Judge Draws Line between Pension, Financial Interest in SDCERS Case

October 3, 2005 (PLANSPONSOR.com) - A Superior Court judge on Friday dismissed San Diego City Attorney Michael Aguirre's lawsuit against top staff and six former members of the city's pension board in a tentative ruling.

Aguirre’s suit had alleged that San Diego City Employees’ Retirement System (SDCERS) administrator Lawrence Grissom, general counsel Lori Chapin, and former board members Bruce Herring, Cathy Lexin, Ron Saathoff, John Torres, Terri Webster, and Sharon Wilkinson granted pension benefits illegally (see  Lawsuit Intends to Roll Back San Diego City Pension Benefit Increases ).  According to the San Diego Daily Transcript, Aguirre claimed they violated the Political Reform Act, which prohibits a public official from participating in any decision where he or she has a “financial interest.”

However, in his ruling, Judge Charles Wickersham stated that “pension benefits cannot as a matter of law constitute the type of ‘income’ resulting in a ‘financial interest,’ which violates the Political Reform Act (PRA).”   Additionally, the Transcript notes that in oral arguments, the City Attorney was unable to articulate any “financial interest” that would be a violation of the PRA. Consequently, the City Attorney’s request to amend the complaint was rejected, and the case has been dismissed.

Aguirre said he will appeal the ruling.


“The City Attorney’s claim that pension board members should not be involved in pension matters because they may someday receive a pension benefit, is in direct conflict with the City Charter,” said SDCERS Board President Peter Preovolos, according to the Transcript report. “The charter explicitly requires employee membership on the board, and as the current board president, having employees serving with me has been an essential component in understanding the concerns of our members and the benefits to which they are entitled. Judge Wickersham was diligent in considering the facts of this case, and we’re very pleased with the positive outcome.”

“This ruling guts the essence of Mr. Aguirre’s much-publicized legal theory of why certain pension benefits are allegedly ‘illegal’ and must be rolled back,” said Ann Smith, attorney for the San Diego Municipal Employees Association, according to the report. “His misguided theory has regrettably been embraced by politicians and the public who have been misled into thinking that pension benefits are ‘illegal’ and should be taken away in order to solve the city’s financial challenges. Employees and retirees have been the victims of this irresponsible rhetoric.”

Aguirre said the court erred by failing to allow the case to be resolved on its merits, and noted that another legal action to clarify the legality of pension benefits is continuing and that there have been favorable court rulings in a related criminal case brought by the district attorney.