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City of Montebello v. Vasquez

Supreme Court of California

August 8, 2016

CITY OF MONTEBELLO, Plaintiff and Respondent,
v.
ROSEMARIE VASQUEZ et al., Defendants and Appellants; ARAKELIAN ENTERPRISES INC., Intervener and Respondent.

         Superior Court Ct. App. 2/1 B245959 Los Angeles County No. BC488767 Rolf M. Treu Judge

          Revere & Wallace and Frank Revere for Defendants and Appellants.

          AlvaradoSmith, Raul F. Salinas, Mary M. Monroe; Leibold McClendon & Mann, Leibold McClendon and John G. McClendon for Plaintiff and Respondent.

          Joseph T. Francke and Steven J. André for Californians Aware, First Amendment Coalition, First Amendment Project, Penelope Canan, Michael Harris, Libertarian Law Council, Klaus J. Kolb and Center for Constitutional Jurisprudence as Amici Curiae on behalf of Plaintiff and Respondent.

          No appearance for Intervener and Respondent.

          Janis L. Herbstman for California State Association of Counties and League of California Cities as Amici Curiae.

          Corrigan, J.

         The City of Montebello sued three of its former councilmembers and a former city administrator, claiming they violated Government Code section 1090 by voting on a waste hauling contract in which they held a financial interest.[1] It sought to invalidate the contract and force defendants to disgorge campaign contributions made by the company that was awarded the contract. Defendants moved to strike the complaint under the anti-SLAPP statute. (Code Civ. Proc., § 425.16.)[2] The trial court denied the motion, and the Court of Appeal affirmed.

         We hold, as did the courts below, that this case does not come within the statutory anti-SLAPP exemption for public enforcement actions. However, the votes cast in favor of the contract at issue were protected activity under section 425.16. The Court of Appeal’s judgment to the contrary is reversed.

         I. BACKGROUND

         In 2008, the franchise for residential waste collection in Montebello was held by intervener Arakelian Enterprises, doing business as Athens Disposal Company (Athens). Athens had been the City’s residential waste hauler for over 40 years, but a number of companies provided commercial waste services. Athens’s executive vice-president, Dennis Chiapetta, was approached by defendant Robert Urteaga, who suggested that Athens consider seeking an exclusive commercial waste hauling contract.[3]

         During subsequent negotiations over adjustments to the residential contract, City representatives invited Athens to submit a proposal for a commercial and industrial waste hauling contract. Chiapetta agreed. He negotiated primarily with the city administrator, defendant Richard Torres, but also with the city attorney. Chiapetta said Torres had previously opposed the idea of an exclusive contract, but changed his mind because the waste hauling industry was undergoing consolidation, landfills were preparing to close, and the City faced compliance issues under the Integrated Waste Management Act (Pub. Resources Code, § 40000 et seq.). Under a proposed comprehensive contract, Athens would pay the City $500, 000, improve its residential services, and indemnify the City for any failure to comply with the Integrated Waste Management Act.

         At a city council meeting, more than 20 people spoke against the contract. Nevertheless, it was approved by a three to two vote. Urteaga and codefendants Kathy Salazar and Rosemarie Vasquez voted in favor. Mayor William Molinari was in the minority. When presented with the finalized contract, Molinari declined to sign it because of various misgivings. He sought the advice of the city attorney, who told him he had a ministerial duty to execute the document. The city attorney advised Molinari in writing that a decision not to sign would “warrant a determination that for purposes of this Agreement only, you are deemed ‘absent’ thus vesting in the mayor pro tem the authority to execute this contract.” The city attorney stated he would instruct the mayor pro tem to sign, with an annotation reflecting her authority to perform that duty in the mayor’s absence.

         Acting as mayor pro tem, Vasquez signed the contract with the city attorney’s annotation. Thereafter, Molinari asked the Los Angeles County District Attorney’s office to investigate possible money laundering by Salazar, along with Brown Act violations by all three councilmembers who had voted for the contract. (See Gov. Code, § 3500 et seq.) The office responded that Brown Act violations could not be investigated without some evidence of an illegal closed session, but that it would look into the money laundering allegation.

         The district attorney’s office ultimately filed no charges against Salazar. Its investigation revealed no impropriety in her alleged use of campaign donations from Athens to make loans to a nonprofit organization where she served as executive director. Nor did Athens’s donations to that organization disqualify Salazar from voting on the Athens contract. There was no evidence she had offered to vote for the contract in exchange for money. While a technical conflict of interest might “possibly” be established under Government Code section 1090, the district attorney did not believe Salazar had a corrupt motive in voting on the Athens contract.

         Montebello resident Mike Torres sued the City in April 2009, seeking to invalidate the Athens contract on various grounds.[4] The trial court denied an anti-SLAPP motion filed by the City, and it appealed. Mayor Molinari and Councilmember Vasquez were up for reelection in November 2009. Montebello voters qualified a recall of Councilmembers Urteaga and Salazar, and a special election was set for February 2010. Athens contributed $37, 300 to defeat Molinari, $45, 000 to reelect Vasquez, and $352, 912.73 to defeat the recall.[5] Despite those efforts Molinari was reelected, Vasquez was not, and Urteaga and Salazar were recalled. Richard Torres announced his retirement as city administrator shortly after the November election.

         The City abandoned its appeal in the Mike Torres action, and substituted new counsel in place of the city attorney. In May 2011 it filed an amended answer, declaring it no longer disputed the material allegations of the petition. Athens, however, continued to defend its contract as real party in interest in the Mike Torres litigation.

         The City filed the action now before us in July 2012, represented by the same outside counsel who took over in the Mike Torres case. The complaint states a single cause of action against Urteaga, Salazar, Vasquez, and Richard Torres for conflict of interest in violation of Government Code section 1090. It seeks a declaration that the Athens contract is void, and an order requiring the councilmember defendants to disgorge the campaign contributions they received from Athens.

         Three days after the City filed its complaint, the trial court in the Mike Torres action issued a writ of mandate setting aside the Athens contract.[6] Defendants then moved to strike the City’s complaint under the anti-SLAPP statute. Noting that the Athens contract had been voided, they contended the City’s action was little more than a politically driven attempt to punish them for exercising their constitutional right of free speech in connection with issues of public interest related to their official duties. The City claimed its action fell within the public enforcement exemption of section 425.16, subdivision (d) (hereafter, § 425.16(d)). Alternatively, the City argued that voting by public officials is not protected under the First Amendment, citing Nevada Commission on Ethics v. Carrigan (2011) 564 U.S. 117 (Carrigan). If the court were to disagree and consider the likelihood of the lawsuit succeeding, the City maintained that its case was sufficiently strong.

         The trial court denied the motion to strike. It ruled that the public enforcement exemption did not apply because, contrary to the requirements of section 425.16(d), the action was not “brought in the name of the people” by the city attorney as a public prosecutor. Deciding that defendants’ actions were protected activity for purposes of section 425.16, the court went on to consider the likelihood the City would prevail. (§ 425.16, subd. (b)(1).) It found sufficient evidence of a conflict of interest in the showing that Urteaga and Richard Torres had encouraged Athens to seek an exclusive contract, and that Athens contributed to the campaigns of Urteaga, Salazar, and Vasquez after the contract was approved.

         The Court of Appeal affirmed. It agreed that the public enforcement exception did not apply. However, it held that defendants’ votes on the contract were not protected activity under section 425.16. Accordingly, the court did not review the question of whether the City could establish a probability it would prevail. We address the exemption first, because its application would take the case entirely out of the anti-SLAPP statutory scheme.

         II. DISCUSSION

         A. The Public Enforcement Exemption

         The Legislature enacted section 425.16 in 1992, noting “a disturbing increase in lawsuits brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances.” (§ 425.16, subd. (a).) The statute authorizes defendants to file a special motion to strike in order to expedite the early dismissal of unmeritorious claims. (§ 425.16, subds. (b)(1), (f).) “[T]o encourage continued participation in matters of public significance, ” and to ensure “that this participation should not be chilled through abuse of the judicial process, ” the Legislature has specified that the anti-SLAPP statute “shall be construed broadly.” (§ 425.16, subd. (a).)

         The statute has always included an exemption for public enforcement actions. (Stats. 1992, ch. 726, pp. 3523-3524.) Section 425.16(d) provides: “This section shall not apply to any enforcement action brought in the name of the people of the State of California by the Attorney General, district attorney, or city attorney, acting as a public prosecutor.” A split of authority has developed on the scope of this exemption. On one side, two opinions from the Second District Court of Appeal have taken an expansive view. (City of Long Beach v. California Citizens for Neighborhood Empowerment (2003) 111 Cal.App.4th 302 (City of Long Beach); City of Los Angeles v. Animal Defense League (2006) 135 Cal.App.4th 606 (City of Los Angeles).) On the other, the Fourth District has applied the statutory language narrowly. (City of Colton v. Singletary (2012) 206 Cal.App.4th 751 (City of Colton).) We conclude that the narrow interpretation is consistent with the statutory language and with our decisions construing exceptions to the anti-SLAPP statute.

         In City of Long Beach, the city sued an organization and its treasurer for violating municipal campaign contribution limits. (City of Long Beach, supra, 111 Cal.App.4th at p. 304.) In response to the defendants’ anti-SLAPP motion, the city claimed its action was exempt. The defendants argued that the exemption did not apply because the action was “not brought in the name of the people of the State of California, ” as required by section 425.16(d). The Court of Appeal agreed. It relied on legislative history to conclude that the public enforcement exemption was meant to apply to actions in the name of local authorities, as well as the people of California. In a brief opinion, the court conceded that the history of section 425.16 was silent on this point. It referred instead to comments in a bill analysis pertaining to a different statute: section 998, which governs cost awards after offers to compromise. The Legislature added a public enforcement exemption to section 998 in 2001, using terms identical to those of section 425.16(d). (§ 998, subd. (g)(2); Stats. 2001, ch. 153, § 1, p. 1444.)

         The section 998 bill analysis explained that when section 425.16 was enacted in 1992, subdivision (d) was included “[a]t the request of the Attorney General’s office.” (Sen. Com. on Judiciary, Analysis of Assem. Bill No. 732 (2001-2002 Reg. Sess. July 3, 2001, p. 5.) “Legislative staff involved in the drafting of the [anti-SLAPP] bill report that this provision was not included to provide a special exemption that otherwise would have been considered nonexistent, but rather to confirm the existence of the prosecutorial exemption assumed by the drafters.” (Ibid.) The City of Long Beach court relied on this passage to support its belief that the section 998 exemption was intended to “apply broadly to ‘civil enforcement actions’ seeking injunctions, restitution and civil penalties, but not damages.” (City of Long Beach, supra, 111 Cal.App.4th at p. 307.) Based on that inference, the court reasoned that nearly a decade after the anti-SLAPP statute was enacted, “the Legislature understood the language at issue in this case (albeit in the context of section 998) to encompass the type of lawsuit now before us.” (Ibid.)

         The court also noted that a committee analysis of the first anti-SLAPP bill, which was ultimately vetoed, had reflected the Attorney General’s concern over the unintended consequence of hindering enforcement of consumer protection laws by local as well as state agencies. (City of Long Beach, supra, 111 Cal.App.4th at pp. 307-308.) It pointed out that the anti-SLAPP statute was meant to thwart abusive lawsuits intended to chill the exercise of First Amendment rights, whereas “ ‘[t]he prosecutor’s motive derives from the constitutional mandate to assure that the laws of the state are uniformly enforced and to prosecute any violation of these laws....’ ” (Id. at p. 308.) The court ...


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