Terminated Officers Not Entitled To Retiree Health Care

Matt Tyson was employed as a police officer for the City of Fontana, California from July 1986 until he was terminated in 2005. He was not yet 50, retirement age, at the time of his termination, but reached his retirement age 12 days later. Tyson applied for retiree health benefits under the memorandum of understanding (California’s version of a collective bargaining agreement) between the City and the Fontana Police Officers Association.

The MOU provides that “all employees hired prior to June 30, 1990, who retire (i.e., begin to draw from their PERS retirement accounts) shall continue to be eligible for retiree health benefits.” The City decided that Tyson was ineligible for retiree health benefits because he was terminated, and did not retire. The dispute wound up in the California Court of Appeals. The Court sided with the City.

The Court found that Tyson’s entire argument was that the word “retire” should “be given a special meaning.” Tyson argued that employees retire when they “begin to draw from their PERS retirement accounts,” irrespective of how or when their employment ceases. In other words, employees who were terminated who subsequently began to draw retirement benefits would, at that moment, be also eligible to receive retiree health care.

The Court rejected Tyson’s argument. The Court noted that “we disagree with the premise that the parenthetical phrase constitutes a special meaning to be ascribed to the term ‘retire.’ We believe that additional retiree health benefits were never intended for employees who are terminated for cause before they are eligible to retire.

“The general rule is that the terms of a contract are presumed to have been used as a primary and general acceptation, although evidence is nevertheless admissible that they have a local, technical, or otherwise peculiar meaning, and were so used and understood. The parties to a written contract have the right to set aside the general sense of the words they use and to assign another and different meaning to them. However, nowhere in the MOU do the parties acknowledge that there is a customary use attributed to the term ‘retire’ which they expressly agree to reject, and nowhere in the agreement do the parties state that the parenthetic phrase is intended to replace the commonly accepted definition of the term ‘retire.’ Of note is the fact that Tyson did not introduce extrinsic evidence that the parenthetical phrase contained in the MOU reflected an intention to extend retiree health benefits to employees who were terminated for cause before becoming eligible to retire.”

Tyson v. City of Fontana, 2008 WL 171892 (Cal.App. 2008).

This article appears in the March 2008 issue