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People v. Superior Court (Hossain Sahlolbei)

Supreme Court of California

June 26, 2017

THE PEOPLE, Petitioner,
v.
THE SUPERIOR COURT OF RIVERSIDE COUNTY, Respondent; HOSSAIN SAHLOLBEI, Real Party in Interest.

         Superior Court Riverside County, No. INF1302523, Ct.App. 4/2 E062380 Michael J. Naughton Judge.

          Paul E. Zellerbach and Michael A. Hestrin, District Attorneys, Elaina Gambera Bentley, Assistant District Attorney, Kelli M. Catlett and Emily R. Hanks, Deputy District Attorneys, for Petitioner.

          No appearance for Respondent.

          Brown White & Newhouse, Brown White & Osborn and Kenneth P. White for Real Party in Interest.

          Francisco J. Silva and Long X. Do for California Medical Association as Amicus Curiae on behalf of Real Party in Interest.

          LIU, J.

         Government Code section 1090 prohibits public officers and employees from making contracts in which they have a financial interest when they act in their official capacities. Knowing and willful self-dealing can result in criminal liability. In this case, the District Attorney of Riverside County seeks to prosecute Dr. Hossain Sahlolbei under section 1090 for allegedly influencing the public hospital where he worked to hire another doctor and then profiting from that doctor's contract. The Court of Appeal held that because Sahlolbei was an independent contractor and not an employee of the hospital, section 1090 does not apply to Sahlolbei. We conclude that independent contractors are not categorically excluded from section 1090. Liability under the statute can extend to independent contractors who have duties to engage in or advise on public contracting. Because Sahlolbei's duties brought him within the scope of the statute, we reverse.

         I.

         Sahlolbei was a surgeon at Palo Verde Hospital (the Hospital) in Blythe, Riverside County. The Hospital is a public entity under California law. It is undisputed that Sahlolbei was an independent contractor and never an employee of the Hospital. In addition to providing medical services as the Hospital's codirector of surgery, Sahlolbei served on the Hospital's medical executive committee (the Committee). The Committee, comprised of members of the medical staff, is independent of the Hospital and advises the board of governors of the Hospital (the Board) on the Hospital's operations, including physician hiring. Sahlolbei was at times the chief of staff or the vice-chief of staff of the Committee, and he is alleged to have had considerable influence over the Board's decisions in those roles.

         The prosecution alleges that Sahlolbei in 2009 recruited an anesthesiologist, Dr. Brad Barth, to work at the Hospital. Sahlolbei negotiated a contract with Barth under which Barth would receive $36, 000 a month with a one-time relocation fee of $10, 000. But Sahlolbei pressured the Board into hiring Barth for $48, 000 a month with a one-time relocation fee of $40, 000 as well as a directorship position of $3, 000 a month. Sahlolbei allegedly threatened to have the medical staff stop admitting patients to the Hospital if the Board did not agree to his terms. Sahlolbei instructed Barth to have Barth's paychecks deposited directly into Sahlolbei's account, out of which Sahlolbei remitted to Barth the $36, 000 a month on which they had agreed. The Board was not aware that Sahlolbei was profiting from Barth's contract. When this was brought to the Board's attention, the Hospital renegotiated Barth's contract to pay Barth directly.

         The Riverside County District Attorney charged Sahlolbei with grand theft and violation of Government Code section 1090, which provides in relevant part: “Members of the Legislature, state, county, district, judicial district, and city officers or employees shall not be financially interested in any contract made by them in their official capacity, or by any body or board of which they are members.” (Gov. Code, § 1090, subd. (a); all undesignated statutory references are to this code.) A willful and knowing violation of section 1090 is punishable by a fine of up to $1, 000 or imprisonment, and disqualification “from holding any office in this state.” (§ 1097, subd. (a); People v. Honig (1996) 48 Cal.App.4th 289, 333-336 (Honig).)

         The trial court dismissed the section 1090 count. It considered itself bound by People v. Christiansen (2013) 216 Cal.App.4th 1181 (Christiansen), which held that independent contractors cannot be held criminally liable under section 1090. A divided panel of the Court of Appeal agreed with Christiansen and upheld the dismissal. The court also held that there was no evidence Sahlolbei was acting in an official capacity or performing an authorized public function. Justice Hollenhorst dissented, arguing that Christiansen was wrongly decided. He would have found that independent contractors can be criminally liable under section 1090 where the contractor exerts “considerable” influence over the contract decisions of a public entity. We granted review.

         II.

         Whether section 1090 applies to independent contractors is a question of statutory construction that we review de novo. (Lexin v. Superior Court (2010) 47 Cal.4th 1050, 1072(Lexin).) Section 1090 does not define “officer” or “employee.” In Reynolds v. Bement (2005) 36 Cal.4th 1075 (Reynolds), we observed that where “ ‘a statute refer[s] to employees without defining the term[, ] courts have generally applied the common law test of employment.' ” (Id. at p. 1087, quoting Metropolitan Water Dist. v. Superior Court (2004) 32 Cal.4th 491, ...


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