Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Service Employees International Union, Local 1000 et al v. Edmund G. Brown

July 8, 2011

SERVICE EMPLOYEES INTERNATIONAL UNION, LOCAL 1000 ET AL., PLAINTIFFS AND RESPONDENTS,
v.
EDMUND G. BROWN, JR. ET AL., DEFENDANTS AND APPELLANTS.



Alameda County Super. Ct. No. RG09456750

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

CERTIFIED FOR PUBLICATION

This is an appeal by the Governor, the Director of the Department of Personnel Administration (DPA), and dozens of state government entities (collectively, the Governor) from a judgment of the Alameda Superior Court issuing a writ of mandate as petitioned by Local 1000 of the Service Employees International Union (SEIU) on behalf of approximately 95,000 members employed by the State of California. The gist of the judgment was that the Governor's 2008 and 2009 Executive Orders instituting three mandatory monthly furlough days for state employees were declared illegal as to certain groups of employees; the Governor and the Director were commanded to halt enforcement of the furlough program as to those employees; and the State Controller was directed to halt reducing those employees' salaries for the furlough days, as well as to "restore any salary wrongfully withheld as a consequence" of the Executive Orders.

The appeal was fully briefed when our Supreme Court decided Professional Engineers in California Government v. Schwarzenegger (2010) 50 Cal.4th 989 (Professional Engineers), dealing with the legality of the Governor's 2008 Executive Order directing a mandatory two-days-a-month unpaid furlough. The court summarized its core holding 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 (2008 Budget Act) 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 administration 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. . . . 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." (Professional Engineers, supra, 50 Cal.4th 989, 1000.)

By the time Professional Engineers was filed, the Legislature had, after the Governor had issued the second Executive Order, revised the 2009 Budget Act using language virtually identical to that it used in revising the 2008 Budget Act. The relevant language of both revised Budget Acts specifies that "each item of appropriation in this act . . . shall be reduced . . . to reflect a reduction in employee compensation achieved through . . . existing administration authority . . . ." The Governor reads Professional Engineers' construction of the "existing administration authority" language as a blanket legislative validation of the furlough program then in place, be it two or three days per month, with no exceptions. We conclude that this simplistic interpretation is not what the Supreme Court intended.

That said, we conclude that Professional Engineers is virtually dispositive. The scope of the furlough program that the Legislature was ratifying was pegged to the presence of an "item of appropriation," as the Legislature's reiteration of the language construed in Professional Engineers demonstrates. Beyond this, we further conclude that the dispositive statutory language in both instances is "item of appropriation," because "existing administration authority" as shorthand for the furlough program then in place, has relevance only as a mechanism for effecting the Legislature's reduction of a given "item of appropriation." In other words, there must be an "item of appropriation" before the particulars of the furlough program become relevant.

Our independent research--confirmed by the parties at reargument--discloses that all but five of the state agencies and departments made defendants by SEIU are the subject of an "item of appropriation" in both the 2008 and the 2009 Budget Acts. The three-day-per-month furlough program is therefore valid as to these defendants. Because their inclusion was proper, their employees have no grievance, and no entitlement to back pay. Thus, as to 58 of the 63 defendants, the judgment must be reversed. As to the five remaining entities that have already implemented the full furlough program but are not named in an "item of appropriation," their inclusion cannot be deemed "mandated by the act" of the Legislature. However, given the virtual irrelevance of the record on appeal to the issues made dispositive in the wake of Professional Engineers, we remand in order that the parties may have the opportunity to present evidence as to whether the sources of funding for these entities are otherwise part of the budgetary process and therefore may be within the ambit of Professional Engineers.

BACKGROUND

The financial woes of the state that generated the Governor's Executive Orders and the ensuing litigation--including this case--are too well known to require detailed reiteration. The history of the situation up to the issuance of the second Executive Order in 2009 is also set out in Professional Engineers, supra, 50 Cal.4th 989, 1001-1008. Only the salient highlights will be noted here.

On December 19, 2008, the Governor issued Executive Order S-16-08. Citing "an approximately $15 billion General Fund deficit for the 2008-09 fiscal year, which without effective action, is estimated to grow to a $42 billion General Fund budget shortfall over the next 18 months," he directed that "effective February 1, 2009 through June 30, 2010, the Department of Personnel Administration shall adopt a plan to implement a furlough . . . for two days per month, regardless of funding source" for "represented state employees," managers, and supervisors. Then, on July 1, 2009, because "California's revenues . . . continue to plummet," the Governor issued Executive Order S-13-09 which ordered the furlough program expanded to three days per month for the period from July 1, 2009 through June 30, 2010, applicable to all state employees, whether "represented" or "non-represented," to include "supervisors, managers, and exempt state employees." The Governor reiterated that the additional day of furlough was to be imposed on employees "regardless of funding source."

In June 2009, SEIU, alleging that it represented approximately 95,000 state employees in nine bargaining units, brought suit alleging that the Executive Orders were "arbitrary, capricious and without a rational basis because they apply to employees whose salaries are paid by sources other than the General Fund, such as federal funds or special funds. In other words, the furloughing of employees in positions paid from sources other than the General Fund does not achieve the stated purpose of the Orders."*fn1 SEIU prayed for declaratory and injunctive relief, together with a writ of mandate commanding the Controller "to halt any further salary reductions which resulted from the . . . Orders, and to order back pay for any furlough dates previously implemented."

On December 31, 2009, the trial court issued its "Order Granting Petition For Writ of Mandate." The court's decision rested on two grounds. The first ground for finding the furlough program--and the Governor's Executive Orders--invalid was that the Governor "violated a mandatory duty" imposed by Government Code section 19851, subdivision (a), "to take into account the Agencies' 'varying needs' before reducing working hours."*fn2 Not only was the failure to comply with the mandatory duty an abuse of discretion, "when furloughs are implemented to save money, yet their implementation in some agencies saves nothing and increases costs, such a policy is arbitrary, capricious and unlawful."

The second ground for the court's decision was that "furloughing employees to increase potential borrowing from special fund agencies interferes with those agencies' operations," and thereby violated section 16310, subdivision (a), and again qualified as an abuse of discretion "by ordering and implementing furloughs in order to increase internal borrowing from special funds, without regard to whether such borrowing interfered with the objects for which the special funds were created."*fn3

Questions arose thereafter concerning the scope of relief that the trial court would order. After hearing argument from the parties, and over the Governor's objections, the trial court on February 25, 2010, filed an "Order After Hearing" in which it determined that its decision would apply to all employees of the named departments and agencies regardless of whether SEIU represented them, and that the relief ordered would include back pay.

Also on February 25, 2010, the court filed its judgment directing issuance of a peremptory writ of mandate commanding: (1) the Governor and the Director "to set aside the portions of the Governor's Executive Orders S-16-08 and S-13-09 calling for a furlough and resulting salary reduction for all employees of Respondent Departments and Agencies, and to cease and desist the furlough of such employees"; and (2) the Controller "to immediately pay all employees of Respondent Departments and Agencies their full salary without any reductions pursuant to the illegal furloughs directed by the unlawful Executive Orders, and to take any and all actions required by law to restore any salary wrongfully withheld as a consequence thereof." The following day the Governor perfected this timely appeal from the judgment.*fn4

In the wake of Professional Engineers, the parties filed supplemental briefs addressing that decision and its impact upon the arguments advanced in the briefs already on file.

REVIEW

Professional EngineersEstablishes The Validity Of The Third Furlough

Day Imposed By The Governor's Second Executive Order and Ratified

By The Legislature When It Enacted The Revised 2009 Budget Act

The ultimate fulcrum for the Supreme Court in Professional Engineers was this language in a provision of the legislation revising the 2008 Budget Act:

"[T]he legislation that revised the budget applicable to the 2008-2009 fiscal year (Sen. Bill 3X 2) effectuated a reduction in the appropriations for employee compensation by adding a provision to the 2008 Budget Act. (Sen. Bill 3X 2, § 36.)

"Section 36 of Senate Bill 3X 2 provides in full:

" 'Section 3.90 is added to the Budget Act of 2008, to read:

" 'Sec. 3.90. (a) Notwithstanding any other provision of this act, each item of appropriation in this act, with the exception of those items for the California State University, the University of California, Hastings College of the Law, the Legislature (including the Legislative Counsel Bureau), and the judicial branch, shall be reduced, as appropriate, to reflect a reduction in employee compensation achieved through the collective bargaining process for represented employees or through existing administration authority and a proportionate reduction for nonrepresented employees (utilizing existing authority of the administration to adjust compensation for nonrepresented employees) in the total amount of $385,762,000 from General Fund items and $285,196,000 from items relating to the other funds. It is the intent of the Legislature that General Fund savings of $1,024,326,000 and other fund savings of $688,375,000 in the 2009-10 fiscal year shall be achieved in the same manner described above. The Director of Finance shall allocate the necessary reduction to each item of appropriation to accomplish the employee compensation reductions required by this section.

" '(b) The Department of Personnel Administration shall transmit proposed memoranda of understanding to the Legislature promptly and shall include with each such transmission estimated savings pursuant to this section of each agreement.

" '(c) Nothing in this section shall change or supersede the provisions of the Ralph C. Dills Act (Chapter 10.3 (commencing with Section 3512) of Division 4 of Title 1 of the Government Code).' " (Professional Engineers, supra, 50 Cal.4th 989, 1044.)

The Supreme Court identified three reasons why the phrase "existing administration authority" should be treated as referring to the existing two-day-per-month furlough program:

"First, the legislative history of the provision in question clearly and explicitly establishes that the reductions in appropriations for employee compensation that were included in the bill reflected the two-day-a-month furloughs. . . . This history makes it abundantly clear the Legislature contemplated that the reduction in appropriations for employee compensation set forth in section 3.90 could be achieved through the furlough plan that was then in existence

"Second, aside from the furlough plan, the only other available 'existing administration authority' through which the state could have achieved the very substantial reduction in the appropriations for employee compensation mandated by the February 2009 budget legislation was the authority provided by section 19997, permitting a state appointing authority to 'lay off' state employees '[w]henever it is necessary because of lack of . . . funds, or whenever it is advisable in the interests of economy, to reduce the staff of any state agency . . . .' In our view it is not reasonable to suggest that the Legislature intended to compel the state, in the absence of a mutually agreed-upon collective bargaining resolution, to resort to layoffs of a significant percentage of state employees rather than to permit the state to utilize the furlough plan that was then already in use, particularly when the legislative history makes no reference to such layoffs.

"Third, although at the time the revised budget act was adopted on February 20, 2009, the trial court's judgment upholding the validity of the furlough program already had been appealed and the Legislature could not have known how the appeal ultimately would be resolved, it is reasonable to assume that body recognized that the reduction in employee compensation mandated by the revised 2008 Budget Act would have to be implemented prior to a final resolution of the appeal. We conclude that, in view of the exigent circumstances facing the Legislature, it intended to permit the then-existing furlough program to be used as an alternative to other means that might be agreed upon through the collective bargaining process, without regard to whether the appellate courts ultimately determined that the Governor or the DPA possessed the authority to impose an unpaid furlough program unilaterally.

"Accordingly, we conclude that the phrase 'existing administration authority'--as used in section 36 of Senate Bill 3X 2--was intended to encompass the then existing furlough program. By enacting this provision, the Legislature, through the exercise of its own legislative prerogative, authorized the substantial reduction in the appropriations for employee compensation, mandated in the revised budget legislation, to be achieved through the two-day-a-month furlough plan." (Professional Engineers, supra, 50 Cal.4th 989, 1046-1048.)

On July 23, 2009, 22 days after Governor Schwarzenegger issued Executive Order S-13-09 expanding the furlough program to three days per month, the Legislature passed Assembly Bill No. 4X 1, the revised Budget Act of 2009, which was signed by the Governor on July 28, 2009. The measure directs personnel cost reductions using the same language as contained in the revised Budget Act of 2008.*fn5 Specifically:

"SEC. 552. Section 3.90 of the Budget Act of 2009 is amended to read:

"Sec. 390. (a) Notwithstanding any other provision of this act, each item of appropriation in this act, with the exception of those items for the California State University, the University of California, Hastings College of the Law, the Bureau of State Audits, the Legislature (including the Legislative Counsel Bureau), and the judicial branch, shall be reduced, as appropriate, to reflect a reduction in employee compensation achieved through the collective bargaining process for represented employees or through existing administration authority and a proportionate reduction for nonrepresented employees (utilizing existing authority of the administration to adjust compensation for nonrepresented employees) in the total amounts of $1,477,917,000 from General Fund items and $973,058,000 from items relating to other funds. The Director of Finance shall allocate the necessary reductions to each item of appropriation to accomplish the employee reductions required by this section.

"(b) The Department of Personnel Administration shall transmit proposed memoranda of understanding to the Legislature promptly and shall include with each such transmission estimated savings pursuant to this section of each agreement.

"(c) Nothing in this section shall change or supersede the provisions of the Ralph C. Dills Act (Chapter 10.3 (commencing with Section 3512) of Division 4 of Title 1 of the Government Code)." (Stats. 2009, 4th Ex. Sess. 2009-2010, ch. 1, § 552, p. 425.)

Our analysis of Professional Engineers leads us to conclude that the third day of the furlough program imposed by the Governor's second Executive Order was ratified by the Legislature when it revised the 2009 Budget Act. Professional Engineers made it clear that it is the Legislature, not the Governor, which has the preeminent role--and the final say--in fixing the compensation paid to represented state employees, with that final say often being expressed in the budget process.*fn6 (Professional Engineers, supra, 50 Cal.4th 989, 1024 ["the Legislature has demonstrated a special interest in retaining (through the budget process or otherwise) ultimate control over the salary and wages of such employees"], 1043 ["the Legislature retained it ultimate control (through the budget process) over expenditure of state funds required by the provisions of an MOU"]; see also id. at pp. 1019-1020, 1038, fn. 34.)

The Professional Engineers court explained that by enacting revisions to the 2008 Budget Act, the Legislature exercised its ultimate authority over compensation of state employees: "[W]hen the Legislature enacted, and the Governor then signed, legislation revising the 2008 Budget Act, the validity of the mandatory furlough program fundamentally changed. The new legislation explicitly reduced the 2008-2009 fiscal year appropriation for state employee compensation to a level reflecting the reduced ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.