BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 1693 (Gonzalez) - Claims against the state: payment
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|Version: May 10, 2016 |Policy Vote: |
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|Urgency: Yes |Mandate: No |
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|Hearing Date: June 20, 2016 |Consultant: Mark McKenzie |
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This bill does not meet the criteria for referral to the
Suspense File. Pursuant to the committee's rules, the Suspense
File rule does not apply to the provisions of this bill as
judgments and settlement are considered valid obligations of the
state. Additionally, judgments and settlements may have time
sensitivity.
Bill
Summary: AB 1693, an urgency measure, would appropriate $10.55
million from the General Fund to the Department of Justice (DOJ)
for the payment of two settlements. Any funds appropriated in
excess of the amounts required for payment of these claims would
revert to the General Fund.
Fiscal
Impact:
One-time appropriation of $10,164,000 in 2016-17 from the
General Fund to DOJ to pay the settlement in Ruelas, et.al. v.
State of California, et al.
One-time appropriation of $387,088 in 2016-17 from the General
AB 1693 (Gonzalez) Page 1 of
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Fund to DOJ to pay the judgment in Pacific Merchant Shipping
Association v. The Board of Pilot Commissioners for the Bays
of San Francisco, et al.
Background: This bill is one of several annual bills carried by the chairs
of the Appropriations Committees to provide appropriation
authority for legal settlements approved by DOJ and the
Department of Finance (DOF). These settlements were entered into
lawfully by the state upon advice of counsel (DOJ). They are
binding state obligations.
Proposed Law:
This bill would appropriate General Fund revenues to DOJ to
pay the following settlements:
Settlement agreement for Ruelas, et.al. v. State of California,
et al.
(Superior Court of California, County of San Bernardino, Case
No. RCVRS083017) $10 million settlement, plus interest, payable
from the General Fund.
This case initially involved four former wards who had been
incarcerated at Heman G. Stark Youth Correctional Facility. The
wards alleged that a youth correctional counselor had sexually
abused them during their incarceration, and that two members of
facility management knew about the counselor's propensities but
failed to take appropriate action.
A 2010 jury verdict found in favor of all four plaintiffs'
claims for $1,077,896. Parties stipulated to punitive damages
of $100,000 for the counselor and $50,000 each for the two
defendants from management. The court awarded costs and
attorneys' fees at $7,228,136.47, bringing the total judgment
amount to $8,506,032.47.
The state appealed this case to the Fourth District Court of
Appeal; that court issued a final ruling in October, 2016. One
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of the plaintiffs' judgments was reversed; the trial court's
judgments for the remaining three were almost entirely affirmed.
A rehearing took place, and the opinion was upheld with only
slight modifications. This rehearing represented the final
opportunity for the state to contest the awarded judgment.
In February 2016, the California Department of Corrections and
Rehabilitation entered into a settlement with the three
prevailing plaintiffs, agreeing to pay a total of $10 million in
exchange for a waiver of punitive damages against all
defendants, a waiver of any further claims to attorneys' fees
and costs, and the filing of acknowledgments of full
satisfaction of the judgments. DOJ notes that, absent the
settlement, state liability would likely be in the range of $11
million as a result of additional potential costs related to the
appeal.
Per the settlement agreement, interest began to accrue on the
principal amount of the judgments ($7,128,593.55) as of April
23, 2016, and approximately $1,367.12 will be added per day to
the amount owed until payment is complete. DOF estimates that a
payment should be completed within 120 days of the due date;
therefore, a maximum of $164,000 in potential interest has been
added to the principal. In the event that a lesser amount of
interest has accrued at the time of payment, the excess
appropriation will revert to the General Fund.
Settlement agreement for Pacific Merchant Shipping Association
v. The Board of Pilot Commissioners for the Bays of San
Francisco, et al.
(Superior Court of California, County of San Francisco, Case No.
CPF-12 512320) $387,088, payable from the General Fund.
This is a case that involved a Port Agent who refused to turn
over records relating to the assignments and work hours of
harbor pilots in the San Francisco Bay. The state argued that
such Port Agents are not agents of the state and that their
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records are not subject to the Public Records Act. Although the
Port Agent designation was created by statute, Port Agents are
not employed by any state agency and do not act as the agent of
any state agency. Instead, this Port Agent works for the
private San Francisco Bar Pilots, in their private offices.
Port Agents are merely regulated by the state through the Board
of Pilot Commissioners.
Although the Attorney General represented the Port Agent in his
alleged "official capacity" in the litigation, this was only
done to present arguments to the court that the Port Agent is
not a state officer or state official who is himself subject to
the PRA. Moreover, the Attorney General argued throughout the
litigation that the State of California is neither responsible
for the Port Agent's activities or for payment of any judgment
rendered against him in PRA litigation.
A San Francisco Superior Court judgment found in favor of the
plaintiffs (Pacific Merchant Shipping Association) and awarded
them their fees and costs. The judgment is not directed to any
state agency; instead, it directs the Port Agent, in his
official capacity, to pay $387,088.15 as fees and costs incurred
by PMSA in the PRA litigation. For purposes of this judgment,
however, the Attorney General's representation of the Port Agent
in his alleged official capacity makes it necessary to comply
with the court's ruling that a judgment be paid through the
Attorney General's annual claims bill.
DOJ notes that while the state is conclusively obligated to pay
the judgment in PMSA, the State of California does not concede
that a Port Agent is a state officer or state official and will
continue to argue that the state should not be liable for the
actions of Port Agents in any future litigation.
Related
Legislation: SB 1187 (Lara), which is currently pending in this
Committee, is a vehicle to provide payment of any pending
settlements that may require legislative approval this year.
SB 302 (Lara), Chapter 5/2015, appropriated approximately $24.2
million from specified funds for the payment of four
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settlements.
AB 164 (Gomez), Chapter 394/2015, appropriated approximately
$2.7 million from specified funds to DOJ for the payment of two
settlements.
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