Existing law establishes a procedure for the state to pay claims against the state.

This bill would appropriate funds from the General Fund for the payment of specific claims against the state and require any appropriated funds in excess of the amount required to pay those claims to revert to the General Fund.

This bill would declare that it is to take effect immediately as an urgency statute.

Existing law establishes a procedure for the state to pay claims against the state.

This bill would appropriate funds from the General Fund for the payment of specific claims against the state and require any appropriated funds in excess of the amount required to pay those claims to revert to the General Fund.

This bill would declare that it is to take effect immediately as an urgency statute.

Existing law establishes a procedure for the state to pay claims against the state.

This bill would declare that it is to take effect immediately as an urgency statute.

Existing law establishes a procedure for the state to pay claims against the state.

This bill would state the intent of the Legislature to appropriate funds for the payment of claims against the state, as presented by the Attorney General, and to have any appropriated funds in excess of the amount required to pay those claims revert to the General Fund.

This bill would declare that it is to take effect immediately as an urgency statute.

 THIRD READING  

Bill No: AB 1693

Author:

:

Vote:

SENATE APPROPRIATIONS COMMITTEE: 5-0, 6/20/16

AYES: Lara, Beall, Hill, McGuire, Mendoza

NO VOTE RECORDED: Bates, Nielsen

ASSEMBLY FLOOR: 69-3, 5/23/16 - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST: This bill, an urgency measure, appropriates $10.55 million from the General Fund to the Department of Justice (DOJ) for the payment of a judgment and a settlement in two lawsuits against the state. Any funds appropriated in excess of the amounts required for payment of these claims reverts to the General Fund.

ANALYSIS: This bill is one of several annual bills carried by the chairs of the Appropriations Committees to provide appropriation authority for legal judgments and settlements approved by DOJ and the Department of Finance (DOF). Settlements are entered into lawfully by the state upon advice of counsel (DOJ), and they are binding state obligations.

This bill appropriates General Fund revenues to DOJ to pay the following settlements:

Settlement agreement for Ruelas, et.al. v. State of California, et al.
(Superior Court of California, County of San Bernardino, Case No. CVRS083017) $10 million settlement, plus interest, payable from the General Fund.

This case initially involved four former wards who had been incarcerated at Heman G. Stark Youth Correctional Facility. The wards alleged that a youth correctional counselor had sexually abused them during their incarceration, and that two members of facility management knew about the counselor’s propensities but failed to take appropriate action.

A 2010 jury verdict found in favor of all four plaintiffs’ claims for $1,077,896. Parties stipulated to punitive damages of $100,000 for the counselor and $50,000 each for the two defendants from management. The court awarded costs and attorneys’ fees at $7,228,136.47, bringing the total judgment amount to $8,506,032.47.

The state appealed this case to the Fourth District Court of Appeal; that court issued a final ruling in October, 2016. One of the plaintiffs’ judgments was reversed; the trial court’s judgments for the remaining three were almost entirely affirmed. A rehearing took place, and the opinion was upheld with only slight modifications. This rehearing represented the final opportunity for the state to contest the awarded judgment.

In February 2016, the California Department of Corrections and Rehabilitation entered into a settlement with the three prevailing plaintiffs, agreeing to pay a total of $10 million in exchange for a waiver of punitive damages against all defendants, a waiver of any further claims to attorneys’ fees and costs, and the filing of acknowledgments of full satisfaction of the judgments. DOJ notes that, absent the settlement, state liability would likely be in the range of $11 million as a result of additional potential costs related to the appeal.

Per the settlement agreement, interest began to accrue on the principal amount of the judgments ($7,128,593.55) as of April 23, 2016, and approximately $1,367.12 will be added per day to the amount owed until payment is complete. DOF estimates that a payment should be completed within 120 days of the due date; therefore, a maximum of $164,000 in potential interest has been added to the principal. In the event that a lesser amount of interest has accrued at the time of payment, the excess appropriation will revert to the General Fund.

Judgment against the state in Pacific Merchant Shipping Association v. The Board of Pilot Commissioners for the Bays of San Francisco, et al.
(Superior Court of California, County of San Francisco, Case No. CPF-12 512320) $387,088, payable from the General Fund.

This is a case that involved a Port Agent who refused to turn over records relating to the assignments and work hours of harbor pilots in the San Francisco Bay. The state argued that such Port Agents are not agents of the state and that their records are not subject to the Public Records Act (PRA). Although the Port Agent designation was created by statute, Port Agents are not employed by any state agency and do not act as the agent of any state agency. Instead, this Port Agent works for the private San Francisco Bar Pilots, in their private offices. Port Agents are merely regulated by the state through the Board of Pilot Commissioners.

Although the Attorney General represented the Port Agent in his alleged “official capacity” in the litigation, this was only done to present arguments to the court that the Port Agent is not a state officer or state official who is himself subject to the PRA. Moreover, the Attorney General argued throughout the litigation that the State of California is neither responsible for the Port Agent’s activities or for payment of any judgment rendered against him in PRA litigation.

Following the decision, the Port Agent provided more than 1,000 square feet of documents in response to a new PRA request submitted by the Pacific Merchant Shipping Association (PMSA). PMSA then filed a motion for attorney fees and costs connected to the litigation, and the San Francisco Superior Court entered a judgment against the Port Agent. The judgment is not directed to any state agency; instead, it directs the Port Agent, in his official capacity, to pay $387,088.15 as fees and costs incurred by PMSA in the PRA litigation. For purposes of this judgment, however, the Attorney General’s representation of the Port Agent in his alleged official capacity makes it necessary to comply with the court’s ruling that a judgment be paid through the Attorney General’s annual claims bill.

DOJ notes that while the state is conclusively obligated to pay the judgment in PMSA, the State of California does not concede that a Port Agent is a state officer or state official and will continue to argue that the state should not be liable for the actions of Port Agents in any future litigation.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee:

• One-time appropriation of $10,164,000 in 2016-17 from the General Fund to DOJ to pay the settlement in Ruelas, et.al. v. State of California, et al.
• One-time appropriation of $387,088 in 2016-17 from the General Fund to DOJ to pay the judgment in Pacific Merchant Shipping Association v. The Board of Pilot Commissioners for the Bays of San Francisco, et al.

SUPPORT: (Verified 6/21/16)

None received

OPPOSITION: (Verified 6/21/16)

None received

ASSEMBLY FLOOR: 69-3, 5/23/16

AYES: Achadjian, Alejo, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brown, Burke, Calderon, Campos, Chang, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Hadley, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Waldron, Weber, Wilk, Williams, Wood, Rendon

NOES: Travis Allen, Grove, Wagner

NO VOTE RECORDED: Arambula, Brough, Chávez, Eggman, Beth Gaines, Gallagher, Harper, Patterson

Prepared by:

6/22/16 15:15:16

**** END ****

SENATE COMMITTEE ON

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

AB 1693 (Gonzalez) - Claims against the state: payment

This bill does not meet the criteria for referral to the Suspense File. Pursuant to the committee’s rules, the Suspense File rule does not apply to the provisions of this bill as judgments and settlement are considered valid obligations of the state. Additionally, judgments and settlements may have time sensitivity.

Bill Summary:

AB 1693, an urgency measure, would appropriate $10.55 million from the General Fund to the Department of Justice (DOJ) for the payment of two settlements. Any funds appropriated in excess of the amounts required for payment of these claims would revert to the General Fund.

Fiscal Impact:

• One-time appropriation of $10,164,000 in 2016-17 from the General Fund to DOJ to pay the settlement in Ruelas, et.al. v. State of California, et al.
  
• One-time appropriation of $387,088 in 2016-17 from the General Fund to DOJ to pay the judgment in Pacific Merchant Shipping Association v. The Board of Pilot Commissioners for the Bays of San Francisco, et al.

Background:

This bill is one of several annual bills carried by the chairs of the Appropriations Committees to provide appropriation authority for legal settlements approved by DOJ and the Department of Finance (DOF). These settlements were entered into lawfully by the state upon advice of counsel (DOJ). They are binding state obligations.

Proposed Law:

This bill would appropriate General Fund revenues to DOJ to pay the following settlements:

Settlement agreement for Ruelas, et.al. v. State of California, et al.
(Superior Court of California, County of San Bernardino, Case No. RCVRS083017) $10 million settlement, plus interest, payable from the General Fund.

This case initially involved four former wards who had been incarcerated at Heman G. Stark Youth Correctional Facility. The wards alleged that a youth correctional counselor had sexually abused them during their incarceration, and that two members of facility management knew about the counselor’s propensities but failed to take appropriate action.

A 2010 jury verdict found in favor of all four plaintiffs’ claims for $1,077,896. Parties stipulated to punitive damages of $100,000 for the counselor and $50,000 each for the two defendants from management. The court awarded costs and attorneys’ fees at $7,228,136.47, bringing the total judgment amount to $8,506,032.47.

The state appealed this case to the Fourth District Court of Appeal; that court issued a final ruling in October, 2016. One of the plaintiffs’ judgments was reversed; the trial court’s judgments for the remaining three were almost entirely affirmed. A rehearing took place, and the opinion was upheld with only slight modifications. This rehearing represented the final opportunity for the state to contest the awarded judgment.

In February 2016, the California Department of Corrections and Rehabilitation entered into a settlement with the three prevailing plaintiffs, agreeing to pay a total of $10 million in exchange for a waiver of punitive damages against all defendants, a waiver of any further claims to attorneys’ fees and costs, and the filing of acknowledgments of full satisfaction of the judgments. DOJ notes that, absent the settlement, state liability would likely be in the range of $11 million as a result of additional potential costs related to the appeal.

Per the settlement agreement, interest began to accrue on the principal amount of the judgments ($7,128,593.55) as of April 23, 2016, and approximately $1,367.12 will be added per day to the amount owed until payment is complete. DOF estimates that a payment should be completed within 120 days of the due date; therefore, a maximum of $164,000 in potential interest has been added to the principal. In the event that a lesser amount of interest has accrued at the time of payment, the excess appropriation will revert to the General Fund.

Settlement agreement for Pacific Merchant Shipping Association v. The Board of Pilot Commissioners for the Bays of San Francisco, et al.
(Superior Court of California, County of San Francisco, Case No. CPF-12 512320) $387,088, payable from the General Fund.

This is a case that involved a Port Agent who refused to turn over records relating to the assignments and work hours of harbor pilots in the San Francisco Bay. The state argued that such Port Agents are not agents of the state and that their records are not subject to the Public Records Act. Although the Port Agent designation was created by statute, Port Agents are not employed by any state agency and do not act as the agent of any state agency. Instead, this Port Agent works for the private San Francisco Bar Pilots, in their private offices. Port Agents are merely regulated by the state through the Board of Pilot Commissioners.

Although the Attorney General represented the Port Agent in his alleged “official capacity” in the litigation, this was only done to present arguments to the court that the Port Agent is not a state officer or state official who is himself subject to the PRA. Moreover, the Attorney General argued throughout the litigation that the State of California is neither responsible for the Port Agent’s activities or for payment of any judgment rendered against him in PRA litigation.

A San Francisco Superior Court judgment found in favor of the plaintiffs (Pacific Merchant Shipping Association) and awarded them their fees and costs. The judgment is not directed to any state agency; instead, it directs the Port Agent, in his official capacity, to pay $387,088.15 as fees and costs incurred by PMSA in the PRA litigation. For purposes of this judgment, however, the Attorney General’s representation of the Port Agent in his alleged official capacity makes it necessary to comply with the court’s ruling that a judgment be paid through the Attorney General’s annual claims bill.

DOJ notes that while the state is conclusively obligated to pay the judgment in PMSA, the State of California does not concede that a Port Agent is a state officer or state official and will continue to argue that the state should not be liable for the actions of Port Agents in any future litigation.

Related Legislation:

SB 1187 (Lara), which is currently pending in this Committee, is a vehicle to provide payment of any pending settlements that may require legislative approval this year.

SB 302 (Lara), Chapter 5/2015, appropriated approximately $24.2 million from specified funds for the payment of four settlements.

AB 164 (Gomez), Chapter 394/2015, appropriated approximately $2.7 million from specified funds to DOJ for the payment of two settlements.

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 1693

Author:(Gonzalez)

As Amended Ver:May 10, 2016

2/3 vote. Urgency

SUMMARY: This urgency bill appropriates $10.6 million from the General Fund (GF) to the Department of Justice (DOJ) to pay two legal settlements, as follows:

1. Pacific Merchant Shipping Association v. The Board of Pilot Commissioners for the Bays of San Francisco, et al., $387,088; and
2. Ruelas, et al. vs State of California, et al., $10.2 million.

Any funds appropriated in excess of the amounts required for the claims revert back to the appropriate Fund or Account.

FISCAL EFFECT: According to the Assembly Appropriations Committee, one-time General Fund appropriation of $10,552,088 to DOJ for the two legal settlements.

COMMENTS:

1. Purpose. This bill is one of the bills carried by the Chairs of the Appropriations Committees each year to provide appropriation authority for legal settlements approved by DOJ and the Department of Finance (DOF). These settlements were entered into lawfully by the state upon advice of counsel (DOJ). They are binding state obligations.
2. Pacific Merchant Shipping Association v. The Board of Pilot Commissioners for the Bays of San Francisco, et al., $387,088. This is a case that involved a Port Agent who refused to turn over records relating to the assignments and work hours of harbor pilots in the San Francisco Bay. The state argued that such Port Agents are not agents of the state and that their records are not subject to the Public Records Act (PRA). Although the Port Agent designation was created by statute, Port Agents are not employed by any state agency and do not act as the agent of any state agency. Instead, this Port Agent works for the private San Francisco Bar Pilots, in their private offices. Port Agents are merely regulated by the state through the Board of Pilot Commissioners.

Although the Attorney General represented the Port Agent in his alleged "official capacity" in the litigation, this was only done to present arguments to the court that the Port Agent is not a state officer or state official who is himself subject to the PRA. Moreover, the Attorney General argued throughout the litigation that the State of California is neither responsible for the Port Agent's activities or for payment of any judgment rendered against him in PRA litigation.

A San Francisco Superior Court judgment found in favor of the plaintiffs (Pacific Merchant Shipping Association) and awarded them their fees and costs. The judgment is not directed to any state agency; instead, it directs the Port Agent, in his official capacity, to pay $387,088.15 as fees and costs incurred by Pacific Merchant Shipping Association (PMSA) in the PRA litigation. For purposes of this judgment, however, the Attorney General's representation of the Port Agent in his alleged official capacity makes it necessary to comply with the court's ruling that a judgment be paid through the Attorney General's annual claims bill.

The Department of Justice notes that while the state is conclusively obligated to pay the judgment in PMSA, the State of California does not concede that a Port Agent is a state officer or state official and will continue to argue that the state should not be liable for the actions of Port Agents in any future litigation.

1. Ruelas, et al. vs State of California, et al., $10,164,000. This case initially involved four former wards who had been incarcerated at Heman G. Stark Youth Correctional Facility. The wards alleged that a youth correctional counselor had sexually abused them during their incarceration, and that two members of facility management knew about the counselor's propensities but failed to take appropriate action.

A 2010 jury verdict found in favor of all four plaintiffs' claims for $1,077,896. Parties stipulated to punitive damages of $100,000 for the counselor and $50,000 each for the two defendants from management. The court awarded costs and attorneys' fees at $7,228,136.47, bringing the total judgment amount to $8,506,032.47.

The state appealed this case to the Fourth District Court of Appeal; that court issued a final ruling in October, 2016. One of the plaintiffs' judgments was reversed; the trial court's judgments for the remaining three were almost entirely affirmed. A rehearing took place, and the opinion was upheld with only slight modifications. This rehearing represented the final opportunity for the state to contest the awarded judgment.

In February 2016, the California Department of Corrections and Rehabilitation entered into a settlement with the three prevailing plaintiffs, agreeing to pay a total of $10 million in exchange for a waiver of punitive damages against all defendants, a waiver of any further claims to attorneys' fees and costs, and the filing of acknowledgments of full satisfaction of the judgments.

Per the settlement agreement, interest began to accrue on the $10 million as of April 23, 2016; approximately $1,367.12 will be added per day to the amount owed until payment is complete. The Department of Finance estimates that a payment should be completed within 120 days of the due date; therefore, a maximum of $164,000 in potential interest has been added to the principal. In the event that a lesser amount of interest has accrued at the time of payment, the excess appropriation will revert to the General Fund

Analysis Prepared by: Pedro Reyes / APPR. / (916) 319-2081 FN: 0003007

Date of Hearing: May 18, 2016

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 1693

Author:(Gonzalez) – As Amended Ver:May 10, 2016

Urgency: Yes State Mandated Local Program: No Reimbursable: No

SUMMARY:

This urgency bill appropriates $10.6 million from the General Fund (GF) to the Department of Justice (DOJ) to pay two legal settlements, as follows:

1. Pacific Merchant Shipping Association v. The Board of Pilot Commissioners for the Bays of San Francisco, et al., $387,088; and
2. Ruelas, et al. vs State of California, et al., $10.2 million.

Any funds appropriated in excess of the amounts required for the claims revert back to the appropriate Fund or Account.

FISCAL EFFECT:

One-time GF appropriation of $10,552,088 to DOJ for the two legal settlements.

COMMENTS:

1. Purpose. This bill is one of the bills carried by the Chairs of the Appropriations Committees each year to provide appropriation authority for legal settlements approved by DOJ and the Department of Finance (DOF). These settlements were entered into lawfully by the state upon advice of counsel (DOJ). They are binding state obligations.
2. Pacific Merchant Shipping Association v. The Board of Pilot Commissioners for the Bays of San Francisco, et al., $387,088. This is a case that involved a Port Agent who refused to turn over records relating to the assignments and work hours of harbor pilots in the San Francisco Bay. The state argued that such Port Agents are not agents of the state and that their records are not subject to the Public Records Act. Although the Port Agent designation was created by statute, Port Agents are not employed by any state agency and do not act as the agent of any state agency. Instead, this Port Agent works for the private San Francisco Bar Pilots, in their private offices. Port Agents are merely regulated by the state through the Board of Pilot Commissioners.

Although the Attorney General represented the Port Agent in his alleged “official capacity” in the litigation, this was only done to present arguments to the court that the Port Agent is not a state officer or state official who is himself subject to the PRA. Moreover, the Attorney General argued throughout the litigation that the State of California is neither responsible for the Port Agent’s activities or for payment of any judgment rendered against him in PRA litigation.

A San Francisco Superior Court judgment found in favor of the plaintiffs (Pacific Merchant Shipping Association) and awarded them their fees and costs. The judgment is not directed to any state agency; instead, it directs the Port Agent, in his official capacity, to pay $387,088.15 as fees and costs incurred by PMSA in the PRA litigation. For purposes of this judgment, however, the Attorney General’s representation of the Port Agent in his alleged official capacity makes it necessary to comply with the court’s ruling that a judgment be paid through the Attorney General’s annual claims bill.

The Department of Justice notes that while the state is conclusively obligated to pay the judgment in PMSA, the State of California does not concede that a Port Agent is a state officer or state official and will continue to argue that the state should not be liable for the actions of Port Agents in any future litigation.

1. Ruelas, et al. vs State of California, et al., $10,164,000. This case initially involved four former wards who had been incarcerated at Heman G. Stark Youth Correctional Facility. The wards alleged that a youth correctional counselor had sexually abused them during their incarceration, and that two members of facility management knew about the counselor’s propensities but failed to take appropriate action.

A 2010 jury verdict found in favor of all four plaintiffs’ claims for $1,077,896. Parties stipulated to punitive damages of $100,000 for the counselor and $50,000 each for the two defendants from management. The court awarded costs and attorneys’ fees at $7,228,136.47, bringing the total judgment amount to $8,506,032.47.

The state appealed this case to the Fourth District Court of Appeal; that court issued a final ruling in October, 2016. One of the plaintiffs’ judgments was reversed; the trial court’s judgments for the remaining three were almost entirely affirmed. A rehearing took place, and the opinion was upheld with only slight modifications. This rehearing represented the final opportunity for the state to contest the awarded judgment.

In February 2016, the California Department of Corrections and Rehabilitation entered into a settlement with the three prevailing plaintiffs, agreeing to pay a total of $10 million in exchange for a waiver of punitive damages against all defendants, a waiver of any further claims to attorneys’ fees and costs, and the filing of acknowledgments of full satisfaction of the judgments.

Per the settlement agreement, interest began to accrue on the $10 million as of April 23, 2016; approximately $1,367.12 will be added per day to the amount owed until payment is complete. The Department of Finance estimates that a payment should be completed within 120 days of the due date; therefore, a maximum of $164,000 in potential interest has been added to the principal. In the event that a lesser amount of interest has accrued at the time of payment, the excess appropriation will revert to the General Fund

Analysis Prepared by: Pedro Reyes / APPR. / (916) 319-2081