By Dale Kasler
Published: Sunday, Nov. 17, 2013 – 4:53 pm
Last Modified: Monday, Nov. 18, 2013 – 9:01 am

CalPERS suffered a setback in its fight with the city of San Bernardino, which owes the pension fund more than $14 million after filing for bankruptcy.

A judge Friday rejected CalPERS’ request to challenge the city’s bankruptcy eligibility at the U.S. 9th Circuit Court of Appeals. U.S. Bankruptcy Judge Meredith Jury said granting the request would be “duplicative and not an efficient use of judicial resources.” In August, she ruled the city was eligible for bankruptcy, dismissing CalPERS’ argument that San Bernardino was simply trying to avoid paying its bills.

The wrangling over bankruptcy eligibility is a warmup to a potentially epic fight – a test case of whether a city can use bankruptcy to reduce its pension obligations.

The judge’s decision Friday doesn’t end the eligibility skirmish. CalPERS can still take take the matter to a U.S. District Court judge – which it did on Friday.

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