CalPERS spent $80,000 on legal bills after one of its own leaders sued it

CalPERS spent about $80,000 last year defending itself from a lawsuit filed by an elected member of its own board of directors, according to cost figures provided by a spokesman for the retirement system.

A Sacramento County Superior Court judge dismissed board member Margaret Brown’s lawsuit Dec. 2, saying Brown hadn’t provided evidence to support her claim that the pension fund improperly disciplined her when it suspended reimbursement for most of her board-related travel.

CalPERS President Henry Jones handed down the six-month penalty in December 2019, finding that Brown misused the CalPERS name and logo for campaign purposes. Jones at the time also warned Brown’s committee assignments could be affected by the discipline.

In a ruling dismissing the suit, Judge Laurie Earl said Brown failed to provide evidence or cite specific codes or policies she was claiming Jones violated.

The California Public Employees’ Retirement System spent $78,158 through Dec. 30 on its legal defense in the case, according to figures provided by spokesman Wayne Davis.

The system manages pension benefits for about 2 million public employees and retirees in California and health benefits for 1.5 million. As of last week, the value of its investment fund was about $446 billion.

Brown, who is up for re-election this year, defended the lawsuit and the conduct for which she was disciplined when reached by phone Monday.

“I did not violate the rules,” Brown said.

CalPERS found Brown improperly used the CalPERS name and logo when she created a site called calpersboard.com during her 2017 campaign and the Twitter handle @calperspension while serving on the board in 2019. The retirement system warned Brown multiple times about the misuse before Jones imposed the discipline.

The board’s governance policy says a board president, “at his or her discretion,” may take each of the disciplinary measures Jones used, with the exception of the committee appointments, which the policy doesn’t specifically identify.

It wasn’t the first time Brown has been disciplined by the board for political activities. Former president Priya Mathur censured Brown in early 2018 for allowing a guest into a restricted area of CalPERS headquarters and letting the guest use a CalPERS copy machine to scan and email documents for a Women Democrats of Sacramento County fundraiser.

Brown defended her use of the retirement system’s name and logo, saying CalPERS only took issue with her use of them because she used the platforms to criticize the retirement system.

She alleged in the lawsuit that her due process rights had been violated. She asked the court to rescind the discipline, provide her an appeal with a neutral third party and set up a third-party appeal process for future disciplinary actions.

Brown sued the retirement system weeks before the term of the discipline ended in June. She said Monday that she didn’t file the suit earlier because her attorney was busy dealing with issues related to the coronavirus outbreak.

She said she has evidence to support the claims she made in the lawsuit. She said she “didn’t submit it just because of covid, things were a little busy.”

Brown said her claims are moot now, since the period of discipline ended and she was able to join the investment committee after the board made a change that includes all 13 of members on the committee.

She questioned why CalPERS’ legal bills were so high. She said she spent about $10,000 on the lawsuit.

CalPERS hired San Francisco-based law firm Durie Tangri for the case, according to court records. CalPERS had to hire outside attorneys to avoid conflicts of interest for its in-house attorneys, Davis said.

He said CalPERS was “not able to discuss the hourly rates” it paid the firm.

Jones, when reached Monday, reiterated he thinks the lawsuit lacked merit and distracted from board efforts to improve the retirement fund’s sustainability.

This story was originally published January 12, 2021 at 11:08 AM with the headline "CalPERS spent $80,000 on legal bills after one of its own leaders sued it."