LITIGATION UPDATE. January 29, 2010

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1 1400 K Street, Suite 400 Sacramento, California Phone: Fax: LITIGATION UPDATE January 29, 2010 The following report summarizes the cases reviewed by the League s Legal Advocacy Committee ( LAC ) from September 24, 2009, through January 29, 2010, and the League s subsequent action. Copies of the amicus filings mentioned in this report are available at To submit a request for amicus assistance from the League, please visit the League s website at For additional information, please contact Patrick Whitnell, General Counsel, at (916) or pwhitnell@cacities.org, or Kourtney Burdick, Deputy General Counsel, at (916) or kburdick@cacities.org. The League gratefully acknowledges all of the lawyers who volunteered their time to assist the League in advocating on behalf of cities statewide. ATTORNEYS FEES In re Whitley, 1st Dist. (July 23, 2009), review granted (Oct. 21, 2009) (S175855) This case arose after a decision to place Roy Whitley, a person with developmental disabilities, in a community care home. His conservator (and sister) challenged that decision and ultimately prevailed. The conservator then moved for attorneys fees, under the private attorney general statute, which the trial court denied. The appellate court affirmed, concluding the conservator acted to further personal interests, which was sufficient to motivate her to incur the financial burden of bringing the lawsuit; an award of fees was therefore unwarranted as an additional incentive. The League will join the California State Association of Counties brief opposing an award of attorneys fees. COASTAL ACT Venice Stakeholders Association v. California Coastal Commission, pending Superior Court (County of Los Angeles) (BS ) The City applied for several coastal development permits from the Coastal Commission to implement overnight parking districts in the Venice neighborhood. The Commission denied the permits. The City argues the Commission lacks jurisdiction to regulate overnight parking districts. The League is monitoring this case. - 1 of 8

2 EMPLOYMENT County of Sacramento v. Public Employment Relations Board, writ petition pending 3d Dist. (filed Jul. 29, 2009) (C062482) At issue in this case is whether the County is required to meet and confer prior to discontinuing subsidies for medical and dental insurance for employees retiring after June 1, The County argues the change is outside the scope of bargaining because only retirees are affected by the change and they have no bargaining rights under the Meyers-Milias-Brown Act. The PERB Board disagreed, concluding the subsidy was an established past practice that provided a future benefit for current employees. Accordingly, good faith bargaining was required. The County has appealed to the Third District, Court of Appeal. The League will join the California State Association of Counties brief in support of the County. International Association of Fire Fighters, Local 188 v. Public Employment Relations Board, (1st Dist., Div. 3, March 18, 2009), petition for review granted (July 8, 2009) (S172377) The City laid off 18 firefighters as part of a city-wide layoff. In response, Local 188 filed an unfair practice charge with PERB alleging the City violated the Meyers Milias Brown Act (MMBA) by failing to meet and confer with the union about the layoff decision. PERB dismissed the charge on the ground that a layoff decision is not within the scope of representation. Local 188 filed a petition for writ of mandate challenging the decision. PERB and the city opposed the petition, arguing 1) the court lacked jurisdiction to review a PERB refusal to issue a complaint; and 2) in any event, the city s layoff decision was not a mandatory subject of bargaining under the MMBA. The trial court held it had jurisdiction to review PERB s decision not to issue a complaint, but on the merits, the court upheld PERB s determination that the city s layoff decision was outside the scope of representation. The appellate court affirmed and the Supreme Court has granted review. The League thanks James T. Diamond, Jr. and Xochitl Carrion of Goldfarb & Lipman for drafting the League s brief to the Supreme Court, supporting the City s argument that the layoff decision is not subject to collective bargaining. Retired Employees Association of Orange County, Inc. v. County of Orange, 632 F.Supp.2d 983 (C.D. Cal. Jun. 19, 2009), pending 9th Cir. ( ) Since approximately 1966, the County has provided health care benefits to its retired employees. In 1985, the County began pooling the retired employees with the active employees in the ratesetting process. Pooling the two groups allowed retirees to pay lower premiums and receive greater coverage than they otherwise would (the pooling benefit ). Facing rising health care costs, in 2006, the County decided to split the pool, creating different premium pools for active and retired employees. Under the new system, retirees pay significantly higher premiums then they paid while receiving the pooling benefit. The Retired Employees Association brought suit, asserting a vested right to the pooling benefit. The County argues that because the board of supervisors never made an express commitment to subsidize retiree rates through pooling, there was no enforceable contract right or vested right. The trial court agreed. The Association has appealed to the Ninth Circuit. The League thanks Jonathan Holtzman, Steve Cikes, and Kerry R. O Donnell of Renne Sloan Holtzman Sakai for drafting the League s brief in support of the County. - 2 of 8 -

3 FIFTH AMENDMENT Stoot v. City of Everett, 582 F.3d 910 (2009), petition for certiorari to be filed Based on statements by a four-year-old that she had been sexually abused by 14-year old Paul Stoot, Police Detective Jensen interrogated Stoot. The interrogation took place at Stoot s school and lasted for roughly two hours. Stoot eventually confessed to the abuse and his statements were used against him during the preliminary stages of a criminal prosecution. A state court subsequently dismissed the charges, holding that the confession had been coerced and that the four-year-old was incompetent to testify at trial. Stoot then brought this lawsuit under 42 U.S.C. 1983, asserting various constitutional violations. With respect to the Fifth Amendment, Stoot argues the interrogation violated his right against self-incrimination. The City argues Stoot cannot state a claim under the Fifth Amendment because his statements were never used against him at trial (merely during the preliminary stages of the prosecution). The Ninth Circuit disagreed, holding that use of coerced statements at trial is not necessary to assert a Fifth Amendment claim. There is currently a split among the circuits on this issue. In the event the Supreme Court grants certiorari, the League will file a brief in support of the City. INITIATIVES City of Carpinteria v. Venoco, Inc., pending 2d Dist. (filed Sept. 2, 2009) (B218607) This case involves the City s pre-election challenge to an initiative proposed by Venoco, Inc. The initiative amends the City s general plan, adopts a specific plan, adopts a development agreement, and directs the City to issue all necessary permits (including a coastal development permit) for the development of the Paredon Project. The Project involves the installation, maintenance and replacement of exploratory and extended-reach oil drilling rigs, crude oil tanks, pipelines, a gas compression plant, a natural gas liquid recovery plant, and other structures to support the exploration, development, production, gathering and transmission of oil and natural gas from onshore and offshore oil fields. The City argues the initiative exceeds the voters authority. The trial court, for the most part, disagreed, concluding the initiative was a proper exercise of the voters power. With respect to the development agreement, however, the court concluded it exceeded the voters authority as it was authored exclusively by Venoco and not negotiated by the City. The court struck this provision and directed the City Attorney to prepare a ballot title and summary for the remaining portion of the initiative. The League will file a brief in support of the City. INSURANCE City of Carlsbad v. Insurance Company of the State of Pennsylvania, 180 Cal.App.4th 176 (4th Dist. Nov. 20, 2009) This lawsuit arises out of a landslide that occurred as a result of the City and Water District s negligent maintenance of its water system, which caused a hillside to become saturated with water. The landslide resulted in damage to several condominiums, and the City paid roughly $12 million to settle lawsuits brought by the homeowners. The City sought indemnity from its - 3 of 8 -

4 liability insurer, which the company denied. The trial and appellate courts sided with the insurance company. The appellate court held coverage was barred by a policy exclusion that provided, [w]e will not defend or pay under this Policy for claims or suits against you: for property damage arising out of land subsidence for any reason whatsoever. (Italics added.) The policy defined land subsidence as the movement of land or earth, including, but not limited to, sinking or settling of land, earth movement, earth expansion and/or contraction, landslide, slipping, falling away, caving in, eroding, earth sinking, and earth rising or shifting or tilting. (Italics added.) The League is monitoring this case. LAND USE Building Industry Association of Central California v. County of Stanislaus, pending 5th Dist. (filed Nov. 10, 2009) (F058826) This case challenges the County s farmland mitigation program, which was adopted as part of the County s update of its Agricultural Element of the General Plan. Under the program, as a condition for approving a request that a parcel be changed from an agricultural designation to a residential designation in the General Plan, the applicant must mitigate, at a 1:1 ratio, for the loss of farmland associated with that change. An applicant may satisfy the mitigation requirement by either 1) obtaining a conservation easement over an equivalent area of comparable farmland; 2) for small conversions, paying an in-lieu fee; or 3) implementing another measure approved by the Board. In every case, the mitigation measure must be approved by the Board. The trial court invalidated the program on two grounds: 1) the program violates a state statute that prohibits the exaction of conservation easements; and 2) there was no reasonable relationship between the mitigation requirement and the impact it was designed to respond to (conversion of farmland) because it did not prevent the loss of converted farmland. The League will file a brief with CSAC in support of the County. The League thanks Tom Brown of Hanson Bridgett for agreeing to draft the brief. California Native Plant Society v. City of Santa Cruz, 177 Cal.App.4th 957 (6th Dist., Aug. 20, 2009), request for depublication and review denied (Cal. Dec. 17, 2009) (S177419) The City approved a master plan for Arana Gulch, a city-owned greenbelt property. As acknowledged in the EIR and in findings made by the City, the project would have a significant effect on the habitat of the Santa Cruz tar plant due to the chosen alignment of a multiuse trail. The City nevertheless found that overriding considerations warranted approval. On appeal, California Native Plant Society (CNPS) argued the City violated CEQA by failing to properly analyze feasible alternatives to the project, particularly an off-site location for the multiuse trail. The appellate court disagreed and held the city properly analyzed the alternatives and permissibly rejected those alternatives in light of other policy considerations. CNPS has petitioned for rehearing and depublication, which the court denied. The League thanks Michelle Ouellette of Best, Best & Krieger for drafting the League s letter opposing depublication. Guggenheim v. City of Goleta, 582 F.3d 996 (9th Cir. Sept. 28, 2009) ( ), petition for en banc review pending In 1979, the County enacted a mobile home rent control ordinance (RCO). In 2002, the City incorporated within the County and adopted the RCO by reference. The RCO limits rent - 4 of 8 -

5 increases on the pads or plots of land that mobile homes occupy to 75 percent of the increase in the local consumer price index. The ordinance also caps rent increases at 10 percent when a unit is sold. Plaintiffs purchased a mobile home park within the City in A month after the city incorporated, Plaintiffs brought a facial challenge to the RCO, claiming the ordinance worked an unconstitutional taking. The Ninth Circuit agreed. The dissent stated, I cannot agree that there was a taking of anything for which [Plaintiffs] would be entitled to compensation, because they purchased the park after the regulatory takings that mattered. The City has petitioned for en banc review, which the League supported. The League thanks Fran M. Layton, Andrew W. Schwartz, Ellison Folk, Mathew D. Zinn, and Amanda R. Garcia of Shute, Mihaly & Weinberger for drafting the League s brief. Sprint v. City of Palos Verdes Estates, 583 F.3d 716 (9th Cir. Jul. 6, 2009) ( ), petitions for rehearing and en banc review denied (Nov. 27, 2009) Based on aesthetic concerns, the City denied Sprint s request to construct two wireless telecommunications facilities (WTFs) in the public right-of-way. Sprint sued the City under the Federal Telecommunications Act, arguing aesthetics were not a proper basis for denying placement of WTFs. The trial court agreed, but the Ninth Circuit reversed, concluding federal and state law permit municipalities to regulate WTFs based on aesthetics. The League planned to oppose Sprint s requests for rehearing and en banc review, but the court denied Sprint s requests before the League could submit. PROPOSITION 218 Paland v. Brooktrails Township Community Services District Board of Directors, 176 Cal.App.4th 158 (1st Dist. Jul. 31, 2009) (A122630), on remand from the Supreme Court (Oct. 14, 2009) The Community Services District (CSD) padlocked Paland s water meter after he failed to pay water fees. The CSD continued to charge Paland a minimum monthly service charge because he never deactivated his account. Paland argued the minimum monthly service charges were invalid as they were not approved as assessments under Proposition 218. The specific provision of Prop. 218 at issue states, "No fee or charge may be imposed for service unless that service is actually used by, or immediately available to, the owner of the property in question. Fees or charges based on potential or future use of a service are not permitted. Standby charges, whether characterized as charges or assessments, shall be classified as assessments and shall not be imposed without compliance with Section 4['s property-owner election requirement]." The appellate court concluded the service was "immediately available" because all Paland had to do was pay his bill. The Supreme Court granted review and remanded the case back to the First District, at that court s request, to fix an error in the opinion. Michael G. Colantuono of Colantuono & Levin prepared an amicus brief on the League s behalf in support of the CSD, but the opinion was republished before the brief was submitted. The revised opinion remains favorable to local governments. - 5 of 8 -

6 TAXES City of Scotts Valley v. County of Santa Cruz, pending 1st Dist. (filed Oct. 8, 2009) (A126357) The Tax Equity Allocation ( TEA ) (Rev. & Tax Code, 98) guarantees cities 7% of the property taxes collected within their boundaries. The difference between what a city would receive under the regular property tax allocation system (the system created to implement Prop. 13) and TEA s guaranteed 7% is made up by reallocating funds from the county. In this case, the County reduced the City s TEA by the City s Educational Revenue Augmentation Fund (ERAF) shift amount and by the share of tax increment the City s redevelopment agency received. The City filed a petition for writ of mandate, which the court granted. The court ordered the County reallocate approximately $2.3 million in property taxes from the County to the City, and directed the County, in future years, to allocate property taxes in the manner advocated by the City. The court, however, stayed the writ after determining the issue concerns a controlling question of law involving significant legal issues of statewide interest that would benefit from immediate appellate review. Accordingly, the County appealed. The League will file a brief in support of the City. Franchise Tax Board v. Superior Court, 177 Cal.App.4th 36 (Aug. 27, 2009), review granted (Dec. 2, 2009) (S176943) Gonzales filed a complaint against the Franchise Tax Board (FTB) seeking a refund of personal income taxes. FTB filed a cross-complaint seeking to recover a penalty of approximately $2.5 million. Gonzales argues he has a right to a jury trial on both issues. The Court of Appeal concluded Gonzales has a right to a jury trial on the refund action, but not on the collection action. The League will file a brief in support of Franchise Tax Board. Sacks v. City of Oakland, pending 1st Dist. (filed Nov ) (A126817) In 2004, the City s electorate adopted Measure Y, which imposed a special tax to [h]ire and maintain 63 police officers assigned to the following [community policing positions]: Neighborhood beat officers Crime reduction team, etc. The City used the funds to recruit and train officers for patrol positions and, in turn, placed veteran patrol officers into the specified community policing positions, based in part on department s MOU, which precluded placing new officers into non-patrol positions. Plaintiff taxpayer filed suit, asserting the City improperly spent Measure Y revenues. The trial court agreed, stating, The City may not lawfully use Measure Y funds for any aspect of hiring or maintaining any recruit hired into the Police Department to fill any other position; including recruits that may, someday, be assigned to a Measure Y position. The City has appealed. The League will monitor this case. TORT LIABILITY Bryan v. McPherson, -- F.3d ---, 2009 WL (9th Cir. Oct. 9, 2009) (No ), petition for en banc review pending Officer McPherson deployed his taser against Bryan during a traffic stop for a seatbelt infraction. At the time, Bryan was standing roughly 20 feet away and had not physically or verbally threatened the officer, although there is a dispute as to whether Bryan took a step - 6 of 8 -

7 towards the officer. Bryan brought suit for excessive force in violation of the Fourth Amendment. The officer asserted qualified immunity, which the district court denied and the Ninth Circuit affirmed. The court held that use of a taser constitutes an intermediate, significant level of force that must be justified by a strong government interest [that] compels the employment of such force. The court concluded no such interest was present in this case and the use of the taser violated Bryan s clearly established rights. Accordingly, the court denied the officer s motion for qualified immunity. The City has petitioned for en banc review, which the League supported. The League thanks Scott D. Wiener, Deputy City Attorney, San Francisco, for drafting the League s brief. Guzman v. County of Monterey, 178 Cal.App.4th 983 (6th Dist., Oct. 28, 2009), petition for review filed (Dec. 3, 2009) (S178397) Residents of a mobile home park brought a negligence action against the County, alleging that park water was contaminated with dangerously high levels of naturally occurring fluoride since at least 1995, but that residents were not told about the contamination until The trial court granted the County s motion to dismiss. The appellate court reversed, holding that the County had an implied mandatory duty to direct the park owner to notify his customers of the contamination. The Supreme Court disagreed, concluding the County did not have an implied mandatory duty, and remanded the case to the appellate court to determine whether the County had an express mandatory duty that it usurped. On remand, the Court of Appeal held the County had an express mandatory duty to undertake a monthly review of all water quality monitoring data in order to detect abnormalities. The court further concluded that this duty was designed to protect water consumers like the park residents. Therefore, the residents alleged a sufficient cause of action for breach of a mandatory duty. The court further concluded no statutory immunity bars the residents action. The County has petitioned for review, which the League will support. Tichinin v. City of Morgan Hill, 177 Cal.App.4th 1049 (6th Dist. Sept. 21, 2009), petition for review and depublication denied (Cal. Jan. 13, 2010) (S177501) Bruce Tichinin, a local attorney, hired a private investigator to conduct surveillance of the city manager, who Tichinin believed was having an affair with the then-city attorney. When a councilmember asked Tichinin if he was involved in the surveillance, Tichinin said no. Tichinin later admitted his involvement. The city subsequently adopted a resolution condemning Tichinin and his actions. In response, Tichinin filed a Section 1983 claim against the city, alleging the city unlawfully retaliated against him for exercising his First Amendment rights. The city filed an anti-slapp motion to strike the action, arguing the resolution was a proper exercise of the city s First Amendment rights. The trial court granted the motion and the appellate court reversed. While the appellate court agreed the city s activities were protected by the First Amendment, the court held Tichinin demonstrated a probability of success on his claim after concluding his activities were also protected by the First Amendment. The League thanks Vince Chhabria, Deputy City Attorney, San Francisco, for drafting the League s letters in support of review and depublication, which the court denied. - 7 of 8 -

8 WATER MANAGEMENT Sonoma County Water Coalition v. Sonoma County Water Agency, pending 1st Dist. (filed April 10, 2009) (A124556) In this action, the Coalition has challenged Sonoma County Water Agency s (SCWA) Urban Water Management Plan ( Plan ). The Coalition alleges the Plan fails to adequately inventory, assess and allocate ground and surface water resources, overlooks ground and surface water contamination, overstates water supplies, understates water demands, and thus threatens to induce unsustainable urban development throughout the area that will outpace water supplies. The trial court agreed, concluding, [W]hile the volume of available water may be adequate to meet future demands, the availability of that water has not been adequately addressed. Even if there is a sufficient volume of water to draw from, access may be limited for other reasons, such as environmental considerations and the existence of suitable facilities for the transmission of that water. In addition, the Plan is flawed for lack of compliance with the governing statutes relative to the method and scope of preparation. The League will join the brief with California State Association of Counties and the Association of California Water Agencies. REQUESTS FOR VIEWS FROM THE ATTORNEY GENERAL Opinion No A request from Louis B. Green, County Counsel, for an opinion of the Attorney General on the following question: Are the fees required to be collected by cities, counties, and cities and counties under Section of the California Health and Safety Code validly levied as fees, or do they constitute an unlawful tax? The League is monitoring this question. Opinion No A request from Ronald L. Calhoun, District Attorney, for an opinion of the Attorney General on the following question: May a Water District hold its board meetings at the principal office of the Water District if the principal office is located outside the jurisdiction of the Water District? The League is monitoring this question. Opinion No A request from Senator George Runner, for an opinion of the Attorney General on the following question: Does the Massage Therapy Organization s voluntary certification program (SB731, 2008 Stats. Ch. 384) occupy the field of massage regulation statewide, so as to preclude enforcement of local massage regulations enacted by charter cities? The League is monitoring this question. - 8 of 8 -