Retired Employees Ass'n of Orange County, Inc. v. County of Orange

At the request of the United States Court of Appeals for the Ninth Circuit, we address the following abstract question: “Whether, as a matter of California law, a California county and its employees can form an implied contract that confers vested rights to health benefits on retired county employees.” For the reasons that follow, we conclude that a county may be bound by an implied contract under California law if there is no legislative prohibition against such arrangements, such as a statute or ordinance. (Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240, 246 [ 74 Cal.Rptr. 398 , 449 P.2d 462 ].) Although Government Code section 25300 does require that compensation of county employees be addressed in an ordinance or resolution, the statute does not prohibit a county from forming a contract with implied terms, inasmuch as contractual rights may be implied from an ordinance or resolution when the language or circumstances accompanying its passage clearly evince a legislative intent to create private rights of a contractual nature enforceable against the county. Whether an implied term creates vested rights, in the absence of a legislative bar, is a matter of the…