Example of Class Representatives

Examples of Class Representatives

  1. Facts Regarding the Class Representatives
  2. The examples of named Plaintiffs Robert Marzec (“Marzec”), Rachel Healy (“Healy”), Benjamin Esparza (“Esparza”), Jeffrey E. Andert (“Andert”), Neil MacLaren (“MacLaren”), Randy Slaughter (“Slaughter”), and Henry Brown (“Brown”) are illustrative.
  3. Each was a safety officer who was a member of CalPERS.
  4. Each had property and specific acccounts on deposit that CalPERS administered in trust for their benefit.
  5. Each was a beneficiary of CalPERS, the Board of Adminstration, and CalPERS’ employees to whom various fiduciary duties were owed prior to investing in Military/ARSC/PVC.
  6. Each fully vested in the right to an IDR upon first employment in the safety job. Each was eligible for IDR when injured on the safety job so badly that he or she was disabled. By statute, each qualified for IDR to be paid at 50% of their final compensation, free of income tax, regardless of the amount of the employee’s monetary contributions or years of service. (Gov’t Code, §§21406-21409 and 21411-21414.)
  7. For many safety employees, each was responsible for only 5% to 9% of their salary as a source of contributions for their CalPERS defined benefits.[1]
  8. Each Plaintiff was presumed to rely on (or if the presumption of reliance is not given effect, each Plaintiff reviewed and relied on) information or representations in CalPERS’ standardized form publications, Handbooks, communications, annual member statements, or other publications, including about rights, responsibilities, and obligations regarding service retirement, industrial disability, Military/ARSC/PVC, and other benefits, including that Members had limited and specified responsibilities for funding their defined benefit.
  9. After fully vesting in IDR, each Plaintiff sought and received standardized information from CalPERS about investing in Military/ARSC/PVC.
  10. Each Plaintiff was presumed to rely on and specifically relied on CalPERS’ written representations in its standardized forms and publications when determining whether to invest in Military/ARSC/PVC and when investing in Military/ARSC/PVC.
  11. Each Plaintiff understood or was presumed to rely on CalPERS’ representations of “increases” in their future benefits if they invested in the Military/ARSC/PVC.
  12. At the time of investment, each Plaintiff expected or was entitled to rely on CalPERS’ representations that the Military/ARSC/PVC investment would provide him or her with an additional benefit above and in addition to whatever retirement benefit he or she earned or acquired through work in his or her employment.
  13. Each Plaintiff signed the non-negotiable form contract.[2]
  14. Each Plaintiff alleges CalPERS failed to provide specific adequate notice of all of the material terms of the Military/PVC/ARSC contract.
  15. In the CalPERS documents that each Plaintiff received, CalPERS did not disclose the risk of total or partial loss of value, potential higher contributions to IDR, the IDR or other offset, that the employer may receive an advantage from Plaintiffs’ having invested in Military/ARSC/PVC, that the investment may not be “cost neutral” or not priced based on “present value”, and similar information.
  16. Each Plaintiff alleges, including on the presumption of reliance, that CalPERS failed to adequately inform them of material terms of the Military/ARSC/PVC arrangement relevant to safety members, including CalPERS’ failure to adequately inform of the risk of loss of all or part of the value of the investment monies, the IDR or other offset, the lack of “cost neutrality” and “present value” pricing, and other risks.
  17. Each Plaintiff alleges, including on the presumption of reliance, that the disclosure “if you are considering disability retirement, this service credit may not benefit you” did not adequately or sufficiently inform them that they risked the loss of all or part of their money, the IDR or other offset, or other risks or material terms.
  18. Each Plaintiff alleges, including on the presumption of reliance, that CalPERS did not adequately or sufficiently inform them that investing in Military/ARSC/PVC changed the percentage and source of funding for their defined IDR or other benefits.
  19. CalPERS never informed Plaintiffs that the source of funding of their IDR or other accounts could be from their investment in Military/ARSC/PVC, often paid for by rolling over their 457, 401(k) or other retirement funds and investments.
  20. CalPERS never informed Plaintiffs of the specific risks to safety Members under age 50, including that CalPERS failed to warn and failed to inform them that each could lose the money that they had invested for Military/ARSC/PVC if they retired with IDR.
  21. For each Plaintiff, including on the presumption of reliance, the risk of loss of the investment and the potential IDR or other offset were material terms.
  22. Each named Plaintiff was injured on the job and retired with an IDR component in their allowance.
  23. CalPERS pays each Plaintiff an allowance that contains the 50% IDR that each was entitled to on first employment.
  24. CalPERS pays Plaintiffs no commensurate increase for the investment in Military/ARSC/PVC (i.e., they suffer a total or partial loss of the value of their investment).
  25. In many cases, CalPERS pays Plaintiffs no additional value at all for the investment in Military/ARSC/PVC.
  26. In other cases, CalPERS pays Plaintiffs less than the indicated increase represented as consideration or value for the incremental investment in Military/ARSC/PVC.
  27. In many cases, CalPERS or the employer or others receive an undisclosed hidden transfer or windfall at the Plaintiffs’ expense.[3]
  28. CalPERS never gave Plaintiffs notice or information of a seizure, offset, transfer, or a loss of the money. There was no hearing, no notice, no information, and no due process.
  29. Each Plaintiff, including on the presumption of reliance, had no notice and had no reason to suspect (until recently) that CalPERS has partially funded their already-vested IDR or other allowance by utilizing the private monies Plaintiffs invested for Military/ARSC/PVC.
  30. Each Plaintiff, including on the presumption of reliance, alleges CalPERS failed to adequately inform them, breached its fiduciary duties, and that the contract is subject to mistake and rescission. Each Plaintiff demands damages or restitution with interest, including from first deposit.
  31. Plaintiff Robert Marzec:
  • Robert Marzec worked as a police officer for the Stockton Police Department for approximately 17 years. Previously, he served more than four years in the United States Marines.
  • Over his 17-year career, Marzec received CalPERS’ communications, Handbooks, annual member statements, and other publications from CalPERS about his rights and responsibilities, his service, industrial disability, and other benefits, and his options regarding investment in Military/ARSC/PVC.
  • Marzec understood that his responsibility or liability for funding his defined benefit was limited.
  • Sometime in or about 2003, Marzec twice requested that CalPERS inform him about investing in Military Service Credit and the estimated cost of investing in four (4) years of Military Service Credit. (Exhibits 19 and 20.)
  • In September 2004, CalPERS informed and offered Marzec a variety of incremental increases associated with different increments of investment in military time, including the right to invest in four (4) years of “Public Agency Military”, at a cost of $23,709.22. (Exhibit 11.) CalPERS estimated his monthly pension increase would be $642.30 or greater.[4]
  • Marzec chose to invest $23,709.22 for four years of military time.
  • Marzec signed the standardized Election contract to invest in Military Service Credit and “rolled over” $23,709.22 in a one-time lump sum transfer from his Deferred Compensation account. (Exhibit 11, page 7; Exhibits 30 and 31.)
  • Marzec was 38 years old at the time that he invested.
  • About 5 years later, due to medical injuries received on the job, Marzec retired with IDR. CalPERS notified Marzec that he would be retired with IDR effective May 6, 2010. (Exhibits 32 and 33.)
  • Marzec was less than 50 years of age at the time he retired with IDR.
  • CalPERS pays Marzec only a 50% of last salary tax-free IDR allowance. Since it is a tax-free recovery that CalPERS admits is akin to workers compensation recovery, the IDR is required to only contain compensation for physical injuries that excludes any component for age, service or other factors. See infra at paragraphs 491-496.
  • CalPERS provides Marzec no increase for his $23,709.22 investment.
  • CalPERS refuses to return or provide any benefit for Marzec’s $23,709.22 investment.
  • Marzec would not have invested his lump sum in Military Service Credit if he had been informed that there was a risk that he could lose the money, including if he was injured, and retired with IDR.
  • Marzec would not have invested his lump sum in Military Service Credit if he had been informed that this investment would fund in part his already vested IDR defined benefit or some other account.
  • Marzec would not have invested his lump sum in Military Service Credit if he had been informed that there was an IDR or other offset.
  1. Plaintiff Rachel Healy:
  • Rachel Healy is a career law enforcement officer. She is married to Tim Healy, a former District Attorney who is now a Superior Court judge in Calaveras County, CA.
  • Over her 12-year career, Healy received CalPERS’ communications, Handbooks, annual member statements, and other publications from CalPERS about her rights and responsibilities, her service, industrial disability, and other benefits, and her options regarding investment in Military/ARSC/PVC.
  • Healy understood that her responsibility or liability for funding her defined benefit was limited.
  • Healy requested information from CalPERS about investing in ARSC and the estimated cost of investing in five (5) years of ARSC. (Exhibit 8.)
  • CalPERS informed and offered Healy a variety of incremental increases associated with different increments of investment in ARSC, including the right to invest in five (5) years of ARSC at a cost of $77,360.94. (Exhibit 12.) CalPERS estimated her monthly pension increase would be $838.86 or greater.[5]
  • Rachel Healy and her husband Tim Healy each separately reviewed CalPERS’ information and the ARSC contract. They each separately concluded that there was no risk of loss.
  • Healy chose to invest $77,360.44 for five years of ARSC.
  • Healy signed the standardized Election contract to invest in ARSC (Exhibit 12, page 11) and paid $77,360.94 by “rolling over” $46,000 from her Deferred Compensation account and taking a mortgage out on their residence for the balance of $31,360.94 (Exhibits 34 and 35).
  • Healy was 36 years old and a safety officer at the time that she invested.
  • 4 years later, Healy was injured and stopped working. The City of Stockton put her an IDR effective September 1, 2009. (Exhibits 36 and 37.)
  • Healy was less than 50 years of age at the time she was retired with IDR.
  • CalPERS pays Healy a 50% of last salary tax-free IDR allowance and a small additional annuity associated with her prior service for other agencies, for an allowance that slightly exceeds the 50% IDR. Since the IDR portion is a tax-free recovery that CalPERS admits is akin to workers compensation recovery, the IDR is required to only contain compensation for physical injuries that excludes any component for age, service or other factors. See infra at paragraphs 491-496.
  • CalPERS provides Healy no increase for her $77,360.94 investment.
  • CalPERS refuses to return or provide any benefit for Healy’s $77,360.94 investment.
  • Healy would not have invested her lump sum in ARSC if she had been informed that there was a risk that she could lose the money, including if she was injured, and retired with IDR.
  • Healy would not have invested her lump sum in ARSC if she had been informed that this investment would fund in part her already vested IDR defined benefit or other account.
  • Healy would not have invested her lump sum in ARSC if she had been informed that there was a potential IDR or other offset.
  1. Plaintiff Benjamin Esparza:
  • Benjamin Esparza worked for approximately two and one-half decades as a firefighter for the City of Monrovia Fire Department.
  • Over his 25-year career, Esparza received CalPERS’ communications, Handbooks, annual member statements, and other publications from CalPERS about his rights and responsibilities, his service, industrial disability, and other benefits, and his options regarding investment in Military/ARSC/PVC.
  • Esparza understood that his responsibility or liability for funding his defined benefit was limited.
  • In 2004, Esparza sought information from CalPERS about investing in ARSC and the estimated cost of investing in three (3) years of ARSC. (Exhibit 9.)
  • CalPERS informed and offered Esparza a variety of incremental increases associated with different increments of investment in ARSC, including the right to invest in three (3) years of ARSC at a cost of $76,436.40. CalPERS estimated his monthly pension increase at $630.02 or greater. (Exhibit 13.)[6]
  • Esparza chose to invest $77,436.40 for three years of ARSC.
  • On September 14, 2005, Esparza signed the standardized Election contract to invest in ARSC and “rolled over” $76,436.40 in a one-time lump sum transfer from his governmental 457 plan account. (Exhibits 38 and 39.)
  • Esparza was 45 years old at the time that he invested.
  • In December 2008, more than 3 years after investing in ARSC, the Monrovia Fire Department put Esparza on administrative leave associated with injuries.
  • CalPERS notified Esparza on March 9, 2009 that Monrovia had determined him to be industrially disabled (Exhibit 40) with a retirement date effective August 29, 2009 (Exhibit 41).
  • Esparza was less than 50 years of age when he retired with IDR.
  • CalPERS pays Esparza only a 50% of last salary tax-free IDR allowance. Since it is a tax-free recovery that CalPERS admits is akin to workers compensation recovery, the IDR is required to only contain compensation for physical injuries that excludes any component for age, service or other factors. See infra at paragraphs 491-496.
  • CalPERS provides Esparza no increase for his $76,436.40 investment.
  • CalPERS refuses to return or provide any benefit for Esparza’s $76,436.40 investment.
  • Esparza would not have invested his lump sum in ARSC if he had been informed that there was a risk that he could lose the money, including if he was injured, and retired with IDR.
  • Esparza would not have invested his lump sum in ARSC if he had been informed that this investment would fund in part his already vested IDR defined benefit or other account.
  • Esparza would not have invested his lump sum in ARSC if he had been informed that there was an IDR or other offset.
  • Esparza did not discover and had no way to discover that he was harmed by CalPERS’ policies and practices that are the subject of this Third Amended Complaint, including that he was unaware of CalPERS’ failure to inform, CalPERS’ breach of fiduciary duties, the change in funding, the IDR or other offset, and other claims, rights, causes of action, or injuries.
  • CalPERS hid the reasons underlying the cause of action, thus tolling the accrual of all claims.
  • Esparza did not discover that he was harmed until much later.
  1. Plaintiff Jeffrey E. Andert:
  • Jeffrey Andert worked as a police officer for the City of Alhambra Police Department for approximately six years. Previously, he served four years in the United States Air Force.
  • Over the six years, Andert received CalPERS’ communications, Handbooks, annual member statements, and other publications from CalPERS about his rights and responsibilities, his service, industrial disability, and other benefits, and his options regarding investment in Military/ARSC/PVC.
  • Andert understood that his responsibility or liability for funding his defined benefit was limited.
  • In 2004, Andert requested that CalPERS inform him about investing in Military Service Credit and the estimated cost of investing in four (4) years of Military Service Credit. (Exhibit 23.)
  • CalPERS informed and offered Andert a variety of incremental increases associated with different increments of investment in military time, including the right to invest in four (4) years of Military Service Credit would cost $51,176.37. (Exhibit 14.) CalPERS estimated the monthly pension increase at $649.56. Exhibit 14.)[7]
  • Andert chose to invest in four years of military time on the installment payment plan.
  • Andert signed the standardized Election contract to invest in Military Service Credit and elected to pay $269.90 in 286 bi-weekly deductions from his salary. (Exhibit 14, page 7.) Based on the installment plan, four (4) years of Military Service Credit would cost Andert about $77,190, including both principal and interest.
  • The Alhambra Police Department began withholding bi-weekly payments of $269.90 from Andert’s salary. (Exhibit 42.)
  • Andert was 31 years old when he invested.
  • About two years later, Andert was injured on the job. He continued to make installment payments.
  • In April 2007, Andert requested that CalPERS temporarily suspend the installment payments (Exhibit 43), which was granted by CalPERS (Exhibit 44).
  • Soon thereafter, the City of Alhambra Police Department retired Andert with IDR effective May 10, 2008. (Exhibit 45.)
  • Andert then elected to stop all future installment payments prospectively, but received no refund of the approximately $17,500 he had already invested with CalPERS for Military/ARSC/PVC. (Exhibit 46.)
  • Andert was less than 50 years old when he retired with IDR.
  • CalPERS pays Andert only a 50% of last salary tax-free IDR allowance. Since it is a tax-free recovery that CalPERS admits is akin to workers compensation recovery, the IDR is required to only contain compensation for physical injuries that excludes any component for age, service or other factors. See infra at paragraphs 491-496.
  • CalPERS provides Andert no increase for his approximately $17,500 investment.
  • CalPERS refuses to return or provide any benefit for Andert’s approximately $17,500 investment.
  • Andert would not have invested his installment payments in Military Service Credit if he had been informed that there was a risk that he could lose the money, including if he was injured, and retired with IDR.
  • Andert would not have invested his installment payments in Military Service Credit if he had been informed that this investment would fund in part his already vested IDR defined benefit or other account.
  • Andert would not have invested his installment payments in Military Service Credit if he had been informed that there was an IDR or other offset.
  • Andert did not discover and had no way to discover that he was harmed by CalPERS’ policies and practices that are the subject of this Third Amended Complaint, including that he was unaware of CalPERS’ failure to inform, CalPERS’ breach of fiduciary duties, the IDR or other offset, the change in funding, and other claims, rights, causes of action, or injuries.
  • CalPERS hid the reasons underlying the cause of action, thus tolling the accrual of all claims.
  • Andert did not discover that he was harmed until after May of 2011 when he first spoke with counsel for Plaintiffs in the Marzec case and learned that the Marzec class action lawsuit had been filed.
  1. Plaintiff Neil MacLaren:
  • Neil MacLaren worked as a firefighter for the Humboldt Fire District for two years and then worked more than twenty years for the City of Roseville Fire Department.
  • Over his 21-year career, MacLaren received CalPERS’ communications, Handbooks, annual member statements, and other publications from CalPERS about his rights and responsibilities, his service, industrial disability, and other benefits, and his options regarding investment in Military/ARSC/PVC.
  • MacLaren understood that his responsibility or liability for funding his defined benefit was limited.
  • In or about 2005, MacLaren contacted CalPERS and asked that it inform him about investing in ARSC and the estimated cost of investing in two (2) years of ARSC.
  • In May 2005, CalPERS informed and offered MacLaren a variety of incremental increases associated with different increments of investment in ARSC, including the right to invest in two (2) years of ARSC at a cost of $29,977.09. (Exhibit 25.) CalPERS estimated his monthly pension increase would be $313.19 or greater.
  • MacLaren chose to invest $29,977.09 for two years of ARSC.
  • MacLaren signed the standardized Election contract to invest in ARSC and “rolled over” a one-time lump sum transfer of $29,977.09 to CalPERS from his governmental 457 plan account. (Exhibit 47.)
  • MacLaren was 41 years old when he invested.
  • In 2007 about two years after investing in ARSC, MacLaren suffered serious injuries on the job.
  • MacLaren was retired with IDR effective December 9, 2009.
  • MacLaren was less than 50 years old when he retired with IDR.
  • CalPERS pays MacLaren only a 50% of last salary tax-free IDR allowance. Since it is a tax-free recovery that CalPERS admits is akin to workers compensation recovery, the IDR is required to only contain compensation for physical injuries that excludes any component for age, service or other factors. See infra at paragraphs 491-496.
  • CalPERS provides MacLaren no increase for his $29,977.09 investment.
  • CalPERS refuses to return or provide any benefit for MacLaren’s $29,977.09 investment.
  • MacLaren would not have invested in ARSC if he had been informed that there was a risk that he could lose the money, including if he was injured, and retired on IDR.
  • MacLaren would not have invested in ARSC if he had been informed that this investment would fund in part his already vested IDR defined benefit or other account.
  • MacLaren would not have invested in ARSC if he had been informed that there was an IDR or other offset.
  • MacLaren did not discover and had no way to discover that he was harmed by CalPERS’ policies and practices that are the subject of this Third Amended Complaint, including that he was unaware of CalPERS’ failure to inform, CalPERS’ breach of fiduciary duties, the IDR or other offset, the change in funding, and other claims, rights, causes of action, or injuries.
  • CalPERS hid the reasons underlying the cause of action, thus tolling the accrual of all claims.
  • MacLaren did not discover that he was harmed until after May of 2011 when he first spoke with counsel for Plaintiffs in the Marzec case and learned that the Marzec class action lawsuit had been filed.
  1. Plaintiff Randy Slaughter:
  • Randy Slaughter worked as a police officer for the City of Newport Beach for approximately seventeen (17) years. He previously served four years in the United States Marines.
  • Over his 17-year career, Slaughter received CalPERS’ communications, Handbooks, annual member statements, and other publications from CalPERS about his rights and responsibilities, his service, industrial disability, and other benefits, and his options regarding investment in Military/ARSC/PVC.
  • Slaughter understood that his responsibility or liability for funding his defined benefit was limited.
  • In October 2000, Slaughter wrote to CalPERS seeking information about investing in Military Service Credit and the estimated cost of investing in four (4) years of Military Service Credit. (Exhibit 18.)
  • In January 2001, CalPERS informed and offered Slaughter a variety of incremental increases associated with different increments of investment in military time, including the right to invest in approximately four (4) years of “Public Agency Military”, at a cost of $47,694.86. (Exhibit 22.) CalPERS estimated his monthly pension increase would be $506.04 or greater (Exhibit 15.).
  • Slaughter chose to invest in four years of military time on the installment payment plan.
  • Slaughter signed the standardized Election contract to invest in Military Service Credit and elected to pay $183.63 in 390 bi-weekly deductions from his salary. (Exhibit 22.) Based on the installment plan, the approximately four (4) years of Military Service Credit would cost Slaughter about $71,615.70, including both principal and interest.
  • Slaughter was 38 years old when he invested.
  • The pre-2004 Election does not disclose any warning or related information at all.
  • After several years, Slaughter had made 38 installment payments for a total of $6,977.94. (Exhibit 48.) He then arranged to pay off the remaining balance by transferring a lump sum of $44,652.45 from his governmental 457 plan account to CalPERS. (Exhibit 49.)
  • Slaughter paid CalPERS a total of $51,639.39 for his Military Service Credit.
  • 2 years later, Slaughter was diagnosed with a medical issue that was related to the job.
  • In November 2004, CalPERS notified Slaughter that he was retired with IDR effective September 21, 2004. (Exhibit 50.)
  • Slaughter was less than 50 years old when he retired with IDR.
  • CalPERS pays Slaughter only a 50% of last salary tax-free IDR allowance. Since it is a tax-free recovery that CalPERS admits is akin to workers compensation recovery, the IDR is required to only contain compensation for physical injuries that excludes any component for age, service or other factors. See infra at paragraphs 491-496.
  • CalPERS provides Slaughter no increase for his $51,639.39 investment.
  • CalPERS refuses to return or provide any benefit for Slaughter’s $51,639.39.
  • Slaughter would not have invested his installment payments and later his lump sum payment of the remaining balance in Military Service Credit if he had been informed that there was a risk that he could lose the money, including if he was injured and retired with IDR.
  • Slaughter would not have invested his installment payments and later his lump sum payment of the remaining balance in Military Service Credit if he had been informed that this investment would fund in part his already vested IDR defined benefit or other account.
  • Slaughter would not have invested his installment payments and later his lump sum payment of the remaining balance in Military Service Credit if he had been informed that there was an IDR or other offset.
  • In fact, the language in the Election contract and supporting documentation does not even mention IDR. See supra at paragraph 104.
  • Slaughter did not discover and had no way to discover that he was harmed by CalPERS’ policies and practices that are the subject of this Third Amended Complaint, including that he was unaware of CalPERS’ failure to inform, CalPERS’ breach of fiduciary duties, the IDR or other offset, the change in funding, and other claims, rights, causes of action, or injuries.
  • CalPERS hid the harm and the reasons underlying the cause of action, and represented to Slaughter that he had no rights, thus tolling the accrual of all claims.
  • Slaughter did not discover that he was harmed until after May of 2011 when he first spoke with counsel for Plaintiffs in the Marzec case and learned that the Marzec class action lawsuit had been filed.
  1. Plaintiff Henry Brown:
  • Henry Brown worked as a corrections officer employed by the California Department of Corrections San Quentin State Prison (“CDC”) for approximately 13 years. He previously served in the U.S. Armed Services.
  • Over his 13-year career, Brown received CalPERS’ communications, Handbooks, annual member statements, and other publications from CalPERS about his rights and responsibilities, his service, industrial disability, and other benefits, and his options regarding investment in Military/ARSC/PVC.
  • Brown understood that his responsibility or liability for funding his defined benefit was limited.
  • In or about early 2006, Brown requested that CalPERS inform him about investing in ARSC and the estimated cost of investing in five (5) years of ARSC. (Exhibit 56.) Brown completed a Service Credit Cost Estimator on the CalPERS website estimating the cost of investing in five years of ARSC. (Exhibit 54)
  • In or about early 2006, Brown also requested that CalPERS inform him about investing in Military Service Credit.
  • On or about February 23, 2006, CalPERS informed and offered Brown a variety of incremental increases associated with different increments of investment in Military Service Credit, including the right to invest in three (3) years of military time for (i) a lump sum payment of $39,018.30, or (ii) 180 installment payments of $363.24 each totaling to $65,383.20. (Exhibit 55.) CalPERS estimated the monthly pension increase at $496.04. (Exhibit 55.)
  • On or about March 7, 2006, CalPERS again informed and offered Brown a variety of incremental increases associated with different increments of investment in Military Service Credit, including the right to invest in three (3) years of Military Service Credit for $39,018.30. (Exhibit 57.) CalPERS again estimated the monthly pension increase at $496.04. (Exhibit 57.)[8]
  • On or about March 22, 2006, Brown signed the standardized Election contract to invest in Military Service Credit, elected to have $200 deducted from his salary, and enclosed a completed Certification Form to transfer $15,000 from his tax-qualified retirement fund. (Exhibit 58.)
  • On or about June 12, 2006, CalPERS informed Brown that it was unable to process his standardized Election contract to invest in Military Service Credit that he sent to CalPERS on or about March 22, 2006. (Exhibit 62.)
  • On or about June 12, 2006, Brown signed and returned a second copy of the standardized Election contract for Military Service Credit, and elected to have 144 payments of $413.53 each taken from his salary. (Exhibit 63.) Based on the installment plan, the three (3) years of Military Service Credit would cost Brown about $59,848.32, including both principal and interest.
  • On or about March 30, 2006, CalPERS informed and offered Brown a variety of incremental increases associated with different increments of investment in ARSC, including the right to invest in five (5) years of ARSC for (i) a lump sum of $64,970.98, or (ii) 180 installment payments of $604.84 each totaling to $108,871.20. (Exhibit 59.) CalPERS estimated the monthly pension increase at $923.20. (Exhibit 59.)
  • On or about April 18, 2006, CalPERS again informed and offered Brown a variety of incremental increases associated with different increments of investment in ARSC, including the right to invest in five (5) years of ARSC for (i) a lump sum of $64,970.98, or (ii) 180 installment payments of $604.84 each totaling to $108,871.20. (Exhibit 60.) CalPERS estimated the monthly pension increase at $923.20. (Exhibit 60.)[9]
  • On or about May 29, 2006, Brown signed the standardized Election contract to invest in ARSC, electing to have 144 payments of $688.56 each taken from his salary. (Exhibit 61.) Based on the installment plan, the give (5) years of ARSC would cost Brown about $99,152.64, including both principal and interest.
  • Brown had contracted to invest over $100,000 in Military Service Credit and ARSC for a represented estimated monthly increase of $1,419.24.
  • Brown was 38 years old when he invested in both Military Service Credit and ARSC.
  • In July 2006 CalPERS authorized Brown’s employer, the CDC, to deduct $688.58 from Brown’s paycheck each period for ARSC beginning on August 1, 2006. (Exhibit 64.)
  • In July 2006 CalPERS authorized the CDC to deduct $413.52 from Brown’s paycheck each period for Military Service Credit beginning on August 1, 2006. (Exhibit 64.)
  • Six years later, on or about June 21, 2012, Brown was seriously injured in the course of his employment at CDC. Brown continued to make installment payments.
  • Brown and/or his employer thereafter applied for IDR for Brown.
  • On or about July 26, 2013, Brown wrote to CalPERS requesting an immediate decision on his IDR application. (Exhibit 65.)
  • On or about September 9, 2013, CalPERS wrote to Brown informing him that his application for IDR had been approved. (Exhibit 66.)
  • Brown’s IDR retirement was effective on July 5, 2013.
  • On or about October 14, 2013, CalPERS apparently prepared an internal document called a GC 21035 Cancellation of Payments for DR/IDR Determination Worksheet. On this internal document that was subsequently discovered in Brown’s CalPERS “Member file”, CalPERS’ staff indicates after the fact and apparently upon receiving his IDR determination that it was “not beneficial for member to purchase 3.000 years of Military Time and 5.000 years of ARSC. He is IDR payable which is 50% of the final compensation. The unmodified allowance of $3,232.98 will be the same with or without the purchase of Military Time and ARSC.” (Exhibit 67.)
  • CalPERS had never told Brown this before and did not tell him then.
  • CalPERS did not send this form to Brown, did not inform him of these calculations or findings, and did not provide notice.
  • On or about October 17, 2013, CalPERS apparently prepared two other internal documents, each labeled a Payment History Worksheet, showing that Brown had made a total of 83 installment payments of $413.52 each for his investment in Military Service Credit for a total payment of $34,322.16 (Exhibit 68) and 83 installment payments of $688.58 each for his investment in ARSC for a total payment of $57,152.14. (Exhibit 69).
  • On or about October 18, 2013, CalPERS advised Brown of his right to cancel the installment payments for his Military Service Credit. (Exhibit 70.)
  • It is believed that CalPERS also sent Brown a similar letter and form for cancellation of his installment payments for his ARSC investment.
  • The forms themselves do not adequately inform or waive rights.
  • On or about October 18, 2013, Brown elected to cancel paying further monthly installments of $689.08 for ARSC and $413.85 for Military Service Credit. (Exhibit 71.)
  • On or about October 24, 2013, CalPERS confirmed Brown’s election to suspend installment payments for ARSC and Military Service Credit. (Exhibit 72.)
  • Based on Exhibits 68 and 69, Brown made installment payments totaling $91,474.30 for his investments in ARSC and Military Service Credit. To date, Brown has not received a refund or any value for those payments.
  • Brown was less than 50 years old when forced to take IDR.
  • CalPERS pays Brown only a 50% of last salary tax-free IDR allowance. Since it is a tax-free recovery that CalPERS admits is akin to workers compensation recovery, the IDR is required to only contain compensation for physical injuries that excludes any component for age, service or other factors. See infra at paragraphs 491-496.
  • CalPERS provides Brown no increase and no value for his $91,474.30.
  • CalPERS refuses to return or provide any benefit for Brown’s $91,474.30.
  • Brown would not have invested his installment payments in Military Service Creditor in ARSC if he had been informed that there was a risk that he could lose the money, including if he was injured and retired with IDR.
  • Brown would not have invested his installment payments in Military Service Credit or in ARSC if he had been informed that this investment would fund in part his already vested IDR defined benefit or other account.
  • Brown would not have invested his installment payments in Military Service Credit or in ARSC if he had been informed that there was an IDR or other offset.
  • Brown did not discover and had no way to discover that he was harmed by CalPERS’ policies and practices that are the subject of this Third Amended Complaint, including that he was unaware of CalPERS’ failure to inform, CalPERS’ breach of fiduciary duties, the IDR or other offset, the change in funding, and other claims, rights, causes of action, or injuries.
  • CalPERS hid the harm and the reasons underlying the cause of action, thus tolling the accrual of all claims.
  • Brown did not discover that he was harmed until the end of March 2016 when he first spoke with counsel for Plaintiffs in the Marzec case and learned that the Marzec class action lawsuit had been filed.

 

[1] Many Plaintiffs are entitled by contract or collective bargaining agreement to have their employer pay their contributions to CalPERS pursuant to Employer Paid Member Contributions (“EPMC”). In that case, the employer would be required to pay the 5% to 9% of earnings that the individual would otherwise be required to contribute to fund their defined benefit.

[2] Although a beneficiary or successor in interest did not sign the form contract, they are also Plaintiffs arising in part because their principal signed the form contract.

[3] There is no “double dipping” by Plaintiffs. There is double or hidden charging by CalPERS. Two examples illustrate this. In the first, as an example of someone who receives “full value” and is not in the class, a firefighter worked 25 years and bought 3 years of military time for an investment of $50,000. He is injured and retires at age 50 with a last salary of $60,000. His retirement formula is 3% at age 50. He has 28 years of service credit. His total allowance is $50,400 (28 years x 3 % x $60,000). The IDR is $30,000 tax-free annually (50% of $60,000). The other $20,400 is taxable. He receives full value for his military service (about 9% of salary) and would not be in the class. The second, as an example of someone who does not receive full value and is in the class, it is necessary to change only one fact, the years of work before injury. The second firefighter worked only 14 years before injury. He has 17 years of total service credit. His total allowance is $30,600 (17 years x 3% x $60,000). The IDR is the same $30,000 tax-free annually (50% of $60,000). However, the second fire fighter receives only $600 for his military time, even though he paid the same $50,000. The second example shows the nature of the unlawful undisclosed windfall transfer to the employer or CalPERS. In all cases, there is no double dipping by a Plaintiff.

[4] Exhibit 11 lists Marzec’s then-current monthly salary at $5,352.53 and estimates a pension increase of $642.30 per month for four years of Military Service Credit, 12% of his monthly salary. This matches the fact that four years of additional service credit equals a 12% increase based on his membership in the “3% @ 50” CalPERS retirement plan available to Stockton Police Department employees.

[5] Exhibit 12 lists Healy’s then-current monthly salary at $5,592.39 and estimates a pension increase of $838.86 per month for five years of ARSC, 15% of her monthly salary. This matches the fact that five years of additional service credit equals a 15% increase based on her membership in the “3% @ 50” CalPERS retirement plan available to Stockton Police Department employees.

[6] Exhibit 13 lists Esparza’s then-current monthly salary at $7,000.25 and estimates a pension increase of $630.02 per month for three years of ARSC, 9% of his monthly salary. This matches the fact that three years of additional service credit equals a 9% increase based on his membership in the “3% @ 50” CalPERS retirement plan available to Monrovia Fire Department employees.

[7] Exhibit 14 lists Andert’s then-current monthly salary at $5,413 and estimates a pension increase of $649.56 per month for four years of Military Service Credit, 12% of his monthly salary. This matches the fact that four years of additional service credit equals a 12% increase based on his membership in the “3% @ 50” CalPERS retirement plan available to Alhambra Police Department employees.

[8] Exhibit 57 lists Brown’s then-current monthly salary at $5,511.50 and estimates a pension increase of $496.04 per month for three years of Military Service Credit, 9% of his monthly salary. This matches the fact that three years of additional service credit equals a 9% increase based on his membership in the “3% @ 50” CalPERS retirement plan available to California Department of Corrections employees.

[9] Exhibit 60 lists Brown’s then-current monthly salary at $5,487.98 and estimates a pension increase of $823.20 per month for five years of ARSC, 15% of his monthly salary. This matches the fact that five years of additional service credit equals a 15% increase based on his membership in the “3% @ 50” CalPERS retirement plan available to California Department of Corrections employees.