Pension Case All But Dead

Published: Friday, August 3, 2007 5:28 PM PDT

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Judge Jeffrey Barton's ruling today is the latest letdown for City Attorney Mike Aguirre in his pension crusade. Barring successful appeals, it would mark the death of Aguirre's challenge to $900 million worth of employee benefits and the end of a fight that he has made the hallmark of his first term.

Aguirre always maintained that his pension benefits attack would take up to five years, considering the different legal angles and number of appeals he can pursue. The litigation was "like a marathon," he said.

But Aguirre has made very little headway in his pension challenge. In two of the three phases of the case in front of Barton, the court has moved toward shutting down Aguirre's lawsuit.

Friday's ruling will likely bar him from ever reaching the final leg of the trial, when arguments over the actual merits of his case would be heard. Aguirre argued that pension trustees had an illegal conflict of interest when they approved deals in 1996 and 2002 that would raise the retirement benefits for themselves and other employees.

Momentum in the case spiraled in December, when the $900 million Aguirre claimed to be at stake in the case was slashed to a minimal amount by Barton. Aguirre has since asked higher courts to review that decision, but to no avail.

Barton's ruling on the first phase also dismissed Aguirre' back-up legal theory that pension benefits created in 1996 and 2002 violated a law barring agencies from piling up long-term debt without a public vote. Aguirre was trying to use the debt-limit law to void the benefits. The ruling also forced Aguirre to add as defendants several thousand employees and retirees whose benefits Aguirre was challenging.

The second leg of the lawsuit was argued over the last few months, when the court reviewed whether a statute of limitations barred Aguirre from filing the case. On Friday, the judge determined that a recent appellate court decision set the statute of limitations at one year. The judge said the latest the city could have possibly filed the conflict-of-interest case was September 2004, one year after the city and the retirement system were sued for the same alleged violation. Aguirre filed his lawsuit in July 2005.

Aguirre said he plans to appeal the ruling, claiming the judge's ruling had "legal flaws." He also said he is going to ask the state Supreme Court to decertify the appellate case that Barton based his decision on. Additionally, Aguirre said recent state legislation would allow him the ability to file the case again when the law takes effect in January.

A related case, in which the retirement system claims the city owes the pension system after underfunding it as part of the 1996 and 2002 deals, is scheduled to proceed in September.