BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
93 (De Leon)
Hearing Date: 6/29/2009 Amended: 4/29/2009
Consultant: Bob Franzoia Policy Vote: None
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BILL SUMMARY: AB 93, an urgency measure, would appropriate
$11,402,373.95 from the General Fund to the Department of
Justice to pay specific settlements and judgments. Any funds
appropriated in excess of the amount required for the payment of
these claims shall revert to the General Fund.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
Appropriation $11,402 General
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STAFF COMMENTS: Pursuant to the committee's rules, the Suspense
File rule does not apply to the provisions of this bill as
judgments and settlements are considered valid obligations of
the state. Additionally, judgments and settlements may have
time sensitivity.
This bill proposed to appropriate funds for the payment of the
following judgments and settlements:
In re Marriage cases, San Francisco Superior Court - $245,373.95
for combined settlement and judgments.
This action involved six coordinated and/or consolidated cases
dealing with California's ban on same-sex marriages. At the
State Supreme Court, the Attorney General's (AG's) office
represented the State of California. The State Supreme Court
invalidated the previous ban on same-sex marriage, concluding
that Family Code Sections 300 and 308.5 violated the California
Constitution. Several prevailing parties filed motions for
attorney's fees and costs. The state settled with one party
(the Tyler petitioners) and the judge awarded attorneys' fees
and costs to several parties in the following amounts:
1) $160,000 in a negotiated settlement of the Tyler attorneys'
fees motion. Per agreement, no interest will accrue on this
amount.
2) $58,094 in attorneys fees to the Clinton petitioners. This
amount accrues seven percent interest from the judgment date
of November 21, 2008.
3) $3,198 in costs awarded to the Clinton petitioners.
4) $6,442.27 in costs to the Rymer petitioners.
5) $5,639.68 in costs to Petitioner City and County of San
Francisco.
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AB 93 (De Leon)
League of United Latin American Citizens (LULAC) v. Wilson,
United States District Court - $990,000 judgment.
This action involves a successful challenge to Proposition 187
(1994), which denied various public services to undocumented
aliens, but was found to be preempted by federal law. In April
2001, the district court awarded $776,124 in attorney's fees and
costs to the LULAC plaintiffs, plus interest. However, in June
2001, these plaintiffs filed a motion to supplement this award.
The Legislature appropriated funds to pay this claim in AB 1738
(Committee on Budget) Chapter 258/2001. Due to the pendency of
the motion to supplement the fee award, however, the claim was
never paid, and the funds reverted to the General Fund. In
2007, LULAC counsel withdrew the motion to supplement the fee
award, and requested payment of approximately $950,000. The
requested appropriation of $990,000 includes an estimate of
anticipated interest.
Bank of America v. California, San Francisco Superior Court -
$8,500,000 judgment.
This action arose from a prior action filed against Bank of
America by a former bank executive under California's False
Claims Act (State of California ex rel. Patrick Stull v. Bank of
America). The Stull action alleged the bank had cheated the
state and several local governments in the handling of bond
issuances. Following an investigation, the AG's office and
local agencies intervened in the case, which eventually resulted
in a $187.3 million dollar settlement. The Stull settlement
agreement contained an indemnity clause intended to protect the
bank from claims against the funds it was delivering to the
state and local governments, should other claimants come
forward.
The State of Alaska learned of the Stull litigation and began
its own investigation into the bank's handling of Alaska bonds.
The bank entered into settlement negotiations and settled
Alaska's claims for $35 million. The bank then claimed
California was required to indemnify it against nearly half of
Alaska's claim because many Alaskan bond issues had been handled
by the bank's California subsidiaries and were covered by the
Stull indemnity clause. California rejected the bank's
indemnity claim, and the bank filed this action.
In 2003, the bank prevailed on the majority of its claims at
trial. Settlement negotiations reduced the bank's demands for
$24 million to $6.5 million, plus post-judgment interest (now
approximately $1.2 million). The court of appeal affirmed the
trial court's ruling in January 2009. The bank's judgment is
now final and must be paid.
Video Software Dealers Assoc. v. Schwarzenegger, Ninth Circuit
Court of Appeal - $96,000 Attorneys Fees Settlement.
This case is a constitutional challenge to California's violent
video game law brought under the First Amendment and the Equal
Protection and Due Process Clauses of the United States
Constitution. The district court granted summary judgment to the
plaintiffs, permanently enjoining enforcement of the video game
law. In SB 242 (Torlakson) Chapter 59/2008, the Legislature
appropriated $286,577.00 in settlement of an award of attorneys'
fees and costs to the plaintiffs following their successful
challenge in the
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AB 93 (De Leon)
district court. This settlement preserved the state's authority
to appeal the district court's judgment. On February 20, 2009,
the Ninth Circuit Court of Appeal affirmed the lower court's
decision. As the prevailing parties, the plaintiffs are
entitled to attorneys' fees and costs on appeal. Plaintiff's
motion for attorneys' fees and costs demanded $117,000, but they
have agreed to settle the claim for $95,000 plus $1,000 in post
judgment interest.
Whyte v. California Department of Justice, Kern County Superior
Court - $996,000 Settlement.
This litigation involves DOJ's administration of the Child Abuse
Central Index (CACI), a database that tracks reports of child
abuse, an obligation DOJ has pursuant to the Child Abuse
Reporting and Negligence Act. The case arose when the plaintiff
requested DOJ to disclose, pursuant to the Information Practices
Act, all information in DOJ's possession under the CACI system
related to the plaintiff. DOJ directed the plaintiff to
agencies that were the original sources of CACI information, but
did not provide complete disclosure of all information in its
own possession. In September 2002, the plaintiff filed an
action claiming DOJ's administration of CACI violated his right
to privacy, guaranteed by the California Constitution and the
California Information Practices Act of 1977. The case was
litigated for more than seven years, including a lengthy trial.
Ultimately, the court ruled in the plaintiff's favor on all
causes of action, and DOJ paid the plaintiff's money damages
award of $50,000 from its own budget. As a result of this
litigation, DOJ has changed its policies related to "self
inquiries" under CACI.
Negotiations over the plaintiff's attorneys fees commenced in
May 2008 with a demand for more than $2,000,000. Following
negotiations, the parties have agreed to a $930,000 fee award,
with interest, commencing on April 1, 2009. The AG's office
believes there is considerable risk in rejecting this settlement
and having a judge award attorneys fees.
California Pro-Life Counsel v Randolph, Ninth Circuit Court of
Appeals - $575,000 Settlement.
This case involved a challenge to enforcement of Political
Reform Act reporting requirements by the Fair Political
Practices Commission and the AG. The essence of CPLC's action
is that specified statutes violate CPLC's 1st and 14th
Amendment rights by subjecting them to onerous reporting
requirements for ballot measure advocacy. After eight years of
litigation and two published Ninth Circuit opinions, the court
entered judgment against the FPPC and the A.G.
Plaintiff filed a motion for attorneys' fees and costs seeking
$730,000. On September 30, 2008, the court granted the
plaintiff's motion, in part, awarding $550,000. After the
plaintiff and A.G. filed cross appeals, the Ninth Circuit
ordered the parties to mediation. The AG's office believes the
settlement is an appropriate resolution of the plaintiff's claim
for attorneys' fees and costs, and is in the best interests of
the state owing to the risks of further litigation and the
possibility of incurring additional costs on the appeal.