October 2006

Court of Appeal Upholds Dismissal of CFRA Claim

October 2, 2006, by Jesse Lad

Neisendorf v. Levi & Strauss Co.

Following 14 weeks of medical leave, appellant Barbara Neisendorf's at-will employment with Levi Strauss & Co. was terminated. Neisendorf filed a lawsuit in California state court claiming that the termination violated the California Family Rights Act ("CFRA"), which contains reinstatement rights for employee out on leave for certain personal or family medical conditions, including "care for their children, parents or spouses or to recover from their own serious health condition."

In this case, Neisendorf went out on CFRA leave for her own alleged medical problems which occurred after her former employer identified various performance deficiencies during a mid-year performance review. Shortly after her leave of absence, Neisendorf was terminated from her employment for failing to commit to improving the areas of concern noted in her performance review. While Neisendorf claimed she was terminated in retaliation for asserting her CFRA rights, the jury rejected this claim, instead noting that she had well-documented performance issues that were being addressed by her former employer prior to Neisendorf's leave of absence.

In affirming the trial court's decision, the court of appeal noted that an employee who requests CFRA leave "has no greater right to reinstatement or to other benefits and conditions of employment" than an employee who remains at work. To read the entire opinion click here.

California Court of Appeals Holds that Mechanic's Liens Cannot be Enforced against Property Owned by a Municipality

October 2, 2006, by Meyers Nave

In North Bay Construction v. City of Petaluma, the First Appellate District Court agreed with the trial court's decision and held that a mechanic's lien cannot be enforced against property owned by a municipality, even if the work was not performed as part of a "public works" project. In addition, the Court held that a contractor cannot recover in quantum meruit for improvements to a  municipality's property performed under a contract with a third party. The City of Petaluma was represented in this appeal by Joseph M. Quinn and Eric W. Danly, of Meyers, Nave.

In North Bay Construction, North Bay's complaint alleges that the City is the owner of real property commonly known as Redwood Empire Sportsplex that was leased to a developer for the purpose of constructing a sports complex. The developer contracted with North Bay, a licensed paving contractor, to perform grading work at the property, which North Bay completed, by for which it has not been paid. North Bay recorded a mechanic's lien against the property and served a "Notice of Potential Claim" on the City advising it that, as the owner and lessor of the property, it may be responsible for the reasonable value of the material and labor provided by North Bay. The complaint alleges, among other things, a common count to recover from the City the "reasonable value of the material and labor provided by North Bay."  The City demurred to the complaint on the grounds that a mechanic's lien cannot be enforced against public property and that common counts may not be asserted against public entities. The trial court sustained the demurrer without leave to amend. The City was dismissed from the action and North Bay filed a timely appeal.

In its reasoning, the Court explained that because of the principles of sovereign immunity, any right to impress a mechanic's lien of public property must be expressly, not implicitly, provided for by statute. While most of the cases supporting this conclusion involve public work projects, the Court noted that the prohibition is frequently stated as applying to "public property," not simply to public work projects. Moreover, in holding that a mechanic's lien could not be imposed in this situation, the Court disagreed with North Bay's assertion that a distinction must be drawn between property owned by a municipality that is used for governmental as opposed to proprietary purposes--that property held in a proprietary capacity (as North Bay contends is the case here) is subject to a lien as is any privately held property. The Court explained that while California formerly drew a distinction between property held in a proprietary as distinguished from a governmental capacity for the purpose of permitting execution on a judgment lien, this distinction has since been abolished by the Legislature, in its passage of the California Tort Claims Act. The Court also noted that the Legislature has enacted a separate comprehensive scheme prescribing the manner in which a judgment against a local public entity may be satisfied, and it does not include execution of public property.

Lastly, the Court held that North Bay's common count cause of action seeking to recover the value of services based on a theory of quantum meruit was improper given that a quasi-contract theory cannot be asserted against a municipality in a public works context. The Court cited certain general principles inherent in the arena of municipal contracts. The most important being, that contracts wholly beyond the powers of a municipality are void. They cannot be ratified; no estoppel to deny their validity can be invoked against the municipality; and ordinarily no recover in quasi-contract can be had for work performed under them. Moreover, the Court noted that the competitive bidding requirements were founded upon a salutary public policy declared by the Legislature to protect the taxpayers from fraud, corruption, and carelessness on the part of public officials and the waste and dissipation of public funds. As such, the Court concluded that North Bay must be presumed to have known the law. It could have protected itself by confirming the existence and sufficiency of a construction loan and following the statutory sop notice procedures, or by obtaining a payment bond or other security to ensure payment. Having failed to do so, North Bay cannot now shift the burden of its loss to the City in disregard of well-defined public policy to the contrary.

To read the entire published opinion, click here.

Governor Signs Bill to Create Statewide Franchising for Video Service Providers

October 3, 2006, by Meyers Nave

The Governor signed into law the Digital Infrastructure and Video Competition Act of 2006 (AB 2987), which becomes effective January 1, 2007. The law establishes a statewide franchising procedure for video service providers to be administered by the California Public Utilities Commission (CPUC), and preempts local government franchising authority. The law also allows cable companies with existing local franchises to, when a state franchise holder enters the jurisdiction, to opt out of those local franchises and into a state franchise.

The main provisions of the Act include:

  • Application Process: Applications must be filed with the CPUC, which must begin accepting such applications by April 1, 2007. Applications must, among several other items, include a description of the “video service area footprint” that the applicant proposes to serve.
  • Franchise Fees: State franchise holders must pay the local entity 5 percent of gross revenues or the incumbent cable operator’s percentage, whichever is less. Where a state franchise holder provides bundled-service packages to subscribers, the franchise fee only applies to the gross revenue attributable to video service.
  • Discrimination and Build-Out Provisions: The Act provides that a state franchise holder may not discriminate against or deny access to service to any group of residential subscribers based on income, and includes several service requirements to implement this provision. The Act provides for additional build out requirements for state franchise holders or their affiliates with more than 1,000,000 telephone customers in California.
  • PEG:  The Act requires state franchise holders to provide the same number of public, educational, and government (PEG) channels as the incumbent cable operator has activated. The Act preserves the PEG capital support requirements contained in existing local franchises, and, if there are no existing unsatisfied PEG obligations, allows the local entity to establish a fee to support PEG channel facilities in an amount not to exceed 1 percent of the state franchise holder’s gross revenue.

If you have questions on the Act or other telecommunications matters, please contact John Bakker, the co-chair of Meyers Nave's Public Power and Telecommunications Practice Group, at jbakker@meyersnave.com.

To read the text of the Act, click here.

Compulsory Binding Arbitration Held Unconstitional by Tulare County Superior Court

October 4, 2006, by Jesse Lad

Tulare County Superior Court Judge Melinda Reed refused to order the County of Tulare to arbitration pursuant to SB 440 for a bargaining impasse between the County and its Deputy Sherrifs Association. Judge Reed ruled that SB 440 did not cure the constitutional deficiencies in its predecessor legislation, SB 402.

To read an article describing the decision click here.

New York Real Estate Mogul Backing Prop. 90

October 8, 2006, by Meyers Nave

Howie Rich and his tax-exempt "advocacy" groups have contributed 92 percent of the money supporting California's Proposition 90 which, if passed, prevents public agencies from using the power of eminent domain to acquire land and transfer it to a new owner, such as a developer, for redevelopment purposes and requires the government to pay for passing any law which "devalues" private property; opponents of the law argue it will make it impossible for cities to plan developments and protect the environment. Rich and his groups have lobbied and tried to put similar initiatives on several other states' ballots - including Michigan, Missouri, Montana, Nevada, and Oklahoma - but for various reasons, including signature gathering fraud - they were removed from the ballot.

In the Thursday, October 5th, San Francisco Chronicle article "Mogul's Network Bankrolls Prop. 90", the newspaper states that "nearly $3.4 of the $3.6 million raised in support of Prop. 90 came via five entities that Rich either leads or has helped fund in the past."

Questions about the purpose of these groups have risen in light of their tax-exempt status and failure to file paperwork declaring their official purpose.  Various watchdog organizations have urged the IRS to investigate possible tax abuses.

For more information, please read the San Francisco Chronicle article. http://sfgate.com/chronicle/

Meyers Nave Files Amicus Brief on Behalf of LOCC in Yount v. County of Sacramento

October 9, 2006, by Meyers Nave

Meyers Nave attorney Alan Cohen prepared an Amicus Brief on behalf of the League of California Cities (LOCC) in Yount v. County of Sacramento that was filed with the California Supreme Court on October 5, 2006. The Supreme Court will decide whether a defendant who pleads no contest to obstructing or resisting a police officer, where the factual record in support of the plea is vague, may subsequently sue the arresting officer for excessive use of force under 42 U.S.C Section 1983.

It is an important case because for over a decade, courts in California have held that a criminal defendant's conviction under Penal Code 148 (interfering with a police officer) bars him from later suing the police under Section 1983 or analogous state law for using excessive force during the course of that arrest. It did not matter whether the conviction was obtained by a plea of guilty, a plea of no contest, or a jury verdict. This is because the Supreme Court previously decided that to the extent a 1983 lawsuit would impugn a state court conviction, concepts of comity, equity and federalism preclude a civil lawsuit challenging matters which could have been determined in the state court criminal proceeding. Since the lawfulness of a police officers conduct is an element of a 148 charge, and since excessive force is not lawful, a conviction for 148 establishes that the force used to subdue the suspect was appropriate.

That changed when the Ninth Circuit decided Smith v. City of Hemet. In Smith, the court held that where the factual record supporting a plea does not specify which act of obstruction/resistance the accused plead to, the bar does not apply. While the courts in California are not bound by the decisions of the lower federal courts, even on federal constitutional issues, the Court of Appeal for the Third District, however, decided to follow the Ninth Circuit's analysis. In the amicus brief,  LOCC contends the decision contradicts the way courts traditionally analyze both officer misconduct and collateral attacks on final judgments. LOCC also asserts that following the Ninth Circuits analysis is against public policy because it will impose significant costs and significant administrative burdens on local agencies and their police officers.

To learn more about Yount v. County of Sacramento, click here.

To review the Court of Appeals decision in Yount v. County of Sacramento, click here.

To review the Ninth Circuit's decision in Smith v. City of Hemet, click here.

California Court of Appeal rules that Family Code sections limiting civil marriage to opposite sex couples are not unconstitutional

October 17, 2006, by Meyers Nave

On October 5, 2006, the Court of Appeal ruled in In re Marriage Cases, that Family Code sections limiting availability to civil marriage to opposite sex couples are not unconstitutional. The Court's decision stressed that the Legislature has passed legislation, specifically, Family Code section 297, et seq., providing substantially all the rights, responsibilities, benefits and protections of marriage to same-sex couples who register as domestic partners.

In addition, the Court concluded that California's historical definition of marriage did not deprive individuals of a  fundamental right or discriminate against a suspect class; therefore, the Court applied rational basis review. That is, the Court analyzed the marriage statutes to determine whether the opposite-sex requirement is rationally related to a legitimate government interest. Concluding that great deference should be afforded to the Legislature, the Court stated that the marriage statutes are constitutional. In so concluding, the Court noted that the time may come when California chooses to expand the definition of marriage to encompass same-sex unions, but that such change should come from democratic processes, not from the judiciary.

To review the full opinion, click here

California Attorney General Issues Opinion Regarding Spousal Privilege During Peace Officer Investigations

October 19, 2006, by Jesse Lad

In an opinion dated October 12, 2006, California Attorney General Bill Lockyer held:

1)  The privilege for confidential marital communications does not apply when a married peace officer is being interrogated during a law enforcement agency's internal affairs investigation of alleged police misconduct by the peace officer's spouse;

2)  If a married peace officer asserts the privilege for confidential marital communications during an internal affairs interrogation and refuses a direct order to answer the investigator's questions, the law enforcement agency may take disciplinary action against the officer after informing him or her that a failure to answer may result in punitive action; and

3) I f a peace officer has disclosed confidential marital communications during an internal affairs investigation in order to avoid disciplinary action, and use of the marital communications in the investigation results in disciplinary action against the peace officer's spouse, who thereafter challenges the agency's action in an administrative or court proceeding wherein the peace officer witness asserts the privilege not to testify against the spouse, the law enforcement agency may introduce the previously disclosed marital communications to support its disciplinary action in the subsequent proceeding.

Grant of Easement Construed in Favor of Public Entity

October 29, 2006, by Meyers Nave

A California Court of Appeal held that ambiguities in a public entity's grant of easement to a private party must be construed in favor of the public entity. Red Mountain, LLC v. Fallbrook Public Utility District (2006) 114 Cal.App.4th 333, involved both an inverse condemnation claim and an eminent domain case arising from Red Mountain's plans to develop its vacant land adjacent to a drinking water reservoir and the District's refusal to grant an access easement over the road through the reservoir.

The District owned the reservior and a non-exclusive easement of the area of the water-shed for a sanitary easement. The District claimed there was no inverse condemnation because Red Mountain did not have any rights based upon its sanitary easement. Citing Civil Code section 1069, the court held that the trial court's interpretation of the easement was erroneous and that it must be construed in the District's favor passing only those rights and interests to the grantee that are necessarily and expressly embraced in its terms. The matter was ordered for re-trial on the issue of inverse condemnation, if any, and damages.