The Board of Regents of the University of California (Regents) adopted a resolution granting approval for establishing a plan for the restoration of retirement plan benefits denied due to limitations under the Internal Revenue Code. The university president’s office drafted an appendix document, which had provisions aiming to restore benefits reduced by the maximum compensation limit. The appendix stated that the Regents, via the president and the board chairs, retained an unlimited right to amend or terminate the document. The president and the chairs subsequently chose not to implement the appendix or any other plans for restoring benefits by the maximum compensation limit.
Plaintiffs Anne Broome and William Gurtner retired employees of the University of California, brought a class action suit against the Regents for breach of contract, promissory estoppel, and other claims, alleging the Regents violated an obligation to provide them with certain pension benefits. The trial court ruled in the Regents’ favor and the Plaintiffs appealed.
The California Court of Appeal for the First District agreed with the trial court. First, the Court of Appeal held that there was no breach of contract. The 1999 Resolution did not ratify a contract or result from negotiations with public employees and did not show a clear intent to create contractual rights. Rather, the 1999 Resolution delegated its future implementation to the president, with the concurrence of the chairs. The Court noted that the resolution expressly contemplated further review and action before the granting of an employee benefit. Second, the Court of Appeal determined that the Plaintiffs did not have any implied contractual rights to the pension benefits that they sought. The evidence did not clearly show that the Regents intended to create contractual rights to the benefits, and the 1999 Resolution did not implement any benefits or specify their terms. While the appendix had these specifics in its provisions, the appendix never took effect.
The Court of Appeal also agreed with the trial court in that the Regents’ vote on the 1999 Resolution did not amount to a clear and unambiguous promise. Under the 1999 Resolution, the chairs’ concurrence in an implementation plan that the president proposed was an express condition for implementing the benefits. This condition was not fulfilled because the chairs never concurred on the appendix or on any other implementation plan. Therefore, the Court of Appeal concluded that the 1999 Resolution was not a clear and unambiguous promise for benefits.
Broome et al. v. Regents of the University of California (2022) 80 Cal.App.5th 375.