CalPERS board violated open meetings law, judge rules. Ex-board member wants more information

The CalPERS Board of Administration violated California’s open meetings law when it excluded the public from a discussion two years ago related to the exit of its former investment chief, a judge ruled last week.

The retirement system’s board held a closed-session meeting in August 2020 after the sudden resignation of former Chief Investment Officer Ben Meng. Meng quit after someone filed a conflict-of-interest complaint over his personal investments in Blackstone, a private equity firm in which the pension fund also was invested.

A notice published by the board said the meeting, held 12 days after Meng’s resignation, was closed so board members could discuss a “chief executive officer’s briefing on performance, employment, and personnel items.”

J.J. Jelincic, a former CalPERS board member, requested a transcript of the meeting and other CalPERS records through the state’s Public Records Act. CalPERS denied his requests, and Jelincic sued in March 2021, saying the pension system had improperly closed the meeting and withheld records.

Alameda County Superior Court Judge Michael Markman issued a final judgment in the case Tuesday, after determining nearly everything discussed in the meeting should have been held in open session, with the exception of some comments made by Matt Jacobs, the retirement system’s chief counsel.

Judge Markman ordered the retirement system to provide the transcript to Jelincic but allowed redactions of Jacobs’ comments.

On Wednesday, Jelincic appealed to the First Appellate District Court of Appeal, asking the higher court to remove the redactions.

“PERS has become more and more secretive, and is frequently doing policy discussions in closed session,” Jelincic said. “Quite frankly, the beneficiaries are entitled to know what the hell their trustees and fiduciaries are doing, and they should understand why they’re making the decisions they did.”

CalPERS spokesman Brad Pacheco said in an email that the system appreciates and respects the court’s decision and “will factor it into our decisions about future meetings.”

Markman also denied Jelincic’s request for other records, including additional information related to a CalPERS audit that showed the system — recently valued at about $454 billion — had overestimated the value of some of its assets by about $583 million in fiscal year 2018-2019.

Jelincic did not appeal that portion of the ruling.

Meeting transcript

In the course of the lawsuit, CalPERS submitted the transcript of the Aug. 17, 2020 meeting to the court for review.

In an apparent mistake, the transcript — with redactions — was posted in a publicly visible way to the court’s online document system in August 2021. Naked Capitalism, a blog that covers CalPERS, posted the transcript online.

The transcript shows the 13 members of the CalPERS board and at least six employees attended the meeting. They discussed CalPERS’ investigation into what happened with Meng, how to strengthen the system’s conflict-of-interest protections and the possibility that Meng might take legal action, among other matters.

The potential for legal action from Meng was central to Judge Markman’s decision to uphold CalPERS’ redactions of Jacobs’ comments in the transcript. Jacobs’ comments took up about 27 of the transcript’s 167 pages.

Markman determined CalPERS properly redacted Jacobs’ comments under a section of the California Public Records act that allows agencies to withhold information if they determine the public interest in withholding the information outweighs the public interest in disclosing it.

“The discussion itself is the sort that would be privileged and would be properly discussed in a closed session,” Markman wrote.

Judge Markman didn’t view the redacted portions himself, according to Jelincic’s appeal. The appeal argues a court must review the redacted portions before determining they should be withheld.

The appeal also takes issue with withholding documents in anticipation of legal action, arguing the law’s exemption for discussing legal strategy is not that broad.

In February of this year, CalPERS announced it was hiring Nicole Musicco, who most recently worked at New York private investment firm RedBird Capital Partners, as a permanent replacement for Meng.

Deputy chief investment officer Dan Bienvenue filled the job in the time between Meng’s departure and Musicco’s hire.