BILL ANALYSIS Ó SB 302 Page 1 SENATE THIRD READING SB 302 (Lara) As Amended May 7, 2015 2/3 vote. Urgency SENATE VOTE: 35-0 ------------------------------------------------------------------- |Committee |Votes |Ayes |Noes | | | | | | | | | | | |----------------+------+--------------------+----------------------| |Appropriations |17-0 |Gomez, Bigelow, | | | | |Bonta, Calderon, | | | | |Chang, Daly, | | | | |Eggman, Gallagher, | | | | | | | | | | | | | | |Eduardo Garcia, | | | | |Gordon, Holden, | | | | |Jones, Quirk, | | | | |Rendon, Wagner, | | | | |Weber, Wood | | | | | | | | | | | | ------------------------------------------------------------------- SUMMARY: Appropriates $24,106,173.50 from the General Fund, and $141,250 from the Athletic Commission Fund, to specified SB 302 Page 2 departments for the payment of the following four settlements: 1)California First, LP v. California Department of General Services, et al. a) $24 million settlement, payable from the General Fund. 2)Charles R. "Chuck" Reed, et al. v. Fair Political Practices Commission a) $106,173.50 settlement, payable from the General Fund. 3)Sarah Waklee v. California State Athletic Commission, Department of Consumer Affairs a) $71,250 settlement, payable from the Athletic Commission Fund. 4)Dwayne Woodward v. California State Athletic Commission, Department of Consumer Affairs. a) $70,000 settlement, payable from the Athletic Commission Fund. FISCAL EFFECT: According to the Assembly Appropriations Committee: 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: 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 Department of Justice SB 302 Page 3 and the Department of Finance (DOF). These settlements were entered into lawfully by the state upon advice of counsel (Department of Justice). They are binding state obligations. 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 Department of General Services (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. In late 2013, San Jose Police Officers' Association President Jim Unland filed a case against San Jose Mayor Chuck Reed and his pension reform committee before the Fair Political Practices Commission (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 SB 302 Page 4 City Councilmember Rose Herrera. Existing law, Government Code Section 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 Government Code 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 Government Code 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 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 SB 302 Page 5 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 United States 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. Sarah Waklee v. California State Athletic Commission, Department of Consumer Affairs. This lawsuit resulted from an employment dispute. The 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 (DCA) and several other employees of the State Athletic 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 SB 302 Page 6 settlement agreement with Waklee. The settlement offer included 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. Mr. Woodward filed suit in August of 2012 against DCA and the State Athletic 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 $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 FN: 0000788 SB 302 Page 7