BILL ANALYSIS
AB 1262
Page 1
Date of Hearing: May 12, 2009
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
AB 1262 (Strickland) - As Amended: April 22, 2009
SUBJECT : CONFLICT OF INTEREST RULES: EXEMPTION FROM ANTI-SLAPP
LAW
KEY ISSUE : DESPITE THE AUTHOR'S WORTHY INTENTIONS, MIGHT THERE
BE UNINTENDED CONSEQUENCES IF A BROAD CATEGORY OF POLITICAL
REFORM ACT COMPLAINTS WERE REMOVED FROM THE PROTECTION OF THE
ANTI-SLAPP STATUTE, WHICH IS DESIGNED TO PROTECT AGAINST
LITIGATION TARGETING FREE SPEECH AND PETITION RIGHTS?
FISCAL EFFECT : As currently in print this bill is keyed
non-fiscal.
SYNOPSIS
This well-intentioned measure would exempt a broad class of law
suits under the Political Reform Act (PRA) from the protections
of the anti-SLAPP law. According to the author, the PRA has
been effectively eviscerated by the anti-SLAPP statute because
courts are quick to grant the anti-SLAPP motion and dismiss PRA
suits, knowing that most citizen plaintiffs will not risk being
subjected to liability for costly attorney's fees. The author
contends that this is a good government bill that will curtail
corruption and continue to empower citizens to be watchdogs
within their communities as intended by the voters when they
passed the Political Reform Act. Opponents, representing
free-speech advocates, contend that the bill is unjustified and
will not accomplish the author's worthy objective. Moreover,
the bill may have inadvertent negative effects. No supporters
have submitted letters to urge passage of the bill.
SUMMARY : Strips actions under the Political Reform Act (PRA)
from the protections afforded to free speech and petition by the
anti-SLAPP statute. Specifically, this bill provides that the
special motion to strike that is used against speech-related law
suits would no longer apply to any cause of action brought
pursuant to certain conflict of interest suits under the PRA -
namely any action alleging a violation of one of the following:
Articles 1 (commencing with Section 87100), Article 4
(commencing with Section 87400, Article 4.5 (commencing with
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Section 87450) of Chapter 7 of Title 9 of the Government code or
a disqualification provision of the Conflict of Interest Code.
EXISTING LAW :
1)Pursuant to the anti-SLAPP statute, provides that a cause of
action against a person arising from any act of that person in
furtherance of the person's right of petition or free speech
under the United States or California Constitution in
connection with a public issue shall be subject to a special
motion to strike, unless the court determines that the
plaintiff has established that there is a probability that the
plaintiff will prevail on the claim. (Code of Civil Procedure
section 425.16.)
2)Defines "act in furtherance of a person's right of petition or
free speech under the United States or California Constitution
in connection with a public issue" to include: (1) any written
or oral statement or writing made before a legislative,
executive, or judicial proceeding, or any other official
proceeding authorized by law; (2) any written or oral
statement or writing made in connection with an issue under
consideration or review by a legislative, executive, or
judicial body, or any other official proceeding authorized by
law; (3) any written or oral statement or writing made in a
place open to the public or a public forum in connection with
an issue of public interest; (4) or any other conduct in
furtherance of the exercise of the constitutional right of
petition or the constitutional right of free speech in
connection with a public issue or an issue of public interest.
(Code of Civil Procedure section 425.16(e).)
3)Provides that statements by governmental entities and public
officials acting in their official capacity that are made in
the foregoing contexts, or with respect to those subjects,
enjoy the protection of the anti-SLAPP statute. (Vargas v.
City of Salinas. 2009 Cal. LEXIS 3698 (California Supreme
Court)(April 20, 2009).)
4)Pursuant to the Political Reform Act of 1974, including
provisions known as the Ethics in Government Act of 1990,
imposes ethical standards on elected officials and candidates
for elective or judicial office, including provisions
governing the acceptance of gifts, honoraria, and campaign
contributions, as well as rules regulating advocacy by former
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elected officials, and authorizes a person to sue for
injunctive relief to enjoin violations of, or to compel
compliance with, these provisions. (Government Code sections
81000 et seq.)
5)Generally provides pursuant to Article 1 of the PRA that no
public official at any level of state or local government
shall make, participate in making, or in any way attempt to
use his official position to influence a governmental decision
in which he knows or has reason to know he has a financial
interest. (Government Code section 87100 et seq.)
6)Provides that no public official of a state agency shall, for
compensation, act as an agent or attorney for, or otherwise
represent, any other person by making any formal or informal
appearance before, or any oral or written communication to,
his or her state agency or any officer or employee thereof, if
the appearance or communication is for the purpose of
influencing a decision on a contract, grant, loan, license,
permit, or other entitlement for use. (Government Code
section 87104.)
7)Generally provides pursuant to Article 4 of the PRA that no
former state administrative official, after the termination of
his or her employment or term of office, shall for
compensation act as agent or attorney for, or otherwise
represent, any other person (other than the State of
California) before any court or state administrative agency or
any officer or employee thereof by making any formal or
informal appearance, or by making any oral or written
communication with the intent to influence, in connection with
any judicial, quasi-judicial or other proceeding if both of
the following apply: (a) The State of California is a party or
has a direct and substantial interest; (b) The proceeding is
one in which the former state administrative official
participated. (Government Code section 87401.)
8)Further provides that no former state administrative official,
after the termination of his or her employment or term of
office shall for compensation aid, advise, counsel, consult or
assist in representing any other person (except the State of
California) in any proceeding in which the official would be
prohibited from appearing under Section 87401. (Government
Code section 87402.)
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9)Also provides that no Member of the Legislature, other elected
state and local officials and designated employees, for a
period of one year after leaving office or employment, shall,
for compensation, act as agent or attorney for, or otherwise
represent, any other person by making any formal or informal
appearance, or by making any oral or written communication,
before the Legislature, any committee or subcommittee thereof,
any present Member of the Legislature, or any officer or
employee thereof, if the appearance or communication is made
for the purpose of influencing legislative action.
(Government Code section 87406 et seq.)
10)Provides pursuant to Article 4.5 of the PRA that no state
administrative official shall make, participate in making, or
use his or her official position to influence any governmental
decision directly relating to any contract where the state
administrative official knows or has reason to know that any
party to the contract is a person with whom the state
administrative official, or any member of his or her immediate
family, has engaged in any business transaction or
transactions on terms not available to members of the public,
regarding any investment or interest in real property, or the
rendering of goods or services totaling in value one thousand
dollars ($1,000) or more within 12 months prior to the time
the official action is to be performed. (Government Code
section 87450.)
11)Requires every public agency to adopt and promulgate a
Conflict of Interest Code that has the force of law, any
violation of which is a violation of the Political Reform Act,
requiring candidates for elective office and those holding
enumerated public positions to file certain statements at
prescribed intervals disclosing specific types of investments,
business positions, interests in real property, and sources of
income if they may foreseeably be affected materially by any
decision made or participated in by the designated employee by
virtue of his or her position and setting forth any
circumstances under which designated employees or categories
of designated employees must disqualify themselves from
making, participating in the making, or using their official
position to influence the making of any decision when it is
reasonably foreseeable that they may be affected materially by
the decision. (Government Code section 87300 et seq.)
COMMENTS : The bill as it now appears in print would exempt from
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the anti-SLAPP statute those law suits "brought by a private
citizen or business entity pursuant to subdivision (a) of
Section 91003 of the Government Code." This provision creates a
private right of action for injunctive relief for any violation
of the PRA. The sponsor has subsequently advised the Committee
of proposed amendments that would both broaden the bill in some
respects and narrow it in others. The proposed amendments
broaden the bill in that they eliminate the restriction to
actions brought by private citizen and businesses; under the
proposed amendments, any plaintiff would be covered - that is, a
law suit by any plaintiff would be exempt from the anti-SLAPP
statute. The proposed amendments also narrow the bill in
another respect by focusing on certain specified allegations
under the Political Reform Act. The following comments relate
to the proposed amendments on the understanding that the author
wishes to present this version of the bill to the Committee.
Author's Stated Rationale For The Bill . The author provided the
following rationale in support of the bill:
The increasing incidence of conflict of interest violations
by elected and appointed government officials continues to
diminish the confidence in our government officials and
political system. In 1975, the People of the State of
California passed the Political Reform Act ("PRA") and
empowered its citizens to be vigilant watchdogs to curtail
corruption by government officials. To ensure that the
Community was protected from corrupt actions of government
officials, the PRA intentionally provided for an extremely
low threshold (Burden of Proof) to enjoin any action which
violated the conflict of interests provisions of the PRA.
Additionally, to ensure that vigilant citizens would not be
subjected to personal financial harm, the PRA expressly
prohibited the award of attorney fees against these
citizens for any action brought under the PRA.
Government Code Section 91003(a) provides, among other
things, that any person residing in the jurisdiction may
sue for injunctive relief to enjoin violations or to compel
compliance with the provisions of the PRA.
Government Code Section 91003(b) provides that upon a
preliminary showing in an action brought by a person
residing in the jurisdiction that a violation of Article 1
(commencing with Section 87100), Article 4 (commencing with
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Section 87400), or Article 4.5 (commencing with Section
87450) of Chapter 7 of this title or of a disqualification
provision of a Conflict of Interest Code has occurred, the
court may restrain the execution of any official action in
relation to which such a violation occurred, pending final
adjudication. If it is ultimately determined that a
violation has occurred and that the official action might
not otherwise have been taken or approved, the court may
set the official action aside as void. The official
actions covered by this subsection include, but are not
limited to orders, permits, resolutions and contracts, but
do not include the enactment of any state legislation. In
considering the granting of preliminary or permanent relief
under this subsection, the court shall accord due weight to
any injury that may be suffered by innocent persons relying
on the official action.
One example for injunctive relief under Gov't code section
91003 would be to enjoin the action of a city council
member who votes for a development project when he/she has
a financial conflict of interest. A citizen in that
community, pursuant to Gov't code section 91003, could file
suit to enjoin the council action if the court finds that a
financial conflict of interest existed.
Unfortunately, what's occurring is that the council members
and other local public officials who have a conflict of
interest are filing SLAPP actions (California Code of Civil
Procedure 325.16) against the citizen, claiming that the
Gov't code section 91003 injunctive relief lawsuit cannot
be brought, and the case should be dismissed, because the
council member has a constitutional right to vote, even
though they have a conflict of interest. This is nonsense.
California Code of Civil Procedure 425.16, commonly
referred to as the Anti-Slapp statute, amended in 1992, was
designed to limit lawsuits brought for the purpose of
curtailing a persons right to exercise legal free speech.
When a person violates the conflict of interest rules, that
speech is not legal or constitutionally protected. CCP
425.16, approved by a simple majority vote of the
legislature was not intended to amend the PRA, nor did it
amend the PRA, as the PRA can only be amended by a vote of
2/3 majority.
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Additionally, if a person files a Gov't code section 91003
action to protect his/her community and they are then
subjected to a SLAPP action, they face the unfortunate
burden of having to pay attorney fees to the councilmember
who had the conflict of interest. The PRA specifically
prohibits the award of attorney fees to a local government
agency if it prevails in an action brought under the PRA.
However, the Anti-Slapp law, absolutely mandates the award
of attorney fees, to any prevailing party, including a
local government agency. This alone is a substantive
amendment of the PRA. Since the Anti-Slapp legislation was
passed by a simple majority of the legislature and did not
comply with the procedures of amending the PRA, it is an
unconstitutional amendment, as applied to the PRA.
Unfortunately, there is no case law that states that Gov't
code section 91003 was not amended by the 1992 amendment to
the SLAPP statute. Government Code section 91003 was
approved by the voters to encourage citizens to be vigilant
in protecting their communities from local elected
officials who vote when they have financial conflict of
interests. Section 91003 is effectively eviscerated by the
Anti-Slapp statute as private citizens will not risk being
subjected to Anti-Slapp suits (especially when they are
used as a weapon) and having to pay attorneys fees that
could be well in excess of $500,000.) Not having any
published Appellate Court authority, the trial courts, are
quick to grant Slapp suits and dismiss Gov't code section
91003 actions because the case is off their calendars and
they also know that most people are not going to risk
paying additional attorney fees in case they lose on
appeal.
Clearly, if the SLAPP statute is interpreted to prohibit
91003 actions, then it is effectively eviscerating section
91003 as no one could ever seek the constitutional remedy
provided therein.
Legislation is necessary to clarify that the 1992 amendment
to CCP section 325.16 did not amend the PRA and further
that CCP section 425.16 does not apply to actions brought
pursuant to Gov't code section 91003.
This is a good government bill with sound public policy
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that will curtail corruption and continue to empower
citizens to be watchdogs within their communities as
intended by the voters when they passed the PRA in 1975.
The Anti-SLAPP Law Protects Against Frivolous Lawsuits That Seek
To Punish or Deter The Exercise Of Free Speech and Petition
Rights. The anti-SLAPP law protects the public's First
Amendment rights by prohibiting Strategic Lawsuits Against
Public Participation (SLAPPs) - law suits pursued solely to
prevent the target of the suit from participating in government
proceedings or speaking out on public issues. SLAPP suits were
first defined in a 1988 article as "civil lawsuits ... that are
aimed at preventing citizens from exercising their political
rights or punishing those who have done so." While SLAPP suits
"masquerade as ordinary lawsuits" such as defamation and
interference with prospective economic advantage, they are
generally meritless suits brought primarily to chill the
exercise of free speech or petition rights by the threat of
severe economic sanctions against the defendant, and not to
vindicate a legally cognizable right.
In 1992, California enacted an anti-SLAPP statute, codified at
Code of Civil Procedure section 425.16 to provide a "special
motion to strike" which could be used by defendants in SLAPP
suits to obtain an early judicial ruling and termination of a
meritless claim arising from a person's exercise of the right to
petition or free speech in connection with a public issue.
Is There Evidence That The Anti-SLAPP Law Is Frequently Invoked
Against Legitimate Political Reform Act Complaints? The author
contends that this bill is needed because corrupt public
officials regularly retaliate against citizens who bring
legitimate complaints against them for violation of conflict of
interest laws. As recited above, the author asserts that courts
are quick to grant SLAPP motions and dismiss PRA suits. Asked
to provide information about these cases, the author has
provided only one example - City of West Covina v. Hassen
Imports Partnership (2008) No. B195660, 2008 WL 803638 (Cal.
App).
In 2006 the City of West Covina sued a group of car dealerships,
alleging breach of contract and liability under a written
guaranty. The complaint alleged that beginning in 1983 the West
Covina Development Commission entered into a series of
development agreements under which the defendants received loans
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from the Commission to develop or rehabilitate several
automobile dealerships, in consideration for guaranteed minimum
sales tax revenue. The dealerships responded to the City's
breach of contract action by filing a cross-complaint as
taxpayers and citizens against the City and three members of the
city council asserting violations of the conflict of interest
provisions of the PRA (specifically alleging a violation of the
provision that no public official shall make, participate in
making or in any way attempt to use his official position to
influence a governmental decision in which he knows or has
reason to know he has a financial interest).
The City demurred to the cross-complaint and filed an anti-SLAPP
motion seeking dismissal of the cross-action. The trial court
granted the City's anti-SLAPP motion, finding that the alleged
actions taken by the City and City Council members were in
furtherance of their constitutional rights of petition or free
speech, and that defendants had failed to meet their burden to
make a prima facie showing that the council members' actions had
been taken with a financial interest in the outcome. On appeal,
the dealerships conceded that their suit arose from the City's
exercise of constitutional right of petition or free speech in
connection with a public issue, and did not claim to have
established a probability of prevailing on the merits of their
PRA action. Instead, their sole contention on appeal was that
the enactment of the anti-SLAPP statute subsequent to the PRA
had the effect of amending the PRA, in violation of the
California Constitution.
On appeal, the car dealerships (represented by the sponsor of
this bill) did not challenge the trial court's findings;
instead, they argued that the anti-SLAPP law could not be
applied to PRA claims because to do so would amount to an
unconstitutional amendment of the PRA. The appeals court
rejected this argument.
In summary, the West Covina case was not a law suit initiated by
a private citizen seeking to enforce the PRA, but an
unsuccessful rejoinder by a business that was sued for failure
to perform its contractual obligations with public funds. The
trial court found no good evidence that the city or officials
involved had violated their PRA obligations, and the car
dealerships did not dispute that conclusion on appeal.
Might Wholesale Exclusion From The Anti-SLAPP Statute For
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Certain Types Of Lawsuits Under The Political Reform Act
Potentially Allow For Unintended Mischief? If in fact public
entities and officials are misusing the anti-SLAPP law against
conflict of interest allegations, and the courts are failing to
distinguish proper PRA complaints from spurious SLAPP actions,
this bill proposes a broad solution: exclude all conflict of
interest charges from the protections of the anti-SLAPP statute.
It may be, as the author asserts, that "when a person violates
the conflict of interest rules, that speech is not legal or
constitutionally protected." But it must also be acknowledged,
as opponents of law suit abuse frequently argue, that not every
law suit alleging a conflict of interest violation under the PRA
is necessarily asserted in good faith or found to be warranted.
The result of the exemption proposed by the bill would be that
potential SLAPP suits masquerading as PRA actions would be
allowed to proceed unimpeded. Despite the author's worthy
intentions, it would seem that this approach would be justified
only if it could be said with assurance that no conflict of
interest allegation could ever be made irresponsibly or with an
ulterior motive to deter, silence or embarrass a political
opponent or rival because of his or her protected free speech or
petition activity. To take only one of the areas covered by the
bill - the rules restricting post-public service advocacy and
representation, for example - it does not seem impossible that
opposing interests, political adversaries or business rivals
could potentially create mischief by filing PRA complaints
against public officials or candidates that would be unshielded
by the anti-SLAPP law under this bill.
If there is concern that the judiciary is misapplying the
anti-SLAPP law, despite the apparent absence of decisions, the
author may wish to pursue the issue as a matter of improved
judicial education.
ARGUMENTS IN OPPOSITION : Two free-speech groups write in
opposition to the bill. The California Anti-SLAPP Project
(CASP), a public interest organization involved in the creation,
monitoring, enforcement and amendment of the anti-SLAPP law,
states:
The anti-SLAPP law embodies very important values - the
protection of the First Amendment rights of petition and
speech. Therefore, the burden is on anyone proposing an
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exemption to the law to justify the need for said
exemption. In the case of AB 1262, CASP hasn't seen that.
Last year, I discussed with your staff the reason for the
predecessor of this bill (AB 229 of 2008), and the bill
doesn't accomplish the reason given. I was told that the
purpose of the bill is to prevent cities from suing
citizens (filing SLAPPs) because they have filed a
complaint with the FPPC or other agency about the
conflict-of-interest of a city council member. This
hypothetical does sound like a classic SLAPP, but AB 1262
doesn't prevent cities from filing such a SLAPP. Instead,
the bill broadly exempts all Political Reform Act lawsuits
and causes of action from the anti-SLAPP law. Thus, if a
SLAPP filed by a city made claims under the Political
Reform Act (PRA) (such as for declaratory relief that there
were no PRA violations), AB 1262 would actually deprive the
citizen of the protections of the anti-SLAPP law (at least
as to the PRA claims). The bill doesn't prevent the city
from filing a SLAPP (regardless of the causes of action
therein) under any circumstances. At the same time, the
bill, as currently written, would deprive citizens who are
SLAPPed with a meritless lawsuit alleging violations of the
PRA of the protections of the anti-SLAPP law.
It is also important to note that the anti-SLAPP law does
not prevent any meritorious lawsuit from proceeding. All a
plaintiff has to do to defeat an anti-SLAPP motion is to
submit evidence sufficient to establish a prima facie case
in support of the lawsuit. If plaintiff needs discovery to
do so, that is available, upon a showing of good cause by
noticed motion. (C.C.P. 425.16, subd. (g).)
The American Civil Liberties Union also opposes the bill,
stating: "The [anti-SLAPP] statute ensures that people will
continue to participate in their community, by providing a
mechanism for expeditious resolution of any lawsuit filed
against them as a result of their speech activities. This bill
would exempt the state's Political Reform Act from this
important law without providing a good reason. This bill is
similar to legislation proposed last session which was
introduced in part to prevent a specific lawsuit from happening
again. (City of West Covina, v. Hassen Imports Partnership,
B195660, Los Angeles County, Super.Ct. No. KCO48157). In West
Covina ? [a] business filed an injunction, under the provisions
of the Political Reform Act, against the city council members.
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The city, in representing its members, filed a motion to strike,
using the anti-SLAPP law. The car dealership, unable to prove a
prima facie case, had the case dismissed. This case only
exemplifies how the anti-SLAPP law works. It does not prove a
good reason for creating an exemption."
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
ACLU
California Anti-SLAPP Project
Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334