Superior Court of the County of Sonoma, No. SCV242225, Gary Nadler, Judge.
The opinion of the court was delivered by: Jones, P.J.
CERTIFIED FOR PUBLICATION
The County of Sonoma (the County) seeks relief from an order of the superior court compelling the County to arbitrate with real party in interest Sonoma County Law Enforcement Association (SCLEA) under the procedures established in Code of Civil Procedure section 1299 et seq.*fn1 In County of Riverside v. Superior Court (2003) 30 Cal.4th 278 (Riverside), the California Supreme Court held an earlier version of that statute unconstitutional, because the statute impermissibly infringed upon home rule powers reserved to local governments by article XI of the California Constitution. (Riverside, at p. 282.) The Legislature amended the statute in response to the Supreme Court's decision. But the County contends the amended version continues to intrude upon its constitutional authority to establish compensation and terms of employment for county employees. We agree with the County and will therefore grant its petition for writ of mandate.
The County's challenge focuses on the constitutionality of section 1299 et seq., but that statute cannot be understood in isolation. Because this case concerns the collective bargaining process between local government agencies and public employee organizations, the Meyers-Milias-Brown Act (MMBA), Government Code sections 3500-3510, is also relevant to our analysis. (See Voters for Responsible Retirement v. Board of Supervisors (1994) 8 Cal.4th 765, 780 (Voters for Responsible Retirement).) We will therefore summarize the relevant provisions of the MMBA before setting out the history of current section 1299 et seq.
The MMBA was enacted to "provid[e] a reasonable method of resolving disputes regarding wages, hours, and other terms and conditions of employment between public employers and public employee organizations." (Gov. Code, § 3500, subd. (a).) The MMBA covers employees of any "public agency," a term that embraces all municipalities and local governmental subdivisions of the state, including counties. (Gov. Code, § 3501, subds. (c), (d).) The statute grants public employees the right to form and join "employee organizations" for the purpose of representation on matters of employer-employee relations. (Gov. Code, § 3502.)
As pertinent here, the negotiation process established by the MMBA requires public agencies to meet and confer in good faith with representatives of recognized employee organizations regarding wages, hours, and other terms and conditions of employment. (Gov. Code, § 3505.) If these meetings produce an agreement, the representatives of the parties must jointly prepare a written memorandum of understanding (MOU). (Gov. Code, § 3505.1.) The statute makes explicit, however, that the MOU "shall not be binding," but rather must be presented to the public agency's governing body "for determination." (Gov. Code, § 3505.1.) Once the governing body approves the MOU, "it then becomes binding on both parties." (Voters for Responsible Retirement, supra, 8 Cal.4th at p. 781.)
Government Code section 3505 states that the meet-and-confer process "should include adequate time for the resolution of impasses where specific procedures for such resolution are contained in local rule, regulation, or ordinance, or when such procedures are utilized by mutual consent." Thus, if the parties reach an impasse in their negotiations, the public agency and the employee organization may agree to appointment of a mediator. (Gov. Code, § 3505.2.) In addition to mediation, the MMBA authorizes public agencies to adopt additional procedures for dispute resolution. (Gov. Code, § 3507, subd. (a)(5).) If after meeting and conferring in good faith, the parties have reached impasse and exhausted any applicable impasse procedures, "a public agency that is not required to proceed to interest arbitration may implement its last, best, and final offer, but shall not implement a [MOU]." (Gov. Code, § 3505.4.) In those circumstances, the MMBA permits unilateral implementation of a public agency's last, best, and final offer.
In 2000, the Legislature adopted Senate Bill No. 402 (1999-2000 Reg. Sess.) (Senate Bill 402), which added title 9.5 to part 3 of the Code of Civil Procedure. (Stats. 2000, ch. 906, § 2, codified at Code Civ. Proc., § 1299 et seq.) As initially enacted, Senate Bill 402 provided for compulsory binding arbitration of labor disputes between employee organizations representing firefighters and law enforcement officers and the local agencies employing them.*fn2 Then as now, the statute provided that if in the course of labor negotiations, an employer and an employee organization reached an impasse over matters within the scope of arbitration, the employee organization (but not the employer) could request referral of the dispute to an arbitration panel. (§ 1299.4, subd. (a).) Economic issues, including salaries, wages, benefits, and all other forms of remuneration, fall within the scope of arbitration. (§ 1299.3, subd. (g).)
The arbitration panel established by Senate Bill 402 consists of three members, with the employer and the employee organization each choosing one member, who then designate "an impartial person with experience in labor and management dispute resolution to act as chairperson of the arbitration panel." (§ 1299.4, subd. (b).) Once selected, the arbitration panel is empowered to meet with the parties or their representatives, to make inquiries and investigations, to hold hearings, and to take any other action the panel deems appropriate. (§ 1299.5, subd. (a).) The panel also has broad authority to subpoena witnesses, administer oaths, take testimony, issue subpoenas duces tecum and to require the production of the parties' records, books, and papers. (§ 1299.5, subd. (b).)
Prior to the panel's hearings, each of the parties is required to submit its "last best offer of settlement as to each of the issues within the scope of arbitration . . . ." (§ 1299.6, subd. (a).) After conclusion of the hearing, the panel decides the disputed contract issues by selecting, without modification, the last best offer "that most nearly complies with" a list of "factors traditionally taken into consideration in the determination of those matters within the scope of arbitration . . . ."*fn3 (§ 1299.6, subds. (b), (c).) The statute provides that the panel must then deliver its decision to the parties, but the decision is not to be publicly disclosed for a period of five days, during which time the parties may meet privately and amend or modify the decision by mutual agreement. (§ 1299.7, subd. (a).) Under the original version of the statute, the panel's decision was made public at the conclusion of the five-day period and automatically became binding on the parties. (Former § 1299.7, subd. (b), as enacted by Stats. 2000, ch. 906, § 2.) The statute empowers the arbitration panel to have the decision made part of any existing MOU. (§ 1299.7, subd. (b).)
County of Riverside v. Superior Court
In 2003, the California Supreme Court declared Senate Bill 402 unconstitutional. (Riverside, supra, 30 Cal.4th at pp. 282, 296.) The high court determined that the legislation violated two separate sections of article XI of the California Constitution. (Id. at p. 282.) The court held that the statute violated section 1, subdivision (b) (section 1, subdivision (b)) of that article, which states that a county's "governing body shall . . . provide for the . . . compensation . . . of its employees." (Id. at p. 289.) It further held that the legislation was inconsistent with section 11, subdivision (a) (section 11, subdivision (a)), which provides that "[t]he Legislature may not delegate to a private person or body power to make, control, appropriate, supervise, or interfere with county . . . money, . . . or perform municipal functions." (Id. at p. 291.)
The Supreme Court held that Senate Bill 402 contravened section 1, subdivision (b) "by compelling [the county] to submit to binding arbitration of compensation issues." (Riverside, supra, 30 Cal.4th at p. 285.) The court explained that the language of section 1, subdivision (b) clearly provides that "the county, not the state, not someone else, shall provide for the compensation of its employees." (Riverside, at p. 285, italics in original.) The statute violated section 1, subdivision (b) because it "permits the union to change the county's governing board from the body that sets compensation for its employees to just another party in arbitration . . . [and] thereby deprives the county of the authority that section 1, subdivision (b), specifically gives to counties." (Riverside, at p. 285.)
The court rejected the notion that the statute could be upheld because it involved a matter of statewide concern. (Riverside, supra, 30 Cal.4th at pp. 286-289.) It acknowledged that "the Legislature may regulate as to matters of statewide concern even if the regulation impinges "to a limited extent' [citation] on powers the Constitution specifically reserves to counties (§ 1) or charter cities (§ 5)." (Riverside, at p. 287.) But the court distinguished two prior decisions in which it had upheld such statewide regulation --Baggett v. Gates (1982) 32 Cal.3d 128 and People ex rel. Seal Beach Police Officers Assn. v. City of Seal Beach (1984) 36 Cal.3d 591 (Seal Beach) -- because the statutes challenged in those cases had imposed only procedural requirements. (Riverside, supra, 30 Cal.4th at pp. 287-289; see Seal Beach, supra, at pp. 597-601 [meet-and-confer requirement of Gov. Code, § 3505 does not conflict with charter city's authority to propose charter amendments under Cal. Const., art. XI, § 3, subd. (b)]; Baggett v. Gates, supra, at pp. 137-139 [Gov. Code, §§ 3300-3311, establishing basic rights and protections for peace officers, does not violate charter cities' power under Cal. Const., art. XI, § 5 to regulate police force and to provide or compensation, qualifications, or removal of employees].) Senate Bill 402, in contrast, was substantive and not procedural, because it took away from counties the authority to establish local salaries and gave that power to an arbitration panel. (Riverside, supra, 30 Cal.4th at pp. 288-289.) Unlike the statute at issue in Seal Beach, under Senate Bill 402, the county's governing body did not ""retain the ultimate power to refuse an agreement and to make its own decisions.'" (Riverside, at p. 289, quoting Seal Beach, supra, at p. 601.)
The Riverside court also ruled that Senate Bill 402 was inconsistent with section 11, subdivision (a). (Riverside, supra, 30 Cal.4th at p. 291.) The court agreed that "the Legislature has impermissibly delegated to a private body -- the arbitration panel -- the power to interfere with county money (by potentially requiring the county to pay higher salaries than it chooses) and to perform municipal functions (determining compensation for county employees)." (Ibid.)
Once again, the court rejected the argument that the Legislature could delegate the authority to set compensation to the arbitration panel because the delegation involved a matter of statewide concern. (Riverside, supra, 30 Cal.4th at pp. 291-293.) The court concluded that because section 1, subdivision (b) states that the county shall provide for employee compensation, "compensating county employees is a municipal function[,]" rather than a statewide concern. (Riverside, at p. 292; accord, id. at p. 300 (conc. opn. of George, C.J.) [compensation of county employees is "a quintessentially local question"].) As a consequence, "establishing compensation for its employees is for the county to do, and section 11, subdivision (a), prohibits the Legislature from delegating that function to a private body." (Riverside, at pp. 292-293.)
The Legislature responded to the decision in Riverside by adopting Senate Bill No. 440 (2003-2004 Reg. Sess.) (Senate Bill 440). (See Stats. 2003, ch. 877.) Senate Bill 440 amended section 1299.7, subdivision (b) and added a new subdivision (c) to that section. (See Stats. 2003, ch. 877, § 1.) Amended subdivision (b) now provides: "At the conclusion of the five-day period, which may be extended by the parties, the arbitration panel's decision, as may be amended or modified by the parties pursuant to subdivision (a), shall be publicly disclosed and, unless the governing body acts in accordance with subdivision (c), shall be binding on all parties, and, if specified by the arbitration panel, be incorporated into and made a part of any existing memorandum of understanding as defined in Section 3505.1 of the Government Code." (§ 1299.7, subd. (b), amendment in italics.) New subdivision (c) provides: "The employer may by unanimous vote of all the members of the governing body reject the decision of the arbitration panel, except as specifically provided to the contrary in a city, county, or city and county charter with respect to the rejection of an arbitration award." (§ 1299.7, subd. (c).)
In enacting Senate Bill 440, the Legislature declared that its intent was to "[m]ake Title 9.5 (commencing with Section 1299) of Part 3 of the Code of Civil Procedure consistent with the decision of the California Supreme Court in County of Riverside v. Superior Court (2003) 30 Cal.4th 278." (Stats. 2003, ch. 877, § 3(b)(4).)
Petitioner is a general law county and is a "public agency" within the meaning of the MMBA. (Gov. Code, § 3501, subd. (c).) SCLEA is the exclusive employee representative of County employees with job classifications in certain law enforcement categories. The County and SCLEA were previously parties to an MOU governing wages, hours, and other terms and conditions of employment for SCLEA's membership. That MOU expired by its terms on June 18, 2007. Prior to its expiration, the parties began negotiations over a new agreement. They were unable to agree on the terms of a successor MOU, and SCLEA declared an impasse in the negotiations in May 2007.
The parties then proceeded to impasse mediation in accordance with the County's employee relations policy. After a number of mediation sessions, the parties were still unable to reach agreement. On August 17, 2007, the County submitted its last, best, and final offer to SCLEA, but SCLEA's members voted to reject it. Further mediation likewise failed to yield an agreement, and on November 13, 2007, SCLEA formally requested that mediation be closed.
On November 19, 2007, SCLEA made a written request to submit the dispute to interest arbitration. The County denied the request on December 4, 2007, and expressed its view that the interest arbitration provisions of section 1299 et seq. represented an unconstitutional delegation of municipal power to private persons and an illegal impingement on the County's plenary authority over the terms and conditions of county employment. SCLEA later renewed its request for interest arbitration. The record is not entirely clear as to how the County responded to this request, if it responded at all, but it is apparent that the County refused to proceed to arbitration.
The County then notified SCLEA that it would submit a resolution to the County's board of supervisors asking the board to implement unilaterally the terms of the County's last, best, and final offer. The board adopted the resolution on January 8, 2008.
On January 25, 2008, SCLEA filed in the superior court a petition to compel arbitration pursuant to section 1299 et seq. The County opposed the petition to compel arbitration and filed its own cross-complaint seeking declaratory relief. The first cause of action of the County's cross-complaint sought a declaration that section 1299 et seq. is unconstitutional because the statute "vest[s] in a private body, rather than a duly elected legislative body, the power to set the terms and conditions of county employment[.]"*fn4
SCLEA answered the County's cross-complaint, and both parties filed cross-motions for judgment on the pleadings.
The County's principal argument below was that section 1299 et seq. impinged substantially on its exercise of home rule powers guaranteed by section 1, subdivision (b) and section 11, subdivision (a) of article XI. It noted that the California Supreme Court had declared an earlier version of the statute unconstitutional in Riverside, and asserted that the amended statute continued to infringe impermissibly on the County's authority to "provide for" the compensation of its employees. The County further argued that the statute: (1) impermissibly delegated the municipal function of setting compensation to a private body, (2) interfered with the board of supervisors' ability to meet its obligations under the Ralph M. Brown Act (Gov. Code, § 54950 et seq.), and (3) interfered with county money by imposing on the County the expense of participating in the interest arbitration proceedings.
The parties stipulated to having SCLEA's petition and the issues raised in the County's cross-complaint decided in a single proceeding. The superior court held a hearing on the petition and the parties' motions for judgment on the pleadings on July 16, 2008. After receiving additional briefing from the parties, on August 1, 2008, the superior court issued an "Order on Submitted Matter." The order granted SCLEA's motion for judgment on the pleadings and denied the County's cross-motion as to the County's first cause of action.*fn5 The superior court ruled that section 1299 et seq. was constitutional. It acknowledged that the process imposed by the statute "is procedurally demanding" but concluded that the County's board of supervisors could convene and vote within five days to reject the arbitration panel's award. The court ...