Not to be outdone by Detroit's unions (here), the California Public Employees' Retirement System (CalPERS) is appealing the decision by Judge Meredith Jury that the City of San Bernadino is eligible for Chapter 9 bankruptcy relief. (If you have access, you can read about it at Reuters here.) Unlike the other chapters of the Bankruptcy Code in which the burden is on creditors to get a debtor out of bankruptcy, Chapter 9 requires a city to to prove it's entitled to be in bankruptcy.
CalPERS is po'd because San Bernadino had the temerity to stop making payments into the retirement system for its employees and retirees. Of course, CalPERS shed no tears for the bondholders of Stockton when that city stiffed them. But CalPERS is determined to teach a lesson when a California city chooses not pay the 900 lb. gorilla.
And that's all I can make of the decision to appeal: CalPERS wants to punish San Bernadino by forcing it to lay out even more in attorneys fees when what is really at stake--nonpayment to CalPERS--is not a requirement for the city's eligibility to be in Chapter 9. To be sure CalPERS dresses up its appeal with citations to the California law that governs filing Chapter 9 by a California city but there's every reason to believe that the higher courts will see through the smokescreen.
But even if CalPERS looses all the way up the hierarchy of the federal court system, we can see that it has already achieved its in terrorem goal. How? Because Stockton didn't raise a peep about paying its retirement contributions to CalPERS. Exemplary "justice" is not justice at all. But that doesn't mean it doesn't work.
CalPERS is po'd because San Bernadino had the temerity to stop making payments into the retirement system for its employees and retirees. Of course, CalPERS shed no tears for the bondholders of Stockton when that city stiffed them. But CalPERS is determined to teach a lesson when a California city chooses not pay the 900 lb. gorilla.
And that's all I can make of the decision to appeal: CalPERS wants to punish San Bernadino by forcing it to lay out even more in attorneys fees when what is really at stake--nonpayment to CalPERS--is not a requirement for the city's eligibility to be in Chapter 9. To be sure CalPERS dresses up its appeal with citations to the California law that governs filing Chapter 9 by a California city but there's every reason to believe that the higher courts will see through the smokescreen.
But even if CalPERS looses all the way up the hierarchy of the federal court system, we can see that it has already achieved its in terrorem goal. How? Because Stockton didn't raise a peep about paying its retirement contributions to CalPERS. Exemplary "justice" is not justice at all. But that doesn't mean it doesn't work.
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