BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 1693| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 1693 Author: Gonzalez (D) Amended: 5/10/16 in Assembly Vote: 27 - Urgency SENATE APPROPRIATIONS COMMITTEE: 5-0, 6/20/16 AYES: Lara, Beall, Hill, McGuire, Mendoza NO VOTE RECORDED: Bates, Nielsen ASSEMBLY FLOOR: 69-3, 5/23/16 - See last page for vote SUBJECT: Claims against the state: payment SOURCE: Author DIGEST: This bill, an urgency measure, appropriates $10.55 million from the General Fund to the Department of Justice (DOJ) for the payment of a judgment and a settlement in two lawsuits against the state. Any funds appropriated in excess of the amounts required for payment of these claims reverts to the General Fund. ANALYSIS: This bill is one of several annual bills carried by the chairs of the Appropriations Committees to provide appropriation authority for legal judgments and settlements approved by DOJ and the Department of Finance (DOF). Settlements are entered into lawfully by the state upon advice of counsel (DOJ), and they are binding state obligations. This bill appropriates General Fund revenues to DOJ to pay the following settlements: AB 1693 Page 2 Settlement agreement for Ruelas, et.al. v. State of California, et al. (Superior Court of California, County of San Bernardino, Case No. CVRS083017) $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 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 AB 1693 Page 3 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. Judgment against the state in 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 records are not subject to the Public Records Act (PRA). 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. Following the decision, the Port Agent provided more than 1,000 square feet of documents in response to a new PRA request submitted by the Pacific Merchant Shipping Association (PMSA). PMSA then filed a motion for attorney fees and costs connected to the litigation, and the San Francisco Superior Court entered a judgment against the Port Agent. 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. AB 1693 Page 4 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. FISCAL EFFECT: Appropriation: Yes Fiscal Com.:YesLocal: No According to the Senate Appropriations Committee: 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 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. SUPPORT: (Verified 6/21/16) None received OPPOSITION: (Verified 6/21/16) None received ASSEMBLY FLOOR: 69-3, 5/23/16 AYES: Achadjian, Alejo, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brown, Burke, Calderon, Campos, Chang, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Hadley, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, AB 1693 Page 5 Ting, Waldron, Weber, Wilk, Williams, Wood, Rendon NOES: Travis Allen, Grove, Wagner NO VOTE RECORDED: Arambula, Brough, Chávez, Eggman, Beth Gaines, Gallagher, Harper, Patterson Prepared by:Mark McKenzie / APPR. / (916) 651-4101 6/22/16 15:15:16 **** END ****