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TO: Board of Supervisors
n.
FROM: Phil Batchelor, County Administrator
DATE: May 31, 1989
STa ---orrtl
SUBJECT: LEGISLATION: AB 731 (Wright)
Specific Request(s) or Recommendations(s) & Background & Justification
RECOMMENDATION:
Adopt a position of OPPOSE in relation to AB 731 by Assemblywoman Wright which would allow courts to award
costs and attorney fees against the Retirement Board or individual members of the Retirement Board for a transfer
of funds which constitutes a breach of trust in the course and scope of their board member duties.
BACKGROUND:
Assemblywoman Wright has introduced AB 731 which would make Retirement Boards liable for court costs and
attorney fees for judgments where a plaintiff prevails in a suit for breach of trust in relation to a transfer of funds
in the course and scope of their board member duties. We are not talking here about fraud or theft of funds. AB
731 would allow a plaintiff tosecond guess investment decisions made by Retirement Boards and charge that a breach
of trust occurred with a particular transfer. If the plaintiff were successful in such a suit the court could assess the
costs and attorney fees against the Retirement System as a reduction of the earnings of the retirement system.
County Counsel points out that this will tend to expand suits against retirement systems and thereby impose on them
the costs of defending such suits. Opening up the Retirement Board to this kind of liability seems to be bad public
policy. The Retirement Board agrees that the Board of Supervisors should oppose AB 731 and it is therefore
recommended that the Board of Supervisors adopt a position of opposition to AB 731.
AB 731 has passed the Assembly and is currently on referral to the Senate Committee on Public Employees and
Retirement.
CONTINUED ON ATTACHMENT: YES SIGNATURE:
Recommendation of County Administrator Recommendation of Board Committee
/ Approve Other:
Signature(s):
Action of Board on: June 6, 1989 Approved as Recommended Other
Vote of Supervisors
I HEREBY CERTIFY THAT THIS IS A TRUE AND
Unanimous(Absent ) CORRECT COPY OF AN ACTION TAKEN AND
Ayes: Noes: ENTERED ON HE MINUTES OF THE BOARD
Absent: Abstain: OF SUPERVISORS ON DATE SHOWN.
cc: County Administrator ATTESTED JUN 6 1989
Retirement Administrator PHIL BATCHELOR,CLERK OF THE BOARD
County Counsel SUPERVISORS AND COUNTY ADMINISTRATOR
Treasurer-Tax Collector
Auditor-Controller BY: Deputy Clerk
clvm:eh(ab731bo)