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California Settles Suit with Prison Guards’ Union for $3.5 Million, Interest-Free

Avoiding the uncertainty of litigation, in January 2012 the State of California settled a lawsuit it had initiated two years earlier against the prison guards’ union, the California Correctional Peace Officers Association (CCPOA).

According to the suit, the CCPOA owed the state at least $4.5 million for wages and benefits paid to CCPOA leaders from July 2005 to May 2011 when they were absent from their jobs while tending to union business. The state alleged causes of action that included breach of express contract, breach of implied-in-fact contract, breach of the covenant of good faith and fair dealing, and unjust enrichment.

The CCPOA disputed the amount of the debt, arguing that the Department of Mental Health and Department of Corrections and Rehabilitation were significantly overestimating the amount owed for “union paid-leave.”

State officials eventually agreed to a deal in which the CCPOA will repay $3.5 million – one million less than what the state claimed it was owed but around $500,000 more than what the CCPOA said it should have to pay – over a 9-year period ending in 2021, with no interest unless the union defaults on a payment. In effect, the CCPOA received an inter-est-free loan from taxpayers to subsidize union business.

The CCPOA agreed to make an initial payment to the state of $750,000. The union may make its 2013 and 2014 First Period Payments of $250,000 either in cash or a combination of cash and “a deduction of hours from the Release Time Bank,” or RTB.
CCPOA members donate hours of earned leave credits, such as vacation time, to the RTB, which are then available for use by other union members. The parties agreed in the settlement that the CCPOA had 8,963 hours of RTB worth $492,965 that “can potentially be used to satisfy the First Period Payments.”

Beginning in 2015, the CCPOA must make annual payments of $350,000 until the balance of the settlement amount is paid in full.

Ron Yank, a former CCPOA attorney who now heads the California Department of Personnel Administration – the agency handling the litigation for the state – defended the settlement. Yank noted on the one hand that “the state’s bookkeeping problems are credible,” and on the other that “litigation is never a slam dunk.”

Aside from the fact that a court fight would be risky, state officials were aware that the CCPOA had lost a $5 million federal defamation case in 2010, Dawe v. CUSA. As a result of that loss, the CCPOA had been forced to put up most of its assets as collateral to cover the cost of the judgment while it pursues an appeal.

“That was a reason to take the money and run,” Yank said. “If CCPOA loses Dawe [the state] might end up with nothing.”

Another potential reason for settling the lawsuit was that the state had already spent $277,393 on outside attorneys to litigate the case, and absent a quick resolution the legal costs would have continued to grow. As part of the settlement, the CCPOA agreed to drop its pending appeal in the case. See: State of California v. CCPOA, Sacramento County Superior Court (CA), Case No. 34-2010-00075552.

Sources: Sacramento Bee,

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Related legal case

State of California v. CCPOA