BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                       AB 1693|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
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                                   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:









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          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  







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          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.







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          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,  







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            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


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