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Union of American Physicians v. Edmund G. Brown

May 16, 2011


Superior Court of the County of Alameda, No. RG09456684, Frank Roesch, Judge. (Alameda County Super. Ct. No. RG09456684)

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

California Court of Appeals A127775.doc


The Union of American Physicians and Dentists (UAPD) filed a petition for writ of mandate seeking to invalidate the two-day-a-month unpaid furlough program for state employees that was instituted by Governor Arnold Schwarzenegger on December 19, 2008. The trial court granted the petition ruling the two-day-a-month furlough program and the subsequently expanded three-day-a-month unpaid furlough program that was put in place by the Governor on July 1, 2009, were invalid because they violated certain statutes. The Governor now appeals contending the trial court interpreted the applicable statutes incorrectly. Applying the principles articulated by our Supreme Court in Professional Engineers in California Government v. Schwarzenegger (2010) 50 Cal.4th 989 (Professional Engineers) we agree and will reverse the trial court's judgment.


In Professional Engineers, supra, 50 Cal.4th at pages 1000-1008, our Supreme Court described in detail the economic factors that led to the furlough programs that are at issue in this case. We need not repeat that description here other than to note that in the fall of 2008, the State of California was facing an almost unprecedented financial crisis. In November 2008, the Department of Finance reported that the state faced a revenue shortfall of $11.2 billion for the 2008-2009 fiscal year and stated that "'[i]f no action is taken to reduce spending, increase revenues, or a combination of both, the state will run out of cash in February and be unable to meet all of its obligations for the rest of the year.'" (Id. at p. 1001, quoting Dept. of Finance, Rep., Governor's Budget, Special Session 2008-09, p. 1.)

The Governor proposed a variety of measures to address that financial crisis. Two of them are relevant here. First on December 19, 2008, the Governor issued an executive order that directed the Department of Personnel Administration (DPA) to "'implement a furlough of represented state employees and supervisors for two days per month, regardless of funding source.'" The program was to be effective from February 1, 2009, though June 30, 2010. Then, when the economic crisis continued to worsen, the Governor expanded the furlough program. On July 1, 2009, he issued another executive order that directed the DPA to adopt an amended plan "to implement a furlough of represented state employees for three days per month, regardless of funding source." The expanded furlough program ran from July 1, 2009 through June 30, 2010.

UAPD is the collective bargaining representative for nonmanagement physicians and dentists in state employment. In June 2009, UAPD filed a petition for writ of mandate challenging the legality of the furlough program. The petition named, as defendants, the Governor, the director of the DPA, the State Controller, and the directors of 6 different state departments and agencies who employed UAPD members.*fn1 UAPD alleged that to the extent its members were paid by sources other than then General Fund, i.e., special funds that must by law be spent for a specific purpose, or the federal government which pays the salaries of certain state employees who perform federally mandated tasks, the furlough program was irrational and illegal.

The case proceeded to a trial*fn2 and on December 31, 2009, the court ruled the furlough programs were illegal. The court based its decision on two statutes. First the court found the furlough programs violated Government Code*fn3 section 19851*fn4 because they failed to take into account the varying needs of the different state agencies. As the court explained, "Each State agency has differing needs relating to its function and to the sources of its funding. Respondents' refusal to consider those varying needs of the different state agencies before ordering and implementing furloughs conflicts with the requirements of Section 19851." (Fn. omitted.)

Second, the court found the furlough programs violated section 16310.*fn5 The Governor had argued that even though furloughing special funds and federally funded employees does not save General Fund any money, that act was still rational because it allowed the General Fund to borrow money from the agencies for which those employees worked. The trial court rejected that justification finding it violated section 16310. The court ruled the mere fact that state agencies were closed three days per month was "at least a prima facie showing of interference with the object of the special fund agencies, specifically the agencies' ability to carry out their respective missions."

On February, 22, 2010, the trial court conducted a hearing to determine what form of judgment should be entered. After hearing arguments from counsel, the court issued a judgment that ordered the Governor immediately to cease furloughing employees of the departments and agencies who had been named in the complaint. The court stated that its ruling was to include "all employees" of the named departments and agencies regardless of whether they were members of UAPD.

On February 26, 2010, the Governor filed this appeal.

Shortly after the appeal was filed, UAPD filed a motion to lift the automatic stay put in place by the appeal. On March 23, 2010, the trial court granted the motion in part ruling that the stay would be lifted "with respect to the prospective remedy requiring that Respondents cease and desist from further implementation of furloughs under the Governor's Executive Orders." The Governor then filed a petition for writ of supersedeas in this court to stay the trial court's March 23, 2010 order. On March 30, 2010, we stayed the trial court's order temporarily, and on April 12, 2010, we issued a writ of supersedeas staying the order pending the resolution of this appeal.

The parties filed their appellate briefs and this court commenced its review of the appeal. Then on October 4, 2010, our Supreme Court issued its decision in Professional Engineers, supra, 50 Cal.4th 989, and in so doing, addressed this area of the law and set forth analytical principles directly relevant to the issues before us. The pivotal issue in Professional Engineers was whether "the Governor on December 19, 2008, possessed authority to institute a mandatory furlough of represented state employees . . . ." (Id. at p. 1000.) Our Supreme Court ruled the governor lacked that power. In the court's words, neither the "constitutional authority granted to [the governor] by the California Constitution or the existing statutory provisions pertaining to the terms and conditions of state employment granted him or the DPA the authority unilaterally to impose a mandatory unpaid furlough on state employees." (Id. at p. 1041.) But the court also found subsequent actions of the Legislature dispositive in determining the validity of the governor's 2008 two-day-a-month furlough program. The court ruled as follows:

"In mid-February, 2009--shortly after the furlough program went into effect--the Legislature enacted, and the Governor signed, legislation that revised the Budget Act of 2008 . . . by, among other means, reducing the appropriations for employee compensation contained in the original 2008 Budget Act by an amount that reflected the savings the Governor sought to obtain through the two-day-a-month furlough program. The February 2009 legislation further provided that the specified reduction in the appropriations for employee compensation could be achieved either through the collective bargaining process or through 'existing administrative authority.' That phrase, in the context in which the revised budget act was adopted and in light of the provision's legislative history, reasonably included the furlough program that was then in existence and that had been authorized by the current gubernatorial administration. In particular, the bill analyses considered by the Legislature made specific reference to furlough-related reductions of employee compensation costs. Under these circumstances, we conclude that the Legislature's 2009 enactment of the revisions to the 2008 Budget Act operated to ratify the use of the two-day-a-month furlough program as a permissible means of achieving the reduction of state employee compensation mandated by the act. [¶] Accordingly, we conclude that the 2009 budget legislation validated the Governor's furlough program here at issue, and reject plaintiffs' challenge to that program." (Professional Engineers, supra, 50 Cal.4th at p. 1000.)

Given the obvious importance of the court's ruling in Professional Engineers, we ordered the parties to submit additional briefs discussing how that decision affected the issues presented in this case. Both parties have now filed those briefs and, in effect, reformulate their ...

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