SAN DIEGO – A Superior Court judge levied a devastating blow today to City Attorney Michael Aguirre's bid to eliminate increased pension benefits granted to San Diego employees in 1996 and 2002.

Judge's decision (PDF)

Judge Jeffrey Barton ruled that a pair of settlements the city made with employees in recent years limits the scope of Aguirre's challenge to benefits that people are entitled to receive after July 2004.

The decision means that, at best, Aguirre can only hope to recoup a fraction – $50 million or less – of the $900 million he was seeking.

Barton, however, did praise the city's efforts. He said the legal principles used by Aguirre appear to be one of the few available mechanisms to challenge the benefits in the court system.

“Despite the creative use of these principles and the excellent presentation of the case at trial by the city, previous inconsistent positions taken by the city before the filing . . . raise significant obstacles to the city's current effort to undo the remaining pension benefits,” he wrote.

The obstacles Barton cites are agreements in 2000 and 2004 that the city made to settle lawsuits filed by former city employees, William J. Corbett and James F. Gleason.

The Corbett case led to an increase in benefits for thousands of current and future retirees. Corbett had alleged that the city had not taken all forms of ancillary compensation into account when calculating the amount pensioners deserved.

The Gleason settlement required the city to stop underfunding its retirement system.

Barton said city officials had an opportunity to address any issues with benefits during those cases and chose not to do so.

Barton's ruling goes to the heart of efforts by Aguirre to have recent pension benefit increases declared illegal. The case focuses on three central issues:

 The legal basis of Aguirre's court challenge.

 The statute of limitations on Aguirre's allegations against the retirement board.

 The heart of Aguirre's case, namely that the pension board decision to shortchange the pension fund was approved by pension board members who stood to benefit financially from their vote.

The pension system has a deficit of at least $1.43 billion, a problem that has led to multiple financial and legal quandaries, including criminal investigations by the U.S. and District Attorney's offices.

It also has produced a scathing judgment from the federal Securities and Exchange commission, which ruled last month that the city defrauded investors by keeping them in the dark about the massive pension shortfall.

The crisis has tarnished reputations in city government, and undermined the tenure of Dick Murphy, who eventually resigned as mayor in April 2005.

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