BILL ANALYSIS Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair 1714 (Fuentes) Hearing Date: 6/28/2010 Amended: 6/16/2010 Consultant: Bob Franzoia Policy Vote: None _________________________________________________________________ ____ BILL SUMMARY: AB 1714, an urgency measure, would appropriate $1,490,000 from two funds to the Department of Justice (DOJ) to pay settlements in (1) Humphries v Lockyer, (2) Gardner v. Schwarzenegger, and (3) Berg v. California Horse Racing Board. Any funds appropriated in excess of the amount required for the payment of these claims shall revert to the General Fund and to the Horse Racing Fund on June 30 of the fiscal year in which the settlement is paid. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2010-11 2011-12 2012-13 Fund Appropriation $1,098 General $392 Special* * Horse Racing Fund _________________________________________________________________ ____ STAFF COMMENTS: Pursuant to the committee's rules, the Suspense File rule does not apply to the provisions of this bill as judgments and settlements are considered valid obligations of the state. Additionally, judgments and settlements may have time sensitivity. Humphries v. Lockyer, et al., Ninth Circuit Court of Appeals ($536,000) Craig and Wendy Humphries were arrested on suspicion of having physically abused their teenage daughter. When the criminal case was dismissed, the couple obtained a finding of factual innocence. Nevertheless, pursuant to the Child Abuse Neglect and Reporting Act (CANRA), the Los Angeles Sheriff's Department reported the couple to DOJ's Child Abuse Central Index (CACI). CANRA requires reporting when the investigating authority determines that the claim of child abuse is "not unfounded," regardless of whether the suspect was actually charged or arrested. The Humphries sued the Sheriff's Department and DOJ, alleging the CANRA was an unconstitutional denial of due process. After losing in the trial court on defense motions seeking summary judgment, the Humphries appealed. The Ninth Circuit Court reversed, finding CANRA and CACI to be unconstitutional, because, in part, California offered no procedure for the Humphries to remove their listing on the database as suspected child abusers and thus, clear their names. Prevailing civil rights suit plaintiffs are generally entitled to attorney's fees. The Humphries argued to the Ninth Circuit Court that they were entitled to over $1.2 million Page 2 AB 1714 (Fuentes) in attorney's fees and expenses for the appellate portion of the case. The state opposed this claim as premature. The Ninth Circuit Court decided the claim was not premature and referred it to an Appellate Commissioner. In that proceeding, the commissioner recommended the Humphries be awarded $592,580.92. Under the commissioner's recommendation, $533,323 of the total would be charged to the state. The commissioner's fee recommendation was adopted by the Ninth Circuit Court. Including anticipated interest, it is projected that the amount due the Humphries under this appellate attorney fee decision will be $536,000. Gardner, et al., v. Schwarzenegger, et al., First District Court of Appeal ($562,000) Proposition 36 enacted the Substance Abuse and Crime Prevention Act of 2000. The act diverted certain nonviolent drug offenders to noncustodial drug counseling and treatment in lieu of incarceration. SB 1137 (Ducheny) Chapter 63/2006, authorized jail sanctions when nonviolent drug offenders violate conditions of Proposition 36 probation. SB 1137 also specified that if any of its provisions were found unconstitutional, the entire legislative measure would be placed on the ballot in the next statewide election. Plaintiffs sued to invalidate SB 1137 as inconsistent with the purposes of Proposition 36. The trial court agreed, finding that the provisions in SB 1137 relating to short-term jail sanctions for offenders who violate their Proposition 36 probation, and provisions excluding violent offenders from probation, are inconsistent with the purposes of Proposition 36. The Court of Appeal agreed with the trial court's analysis. The Court of Appeal also found that Section 9 of SB 1137, which allows for every provision of SB 1137 to be placed on the ballot if any part is found unconstitutional, is itself unconstitutional because it effectively provides for a referendum without satisfying the legal prerequisites. Plaintiffs sought attorney's fees. In 2009, plaintiffs were awarded fees and costs in the amount of $425,821, plus interest. Plaintiffs then pursed a claim for fees incurred for litigating the underlying fee question itself, i. e., a fee on fee claims. This resulted in an additional $83,834 plus interest. The Department of Finance has requested the total amount of $562,000 for the underlying fee award, settlement of the fees on fees claim, and accrued interest. Berg v. California Horse Racing Board, Superior Court of California, County of Sacramento ($392,000) Pamela A. Berg worked as a horse racing steward for the California Horse Racing Board (board) from 1998 to 2006. Berg filed her First Amended Complaint on March 20, 2009. Her lawsuit alleged discrimination and harassment based on age and gender, and for retaliation, in violation of the Fair Employment and Housing Act (FEHA). In her deposition, Berg alleged that board superiors gave improper preferences to less- Page 3 AB 1714 (Fuentes) qualified male racing stewards when making assignments to California's larger race tracks. Berg also claimed the board's failure to make such assignments, to honor her 2006-2007 contract, and to contract for her services after her 2006-2007 contract had expired, amounted to retaliation for her existing discrimination claims in violation of the FEHA. Following a review of the allegations and discovery, the board reached settlement with Berg. By its terms, Berg will receive $400,000, of which $100,000 will be in the form of a ten-year annuity with an approximate cost to the board of $92,000. The claim is to be paid from the Horse Racing Fund, and any amounts in excess of that needed to pay the settlement, including the purchase of the annuity, will revert to the Horse Racing Fund. The Horse Racing Fund (8550-3153) receives revenues from license fees.