The state Supreme Court stepped into San Diego's legal battle over its deficit-ridden pension system yesterday, agreeing to hear the case of six former members of the retirement board charged with violating state conflict-of-interest laws.
The high court, at its weekly conference, announced it would review a Sept. 7 decision by the 4th District Court of Appeals, which said the criminal case against the six members could go to trial.
At issue is the criminal case against Cathy Lexin, Ronald Saathoff, John Torres, Mary Vattimo, Terri Webster and Sharon Wilkinson. San Diego prosecutors contend they broke the conflict-of-interest law in 2002 when, as members of the San Diego City Employees' Retirement System (SDCERS) board, they voted for a plan that allowed the city to put less money into the system than required.
In exchange, the city boosted retirement benefits for city workers. That deal, prosecutors say, led to a $1 billion deficit in the retirement system and other financial woes for San Diego.
Defense lawyers have said the prosecution is wrong because the law contains several exemptions that make the actions of their clients legal.
Both a Superior Court judge and the appeals court disagreed. Despite those setbacks, the defense lawyers were pleased yesterday because the court decided to review an appeals court decision that supported the prosecution.
“If they thought the court of appeal decision was accurate in every respect, I doubt review would have been granted,” said Frank Vecchione, Webster's lawyer.
Prosecutors with the District Attorney's Office declined to comment on the matter. But Shaun Martin, a law professor at the University of San Diego, said prosecutors should be worried.
“It would be very unusual for the Supreme Court to take this case and then say the prosecution was just fine,” Martin said. “If you're the prosecutor, you have an uphill battle now.”
The court's decision, which will probably come sometime next year, will have broad implications. Two dozen retirement systems in California, including the system for state employees, public school teachers and numerous county retirement systems, filed letters urging the court to take the case.
If the appeals court decision stands, they said, retirement boards, which are required to have employees sit on them by law, would be unable to function properly. Board members routinely vote on contracts – such as health benefits – which they have an interest in and have never been prosecuted for in the past.
The state conflicts law bars public employees from voting on or crafting contracts in which they have a financial interest. The law has several exemptions, including one that allows votes on matters regarding salary.
Defense lawyers have said that under other state laws, pension benefits are part of a worker's salary, so votes on that have long been allowed.
Greg Moran: (619) 542-4586; greg.moran@uniontrib.com
