California Court of Appeals, First District, Second Division
San Francisco City and County Super. Ct. No. CGC-09-492995, Hon. Richard Kramer
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The Quinlan Law Firm, William J. Quinlan Lisa H. Quinlan Sarah M. Steele; Litigation Law Group and Gordon M. Fauth, Jr., for Plaintiffs and Appellants.
Ruiz & Sperow, Janice L. Sperow Forrest F. Fang and Juliana V. Kresse for Defendants and Respondents.
PegaStaff is an agency that provides temporary staffing for its clients. A large part of PegaStaff’s business was the provision of staffing to Pacific Gas and Electric Company (PG&E), through a staffing agency with which PG&E directly contracted, initially Corestaff Services, LP (Corestaff) and later Agile 1.
California's Public Utilities Commission (CPUC) adopted General Order 156 to implement Public Utilities Code sections 8281 through 8286 (Article 5),  the purpose of which is to encourage and develop the use of women, minority and disabled veteran-owned business enterprises (WMDVBEs) within the public utility sector. PegaStaff is not a WMDVBE and after PG&E
adopted a program to increase the utilization of WMDVBEs, its provision of staff to PG&E was substantially reduced.
PegaStaff filed suit against the CPUC, PG&E, Corestaff and Agile 1. Its claims against the CPUC consisted of constitutional challenges to Article 5 and General Order 156. The trial court determined that it did not have subject matter jurisdiction to consider PegaStaff’s constitutional challenges, granted the CPUC’s motion for judgment on the pleadings, and entered judgment in favor of the CPUC. The trial court also denied PegaStaff’s motion to transfer its claims against the CPUC to the Court of Appeal.
On appeal,  PegaStaff maintains that the trial court has subject matter jurisdiction to hear its claims against the CPUC. PegaStaff also argues that if the trial court did not err on the jurisdictional issue, then it erred by denying the motion to transfer. We find no merit in PegaStaff’s arguments and affirm.
The CPUC is an agency created by the California Constitution to regulate privately owned public utilities such as PG&E. (Cal. Const., art. XII.)
PegaStaff is a division of PegaSoft Corporation, a California corporation, that provides temporary staffing in the fields of information technology and engineering. Mark Arshinkoff, a white male, owns 100 percent of PegaSoft stock.
For nine years prior to filing suit, PegaStaff provided contract labor to PG&E through a program administered by Corestaff, another staffing company. PegaStaff’s placement of workers at PG&E peaked in 2007 at about 40 workers. In that year, PegaStaff received about 400 job orders and revenue of about $4.5 million from PG&E. The revenue from PG&E comprised about 50 percent of PegaStaff’s gross revenues for the year.
In October 2007, at the direction of PG&E, Corestaff created a tier structure whereby all WMDVBEs were placed in the first tier and all other businesses, such as PegaStaff, were placed in the second tier. First tier businesses received preference in job orders for temporary workers. Corestaff created the tiered system because its contract with PG&E required it to spend a substantial percentage of its purchasing/contracting dollars on WMDVBEs.
The number of PG&E job orders routed to PegaStaff dropped substantially as a consequence of the tier structure. Many contingent workers placed by PegaStaff were transferred to WMDVBEs by Corestaff, to PegaStaff’s financial detriment. Between January and September 2009, PegaStaff received only one job order for PG&E from Corestaff and employed only four temporary workers at PG&E. In 2010, defendant Agile 1 replaced Corestaff as the administrator of PG&E’s contingent worker program.
On September 29, 2009, PegaStaff filed suit. The operative first amended complaint (FAC) was filed on September 5, 2012, naming PG&E, Corestaff, Agile 1 and the CPUC as defendants. The FAC asserts 10 causes of action: (1) violation of Civil Code section 51.5 (barring discrimination by businesses based on enumerated characteristics), asserted against Corestaff and PG&E; (2) violation of California Constitution, article I, section 31 (barring discrimination by the state based on race, sex, color, ethnicity or national origin in the operation of public employment, public education or public contracting), asserted against the CPUC; (3) violation of the equal protection clause of the California Constitution (Cal. Const., art. I, § 7), asserted against the CPUC; (4) injunctive relief for violation of California’s unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.), asserted against Corestaff and PG&E; (5) intentional interference with prospective economic advantage, asserted against PG&E; (6) negligent interference with prospective economic advantage, asserted against PG&E; (7) civil conspiracy, asserted against Agile 1; (8) intentional interference with prospective economic advantage, asserted against Agile 1; (9) negligent interference with prospective economic advantage, asserted against Agile 1; and (10) violation of the UCL, asserted against Agile 1. PegaStaff sought, among other relief, a declaration that Article 5 and General Order 156 are “unconstitutional, invalid, unenforceable and void, both on their face and as applied here.”
On May 13, 2013, the CPUC filed a motion for judgment on the pleadings, asserting that section 1759 deprives the superior court of subject matter jurisdiction over PegaStaff’s two claims asserted against it. PegaStaff opposed CPUC’s motion but eight days before the hearing set for that motion moved for transfer to this court, should the trial court determine that it lacked jurisdiction.
A hearing on the parties’ motions, as well as other matters, was held on July 11, 2013. At the hearing, the trial court stated that the CPUC’s motion for judgment on the pleadings would be granted. The court also denied as untimely PegaStaff’s motion to transfer. On July 15, 2013, the court filed an order formally making the rulings that it stated at the hearing. It granted the motion based on section 1759, concluding that it “lacks jurisdiction to review constitutional challenges to Sections 8281-8286 because it would interfere
with Defendant CPUC’s job duties” and lacks jurisdiction to hear constitutional challenges to General Order 156 because it "lacks jurisdiction to review, reverse, correct, or annul any order or decision of the commission.”
The court entered judgment in favor of the CPUC on July 35, 2013. PegaStaff timely filed a notice of ...