b'LOS ANGELES FIRE AND POLICE PENSION SYSTEM NOTES TO FINANCIAL STATEMENTS JUNE 30, 2024 AND 2023 NOTE 14COMMITMENTS AND CONTINGENCIES (Continued)Retiree Health Subsidy Litigation (Continued)While the LAPPL Action I was pending on appeal, on August 10, 2017, the union filed LAPPL Action II. The LAPPL Action II raises the same issues as the LAPPL Action I regarding the 2% contribution and the interpretation of the LOA, but also asserts a new breach of fiduciary duty claim against LAFPP, which preserves the unions rights to challenge LAFPPs 2017 discretionary action to set the subsidy should the union lose the issues in the pending LAPPL Action I. On July 3, 2018, the LAPPL filed a First Amended Complaint, asserting the same claims based on LAFPPs 2018 discretionary action in setting the subsidy.The union filed a Second Amended Complaint to add LAFPPs 2019 and 2020 discretionary actions in setting the subsidy.The union later sought to file a Third Amended Complaint to add LAFPPs 2021 discretionary actions in setting the subsidy, and on or around August 11, 2021, the parties stipulated to permit the union to file its Third Amended Complaint. The union has not filed any further amended pleadings for LAFPPs 2022, 2023, and 2024 discretionary actions.On February 15, 2019, the LAPPL I Action was remanded back to the Superior Court and reassigned to Judge Holly Fujie for further trial proceedings The City filed a motion to consolidate the two actions before Judge Fujie, which the Court granted. On September 30, 2019, Judge Fujie ordered that the case be heard in phases. In Phase One, the LOA interpretation issues common to LAPPL I and LAPPL II are to be heard in a bench trial.Upon resolution of Phase One, the Court will then address the residual fiduciary duty claims against LAFPP unique to LAPPL II.On September 20 and 21, and October 28, 2021, Judge Fujie held a bench trial began in Phase One of the consolidated action. On May 2, 2022, Judge Fujie issued the trial courts Final Statement of Decision for Phase One in favor of the City on the LOA interpretation issues. On June 23, 2022 the union plaintiff appealed the trial courts Final Statement of Decision for Phase One. As of September 19, 2024, Phase One of the consolidated action is pending on appeal and Phase Two continues to be stayed pending the final resolution of Phase One.Current Status of the Retiree Medical SubsidyLAFPP provides a subsidy frozen at the 2011 levels to current and future retired members who chose not to opt-in and contribute an additional 2% of their salaries in order to avoid the Freeze Ordinance.For members who opted-in to pay the 2% contribution, LAFPP will continue to abide by its fiduciary duty to follow LAAC4.1154(e) as written. Specifically, LAFPP continues to set and implement the retiree health insurance premium subsidy increases in the same manner as it did prior to the 2011 Freeze Ordinance and will do so until a final judgement is rendered in Phase One of the consolidated LAPPL Action I and LAPPL Action II. This means that the LAFPP Board continues to exercise its discretion provided under the Los Angeles Administrative Code to set the subsidy up to and including the medical trend rate or 7%, whichever is lower, until the courts render final judgment. NOTE 15RISKS AND UNCERTAINTIESThe System invests in various investment securities.Investment securities are exposed to various risks such as interest rate, market, and credit risks.Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and such changes could materially affect the amounts reported in the Statements of Fiduciary Net Position.53 70 LAFPP ANNUAL REPORT 2024'