A judge ruled last week that firefighters working for the bankrupt California city of San Bernardino cannot sue the city in an attempt to recover lost benefits.
The firefighters claim the city illegally cut their benefits after it declared for bankruptcy in 2012. Specifically, the firefighters had to pay a higher percentage of their paychecks into the pension system.
Reported by Reuters:
Firefighters in bankrupt San Bernardino cannot sue the city in a California state court over lost wages and benefits, the U.S. Bankruptcy Court judge overseeing the case ruled on Wednesday.
“Starting to allow parties to argue their claims in another forum isn’t a precedent I want to set,” U.S. Bankruptcy Judge Meredith Jury said.
The city’s firefighters union had sought to escape the automatic block on suing a city under Chapter 9 bankruptcy protection. Firefighters want a state court, not the federal bankruptcy court, to hear their arguments that the city has illegally cut wages and benefits since declaring bankruptcy in August 2012.
Jury said she would not approve any city bankruptcy plan that breaks state law when it comes to firefighter compensation.
The same judge ruled in September that the city could indeed cut firefighter benefits as part of its bankruptcy plan. Reuters reported at the time:
In a tentative ruling, federal U.S. Bankruptcy Judge Meredith Jury said San Bernardino was entitled to unilaterally impose benefit cuts on the city’s firefighters, something their union had fiercely opposed.
Jury conceded that the cuts, which involve greater pension contributions by firefighters and reduction in overtime, were a hardship on the firefighters.
But she said the city had also been persuasive in showing that what it had been paying in terms of benefits to the firefighters was a financial burden, and being able to reject the firefighters’ collective bargaining agreement was a key step to forming a bankruptcy exit plan.
But the city has decided not to cut pension benefits as part of its bankruptcy proceedings. In fact, the city is re-paying CalPERS for $13 million in missed pension payments between 2012 and 2014.
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