The pink slips "no longer exist," said Costa Mesa attorney John Vogt. "They were withdrawn."
Vogt questioned what possible outcome the court case could have if there are no layoffs for the court to issue an injunction against.
"Until the city acts ... there's nothing for the court to enjoin," he told Monarch.
But CMCEA attorneys contended that the city is still intent on outsourcing, even without the mechanism of layoffs.
"The city never ever repealed or withdrew the plan," said CMCEA lawyer Richard Levine, referring to the March 2011 City Council decision in favor of outsourcing a swath of city services and issuing more than 200 layoff notices — a widespread austerity measure meant to rein in employment costs and redistribute money to capital improvement projects.
The CMCEA sued the following May, arguing that government code limits what positions general-law cities like Costa Mesa can legally outsource. The city's move also violated employees' collective-bargaining agreement with the city, according to the CMCEA's complaint.
In 2011, a judge issued a preliminary injunction blocking the layoffs, though it was dissolved last year after the layoffs were rescinded.
After canceling the pink slips, the city asked CMCEA to drop the lawsuit, but outside the courtroom Thursday, Levine said there needs to be a clear answer on the legality of outsourcing because, he said, the city still intends to contract out city services.
In 2013, the City Council voted 4-1 to outsource operation of the city's jail for an estimated savings of $3 million over five years. The plan did not include layoffs.
Mayor Jim Righeimer has also said he would like to outsource other city services, such as parks maintenance, payroll and street sweeping.
CMCEA and city lawyers will each file briefs and return to court in June to determine if the case can move forward.