HR Files Lawsuit Challenging Redevelopment Bills

Two weeks ago we filed California Redevelopment Association v. Matosantos, an original writ proceeding in the California Supreme Court challenging a two-bill package in which the Legislature first eliminated California's 400 redevelopment agencies and then stayed execution if the agencies, or their sponsoring cities and counties, pay $1.7 billion this year and $400 million annually thereafter, primarily for support of the schools. The writ petition and supporting documents are here; the State's "informal opposition" is here; our "informal reply" is here; and the Supreme Court's docket is here. The petition alleges that the redevelopment bills violate Prop. 1A (2004) and Prop. 22 (2010), two constitutional amendments that prohibit the State from using or diverting local tax revenues.

California Supreme Court Upholds Regulatory Fees

In California Farm Bureau Federation v. State Water Resources Control Board (here), the California Supreme Court held that regulatory fees imposed by the State Water Resources Control Board to pay the cost of administering California’s water rights program are not facially unconstitutional as invalid taxes. The decision adopts generous language concerning the scope of a regulatory fee. While such a fee cannot “exceed the reasonable cost of regulation with the generated surplus used for general revenue collection,” the fee need not benefit the fee payers, and it need not be proportional to the service rendered to individual fee payers. With respect to the as-applied challenge, the Supreme Court remanded for the trial court to make detailed findings regarding the Board’s showing that the regulatory costs were reasonably related to the fees assessed. However, the Court acknowledged that while fees must be reasonably related to regulatory costs, a “government agency should be accorded some flexibility in calculating the amount and distribution of a regulatory fee.” It therefore appears that the plaintiffs have an uphill battle to support their claim that the fee is illegal, even though under the statutory scheme, only 40% of those subject to the Board’s jurisdiction are being assessed to pay the regulatory costs (because the remaining 60% of water rights holders are either grandfathered or immune from Board decisions granting vested rights)

Court Upholds Regents' Autonomy

In Goldbaum v. Regents of the University of California (here), the Court of Appeal held that the Regents are not bound by the fee-shifting provision contained in Labor Code §218.5. The Court held that applying the statute to the Regents would violate their constitutional autonomy under Article IX, Section 9(a).

This decision is not a surprise. Earlier cases had held that the Regents were exempt from prevailing wage statutes. See, e.g., San Francisco Labor Council v. Regents of the University of California, 26 Cal. 3d 785 (1980); Regents of the University of California v. Aubry, 42 Cal. App. 4th 579 (1996). Similarly, the courts have held that the Regents are exempt from a statute requiring employers to indemnity employees for necessary expenses and losses incurred in discharging job duties. In re Work Uniform Cases, 133 Cal. App. 4th 328 (2005). Accordingly, there is little likelihood that the California Supreme Court will grant review.

Blogging To Resume In New Year

Now that we've been profiled as a "blogging lawyer" in San Francisco Attorney, its time to start blogging again. Stay tuned!

Supreme Court Upholds Prop. 209 Against Federal Challenge

The Supreme Court has held, in Coral Construction, Inc. v. City and County of San Francisco (here), that Prop. 209's ban on racial preferences does not violate the Equal Protection Clause. The Court held that the "political structure" doctrine, as applied in cases like Hunter v. Erickson and Washington v. Seattle School District No. 1, does not apply to bans on racially preferential treatment. However, the Court left the door open for San Francisco to try and prove that its affirmative action policy was required, not just permitted, by federal law.

Walgreen's States Equal Protection Claim

San Francisco prohibits pharmacies such as Walgreen's from selling cigarettes, but not grocery stores or big box stores even if they contain licensed pharmacies. Walgreen's sued contending that this distinction lacked a rational basis. The Superior Court agreed, but the Court of Appeal held that Walgreen's could state a cause of action (here). The court held that the City's rationale for the ordinance--that cigarettes should not be sold in retail establishments such as pharmacies that are identified in the public mind with health--did not apply to chain stores like Walgreen's, that typically sell products that are largely indistinguishable from those sold in grocery stores. The court also held that the city could not defend its disparate treatment of pharmacies and grocery stores by the need to keep supermarkets in San Francisco.

I think this case has a shot at Supreme Court review. The court's opinion is certainly less deferential to the city that courts usually are in evaluating legislation under the rational basis test.

Court Grants Review Of Line-Item Veto Case

The Supreme Court granted review Wednesday in St. John's Well Child and Family Center v. Schwarzenegger. which poses the question of whether the Governor has the power to veto a legislative reduction of a previously-enacted budget appropriation. The Court of Appeal opinion is here. Given the fact that all seven Justices voted to grant, my guess is that they took the case because it's important, not because they necessarily disagreed with the Court of Appeal's opinion. Stayed tuned.

Secret Ballot Not Required In Fee Elections Under Prop. 218

In Greene v. Marin County Flood Control and Water Conservation District (here), the Supreme Court held that a Article II, Section 7, which requires that Article II, Section 7, which provides that "voting shall be secret," does not require a totally secret ballot on fee elections under Prop. 218 (which requires an election on property-related fees except for water, sewer and garbage service). The Court relied on the provision in Article XIII D. Section 6(c), which provides that an agency may adopt procedures for fee elections that are similar to those compelled for assessment elections by Article XIII D, Section 4. Since that provision does not require secret ballots--indeed, it provides for weighted voting that requires that a voter's identity be known--neither does Article XIII D, Section 6(b). Because the agency in this case provided for a high degree of secrecy--ballots could only be inspected after the tabulation and then only by court order--the court found no constitutional violation. However, the court left open the possibility that lesser degree of secrecy might violate the constitution.

Congratulations to Mike Colantuono, who successfully represented the public agency defendant.

Park Assessment Fails To Comply With Prop. 218

In Beutz v. County of Riverside (here), the Court of Appeal held that a park assessment failed to comply with the requirements of Article XIII D, Section 4, part of Proposition 218. The court first held that the county had failed to separate the general benefit from the special benefit provided by the improvements in question (park landscaping) and also failed to spread the special benefit proportionately among the assessees (all of whom paid an equal assessment). In short, the opinion gives teeth to the requirements of Prop. 218, insofar as they relate to assessments.

SLAPPing "Mixed" Causes Of Action

What happens when only a small part of a cause of action is subject to strike under the anti-SLAPP statute? That's the question underlying the debate in Haight-Ashbury Free Clinics, Inc. v. Happening House Ventures (here). The plaintiff alleged a claim for breach of fiduciary duty, based on sixteen acts, two of which were found protected under the anti-SLAPP statute. The majority opinion dismissed the whole cause of action, because the plaintiff had failed to show that it could succeed on any part of its claim, whether based on protected or unprotected activity. The concurring and dissenting opinion would have dismissed only the portion of the claim based on protected activity, which seems right to me.

Arbitration Clause Not Enforceable On Homeowners' Association

In Villa Vicenza Homeowners Ass'n v. Nobel Court Development, LLC (here), the Court of Appeal held that an arbitration clause recorded in CC&Rs was not enforceable in a suit brought by a homeowners' association against a developer. Because the clause was subject to the Federal Arbitration Act, the court was not bound by the holdings in Grafton Partners v. Superior Court (in which we represented the petitioner), which holds that predispute jury waivers are unenforceable except as specifically authorized by the Legislature, or Treo @ Kettner Homeowners Assn. v. Superior Court, which held that a homeowners association was not bound by a judicial reference agreement contained in CC&Rs. Nevertheless, the court held that both federal law and state law refuse to enforce arbitration clauses against non-signatories, and the homeowners association had never agreed to arbitrate a dispute against the developer.

Palin Resists Disclosure Of Speaking Fee

This is too good to pass up. Go, CFAC! (The story is here.)

Change The Two-Thirds Budget Requirement? Not Likely

For the obvious reason that a proposed constitutional amendment to change the two-thirds vote requirement for enacting a budget itself requires a two-thirds vote. Calbuzz reports here.

No Damages For Violating Right to Petition

In MHC Financing Limited Partnership Two v. City of Santee (here), the Court of Appeal has held that compensatory damages are unavailable for a violation of Article I, Section 3(a), which grants the “right to petition.” This holding is neither novel nor surprising. The California Supreme Court had already held in Katzberg v. Regents of the University of California, 29 Cal. 4th 300 (2002), that damages are not available for a violation of the California Constitution’s due process clause, and similarly held in Degrassi v. Cook, 29 Cal. 4th 333 (2002), that damages are not available for a violation of the California Constitution’s free speech provision. The MHC decision arises in a unique factual setting (the city council had enacted the wrong initiative), and comports with existing precedent. It therefore is an unlikely candidate for California Supreme Court review.

Court Upholds LAX Solicitation Ban, Ducks "Public Forum" Issue

In ISKCON v. City of Los Angeles (here), the California Supreme Court held that a ban on "Immediate solicitation" (i.e., soliciting an immediate contribution) in the public areas of Los Angeles Airport was a reasonable time, place and manner restriction, regardless of whether these areas constituted a "public forum" under the "liberty of speech" clause of the California Constitution (art. I, sec. 2(a)). The Court's earlier decision in Los Angeles Alliance for Survival v. City of Los Angeles, 22 Cal. 4th 352 (2000), had held that a ban on solicitation was not content-based. As a result, the solicitation ban at issue in ISKCON only had to satisfy the less exacting standards applicable to content-neutral time, place and manner restrictions--i.e., that they be narrowly tailored, serve a significant governmental interest and leave open ample alternative means of communication.

The Court first held that the narrow tailoring requirement does not incorporate a "less drastic alternative" standard--i.e., the government need not prove that no less speech-restricting alternative would further the same interest. Instead, it requires only that the challenged law promote a substantial governmental interest that would be achieved less effectively absent the regulation. The solicitation ban met this requirement (it's hard to imagine an ordinance that wouldn't) in light of the special intrusiveness of requests for an immediate donation of funds and the "often crowded and hectic environment of a large international airport." Moreover, solicitation of funds creates problems of duress and fraud that other speech does not. The Court rejected the district court's finding that these interests could only justify a ban on solicitation during peak hours or in busy locations, because these times and locations vary. Finally, the court held that the ban left open ample alternative means of communication; the plaintiff could solicit funds elsewhere and could even solicit in the airport as long as they did not ask for an immediate donation of money.

Justice Kennard concurred. She dissented in Los Angeles Alliance for Survival v. City of Los Angeles, and continued to believe that a solicitation ban was content-based. But, given that decision, she concurred that the solicitation ban met the time, place and manner standard. Indeed, she said so forcefully, stating that "[s]peech activities at airports that interfere with the legitimate interests of the airport management, arriving or departing passengers, or airline or airport employees need not be tolerated." She also indicated, somewhat contradictorily, that she viewed the public areas of LAX as a public forum. So, despite her strong language, it's not clear how she would have voted had she not been compelled to follow Los Angeles Alliance for Survival.

Justices Chin, Baxter and Corrigan also concurred, taking the opposite tack from Justice Kennard. They would have held that the common areas of LAX are not a public forum. Accordingly, they had no problem upholding the no-solicitation ban.

This opinion conforms California law to federal law in analyzing time, place and manner restrictions. Accordingly, it may have a broad impact outside the somewhat special context of airport speech.

Line Item Vetoes Upheld

The Court of Appeal, in an opinion by Justice Kline, has upheld the Governor's exercise of his line-item veto authority over amendments by the Legislature to a previously enacted budget bill. In other words, the court has held that a bill amending appropriations made in a prior budget bill contains appropriations that are themselves subject to line-item veto. The opinion is here.

Tepid Support for Constitutional Change

Why did the con-con measures not get the necessary financial support? Backers blamed the recession, but perhaps because of polls like this. The Sacramento Bee reports here. Voters believe the state government is riddled with fraud and waste, and want spending cuts prior to tax increases. They also oppose deleting the two-thirds requirement to pass a budget. Meanwhile, California Forward's budget reform initiative is also in jeopardy, as the Bee reports here.

Taxes or Fees?

Like beauty, it seems to be in the eye of the beholder. The Sacramento Bee reports here.

New Federal Challenge To Prop. 209 Filed

Talking Points Memo reports here (from the AP).

County Can Bargain Over Union's Support For Binding Arbitration Initiative

In DiQuisto v. County of Santa Clara (here), the Court of Appeal held that Santa Clara County did not violate Stanson v. Mott, 17 Cal. 3d 206 (1976), and its progeny, when it negotiated with a couple of employee unions over their potential support for an initiative that would have imposed binding arbitration on the county. The court held that the arbitration initiative was a permissible subject of bargaining under the Meyers-Milias-Brown Act, and that the county's discussion of the measure in collective bargaining was not impermissible electioneering.

One interesting fact about the case is that the parties spent a lot of time at trial trying to prove, or disprove, whether the county offered higher wages as a quid pro quo for the unions' "political silence" vis-a-vis the initiative (which failed at the ballot box). The trial court held that there was no quid pro quo, a finding which the court of appeal held was supported by substantial evidence. But why would it matter? If the initiative was a permissible subject of bargaining, as the court (correctly) held, the county can bargain about it, and quid pro quos, perceived or real, are part and parcel of the bargaining process. Focussing on the quid pro quo issue, while superficially appealing, seems to be a distraction from the real, and much more interesting, issues at stake.