Fry v. City of Los Angeles (a.k.a. “The Fry Case”)

The “Freeze Ordinance” Stands

The Fry, et al. v. City of Los Angeles case concerns the City’s ordinance freezing the retiree health subsidy benefit by the City for those LAFPP members who retired or entered DROP on or after July 15, 2011, and who did not elect to contribute an extra 2% of their salary. The petitioners sued the City and argued that the City’s “freeze ordinance” illegally impaired their vested rights to a retiree health subsidy that would increase over time.

Settlement Agreement Reached in February 2017

In April 2016, the plaintiffs filed a Petition for Review with the California Supreme Court, which was later denied in June 2016.  The matter was remanded to the trial court to resolve the remaining issues in accordance with the Court of Appeal’s opinion.  The trial court instructed the parties to complete a mandatory settlement conference by February 23, 2017. The two parties subsequently met as instructed and reached agreement on the remaining issues in early February 2017. The stipulations outlined in the settlement agreement are:

• Plaintiffs acknowledge that the Court of Appeal held that the City Council had the authority, under the City Charter, to enact the Freeze Ordinance and freeze the amount of the medical premium subsidy.
• The City acknowledges that the City Administrative Officer stated to the City Council and the Mayor that the “current retiree healthcare subsidy is a vested benefit, but the discretionary adjustment that increases the medical subsidy is not vested.”
• The parties understand and agree that nothing in the Agreement shall be construed to preclude a party from proffering any evidence adduced in discovery in the Action in any future proceeding, subject to objections.
• The City also agreed to reimburse Plaintiffs in the amount of $13,000 for litigation expenses. The settlement is considered a “no fault” settlement and the Plaintiffs release the City from liabilities, claims, and causes which relate to this action. 

Based on this final ruling, the freeze ordinance stands and LAFPP will continue to provide a frozen subsidy to current and future pensioners who chose not to “opt-in” to contribute an additional 2% of their salaries. 

Re-cap of Events

• July 28, 2014: Judge Joanne O’Donnell ruled that the petitioners have a vested right to a “non-frozen” health subsidy in retirement.  The Court ruled that petitioners had a right to the Board exercising its discretion in setting the subsidy rate, but not a right to any particular amount of subsidy.

• September 5, 2014: the Los Angeles County Superior Court issued an official Writ based upon the ruling made by Judge O’Donnell.  The Writ directed the Board to resume exercising its discretion to make annual, limited adjustments to the health premium subsidy amount without any regard to the “freeze ordinance.”  Accordingly, on the October 31, 2014 pension payments, LAFPP provided the current “non-frozen” subsidy to pensioners who were impacted by the freeze.

   

• October 29, 2014: In response to the Writ, the City of Los Angeles filed a Notice of Appeal.  The City also filed a Verified Petition for Writ of Supersedeas and Request for Immediate Stay on November 3, 2014.  The City filed both petitions because of the legal uncertainty regarding the proper procedure to challenge the trial court’s September 5, 2014 ruling.

   

• November 12, 2014: In response to the appeal and Writ filed by the City of Los Angeles, the Court of Appeal granted a stay on the Writ issued by the trial court on September 5, 2014.  As a result of the stay, beginning with the November 30, 2014 pension payments, LAFPP once again provided a frozen subsidy to those pensioners who did not elect to contribute the additional 2% of their salary.

   

• March 7, 2016: The California Second District Court of Appeal reversed the September 5, 2014 Writ of Mandate issued by the Los Angeles Superior Court authorizing the Board of Fire and Police Pension Commissioners (Board) “to exercise its discretion, previously delegated to it by the City in an ordinance, to set the maximum subsidy…without regard to later City ordinances ‘freezing’ the subsidy…”  The Court of Appeal agreed with the City’s position that there was not a vested right to a LAFPP Board-determined subsidy.  The Court of Appeal found that the City Council continues to retain the final decision authority over the subsidy even while delegating to the LAFPP Board determination of subsidy increases. 

   

• March 25, 2016: The Second Appellate Court denied the plaintiffs’ petition for rehearing.