BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 302


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          Date of Hearing:   May 27, 2015


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                                 Jimmy Gomez, Chair


          SB  
          302 (Lara) - As Amended May 7, 2015


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          Urgency:  Yes State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:




          This bill appropriates $24,106,173.50 from the General Fund, and  
          $141,250 from the Athletic Commission Fund, to specified  








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          departments for the payment of the following four settlements:


          California First, LP v. California Department of General  
          Services, et al. 
          (San Francisco County Superior Court, Case No. CGC10-505436)  
          $24 million settlement, payable from the General Fund.

          Charles R. "Chuck" Reed, et al. v. Fair Political Practices  
          Commission.
          (Sacramento Superior Court, Case No. 34-2013-80001709)
          $106,173.50 settlement, payable from the General Fund.

          Sarah Waklee v. California State Athletic Commission, Department  
          of Consumer Affairs.
          (Sacramento County Superior Court, Case No. 2012-00135227)
          $71,250 settlement, payable from the Athletic Commission Fund.

          Dwayne Woodward v. California State Athletic Commission,  
          Department of Consumer Affairs.
          (Los Angeles County Superior Court, Case No.BC487180)
          $70,000 settlement, payable from the Athletic Commission Fund.

          FISCAL EFFECT:


          1)One-time General Fund appropriations of $24 million to the  
            Department of General Services and $106,173.50 to FPPC.


          2)One time appropriation of $141,250 from the Athletic  
            Commission Fund to the Department of Consumer Affairs.  


          Any funds appropriated in excess of the amounts required for  
          payment of these claims will revert to the respective funds.  


          COMMENTS:








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          1)Purpose.  This bill is one of the bills carried by the chairs  
            of the Appropriations Committees each year 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.
           


          2)Background.  These are the four cases.


            California First, LP v. California Department of General  
            Services, et al.


            In this lawsuit, the prospective buyers of 11 state-owned  
            properties filed a complaint against DGS and its Director on  
            March 10, 2011.  The plaintiffs had won a bid to purchase the  
            state properties for $2.3 billion, and sued to compel the  
            state to proceed with the sale or pay monetary damages and  
            other relief totaling $1 billion.  DGS filed a cross-complaint  
            alleging that the parties' contract had terminated and that  
            the state could therefore not be compelled to complete the  
            sale.  The trial commenced in November of 2014 after several  
            failed motions by the state to dismiss the case or reduce the  
            claim amounts, and the parties entered into voluntary  
            mediation.  A settlement was reached on February 19, 2015.   
            Under the terms of the settlement, DGS will make a lump-sum  
            payment of $24 million to California First, and all claims by  
            both parties will be released.


            Charles R. "Chuck" Reed, et al. v. Fair Political Practices  
            Commission.










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            In late 2013, San Jose Police Offers' Association President  
            Jim Unland filed a case against San Jose Mayor Chuck Reed and  
            his pension reform committee before the FPPC, arguing that  
            Reed had violated state law when he redirected $100,000 from  
            his PAC to an independent expenditure group that supported the  
            2012 reelection campaign of City Councilmember Rose Herrera.   
            Existing law, Gov. Code 85501, prohibits candidate controlled  
            committees from funding independent expenditures in support of  
            or opposition to other candidates.  FPPC determined that Reed  
            had violated that law, but concluded that he had done so  
            unintentionally because he was not up for reelection and did  
            not consider himself to be a candidate, and imposed a $1.00  
            fine (FPPC No. 12/761).


            On December 13, 2013, Reed filed a petition with the Superior  
            Court to appeal the fine, and challenge the decision, alleging  
            that Section 85501 is facially unconstitutional because it  
            suppresses campaign contribution speech.  In March 2014, the  
            court ruled that Reed was a "candidate" under the Political  
            Reform Act, but that Section 85501 is unconstitutional on its  
            face in that it violates public officials' First Amendment  
            rights to free speech and engagement in the political process.


            As a result of this judgment, Reed demanded that FPPC pay his  
            attorneys' fees and costs pursuant to the Civil Code of  
            Procedure.  Following settlement negotiations with FPPC's  
            counsel, an agreement was reached where Reed agreed to accept  
            a reduced balance of fees amounting to $106,173.50.  FPPC  
            approved the settlement in July 2014.  


            Kevin Marilley, et al. v. California Department of Fish and  
            Game.


            This case involved a group of commercial fishermen who were  
            not California residents but fished in California waters.  One  








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            of these fishermen, Kevin Marilley, filed a class action suit  
            in the United States District Court in May of 2011 against the  
            Director of the California Department of Fish and Game (later  
            appeals were filed against the Director of the Department of  
            Fish and Wildlife), alleging that California's fishing license  
            statutes, which charge nonresident fishermen two to three  
            times more than the fees assessed on resident competitors, are  
            unconstitutional.  The fishermen and the state filed  
            cross-motions for summary judgment.





            The US District Court granted summary judgment in favor of the  
            plaintiffs, finding that the differential fees violate the  
            Privileges and Immunities Clause of Article IV of the US  
            Constitution, and concluding that the state failed to  
            demonstrate a substantial state interest.  On December 10,  
            2013, the plaintiffs moved for an award of attorney's fees and  
            court costs.  After negotiations, and upon recommendation from  
            the Department of Justice, the Department of Fish and Wildlife  
            accepted the proposed settlement of fees accrued by the  
            plaintiffs though April 18, 2014, in the amount of $1,034,570.  
             The state has filed an appeal in the Ninth Circuit Court of  
            Appeals and the payment of these fees and costs are stayed  
            until that appeal is resolved.  However, in the event that the  
            decision is upheld, prompt payment will be required.  The  
            Department of Finance approved an appropriation of the  
            settlement amount to be split between the General Fund and the  
            Dungeness Crab Account within the Fish and Game Preservation  
            Fund.


            Sarah Waklee v. California State Athletic Commission,  
            Department of Consumer Affairs.


            This lawsuit resulted from an employment dispute.  The  








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            complaint was filed by an employee of the State Athletic  
            Commission, Sarah Waklee, who worked for the Commission since  
            2004, becoming Lead Athletic Inspector in 2007.  Ms. Waklee  
            filed suit in the Sacramento Superior Court on November 5,  
            2012 against the Department of Consumer Affairs and several  
            other employees of the Commission, alleging preferential  
            treatment, harassment, and gender discrimination.  


            In late 2014, following depositions and upon calculating  
            current and prospective litigation costs, the DCA, in  
            consultation with the Attorney General's office, negotiated  
            and accepted a settlement agreement with Waklee.  The  
            settlement offer included a dismissal of the suit with  
            prejudice; Waklee's resignation from the Commission; and a  
            payment to Waklee in the amount of $95,000.00 on or before  
            June 30, 2015.  DCA was able to absorb $23,750 within its  
            existing spending authority.  The appropriation in this bill  
            will pay the remaining $71,250 from the Athletic Commission  
            Fund.


            Dwayne Woodward v. California State Athletic Commission,  
            Department of Consumer Affairs


            This lawsuit also resulted from an employment dispute.  The  
            complaint was filed by an employee of the State Athletic  
            Commission, Dwayne Woodward, a thirty-year employee who worked  
            for the Commission as an inspector.  Mr. Woodward filed suit  
            in August of 2012 against DCA and the Commission, alleging,  
            among other things, age discrimination, retaliation, and  
            harassment in violation of the Fair Employment and Housing  
            Act.  


            Woodward sought a total of $1.9 million in damages, including  
            $750,000 for age discrimination, $750,000 for retaliation,  
            $164,954.24 for lost earnings, $100,000 for attorney fees, and  








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            $123,715.68 for three years of future earnings.  After several  
            good-faith negotiations, the parties concluded that it would  
            be in their best interests to settle their disputes to avoid  
            the expense, inconvenience, and uncertainty of a trial.  The  
            January 15, 2015 settlement calls for dismissal of the suit  
            with prejudice, and a payment from DCA to the plaintiff in the  
            amount of $70,000 (with $35,000 due by June 30, 2015, ad  
            $35,000 due by July 15, 2015).  This claim is to be paid  
            through an appropriation from the Athletic Commission Fund. 


          Analysis Prepared by:Pedro Reyes / APPR. / (916)  
          319-2081