, 16 Cal.4th at p.
497.)
But it is undisputed that CERL contains provisions
excluding benefits potentially paid to the employee in cash from
the calculation of “compensation.” For example, section 31461.1
provides that, for “a county of the first class”—currently, only Los
Angeles County—“Notwithstanding Sections 31460 and 31461,
neither ‘compensation’ nor ‘compensation earnable’ shall include
any of the following: cafeteria or flexible benefit plan
contributions, transportation allowances, car allowances, or
security allowances, as enumerated in a resolution adopted
‘compensation.’ ” (Stats. 1992, ch. 45, § 3(6).) Moreover, the
Legislature repealed section 31460.1 not because it wanted those
flexible benefits payments included in the “Compensation”
calculation, but because the section had been “erroneously
construed as implicitly requiring counties maintaining
retirement systems under the 1937 act to include in
‘compensation’ those flexible benefits payments until the board of
supervisors elect pursuant to that section to exclude those
flexible benefits payments from ‘compensation.’ ” (Stats. 1992,
ch. 45, § 3(3).)
24
pursuant to subdivision (c).”9 (See also §§ 31461.4 & 31461.45
[further defining “compensation” and “compensation earnable” for
“a county of the first class”].) Neither Ventura County nor any
case of which we are aware has held that these provisions are
invalid. Thus, while local ordinances cannot contradict CERL,
inasmuch as Resolution 90-1551 was authorized by CERL when
it was passed and preserved by Senate Bill 193, it does not
contradict CERL, and has not been invalidated by Ventura
County or any other case.10
9 Subdivision (c) discusses how the section can become
operative. (§ 31461.1, subd. (c).) While the statute discusses
“cafeteria or flexible benefit plan contributions,” these
contributions are typically paid back to an employee in cash.
“Cafeteria plan selections include . . . flexible spending
accounts . . . and cash benefits.” (Investopedia
<https://www.investopedia.com/terms/c/cafeteriaplan.asp> [as of
July 9, 2024], archived at <https://perma.cc/Q3SC-KEQ3>.) A
flexible spending account “allows you to contribute a portion of
your regular earnings before tax; employers also can contribute to
employees’ FSAs. Distributions from the account must be used to
reimburse the employee for qualified expenses related to medical
and dental services.” (Investopedia
<https://www.investopedia.com/terms/f/flexiblespendingaccount.a
sp> [as of July 9, 2024], archived at <https://perma.cc/3W8U-
WGPX>.)
10 Morell also argues that Resolution 90-1551 is not “self-
executing” in that it “does not by its terms exclude OBP
payments from the calculation of retirement allowances” and
“could only be given effect through the further actions of”
OCERS, which occurred after the enactment of Senate Bill 193.
We are unpersuaded. While it is true that the processing of
Morell’s retirement application occurred well after Senate Bill
(Fn. is continued on the next page.)
25
C. Resolution 90-1551 Applies to Morell
As discussed above, Resolution 90-1551 excludes only
“payments, made to, or on behalf of, . . . employees who have
elected to participate in a flexible benefits program, where those
payments reflect amounts that exceed[] their employees’
salaries.” Having concluded that Resolution 90-1551 is still valid,
we must determine whether Morell elected to participate in the
OBP, and whether the payments therefrom reflected amounts
that exceeded his salary. We answer both questions
affirmatively.
1. Morell Elected to Participate in the OBP
Morell argues that because he had no choice but to
participate in the OBP, he cannot be considered to have “elected”
to participate in the plan. But the record belies his claim.
Although the OBP was a benefit offered to Morell, it was
not mandatory; he had to elect to participate in it. Once he
elected to participate, he further had to elect how to allocate the
$3,500 he had chosen yearly to be placed in the OBP. It is
undisputed that, for each year relevant to this appeal, Morell
allocated some of the $3,500 in OBP payments to a healthcare
reimbursement account, and the rest to cash. Morell also admits
that if he had not made these allocations, then he would have
“received the full annual benefit under the OBP program [i.e., the
193, the board of supervisors’ passing of Resolution 90-1551—
excluding OBP payments from the definition of compensation—
occurred before. The board of supervisors validly excluded
certain payments from the definition of compensation, and
Senate Bill 193 preserved that exclusion. We do not know what
other “execution” was required.
26
$3,500], even though he did not ‘elect’ to do so or to otherwise
participate in the program.” In other words, Morell had a
choice—he could choose to participate in the program and save on
taxes by having certain medical expenses reimbursed on a pre-
tax basis (thereby reducing his taxable salary), or he could, in
essence, “opt out” of the program by making no elections, in
which case he would have received the $3,500 in taxable cash as
part of his first paycheck of the year. We need not and do not
decide whether “opting out” in this fashion would cause the
$3,500 OBP benefit to fall out from the auspices of Resolution 90-
1551, because Morell did not “opt out.” Instead, he elected to
participate in the OBP by allocating the $3,500 into permissible
categories.
2. The OBP Payments Reflect Amounts That
Exceeded His Salary
Orange County’s Section 125 Plan provided that after an
eligible employee elected to participate in the OBP, “his or her
Compensation will be reduced in an amount equal to the amount
of contributions elected pursuant to Section 4.” As discussed
above, Morell elected to participate in the OBP by allocating the
$3,500 between a healthcare reimbursement account and taxable
cash. His “Compensation”—defined as the total cash payment
received by the Participant from the Employer during a
Contribution Period before any reductions pursuant to a Salary
Redirection Agreement—was thus reduced by $3,500. Therefore,
the payments he received under the OBP reflect amounts that
exceeded his salary. Morell himself admitted this when he
informed the board of retirement that, when he was hired, he was
told that “you get this salary plus you get this $3500.”
27
Morell admits that the requirement that the OBP payment
reflect an amount that exceeds his salary “might be construed to
have been met in this case, on the ground that the OBP payments
received by Respondent were not paid regularly and therefore
technically were not salary.” Nevertheless, he urges us to focus
on the fact that the payments were required to “reflect” amounts
that exceeded his salary, arguing that the use of that word
“suggests that the clause was intended to refer not to the salaries
actually paid to employees with flexible benefit plans, but rather
to the salaries which would have been paid in the absence of the
flexible benefit plan.” In other words, Morell appears to be
arguing that, if the OBP did not provide a $3,500 benefit to him,
then his salary would have been $3,500 higher, and therefore the
$3,500 OBP payment does not “reflect” an amount that exceeded
his salary.
We reject Morell’s contention. Morell provides no authority
to support his theory that the Legislature’s choice of the word
“reflect” had any special meaning. Nor do we see how use of
“reflect” transforms “amounts that exceed[] their employees’
salaries,” which Morell concedes the OBP payments were, into
“amounts that exceed[] what their employees’ salaries would
have been had they not elected to participate in the flexible
benefit program.” Further, as explained above, Morrell elected to
participate in the flexible benefit program, and we thus need not
analyze a speculative fact pattern that does not apply to his
case. We therefore conclude that the OBP payments in question
reflected amounts that exceeded Morell’s salary.
28
DISPOSITION
The judgment in favor of Morell is reversed. On remand,
the trial court is directed to enter a judgment denying his
petition. Appellant is awarded its costs on appeal.
CERTIFIED FOR PUBLICATION
CHANEY, J.
We concur:
ROTHSCHILD, P. J.
WEINGART, J.
29