In re Retirement Cases (110 Cal. App. 4th 426, 2003)

Opinion

LAMBDEN, J.

The counties involved in these consolidated appeals maintain employee retirement plans under the County Employees Retirement Law of 1937 (CERL) as codified in 1947. (Gov. Code, § 31450 et seq.) The retirement boards in these counties are required to determine whether items of remuneration paid to employees qualify as “compensation” under section 31460 and “compensation eamable” pursuant to section 31461, and therefore must be included as part of a retiring employee’s “final compensation” (§ 31462 or § 31462.1) for purposes of calculating the amount of a pension.

Prior to 1997, many, if not all, of the 20 retirement boards operating under CERL calculated employees’ pension benefits according to the holding in Guelfi v. Marin County Employees’ Retirement Assn. (1983) 145 Cal.App.3d 297 [193 Cal.Rptr. 343] (Guelfi). The Guelfi court held that an item of “compensation” under CERL must be received by all employees in the applicable grade or class of position for it to be a mandatory part of a retiring employee’s “compensation eamable” and “final compensation” on which an employee’s pension is based. (Id. at pp. 303-307.) Fourteen years later, our Supreme Court, in Ventura County Deputy Sheriffs’ Assn. v. Board of Retirement (1997) 16 Cal.4th 483 [66 Cal.Rptr.2d 304, 940 P.2d 891] (Ventura), overruled Guelfi’s interpretation of “compensation eamable,” holding that “items of ‘compensation’ paid in cash, even if not earned by all employees in the same grade or class, must be included in the ‘compensation eamable’ and ‘final compensation’ on which an employee’s pension is based.” (Ventura, supra, at p. 487.)

The Ventura court declined to consider whether its decision should have retroactive application, which now is one of the questions before us. After numerous counties and retirement boards refused to apply the Ventura holding retroactively, Randall E. Francis, a retired county employee, filed a petition for writ of mandamus (Code Civ. Proc., § 1085) on behalf of himself and other members of his class against the Board of Retirement of the Stanislaus County Employees’ Retirement Association, with the County of Stanislaus as real party in interest, alleging that Ventura must be applied retroactively; that arrears contributions or interest collected cannot, among other things, be from members not benefiting from retroactive relief; and that cash-outs of unused leave upon separation from service, employer’s payments for insurance premiums, and employer’s payments to the retirement fund must be included in the calculations of “final compensation” for retirement benefits under CERL. Numerous similar petitions were filed across the state; the cases were coordinated pursuant to Code of Civil Procedure section 404 et seq. and California Rules of Court, rule 1500 et seq.

The trial court ruled that the Ventura decision should be applied retroactively; that the retirement boards did have discretion to collect arrears and that their discretion included the ability to collect arrears beyond the three-year statute of limitations period (Code Civ. Proc., § 338, subd. (d)); and that CERL did not mandate that various items of remuneration that did not involve cash payments to employees had to be included in the calculations of “final compensation” for retirement benefits. Three counties (collectively, counties) appeal from those portions of the judgments applying Ventura retroactively and giving the retirement boards discretion to collect arrears. Two boards of retirement (collectively, retirement boards) appeal from those portions of the judgments regarding retroactivity. Numerous individual plan members suing on behalf of themselves and others and associations (collectively, plan members) appeal from those portions of the judgments regarding collections of arrears and the exclusion of items of remuneration from the calculation of retirement benefits under CERL. We conclude that the trial court’s rulings were correct, and affirm.

BACKGROUND

Counties maintain employee retirement plans under CERL. (§ 31450 et seq.) CERL requires retirement boards to determine whether the remuneration paid in cash qualifies as “compensation” under section 31460 and “compensation eamable” pursuant to section 31461, and therefore must be included as part of a retiring employee’s “final compensation” (§ 31462 or 31462.1) for purposes of calculating the amount of a pension.

Prior to 1997, many, if not all, of the 20 retirement boards interpreted “compensation eamable” under CERL in accordance with the holding in Guelfi, supra, 145 Cal.App.3d 297. The Guelfi court held that payments received for overtime, uniform allowance, and educational incentive pay did not satisfy the requirements for “compensation eamable.” (Id. at p. 307.) It determined that an item of “compensation” must be received by all employees in the applicable grade or class of position for it to be a mandatory part of a retiring employee’s “compensation eamable” and “final compensation” on which an employee’s pension is based. (Id. at pp. 303-307.)

Fourteen years after the Court of Appeal had decided Guelfi, the California Supreme Court, in Ventura, supra, 16 Cal.4th 483, considered the meaning of “compensation” and “compensation eamable” under CERL. It overruled Guelfi’s interpretation of “compensation eamable” by holding that “items of ‘compensation’ paid in cash, even if not earned by all employees in the same grade or class, must be included in the ‘compensation eamable’ and ‘final compensation’ on which an employee’s pension is based.” (Ventura, supra, at p. 487.)

Retirement boards began to include a variety of cash payments in their computations for “compensation eamable” that they had not included earlier, but they restricted these modified calculations to “compensation” earned on or after October 1, 1997, the date the Supreme Court declined to rehear Ventura, supra, 16 Cal.4th 483. (Ventura was filed on August 14, 1997.) They did not odify their calculations to include a variety of cash payments in “compensation eamable” if plan members had earned the “compensation” prior to October 1, 1997.

Plan members throughout the state who did not have their “compensation eamable” modified to comply with Ventura, because their “final compensation” was based on compensation earned prior to October 1, 1997, filed writs of mandate. They contended that certain cash premiums should not have been excluded from their “final compensation” and that the holding of Ventura should apply retroactively. The actions by plan members were coordinated under Code of Civil Procedure section 404 et seq. on December 21, 1998. The court recommended that the coordinated proceedings be assigned to the San Francisco County Superior Court because the City and County of San Francisco did not operate under CERL. It also ordered “that the reviewing court having appellate jurisdiction [of the coordinated actions] is the Court of Appeal for the First Appellate District.”

On January 19, 1999, the Honorable Stuart R. Poliak, sitting in San Francisco, was assigned as coordination trial judge. Liaison counsel were designated to represent counties, retirement boards, and plan members. Most of the coordinated cases also were converted to class actions.

At the coordinated trial, the court first considered whether CERL mandates inclusion of certain employment benefits in the calculation of retirement benefits. Plan members requested that the following items be included: cash-outs by employees of unused leave upon separation from service, insurance-related payments made by the employer, and employer payments of mandatory employee retirement contributions that are paid by the employer directly to the retirement plan. The court concluded that none of these was required to be included in the formula for calculating pension benefits.

The superior court next considered the question of retroactivity, determining that the general rule of applying judicial decisions retroactively (Newman v. Emerson Radio Corp. (1989) 48 Cal.3d 973, 978-979 [258 Cal.Rptr. 592, 772 P.2d 1059] (Newman)) should govern here. The superior court explained: “A decision that is disapproved or overruled is considered to have misstated the law, and consequently never was the law. (Id. at [p.] 979.) This general rule applies equally to pension cases. Where retirement allowances are calculated improperly based on a good faith misapplication of the law, retroactive recalculations must be made for retirees whose claims are filed within the three-year statute of limitations. (County of Marin [Assn. of] Firefighters v. Marin County Employees Retirement Assn. (1994) 30 Cal.App.4th 1638 [36 Cal.Rptr.2d 736] [(Marin Firefighters)]); Dunham v. City of Berkeley (1970) 7 Cal.App.3d 508 [86 Cal.Rptr. 569]; Terry v. City of Berkeley (1953) 41 Cal.2d 698 [263 P.2d 833] [(Terry)]; Abbott v. City of Los Angeles (1960) 178 Cal.App.2d 204 [3 Cal.Rptr. 127] (Abbott II).) There is no reason why the same rule should not be applied here, where pensions were miscalculated based on a prior erroneous judicial construction of the law.” In the footnote, the trial court noted that the law may be different in federal cases.

The trial court also determined that considerations of fairness and public policy did not justify denial of the retroactive application of Ventura. The court stated that retirement boards may have established reasonable reliance on the former interpretation of the statute, but they did not establish “a hardship emanating from such reliance sufficient to invoke a fairness exception.” The court also concluded that the retroactive application of Ventura did not unconstitutionally impair contractual obligations. It explained that the retroactive application of Ventura did not reduce or eliminate any contractual rights of retired plan members and “[retirement boards] have not identified any contractual rights of their own that will be adversely affected by retroactive application of that decision.” Finally, the court ruled that retirement boards have the discretion to collect arrears; full arrears contributions are authorized, but not mandatory.

The trial court entered final judgments, denying those portions of plan members’ petitions for writs of mandate requesting to have additional items of remuneration calculated as part of CERL pension benefits. It issued peremptory writs of mandate commanding retirement boards “to recalculate the final compensation of members whose final compensation measurement period occurred in whole or in part prior to the effective date upon which it implemented the Ventura decision in the same manner [they are] calculating ‘compensation eamable’ and ‘final compensation’ after that date ....”

Following Judge Poliak’s decision, several other retirement systems settled. Three counties are challenging (see fn. 2, ante) those portions of the judgments that applied Ventura retroactively and that gave retirement boards discretion to collect arrears. Two retirement boards are challenging (see fn. 3, ante) those portions of the orders applying Ventura retroactively. Numerous plan members appeal (see fn. 4, ante) from those portions of the judgments regarding the collection of arrears and the denial of their requests to have certain items included in the calculation of their pensions.

The appeals were consolidated before us for resolution. On March 14, 2002, we granted the parties’ stipulated motion to maintain liaison counsel and for a coordinated briefing schedule. In addition to receiving briefs from liaison counsel for counties, retirement boards, and plan members, we received briefs from the County of Los Angeles (L.A. County) and the plan members of the Los Angeles County Employees’ Retirement Association (LACERA members) and an amicus curiae brief from the Board of Retirement of the Orange County Employees’ Retirement System (OCERS).

DISCUSSION

In this opinion, we address three questions regarding the implementation of the Ventura decision: (1) Should we limit the application of the Ventura holding to calculations of “compensation” after October 1, 1997, the effective date of the decision? (2) If we hold that Ventura applies retroactively, do the retirement boards have discretion to collect arrears and is that discretion limited? (3) Should items of remuneration that do not involve cash payments to the employee prior to his or her retirement be included in the pension calculation? Prior to our examination of each of these issues, we set forth the relevant law.

I. Relevant Law

The counties involved in these consolidated appeals maintain employee retirement plans under CERL, which mandates that the funds for the pensions contain both employer and employee contributions and that the level of funding be based on actuarial valuations. (§ 31450 et seq.) Under CERL, an employee’s pension “is a combination of a retirement annuity based on the employee’s accumulated contributions supplemented by a pension established with county contributions sufficient to equal a specified fraction of the employee’s ‘final compensation.’ (See, e.g., §§ 31664, 31676.1.)” (Ventura, supra, 16 Cal.4th at p. 490.) The proper administration of a CERL pension system includes a determination of what payments in addition to base pay must be included when determining an employee’s “final compensation.” (Ibid.)

When determining what payments are to be included, we use the definitions provided in CERL and resolve any ambiguity or uncertainty in favor of the pensioner, mindful that such construction must be consistent with the clear language and purpose of the statute. (Ventura, supra, 16 Cal.4th at p. 490.)

Section 31460 defines “compensation” as “the remuneration paid in cash out of county or district funds, plus any amount deducted from a member’s wages for participation in a deferred compensation plan ..., but does not include the monetary value of board, lodging, fuel, laundry, or other advantages furnished to a member.”

Under section 31461, “compensation eamable” by a member of the plan “means the average compensation as determined by the board, for the period under consideration upon the basis of the average number of days ordinarily worked by persons in the same grade or class of positions during the period, and at the same rate of pay. The computation for any absence shall be based on the compensation of the position held by [the member] at the beginning of the absence. Compensation, as defined in Section 31460, that has been deferred shall be deemed ‘compensation eamable’ when earned, rather than when paid.”

Section 31462.1 defines “final compensation” as “the average annual compensation eamable by a member during any year elected by a member at or before the time he files an application for retirement, or, if he fails to elect, during the year immediately preceding his retirement.” Section 31462 is substantially the same as section 31462.1, and differs only in that it sets the relevant time period as “during any three years elected by a member.”

These definitions were first construed and applied by the Court of Appeal in Guelfi, supra, 145 Cal.App.3d 297. In Guelfi, two retired peace officers claimed that their final compensation should have been calculated to include their overtime, educational incentive pay, and uniform allowance. (Id. at pp. 299-300.) The Guelfi court concluded that educational incentive pay and overtime fit the definition of “compensation,” but these items were not a mandatory part of a retiring employee’s “compensation eamable,” and therefore not part of the “final compensation” on which a pension is calculated, because not all employees in the same grade or class of position qualified for this pay. (Id. at pp. 303-307.)

Subsequently, the Supreme Court, in Ventura, supra, 16 Cal.4th 483, considered these same definitions in CERL when a county deputy sheriffs’ association and three retirees challenged the county retirement board’s determination of “final compensation.” This determination excluded the county’s contributions to an employee’s deferred compensation plan, overtime pay, cash payments of bilingual premium pay, a uniform maintenance allowance, educational incentive pay, additional compensation for scheduled meal periods for designated employees, pay in lieu of annual leave accrual, holiday pay, a motorcycle bonus, a longevity incentive, and a field training officer bonus. (Id. at pp. 488-489.) The court pointed out that sections 31460 and 31461 were ambiguous. (Id. at p. 493.) The court stated that the method of construction is first to determine what falls into the broad definition of “compensation” under section 31460, and then determine whether it falls within the narrower category of “compensation eamable” as defined in section 31461 “and thus form[s] the basis for the calculation of ‘final compensation’ on which the pension is based pursuant to section 31462 or 31462.1.” (Ventura, supra, at pp. 493-494.)

The Ventura court explained that, under section 31460, “compensation” is remuneration not excluded by that section. (Ventura, supra, 16 Cal.4th at p. 494.) The court concluded that the Legislature did not consider county contributions to an employee’s deferred compensation plan as “compensation” as defined in section 31460. (Ventura, at p. 495.) In addition, section 31460 excludes the monetary value of an advantage provided in kind. However, the Ventura court held, when the advantages are paid in cash, and not in kind, they are not excluded. (Id. at p. 497.) The court therefore agreed with the Guelfi court that a longevity bonus and cashed-out accmed vacation were remuneration under section 31460. (Ventura, supra, at p. 497.) Further, bilingual premium pay, pay for acting as a field training officer and for motorcycle duty, and educational incentive pay also qualify as “compensation.” (Id. at pp. 497-499.) This analysis of “compensation” did not differ significantly from the one employed by the Court of Appeal in Guelfi.

The Ventura court, however, concluded that the Court of Appeal in Guelfi erred in its construction of the statute’ term “compensation eamable.” It pointed out that the holding in Guelfi was not prior precedent of the Supreme Court; the issue was therefore one of first impression for it. (Ventura, supra, 16 Cal.4th at pp. 505-506.) The court examined the predecessor statutes to sections 31460 and 31461 and the use of the terms “compensation” and “compensation eamable” in the Public Employees’ Retirement Law (PERL) (§ 20000 et seq.). (Ventura, at pp. 495-497, 501-505.) The court concluded that, in the context of CERL and PERL, “ ‘compensation earnable’ is the average pay of the individual retiring employee computed on the basis of the number of hours worked by other employees in the same class and pay rate—that is the average monthly pay, excluding overtime, received by the retiring employee for the average number of days worked in a month by the other employees in the same job classification at the same base pay level.” (Ventura, at p. 504.) The Ventura court concluded that, with the exception of overtime, all of the premiums that it had determined were remuneration must be included as “compensation earnable” and therefore included in the calculation of the employee’s pension. (Id. at pp. 504-505.)

The Supreme Court in Ventura refused to decide whether its decision applied retroactively to any other county. (Ventura, supra, 16 Cal.4th at p. 507.) As to the county before it, the court concluded: “There may be unanticipated costs to Ventura County if the pensions of the individual plaintiffs and the employees the association represents must be recalculated and adjusted upward. If so, to comply with the financial provisions of CERL (§ 31580 et seq.) and accommodate future increases, the county may have to make a supplemental appropriation and adjust the future annual appropriation for its contribution to the pension fund to cover the increase in future retiree pensions that results from inclusion of additional items of ‘compensation’ in ‘compensation eamable.’ Past experience should enable the county to anticipate the number of employees who will receive premium pay, however, and adjustments of this nature are contemplated by CERL. (See §§ 31453, 31454.) Nothing in this record suggests that the burden on the county fisc justifies either perpetuation of an erroneous constmction of the applicable statutes or denying these plaintiffs the benefit of our decision.” (Ventura, supra, at p. 507.)

II. Retroactivity

A. The General Rule of Retroactivity and Standard of Review

Retirement boards and counties contend that they had diligently calculated pension benefits under CERL as set forth by the Court of Appeal in Guelfi, supra, 145 Cal.App.3d 297. Once the Supreme Court articulated its interpretation of CERL, they attempted to implement the holding in Ventura, supra, 16 Cal.4th 483 for all current employees and for all retirees whose final compensation periods began on or after October 1, 1997 (the date the Supreme Court denied rehearing on Ventura). Plan members, however, contend that Ventura’s holding should also be applied to those retirees whose final compensation periods fell in whole or in part prior to October 1, 1997. They contend that they are entitled to corrected calculations of their pension benefits, if not barred by the statute of limitations. (See Marin Firefighters, supra, 30 Cal.App.4th 1638; Dunham v. City of Berkeley, supra, 7 Cal.App.3d 508; Terry, supra, 41 Cal.2d 698; Abbott II, supra, 178 Cal.App.2d 204.)

Retirement boards claim that “the language of the [Ventura] decision shows that the [Supreme] Court both expected and intended that the effects of the decision would be almost entirely prospective even in Ventura County—the one county that was a party in the case.” However, contrary to retirement boards’ assertions, the Supreme Court expressly declined to address the issue of retroactivity when it stated: “No other county is before us in this matter, however, and we need not decide whether this decision applies retroactively to any other county.” (Ventura, supra, 16 Cal.4th at p. 507.) Accordingly, we need to consider the application of the rule of retroactivity and judicial decisions to the facts of this case.

It is well settled that the general rule in California is that “a decision of a court of supreme jurisdiction overruling a former decision is retrospective in its operation and that the effect is not that the former decision was bad law but that it never was the law.” (County of Los Angeles v. Faus (1957) 48 Cal.2d 672, 680-681 [312 P.2d 680] (Faus), abrogated on another issue by Evid. Code, § 822.) Counties attempt to circumscribe this rule to criminal and tort cases, but this general rule of retroactivity has been applied without regard to the area of law at issue (see Newman, supra, 48 Cal.3d at p. 995, fn. 3 (dis. opn. of Broussard, J.)). “ ' “Indeed, a legal system based on precedent has a built-in presumption of retroactivity.” [Citation.]’ ” (McManigal v. City of Seal Beach (1985) 166 Cal.App.3d 975, 981 [212 Cal.Rptr. 733] (McManigal).)

Our Supreme Court has “recognized exceptions to [the general rule of retroactivity] when considerations of fairness and public policy preclude full retroactivity. [Citation.] For example, where a constitutional provision or statute has received a given construction by a court of last resort, and contracts have been made or property rights acquired in accordance with the prior decision, neither will the contracts be invalidated nor will vested rights be impaired by applying the new rule retroactively.” (Peterson v. Superior Court (1982) 31 Cal.3d 147, 151-152 [181 Cal.Rptr. 784, 642 P.2d 1305] (Peterson), citing Faus, supra, 48 Cal.2d at p. 681; see also Moradi-Shalal v. Fireman’s Fund Insurance Companies (1988) 46 Cal.3d 287, 305 [250 Cal.Rptr. 116, 758 P.2d 58] (Moradi-Shalal).) Fairness and public policy may also require an exception when “retroactive application of a decision would raise substantial concerns about the effects of the new rule on the general administration of justice, or would unfairly undermine the reasonable reliance of parties on the previously existing state of the law. In other words, courts have looked to the ‘hardships’ imposed on parties by full retroactivity, permitting an exception only when the circumstances of a case draw it apart from the usual run of cases.” (Newman, supra, 48 Cal.3d at p. 983.)

Counties, citing Dillon v. Board of Pension Commrs. (1941) 18 Cal.2d 427, 430 [116 P.2d 37], claim that the trial court erroneously shifted the burden of proof regarding the retroactive application of Ventura to them. The Dillon court states that, when the board denies the plaintiff’s right to a pension, the plaintiff may bring a mandamus action to establish as a matter of law that he or she is entitled to the status of a pensioner. (Dillon, supra, at p. 430.) That is clearly not the issue here. No one denies that plan members are entitled to a pension. Rather, the question is whether the decision in Ventura has retroactive effect. Since counties and retirement boards are arguing that an exception to the general rule of retroactivity applies to them, they have the burden of proof. (See, e.g., Estate of Propst (1990) 50 Cal.3d 448, 465 [268 Cal.Rptr. 114, 788 P.2d 628] (Propst) [prior to deciding whether judicial decision should be applied retroactively to each person, “the cause must be remanded to afford respondent an opportunity to present .. .proof’ of hardship or detrimental reliance].)

We review the trial court’s ruling that neither fairness nor public policy warranted an exception to the retroactivity rule under the abuse of discretion standard. A trial court, “acting as a court of equity, has discretion to fix a more realistic starting date for the payment of retroactive benefits to class members.” (Green v. Obledo (1981) 29 Cal.3d 126, 142 [172 Cal.Rptr. 206, 624 P.2d 256].) To the extent that counties and retirement boards contend the court erred in its application of the law, we apply the de novo standard of review (see, e.g., Burden v. Snowden (1992) 2 Cal.4th 556, 562 [7 Cal.Rptr.2d 531, 828 P.2d 672]). Those findings of fact that support the trial court’s ruling, we review for substantial evidence. (Scott v. Common Council (1996) 44 Cal.App.4th 684, 689 [52 Cal.Rptr.2d 161].)

Preliminarily, we must first consider what is meant by a retroactive application. Counties and retirement boards contend that a prospective application of Ventura would permit them not to modify either the future retirement benefits or the back payments to all plan members who had all or part of their “final compensation” calculated prior to October 1, 1997. OCERS, in its amicus curiae, brief, maintains that, even if Ventura is limited to a prospective application, retirement boards must recalculate the future retirement benefits for plan members who had all or part of their “final compensation” calculated prior to October 1, 1997. OCERS asserts that under California law a governmental entity has a mandatory duty to make certain payments; those payments are deemed “due to the recipient as of the date he first became entitled to them.” (Green v. Obledo, supra, 29 Cal.3d at p. 141, 172 Cal.Rptr. 206, 624 P.2d 256.) When the Supreme Court in Green v. Obledo addressed the issue of retroactivity and the payment of welfare benefits, it only considered the back payments that would be paid to welfare recipients as subject to any exception to retroactivity, not the benefit payments to be made in the future. (Id. at pp. 141-143.) Further, it explained that when a governmental entity unlawfully withholds pension benefits from its retirees, “each such payment becomes a debt due to the employee as of the date he was entitled to receive it. It is settled that in such cases each deficient payment constitutes a separate violation triggering the running of a new period of limitations.” (Id. at p. 141.) OCERS therefore argues that requiring counties and retirement boards to cease “perpetuation of an erroneous construction of the applicable statutes” (Ventura, supra, 16 Cal.4th at p. 507) is a prospective application of the decision.

We are not aware of any California case that has addressed the specific issue of retroactivity and pensions. In the federal context, however, courts have considered the question of pensions and retroactivity when invalidating pension systems based on gender-segregated mortality tables as in violation of title VII. of the Civil Rights Act of 1964 (Title VII) (42 U.S.C. § 2000e-2(a)(1)). (See, e.g., Los Angeles Dept. of Water & Power v. Manhart (1978) 435 U.S. 702 [55 L.Ed.2d 657, 98 S.Ct. 1370] (Manhart); Florida v. Long (1988) 487 U.S. 223, 237 [101 L.Ed.2d 206, 108 S.Ct. 2354] (Long); Arizona Governing Committee v. Norris (1983) 463 U.S. 1073, 1092 [77 L.Ed.2d 1236, 103 S.Ct. 3492] (Norris); Retired Public Employees’ Ass’n. v. State of Cal. (9th Cir. 1986) 799 F.2d 511, 515; Probe v. State Teachers’ Retirement System (9th Cir. 1986) 780 F.2d 776 (Probe).) These federal courts have defined retroactivity in the manner advocated by counties and retirement boards (but see our discussion of the relevance of federal cases in pt. II.E.). They have concluded that, because these future annuity payments were funded by past contributions, any court judgment affecting these payments “is fundamentally retroactive in nature.” (Probe, supra, 780 F.2d at p. 782.)

Since we are holding that the Ventura decision should be applied retroactively, we need not settle the question whether future benefits to people who retired before October 1, 1997, is a retroactive or prospective application of Ventura. In arriving at our holding, we review the following arguments by retirement boards and counties. Retroactive application is inappropriate because: (1) judicial decisions can have no retroactive effect when none of the parties was involved in the Ventura decision or had a lawsuit pending at the time; (2) it would unfairly and unconstitutionally impair vested contract rights; (3) it would be unfair as the parties detrimentally relied on the holding in Guelfi and it would not promote public policy concerns; and (4) it would contravene federal case law.

B. Considerations of Retroactive Effect and Nonparties to Ventura

Retirement boards contend that the trial court erred in its retroactive application of the holding in Ventura to plan members, counties and retirement boards in this coordinated action because none of them was a party to the lawsuit or had similar lawsuits pending when Ventura became final. Moreover, Ventura was not a class action. They assert that the Supreme Court mandated retroactive application of its decision only to the parties before it.

In support of their argument, retirement boards cite Bartman v. Estate of Bartman (1978) 83 Cal.App.3d 780 [148 Cal.Rptr. 207], and Newman, supra, 48 Cal.3d 973. They claim that judicial retroactivity “ ‘governs events occurring prior to the date of decision, when such events are at issue in timely filed actions’ [Citation.]” (Bartman, supra, 83 Cal.App.3d at pp. 785-786.) By quoting this language in Bartman, they imply that the Bartman court held that judicial decisions only have retroactive effect on those parties who have a pending lawsuit on the same issue. However, a complete reading of the Bartman opinion does not support the conclusion urged by retirement boards. The Bartman court was concerned with the effect of a retroactive application of a judicial decision on cases not yet pending when the statute of limitations would make such claims untimely. (Id. at p. 786.) Thus, it did not hold that an action had to be pending for a judicial decision to have retroactive effect but that “ ‘[t]he normal “retroactivity” of most civil decisions has never been thought to supersede the operation of the statute of limitations so as to revive old claims which were not pursued because of a previously prevailing contrary rule of law, or to reincarnate dead causes which had fallen to the sword of the statute.’ [Citation.]” (Ibid.)

Retirement boards’ citation to Newman, supra, 48 Cal.3d 973, is equally unsound. They argue that the Supreme Court in Newman determined that its holding in Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654 [254 Cal.Rptr. 211, 765 P.2d 373], was retroactive but, according to retirement boards, “only to ‘all cases not yet final on January 30, 1989, the date that decision became final.’ ” Thus, they claim that the Foley decision had retroactive effect only on those cases pending at the time it became final. The Newman court, however, did not so limit the Foley holding; rather it was merely pointing out that Foley “is fully retroactive, applying to all cases not yet final as of January 30, 1989, the date our decision in Foley became final.” (Newman, supra, 48 Cal.3d at p. 976.) By inserting the word “only” prior to the quoted language from Newman, retirement boards imply that the court was in some manner limiting its retroactive application of Foley. Clearly, it was not. Moreover, retirement boards omitted the language at the beginning of the sentence stating that the decision “is fully retroactive.” (Newman, at p. 976.) Since Foley involved tort claims, the Newman court obviously did not have to be concerned about lawsuits filed after Foley became final; the prospective application of Foley would govern these cases.

Accordingly, retirement boards’ attempt to create a new rule that retroactivity does not apply to them simply because none of the parties in this coordinated action had filed a pleading on this issue at the time the Ventura decision became final is wholly without merit.

C. Considerations of Fairness Based on Vested Contract Interests

Both counties and retirement boards contend that retroactivity should not apply because pensions are contract rights. Counties maintain that retroactive application of Ventura would unconstitutionally impair contract expectations. (See, e.g., Kern v. City of Long Beach (1947) 29 Cal.2d 848, 853 [179 P.2d 799] (Kern) [pension rights involve “obligations which are protected by the contract clause of the Constitution”].) They argue that counties and plan members entered into employment arrangements based on preVentura rules of law. A new decision will not be applied “to impair contracts made or property rights acquired in accordance with the prior rule.” (Propst, supra, 50 Cal.3d at p. 462; see also Houghton v. City of Long Beach (1958) 164 Cal.App.2d 298, 311 [330 P.2d 918]; Abbott v. City of Los Angeles (1958) 50 Cal.2d 438, 455 [326 P.2d 484] (Abbott I).) “ ‘ “[W]here a ... statute has received a given construction by a court of last resort, and contracts have been made or property rights acquired in accordance with the prior decision, neither will the contracts be invalidated nor will vested rights be impaired by applying the new rule retroactively. [Citation.]” [Citation.]’ [Citation.]” (Newman, supra, 48 Cal.3d at p. 982; see also Faus, supra, 48 Cal.2d at pp. 680-681.) These vested rights are defined by the benefits and law in place when an employee is rendering services, not by changes that occur after retirement. (Betts v. Board of Administration (1978) 21 Cal.3d 859, 866 [148 Cal.Rptr. 158, 582 P.2d 614].)

It is true that “California is firmly committed to the proposition that [public employees’ retirement rights] are contractual; that they are ‘vested’ in the sense that the lawmakers’ power to alter them after they have been earned is quite limited.” (Lyon v. Flournoy (1969) 271 Cal.App.2d 774, 779 [76 Cal.Rptr. 869].) “ ‘[T]he right to a pension becomes a vested one upon acceptance of employment by an applicant.’ ” (Kern, supra, 29 Cal.2d at p. 852.) Although “upon acceptance of public employment [an employee acquires] a vested right to a pension based on the system then in effect” (Miller v. State of California (1977) 18 Cal.3d 808, 817 [135 Cal.Rptr. 386, 557 P.2d 970]), the “ ‘amount, terms and conditions of the benefits may be altered’ ” (Lyon v. Flournoy, supra, at p. 780). “The contractual basis of a pension right is the exchange of an employee’s services for the pension right offered by the statute.” (Claypool v. Wilson (1992) 4 Cal.App.4th 646, 662 [6 Cal.Rptr.2d 77].)

Counties maintain that they entered into employment arrangements with plan members and retirement boards administered their pension plans under pre-Ventura rules of law. Indeed, the trial court specifically found that retirement boards and counties relied on the law as stated in Guelfi. “ ‘The parties are presumed to have had existing law in mind when they executed their agreement....’ [Citation.] ‘Existing law’ includes decisions of the appellate courts interpreting statutes. [Citations.]” (California Assn, of Highway Patrolmen v. Department of Personnel Admin. (1986) 185 Cal.App.3d 352, 364 [229 Cal.Rptr. 729] (CAHP).) They contend that Allen v. Board of Administration (1983) 34 Cal.3d 114 [192 Cal.Rptr. 762, 665 P.2d 534] (Allen) “cements the point” that retroactive relief is improper.

In Allen, retired legislators or their surviving spouses maintained that they were entitled to the benefit of legislation passed after their retirement even though the legislation stated that the increased salaries could not be used as a basis for calculating retirement benefits for any legislators who retired prior to the amendment. (Allen, supra, 34 Cal.3d at pp. 117-118.) The retirees argued that the subsequent legislation impaired their contractual right to a pension based on a percentage of current comparative salaries. (Ibid.) The court held that there was no unconstitutional impairment because this was an unforeseen change in the law and the legislators could not have had a realistic expectation of such increases when they were legislators. (Id. at pp. 124-125.) Further, the court reasoned, “a fiscal consideration provides additional support for rejection of [retirees’] claim.... [][] It thus becomes apparent that payment to [retirees] of inflated retirement allowances ... not only would give to them a bonanza far outstripping any reasonable expectation for cost-of-living increases ... but also would afford them pensions dwarfing their relatively modest contributions to the [retirement system].” (Id. at p. 125.)

Similarly here, counties argue, plan members are seeking to alter their pension contracts and obtain a windfall by claiming an entitlement to an increased pension based upon a change in the law after they retired. Counties maintain that it does not matter that Allen considered a statutory change while the situation here involves a judicial change in the law.

The question in Allen, as well as in United Firefighters of Los Angeles City v. City of Los Angeles (1989) 210 Cal.App.3d 1095 [259 Cal.Rptr. 65], which counties cite in a footnote, was whether the plan members’ vested pension rights could be modified. Modifications of vested pension rights, to avoid violating the contract clause, “must be reasonable, must bear a material relation to the theory and successful operation of a pension system, and, when resulting in disadvantage to employees, must be accompanied by comparable new advantages.” (Allen, supra, 34 Cal.3d at p. 120.) Here, there was no modification of plan members’ vested pension rights; there was a correction to an erroneous construction of the statute after the plan members retired.

Although counties vigorously argue to the contrary, there was no change in the law and therefore there was no change to a plan member’s vested right. Rather, counties agreed to implement a pension plan under CERL. During the relevant time period, the statutes remained the same, but our Supreme Court in 1997 concluded that retirement boards had implemented “an erroneous construction of the applicable statutes ...” (Ventura, supra, 16 Cal.4th at p. 507.) Retirement boards and counties had not relied on the ruling of a court of last resort, but on the construction of a statute by a Court of Appeal. Accordingly, the narrow exception to the general rule of retroactivity based on the making of contracts in reliance of the interpretation of a statute “ ‘ “by a court of last resort” ’ ” (Newman, supra, 48 Cal.3d at p. 982) does not apply.

Since “[i]t is the general rule that a decision of a court of supreme jurisdiction overruling a former decision is retrospective in its operation and that the effect is not that the former decision was bad law but that it never was the law” (Faus, supra, 48 Cal.2d at pp. 680-681 ), the effect of the Ventura decision was that Guelfi never was the law. Retirement allowances calculated prior to October 1, 1997 were based on “an erroneous construction of the applicable statutes” (Ventura, supra, 16 Cal.4th at p. 507) and were not incorrect because of a subsequent change in the law.

In their reply brief, counties rely extensively on CAHP, supra, 185 Cal.App.3d 352, but that appellate opinion does not contradict the foregoing rule. Rather, CAHP addresses a different situation. In CAHP, the highway patrol officers and the state had entered into a written memorandum of understanding (MOU), which stated that only “ordered overtime” was to be compensated. (Id. at pp. 356-362.) At the time the MOU was negotiated, a Court of Appeal had defined the period during lunch as not “ordered overtime.” (Id. at pp. 362-363, citing Fowler v. State Personnel Bd. (1982) 134 Cal.App.3d 964, 970 [185 Cal.Rptr. 292].) Subsequently, after the execution of the MOU, our Supreme Court held “that rules and regulations of the City of Madera mandated that overtime be paid to police officers for their mealtimes because of numerous restrictions on the officers’ freedom during these times.” (CAHP, supra, at p. 357, citing Madera Police Officers Assn. v. City of Madera (1984) 36 Cal.3d 403, 413 [204 Cal.Rptr. 422, 682 P.2d 1087] (Madera).)

Following the Supreme Court’s ruling in Madera, the highway patrolmen in CAHP sued to have their lunchtime considered as overtime. (CAHP, supra, 185 Cal.App.3d 352.) The reviewing court noted that the officers derived whatever rights they had from the MOU, and their right to overtime “must be located in the MOU.” (Id. at pp. 358, 361.) The MOU unambiguously denied them compensation for anything other than “ordered overtime” and, at the time of the contract, the parties did not intend or interpret the lunch period as “ordered overtime.” (Id. at pp. 358-362.) The CAHP court held that the Supreme Court’s Madera decision had no bearing on the interpretation of the MOU and therefore no effect on the officers’ claim that they were owed compensation for their work during lunchtime. (CAHP, at p. 361.) It also noted that nothing in the Supreme Court decision (in Madera) indicated that the earlier Court of Appeal decision (in Fowler) had interpreted any statute unlawfully or against public policy. (CAHP, at p. 364.) Accordingly, the CAHP court concluded: “ ' “A subsequent decision of a higher court, in a different case, giving a different exposition to a point of law from the one declared and known, when a settlement between parties takes place, cannot have a retrospective effect and overturn such settlement.” ’ [Citations.]” (Id. at pp. 364-365.)

The CAHP court was concerned with the interpretation of a term in a contract, while we are concerned with the construction of a statute. In discerning the intent of the parties, the CAHP court looked to the prevailing definition or interpretation of “ordered overtime” at the time the parties executed the agreement. (CAHP, supra, 195 Cal.App.3d at p. 364 [“ ‘The parties are presumed to have had existing law in mind when they executed their agreement’ ”].) In contrast, here our Supreme Court did expressly overrule the earlier Court of Appeal decision and held that the earlier ruling was an unlawful construction of the statute-, thus, CAHP is unhelpful regarding the issue before us.

Rather than being concerned with the interpretation of a term in a contract, we are concerned about the effect of miscalculating a pension because of an incorrect construction of a statute. When retirement allowances have been improperly calculated, courts have held that the pensions should be recalculated and the affected plan participants should receive retroactive relief, assuming the relief is timely. (See, e.g., Marin Firefighters, supra, 30 Cal.App.4th 1638; Terry, supra, 41 Cal.2d 698; Dunham v. City of Berkeley, supra, 7 Cal.App.3d 508; Abbott II, supra, 178 Cal.App.2d 204.) Retirement boards do not have the discretion to exclude items from the calculation that they have determined meet the statutory definition of “compensation earnable.” (Marin Firefighters, supra, at p. 1646, 36 Cal.Rptr.2d 736.) In Marin Firefighters, the Board of Retirement of the County of Marin adopted the opinion of its attorney that holiday pay was mandatorily includable as “final compensation” in determining pensions. (Id. at p. 1644.) After correcting the mistake only for prospective retirees, the firefighters association sued. (Ibid.) The Court of Appeal held that the corrected calculation had to be applied retroactively. (Id. at p. 1648.)

Similarly, our Supreme Court ordered that a mistake in the calculation of a pension be corrected retroactively in Terry, supra, 41 Cal.2d 698. In Terry, a retired mounted patrolman asserted that he was entitled to a percentage of the actual compensation then being paid to his position’s rank (a fluctuating pension), but he had been paid a percentage of the amount he had actually earned during the relevant time period immediately prior to his retirement (a fixed pension). (Id. at p. 699.) The court noted that it did not matter that four years after the patrolman retired an amendment to the statute created a right to a fixed pension. “The pension payments are in effect deferred compensation to which the pensioner becomes entitled upon the fulfillment of the terms of the contract which may not be changed to his detriment by subsequent amendment. [Citations.]” (Id. at p. 703.) Accordingly, he was entitled to have his pension calculated pursuant to the operative statute at the time of his retirement. (Ibid.)

In Dunham v. City of Berkeley, supra, 7 Cal.App.3d 508, the court interpreted and applied the same fluctuating pension provision addressed in Terry. The court considered whether retired police officers should receive an increased pension based on salary increases associated with a different ranking classification and a new career incentive program that were created after they retired. (Dunham, supra, at p. 511.) The Court of Appeal agreed with the lower court’s ruling that the new system added salary groupings within each rank rather than creating new ranks (id. at p. 513); to deny the plaintiffs these increases would “defeat the purpose of the fluctuating pensions system in maintaining parity between retired and active employees.” (Id. at p. 516.) The Court of Appeal affirmed the judgment that ordered the city to pay past accrued and unpaid benefits. (Id. at p. 517.)

Finally, in Abbott II, supra, 178 Cal.App.2d 204, the court considered, among other things, whether the salary calculated for pensions should include “longevity” or “merit pay.” (Id. at pp. 211-213.) The court concluded: “We think that longevity and merit pay constitute a part of the ‘salary attached to the rank or position’ formerly held by the retired or deceased members and that it was error for the court to disregard them in its computation of the pensions to be paid and the judgments awarded.” (Id. at pp. 213-214.) The court determined that the pensions had been calculated incorrectly and that the plaintiffs were entitled to “pensions and past due pension payments reflecting longevity and merit pay.” (Id. at p. 216.)

Counties contend that none of the foregoing cases applies because in each of them the retirement board misapplied an existing law that was part of a plan member’s pension contract. In contrast, here, they argue that retirement boards did not misapply an existing law; rather, Ventura changed the law. They argue that a mistaken application of existing law is significantly different from a judicial change in the law, and they quote the following from an old Supreme Court case: “ ‘Every man is to be charged at his peril with a knowledge of the law. There is no other principle which is safe and practicable in the common intercourse of mankind; and to permit a subsequent judicial decision in any one given case on a point of law to open or annul everything that has been done in other cases of the like kind for years before under a different understanding of the law, would lead to the most mischievous consequences.’ ” (Kenyon v. Welty (1862) 20 Cal. 637, 642.) They contend that plan members did not have any vested rights to the benefits claimed, and to undo these agreements regarding benefits because of a change in law would result in havoc, especially since these contributions were calculated on the basis of the benefits as defined by Guelfi.

As discussed ante, no change in the law occurred; CERL was not amended during the relevant time period. When quoting the particular section from Kenyon v. Welty, supra, 20 Cal. at page 642, counties fail to divulge that the court was considering whether to undo a contract that had been made according to a judicial law as articulated by the Supreme Court, because the contract was now invalid under a subsequent Supreme Court decision. (Id. at p. 641.) Another passage, not cited by the counties, clarifies that the court’s decision not to disturb the contract was on the grounds that the contract had been made on an earlier, overruled, Supreme Court decision: “To establish the doctrine that all contracts made under a condition of the law, as expounded by the Supreme Court of the State, can be set aside if the Court subsequently changes its opinions or corrects its error, would be attended with very serious evils.” (Id. at p. 642, italics added.) As already stressed, that is not the situation here. The Supreme Court had not addressed the definition of “compensation eamable” under CERL until its Ventura decision and, therefore, once the Supreme Court issued its decision in Ventura, the effect was that Guelfi never was the law. (See, e.g., Faus, supra, 48 Cal.2d at pp. 680-681.)

Judicial decisions do not establish a new rule of law for purposes of exclusion from the rule of retroactivity when the court “ ‘gave effect to a statutory rule that the courts had theretofore misconstrued [citation] or had not definitively addressed [citation] ....’ [Citation.]” (McManigal, supra, 166 Cal.App.3d at p. 981.) Thus, “prior misconstruction of a statute by the courts does not prevent the retroactive application of the Supreme Court’s authoritative interpretation.” (Id. at p. 982.) At the time plan members accepted employment, they received a vested right to a pension as mandated by CERL and intended by the Legislature. “ ‘[T]he right to a pension becomes a vested one upon acceptance of employment by an applicant.’ ” (Kern, supra, 29 Cal.2d at p. 852.) Thus, the Ventura court concluded that the particular plaintiffs before it should not be denied the benefit of their decision simply because Ventura County had implemented “an erroneous construction of the applicable statutes.” (Ventura, supra, 16 Cal.4th at p. 507.)

Further, an additional reason exists for rejecting counties’ and retirement boards’ arguments regarding violation of vested contract rights. The Ventura decision affected the determination of what items were to be included in “compensation eamable,” and this is not subject to a contract right. As already stressed, counties and plan members entered into employment contracts, which included a right to a pension to be calculated as mandated by CERL. They did not bargain for the amount of “final compensation” or the amount of contributions and earnings that are necessary to fund the retirement allowances required by that formula. Retirement boards may have set the contribution rates too low because of their miscalculation of “compensation eamable,” but the parties did not negotiate contribution rates or final compensation. L.A. County separately argues that its plan members were repeatedly told by LACERA Board how their retirement benefits would be calculated, the interpretation of terms such as “compensation eamable,” and their retirement benefits, which were calculated in accordance with Guelfi. However, plan members could not bargain regarding their contribution rates or their “final compensation.” Once a retirement board sets contribution rates based upon the recommendation of its actuary, those rates are binding on the county. (See §§ 31584-31586; see also City of Oakland v. Public Employees’ Retirement System (2002) 95 Cal.App.4th 29, 49 [115 Cal.Rptr.2d 151] (City of Oakland) [“contribution rates are set by law”].)

Essential to counties’ position, and repeatedly asserted by them in their briefs and at oral argument, is that plan members received pensions calculated in accordance with the law then in effect and they cite Guelfi. However, as stressed throughout this opinion, the law in effect at the time the plan members received their pensions was CERL, and plan members agreed to have their “compensation eamable” and “final compensation” calculated pursuant to CERL. The calculations made for plan members may have complied with the holding in Guelfi, but they were calculated incorrectly under CERL. Guelfi misstated the law; it did not establish any law. (See, e.g., Newman, supra, 48 Cal.3d at p. 979.) Thus, the contract right is the entitlement to the pension; statutes set the contributions and “final compensation” of plan members.

Accordingly, the law is well settled: Unless one of the exceptions to the retroactivity rule applies, any error in the calculation of a pension results in the retiree’s receiving a pension based on the corrected mistake and any sums of money due on past payments. We next consider the fairness exception based on detrimental reliance and public policy.

D. Considerations of Fairness Based on Detrimental Reliance and Public Policy

Retirement boards and counties contend that the fairness exception based on detrimental reliance and public policy requires reversal of the trial court’s ruling that Ventura applies retroactively. Plan members respond that this is not a situation where the “hardships” of the case “draw it apart from the usual run of cases” (Newman, supra, 48 Cal.3d at p. 983) and of the basic rule of retroactivity.

California courts “have long recognized the potential for allowing narrow exceptions to the general rule of retroactivity when considerations of fairness and public policy are so compelling in a particular case that, on balance, they outweigh the considerations that underlie the basic rule.” (Newman, supra, 48 Cal.3d at p. 983; see also Smith v. Rae-Venter Law Group (2002) 29 Cal.4th 345, 372-373 [127 Cal.Rptr.2d 516, 58 P.3d 367] [reliance on prior construction of fee-shifting statute had only prospective application where party reasonably relied on earlier interpretation in weighing the potential costs of unsuccessfully appealing commissioner’s award].) “Considerations of fairness would measure the reliance on the old standards by the parties or others similarly affected, as well as ‘the ability of litigants to foresee the coming change in the law ....’ [Citation.]” (Peterson, supra, 31 Cal.3d at p. 153.) “Public policy considerations include the purpose to be served by the new rule, and the effect on the administration of justice of retroactive application.” (Ibid.)

T. Detrimental reliance

The trial court stated that retirement boards established that the contributions into the retirement systems collected from the employees and the counties were calculated in reliance on Guelfi. The pension plans are funded on an actuarial basis and therefore determinations of contribution rates relate to determinations of those items included in a calculation of the “compensation eamable” and “final compensation.”

The trial court also found that retirement boards and counties established that they could not foresee the Supreme Court’s ruling in Ventura. Plan members dispute this finding and assert that the practice set forth in Guelfi was not that widespread. Thus, for example, the declaration of the chief executive officer for the San Mateo County Employees’ Retirement Association indicated that San Mateo County, prior to the Ventura decision, included in its pension calculations items of pay not automatically provided in a uniform amount to all employees in the same grade or class of positions, such as night shift differential pay, helicopter observer pay, desk duty pay, and investigative work pay. In addition, LACERA members argue that as early as 1993 counties and retirement boards knew that liaison counsel were litigating the validity of Guelfi. They also point out that employees successfully sued the City of Hayward and the State Public Employees Retirement System to include certain fringe benefits in the salary base from which their retirement pension allowances were computed (Rose v. City of Hayward (1981) 126 Cal.App.3d 926 [179 Cal.Rptr. 287]), and that the decision has been applied retroactively.

The record, however, supports the trial court’s finding that counties and retirement boards reasonably relied on Guelfi. No other Court of Appeal decision contradicted its holding and the Supreme Court had not granted review of Guelfi. The critical question therefore is whether their reliance on Guelfi resulted in substantial detriment or hardship.

Retirement boards and counties must establish that they have “forgone substantial benefits” in reliance (Propst, supra, 50 Cal.3d at p. 464) on the rule set forth in Guelfi. (See also Sierra Club v. San Joaquin Local Agency Formation Com. (1999) 21 Cal.4th 489, 509 [87 Cal.Rptr.2d 702, 981 P.2d 543] [must establish “substantial detrimental reliance” for exception to retroactivity rule].) In Propst, our Supreme Court reversed a judicially developed rule that had prohibited the unilateral severance of a joint tenancy in personal property. (Propst, at pp. 461-462.) The court noted that this rule had been unforeseeable to counsel, since the Supreme Court had earlier applied the former rule (e.g., In re Kessler (1932) 217 Cal. 32 [17 P.2d 117]) and had not indicated that it was planning to overturn it. (Propst, at pp. 463-464.) The court, however, doubted that many lay persons had detrimentally relied on the former rule, but it noted “there may be instances of persons who have incurred legal obligations or forgone substantial benefits in reasonable reliance” on the prior rule against unilateral severance. (Id. at p. 464.) It therefore remanded to permit individuals to establish detrimental reliance. (Id. at pp. 464-465.)

A review of those California cases that have refused to apply a judicial rule retroactively on the grounds of hardship indicates that this exception is generally imposed when retroactivity jeopardizes a legal right. To preserve people’s legal claims, our Supreme Court has sometimes refused to apply a decision overruling its own earlier opinion to cases already filed. (E.g., Camper v. Workers’ Comp. Appeals Bd. (1992) 3 Cal.4th 679 [12 Cal.Rptr.2d 101, 836 P.2d 888]; Moradi-Shalal, supra, 46 Cal.3d 287.) In particular, “[retroactive application of an unforeseeable procedural change is disfavored when such application would deprive a litigant of ‘any remedy whatsoever.’ [Citations.]” (Woods v. Young (1991) 53 Cal.3d 315, 330 [279 Cal.Rptr. 613, 807 P.2d 455] [interpretation of notice provision and effect on statute of limitations applied prospectively becau