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