Successfully Defended a Multiple-Employer Defined Benefit Public Retirement System, its Board and CEO Against Claims of Overcharging of One Participating Employer

We won a five-year, $100 million legal battle for our clients. We defended the Alameda County Employees' Retirement Association (ACERA), ACERA’s Board of Retirement, and its Chief Executive Officer (ACERA Respondents) against allegations the retirement system had overcharged a participating employer in violation of their fiduciary responsibilities.

The Alameda Health System (AHS) has been a participating employer within ACERA since 1998 when it separated from the County of Alameda. In 2017, AHS claimed that ACERA’s funding methodology resulted in it being overcharged from 2002-forward by ACERA.

In its lawsuit, AHS demanded the ACERA Respondents’ actuary conduct a comprehensive study of what AHS’s contributions might have been under a different methodology. AHS also demanded the Board change ACERA’s actuarial funding methodology. AHS claimed this change would result in retroactive and prospective adjustments totaling $100 million fewer contributions by AHS, which would then be paid by ACERA’s other participating employers.

In their response, the ACERA Respondents established that the “percentage of payroll” manner in which ACERA’s actuary calculates employer contribution rates is actuarially sound, prudent and a longstanding funding methodology of ACERA. It is also in line with the methodology used by other public pension plans both in California and across the nation. They also demonstrated that the ACERA Respondents complied with their fiduciary duties of care and loyalty to the overall best interest of all members, when considering AHS’s demands. Thus, they established that the ACERA Respondents acted within their legal discretion in declining AHS’s demands for a further actuarial study and change in methodology.

The San Francisco Superior Court ruled in the ACERA Respondents’ favor, granting summary judgment. (See Alameda Health System et al. v. Alameda County Employees' Retirement Association et al.).