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State Building and Construction Trades Council of California, AFL-CIO v. City of Vista

April 28, 2009

STATE BUILDING AND CONSTRUCTION TRADES COUNCIL OF CALIFORNIA, AFL-CIO, PLAINTIFF AND APPELLANT,
v.
CITY OF VISTA ET AL., DEFENDANTS AND RESPONDENTS.



APPEAL from a judgment of the Superior Court of San Diego County, Robert P. Dahlquist, Judge. Affirmed. (Super. Ct. No. 37-2007-00054316-CU-WM-NC).

The opinion of the court was delivered by: Benke, Acting P. J.

CERTIFIED FOR PUBLICATION

State Building and Construction Trades Council of California, AFL-CIO (SBCTC), appeals from a trial court judgment denying its petition for a peremptory writ of mandate against the City of Vista (Vista), Vista Mayor Morris B. Vance and Vista City Manager Rita Geldert.*fn1 SBCTC sought a ruling requiring that Vista comply with California's prevailing wage law (PWL) (Lab. Code,*fn2 §§ 1720-1780) in the construction of its public works projects notwithstanding its status as a charter city.

We conclude the PWL does not address matters of statewide concern and therefore Vista, as a charter city, is not required to comply with the PWL with respect to public works contracts which are financed solely from city revenues. Rather, such contracts are municipal affairs over which Vista has paramount power under article XI, section 5, subdivision (a) of the California Constitution. Accordingly, we affirm the trial court's judgment denying SBCTC's petition.

FACTUAL AND PROCEDURAL BACKGROUND

A. Adoption of City Charter

In June 2007 Vista became a charter city within the meaning of article XI, section 5 of the California Constitution after its voters approved a ballot measure to adopt a city charter.

At the time of the ballot measure, Vista was anticipating the construction of several capital improvement projects: (1) a new civic center; (2) two fire stations; (3) a new sports park; and (4) a stage house for the Moonlight Amphitheater. In advising the city council about the ballot measure, Vista's city attorney explained that the anticipated construction projects were "expected to cost in the neighborhood of $100 million," and "the payment of prevailing wages is likely to add millions of dollars in extra costs to these projects, costs that would not have to be incurred if Vista chooses its own destiny and becomes a charter city." Advocating for a vote in favor of the ballot measure, the Vista city council informed the public that if Vista became a charter city it "could choose when and if it pays 'prevailing wages' " on public works contracts. The voters approved the measure and Vista became a charter city. Shortly thereafter, the Vista city council adopted Ordinance No. 2007-9. The ordinance amends the Vista municipal code to provide:

"A. Payment of Prevailing Wage

No City contract shall require payment of the prevailing wage schedule unless: "1. The prevailing wage is legally required, and constitutionally permitted to be imposed, by federal or state grants pursuant to federal or state law; or "2. The project is considered by the City Council not to be a municipal affair of the City; or "3. Payment of the prevailing wage schedule is authorized by resolution of the City Council."

Vista has proceeded with its planned public works projects. The record establishes that for the first of those projects - the two new fire stations - Vista has approved a design-build contract that does not comply with the requirements of the PWL.*fn3

B. SBCTC'S Petition

SBCTC alleges that it is a labor federation composed of local labor unions and local labor councils that collectively represent about 300,000 workers in the building and construction trades in California. In July 2007 SBCTC filed a petition for peremptory writ of mandate against Vista, its mayor and its city manager. Thereafter, SBCTC filed an amended petition (the petition). The petition alleged Vista is required to comply with the PWL despite its status as a charter city and that "[a]s a result of the adoption of [Vista] Ordinance No. 2007-9, [Vista] will, unless this Court issues its writ of mandate, award contracts for the construction of . . . Vista's upcoming capital projects, without requiring the payment of prevailing wages." The petition described the current status of the four capital improvement projects planned by Vista - the civic center, the two fire stations, the sports park, and the Moonlight Amphitheater stage house. With respect to the construction of the two new fire stations, the petition alleged Vista already had issued a request for proposals (RFP) to design-build firms, but that "[t]he RFP does not require that the prevailing wages must be paid to the workers who build the fire stations." The other projects were described as similarly proceeding toward implementation, with an RFP being issued for the Moonlight Amphitheater project, and an architect and a landscape architect being selected for the civic center and the sports park, respectively.

The petition prayed that the court issue (1) a peremptory writ of mandate "directing [Vista] to comply with California's prevailing wage law . . . whenever they award City construction contracts in excess of $1,000, including by requiring the payment of prevailing wages in the contracts for [the two new fire stations]"; and (2) a declaration that Vista is "obligated to comply with California's prevailing wage law notwithstanding . . . Vista's recent adoption of a charter, and that Vista Ordinance No. 2007-9 is invalid to the extent it forbids the inclusion of a prevailing wage requirement in . . . Vista construction contracts in excess of $1,000, such as [the two new fire station] projects."

Vista answered the petition, and the parties filed memoranda of points and authorities.

In support of its position, SBCTC argued the PWL addressed a matter of statewide concern and thus Vista's decision to award public works contracts was not a "municipal affair" superseding all inconsistent state laws, regardless of whether the public works project at issue was a project of the municipality. (See art. XI, § 5.)

In opposing the petition, Vista argued SBCTC's challenge was premature and the controversy was "not ripe for adjudication" because SBCTC had not demonstrated "a current legal dispute." With respect to the merits, Vista argued, among other contentions, that the trial court was bound by longstanding precedent which has consistently held that the PWL does not embrace matters of statewide concern.

The trial court rejected Vista's argument that the controversy was not sufficiently ripe for resolution. The trial court noted Vista had approved certain public works project contracts under Vista Ordinance No. 2007-9 without complying with the PWL, including contracts for the construction of the two fire stations.*fn4

Nonetheless, on the merits of the petition, the trial court agreed with Vista that existing precedent did not require that the city comply with the PWL and denied SBCTC's petition for peremptory writ of mandate.

SBCTC filed a timely notice of appeal from the judgment.

DISCUSSION

I. The Controversy Presented in This Action Is Ripe for Adjudication

As a threshold matter, we reject Vista's argument that we should not decide the matter presented in this appeal because SBCTC "has brought a premature action that does not challenge any particular contract or language in Vista codes."

Vista argues that SBCTC's action is premature because "[t]his case has no concrete project, wage determination or specific fact pattern at issue." Vista asserts that SBCTC "cannot point to the performance of any act that Vista has violated wherein action must be compelled" and that SBCTC "has failed to allege any contract being let, or other action in violation of any California Labor Code provision it seeks to enforce" so that "there is no current legal dispute, only a potential future dispute." Furthermore, Vista claims that SBCTC's petition presents a "facial attack" to Vista Ordinance No. 2007-9 because it seeks a ruling that Vista must comply with the prevailing wage laws for all of its public works projects. According to Vista, this lawsuit impermissibly asserts a facial challenge based on a "hypothetical future situation[]." (See, e.g., Pacific Legal Foundation v. California Coastal Com. (1982) 33 Cal.3d 158, 170 (Pacific Legal Foundation) [when a lawsuit involves a "facial challenge" to administrative regulations, "we must first determine that the issues raised are sufficiently concrete to allow judicial resolution even in the absence of a precise factual context"].)

Vista's argument is essentially a challenge to the ripeness of this controversy. "The ripeness requirement, a branch of the doctrine of justiciability, prevents courts from issuing purely advisory opinions." (Pacific Legal Foundation, supra, 33 Cal.3d at p. 170.) "It is rooted in the fundamental concept that the proper role of the judiciary does not extend to the resolution of abstract differences of legal opinion," and it "is primarily bottomed on the recognition that judicial decisionmaking is best conducted in the context of an actual set of facts so that the issues will be framed with sufficient definiteness to enable the court to make a decree finally disposing of the controversy." (Ibid.) " 'The controversy must be definite and concrete, touching the legal relations of parties having adverse legal interests. [Citation.] It must be a real and substantial controversy admitting of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.' " (Id. at pp. 170-171.)

Here, a real and substantial controversy has arisen between the parties. Vista has demonstrated, in several ways, that it does not intend to comply with the PWL: (1) it has adopted a city charter specifically for the purpose of building its planned capital improvements without complying with the PWL; (2) it has enacted Vista Ordinance No. 2007-9, which specifically provides that Vista is not required to follow the PWL unless the project at issue is not merely a municipal affair or the state or federal grants connected to the project require that the PWL be followed; (3) it is proceeding with its capital improvement projects and has approved design-build contracts for the first of those improvements - the two fire stations - without including within those contracts provisions required by the PWL; and (4) it has taken a litigation position here that it is not required to follow the prevailing wage law for projects paid for by local funds. SBCTC has made clear that it disputes Vista's refusal to follow the PWL, and it is seeking relief consistent with that view. Specifically, SBCTC seeks an order that would

(1) require Vista to comply with the PWL for all public works projects over $1,000, specifically and expressly including the construction of the two fire stations; and

(2) declare Vista Ordinance No. 2007-9 to be invalid to the extent it forbids Vista to comply with the PWL for such contracts.

Under these circumstances, we are presented with a definite controversy that arises out of the parties' adverse positions and is based on a concrete set of facts, not merely a hypothetical future situation. Judicial relief is appropriate because we are easily able "to make a decree finally disposing of the controversy" (Pacific Legal Foundation, supra, 33 Cal.3d at p. 170) by simply addressing the main disputed legal issue, namely, whether the PWL is a matter of statewide concern such that Vista, as a charter city, is bound to comply with it regardless of the purely local character of its public works projects. We thus proceed to consider the merits of SBCTC's petition.

II. Article XI, Section 5 of the California Constitution

A. Evolution of "Home Rule"

Article XI, section 5 of the California Constitution provides in pertinent part "[c]ity charters adopted pursuant to this Constitution shall supersede any existing charter, and with respect to municipal affairs shall supersede all laws inconsistent therewith." (Italics added.) As the court pointed out in Johnson v. Bradley (1992) 4 Cal.4th 389, 395-397, the "home rule" powers established by article XI, section 5 of the California Constitution have their roots in the experience of municipalities following adoption of the California Constitutions of 1849 and 1879, under which a charter city's power to legislate was subordinate to the power of the Legislature to pass general laws. (Id. at p. 395.) In 1896 the California Constitution was amended to create an exception to the preemptive character of state law for the "municipal affairs" of charter cities. (Ibid.) "The lead opinion in Fragley v. Phelan (1899) 126 Cal. 383, discussed 'the reasons which moved the legislature to propose the amendment [to California Constitution article XI, former section 6], and the people to adopt it. What was the evil to be remedied? What was the good to be gained by this amendment? The answer is common, every-day history. It was to prevent existing provisions of charters from being frittered away by general laws. It was to enable municipalities to conduct their own business and control their own affairs to the fullest possible extent in their own way. It was enacted upon the principle that the municipality itself knew better what it wanted and needed than the state at large, and to give that municipality the exclusive privilege and right to enact direct legislation which would carry out and satisfy its wants and needs. . . . This amendment, then, was intended to give municipalities the sole right to regulate, control, and govern their internal conduct independent of general laws . . . .' [Citation.]" (Johnson v. Bradley, supra, 4 Cal.4th at pp. 395-396.)

In 1914 the California Constitution was amended again and provided that the municipal affairs exception applied not just to matters set forth as such in a city charter but to all laws and regulations adopted by cities with respect to their municipal affairs. (Johnson v. Bradley, supra, 4 Cal.4th at p. 396.) In substance, this version of the municipal affairs exception was readopted by the voters in 1970 and now appears as article XI, section 5 of the California Constitution. (Id. at p. 397.)

B. Application of Municipal Affairs Clause

As our Supreme Court itself has conceded, although more than a century has passed since the municipal affairs clause was placed in the California Constitution, the phrase has "defeated efforts at a defining formulation" of its content. (California Fed. Savings & Loan Assn. v. City of Los Angeles (1991) 54 Cal.3d 1 (California Federal).) Nonetheless, the court in California Federal has provided us with important and binding analytical principles.

In California Federal the court considered a 1979 amendment to the Revenue and Taxation Code, by which the Legislature declared that a state income tax on all financial corporations, including savings and loan associations, was in lieu of all other taxes and license fees, including business license taxes imposed by charter cities. National banks were provided such an exemption from local taxes and fees by the California Constitution. (Art. XIII, § 27, Cal. Const.)

The City of Los Angeles, a charter city, imposed an annual business license tax on businesses within its boundaries and collected the tax from a savings and loan association which had its headquarters in the city. The savings and loan association sued the city in an effort to obtain a refund of the tax. The city, relying on a number of cases which upheld the power of charter cities to impose various taxes and fees, argued a city's tax measures were inflexibly "municipal affairs" and thus, unlike municipal regulations, invariably immune from state legislative supremacy. The trial court conducted a bench trial and determined that the record presented by the parties supported findings by the Legislature that taxation of financial institutions was a matter of statewide concern. The Court of Appeal reversed the trial court and upheld the city's right to impose the tax on the savings and loan association. The Supreme Court granted review and reversed the Court of Appeal. Like the trial court, the Supreme Court found that protecting financial institutions from undue tax burdens was a matter of statewide concern.

"Although municipal taxation is a 'municipal affair' within the meaning of article XI, section 5(a), in that it is a necessary and appropriate power of municipal government, aspects of local taxation may under some circumstances acquire a 'supramunicipal' dimension, transforming an otherwise intramural affair into a matter of statewide concern warranting legislative attention. In short, our cases do not support the distinction drawn by the Court of Appeal; charter city tax measures are subject to the same legal analysis and accumulated body of decisional law under article XI, section 5(a), as charter city regulatory measures. In the event of a true conflict between a state statute reasonably tailored to the resolution of a subject of statewide concern and a charter city tax measure, the latter ceases to be a 'municipal affair' to the extent of the conflict and must yield. In addition, we hold that under the circumstances of this case the trial court correctly concluded that the aggregate intrastate tax burden on financial corporations-including local taxes such as the City's business license tax-is a subject of statewide concern." (California Federal, supra, 54 Cal.3d at p. 7.)

In discussing how it reached its conclusion the city's business tax was not immune from regulation by the Legislature, the court set out the analytical process by which courts should confront "home rule" disputes. "In broad outline, a court asked to resolve a putative conflict between a state statute and a charter city measure initially must satisfy itself that the case presents an actual conflict between the two. If it does not, a choice between the conclusions 'municipal affair' and 'statewide concern' is not required. . . . To the extent difficult choices between competing claims of municipal and state governments can be forestalled in this sensitive area of constitutional law, they ought to be; courts can avoid making such unnecessary choices by carefully insuring that the purported conflict is in fact a genuine one, unresolvable short of choosing between one enactment and the other.

"In those cases where the preliminary conditions are satisfied, that is, where the matter implicates a 'municipal affair' and poses a genuine conflict with state law, the question of statewide concern is the bedrock inquiry through which the conflict between state and local interests is adjusted." (California Federal, supra, 54 Cal.3d at pp. 16-17.) When a genuine conflict arises, a court must consider first whether the state law qualifies as a matter of "statewide concern." (Ibid.) If the state law does not qualify as a matter of statewide concern, the conflicting city measure is a " 'municipal affair' and 'beyond the reach of legislative enactment.' " (Id. At p. 17.) On the other hand, if the state statute qualifies as a statewide concern, a court must next consider whether it is both reasonably related to resolution of that concern, and (ii) narrowly tailored to limit incursion into legitimate municipal interests. (Ibid.; see also Johnson v. Bradley, supra, 4 Cal.4th at p. 404.)

In determining whether an act of the Legislature supersedes a conflicting municipal enactment, the court in California Federal cautioned that "courts should avoid the error of 'compartmentalization,' that is, of cordoning off an entire area of governmental activity as either a 'municipal affair' or one of statewide concern. Beginning with the observation in Pac. Tel. & Tel. Co. v. City and County of S.F. [1959] 51 Cal.2d [766], 771, that 'the constitutional concept of municipal affairs is not a fixed or static quantity . . . [but one that] changes with the changing conditions upon which it is to operate,' our cases display a growing recognition that 'home rule' is a means of adjusting the political relationship between state and local governments in discrete areas of conflict. When a court invalidates a charter city measure in favor of a conflicting state statute, the result does not necessarily rest on the conclusion that the subject matter of the former is not appropriate for municipal regulation. It means, rather, that under the historical circumstances presented, the state has a more substantial interest in the subject than the charter city." (Id. at pp. 17-18.)

Importantly, the court instructed us that a corollary of the proposition that the California Constitution contemplates a continuing mediation of competing interests, rather than a fixed and immutable demarcation of those interests, is the principle that a decision favoring a charter city measure does not "preclude superseding state legislation in a later case if the fact-bound justification-the statewide dimension-is subsequently demonstrated." (Id. at p. 18, italics added.) Thus, "[i]n cases presenting a true conflict between a charter city measure-whether tax or regulatory-and a state statute, therefore, the hinge of the decision is the identification of a convincing basis for legislative action originating in extramunicipal concerns, one justifying legislative supersession based on sensible, pragmatic considerations." (Ibid.)

Of significance to us, the court in California Federal also discussed the nature of the record which supported its conclusion that taxing financial institutions was a matter of statewide concern. First the court noted the Legislature made express findings that, to promote competition among banks and other financial institutions and thereby afford the state with a full range of financial services, it was necessary to treat all financial institutions in the state in a uniform manner and that existing divergent and competing tax local measures impaired such uniformity. (California Federal, supra, 54 Cal.3d at p. 10, fn. 8.) With respect to the Legislature's findings the court reaffirmed the principle that, while not controlling, legislative determinations are entitled to deference. In Bishop v. City of San Jose (1969) 1 Cal.3d 56, 63, footnote 6, the court discussed the weight courts should accord legislative findings, and in California Federal the court reiterated the Bishop v. City of San Jose formulation: "Our statement in Bishop v. City of San Jose, supra, 1 Cal.3d at page 63, that 'the Legislature is empowered neither to determine what constitutes a municipal affair nor to change such an affair into a matter of statewide concern,' meant that legislative declarations that a subject is one of statewide concern do not ipse dixit make it so; we exercise our 'independent judgment' as to that issue, giving 'great weight' to legislative statements of purpose where they exist. [Citation.]" (California Federal, supra, 54 Cal.3d at p. 24, fn. 21.)

Second, the court noted that the trial court had considered several days of testimony by experts in the fields of economics and banking regulation as well as a considerable number of congressional reports and studies which set forth the then-evolving economic and regulatory environment affecting the savings and loan industry. (California Federal, supra, 54 Cal.3d at pp. 20-22.) The court found that the large volume of evidence in the record fully supported the Legislature's conclusion that the well-being of the state's savings and loan industry depended upon a uniform system of taxation. (Ibid.)

In rejecting the city's argument that there was no persuasive justification for the legislative change because the pre-existing system-under which savings and loan associations were allowed to offset the amounts paid in local taxes against their state income taxes-had worked well for a number of years, the court identified the central question to be resolved when considering whether a particular issue presents a matter of statewide concern: "[T]he city's argument proves too much. The question is not whether the amendment of section 23182 was prudent public policy or whether the municipal tax burden on savings banks has sufficient impact on the industry's financial health to make the change to a net income tax system an advisable or effective measure. The issue is whether the income tax burden on financial corporations, especially savings banks- including the component imposed by municipalities-is of sufficient extramural dimension to support legislative measures reasonably related to its resolution." (California Federal, supra, 54 Cal.3d at pp. 23-24, italics added.)

Finally, the court took pains to recognize that resolution of a conflict between state law and a municipal enactment in any particular case was necessarily subjective and flexible: "The approach to that demanding task historically taken in our cases has been one of ad hoc intuition informed by pragmatic common sense rather than a rigid fidelity to some theoretical model. In an area of constitutional law so deeply marked from the beginning by conceptual uncertainty and inherent factual ambiguity, we should not expect doctrinal tidiness: 'constitutions,' as Justice Holmes said, 'are intended to preserve practical and substantial rights, not to maintain theories.' [Citation.]" (California Federal, supra, 54 Cal.3d at p. 25.)

California Federal did not in any sense represent an expansion of the power of the Legislature over charter cities. Indeed one year later, adhering to the very analytical approach set forth in California Federal, the court found that a statewide initiative prohibiting public financing of political campaigns did not apply to a charter city whose voters had approved ...


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