A taxpayers association is appealing the dismissal of its lawsuit against the $2.54 million CalSavers Retirement Savings Program, according to its notice of appeal filed April 1.
CalSavers is a defined contribution plan for private-sector workers in California who do not have access to a retirement plan sponsored by their employers.
The Howard Jarvis Taxpayers Association sued CalSavers in U.S. District Court for the Eastern District of California to permanently stop the implementation of the program and prevent its board from spending taxpayer money on the CalSavers program, arguing that the state program is preempted by federal law.
On March 10, the court dismissed Howard Jarvis Taxpayers Association’s lawsuit without leave to amend. CalSavers is not an employee benefit plan under The Employee Retirement Income Security Act of 1974 and so, the state-mandated auto-enrollment retirement savings program is not preempted by ERISA, the court ruled. The ruling marked the second time the case had been dismissed. In April 2019, a U.S. District Court dismissed the association’s case, but allowed it to amend its complaint.
The association’s one sentence notice of appeal to the U.S. Court of Appeals for the 9th Circuit does not state the basis of its appeal.
Laura Dougherty, staff attorney for the Howard Jarvis Taxpayers Association said in an email that U.S. Justice Department had filed a statement of interest in the case, agreeing with the association that CalSavers is preempted by ERISA.
“CalSavers is high risk and unnecessary for Californians who would be safer opening up their own IRAs, if they can even afford to do so as the real challenge for most Californians is sufficient income itself,” Ms. Dougherty said.
She added that the 9th Circuit needs to “evaluate the whole picture” because the lower court had not addressed the U.S. Justice Department’s brief.
“We remain confident in the District Court’s two prior rulings strongly in our favor,” said Katie Selenski, CalSavers’ executive director in an email.
“Enrollment is continuing through the COVID-19 crisis and new employers are still coming aboard every day,” Ms. Selenski said. “We’re very sensitive to employers and savers’ needs and we’re here to support them.”
On April 15, the CalSavers board is scheduled to consider a recommendation to push its first employer deadline to Sept. 30 from June 30, she said.