Appellate Court Holds That MOU Does Not Provide Vested Interest in Retiree Medical Benefits

A new California appellate court decision affirmed the denial of retiree medical benefits and reinforced a 2011 California Supreme Court ruling that absent clear contractual language or convincing extrinsic evidence of intent, the presumption is that a Memorandum of Understanding (“MOU”) does not create rights that survive the term of the contract.

Specifically, the California Court of Appeal ruled in an unpublished decision, Vallejo Police Officers Association v. City of Vallejo, 2017 WL 3600572, that the MOU between the Vallejo Police Officers Association (“Police Association”) and the City of Vallejo (“City”) did not provide a vested right to retiree medical benefits that covered insurance premiums up to the full cost of a Kaiser health plan. The court determined the Police Association did not sufficiently show that the City intended the promise relating to retiree medical benefits to survive beyond the term of the MOU.

For more detail and insight, please read AALRR’s Alert about the decision.

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