REAOC v. County of Orange

Without explicit legislative intent or statutory authority, longstanding practice or policy alone does not create an implied contractual right.

The Ninth Circuit considered what health benefits the Retired Employees Association of Orange County (“REAOC”), which represents 4,600 retired employees and their spouses, has under contract with the County of Orange (“County”). Responding to the County discontinuing the pooling of their healthcare premiums with current employees, REAOC initially filed suit in the Central District of California seeking injunctive and declaratory relief, arguing that the County’s representations to employees, in addition to their history of pooling premiums, created an implied contractual right to continue pooled premiums for those already retired employees benefiting from the practice. Granting the County’s motion for summary judgment, the district court clarified that although vested health benefits “can be implied under certain circumstances from a county ordinance or resolution,” California courts have “refused to find public entities contractually obligated to provide specified retirement benefits like those [REAOC] seeks in the absence of explicit legislative or statutory authority.” The panel affirmed the district court’s summary judgment in favor of the County, holding that REAOC’s complaint failed to raise a genuine issue of material fact, which rendered their claim deprived of legal or factual support. A longstanding practice or policy alone does not create an implied contractual right for sustained supply of such practice. “[I]mplied rights to vested benefits should not be inferred without a clear basis in the contract or convincing extrinsic evidence.” The panel held that REAOC failed to demonstrate definitive intent of the County to provide continued delivery for the pooled premium. AFFIRMED.