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Mission Springs Water District v. Verjil

California Court of Appeals, Fourth District, Second Division

August 7, 2013

MISSION SPRINGS WATER DISTRICT, Plaintiff and Respondent,
v.
KARI VERJIL, as Registrar of Voters, etc., Defendant TIM RADIGAN BROPHY et al., Real Parties in Interest and Appellants.

APPEAL from the Superior Court of Riverside County. No. INC1105569 Harold W. Hopp, Judge.

Trevor A. Grimm, Jonathan M. Coupal, and Timothy A. Bittle for Defendants and Appellants.

Benbrook Law Group and Bradley A. Benbrook for Citizens in Charge as Amicus Curiae on behalf of Defendants and Appellants.

Slovak Baron & Empey, John O. Pinkney, and Charles L. Gallagher for Plaintiff and Respondent.

OPINION

RICHLI J.

Colantuono & Levin and Michael G. Colantuono for Association of California Water Agencies, California Association of Sanitation Agencies, California State Association of Counties, and League of California Cities as Amici Curiae on behalf of Plaintiff and Respondent.

Mission Springs Water District (the District) increased its water and sewer rates. Initiatives to roll back the increases gathered enough signatures to qualify for the ballot. Rather than hold an election on the initiatives, however, the District filed this action against the proponents of the initiatives[1] (the Proponents) for a declaration that the initiatives are invalid.

The Proponents filed a “SLAPP motion” — i.e., a special motion to strike pursuant to Code of Civil Procedure section 425.16 (SLAPP Act). For this motion to be granted, the Proponents had to show that the action arose out of activity protected under the constitutional right of petition or free speech, and the District had to fail to show a probability of prevailing on its claims. The trial court denied the motion. It ruled that, under our decision in City of Riverside v. Stansbury (2007) 155 Cal.App.4th 1582 (Stansbury), a declaratory relief action concerning the validity of an initiative does not arise out of protected activity by the initiative’s proponents.

The Proponents ask us to reconsider Stansbury, asserting that itwas poorly reasoned. We conclude that Stansbury was sound when decided; however, in light of the California Supreme Court’s subsequent holding in Perry v. Brown (2011) 52 Cal.4th 1116 (Perry) that a preelection challenge to an initiative does implicate the personal constitutional rights of the initiative’s proponents, Stansbury is no longer good law.

Nevertheless, we also conclude that the trial court properly denied the SLAPP motion, albeit for the wrong reason. The District showed a probability of prevailing on at least one of its theories — that the initiatives would set the District’s rates too low to cover its costs, in violation of Water Code section 31007, and that the voters of a local district cannot override this statewide requirement. Hence, we will affirm.

I.

FACTUAL BACKGROUND

In 2010, the District adopted water and sewer rate increases effective January 1, 2011. According to the District, the rate increases are necessary if it is to remain solvent and to continue to carry out its vital public functions. According to the Proponents, however, the rate increases are unjustifiably high, due in part to employee salaries, health benefits, and pension benefits that are out of line with those prevailing in the private sector.

The Proponents circulated petitions for two initiatives (one for water rates and one for sewer rates) that would undo the rate increases and restore the preexisting rates. The initiatives also provided that, every fiscal year, “the District may adjust these... rates by the percentage increase, if any, in the Consumer Price Index published by the federal Bureau of Labor Statistics for the region applicable to the... District.”

In May 2011, defendant Kari Verjil, the registrar of voters, notified the District that the initiatives had received enough signatures. (See Elec. Code, §§ 9308, subd. (e), 9309, subd. (f).) At that point, the District was statutorily required to order that the initiatives be placed on the ballot at the next general election. (Elec. Code, §§ 1405, subd. (b), 9310, subd. (a)(2).)[2] The District, however, did not do so. Instead, it filed this action for declaratory relief.

II.

PROCEDURAL BACKGROUND

The District alleged that the initiatives were invalid because:

1. While Proposition 218 permits reducing local district rates by initiative, the initiatives went beyond this authorization by also limiting future rate increases.

2. The initiatives were void for vagueness because they did not specify which Consumer Price Index (CPI) was to be used for future rate increases.

3. The initiatives would cause the District to become insolvent.

4. The initiatives, rather than enacting legislation directly, required the District to enact legislation.

5. The initiatives unconstitutionally impaired the obligation of contract.

The Proponents filed a demurrer. In it, they argued that the initiatives were not invalid on any of the five theories that the District was asserting.

Meanwhile, the Proponents also filed a SLAPP motion. They argued that the action arose from the protected activity of exercising their right of petition. They also argued that the District was not likely to prevail on the merits.

The trial court held a combined hearing on both the demurrer and the SLAPP motion. After hearing argument, it denied the SLAPP motion. It reasoned that, under Stansbury, the action did not arise out of any protected activity. It therefore did not reach the question of whether the District had shown a probability of prevailing on the merits. (See Code Civ. Proc., § 425.16, subd. (b)(1).)

At the same time, however, it overruled the demurrer. It ruled that at least one of the District’s theories — that the initiatives unconstitutionally limited future rate increases — appeared to be meritorious.

III.

THE DISTRICT’S CLAIM DOES ARISE OUT OF PROTECTED ACTIVITY, BUT THE DISTRICT SHOWED A PROBABILITY OF PREVAILING

A. General SLAPP Act Principles.

The SLAPP Act states: “A cause of action against a person arising from any act of that person in furtherance of the person’s right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.” (Code Civ. Proc., § 425.16, subd. (b)(1).)

“The analysis of [a SLAPP] motion thus involves two steps. ‘First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one “arising from” protected activity. [Citation.] If the court finds such a showing has been made, it then must consider whether the plaintiff has demonstrated a probability of prevailing on the claim.’ [Citation.]” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 819-820.)

“We review an order granting or denying a motion to strike under section 425.16 de novo. [Citation.]” (Oasis West Realty, LLC v. Goldman, supra, 51 Cal.4th at p. 820.)

B. The “Arising From” Requirement.

The Proponents contend that this action does arise out of protected activity. They appear to concede that, under Stansbury, it does not, but they urge us either to “revisit” Stansbury (capitalization omitted) or to carve out an exception to it.

“[T]o meet its burden ‘the defendant... must present a prima facie showing that the plaintiff’s causes of action arise from acts of the defendant taken to further the defendant’s rights of free speech or petition in connection with a public issue....’ [Citation.]” (Flatley v. Mauro (2006) 39 Cal.4th 299, 314 [discussing & quoting Paul for Council v. Hanyecz (2001) 85 Cal.App.4th 1356, 1365]; see also Flatley, at pp. 316-318 [approving Paul for Council].)

“[T]he mere fact that an action was filed after protected activity took place does not mean the action arose from that activity for the purposes of the anti-SLAPP statute. [Citation.] Moreover, that a cause of action arguably may have been ‘triggered’ by protected activity does not entail that it is one arising from such. [Citation.] In the anti-SLAPP context, the critical consideration is whether the cause of action is based on the defendant’s protected free speech or petitioning activity.” (Navellier v. Sletten (2002) 29 Cal.4th 82, 89.) “The anti-SLAPP statute’s definitional focus is not on the form of the plaintiff’s cause of action but, rather, the defendant’s activity that gives rise to his or her asserted liability — and whether that activity constitutes protected speech or petitioning.” (Id. at p. 92.)

To the best of our knowledge, this standard has been applied to actions challenging initiatives only twice.

First, in City of Santa Monica v. Stewart (2005) 126 Cal.App.4th 43 (Stewart), voters in Pasadena passed an initiative that prohibited city officials from accepting gifts and campaign contributions from recipients of certain public benefits. (Id. at pp. 50-51, 54.) The city, however, claimed that the initiative was unconstitutional; it refused to authenticate, certify and ...


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