Stockton ruling, like Vergara ruling, shakes CA status quo

Stockton ruling, like Vergara ruling, shakes CA status quo

union-corruptionCalifornians who think the state status quo is nuts and that public employees amount to a protected class of citizens have gotten unexpected help this year from the state and federal courts.

First came Los Angeles Superior Court Judge Rolf True’s ruling that teacher tenure laws are unconstitutional and “shock the conscience” because they protect incompetent teachers and funnel them to the schools in poor minority communities that most need the best teachers.

Now U.S. Bankruptcy Judge Christopher Klein has struck another blow for sanity by rejecting CalPERS’ argument that the city of Stockton can’t cut the pensions of city employees and retirees as it tries to get out of bankruptcy. CalPERS’ claim that state laws somehow trump federal laws has always seemed strange. Klein’s comments Wednesday certainly reflected that view. This is from Ed Mendel at

Part of his analysis yesterday that CalPERS pensions are not state “governmental or political powers” protected under federal bankruptcy law is that while state workers are in CalPERS by statute, cities choose to join CalPERS.

Klein said California cities have the option of forming their own pension systems, joining a county pension system, hiring a private pension provider or withdrawing from CalPERS, if they can afford to do so.

He concluded that benefits not prescribed by state law are not “governmental or political” powers protected by the federal bankruptcy law, but instead are unprotected “business powers.”

Klein said a CalPERS-sponsored state law preventing cities from rejecting their CalPERS contracts in bankruptcy is “flat-out invalid” under the constitutional “supremacy clause” giving federal law priority over state law.

The judge said another CalPERS-sponsored state law that gives CalPERS a lien on all city assets, except wages, when they declare insolvency is an invalid attempt by the state Legislature to “edit” the federal bankruptcy law.

Judge: “Why should I take [CalPERS claim] seriously?

The New York Times treated this ruling as a major national story and made a point that California coverage did not: “Judge Klein’s ruling went beyond anything that Stockton was seeking.” More from the NYT:

Calpers had argued that if Stockton stopped making payments and dropped out of the state pension system, the lien would let it claim $1.6 billion of its assets. But Judge Klein said those statutory powers were suspended once a California city received federal bankruptcy protection.

“Why should I take that lien seriously?” he asked a lawyer for Calpers, Michael Gearin. …

“The bankruptcy code provides that the lien can be avoided and be treated as an unsecured claim,” Judge Klein said.

Judge Klein also said that Stockton had many options other than Calpers for retirement benefits: a private provider, like an insurance company; a multiemployer pension plan affiliated with a union; one of California’s county-run pension plans; or it could even offer no pensions at all.

“There are lots of permutations and combinations out there with respect to the art of the possible,” he said, adding that nothing in the law required any city to give its business to Calpers. “The whole world is out there.”

Conservatives, libertarians and believers in small government have long viewed the courts with suspicion. That’s especially so in California, where conservative ballot propositions have often been scrapped or enfeebled by courts but liberal ballot measures rarely seem to get picked apart.

But Judge Treu and Judge Klein go against that narrative — and offer hope that a new balance of power is coming in a state dominated for too long by public employee unions.


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  1. LetitCollapse
    LetitCollapse 2 October, 2014, 11:08

    Until the day that the California Supreme Court is not owned lock, stock and barrel by the public unions and the liberals – nothing to see here. It really doesn’t matter what these lower court judges think or rule. As it travels up the food chain it all gets whitewashed away. So I don’t really consider this any sort of victory. It only eludes you into believing that there may be justice afterall. Don’t fall into that trap. There is no such thing in today’s world. Most everything has turned into a scam.

    Reply this comment
  2. Desmond
    Desmond 2 October, 2014, 13:04

    Understand, but this is a Federal Court. Judge commented that clauses in the California law, which exempt some from bankruptcy effects, are in violation of US constitution. Sure this has to play out, but this is a big deal. If nothing else, certainly has to upset a lot of people and Calpers. That is fun, maybe cause a few well deserved cardiac arrest cases, who will do their part to reduce the unfunded pensions.

    Reply this comment
    • LetitCollapse
      LetitCollapse 2 October, 2014, 13:52

      Ok. So instead of the CSC it’s the 9th Circuit. So what?

      Six of one, half dozen of the other.

      I’m over being fooled into having false hope. It only leads to more disappointment.

      Nothing to see here. Move along. You’ll have be patient and wait for the bond markets to implode.

      In the meantime, the scams continue.

      Reply this comment
      • Rex the Wonder Dog!
        Rex the Wonder Dog! 2 October, 2014, 16:34

        The 9th will not overturn Klein, even if it gets some of the more liberal judges (the 9th is about 50/50 liberal ad conservative today.

        But before it hits the 9th it also goes through a district court judge for the Eastern District, who likewise will not reverse.

        If the 9th did reverse there is a good chance an issue like this will go up to the SCOTUS where there is no chance of reversing Klein and siding with the public unions. No chance.

        Reply this comment
        • T Mind of Ted Your God
          T Mind of Ted Your God 2 October, 2014, 17:27

          OMG ANOTHER infamous POODLE- Girl ™ prediction!

          I am pretty certain she has never been correct on any of them…

          These lower court rulings won’t be around long—lol zzzzzzzzzzzzzzz

          Reply this comment
          • Rex the Wonder Dog!
            Rex the Wonder Dog! 2 October, 2014, 21:17

            I thought they kicked you off of Calwatchdog.

            I’m otta here….I have had enough Teddy Steals brain damage to last a LIFETIME.

            Chris, email me when you ban Teddy.


          • T Mind of Ted Your God
            T Mind of Ted Your God 6 October, 2014, 08:58

            I’ll miss the Poodle Girl.

            The Ju Jitsu Walter Mitty life, the predictions which of course never came true, the hatred of others, the odd combination of arrogance and ignorance……

        • LetitCollapse
          LetitCollapse 2 October, 2014, 23:09

          “If the 9th did reverse there is a good chance an issue like this will go up to the SCOTUS where there is no chance of reversing Klein and siding with the public unions.”

          Yeah, sure. There was no chance of the SCOTUS dismissing the Commerce Clause either when it ruled in favor of ObamaCare either. The neo-conservative Roberts sold us out, which no one expected to happen. That’s what happens when there’s big money at stake.

          It’s widely known throughout the country that the 9th circuit is a conglomeration of liberal judges who rule in favor of public unions. The entire nation laughs at the 9th circuit.

          Reply this comment
      • Chris Reed
        Chris Reed Author 2 October, 2014, 22:47

        LIC, I enjoy your gloomy vibe, but on this matter, it’s not appropriate.

        If you read legal blogs, as opposed to the MSM, this ruling was completely expected. Federal bankruptcy laws are powerful and clearly written. If the 9th U.S. Circuit Court of Appeals throws out this ruling, I will videotape myself eating a napkin and post it here. Why would a federal court say that with bankruptcy, federal laws don’t apply to California? Federal courts don’t defer to state courts in such situations.

        P.S.: If such insanity occurs, I reserve the right to cover the napkin with Sriracha.

        Reply this comment
        • LetitCollapse
          LetitCollapse 2 October, 2014, 23:13

          “If the 9th U.S. Circuit Court of Appeals throws out this ruling, I will videotape myself eating a napkin and post it here.”

          And we’ll hold you to that too, Chris. 🙂

          Come on. There’s been a crusade against public pensions since year 2000. Have you made any real progress to date? Nope. Even when public safety pays higher contributions to their pensions they simply raise their salaries and benefits so that it more than offsets the higher contributions to the pensions. So it’s still a net loss for the taxpayers. You’ve got both the politicians and the judges in the back pockets of the public unions. You’re a smart guy, Chris. You know that.

          Reply this comment
        • LetitCollapse
          LetitCollapse 2 October, 2014, 23:56

          “Why would a federal court say that with bankruptcy, federal laws don’t apply to California?”

          Why would the SCOTUS rule that the healthcare insurance mandate was a tax when the black-letter law itself stated that it wasn’t a tax?

          They can massage the constitution and the laws to fix the outcome to their heart’s desire. This has been done COUNTLESS times, Chris.

          For God sakes, if they can strip ‘due process’ from American citizens and get away with it excluding California from Federal bankrupcy law would be like cutting butter with a red hot knife!

          We seem to have such short memories.

          Reply this comment
        • Anonymous
          Anonymous 4 October, 2014, 12:11

          Will that be a cloth or paper napkin? Just looking to clarify your response. And, dinner or lunch napkin size?

          Reply this comment
  3. Queeg
    Queeg 2 October, 2014, 16:23

    You retired 15 years ago.

    You played by the rules.

    Will they at least send you a dumpster diving pass in the mail?

    That will nice-

    Reply this comment
    • Tough Love
      Tough Love 3 October, 2014, 21:09

      Yes, the Public Sector workers did indeed follow the rules, but the RULES were stacked against the taxpayers because the Unions BOUGHT the favorable votes of our legislature. AND, it’s the WORKERS that are the financial beneficiaries of the Union/Legislator collision ….. so THAT’S where the Taxpayers must look to right this wrong … by very materially reducing the pensions of all CURRENT Public Sector workers (AND those already retired if dire financial circumstances so necessitate).

      Reply this comment
    • Headed south
      Headed south 6 October, 2014, 08:26

      Uhaul is hiring, pack and ship!

      Reply this comment
  4. Desmond
    Desmond 2 October, 2014, 18:35

    Education,pensions,can euthanasia as a cost control move be far behind?Calipers Would support that if their executives are exempt.

    Reply this comment
  5. LetitCollapse
    LetitCollapse 2 October, 2014, 23:18

    “Education,pensions,can euthanasia as a cost control move be far behind?”

    What do you think ObamaCare is? They’ve already taken benefits away from the Medicare population to pay for the huge upsurge of indigent Medicaid patients. And if you are over 55 and unfortunate enough to be enrolled in Medi-Cal if you have any assets to your name when you croak the State will swoop in to steal them before they pass on to your heirs. It’s a form of elder abuse. If you are 53 and on Medi-Cal the State won’t steal your assets. But if you are over 55 they will. And that’s the law. Essentially, it’s elder abuse.

    Reply this comment
  6. LetitCollapse
    LetitCollapse 2 October, 2014, 23:23

    I remember when everybody said that the crazy train was dead. lol. Remember when the lone judge ruled against it? lol.

    I warned all of you not to jump to conclusions too soon. And now it appears that there’s a better chance that the crazy train stays on the tracks as oppose to being derailed. You need to understand. You don’t decide what goes on in this society. The ruling class is the decision maker. You are just going along for the ride.

    Reply this comment

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