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
SB 302
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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