The Los Angeles Times On The State's Business Climate

How does California rank as a place to do business? Here is an interesting article on this subject from the Los Angeles Times. The real culprits: traffic gridlock and the lack of an educated workforce. And George Skelton picks the winners and losers in the budget battles, both short-term and long-term, here.

Dan Walters on Young v. Schmidt

He's pessimistic about the lawsuit's chances (here). The case is still pending before the California Supreme Court. (Full disclosure: I will be representing the Respondents in the case.) And here is Walters' take on the deeper problems causing the budget crisis, and suggesting that a constitutional convention may be the fix.

The Los Angeles Times On The Budget Fix

Here is the editorial from today's Los Angeles Times on the State's budget fix and the need for a constitutional convention.

Harold Meyerson on the California Constitution

Harold Meyerson of the Washington Post pens this op-ed piece for the Los Angeles Times attacking the two-thirds requirements to pass a budget and raise revenue through tax increases.

Court Interprets "Full Text" Rule

Government Code Section 9238 requires that a referendum petition contain the "full text" of the measure being challenged. This seemingly straightforward command has given rise to a surprising amount of litigation. The latest case is Lin v. City of Pleasanton (here). This decision holds that, at most, a referendum petition must include the ordinance being challenged and any documents attached to the ordinance or incorporated by reference. Indeed, the court left open the possibility in footnote 4, citing Defend Bayview Hunters Point Committee v. City and County of San Francisco, 167 Cal. App. 4th 846 (2008), that the full text requirement could be satisfied in some situations even if not every document incorporated or attached to the challenged measure was included. This case continues the reasonable construction of these textual requirements begun in We Care -- Santa Paula v. Herrera, 139 Cal. App. 4th 387 (2006), which followed a string of more exacting decisions. It is sound and there is no reason why the Supreme Court should grant review.

HJTA Moves To Intervene in Two-Thirds Vote Case

The Howard Jarvis Taxpayers Association has moved to intervene in Young v. Schmidt, the case challenging the two-thirds rules for passing a budget and raising taxes to increase revenue. A copy of the motion is here. According to the court's docket, the Petitioner will oppose the motion.

Ideology Divides Tax Panel

A foretaste of what could happen to a constitutional convention. Dan Walters reports in the Sacramento Bee (here).

Lawsuit Filed Challenging Two-Thirds Vote Requirements

A petition for writ of mandate has been filed in the California Supreme Court attacking the constitutionality of the California Constitution's two-thirds vote requirements for passing a budget and raising taxes. The petitioner's theory is that these enactments constituted revisions of the California Constitution, not amendments. The petition/memo is here and the accompanying motion for judicial notice is here. The Supreme Court docket for the case is here. The docket notes that the Court has retained the case for consideration.

ps. Here is an article by Dan Walters about the lawsuit.

Pleadings in the Charter City/Prevailing Wage Case

Here are the Supreme Court filed so far in City if Vista, the case raising the issue of whether the state's prevailing wage statute applies to charter cities. The petition for review is here; the answer to the petition is here; the amicus letter by the Attorney General in support of review is here; and here is the reply to the answer. This is a good candidate for review.

Dan Walters on the Constitutional Convention

Dan Walters reports here that the same political battles that have led to California's budget crisis have infected the drive for a constitutional convention. This is not a big surprise, as I pointed out several months ago (here), and others have said the same, constitutional law is merely politics by other means. Changing the constitution, of course, is even more so.

Limits on Transportation Funding Upheld

In Shaw v. People ex rel. Chiang (here), the Court of Appeal invalidated several legislative appropriations that it said violated restrictions on the permissible uses of transportation funding contained in a series of initiatives and legislative constitutional amendments. While much of the case involves the precise wording of the various provisions at issue, from a constitutional perspective there are two interesting holdings.

First, the court considered the interplay between Article IV, Section 9, which provides that a "section of a statute may not be amended unless the section is re-enacted as amended," and Article II, Section 10(c), which says that an initiative can't be amended, except by another initiative, unless the initiative itself permits amendments. Here's how the issue arose. Revenue and Taxation Code Section 7102 is a statute that distributes the state's share of the sales and use tax. An initiative added a subdivision to the statute that limited the permissible uses of a portion of sales tax revenue derived from the sale of gasoline. However, because of Article IV. Section 9, the initiative had to reenact the entire statute. That wouldn't have mattered much, except that the initiative also provided that future amendments to the statute (not just the subdivision of the statute added by the initiative) could be enacted by the Legislature, but only if the amendment was consistent with, and furthered the purpose of, the measure.

The trial court held that amendments to the entire statute had to comply with this requirement. However, it also held that, since the purpose of the entire statute was to distribute sales tax revenue, any amendment that did that furthered the statute's purpose and was thus permissible. The Court of Appeal disagreed, rightly holding that this interpretation would make any amendment of the statute permissible, thus essentially eliminating the consistency requirement. Instead, the court held that any amendment to the statute as a whole had to be consistent with, and further, the purpose of the initiative, which was to provide a dedicated source of revenue for mass transportation.

That's fine as far as it goes, but it leaves an important question hanging. Suppose the Legislature wanted to amend a subdivision of the statute that had nothing to do with transportation funding. Under the decision, the amendment would be invalid, unless it was approved by the electorate, because by hypothesis it wouldn't further the initiative's purpose. That seems like quite a stretch, particularly since the court acknowledged that the initiative's failure to limit the amendment-restricting language to the particular subdivision of the statute, rather than the statute as a whole, was probably an oversight.

The second aspect of the court's decision that is interesting from a constitutional perspective is its treatment of initiative language restricting legislative budget-making. In People's Advocate v. Superior Court, the same court had invalidated a provision of an initiative statute that purported to limit future Budget Act appropriations for the Legislature. (Jerry Falk and I represented the Assembly in that case.) But the court also said that an initiative could appropriate money without posing a constitutional problem, if the initiative provided for a continuing appropriation. Since the initiative involved in the Chiang case did that, its limitation on the use of pre-existing funds was not invalid under People's Advocate.

This decision is not good news for the Legislature, particularly given the state's budget crisis. But it won't become effective until the Supreme Court either decides the case or denies review. Stay tuned.

Local Government's Allocation Of Regional Housing Needs Not Subject To Judicial Review

The Government Code provides a procedure by which each locality is assigned its share of meeting projected Regional Housing needs. Each jurisdiction's allocation in turn is used to formulate the "housing element" of its general plan. The allocation is made pursuant to a complex statutory process involving both the local association of governments and the state Housing and Community Development Department (which hears appeals from decisions made by the local association of governments). A city dissatisfied with the results of this process filed a petition for writ of mandate to overturn the local association's allocation. The trial court held that the allocation was not subject to judicial review and the Court of Appeal affirmed (here), in City of Irvine v . Souther California Association of Governments.

The court acknowledged that nothing in the relevant statutes expressly precludes judicial review and that the constitutional jurisdiction of the California courts to issue writs of mandate is not to be lightly cast aside in the absence of clear indications of legislative intent. Nevertheless, the court found "a clear intent on the part of the Legislature to render this process immune from judicial intervention." The court reached this conclusion because decreasing the plaintiff city's allocation of housing need would increase the burden on other jurisdictions within the region, thus frustrating the statutory mandate that each jurisdiction';s housing element reflect its allocation of housing needs.

This decision reaches the right result, notwithstanding the presumptions in favor of judicial review. Permitting judicial review of these administrative decisions seems incompatible with the statutory scheme.

Criminal Restitution and Civil Judgments

In Vigilant Insurance Co. v. Chiu (here), the plaintiff insured a company against criminal activity. The defendant, a company employee, stole money from the insured. The insurer paid the insured, receiving an assignment of rights in return, and sued the defendant, obtaining a judgment. The defendant appealed the judgment on the ground that he had already been subject to a restitution order in the criminal proceeding for the same loss.

The court held that the restitution order did not preclude a civil judgment. Restitution judgments are limited to economic losses and don't bear interest; in contrast, civil judgments include non-economic losses and bear interest. Thus, a restitution order does not duplicate a civil judgment. However, pursuant to Penal Code Section 1204(j), money actually paid pursuant to a restitution order shall be credited against a civil judgment arising out of the same wrong. Similarly, money other than interest paid pursuant to a civil judgment shall be credited against a restitution order.

Court Clarifies Criminal Restitution

Both the California Constitution (Art. I, section 28(b)) and implementing provisions of the Penal Code provide for restitution to victims of criminal activity. In People v. Millard (here), the Court orf Appeal resolved a series of issues relating to restitution in the context of a accident in which the defendant, who was driving a Ford Explorer while "under the influence," collided with and injured the driver of a motorcycle. The court held (a) the trial court did not abuse its discretion in awarding the victim the amount his insurance company paid to his doctors, as opposed to the amount that the doctors billed the victim; (b) the amount of attorney's fees incurred by the victim that is awardable under the restitution statute must be calculated according to the "lodestar method" used for calculating a fee award in civil rights cases; (c) although restitution is limited to economic losses, the victim's fees need not be automatically reduced even if the fee was incurred to obtain a recovery for both economic and non-economic losses, if there is no reasonable way of dividing the attorney's time; (d) a restitution order does not require either a jury trial or proof beyond a reasonable doubt; and (e) the doctrine of comparative fault may be used to reduce a criminal defendant's restitution obligation to the extent the victim's negligence contributed to his injuries.

This is an interesting and scholarly decision. The comparative fault issue is novel and may be worthy of the California Supreme Court's attention, particularly if the AG can portray it as a limitation on victim's rights in favor of criminal defendants.