Existing law requires the Attorney General to pay certain judgments against the state.

This bill would appropriate $141,250 from the Athletic Commission Fund and $24,106,173.50 from the General Fund to pay specified judgments.

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

Existing law requires the Attorney General to pay certain judgments against the state.

This bill would appropriate $141,250 from the Athletic Commission Fund and $24,106,173.50 from the General Fund to pay specified judgments.

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

Existing law requires the Attorney General to pay certain judgments against the state.

This bill would appropriate $141,250 from the Athletic Commission Fund and $24,140,683.50 $24,106,173.50 from the General Fund to pay specified judgments.

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

Existing law requires the Attorney General to pay certain judgments against the state.

This bill would state that it appropriates an unspecified amount from the General Fund to the Attorney General to pay an undesignated judgment. appropriate $141,250 from the Athletic Commission Fund and $24,140,683.50 from the General Fund to pay specified judgments.

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

Existing law requires the Attorney General to pay certain judgments against the state.

This bill would state that it appropriates an unspecified amount from the General Fund to the Attorney General to pay an undesignated judgment.

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

SENATE THIRD READING

STR Bill Id:SB 302

Author:(Lara)

As Amended Ver:May 7, 2015

2/3 vote. Urgency

SENATE VOTE: 35-0

SUMMARY: Appropriates $24,106,173.50 from the General Fund, and $141,250 from the Athletic Commission Fund, to specified departments for the payment of the following four settlements:

1. California First, LP v. California Department of General Services, et al.

   1. $24 million settlement, payable from the General Fund.

2. Charles R. “Chuck” Reed, et al. v. Fair Political Practices Commission

   1. $106,173.50 settlement, payable from the General Fund.

3. Sarah Waklee v. California State Athletic Commission, Department of Consumer Affairs

   1. $71,250 settlement, payable from the Athletic Commission Fund.

4. Dwayne Woodward v. California State Athletic Commission, Department of Consumer Affairs.

   1. $70,000 settlement, payable from the Athletic Commission Fund.

FISCAL EFFECT: According to the Assembly Appropriations Committee:

1. One-time General Fund appropriations of $24 million to the Department of General Services and $106,173.50 to FPPC.

2. One time appropriation of $141,250 from the Athletic Commission Fund to the Department of Consumer Affairs.

Any funds appropriated in excess of the amounts required for payment of these claims will revert to the respective funds.

COMMENTS:

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 Department of Justice and the Department of Finance (DOF). These settlements were entered into lawfully by the state upon advice of counsel (Department of Justice). They are binding state obligations.

Background. These are the four cases:

California First, LP v. California Department of General Services, et al.

In this lawsuit, the prospective buyers of 11 state-owned properties filed a complaint against Department of General Services (DGS) and its Director on March 10, 2011. The plaintiffs had won a bid to purchase the state properties for $2.3 billion, and sued to compel the state to proceed with the sale or pay monetary damages and other relief totaling $1 billion. DGS filed a cross-complaint alleging that the parties' contract had terminated and that the state could therefore not be compelled to complete the sale. The trial commenced in November of 2014 after several failed motions by the state to dismiss the case or reduce the claim amounts, and the parties entered into voluntary mediation. A settlement was reached on February 19, 2015. Under the terms of the settlement, DGS will make a lump-sum payment of $24 million to California First, and all claims by both parties will be released.

Charles R. “Chuck” Reed, et al. v. Fair Political Practices Commission.

In late 2013, San Jose Police Officers' Association President Jim Unland filed a case against San Jose Mayor Chuck Reed and his pension reform committee before the Fair Political Practices Commission (FPPC), arguing that Reed had violated state law when he redirected $100,000 from his PAC to an independent expenditure group that supported the 2012 reelection campaign of City Councilmember Rose Herrera. Existing law, Government Code Section 85501, prohibits candidate controlled committees from funding independent expenditures in support of or opposition to other candidates. FPPC determined that Reed had violated that law, but concluded that he had done so unintentionally because he was not up for reelection and did not consider himself to be a candidate, and imposed a $1.00 fine (FPPC No. 12/761).

On December 13, 2013, Reed filed a petition with the Superior Court to appeal the fine, and challenge the decision, alleging that Government Code Section 85501 is facially unconstitutional because it suppresses campaign contribution speech. In March 2014, the court ruled that Reed was a "candidate" under the Political Reform Act, but that Government Code Section 85501 is unconstitutional on its face in that it violates public officials' First Amendment rights to free speech and engagement in the political process.

As a result of this judgment, Reed demanded that FPPC pay his attorneys' fees and costs pursuant to the Civil Code of Procedure. Following settlement negotiations with FPPC's counsel, an agreement was reached where Reed agreed to accept a reduced balance of fees amounting to $106,173.50. FPPC approved the settlement in July 2014.

Kevin Marilley, et al. v. California Department of Fish and Game.

This case involved a group of commercial fishermen who were not California residents but fished in California waters. One of these fishermen, Kevin Marilley, filed a class action suit in the United States District Court in May of 2011 against the Director of the California Department of Fish and Game (later appeals were filed against the Director of the Department of Fish and Wildlife), alleging that California's fishing license statutes, which charge nonresident fishermen two to three times more than the fees assessed on resident competitors, are unconstitutional. The fishermen and the state filed cross-motions for summary judgment.

The United States District Court granted summary judgment in favor of the plaintiffs, finding that the differential fees violate the Privileges and Immunities Clause of Article IV of the US Constitution, and concluding that the state failed to demonstrate a substantial state interest. On December 10, 2013, the plaintiffs moved for an award of attorney's fees and court costs. After negotiations, and upon recommendation from the Department of Justice, the Department of Fish and Wildlife accepted the proposed settlement of fees accrued by the plaintiffs though April 18, 2014, in the amount of $1,034,570. The state has filed an appeal in the Ninth Circuit Court of Appeals and the payment of these fees and costs are stayed until that appeal is resolved. However, in the event that the decision is upheld, prompt payment will be required.

Sarah Waklee v. California State Athletic Commission, Department of Consumer Affairs.

This lawsuit resulted from an employment dispute. The complaint was filed by an employee of the State Athletic Commission, Sarah Waklee, who worked for the Commission since 2004, becoming Lead Athletic Inspector in 2007. Ms. Waklee filed suit in the Sacramento Superior Court on November 5, 2012 against the Department of Consumer Affairs (DCA) and several other employees of the State Athletic Commission, alleging preferential treatment, harassment, and gender discrimination.

In late 2014, following depositions and upon calculating current and prospective litigation costs, the DCA, in consultation with the Attorney General's office, negotiated and accepted a settlement agreement with Waklee. The settlement offer included a payment to Waklee in the amount of $95,000.00 on or before June 30, 2015. DCA was able to absorb $23,750 within its existing spending authority. The appropriation in this bill will pay the remaining $71,250 from the Athletic Commission Fund.

Dwayne Woodward v. California State Athletic Commission, Department of Consumer Affairs

This lawsuit also resulted from an employment dispute. Mr. Woodward filed suit in August of 2012 against DCA and the State Athletic Commission, alleging, among other things, age discrimination, retaliation, and harassment in violation of the Fair Employment and Housing Act.

Woodward sought a total of $1.9 million in damages, including $750,000 for age discrimination, $750,000 for retaliation, $164,954.24 for lost earnings, $100,000 for attorney fees, and $123,715.68 for three years of future earnings. After several good-faith negotiations, the parties concluded that it would be in their best interests to settle their disputes to avoid the expense, inconvenience, and uncertainty of a trial. The January 15, 2015, settlement calls for dismissal of the suit with prejudice, and a payment from DCA to the plaintiff in the amount of $70,000 (with $35,000 due by June 30, 2015, ad $35,000 due by July 15, 2015). This claim is to be paid through an appropriation from the Athletic Commission Fund.

Analysis Prepared by: Pedro Reyes / APPR. / (916) 319-2081 FN: 0000788

Date of Hearing: May 27, 2015

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Jimmy Gomez, Chair

SBPCA Bill Id:SB 302

Author:(Lara) – As Amended Ver:May 7, 2015

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

SUMMARY:

This bill appropriates $24,106,173.50 from the General Fund, and $141,250 from the Athletic Commission Fund, to specified departments for the payment of the following four settlements:

California First, LP v. California Department of General Services, et al.

(San Francisco County Superior Court, Case No. CGC10-505436)

$24 million settlement, payable from the General Fund.

Charles R. “Chuck” Reed, et al. v. Fair Political Practices Commission.

(Sacramento Superior Court, Case No. 34-2013-80001709)

$106,173.50 settlement, payable from the General Fund.

Sarah Waklee v. California State Athletic Commission, Department of Consumer Affairs.

(Sacramento County Superior Court, Case No. 2012-00135227)

$71,250 settlement, payable from the Athletic Commission Fund.

Dwayne Woodward v. California State Athletic Commission, Department of Consumer Affairs.

(Los Angeles County Superior Court, Case No.BC487180)

$70,000 settlement, payable from the Athletic Commission Fund.

FISCAL EFFECT:

1. One-time General Fund appropriations of $24 million to the Department of General Services and $106,173.50 to FPPC.

2. One time appropriation of $141,250 from the Athletic Commission Fund to the Department of Consumer Affairs.

Any funds appropriated in excess of the amounts required for payment of these claims will revert to the respective funds.

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. Background. These are the four cases.

California First, LP v. California Department of General Services, et al.

In this lawsuit, the prospective buyers of 11 state-owned properties filed a complaint against DGS and its Director on March 10, 2011. The plaintiffs had won a bid to purchase the state properties for $2.3 billion, and sued to compel the state to proceed with the sale or pay monetary damages and other relief totaling $1 billion. DGS filed a cross-complaint alleging that the parties’ contract had terminated and that the state could therefore not be compelled to complete the sale. The trial commenced in November of 2014 after several failed motions by the state to dismiss the case or reduce the claim amounts, and the parties entered into voluntary mediation. A settlement was reached on February 19, 2015. Under the terms of the settlement, DGS will make a lump-sum payment of $24 million to California First, and all claims by both parties will be released.

Charles R. “Chuck” Reed, et al. v. Fair Political Practices Commission.

In late 2013, San Jose Police Offers’ Association President Jim Unland filed a case against San Jose Mayor Chuck Reed and his pension reform committee before the FPPC, arguing that Reed had violated state law when he redirected $100,000 from his PAC to an independent expenditure group that supported the 2012 reelection campaign of City Councilmember Rose Herrera. Existing law, Gov. Code 85501, prohibits candidate controlled committees from funding independent expenditures in support of or opposition to other candidates. FPPC determined that Reed had violated that law, but concluded that he had done so unintentionally because he was not up for reelection and did not consider himself to be a candidate, and imposed a $1.00 fine (FPPC No. 12/761).

On December 13, 2013, Reed filed a petition with the Superior Court to appeal the fine, and challenge the decision, alleging that Section 85501 is facially unconstitutional because it suppresses campaign contribution speech. In March 2014, the court ruled that Reed was a “candidate” under the Political Reform Act, but that Section 85501 is unconstitutional on its face in that it violates public officials’ First Amendment rights to free speech and engagement in the political process.

As a result of this judgment, Reed demanded that FPPC pay his attorneys’ fees and costs pursuant to the Civil Code of Procedure. Following settlement negotiations with FPPC’s counsel, an agreement was reached where Reed agreed to accept a reduced balance of fees amounting to $106,173.50. FPPC approved the settlement in July 2014.

Kevin Marilley, et al. v. California Department of Fish and Game.

This case involved a group of commercial fishermen who were not California residents but fished in California waters. One of these fishermen, Kevin Marilley, filed a class action suit in the United States District Court in May of 2011 against the Director of the California Department of Fish and Game (later appeals were filed against the Director of the Department of Fish and Wildlife), alleging that California’s fishing license statutes, which charge nonresident fishermen two to three times more than the fees assessed on resident competitors, are unconstitutional. The fishermen and the state filed cross-motions for summary judgment.

The US District Court granted summary judgment in favor of the plaintiffs, finding that the differential fees violate the Privileges and Immunities Clause of Article IV of the US Constitution, and concluding that the state failed to demonstrate a substantial state interest. On December 10, 2013, the plaintiffs moved for an award of attorney’s fees and court costs. After negotiations, and upon recommendation from the Department of Justice, the Department of Fish and Wildlife accepted the proposed settlement of fees accrued by the plaintiffs though April 18, 2014, in the amount of $1,034,570. The state has filed an appeal in the Ninth Circuit Court of Appeals and the payment of these fees and costs are stayed until that appeal is resolved. However, in the event that the decision is upheld, prompt payment will be required. The Department of Finance approved an appropriation of the settlement amount to be split between the General Fund and the Dungeness Crab Account within the Fish and Game Preservation Fund.

Sarah Waklee v. California State Athletic Commission, Department of Consumer Affairs.

This lawsuit resulted from an employment dispute. The complaint was filed by an employee of the State Athletic Commission, Sarah Waklee, who worked for the Commission since 2004, becoming Lead Athletic Inspector in 2007. Ms. Waklee filed suit in the Sacramento Superior Court on November 5, 2012 against the Department of Consumer Affairs and several other employees of the Commission, alleging preferential treatment, harassment, and gender discrimination.

In late 2014, following depositions and upon calculating current and prospective litigation costs, the DCA, in consultation with the Attorney General’s office, negotiated and accepted a settlement agreement with Waklee. The settlement offer included a dismissal of the suit with prejudice; Waklee’s resignation from the Commission; and a payment to Waklee in the amount of $95,000.00 on or before June 30, 2015. DCA was able to absorb $23,750 within its existing spending authority. The appropriation in this bill will pay the remaining $71,250 from the Athletic Commission Fund.

Dwayne Woodward v. California State Athletic Commission, Department of Consumer Affairs

This lawsuit also resulted from an employment dispute. The complaint was filed by an employee of the State Athletic Commission, Dwayne Woodward, a thirty-year employee who worked for the Commission as an inspector. Mr. Woodward filed suit in August of 2012 against DCA and the Commission, alleging, among other things, age discrimination, retaliation, and harassment in violation of the Fair Employment and Housing Act.

Woodward sought a total of $1.9 million in damages, including $750,000 for age discrimination, $750,000 for retaliation, $164,954.24 for lost earnings, $100,000 for attorney fees, and $123,715.68 for three years of future earnings. After several good-faith negotiations, the parties concluded that it would be in their best interests to settle their disputes to avoid the expense, inconvenience, and uncertainty of a trial. The January 15, 2015 settlement calls for dismissal of the suit with prejudice, and a payment from DCA to the plaintiff in the amount of $70,000 (with $35,000 due by June 30, 2015, ad $35,000 due by July 15, 2015). This claim is to be paid through an appropriation from the Athletic Commission Fund.

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

 THIRD READING 

Bill No: SB 302

Author: Lara (D)

Amended: 5/7/15

Vote: 27 - Urgency

SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/4/15

AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen

SUBJECT: Claims against the state: appropriation

SOURCE: Author

DIGEST: This bill, an urgency measure, appropriates $24,106,173.50 from the General Fund, and $141,250 from the Athletic Commission Fund, to specified departments for the payment of four settlements. Any funds appropriated in excess of the amounts required for payment of these claims shall revert to the respective funds.

ANALYSIS: 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 the Department of Justice (DOJ) and the Department of Finance. These settlements were entered into lawfully by the state upon advice of counsel. They are binding state obligations.

This bill appropriates special fund and General Fund revenues to DOJ and specified state entities to pay the following settlements:

California First, LP v. California Department of General Services, et al.

(San Francisco County Superior Court, Case No. CGC10-505436)

$24 million settlement, payable from the General Fund.

In this lawsuit, the prospective buyers of 11 state-owned properties filed a complaint against the Department of General Services (DGS) and its Director on March 10, 2011. The plaintiffs had won a bid to purchase the state properties for $2.3 billion, and sued to compel the state to proceed with the sale or pay monetary damages and other relief totaling $1 billion. DGS filed a cross-complaint alleging that the parties’ contract had terminated and that the state could therefore not be compelled to complete the sale. The trial commenced in November of 2014 after several failed motions by the state to dismiss the case or reduce the claim amounts, and the parties entered into voluntary mediation. A settlement was reached on February 19, 2015, after lengthy negotiations. Under the terms of the settlement, DGS will make a lump-sum payment of $24 million to California First, and all claims by both parties will be released.

Charles R. “Chuck” Reed, et al. v. Fair Political Practices Commission.

(Sacramento Superior Court, Case No. 34-2013-80001709)

$106,173.50 settlement, payable from the General Fund.

In late 2013, San Jose Police Offers’ Association President Jim Unland filed a case against San Jose Mayor Chuck Reed and his pension reform committee before the Fair Political Practices Commission (FPPC), arguing that Reed had violated state law when he redirected $100,000 from his political action committee to an independent expenditure group that supported the 2012 reelection campaign of City Councilmember Rose Herrera. Existing law, Government Code 85501, prohibits candidate controlled committees from funding independent expenditures in support of or opposition to other candidates. FPPC determined that Reed had violated that law, but concluded that he had done so unintentionally because he was not up for reelection and did not consider himself to be a candidate, and imposed a $1.00 fine (FPPC No. 12/761).

On December 13, 2013, Reed filed a petition with the Superior Court to appeal the fine, and challenge the decision, alleging that Section 85501 is facially unconstitutional because it suppresses campaign contribution speech. In March 2014, the court ruled that Reed was a “candidate” under the Political Reform Act, but that Section 85501 is unconstitutional on its face in that it violates public officials’ First Amendment rights to free speech and engagement in the political process.

As a result of this judgment, Reed demanded that FPPC pay his attorneys’ fees and costs pursuant to the Civil Code of Procedure. Following settlement negotiations with FPPC’s counsel, an agreement was reached where Reed agreed to accept a reduced balance of fees amounting to $106,173.50. FPPC approved the settlement in July 2014.

Sarah Waklee v. California State Athletic Commission, Department of Consumer Affairs.

(Sacramento County Superior Court, Case No. 2012-00135227)

$71,250 settlement, payable from the Athletic Commission Fund.

This lawsuit resulted from an employment dispute. The complaint was filed by an employee of the State Athletic Commission, Sarah Waklee, who worked for the Commission since 2004, becoming Lead Athletic Inspector in 2007. Ms. Waklee filed suit in the Sacramento Superior Court on November 5, 2012, against the Department of Consumer Affairs (DCA) and several other employees of the Commission, alleging preferential treatment, harassment, and gender discrimination.

In late 2014, following depositions and upon calculating current and prospective litigation costs, the DCA, in consultation with the Attorney General’s office, negotiated and accepted a settlement agreement with Waklee. The settlement offer included a dismissal of the suit with prejudice; Waklee’s resignation from the Commission; and a payment to Waklee in the amount of $95,000.00 on or before June 30, 2015. DCA was able to absorb $23,750 within its existing spending authority. The appropriation in this bill will pay the remaining $71,250 from the Athletic Commission Fund.

Dwayne Woodward v. California State Athletic Commission, Department of Consumer Affairs.

(Los Angeles County Superior Court, Case No.BC487180)

$70,000 settlement, payable from the Athletic Commission Fund.

This lawsuit also resulted from an employment dispute. The complaint was filed by an employee of the State Athletic Commission, Dwayne Woodward, a 30-year employee who worked for the Commission as an inspector. Mr. Woodward filed suit in the Los Angeles Superior Court in August of 2012 against DCA and the Commission, alleging, among other things, age discrimination, retaliation, and harassment in violation of the Fair Employment and Housing Act.

Woodward sought a total of $1.9 million in damages, including $750,000 for age discrimination, $750,000 for retaliation, $164,954.24 for lost earnings, $100,000 for attorney fees, and $123,715.68 for three years of future earnings. After several good-faith negotiations, the parties concluded that it would be in their best interests to settle their disputes to avoid the expense, inconvenience, and uncertainty of a trial. The January 15, 2015 settlement calls for dismissal of the suit with prejudice, and a payment from DCA to the plaintiff in the amount of $70,000 (with $35,000 due by June 30, 2015, and $35,000 due by July 15, 2015). This claim is to be paid through an appropriation from the Athletic Commission Fund.

Related/Prior Legislation

AB 1615 (Gatto, Chapter 142, Statutes of 2014) appropriated $2.86 million to DOJ for the payment of two settlements.

AB 234 (Gatto, Chapter 449, Statutes of 2013) appropriated $20.7 million to DOJ for the payment of two settlements.

SB 371 (De Leon, Chapter 9, Statutes of 2013) appropriated $15.6 million to DOJ for the payment of two settlements.

FISCAL EFFECT: Appropriation: Yes Fiscal Com.: Yes Local: No

According to the Senate Appropriations Committee:

• One-time appropriation of $24 million in 2015-16 from the General Fund to DGS to pay the settlement in California First, LP v. California Department of General Services, et al.
  
  

• One-time appropriation of $106,173,50 in 2015-16 from the General Fund to the FPPC to pay the settlement in Charles R. “Chuck” Reed, et al. v. Fair Political Practices Commission.
  
  

• One-time appropriation of $71,250 in 2015-16 from the Athletic Commission Fund to DCA to pay the settlement in Sarah Waklee v. California State Athletic Commission, Department of Consumer Affairs.

• One-time appropriation of $70,000 in 2015-16 from the Athletic Commission Fund to DCA to pay the settlement in Dwayne Woodward v. California State Athletic Commission, Department of Consumer Affairs.

SUPPORT: (Verified 5/8/15)

None received

OPPOSITION: (Verified 5/8/15)

None received

Prepared by: Mark McKenzie / APPR. / (916) 651-4101

5/8/15 15:09:17

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

SB 302 (Lara) - Claims against the state: appropriation

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:

SB 302, an urgency measure would appropriate $25,140,683.50 from the General Fund, and $141,250 from the Athletic Commission Fund, to specified departments for the payment of five settlements. Any funds appropriated in excess of the amounts required for payment of these claims shall revert to the respective funds.

Fiscal Impact:

• One-time appropriation of $24 million in 2015-16 from the General Fund to the Department of General Services (DGS) to pay the settlement in California First, LP v. California Department of General Services, et al.
  
  

• One-time appropriation of $106,173,50 in 2015-16 from the General Fund to the Fair Political Practices Commission (FPPC) to pay the settlement in Charles R. “Chuck” Reed, et al. v. Fair Political Practices Commission.
  
  

• One-time appropriation of $1,034,510 in 2015-16 from the General Fund to the Department of Justice (DOJ) to pay the settlement in Kevin Marilley, et al. v. California Department of Fish and Game.
  
  

• One-time appropriation of $71,250 in 2015-16 from the Athletic Commission Fund to the Department of Consumer Affairs (DCA) to pay the settlement in Sarah Waklee v. California State Athletic Commission, Department of Consumer Affairs.
  
  

• One-time appropriation of $70,000 in 2015-16 from the Athletic Commission Fund to the Department of Consumer Affairs (DCA) to pay the settlement in Dwayne Woodward v. California State Athletic Commission, Department of Consumer Affairs.

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 special fund and General Fund revenues to DOJ and specified state entities to pay the following settlements:

California First, LP v. California Department of General Services, et al.

(San Francisco County Superior Court, Case No. CGC10-505436)

$24 million settlement, payable from the General Fund.

In this lawsuit, the prospective buyers of 11 state-owned properties filed a complaint against DGS and its Director on March 10, 2011. The plaintiffs had won a bid to purchase the state properties for $2.3 billion, and sued to compel the state to proceed with the sale or pay monetary damages and other relief totaling $1 billion. DGS filed a cross-complaint alleging that the parties’ contract had terminated and that the state could therefore not be compelled to complete the sale. The trial commenced in November of 2014 after several failed motions by the state to dismiss the case or reduce the claim amounts, and the parties entered into voluntary mediation. A settlement was reached on February 19, 2015 after lengthy negotiations. Under the terms of the settlement, DGS will make a lump-sum payment of $24 million to California First, and all claims by both parties will be released.

Charles R. “Chuck” Reed, et al. v. Fair Political Practices Commission.

(Sacramento Superior Court, Case No. 34-2013-80001709)

$106,173.50 settlement, payable from the General Fund.

In late 2013, San Jose Police Offers’ Association President Jim Unland filed a case against San Jose Mayor Chuck Reed and his pension reform committee before the FPPC, arguing that Reed had violated state law when he redirected $100,000 from his PAC to an independent expenditure group that supported the 2012 reelection campaign of City Councilmember Rose Herrera. Existing law, Gov. Code 85501, prohibits candidate controlled committees from funding independent expenditures in support of or opposition to other candidates. FPPC determined that Reed had violated that law, but concluded that he had done so unintentionally because he was not up for reelection and did not consider himself to be a candidate, and imposed a $1.00 fine (FPPC No. 12/761).

On December 13, 2013, Reed filed a petition with the Superior Court to appeal the fine, and challenge the decision, alleging that Section 85501 is facially unconstitutional because it suppresses campaign contribution speech. In March 2014, the court ruled that Reed was a “candidate” under the Political Reform Act, but that Section 85501 is unconstitutional on its face in that it violates public officials’ First Amendment rights to free speech and engagement in the political process.

As a result of this judgment, Reed demanded that FPPC pay his attorneys’ fees and costs pursuant to the Civil Code of Procedure. Following settlement negotiations with FPPC’s counsel, an agreement was reached where Reed agreed to accept a reduced balance of fees amounting to $106,173.50. FPPC approved the settlement in July 2014.

Kevin Marilley, et al. v. California Department of Fish and Game.

(United States District Court, Northern District of California, Case No.11-cv-2418)

$1,034,510 settlement, half payable from the General Fund, half payable from the Dungeness Crab Account within the Fish and Game Preservation Fund.

This case involved a group of commercial fishermen who were not California residents but fished in California waters. One of these fishermen, Kevin Marilley, filed a class action suit in the United States District Court in May of 2011 against the Director of the California Department of Fish and Game (later appeals were filed against the Director of the Department of Fish and Wildlife), alleging that California’s fishing license statutes, which charge nonresident fishermen two to three times more than the fees assessed on resident competitors, are unconstitutional. The fishermen and the state filed cross-motions for summary judgment.

The US District Court granted summary judgment in favor of the plaintiffs, finding that the differential fees violate the Privileges and Immunities Clause of Article IV of the US Constitution, and concluding that the state failed to demonstrate a substantial state interest. On December 10, 2013, the plaintiffs moved for an award of attorney’s fees and court costs. After negotiations, and upon recommendation from the Department of Justice, the Department of Fish and Wildlife accepted the proposed settlement of fees accrued by the plaintiffs though April 18, 2014, in the amount of $1,034,570. The state has filed an appeal in the Ninth Circuit Court of Appeals and the payment of these fees and costs are stayed until that appeal is resolved. However, in the event that the decision is upheld, prompt payment will be required. The Department of Finance approved an appropriation of the settlement amount to be split between the General Fund and the Dungeness Crab Account within the Fish and Game Preservation Fund.

Sarah Waklee v. California State Athletic Commission, Department of Consumer Affairs.

(Sacramento County Superior Court, Case No. 2012-00135227)

$71,250 settlement, payable from the Athletic Commission Fund.

This lawsuit resulted from an employment dispute. The complaint was filed by an employee of the State Athletic Commission, Sarah Waklee, who worked for the Commission since 2004, becoming Lead Athletic Inspector in 2007. Ms. Waklee filed suit in the Sacramento Superior Court on November 5, 2012 against the Department of Consumer Affairs and several other employees of the Commission, alleging preferential treatment, harassment, and gender discrimination.

In late 2014, following depositions and upon calculating current and prospective litigation costs, the DCA, in consultation with the Attorney General’s office, negotiated and accepted a settlement agreement with Waklee. The settlement offer included a dismissal of the suit with prejudice; Waklee’s resignation from the Commission; and a payment to Waklee in the amount of $95,000.00 on or before June 30, 2015. DCA was able to absorb $23,750 within its existing spending authority. The appropriation in this bill will pay the remaining $71,250 from the Athletic Commission Fund.

Dwayne Woodward v. California State Athletic Commission, Department of Consumer Affairs

(Los Angeles County Superior Court, Case No.BC487180)

$70,000 settlement, payable from the Athletic Commission Fund.

This lawsuit also resulted from an employment dispute. The complaint was filed by an employee of the State Athletic Commission, Dwayne Woodward, a thirty-year employee who worked for the Commission as an inspector. Mr. Woodward filed suit in the Los Angeles Superior Court in August of 2012 against DCA and the Commission, alleging, among other things, age discrimination, retaliation, and harassment in violation of the Fair Employment and Housing Act.

Woodward sought a total of $1.9 million in damages, including $750,000 for age discrimination, $750,000 for retaliation, $164,954.24 for lost earnings, $100,000 for attorney fees, and $123,715.68 for three years of future earnings. After several good-faith negotiations, the parties concluded that it would be in their best interests to settle their disputes to avoid the expense, inconvenience, and uncertainty of a trial. The January 15, 2015 settlement calls for dismissal of the suit with prejudice, and a payment from DCA to the plaintiff in the amount of $70,000 (with $35,000 due by June 30, 2015, ad $35,000 due by July 15, 2015). This claim is to be paid through an appropriation from the Athletic Commission Fund.

Related Legislation:

• AB 1615 (Gatto), Chap142/2014, appropriated $2.86 million to DOJ for the payment of two settlements.

• AB 234 (Gatto), Chap 449/2013, appropriated $20.7 million to DOJ for the payment of two settlements.

• SB 371 (De Leon), Chap 9/2013, appropriated $15.6 million to DOJ for the payment of two settlements.

Proposed Author Amendments:

The author proposes to amend the bill to delete the Marilley claim, and make several technical and conforming changes. Specifically, the amendments would:

1. Strike out lines 37-40 on page 2, and lines 1-3 on page 3.

2. Strike out lines 20-21 on page 2, and insert:
   (b) Twenty-four million one hundred six thousand one hundred seventy three dollars and fifty cents ($24,106,173.50) is hereby

3. On page 2, line 14, after “($70,000)” insert:
   to the Department of Consumer Affairs

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