The Public Employment Relations Board (“PERB”) recently found that the City of San Diego violated the Meyers-Milias-Brown Act when it failed to meet and confer over the language of Proposition B, a popular pension reform initiative which passed by 67 percent of the majority vote in the 2012 local election.  However, as the Board recognized, PERB lacks the legal authority to rescind a voter-approved initiative.  Notwithstanding this acknowledgment, PERB found a way to sidestep this limitation on its remedial powers and effectively nullified the measure by ordering the City to compensate all affected employees for the value of the pension benefits allegedly lost and to pay any costs incurred by the unions for litigation undertaken to overturn Proposition B through the proper legal channels.

By 2012, San Diego faced a $73 million structural deficit which threatened the financial stability of the city.  Mayor Jerry Sanders vowed to eliminate the deficit by reforming the City’s pension system.  Mayor Sanders worked with special interest groups  to develop the Comprehensive Pension Reform Initiative (CPRI).   A central tenant of the CPRI was to replace the City’s defined benefit plan with a 401(k)-style defined contribution plan for all new employees.

Mayor Sanders and other CPRI supporters pursued the CPRI as a citizens’ initiative.  A citizens’ initiative is a constitutionally protected legislative process which enables citizens to legislate directly by proposing ballot measures themselves instead of relying upon the local legislative body to do so.  Citizens’ initiatives are developed independent of the local legislative body and cannot be placed on the ballot until a sufficient number of citizens sign a petition to place the initiative before voters in the next election.  Once on the ballot, a citizens’ initiative will become law if it receives the majority popular vote.

Supporters of the CPRI eventually garnered enough signatures to place the initiative on the November 2012 ballot.  The CPRI became known as Proposition B and passed with 67 percent of the public vote.

Prior to the November 2012 election, several unions demanded to meet and confer over Proposition B.  The Mayor viewed Proposition B as a private citizens’ initiative and believed the City had no obligation to meet and confer.  After Proposition B passed, the unions filed an unfair practice charge with PERB alleging the City failed to meet and confer prior to placing Proposition B on the ballot.

On December 29, 2015, PERB issued a decision finding that the Mayor acted as the City’s agent when he pursued the pension reform initiative, and therefore, he and the City failed to meet and confer as required under the MMBA.  Critical to PERB’s holding was that the Mayor’s pension reform efforts were motivated by a desire to improve the City’s financial health, and he identified pension reform as a major goal of his administration.   PERB noted that the Mayor and his staff often discussed pension reform in their official capacities, including during press conferences and the Mayor’s “State of the City” speech to the City Council, and that the Mayor used the prestige of his office to promote the CPRI.   Moreover, under San Diego’s “Strong Mayor” form of government, the Mayor was the City’s chief labor negotiator, so he not only had the authority to negotiate with unions over pension reform, but he is the City official traditionally tasked with such responsibilities.

The City argued that, although the Mayor can recommend legislation to the City Council, he must obtain authorization from the Council for ballot measures affecting negotiable subjects.  The Council never authorized the Mayor to pursue this initiative.  Thus, the City argued that the Mayor acted as a private citizen outside the scope of his official duties, and the City had no duty to meet and confer over an initiative developed without its involvement or consent.  PERB rejected this argument and held that, although the Council did not expressly authorize the initiative, it was well aware of the Mayor’s pension reform efforts and his repeated refusals to meet and confer.  PERB also found that the City had notice that it could be held responsible for the Mayor’s refusal to meet and confer because a former City Attorney opined that the City could have a duty to meet and confer over a private citizens’ initiative promoted by the Mayor due to the Mayor’s position and duties.  Given these circumstances, PERB concluded that the Mayor did not act just as a private citizen, but also as an agent of the City, in campaigning to place Proposition B onto the general election ballot.  PERB also held that the City effectively ratified the Mayor’s actions by accepting the substantial financial benefits arising from Proposition B.

The City also argued that Proposition B is exempt from the scope of bargaining because imposing a meet and confer requirement on a citizens’ initiative would violate the citizens’ constitutional right to legislate through local initiatives.  The Board rejected this argument on its merits, reiterating that the Mayor did not act solely as a private citizen when developing and promoting the pension reform initiative.  PERB further stated that it lacks authority to refuse to enforce the MMBA’s meet and confer requirement unless an appellate court declares the MMBA unconstitutional as applied to citizens’ initiatives.  Since no appellate court has declared that citizens’ initiatives are exempt from the MMBA’s meet and confer requirement, PERB decided it was statutorily mandated to enforce the MMBA.

After finding the City failed to meet and confer, the Board recognized that a quo warranto writ action is the exclusive means to repeal a voter-approved initiative due to procedural irregularities, and thus, it did not have the authority to rescind Proposition B.  Despite expressly acknowledging this limitation on its remedial power, PERB nevertheless effectively annulled Proposition B by ordering the City to compensate all affected employees for the value of the pension benefits eliminated by Proposition B.  PERB also took it a step further and ordered the City to pay for any legal costs incurred by the union in pursuing a quo warranto or other civil action to overturn Proposition B.

The City has filed a request for judicial review of PERB’s decision, so this does not appear to be the final statement on the fate of Proposition B.