Broome v. Regents of the University of California
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The University of California Retirement Plan (UCRP) is a defined benefit plan. In 1999, the University’s President addressed the recruitment and retention impacts of federal tax law: for employees hired after a certain date, a “maximum compensation amount that can be used for retirement calculations”—then, $160,000—such that employees earning more than the maximum “cannot receive benefits based on the full compensation that UCRP would otherwise use for benefit calculations.” The President recommended that the University take advantage of recent amendments to the Internal Revenue Code making it possible for public institutions to “mitigate” the limitations. The Regents adopted the 1999 Resolution, establishing restoration plans. The President’s Office drafted a Plan amendment, Appendix E, to implement the Resolution. Appendix E provided for Regents’ unlimited right to amend or terminate Appendix E,. In 2007, following a moratorium, the IRS approved Appendix E. The University did not implement Appendix E.
Retired employees sued on behalf of themselves and similarly situated Plan members who retired between January 1, 2000, and March 29, 2012, alleging impairment of contract, promissory estoppel, equitable estoppel, breach of fiduciary duty, breach of contract, and breach of the covenant of good faith. The court of appeal affirmed the rejection of those claims. The 1999 Resolution expressly contemplated further review and action before any employee benefit was provided, and did not clearly evince an intent to create contractual rights.
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