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.