The opinion
Filed 4/4/19
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION TWO
LINDA C. MARTINEZ et al.,
Plaintiffs and Appellants,
A153679
v.
PUBLIC EMPLOYEES’ RETIREMENT (Alameda County
SYSTEM, Super. Ct. No. RG17846238)
Defendant and Respondent.
Government Code1 section 21156, part of the Public Employees Retirement Law,
has always equated disability with a state employee being “incapacitated physically or
mentally for the performance of his or her duties.” And ordinarily, a governmental
employee loses the right to claim disability benefits if terminated for cause. A pair of
decisions from the Third Appellate District carved out three exceptions to this general
rule. First, under Haywood v. American River Protection Dist. (1998) 67 Cal.App.4th
1292 (Haywood), a terminated-for-cause employee can still qualify for disability
retirement when the conduct which prompted the termination was the result of the
employee’s disability. Second, under Smith v. City of Napa (2004) 120 Cal.App.4th 194
(Smith), a terminated employee may qualify for disability retirement if he or she had a
“matured right” to a disability retirement prior to the conduct which prompted the
termination. Third, Smith further recognized that there might be instances where “a
1
Statutory references are to this code unless otherwise indicated.
1
court, applying principles of equity, will deem an employee’s right to a disability
retirement to be matured and thus survive a dismissal for cause.” (Id. at pp. 206–207.)
Applying Haywood and Smith, the Board of Administration of the California
Public Employees Retirement System (CalPERS) adopted a precedential decision2 that,
when an employee settles a pending termination for cause and agrees not to seek re-
employment, this is “tantamount to a dismissal,” thus precluding a disability retirement.
(In the Matter of Application for Disability Retirement of Vandergoot (2013) CalPERS
Precedential Dec. No. 12–01 (Vandergoot).)
Linda Martinez, a former state employee, settled the termination for cause action
against her, and agreed to resign and not re-apply for employment with the agency she
was leaving. Her application for disability retirement was denied by the CalPERS Board
of Administration (Board). Joined by her union, the Service Employees International
Union, Local 1000 (SEIU), Martinez challenged the soundness and continued validity of
Haywood and Smith, particularly as extended in Vandergoot. Her challenge failed during
her administrative appeal, and was rejected by the trial court that denied her petition for
mandate relief, which concluded that Haywood and Smith “set out the relevant law” and
were binding as stare decisis. The trial court further concluded that “Vandergoot is a
reasonable extension of Haywood and Smith,” and, moreover, was entitled to “substantial
weight” due to “the agency’s area of expertise.” We agree with both of these
conclusions, and in doing so we reject the contention of Martinez and SEIU that a 2008
enactment tacitly “superseded” Haywood and Smith.
BACKGROUND
The salient details are without dispute.
Martinez began work for the State in 1985. In 2001, she commenced working at
the State Department of Social Services (DSS); she also served in various positions with
2
A state agency “may designate as a precedent decision a decision or part of a decision
that contains a significant legal or policy determination of general application that is
likely to recur.” (§ 11425.60, subd. (b).)
2
SEIU, eventually becoming Secretary-Treasurer of the regional District Labor Council.
In 2014, DSS moved to terminate her employment with a Notice of Adverse Action
(NOAA), citing numerous grounds for her dismissal.3 Believing this action “was taken in
retaliation for her union activities,” and having already filed an unfair labor practices
complaint, Martinez prepared to contest the dismissal.
In September 2014, the parties negotiated a settlement, under which DSS agreed to
pay Martinez $30,000, withdraw the NOAA, and remove certain matters from her
personnel file. Martinez agreed to “voluntarily resign from her position . . . effective at
the close of business on September 30, 2014. [DSS] hereby accepts Martinez’s voluntary
resignation as of the day of the execution of this settlement agreement [September 22,
2014].” Martinez agreed “she will never again apply for or accept any employment
position” with DSS, which “agree[d] to cooperate with any application for disability
retirement filed by Martinez within the next six months.”
Martinez duly filed her disability retirement application, claiming she could no
longer function as a “disability eval[uation] analyst” because of various job-related
conditions. In June 2015 CalPERS notified her “Your application has been cancelled.”
Citing Haywood, Smith, and Vandergoot, CalPERS explained: “We have determined that
you were dismissed from employment for reasons which were not the result of a
disabling medical condition. Additionally, the dismissal does not appear to be for the
purpose of preventing a claim for disability retirement. Therefore, you are not eligible
for disability retirement.”
Martinez appealed the denial to the Board. Her appeal was heard by an
Administrative Law Judge, who concluded “the decision made by CalPERS to cancel
3
In the NOAA, Martinez was advised: “This action is being taken against you for those
causes specified in the following subsections of Government Code section 19572:
[¶] (b) Incompetence; [¶] (c) Inefficiency; [¶] (d) Inexcusable neglect of duty; [¶] (e)
Insubordination; [¶] (f) Dishonesty; [¶] (m) Discourteous treatment of the public and
other employees; [¶] (o) Willful disobedience; [¶] (p) Misuse of state property; [¶] (s)
Violation of prohibitions in accordance with Section 19990; [¶] (t) Other failure of good
behavior, et al.; [¶] (x) Unlawful retaliation.”
3
[Martinez’s] application for disability retirement was correct.” The Board adopted the
Administrative Law Judge’s proposed decision, and denied Martinez’s petition for
reconsideration.
Martinez and SEIU filed a petition against CalPERS, its Board, and DSS (named
as “real party in interest”) for a writ of mandate (both traditional and administrative)
ordering the Board to “set aside and reverse” its decision. Reiterating the position they
took before the Board, Martinez and SEIU sought to have the trial court “overrule”
Vandergoot and “disavow” Haywood and Smith because they “misconstrue and misapply
the California Public Employees’ Retirement Law . . . and result in the harsh forfeiture of
public employees’ disability retirement rights, in contravention of the California
Constitution and principles of equity.”
Perhaps recognizing that asking a trial court to flout stare decisis by “disavowing”
higher court decisions was, to say the least, a long-shot, Martinez and SEIU’s alternate
approach was to get the court “to distinguish Martinez’s case from the Haywood, Smith
and Vandergoot cases on the grounds that . . . DSS contractually promised in a Settlement
Agreement to . . . cooperate with the disability retirement application . . . DSS was
aware . . . Martinez intended to imminently file. . . . State of California . . . agencies,
their employees, and the labor unions that represent employees will be discouraged from
settling disputes if, despite the parties’ express contractual stipulations, [the] Board
prohibits employees from pursuing disability retirement on the basis of
Haywood/Smith/Vandergoot the precedents.”
Martinez and SEIU further alleged that “CalPERS members, such as Petitioner
Martinez and other SEIU Local 1000 unit members, have the vested right to retirement
benefits including . . . disability retirement benefits.” And, they alleged, in denying
Martinez’s application for those benefits, the Board violated the Contract Clauses of the
state and federal constitutions (Cal. Const., art. I, § 9; U.S. Const., art. I, § 10, cl. 1) and
its duty to administer the CalPERS system “in a manner that will assure prompt delivery
of benefits . . . to the participants.” (See Cal. Const., art. XVI, § 17, subds. (a)-(b).)
4
The petition’s concluding allegation was that the Board has “a duty to comply
with Article XVI, section 17 of the California Constitution and . . . to process disability
retirement applications on the merits even where an employer has issued the applicant a
notice . . . terminating their employment,” which overrode the Board’s “practice of
cancelling the disability retirement applications of SEIU Local 1000’s members such as
[] Martinez on the sole ground that the applicants have at one point received a notice of
termination from their employer.”
The trial court denied the petition with a 31-page written order. Although it
expressed considerable disagreement and unease with the reasoning of Haywood and
Smith, the court concluded they “set out the relevant law” and must be followed. In
addition to concluding that “Vandergoot is a reasonable extension of Haywood and
Smith,” the court stated it “gives substantial weight to administrative decisions
interpreting statutes and case law within the agency’s area of expertise,” and thus “will
give effect to Vandergoot.”
DISCUSSION
Standard Of Review
“A public employee has a fundamental vested right to a disability pension if he or
she is in fact disabled. [Citation.] Accordingly, the trial court was authorized to apply its
independent judgment as to the weight of the evidence.” (Beckley v. Board of
Administration etc. (2013) 222 Cal.App.4th 691, 697.) The trial court in this case did so.
Ordinarily, a reviewing court would examine the record to determine if substantial
evidence supported the trial court’s judgment. (E.g., Fukuda v. City of Angels (1999) 20
Cal.4th 805, 824; City of Fontana v. California Dept. of Tax & Fee Administration
(2017) 17 Cal.App.5th 899, 920.) However, with undisputed facts, this appeal presents
only issues of law, which will receive our independent review. (E.g., Yuba City Unified
School Dist. v. State Teachers’ Retirement System (2017) 18 Cal.App.5th 648, 654;
California Correctional Peace Officers’ Assn. v. State of California (2010) 188
Cal.App.4th 646, 650.) Even so, courts have given “great weight to CalPERS’s
5
construction of California's Public Employees’ Retirement Law.” (Beckley v. Board of
Administration etc., supra, at p. 697 and decisions cited.)
Haywood, Smith, Vandergoot
Given their significance to this appeal, it is useful to examine Haywood, Smith,
and the Board’s precedential Vandergoot decision, all of which involved firefighters
claiming disability retirement.
According to the Haywood court, “This controversy presents the situation of an
employee who challenged his employer’s authority; was subjected to increasingly serious
disciplinary actions; was ultimately terminated from employment for cause; was
diagnosed by his experts as suffering from a major depression as a result of the
disciplinary actions; has recovered from his depression with slight, if any, residual
impairments; is capable of fully performing his former duties as a firefighter; but claims
he is entitled to disability retirement because a return to work for his former employer
would create a substantial risk of future depression should the old antagonisms with his
supervisors arise again.” (Haywood, 67 Cal.App.4th 1292, 1302.)
The key to the Haywood court’s analysis was the language of section 21156
pegging disability to an employee being “incapacitated physically or mentally for the
performance of his or her duties.” The Court of Appeal reasoned that “there is an
obvious distinction in public employment retirement laws between an employee who has
become medically unable to perform his usual duties and one who has become unwilling
to do so. Disability retirement laws address only the former.” (Haywood, 67
Cal.App.4th 1292, 1296.)
The court explained: “[W]hile nothing in the PERS law restricts an employer’s
right to fire an unwilling employee, the Legislature has precluded an employer from
terminating an employee because of medical disability if the employee would be
otherwise eligible for disability retirement. (§ 21153.) In such a case, the employer must
instead apply for the disability retirement of the employee. (Ibid.) In addition, while
termination of an unwilling employee for cause results in a complete severance of the
6
employer-employee relationship (§ 19583.1[4]), disability retirement laws contemplate the
potential reinstatement of that relationship if the employee recovers and no longer is
disabled. Until an employee on disability retirement reaches the age of voluntary
retirement, an employer may require the employee to undergo a medical examination to
determine whether the disability continues. (§ 21192.) And an employee on disability
retirement may apply for reinstatement on the ground of recovery. (Ibid.) If an
employee on disability retirement is found not to be disabled any longer, the employer
may reinstate the employee, and his disability allowance terminates. (§ 21193.)”
(Haywood, 67 Cal.App.4th 1292, 1305.)
From this followed the conclusion that “Haywood’s firing for cause constituted a
complete severance of the employer-employee relationship, thus eliminating a necessary
requisite for disability retirement—the potential reinstatement of his employment
relationship with the District if it ultimately is determined that he no longer is disabled.”
(Haywood, 67 Cal.App.4th 1292, 1297.) In short, termination for cause “renders the
employee ineligible for disability retirement.” (Ibid.) But the court noted two caveats:
“There is no claim, or evidence which would support a claim, that the termination for
cause was due to behavior caused by a physical or mental condition. And there is no
claim, or evidence which would support a claim, of eligibility for disability retirement
that could have been presented before the disciplinary actions were taken.” (Id. at p.
1306.)
Smith involved another firefighter discharged for cause, whose strategy on appeal
was to directly challenge the soundness of Haywood. The court rejected the contention
4
Which provides: “Dismissal of an employee from the service shall, unless otherwise
ordered by the board: [¶] (a) Constitute a dismissal as of the same date from any and all
positions which the employee may hold in the state civil service. [¶] (b) Result in the
automatic removal of the employee's name from any and all employment lists on which it
may appear. [¶] (c) Terminate the salary of the employee as of the date of dismissal
except that he shall be paid any unpaid salary, and paid for any and all unused and
accumulated vacation and any and all accumulated compensating time off or overtime to
his credit as of the date of dismissal.”
7
that Haywood was “an ‘unenacted’ rule of law . . . . We found our holding inherent in the
structure of the statutes governing disability retirement, and the respect we are to accord
the disciplinary powers of state agencies. If Haywood were indeed a judicial derelict on
the waters of the law of disability retirement [citation], the Legislature has had five years
in which to scuttle it. The absence of legislative action supports our belief in the
propriety of our interpretation.” (Smith, 120 Cal.App.4th 194, 204.)
The Smith court reiterated the “qualification in Haywood that its ruling does not
apply to a dismissal that ‘preempts’ an otherwise valid claim for disability retirement.
. . . [I]t does not refer only to a dismissal intended to thwart a claim for disability
retirement, because a dismissal for cause cannot defeat an employee’s matured right to a
disability retirement antedating the event providing cause for the dismissal.” (Smith, 120
Cal.App.4th 194, 198.) “[E]ven if an agency dismisses an employee solely for a cause
unrelated to a disabling medical condition, this cannot result in the forfeiture of a
matured right to a [disability] pension absent express legislative direction to that effect.
[Citations.] Thus, if a plaintiff were able to prove that the right to a disability retirement
matured before the date of the event giving cause to dismiss, the dismissal cannot
preempt the right to receive a disability pension . . . .” (Id. at p. 206.)
The Smith court explained: “A vested right matures when there is an
unconditional right to immediate payment.” A right to a disability pension vests “when
the pension board determine[s] that the employee is no longer capable of performing his
duties.” (Smith, 120 Cal.App.4th 194, 206.) In other words, a right to a disability
retirement is “mature” once the pension board authority approves the disability
application.5 Firefighter Smith did not qualify: “In the present case, a CalPERS
5
“Application . . . for retirement of a member for disability may be made by: [¶] (a)
The head of the office or department in which the member is or was last employed, if the
member is a state member other than a university member. [¶] (b) The university if the
member is an employee of the university. [¶] (c) The governing body, or an official
designated by the governing body, of the contracting agency, if the member is an
employee of the contracting agency. [¶] (d) The member or any person [on] his or her
behalf.” (§ 21152.) Section 21153 provides that “an employer . . . shall apply for
8
determination of eligibility did not antedate the unsuccessful certification on the ladder
truck. His right to a disability retirement was thus immature, and his dismissal for cause
defeated it.” (Smith, 120 Cal.App.4th 194, 206.)
However, the Smith court allowed there might be an equitable exception to this
matured disability requirement: “Conceivably, there may be facts under which a court,
applying principles of equity, will deem an employee’s right to a disability retirement to
be matured and thus survive a dismissal for cause.” The court provided two examples:
(1) If an employee “had an impending ruling on a claim for a disability pension that was
delayed, through no fault of his own, until after his dismissal” or (2) if there is undisputed
evidence that the employee “was eligible for a CalPERS disability retirement, such that a
favorable decision on his claim would have been a foregone conclusion (as perhaps with
a loss of limb).” Firefighter Smith came within neither of these situations. (Smith, 120
Cal.App.4th 194, 206–207.)
Vandergoot involved a firefighter employed by the Department of Forestry and
Fire Protection who applied for disability retirement after he was terminated for cause.
“CalPERS determined that [Vandergoot] was barred from any entitlement to disability
retirement because he was terminated for cause and the discharge was neither the
ultimate result of a disabling medical condition nor preemptive of any otherwise valid
claim for disability retirement.” While Vandergoot’s appeal to the State Personnel Board
was pending, he and the Department of Forestry reached a settlement that was similar to
the one between Martinez and DSS, though unlike Martinez, Vandergoot did not receive
a cash payment or an assurance that his former employer would assist his application for
a disability retirement.
The Board framed the issue before it as “whether CalPERS may properly apply
Haywood in the absence of an actual dismissal for cause.” The Board recognized the
disability retirement of any member believed to be disabled . . . .” This language
“imposes a ministerial duty on an employer to apply for disability retirement on behalf of
an employee . . . .” (Riverside Sheriffs’ Assn. v. County of Riverside (2011) 193
Cal.App.4th 20, 29.)
9
essential point of Haywood as authorizing an affirmative answer: “Haywood makes it
clear that a necessary requisite for disability retirement is the potential reinstatement of
the employment relationship . . . . Such is not possible here. The employment
relationship has not only been severed, but the terms of the Stipulation and Settlement
Agreement expressly lock [Vandergoot] out from being reinstated. Such a circumstance
must be viewed as wholly inconsistent with the policy behind and rationale for disability
retirement.”
First, quoting from Haywood, the Board showed how the mechanics of the
disability process could not function for persons in Vandergoot’s situation:
“ ‘[D]isability retirement laws contemplate the potential reinstatement of that
relationship if the employee recovers and no longer is disabled. Until an employee on
disability retirement reaches an age of voluntary retirement, an employer may require the
employee to undergo a medical examination to determine whether the disability
continues. (§ 21192.) And an employee on disability retirement may apply for
reinstatement on the ground of recovery. (Ibid.) If an employee on disability retirement
is found not to be disabled any longer, the employer may reinstate the employee, and his
disability allowance terminates. (§ 21193.)’
“Were [Vandergoot] to receive a disability retirement allowance, he would have
no employer who could require him to undergo a medical examination under Government
Code section 21192. And it is no longer possible for him to be reinstated under
Government Code section 21193. These necessary prerequisites for receiving a disability
retirement allowance are simply not present in this case. For this reason alone, CalPERS
can fairly consider the terms of the Stipulation for Settlement . . . as being tantamount to
a dismissal for purposes of applying the Haywood criteria.”
The Board then turned its attention to Smith:
“Smith recognized that even when there has not yet been a determination of eligibility
[for disability], there may be facts which a court, applying principles of equity, will deem
an employee’s right to a disability retirement. [Citation.] Smith then went through a
number of situations where equitable principles might apply. They are also considered
10
here. As in Smith, this is not a case where [Vandergoot] had an impending ruling on a
claim for a CalPERS disability pension that was delayed through no fault of his own.
[Citation.] Here, [Vandergoot] did not even initiate the process for receiving an
industrial disability retirement allowance until after he received the NOAA and after he
received the adverse Skelly determination [i. e., the denial of his administrative appeal of
his termination by the State Personnel Board]. Nor was there ‘undisputed evidence’ that
[Vandergoot] was eligible for a CalPERS disability retirement, ‘such that a favorable
decision on his claim would have been a foregone conclusion (as perhaps with a loss of
limb).’ [Citation.]” In short, Vandergoot failed to establish that his termination was “the
ultimate result of a disabling medical condition” exception mentioned in Haywood, or
that he had a matured right to a disability retirement as allowed by Smith.
Appellants’ Arguments
Martinez and SEIU (who will hereafter be referred to as “appellants”) open their
brief with a candid admission of their goal: “Appellants request this Court hold that
Haywood and Smith both have been superseded by legislation, are inconsistent with
subsequent case law, and declare that Vandergoot is no longer precedential authority.”
Section 21156 has been amended twice since Haywood and Smith were decided.
The first merely moved the words “in the state service” within the statute. (Stats. 2006,
ch. 118, § 10.) The second, in 2008, divided the statute into subdivisions and added what
is now subdivision (a)(2). (Stats. 2008, ch. 370, § 3.) That subdivision, which is the
keystone for all the arguments advanced by appellants, provides: “In determining
whether a member is eligible to retire for disability, the board or governing body of the
contracting agency shall make a determination on the basis of competent medical opinion
and shall not use disability retirement as a substitute for the disciplinary process.”
As appellants see it, “The outcome of this case should begin and end with . . .
section 21156[, subdivision] (a)(2),” which in their view mandates that determinations of
eligibility for disability retirement can only be made on the basis of competent medical
opinion. Appellants submit that Haywood has been “superseded” by subdivision (a)(2) in
that “the Haywood court examined Haywood’s disciplinary history rather than medical
11
evidence of his disability, in clear contravention of current statutory authority,” that is,
subdivision (a)(2), “and then created the requirement that a disabled retiree have the
potential for reinstatement.” And, appellants go on, Haywood’s creation of the “potential
for reinstatement” requirement was created out of the blue, “is unsupported by any law,
whatsoever, past or present,” and “conflicts with the current statutory scheme.”
Moreover, the concept of the “potential for reinstatement” is “inconsistent with past and
present statutes” allowing for reinstatement.
The same is also true with respect to what appellants treat as “Haywood’s
underlying rationale,” namely, the creation of “the unable/unwilling dichotomy to assure
disability retirement benefits would be provided only to persons unable to work rather
than those who are unwilling.” This dichotomy, they assert was also overturned by the
enactment of subdivision (a)(2), which “assures disability retirement is available only to
employees unable to perform job duties, not those unwilling to.” “While the
unable/unwilling dichotomy might have been a helpful analytical tool for purposes of
Haywood, the legislative requirement that disability retirement eligibility determinations
be made on the basis of competent medical opinion would resolve the problem Haywood
presented.”
Next, appellants argue that Haywood’s “interpretation” of section 211936—which
covers reinstatement when an employee determined to be no longer “incapacitated for
6
Which provides: “If the determination pursuant to Section 21192 is that the recipient is
not so incapacitated for duty in the position held when retired for disability or in a
position in the same classification or in the position with regard to which he or she has
applied for reinstatement and his or her employer offers to reinstate that employee, his or
her disability retirement allowance shall be canceled immediately, and he or she shall
become a member of this system.
“If the recipient was an employee of the state or of the university and is so
determined to be not incapacitated for duty in the position held when retired for disability
or in a position in the same class, he or she shall be reinstated, at his or her option, to that
position. However, in that case, acceptance of any other position shall immediately
terminate any right to reinstatement. A recipient who is found to continue to be
incapacitated for duty in his or her former position and class, but not incapacitated for
duty in another position for which he or she has applied for reinstatement and who
12
duty”—is “inconsistent” with the “recent interpretation” of that statute in California
Dept. of Justice v. Board of Administration etc. (2015) 242 Cal.App.4th 133. According
to appellants, that decision “establishes that when it is unknown whether an individual is
eligible for state employment, the former employer’s mandatory duty to extend an offer
of reinstatement to the employee continues. The employer cannot create conditions that
undermine its mandatory reinstatement obligations.”
Pointing to statutes allowing former employees terminated for cause to apply for
reinstatement (e.g., §§ 18941, 20969.3, 21190–21203), appellants conclude that the
Public Employees Retirement Law “does not establish, either expressly or by clear
implication, that dismissal for cause precludes individuals otherwise eligible for disability
retirement from receiving disability retirement benefits.”
Turning to Smith, appellants argue “following Haywood, Smith held ‘dismissal for
cause consequently extinguished [Smith’s] right to a disability retirement,’ ” And by
doing so, “Smith failed to consider medical evidence in order to determine whether the
plaintiff was eligible for disability retirement, contrary to the present statutory
requirements. Therefore, Gov. Code § 21156(a)(2) supersedes Smith as well.”
As for Vandergoot, to appellants it is vulnerable not only because of its reliance on
Haywood and Smith: “what is more, Vandergoot fails to distinguish [between] an
individual fired for cause from one who resigned pursuant to a settlement agreement
where the merits of the termination have not been determined. Failing to recognize this
distinction, Vandergoot erroneously applied Haywood’s analysis of section 19583.1 to
accepts employment in the other position, shall upon subsequent discontinuance of
incapacity for service in his or her former position or a position in the same class, as
determined by the board under Section 21192, be reinstated at his or her option to that
position.
“If the recipient was an employee of a contracting agency other than a local safety
member, with the exception of a school safety member, the board shall notify it that his
or her disability has terminated and that he or she is eligible for reinstatement to duty.
The fact that he or she was retired for disability does not prejudice any right to
reinstatement to duty which he or she may claim.”
13
section 21193, where it does not lie because section 21193 deals solely with
reinstatement. By resting its conclusion on section 19583.1, applicable only to
employees terminated for cause, Vandergoot ignores cases such as the present matter
where employees have resigned pursuant to a settlement agreement and the termination
for cause has been withdrawn. Such individuals remain eligible for reinstatement. (Gov.
Code § 19140(a).)
“Even if Haywood’s analysis of section 19583.1 were applicable, which it is not,
Vandergoot ignores the statutes that allow terminated employees to return to state service
in any one of the many other departments. Said otherwise, individuals who resign
pursuant to settlement agreements with reemployment waivers remain potentially eligible
for reinstatement to every state agency except the one from which they resigned by
mutual agreement to settle a dispute. Therefore, Vandergoot, like Haywood, overstates
the so-called ‘complete severance’ of the employer-employee relationship. The faulty
premises on which Vandergoot relies undermine its conclusion, along with its
precedential value.” (Fn. omitted.)
Finally, “There is no evidence the legislature intended reemployment waivers in
settlement agreements to result in forfeiture of vested benefits. But Vandergoot results in
this exact outcome and, therefore, discourages state employees from settling disputes
regarding discipline in order to preserve their vested disability retirement benefit
eligibility for just this reason. The result is that Vandergoot contravenes longstanding
public policy favoring settlement, thereby increasing the expense and persistency of
litigation at public cost.”
In short, appellants challenge the continued soundness of Haywood and Smith.
Given that this court is not compelled to follow those decisions (Gonzalez v. Lew (2018)
20 Cal.App.5th 155, 166, fn. 7 [“ ‘There is no horizontal stare decisis in the California
Court[s] of Appeal’ ”]; 9 Witkin, Cal. Procedure (5th ed. 2008) Appeal, § 498, pp. 558–
559), they are clearly hoping that we will take up the challenge they made in the trial
court—to “disavow” Haywood and Smith and thus undermine Vandergoot.
14
It is useful to be clear about the scope of our analysis. In light of their full frontal
assault on Haywood and Smith, appellants do not maintain that Martinez can establish
that the conduct which led to her termination was the product of the same conditions for
which she would claim a disability retirement. Nor do they contend that Martinez had a
matured entitlement to a disability retirement prior to DSS commencing the process to
terminate her employment and appellants have abandoned their argument to the Board
that principles of equity will support the existence of such a matured claim. In short, they
do not claim Martinez qualifies for any of the exceptions identified by Haywood and
Smith. Lastly, they make no claim that Martinez is the victim of a violation of either the
United States or the California constitutions.
Application
At the outset, we acknowledge the obvious, that the term “disability” has no fixed,
universal, or constant meaning. It may be partial or total. The term can be found in
statutory contexts ranging from workers’ compensation (e. g., Lab. Code, § 4650 et seq.)
to discrimination against pregnant women (§ 12945). We therefore emphasize that we
are addressing disability only as that term is used in Article 6 (“Disability Retirement,”
§§ 21150–21176) of Chapter 12 (“Retirement from Employment,” § 21060 et seq.) of the
Public Employees Retirement Law. And in this context “disability retirement” has a very
distinct meaning. It is not “retirement” in the ordinary sense, nor is it a permanent
condition. It is a sort of temporary hiatus.
As noted, appellants rest their case on subdivision (a)(2) of section 21156. They
deem it “dispositive.” They are mistaken.
Subdivision (a)(2) is but a single sentence in a single statute, and cannot be
examined to the exclusion of the entirety of the Public Employees Retirement Law. (See,
e. g., Mendoza v. Nordstrom, Inc. (2017) 2 Cal.5th 1074, 1084 [“ ‘We do not construe
statutory language in isolation, but rather as a thread in the fabric of the entire statutory
scheme of which it is a part’ ”]; Lungren v. Deukmejian (1988) 45 Cal.3d 727, 735 [“The
meaning of a statute may not be determined from a single word or sentence . . . . [E]ach
sentence must be read not in isolation but in the light of the statutory scheme”].) There
15
has been no change in section 21156 equating disability with the employee being
“incapacitated physically or mentally for the performance of his or her duties.” 7 The
nature of incapacity excludes fleeting periods of inability to perform. “ ‘Disability’ and
‘incapacity for performance of duty’ as a basis of retirement, mean disability of
permanent or extended duration.” (§ 20026; see Nolan v. City of Anaheim (2004) 33
Cal.3d 335, 343–344 [“ ‘incapacitated for the performance of duty,’ for the purposes of
former section 21022, meant the substantial inability of the applicant to perform his
usual duties,” italics added.)
The 2008 enactment that added subdivision (a)(2) to section 21156 (Stats. 2008,
ch. 370, § 3) was modest in scope, amending three existing statutes and adding two
others: Education Code sections 24003 and 24103 were amended with language similar
to subdivision (a)(2)(i), and the same general language also appears in the new sections
31720.3 and 53222.5. The connecting theme was disability benefits for public
employees. The intent and scope of the bill was explained in the Legislative Counsel’s
summary digest:
“The Public Employees’ Retirement System provides for the granting of disability
benefits to members in state service. Existing law generally provides that if a medical
examination and other available information show to the satisfaction of the Board of
Administration of the Public Employees’ Retirement System that a member in state
service is incapacitated physically or mentally for the performance of his or her duties
and is eligible to retire for disability, the board shall immediately retire him or her for
disability. The State Teachers’ Retirement System permits the board of administration of
the system to authorize payment of a disability allowance or disability retirement
allowance, requires a member to provide medical documentation to substantiate the claim
qualifying the member for the disability allowance or disability retirement allowance, and
permits the board to order a medical examination in this regard, as specified. The County
7
This is also the standard for local employees whose retirement is administered by their
county under the County Employees Retirement Law of 1837. (§§ 31724–31725.)
16
Employees Retirement Law of 1937 permits a member permanently incapacitated for
duty to retire for disability only if specified criteria are met. Existing law permits the
legislative body of a local agency to establish a pension trust, as specified, for the benefit
of its officers and employees and permits that legislative body to establish reciprocal
retirement benefits with other specified retirement systems.
“This bill would restrict the board or body administering a retirement system or a
pension trust, as described above, with respect to the medical opinion or documentation
used to determine whether a member is eligible to retire for disability, as specified, and
would prohibit the use of disability retirement as a substitute for the disciplinary
process.” (Legis. Counsel’s Dig., Assem. Bill No. 2023 (2007–2008 Reg. Sess.) 5 Stats.
2008, Summary Dig., p. 152.)
The measure codified one of the recommendations of the Public Employee Post-
Employment Benefits Commission established by Governor Schwarzenegger in
December 2006. Change was needed, it concluded, because “ ‘there can be, and has
been, significant differences in standards between employers as to what constitutes a
disability, with some local agencies at times using disability retirement as a substitute for
the disciplinary process.’ ” (Sen. Com. on Public Employment and Retirement, Analysis
of Assem. Bill No. 2023 (2007–2008 Reg. Sess.), as amended June 18, 2008, p. 3.) The
complete bill history prepared by the Assembly shows it was passed in both houses
without a single negative vote. All of five parts of the bill declared the sole point that
eligibility for disability retirement should be decided on the basis of medical evidence,
not the desire to get rid of an employee without going through the process of disciplining
that employee. It was, in short, unopposed and uncontroversial. There is not a single
mention of either Haywood or Smith in the legislative history. In short, the central pillar
of Haywood and Smith—the employee’s inability to resume performing his or her
duties—has not changed.
However, if the disciplinary process is used, and results in a termination for cause,
there is nothing in the legislative history of subdivision (a)(2) suggesting the terminated
employee may then apply for a disability retirement. Dismissal for cause is a
17
“[p]ermanent separation . . . from state service,” while disability retirement is only a
“[t]emporary separation . . . from state service.” (Cal. Code Regs., tit. 2, § 446; see Willis
v. State of California (1994) 22 Cal.App.4th 287, 291 [“A disability retirement is not, by
definition, permanent. (Cal. Code Regs., tit. 2, § 446.)”].) This “dichotomy,” to use
appellants’ term, is fully consistent with the purposes of the disability procedures
outlined by the Haywood court, procedures meant to ascertain the duration of an
employee’s inability to return to work.
Appellants’ arguments do not persuade us that fundamental change of that
structure was either intended or accomplished by subdivision (a)(2). The nature of
disability retirement was not changed. The procedure for obtaining benefits has changed
only in one respect. The concept of reinstatement is still the desired conclusion. The
mechanism for reinstatement, the medical examination, is still in place. The
“unwilling/unable dichotomy” is still, as the Smith court put it, “inherent in the structure
of the statutes governing disability retirement” (Smith, supra, 120 Cal.App.4th 194, 204)
of the Public Employees Retirement Law. In the language of Haywood, Martinez’s
voluntary resignation “constituted a complete severance of the employer-employee
relationship, thus eliminating a necessary requisite for disability retirement—the potential
reinstatement of [her] employment relationship.” (Haywood, supra, 67 Cal.App.4th
1292, 1297.) In these circumstances, we cannot agree with appellants that the enactment
of subdivision (a)(2) “superseded” Haywood and Smith.
We also conclude that Haywood and Smith are not “inconsistent with subsequent
case law,” specifically, California Dept. of Justice v. Board of Administration etc., supra,
242 Cal.App.4th 133. The issue there was whether an employer was required to reinstate
an employee who was no longer incapacitated by the physical difficulty that led to the
disability retirement. The employer wanted to make reinstatement dependent upon a
formal offer of reinstatement conditioned on the employee completing “medical and
psychological evaluations and a background investigation.” (Id. at p. 137.)
The Court of Appeal held that both of the employer’s arguments were contrary to
section 21193 (quoted at fn. 6, ante): “The first paragraph of section 21193 suggests
18
there is a two-step process for reinstatement, but when read in context with the second
paragraph, it is clear that a state employee who is not incapacitated for duty must be
reinstated. An offer to reinstate the employee is mandatory under those circumstances.
DOJ was required to reinstate [the employee] after CalPERS determined that she was no
longer incapacitated for duty.” (California Dept. of Justice v. Board of Administration
etc., supra, 242 Cal.App.4th 133, 142.) Moreover, “[m]andatory reinstatement, by itself,
does not require medical and psychological evaluations or a new background
investigation. Placing conditions on [the employee] prior to reinstatement would be
contrary to the mandatory reinstatement provisions of section 21193.” (Ibid.)
It may be that criteria for reinstatement have been relaxed, and that Martinez may
have a theoretical right to seek employment with a state agency other than DSS. And it is
true that there are circumstances where an application for disability benefits can be
submitted following termination. (See § 21154.) Even so, there is nothing in the
decision providing support to appellants’ reading of it, namely, that the Court of Appeal
held that a “former employer” has a “mandatory duty to extend an offer of reinstatement”
that continues past termination. That stands the very nature—the temporary quality—of
disability on its head.
As already mentioned, in 2004 the Smith court noted: “If Haywood were indeed a
judicial derelict on the waters of the law of disability retirement [citation], the Legislature
has had five years in which to scuttle it. The absence of legislative action supports our
belief in the propriety of our interpretation.” (Smith, supra, 120 Cal.App.4th 194, 204.)
That is even more true if the legislative inaction spans more than 20 years. During those
years, Smith’s central premise—what appellants term the “unwilling/unable
dichotomy”—has never been challenged—and has become accepted. (E. g., Riverside
Sheriffs’ Assn. v. County of Riverside (2009) 173 Cal.App.4th 1410, 1419–1420;
Holtzman, Cal. Practice Guide: Public Sector Employment Litigation (The Rutter Group
2017) ¶¶ 6:478 to 6:479, p. 6-33.)
In these circumstances, what we said in Wolfe v. Dublin Unified School Dist.
(1997) 56 Cal.App.4th 126, 137 is apposite: “ ‘We acknowledge we are not bound by an
19
opinion of another District Court of Appeal, however persuasive it might be. [Citation.]
We respect stare decisis, however, which serves the important goals of stability in the law
and predictability of decision. Thus, we ordinarily follow the decisions of other districts
without good reason to disagree. [Citation.]’ [Citation.] No compelling reason has been
advanced . . . for clouding 21 years of precedent under [Haywood].” (See 9 Witkin, Cal.
Procedure, supra, Appeal, § 499, p. 560 [“Normally, a Court of Appeal will follow prior
decisions of its own or other districts or divisions”].) We therefore decline appellants’
invitation to “disavow” Haywood and Smith.
With respect to Vandergoot, it was designated as a precedential decision because
the Board believed it had “a significant legal or policy determination of general
application that is likely to recur.” (See fn. 2, ante.) The Board presumably did so
because employees leaving state service with a settlement of a pending termination for
cause were becoming sufficiently common to merit a statement of policy. The
Legislature and the Board have decided that resignation effects a “permanent separation”
from state service. (§ 19996 [“Any . . . employee may be . . . permanently separated
through resignation”]; Cal. Code Regs., tit. 2, § 446 [“Permanent separations from state
service shall include . . . resignation”].) Which is exactly what Martinez did when she
agreed to leave state service and “never again apply for or accept any employment” with
DSS. Notwithstanding the theoretical possibility of reinstatement, Martinez was not
going to return to her former job. From this perspective, Vandergoot is eminently
logical: resignation in these circumstances does indeed appear to be “tantamount to a
dismissal for purposes of applying the Haywood criteria.”
A long-standing principle is that “the Board’s interpretation of the Public
Employees Retirement Law is accorded great weight unless clearly erroneous.” (City of
Fremont v. Board of Administration (1989) 214 Cal.App.3d 1026, 1033; accord, e. g.,
Wheeler v. Board of Administration of Public Employees’ Retirement System (1979) 25
Cal.3d 600, 605; California Dept. of Justice v. Board of Administration etc., supra, 242
Cal.App.4th 133, 138.) In light of the foregoing, Vandergoot cannot be so condemned.
20
DISPOSITION
The Judgment Denying Writ of Mandate is affirmed.
21
_________________________
Richman, J.
We concur:
_________________________
Kline, P. J.
_________________________
Stewart, J.
Martinez v. CalPERS (A153679)
22
Trial Court: Alameda County Superior Court
Trial Judge: Honorable Kimberly Colwell
Attorney for Plaintiff and Appellant Linda Weinberg, Roger & Rosenfeld, Emily P.
Martinez: Rich, Kerianne R. Steele, Paul K.
Pfeilschiefter;
Attorney for Plaintiff and Appellant SEIU Local 1000, Anne Maria Giese,
Service Employees International Union, Theresa C. Witherspoon, Nicole Heeder;
Local 1000:
Public Employees’ Retirement System,
Attorney Defendant and Respondent Matthew G. Jacobs, Austa Wakily.
Public Employees’ Retirement System:
23