CALIFORNIA SCHOOL BOARDS ASSOCIATION v.
CALIFORNIA










Filed 3/9/09






CERTIFIED FOR PUBLICATION

COPY
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Sacramento)
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CALIFORNIA SCHOOL BOARDS ASSOCIATION et al., Plaintiffs and Appellants, v. STATE OF CALIFORNIA et al., Defendants and Appellants.	C055700 (Super. Ct. No. 06CS01335)
DEPARTMENT OF FINANCE, Intervener and Appellant.

STORY CONTINUE FROM PART I….

In Assembly Bill No. 138 and corresponding legislation, the Legislature directed the Commission to set aside, in one instance, and reconsider, in the others, its decisions on the test claims at issue here. The trial court decided that the direction to reconsider test claims “is procedural only; it operates, or can be construed to operate prospectively only; it does not dictate the result; and, therefore, it does not violate the separation of powers doctrine.” As for the Legislature’s direction to the Commission to set aside a test claim decision, however, the trial court concluded that it violated the separation of powers doctrine because it did not merely require the Commission to reconsider them. This is the extent of the distinction identified by the trial court.
On appeal, the State urges us to find that the direction to set aside test claims did not violate the separation of powers doctrine because doing so was functionally the same as directing the Commission to reconsider the test claim decisions. On the other hand, CSBA, in its cross-appeal, argues that the Legislature violated the separation of powers as to the direction to reconsider test claim decisions as well as the direction to set aside a test claim decision. We conclude that CSBA is correct. The Legislature exceeded its power and therefore violated the separation of powers doctrine when it directed the Commission to set aside and reconsider test claim decisions. As a quasi-judicial decision maker, the Commission does its work independent of legislative oversight and is not subject to review by the Legislature. The Legislature had no power to direct the Commission to set aside or reconsider specific test claim decisions.
“In [Government Code] section 17500 et seq., the Legislature established the Commission as a quasi-judicial body to carry out a comprehensive administrative procedure for resolving claims for reimbursement of state-mandated local costs arising out of article XIII B, section 6 . . . of the California Constitution.
“‘The Legislature did so because the absence of a uniform procedure had resulted in inconsistent rulings on the existence of state mandates, unnecessary litigation, reimbursement delays, and apparently, resultant uncertainties in accommodating reimbursement requirements in the budgetary process. [Citation.]
“‘“It is apparent from the comprehensive nature of this legislative scheme, and from the Legislature’s expressed intent, that the exclusive remedy for a claimed violation of [article XIII B,] section 6 lies in these procedures. The statutes create an administrative forum for resolution of state mandate claims, and establishes [sic] procedures which exist for the express purpose of avoiding multiple proceedings, judicial and administrative, addressing the same claim that a reimbursable state mandate has been created. . . . [¶] . . . In short, the Legislature has created what is clearly intended to be a comprehensive and exclusive procedure by which to implement and enforce [article XIII B,] section 6.” [Citation.]
“‘Thus, the statutory scheme contemplates that the Commission, as a quasi-judicial body, has the sole and exclusive authority to adjudicate whether a state mandate exists.’ [Citation.]” (Redevelopment Agency v. Commission on State Mandates (1996) 43 Cal.App.4th 1188, 1192-1193, italics omitted.)
The Commission’s authority to issue a final decision that solely and exclusively adjudicates a test claim is limited only by judicial review. “A claimant or the state may commence a proceeding in accordance with the provisions of Section 1094.5 of the Code of Civil Procedure to set aside a decision of the commission on the ground that the commission’s decision is not supported by substantial evidence. . . .” (Gov. Code, § 17559, subd. (b).)
The Legislature’s direction to the Commission to reconsider or set aside its final decisions is an unlawful collateral attack on those decisions. Once a decision of the Commission becomes final and has not been set aside by a court pursuant to a petition for writ of administrative mandamus (Code Civ. Proc., 1094.5), it is not subject to collateral attack. As a collateral attack, the Legislature’s direction to the Commission to set aside or reconsider Commission decisions went beyond the power of the Legislature.
The Legislature is powerless to overturn a specific judicial decision. (Mandel v. Myers (1981) 29 Cal.3d 531, 547 (Mandel).) “Our Constitution assigns the resolution of such specific controversies to the judicial branch of government (Cal. Const., art. VI, § 1) and provides the Legislature with no authority to set itself above the judiciary by discarding the outcome or readjudicating the merits of particular judicial proceedings.” (Mandel, supra, at p. 547.) “[T]he fundamental separation of powers doctrine embodied in article III, section 3 of the California Constitution [citation] forbids any such legislative usurpation of traditional judicial authority.” (Mandel, supra, at p. 547.)
Once the Commission’s decisions are final, whether after judicial review or without judicial review, they are binding, just as are judicial decisions. An administrative agency’s quasi-judicial decision is binding in later civil actions. (Johnson v. City of Loma Linda (2000) 24 Cal.4th 61, 65.) “[U]nless a party to a quasi-judicial proceeding challenges the agency’s adverse findings made in that proceeding, by means of a mandate action in superior court, those findings are binding in later civil actions.” (Id. at pp. 69-70.) Therefore, like a judicial decision, a quasi-judicial decision of the Commission is not subject to the whim of the Legislature. Only the courts can set aside a specific Commission decision and command the Commission to reconsider, and, even then, this can be done only within the bounds of statutory procedure. (Gov. Code, § 17559, subd. (b).)
There is no legally defensible basis for distinguishing between the Legislature’s direction to set aside, on one hand, and to reconsider, on the other, a final determination by the Commission. The trial court found that the direction to reconsider was merely procedural and therefore did not overstep the Legislature’s bounds. However, the effect of the direction to reconsider was to nullify the finality of specific Commission decisions. Such a case-by-case legislative abrogation of Commission decisions violates the separation of powers doctrine.
The conclusion that the Commission’s decisions are beyond the reach of legislative encroachment is supported in Carmel Valley Fire Protection Dist. v. State of California (1987) 190 Cal.App.3d 521 (Carmel Valley). In that case, the State required counties to supply firefighters with protective clothing and equipment. The counties filed a petition for reimbursement with the Board of Control, the Commission’s predecessor. The Board of Control found that the clothing and equipment requirement constituted a state mandate and ordered reimbursement. The State did not challenge the decision of the Board of Control by seeking a writ of mandate during the statutory time limit. The Legislature then refused to appropriate funds for reimbursement. (Id. at pp. 530-533.)
When the counties sought judicial relief for the failure to provide reimbursement, the State attempted to argue that the decision of the Board of Control was incorrect. The court held, however, that the State could not obtain relief in this manner, even if the decision of the Board of Control was incorrect, because the State waived the right to challenge the decision and was collaterally estopped from doing so. (Carmel Valley, supra, 190 Cal.App.3d at pp. 534-537.)
As in Carmel Valley, the State, in this case, is not entitled to nullify the finality of the prior Commission decisions, whether by refusing to fund a mandate or directing the Commission to reconsider. The State is bound by those decisions. As noted in Carmel Valley, a party to a final adjudication of an administrative agency is collaterally estopped from relitigating the issues if (1) the agency acted in a judicial capacity, (2) it resolved the disputed issues, and (3) all parties had the opportunity to fully and fairly litigate the issues. (Carmel Valley, supra, 190 Cal.App.3d at p. 535.) Each of the elements is present in this case. Therefore, the State may not attack the test claim decisions by having the Legislature require the Commission to set aside or reconsider its decisions.
Because the Legislature had no power to direct the Commission to set aside or reconsider its test case decisions, the Commission’s actions in response to that direction were unauthorized. The Commission, itself, stated in its new decisions that it was acting to reconsider or set aside the decisions pursuant to the direction of the Legislature.
Therefore, the setting aside and reconsideration of the test claims at issue here (Open Meetings Act and Brown Act Reform test claims, the Mandate Reimbursement I test claim, and the School Accountability Report Cards test claim) was unauthorized, and we direct the trial court to modify its judgment and the writ of mandate accordingly. The lone exception is the Mandate Reimbursement Process II test claim decision, which was heard pursuant to a new test claim and was not a reconsideration of a prior test claim.
Over time, any particular decision of the Commission may be rendered obsolete by changes in the law and material circumstances that originally justified the Commission’s decision. While decisions of the Commission are not subject to collateral attack, logic may dictate that they must be subject to some procedure for modification after changes in the law or material circumstances. CSBA argues that the most analogous procedure is the inherent power of a court to modify a continuing injunction to take into account changes in the law and material circumstances. We conclude that we need not decide this question.
In deciding that the Legislature cannot direct, on a case-by-case basis, that a final decision of the Commission be set aside or reconsidered, we do not imply that there is no way to obtain reconsideration of a Commission decision when the law or material circumstances have changed. We only conclude that the Legislature’s attempt to force a reconsideration in this case violated the separation of powers doctrine. Whether the Commission, exercising inherent powers, may agree to reconsider a decision or the Legislature may provide, generally, a process for obtaining reconsideration of a decision is beyond the scope of this opinion.^[1]
II
Additional Separation of Powers Argument
Because we have already determined that the setting aside and reconsideration of all but one of the test claim decisions at issue in this appeal was unauthorized, we need not consider further arguments concerning those test claim decisions. Accordingly, the remaining discussion relates to the Mandate Reimbursement Process II test claim.
In finding that the duties imposed by the State did not give rise to reimbursable costs in the Mandate Reimbursement Process II test claim decision, the Commission did not decide for itself whether those duties were expressly included in or necessary to implement a ballot measure. Instead, the Commission simply cited the Legislature’s declaration in Government Code section 17500 that the Legislature’s intent in enacting the statutes was “to provide for the implementation of [Proposition 4].” “Thus,” concluded the Commission, “the test claim statutes and executive orders, as part of that statutory scheme, meet the standard of section 17556, subdivision (f), in that they are ‘necessary to implement [or] reasonably within the scope of’ article XIII B, section 6.” (Brackets in original.)
The Commission’s conclusion that the Legislature’s statement of intent resolved the matter was unjustified because legislative declarations concerning whether a state mandate exists are irrelevant to the Commission’s determination of whether a state mandate exists. (County of Los Angeles v. Commission on State Mandates (1995) 32 Cal.App.4th 805, 818 (County of Los Angeles).)
In County of Los Angeles, the court considered a Penal Code statute imposing duties on local governments and providing for state mandate reimbursement to local governments for implementing the duties. (32 Cal.App.4th at pp. 811-812.) When the State discontinued payments, the county filed a test claim, asserting that the Legislature’s provision granting state mandate reimbursement was a “final and unchallengeable determination that [the statute] constitute[d] a state mandate.” (Id. at p. 818.) The County of Los Angeles court disagreed. It held that “the Commission, as a quasi-judicial body, has the sole and exclusive authority to adjudicate whether a state mandate exists. Thus, any legislative findings are irrelevant to the issue of whether a state mandate exists, and the Commission properly determined that no state mandate existed.” (Id. at p. 819.)
Applying the holding in County of Los Angeles, we conclude that the Legislature’s declarations concerning its intent in enacting the state mandate reimbursement provisions are simply irrelevant to the determination of whether a state mandate exists. We discern no conflict between this conclusion and article III, section 3.5 of the Constitution, stating that an administrative agency has no power to declare a statute unconstitutional or refuse to enforce it on that basis. A legislative finding that a mandate exists is irrelevant to the Commission’s determination and, therefore, it is unnecessary to determine whether the finding conflicts with the Constitution. (County of Los Angeles, supra, Cal.App.4th at pp. 819.) On remand, the Commission must disregard any declarations of legislative intent and, instead, decide for itself whether a reimbursable state mandate exists.
III
Alternative Basis for Rejecting Claim
In reconsidering the School Accountability Report Cards test claim, after it was directed to do so by the Legislature, the Commission determined that the application of the amended version of Government Code section 17556, subdivision (f) resulted in a finding that there were no reimbursable costs. The Commission then continued: “Even in the absence of Government Code section 17556, subdivision (f), there is a separate and independent ground for finding that the test claim legislation does not impose costs mandated by the state.” The Commission then found that (1) the additional school accountability report card elements added by the Legislature required only a minimal reallocation of resources and (2) the State essentially funds the school accountability report cards through Proposition 98’s mandatory funding.
In its separate appeal, the Commission asserts that, even if we determine that the statutes that required reconsideration are unconstitutional, we should reverse the trial court’s judgment as to the School Accountability Report Cards test claim because the trial court did not consider the alternative grounds that the Commission gave for its finding that there were no reimbursable costs. CSBA argues that we should disregard this assertion because it was not raised in the trial court. CSBA also argues that the alternative grounds cited by the Commission are not a valid basis for upholding the Commission’s decision because the Commission acted only pursuant to the Legislature’s invalid direction to reconsider the test claim decision. We conclude that the alternative grounds cited by the Commission have no bearing on the outcome because the Legislature’s direction to the Commission to reconsider the School Accountability Report Cards test claim decision exceeded the Legislature’s power.
The Commission agrees that the issue of whether the alternative grounds were sufficient to uphold the decision on reconsideration is moot if we find that the Legislature exceeded its power in directing reconsideration of the School Accountability Report Cards test claim decision. The Commission states: “[I]f the appellate court finds that the reconsideration statutes are constitutionally invalid, as argued in CSBA’s cross appeal [citation], the Commission’s reconsideration decision must be set aside, the alternative grounds issue is moot, and no further analysis is required.” We agree. The reconsideration statutes were invalid. Therefore, the Commission’s reconsideration based on those statutes must be nullified, regardless of the decision’s merits.^[2]
IV
Costs Expressly Included in Ballot Measures
In its cross-appeal, CSBA contends that ballot measure mandates imposed on local governments must be reimbursed under article XIII B, section 6. It argues that the provision in the original version of Government Code section 17556, subdivision (f), that the State need not reimburse costs resulting from “duties which were expressly included in a ballot measure approved by the voters in a statewide election” (Stats. 1984, ch. 1459, § 1, p. 5119, enacting former Gov. Code, § 17556, subd. (a)(6)), was in conflict with article XIII B, section 6. We turn first to this contention. As did the trial court, we conclude that CSBA’s contention is without merit, based on the plain meaning of article XIII B, section 6. The State’s constitutional duty to reimburse local governments for mandated costs does not include ballot measure mandates.
A. Constitutional Challenge to Legislative Enactment
“In deciding whether the Legislature has exceeded its power, we are guided ‘by well settled rules of constitutional construction. Unlike the federal Constitution, which is a grant of power to Congress, the California Constitution is a limitation or restriction on the powers of the Legislature. [Citations.] Two important consequences flow from this fact. First, the entire law-making authority of the state, except the people’s right of initiative and referendum, is vested in the Legislature, and that body may exercise any and all legislative powers which are not expressly or by necessary implication denied to it by the Constitution. [Citations.] In other words, “we do not look to the Constitution to determine whether the legislature is authorized to do an act, but only to see if it is prohibited.” [Citation.] [¶] Secondly, all intendments favor the exercise of the Legislature’s plenary authority: “If there is any doubt as to the Legislature’s power to act in any given case, the doubt should be resolved in favor of the Legislature’s action. Such restrictions and limitations [imposed by the Constitution] are to be construed strictly, and are not to be extended to include matters not covered by the language used.”’ [Citations.] On the other hand, ‘we also must enforce the provisions of our Constitution and “may not lightly disregard or blink at . . . a clear constitutional mandate.”’ [Citation.]” (County of Riverside v. Superior Court (2003) 30 Cal.4th 278, 284-285.)
B. Plain Meaning of the Constitutional Provision
Article XIII B, section 6 requires the state to reimburse the local government “[w]henever the Legislature or any state agency mandates a new program or higher level of service . . . .” Although the text refers to mandates by “the Legislature or any state agency,” which does not appear to include ballot measures passed by voters, CSBA claims that “Legislature” is ambiguous and can include the voters. It further claims that by turning to Proposition 4’s history and ballot arguments, the ambiguity must be resolved in favor of including the voters in the meaning of “Legislature.” We reject this argument because “Legislature” is not ambiguous.
When interpreting the Constitution, we must choose the plain meaning of the provision if the language is clear and unambiguous. If the language is ambiguous, however, we turn to extrinsic evidence, such as ballot arguments. (Silicon Valley Taxpayers' Assn., Inc. v. Santa Clara County Open Space Authority (2008) 44 Cal.4th 431, 444-445.)
“Legislature” is not ambiguous in the context of reimbursement for state mandates: “The legislative power of this State is vested in the California Legislature which consists of the Senate and Assembly, but the people reserve to themselves the powers of initiative and referendum.” (Cal. Const., art. IV, § 1.) Although the “legislative power” is shared by the Legislature and the people, the two sources of legislation are distinct. If they were not distinct, it would have been unnecessary for the people to “reserve to themselves the powers of initiative and referendum.” (Ibid.)
Article XIII B, section 6 requires reimbursement for mandates imposed by the “Legislature” and not by ballot measures. If the voters had intended to include ballot measure mandates -- that is, mandates imposed by the voters themselves
-- they could have done so by using (1) more general but inclusive language, such as providing that reimbursement is required whenever “the state” mandates a new program or higher level of service and (2) additional specific language, such as providing that reimbursement is required whenever “a ballot measure” mandates a new program or higher level of service. The voters did neither. Therefore, we must not read into the language of Proposition 4 an interpretation that goes beyond the plain meaning of the provision.
C. Introducing Ambiguity
But CSBA attempts to introduce ambiguity by referring to cases holding that an extension or limitation on the power of the “Legislature” in some contexts in the state Constitution includes an extension of or limitation on the people’s power of initiative. (See Legislature v. Deukmejian (1983) 34 Cal.3d 658; Kennedy Wholesale, Inc. v. State Bd. of Equalization (1991) 53 Cal.3d 245; Independent Energy Producers Assn. v. McPherson (2006) 38 Cal.4th 1020.) This attempt to introduce ambiguity fails because the cases upon which CSBA relies are distinguishable.
1. Legislature v. Deukmejian
In Legislature v. Deukmejian, the Supreme Court considered the validity of a proposed initiative that would have realigned voting districts. At the time Legislature v. Deukmejian was decided, article XXI, section 1 of the California Constitution stated: “In the year following the year in which the national census is taken under the direction of Congress at the beginning of each decade, the Legislature shall adjust the boundary lines of the . . . congressional . . . districts . . . .” (Former Cal. Const., art. XXI, § 1.) The proposed initiative sought to realign the districts even though the Legislature had already acted pursuant to its decennial duty. (Legislature v. Deukmejian, supra, 34 Cal.3d at p. 663.) The specific issue resolved by the Supreme Court was whether it should “create an exception to the constitutionally mandated and long-established rule that redistricting may occur only once within the 10-year period following a federal census.” (Ibid.) Assuming, without deciding, that the people have the authority to realign districts through the initiative process (id. at p. 673), the court concluded that, “based upon the principle that in the enactment of statutes the constitutional limitations that bind the Legislature apply with equal force to the people’s reserved power of initiative, that such an exception cannot be justified.” (Id. at p. 663.)
Contrary to CSBA’s argument, Legislature v. Deukmejian does not lead to the conclusion that the term “Legislature” in the Constitution applies equally to what we normally refer to as the Legislature and to the voters acting pursuant to the power of initiative and referendum. The Supreme Court specifically declined to decide whether “redistricting by initiative is permissible.” (Legislature v. Deukmejian, supra, 34 Cal.3d at p. 673.) Instead, it held that, even if it is permissible, the limitations imposed by the Constitution apply to redistricting by initiative. (Id. at pp. 673-674.)
This holding does not support CSBA’s argument that the term “Legislature” in article XIII B, section 6 includes the voters. The Constitution narrowly granted the Legislature the power to realign districts. Even if the people have the power to exercise the initiative power to realign districts, which power is not specifically granted to the people by the Constitution, such power must be limited, as is the Legislature’s power. This holding did not blur the definition of “Legislature.” It simply refused to grant the people power in excess of the Legislature’s as to redistricting.
2. Kennedy Wholesale, Inc. v. State Board of Equalization
In Kennedy Wholesale, Inc. v. State Board of Equalization, supra, the Supreme Court addressed the issue of whether Proposition 13 impliedly repealed the people’s power to raise taxes by initiative. Proposition 13 provided, in part, that “any changes in State taxes enacted for the purpose of increasing revenues . . . must be imposed by an Act passed by not less than two-thirds of all members elected to each of the two houses of the Legislature . . . .” Noting that the provision referred to the Legislature but not to the people’s power of initiative, thereby supporting at least an inference that the people do not have the power to raise taxes, the court found the provision ambiguous because it conflicts with article IV, section 1 of the Constitution, which reserves to the people the power of initiative. Based on this contextual ambiguity, the court referred to extrinsic evidence and found there was nothing to support an argument that Proposition 13 impliedly repealed the people’s power to raise taxes. (Kennedy Wholesale, Inc. v. State Bd. of Equalization, supra, 53 Cal.3d at pp. 248-251.)
CSBA claims that the Kennedy Wholesale, Inc. v. State Board of Equalization court “held that the reference to ‘the Legislature’ in [Proposition 13] refers both to the Legislature and to the People acting by initiative.” We read the case differently. The court held that the two-thirds majority limitation on the Legislature’s power to raise taxes did not implicate the people’s power to raise taxes by initiative with a simple majority vote. (Kennedy Wholesale, Inc. v. State Bd. of Equalization, supra, 53 Cal.3d at p. 251.) In that way, the case makes it clear that the Legislature’s lawmaking power and the people’s power of initiative are separate and distinct.



TO BE CONTINUED AS PART III….

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