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Vargas v. City of Salinas

April 20, 2009

ANGELINA MORFIN VARGAS ET AL., PLAINTIFFS AND APPELLANTS,
v.
CITY OF SALINAS ET AL., DEFENDANTS AND RESPONDENTS.



Ct.App. 6 H027693 Monterey County Super. Ct. No. M61489. Judge: Robert A. O'Farrell.

The opinion of the court was delivered by: George, C. J.

Plaintiffs - proponents and supporters of a local ballot measure that proposed the repeal of a utility users tax imposed by the City of Salinas - filed this lawsuit against the City of Salinas (the City) challenging the validity of a number of actions taken by the City relating to the ballot measure. In Stanson v. Mott (1976) 17 Cal.3d 206 (Stanson), we explained that because of potential constitutional questions that may be presented by a public entity's expenditure of public funds in connection with a ballot measure that is to be voted upon in an upcoming election, there is a need to distinguish between (1) "campaign" materials and activities that presumptively may not be paid for by public funds, and (2) "informational" material that ordinarily may be financed by public expenditures. We noted in Stanson that although there are some communications or activities that clearly fall within one of these categories or the other, under some circumstances it may be necessary to examine the "style, tenor, and timing" of a communication (id. at p. 222 & fn. 8) in order to determine whether it should be characterized as permissible or impermissible.

In the present case, the Court of Appeal concluded that in light of a statutory provision enacted subsequent to Stanson, supra, 17 Cal.3d 206, a municipality's expenditure of public funds on a communication relating to a ballot measure is permissible whenever the communication does not "expressly advocate" a position with regard to the ballot measure. The appellate court held that so long as a communication avoids this prohibition on "express advocacy" - a term of art originating in the context of regulations relating to private campaign contributions and expenditures, and referring to a limited and narrowly defined category of statements - there is no need to consider the communication's "style, tenor, and timing" in determining the validity of the use of public funds on the communication. Because plaintiffs conceded that the materials challenged in the present case did not (within the meaning of the express advocacy standard) expressly advocate a position regarding the ballot measure, the Court of Appeal on that basis alone concluded that plaintiffs' legal challenge lacked merit and consequently upheld the trial court's order striking plaintiffs' action under Code of Civil Procedure section 425.16, California's anti-SLAPP statute.*fn1

We granted review primarily to consider whether the Court of Appeal correctly identified the legal standard applicable to publicly funded, election-related communications made by a municipality, and further to determine whether, under the appropriate standard, plaintiffs' legal challenge to the City's expenditure of public funds in this case should have been permitted to go forward.

For the reasons discussed below, we conclude that the statute relied upon by the Court of Appeal was not intended, and should not be interpreted, to displace the analysis and standard set forth in our decision in Stanson, supra, 17 Cal.3d 206. We further conclude that a municipality's expenditure of public funds for materials or activities that reasonably are characterized as campaign materials or activities - including, for example, bumper stickers, mass media advertisement spots, billboards, door-to-door canvassing, or the like - is not authorized by the statute in question, even when the message delivered through such means does not meet the express-advocacy standard. At the same time, we also conclude that the challenged actions of the City, here at issue, as a matter of law do not constitute improper campaign materials or activities under the standard set forth in Stanson. Accordingly, although we disagree with the legal standard applied by the Court of Appeal, we conclude that it correctly upheld the trial court's ruling in favor of defendants and thus that the judgment of the Court of Appeal should be affirmed.

I.

A.

The controversy that gave rise to this litigation relates to a local initiative measure - ultimately designated Measure O - that was drafted and circulated in 2001 by residents of the City. Measure O proposed the adoption of an ordinance that immediately would cut in half, and over a few years totally repeal, the City's Utility Users Tax (sometimes referred to as UUT). The UUT was a local tax that had been in place for more than 30 years and that, at the time the measure was presented to the voters, generated approximately $8 million in annual revenue for the City, a figure that represented 13 percent of the City's general fund budget.*fn2

After gathering signatures, the proponents submitted the initiative petition to the county registrar of voters on September 24, 2001, and on October 3, 2001, that official certified it had been signed by the number of voters required to qualify the initiative for the ballot. Under the provisions of Elections Code section 9215, when a local initiative petition obtains the requisite number of signatures, the local legislative body must take one of three actions: (1) adopt the proposed ordinance itself without alteration, (2) submit the proposed ordinance without alteration to the voters, at either the next regularly scheduled municipal election or at a special election, or (3) direct the municipality's staff to prepare a report - as authorized by Elections Code section 9212 - on the impact that the proposed ordinance likely would have on the municipality.

On October 9, 2001, the Salinas City Council adopted the third of these alternatives. Under the direction of the city manager, each of the municipal departments conducted an initial study of the measure's potential impact on the respective department, and on November 6, 2001, the city manager submitted the requested report to the city council. The report stated in part that "the initial analysis leads to the conclusion that the repeal of the Utility Users Tax will require substantial service level reductions to City residents." At its November 6, 2001 meeting, the city council, declining to adopt the proposed ordinance itself, voted to submit it to the voters at the next regularly scheduled municipal election, to be held the following year on November 5, 2002. At the same time, the council directed city staff to conduct further study of the proposed cuts that would be required were Measure O to be adopted by the voters.

In the following months, each of the municipal departments reviewed its operations and prepared detailed reports and financial analyses discussing the reduction or elimination of specific services or programs that could be implemented in the event Measure O were adopted.

Pursuant to its usual schedule, the city council considered the proposed annual city budget for the 2002-2003 fiscal year at its June 11, 2002 meeting. Because it was not known at that time whether Measure O would be adopted at the upcoming November 2002 election, the city manager submitted a proposed budget that was based on the assumption that the City would continue to obtain revenue from the UUT at its current rate throughout the 2002-2003 fiscal year. At that meeting, the city council voted to approve and adopt the proposed budget for the 2002-2003 fiscal year. Although the budget adopted by the city council assumed the City's retention of the UUT, the material accompanying the proposed budget briefly noted program and service reductions that could be required were the UUT to be repealed. The city manager stated at the June 11 meeting that he anticipated a detailed alternative budget - setting forth program and service reductions that could be implemented should the UUT repeal be adopted - soon would be presented to the city council so that this body could consider such an eventuality at its July 16, 2002 meeting.

Two weeks later, in a lengthy report dated June 24, 2002, the city manager specifically identified the individual program and service reductions recommended by the city staff should Measure O be adopted. The report discussed in detail the financial implications of the passage of that measure, including recommended program and service reductions in each city department.

The report formally was presented to the city council at its July 16, 2002 meeting, at which numerous city residents - some supporters of Measure O, and some opponents - expressed their opinions regarding the staff recommendations and the overall impact of Measure O. After an extensive discussion at the July 16 meeting, the city council voted formally to accept the city staff's recommendations with regard to the city services and programs that would be reduced or eliminated should Measure O be approved at the November 2002 election. The council's resolution listed numerous city facilities that would be closed and specific programs and services that would be eliminated or reduced if Measure O were adopted.

Thereafter, at four weekly meetings of the city council held throughout the month of August 2002, each of the city departments made an extensive slide presentation to the public describing the reductions in services and programs that would be implemented in the event UUT revenues were reduced and ultimately eliminated through the passage of Measure O.

At numerous city council meetings as well as at other venues, the proponents of Measure O sharply criticized the service and program reductions that had been recommended by city staff and adopted by the city council, contending that the anticipated reduction in city revenue could and should be dealt with through more efficient municipal operations and reductions in management positions and in employee salaries and benefits. At the August 20, 2002 city council meeting, the proponents of Measure O distributed a document that set forth their own analysis of the City's financial condition and of the financial implications were Measure O to pass, and that described a number of alternative courses of action that the proponents suggested would be preferable to the service and program reductions approved by the city council in the event Measure O were to be adopted.

At the August 27, 2002 city council meeting, the proponents of that measure formally presented their alternative proposals to the city council and to the public. At that same meeting, the city staff presented a report critically analyzing the financial assumptions underlying the position and alternatives submitted by the proponents.

Pursuant to the City's normal practice, detailed minutes of each city council meeting - summarizing the statements of each speaker - were posted on the official Web site maintained by the City. In addition to these minutes, the City posted on its official Web site (1) the lengthy June 24, 2002 report of the city manager setting forth the city finance department's analysis of the financial impact of Measure O and describing in detail the service and program reductions recommended for each department, (2) the slide presentations that had been made by each of the city departments at the August 2002 city council meetings, and (3) the city staff's August 27 report responding to the alternative implementation plans advanced by the proponents of Measure O.

After the city council formally voted on July 16, 2002, to specify the particular city facilities, services, and programs that the council would eliminate or reduce if the UUT were repealed, the City produced a one-page document - characterized by the proponents of Measure O as a "flyer" or "leaflet" - that briefly described the initiative measure and the background of the utility users tax and that then stated, "On July 16, 2002, the Salinas City Council unanimously identified the services that would be eliminated or reduced if the Utility Users Tax is repealed." The document then listed, in separate categories, the "Facilities To Be Closed," "Programs/Services To Be Eliminated," "Community Funding To Be Eliminated," and "Programs/Services To Be Reduced." Finally, the document advised that detailed information concerning the potential elimination or reduction of programs and services was contained in the June 24, 2002 report of the city manager, and that the report was available to the public at city hall as well as in all city libraries and on the City's Web site. Copies of the one-page document (in English and Spanish) were made available to the public in the city clerk's office at city hall and in all city libraries.*fn3

In addition to producing and making available to the public this one-page document, the City also informed the public of the city council's July 16, 2002 action (identifying the services and programs that would be eliminated or reduced if the UUT were repealed) through a number of articles published in the fall 2002 edition of the City's regular quarterly "City Round-up" newsletter, a publication that was mailed to all city residents prior to October 1, 2002.*fn4 An article on the first page of the eight-page newsletter, entitled "Community to Decide Fate of Utility Users Tax," contained the same text as the one-page document described above. Another item, on page 3 of the newsletter, contained answers to frequently asked questions concerning the UUT, and additional articles on pages 4 and 5 of the newsletter described the proposed cuts to police, fire, and recreation/park services that would be implemented should the UUT be repealed. Other articles appearing in the fall 2002 newsletter concerned a variety of subjects of local interest unrelated to either the UUT or Measure O, including articles on local highway improvements (p. 2), a new "Neighborhood Problem Solver" guide developed by the City (p. 7), and a "Salinas Quiz" posing questions about local birds (p. 6).*fn5

B.

On October 7, 2002, shortly after the city newsletter was mailed to and received by city residents, plaintiffs - a number of Salinas residents who supported Measure O - filed the underlying lawsuit against the City and various city officials, contending that the City and its officials had engaged in unlawful campaign activities in utilizing public resources and funds "to prepare and distribute pamphlets, newsletters and Web site materials." The complaint maintained that the materials in question - characterized by the complaint as "campaign materials" - "do not provide a balanced analysis of the arguments in favor of and against Measure O" and improperly were intended to influence voters against Measure O. The complaint sought declaratory, injunctive, and equitable relief, as well as the recovery of the public funds alleged to have been unlawfully expended in the production and distribution of the challenged materials (which the complaint asserted to be in excess of $250,000).

Concurrently with the filing of the complaint, plaintiffs filed an ex parte application for a temporary restraining order. Defendants filed an opposition to the application. The trial court denied the requested temporary restraining order and set a hearing on plaintiffs' request for a preliminary injunction for November 8, 2002, three days after the scheduled election. Measure O was defeated at the November 5, 2002 election. The hearing on the preliminary-injunction request went forward on November 8, 2002, and at the conclusion of that hearing the trial court denied the request.

In April 2004, after the trial court had granted defendants' motion for judgment on the pleadings as to several counts of the original complaint and thereafter had permitted plaintiffs to file a supplemental complaint,*fn6 defendants filed a special motion to strike plaintiffs' supplemental complaint pursuant to section 425.16. In support of the motion to strike, defendants submitted declarations of numerous city officials and voluminous documentary materials, including the materials challenged by plaintiffs as improper campaign material.

Plaintiffs filed an opposition to the motion to strike, including a "statement of undisputed facts" and three supporting declarations by proponents of Measure O and their attorney. The opposition asserted, among other matters, that the materials relating to Measure O that the City made available to the public failed to include the viewpoint and positions advanced by the proponents of Measure O, that the City had ignored offers by the proponents of Measure O to provide material supporting the proponents' viewpoint, and finally that the proponents of Measure O would have utilized the City's Web site and the City's other publications, had they been offered access to those media.

In May 2004, the trial court held a hearing on defendants' motion to strike and thereafter granted the motion. After the trial court denied plaintiffs' motion for reconsideration, plaintiffs appealed from the trial court's order granting defendants' motion to strike.

C.

On appeal, the Court of Appeal affirmed the judgment entered by the trial court.

Because the appeal arose from an order granting a motion to strike under section 425.16, the appellate court undertook the two-step analysis called for by prior decisions of this court, considering first whether defendants had made a threshold showing that the challenged cause of action was one arising from "protected activity," and second, if so, whether plaintiffs had made a prima facie showing of facts that would support a judgment in their favor if proved at trial. (See, e.g., Equilon, supra, 29 Cal.4th 53, 67; City of Cotati v. Cashman (2002) 29 Cal.4th 69, 76.)

With respect to the first step, the Court of Appeal rejected plaintiffs' claim that defendants failed to make the required threshold showing, explaining that (1) past California decisions uniformly hold that government entities and public employees may invoke the protection of the anti-SLAPP statute, (2) the statements and communications of defendants challenged in this case clearly concern a matter of public interest, (3) the alleged illegality of defendants' conduct does not render the anti-SLAPP statute inapplicable but rather presents an issue to be addressed in the second step of the legal analysis, and (4) newly enacted Code of Civil Procedure section 425.17 does not exempt plaintiffs' action from the anti-SLAPP statute.

Having found that the communications of the City that gave rise to plaintiffs' action fall within the potential protection of the anti-SLAPP statute, the Court of Appeal went on to consider whether plaintiffs had met their burden of making a prima facie showing that they were likely to succeed on the merits. In evaluating this point, the court determined that the first matter to be addressed was the proper legal standard for evaluating whether the statements and other communications of the City challenged by plaintiffs constituted campaign materials or whether they constituted informational materials. With respect to this issue, the Court of Appeal observed: "Defendants argue for an express advocacy standard. Plaintiffs urge us to examine the materials' style, tenor, and timing, asserting that such a standard is compelled by Stanson[, supra, 17 Cal.3d 206]." Relying upon the language of a statutory provision enacted subsequent to the Stanson decision that explicitly prohibits a local agency's expenditure of funds with regard to "communications that expressly advocate the approval or rejection of a clearly identified ballot measure" (Gov. Code, § 54964, subd. (b)) and upon a state regulation that defines when a communication "expressly advocates" the election or defeat of a candidate or the passage or defeat of a ballot measure for purposes of campaign finance laws (Cal. Code Regs., tit. 2, § 18225, subd. (b)(2)),*fn7 the Court of Appeal agreed with defendants' position, concluding that "[t]o be considered unlawful promotional materials, the challenged statements must expressly advocate the election outcome." Because it found that the statements challenged by plaintiffs did not meet the express-advocacy standard, the Court of Appeal concluded that the City's statements were informational rather than campaign materials, and thus that plaintiffs failed to demonstrate a prima facie case of likely prevailing on the merits.*fn8

We granted review primarily to determine (1) whether the Court of Appeal correctly determined that the "express advocacy" standard, rather than the standard set forth in Stanson, supra, 17 Cal.3d 206, is the applicable standard, and (2) whether, under the appropriate standard, the trial court properly granted defendants' motion to strike.

II.

Before reaching the question of the proper standard under which publicly funded communications relating to a pending ballot measure should be evaluated, we briefly address the threshold question whether, as a general matter, the City and its officials are entitled to invoke the protections of the motion-to-strike procedure in California's anti-SLAPP statute.

Section 425.16, subdivision (b)(1) provides: "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." As already noted, past cases analyzing the proper application of this statute have explained that "in ruling on a section 425.16 motion to strike, a court generally should engage in a two-step process: 'First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity. . . . If the court finds such a ...


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