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Hanford Executive Management Employee Association, et al v. City of Hanford

November 17, 2011

HANFORD EXECUTIVE MANAGEMENT EMPLOYEE ASSOCIATION, ET AL.,
PLAINTIFFS,
v.
CITY OF HANFORD, ET AL.,
DEFENDANTS.



ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS AND ORDER DENYING PLAINTIFFS' MOTION FOR PRELIMINARY INJUNCTION [Doc. #12 and #16]

INTRODUCTION

Plaintiffs are Executive Management Employees of the City of Hanford. This case arises out of the Hanford City Council voting to make various changes to Plaintiffs' employment pursuant to a proposal submitted by City Manager Hilary Straus. Plaintiffs initiated the present action against the City of Hanford, Straus and the individual members of the Hanford City Council (collectively "Defendants"). In their Complaint, Plaintiffs assert numerous violations of their constitutional rights under the United States and California Constitutions and bring several other state law claims.

Currently before the Court is Defendants' motion to dismiss pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure and Plaintiffs' motion for preliminary injunction. For the reasons that follow Defendants' motion to dismiss is granted in part and denied in part and Plaintiffs' motion for preliminary injunction is denied.

LEGAL STANDARD

A. Rule 12(b)(1) Motion to Dismiss

Rule 12(b)(1) of the Federal Rules of Civil Procedure allows a motion to dismiss for lack of subject matter jurisdiction. "It is a fundamental precept that federal courts are courts of limited jurisdiction. The limits upon federal jurisdiction, whether imposed by the Constitution or by Congress, must not be disregarded nor evaded." Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 374 (1978). A challenge to jurisdiction "can be either facial, confining the inquiry to allegations in the complaint, or factual, permitting the court to look beyond the complaint." Savage v. Glendale Union High Sch., Dist. No. 205, Maricopa Cnty., 343 F.3d 1036, 1039 n.2 (9th Cir. 2003). Thus, the Court is not restricted to the face of the pleadings and "may review any evidence, such as affidavits and testimony, to resolve factual disputes concerning the existence of jurisdiction." McCarthy v. United States, 850 F.2d 558, 560 (9th Cir. 1988) (citation omitted). Furthermore, when subject matter jurisdiction is challenged under Rule 12(b)(1), the plaintiff has the burden of proving jurisdiction in order to survive the motion. Stock West, Inc. v. Confederated Tribes, 873 F.2d 1221, 1225 (9th Cir. 1989).

B. Rule 12(b)(6) Motion to Dismiss

Under Federal Rule of Civil Procedure 12(b)(6), a claim may be dismissed because of the plaintiff's "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). A dismissal under Rule 12(b)(6) may be based on the lack of a cognizable legal theory or on the absence of sufficient facts alleged under a cognizable legal theory. Johnson v. Riverside Healthcare Sys., 534 F.3d 1116, 1121 (9th Cir. 2008); Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). In reviewing a complaint under Rule 12(b)(6), all allegations of material fact are taken as true and construed in the light most favorable to the non-moving party. Marceau v. Blackfeet Hous. Auth., 540 F.3d 916, 919 (9th Cir. 2008); Vignolo v. Miller, 120 F.3d 1075, 1077 (9th Cir. 1999). The Court is not required "to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1056-57 (9th Cir. 2008); Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). As the Supreme Court has explained:

While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).

To avoid a Rule 12(b)(6) dismissal, "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face[.]" Telesaurus VPC, LLC v. Power, 623 F.3d 998, 1003 (9th Cir. 2010) (citations omitted). "In sum, for a complaint to survive a motion to dismiss, the non-conclusory 'factual content,' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief." Moss v. United States Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009).

If a Rule 12(b)(6) motion to dismiss is granted, "[the] district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts." Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995). In other words, leave to amend need not be granted when amendment would be futile. Gompper v. VISX, Inc., 298 F.3d 893, 898 (9th Cir. 2002).

C. Preliminary Injunction

A plaintiff seeking a preliminary injunction must establish: (1) that he is likely to succeed on the merits, (2) that he is likely to suffer irreparable harm in the absence of preliminary relief, (3) that the balance of equities tips in his favor, and (4) that an injunction is in the public interest.

Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 22 (2008).

The Ninth Circuit has also concluded that a preliminary injunction may be granted if there are serious questions going to the merits and a balance of hardships that tips sharply towards the plaintiff, so long as the plaintiff also shows that there is a likelihood of irreparable injury and that the injunction is in the public interest. Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir. 2011).

ALLEGED FACTS

Plaintiffs Cathy Cain ("Cain"), Louis Camara ("Camara"), George Thomas Dibble ("Dibble"), Timothy Ieronimo ("Ieronimo"), Mary Rose Lindsay ("Lindsay"), Carlos Mestas ("Mestas") and Scott Yeager ("Yeager") are Executive Management Employees of the City of Hanford and are members of the Hanford Executive Management Employee Association ("EMEA"). Complaint at ¶¶ 1-8. EMEA is the exclusive recognized employee organization representing the City of Hanford bargaining unit, which consists of all seven non-exempt Executive Management Employees. Id. at ¶ 1.

On or about November 16, 2010, Camara, Dibble, Ieronimo, Lindsay, Mestas and Yeager signed a memorandum directed to the Hanford City Council and incoming City Council members, entitled, "Vote of No Confidence - City Manager Hilary Straus." Id. at ¶ 18. The Hanford City Council consists of Defendants Dan Chin ("Chin"), Sue Sorensen ("Sorensen"), Jim Irwin ("Irwin"), Lou Martinez ("Martinez") and Joleen Jameson ("Jameson"). Id. at ¶¶ 11-15. Plaintiffs' three-page memorandum set forth the reasons why each of the signatories had no confidence in the ability of Straus to properly perform the duties of Hanford City Manager. Id. at ¶ 18. Some of the stated reasons included allegations of dishonest, unethical and potentially illegal conduct, hiding information from management and the public, improperly awarding contracts to Straus' friends, potential Brown Act violations, and other unprofessional conduct. Id.

On March 10, 2011, Straus met with EMEA representatives. Id. at ¶ 23. It was not until March 10, 2011 that Plaintiffs discovered that Straus had submitted a proposal for the March 15, 2011 Hanford City Council meeting that would make substantial changes to Plaintiffs' employment. Id. The proposed changes included:

a. Converting Executive Management Employees from permanent employees with property rights in their employment to at-will employees;

b. Revising the Seniority, Layoff and Bumping provisions to strip Executive Management Employees of the right to return to previously held positions and reemployment rights in the event of a layoff;

c. Stripping disciplinary appeal rights from Executive Management Employees;

d. Changing the process by which Executive Management Employees progress through salary steps and creating a right to deny what were previously automatic step increases on the grounds of "average" performance; and

e. Increasing Executive Management Employees' contributions toward retirement, and decreasing the City of Hanford's contributions toward retirement for Executive Management Employees, including the individual Plaintiffs herein, which also had the impact of decreasing their salaries for purposes of retirement benefit calculations.

Id. The proposed changes differed from the rules and regulations set forth in the applicable Personnel Rules and Regulations, including the Policy of Administration for Executive Management that was in effect prior to March 15, 2011. Id. at ¶ 24.

On or about March 11, 2011, all seven individual Plaintiffs signed and submitted a Petition for Recognition and Certification petitioning the Hanford City Council for formal recognition of EMEA as the bargaining unit for the individual Plaintiffs. Id. at ¶ 19. On March 15, 2011, prior to the Hanford City Council meeting, the EMEA wrote to the City Council and addressed the chief concerns of EMEA and its members. Id. at ¶ 25. The letter warned that passing the proposal by Straus could expose the City of Hanford to liability and could also expose the individual City Council members and Straus to personal liability. Id.

On the evening of March 15, 2011, the Hanford City Council met to discuss Straus' proposal. Id. at ¶ 26. Numerous individuals, including EMEA's counsel, spoke against the proposal, and highlighted the illegal nature of many of the components of the proposal. Id. The Hanford City Council unanimously ratified the proposal. Id.

On March 22, 2011, the EMEA delivered a follow-up letter to the Hanford City Council, again advising it of the illegality of the City Council's actions. Id. at ¶ 27. The letter warned that if the City Council's actions were not immediately overturned, EMEA and its members would file suit. Id. On March 25, 2011, the Hanford City Attorney responded by stating that the City Council would not rescind its actions. Id. at ¶ 28. In response, on March 30, 2011, EMEA filed a Government Claim form with the City of Hanford and an amended Government Claim form on April 13, 2011. Id. Subsequently, the present action ensued.

DISCUSSION

A. Defendants' Rule 12(b)(1) Motion to Dismiss is denied.

1. Defendants' argument that the Court lacks subject matter jurisdiction over Plaintiffs' claims for violations of the Public Safety Officers' and Firefighters' Procedural Bill of Rights Acts fails.

In their Rule 12(b)(1) motion to dismiss, Defendants argue that the Court lacks subject matter jurisdiction to hear Plaintiffs' tenth and eleventh claims for relief brought under the Public Safety Officers' Procedural Bill of Rights Act and Firefighters' Procedural Bill of Rights Act. Motion at 3, Doc. 12-1 at 9. Defendants argue that Plaintiffs are asking the Court to issue an advisory opinion because Plaintiffs Mestas and Ieronimo have not been removed by the City of Hanford.*fn1 Id. at 4, Doc. 12-1 at 10.

Defendants' argument is premised on Plaintiffs asserting their claims under California Government Code §§ 3304(c) and 3254(c), which provide that no police chief or fire chief may be removed by a public agency, or appointing authority, without providing the chief of police or fire chief with written notice and the reason or reasons therefor and an opportunity for administrative appeal. Cal. Gov. Code §§ 3304(c) and 3254(c). Plaintiffs clarify in their opposition that they are asserting their tenth and eleventh claims for relief under California Government Code §§ 3304(b) and 3254(b), which relate to whether a punitive action can be undertaken by a public agency against a public safety officer or firefighter without an opportunity for administrative appeal. Cal. Gov. Code §§ 3304(b) and 3254(b); Opposition at 2, Doc. 17 at 9. Therefore, Defendants' argument is irrelevant to Plaintiffs' tenth and eleventh claims for relief. Accordingly, Defendants' Rule 12(b)(1) motion to dismiss Plaintiffs' tenth and eleventh claims for relief is DENIED.

2. The Court has subject matter jurisdiction over Plaintiff Cain's claims. Defendants argue that Plaintiff Cain lacks standing to bring her claims. First, Defendants contend that Cain has no standing to bring her first, fourth and ninth claims for relief because they are based on retaliation for the Plaintiffs submitting the memorandum to the City Council.*fn2

Motion at 5, Doc. 12-1 at 11. Defendants state that there is no case or controversy because Plaintiffs do not allege that Cain signed the memorandum to the Hanford City Council and therefore was not subject to retaliation for submitting the memorandum. Id.

Plaintiffs clarify that Cain's first, fourth and ninth claims for relief are not based on her signing the memorandum, but are based on her protected associational activity, which includes forming the EMEA and engaging in protective collective activity. Opposition at 4, Doc. 17 at 11; see also Complaint at ¶¶ 30, 53 and 77. Since Cain's claims for relief are not based on her signing the memorandum, Defendants' argument fails.

Second, Defendants argue that Plaintiffs' second, third, fifth, sixth and seventh claims for relief are based on allegations that Plaintiffs' rights were vested as permanent employees of the City of Hanford. Motion at 5, Doc. 12-1 at 11. Defendants contend that there is no case or controversy with respect to Cain because Plaintiffs allege that Cain is not a permanent employee and therefore Cain could not have had any vested rights taken away. Id.

In their Complaint, Plaintiffs allege that prior to becoming Interim Community Development Director, Cain was a permanent employee as Assistant Planner and then Planning Manager. Complaint at ¶ 2. In their opposition, Plaintiffs reiterate that Cain is a permanent employee despite her current title being Interim Community Development Director. Opposition at 3, Doc. 17 at 10. Therefore, Defendants' argument fails. Accordingly, Defendants' Rule 12(b)(1) motion to dismiss Plaintiff Cain's claims for relief is DENIED.

B. Defendants' Rule 12(b)(6) Motion to Dismiss is granted in part and denied in part.

1. Plaintiffs have not stated a claim for alleged violations of the Contract Clause of the United States Constitution or California Constitution.

Defendants seek to dismiss Plaintiffs' sixth and seventh claims for relief for violations of the Contract Clause of the United States and California Constitutions.*fn3 Defendants argue that Plaintiffs have no vested contractual rights in the terms and conditions of their employment. Motion at 6-8, Doc. 12-1 at 12-14.

In their sixth and seventh claims for relief, Plaintiffs allege that they are guaranteed certain contractual rights relating to their employment with Defendant City of Hanford, including

(1) the right to continue holding their positions except and unless just cause is shown for termination; (2) the right to a due process hearing regarding discipline; (3) the right to progress through the established salary steps pursuant to the terms in place at the time Plaintiffs were hired and during their employment; and (4) the entitlement to certain specified retirement benefits. Complaint at ¶¶ 70 and 75. Plaintiffs allege that Defendants violated Plaintiffs' vested contractual rights by changing the City of Hanford's Executive Management Policies at the March 15, 2011 City Council meeting. Id. at ¶¶ 71 and 76.

With respect to Plaintiffs' sixth claim for relief, Article I, Section 10, Clause 1 of the United States Constitution provides that "No State shall . . . pass any . . . Law impairing the Obligation of Contracts." Courts undertake a threshold inquiry to determine whether contract rights have been impaired, examining "whether the state law, has, in fact, operated as a substantial impairment of a contractual relationship." Energy Reserves Group, Inc. v. Kan. Power & Light Co., 459 U.S. 400, 411 (1983). "That inquiry includes (1) whether a contract exists as to the specific terms allegedly at issue, (2) whether the law in question impairs an obligation under that contract and (3) whether the discerned impairment can fairly be characterized as substantial." San Diego Police Officers' Ass'n v. San Diego City Emps. Ret. Sys., 568 F.3d 725, 736-37 (9th Cir. 2009) (citations omitted). Laws that substantially impair state or local contractual obligations are nevertheless valid if they are "reasonable and necessary to serve an important public purpose." U.S. Trust Co. v. N.J., 431 U.S. 1, 25 (1977).

"Although federal courts look to state law to determine the existence of a contract, federal rather than state law controls as to whether state or local statutes or ordinances create contractual rights protected by the Contracts Clause." San Diego, 568 F.3d at 737 (citing Nev. Emps. Ass'n v. Keating, 903 F.2d 1223, 1227 (9th Cir. 1990)). Nevertheless, federal courts do "accord respectful consideration and great weight to the views of the State's highest court." Gen. Motors Corp. v. Romein, 503 U.S. 181, 187 (1977). "Under federal law the state's statutory language must evince a clear and unmistakable indication that the legislature intends to bind itself contractually before a state legislative enactment may be deemed a contract for purposes of the Contracts Clause." San Diego, 568 F.3d at 737 (citations omitted).

It is well established in California that public employment, by and large, is not held by contract, but by statute. Bernstein v. Lopez, 321 F.3d 903, 905 (9th Cir. 2003) (citing Miller v. State of California, 18 Cal. 3d 808, 813 (1977)). "The public employee, thus, can have no vested contractual right in the terms of his or her employment, such terms being subject to change by the proper statutory authority." Hinchliffe v. City of San Diego, 165 Cal. App. 3d 722, 725 ...


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