The following is our summary of the Supreme Court’s actions on petitions for review in civil cases from the Court’s conference on Wednesday, June 10, 2015. The summary includes those civil cases in which (1) review has been granted, (2) review has been denied but one or more justices has voted for review, or (3) the Court has ordered depublished an opinion of the Court of Appeal. This week we note that the Court has granted outright review, or granted and held, in no fewer than 21 civil and criminal cases. We can’t say for sure, but this may be due to a backlog caused by the Court’s recent heavy oral argument calendars. We summarize the civil cases below.
Review Granted
Jacks v. City of Santa Barbara, S225589—Review Granted—June 10 , 2015
The court limited review to the following issue: Is the City of Santa Barbara’s 1 percent increase on its electricity bills (i.e., the 1 percent surcharge) a tax subject to Proposition 218’s voter approval requirement, or is it a franchise fee that may be imposed by the City without voter consent?
Southern California Edison (SCE) provides electricity to the City of Santa Barbara (City) pursuant to a series of franchise agreements allowing SCE to use the City’s streets and other property. In 1999, SCE and the City agreed to the City’s increase of the franchise fee contingent upon the Public Utilities Commission (PUC) treating the additional 1 percent as a surcharge. In 2005, the PUC approved the 1 percent surcharge and SCE began billing and collecting it from the City’s electricity users and remitting the revenues to the City. The 1 percent surcharge was expected to generate approximately $600,000 in revenue each year and increase the monthly electricity bill for a typical residential customer by about 54 percent. It was never submitted to, or approved by, city voters.
Appellants filed a class action seeking an order declaring the 1 percent surcharge invalid under Proposition 218 as a tax imposed without voter approval. The trial court accepted the argument that the 1 percent surcharge was part of the franchise fee and does not qualify as a tax under Proposition 218. The court held the 1 percent surcharge did not constitute a tax under Proposition 26 because Proposition 26 does not apply retrospectively to the 1999 franchise agreement.
The Court of Appeal, Second District, Division Six, held in a published opinion, Jacks v. City of Santa Barbara (2015) 234 Cal.App.4th 925, that the City imposed the 1 percent surcharge without complying with Proposition 218, and directed the trial court to grant the appellants’ motion for summary judgment. The court held that the surcharge had all the hallmarks of a utility user tax because its primary purpose was for the City to raise revenue from electricity users for general spending purposes, rather than for SCE to obtain the right of way to provide electricity. This constitutes a tax under Proposition 218 and is subject to approval by the electorate.
Roy Allan Slurry Seal, Inc. v. American Asphalt South, Inc., S225398—Review Granted—June 10, 2015
This case presents the following issues: (1) In the context of competitive bidding on a public works contract, may the second lowest bidder state a claim for intentional interference with prospective economic advantage against the winning bidder based on an allegation that the winning bidder did not fully comply with California’s prevailing wage law after the contract was awarded? (2) To state a cause of action for intentional interference with prospective economic advantage, must the plaintiff allege that it had a preexisting economic relationship with a third party with probable future benefit that preceded or existed separately from defendant’s interference, or is it sufficient for the plaintiff to allege that its economic expectancy arose at the time the public agency awarded the contract to the low bidder?
American Asphalt South, Inc. (American) outbid Roy Allan Slurry Seal, Inc. (Allan), and jointly, Doug Martin Contracting, Inc. (Martin), on 23 public works cases totaling $14.6 million dollars. Allan and Martin sued American for intentional interference with prospective economic advantage, claiming American was only able to submit the lowest bid because it paid its workers less than is required by Labor Code sections 1770 and 1771. American demurred to the complaints, contending the plaintiffs did not have the required existing relationship and reasonable probability of being awarded the contracts that was required to show intentional interference with prospective economic advantage.
The Court of Appeal, Second District, Division Eight, held in a published opinion, Roy Allan Slurry Seal, Inc. v. American Asphalt South, Inc. (2015) 234 Cal.App.4th 748, that (1) a bidder on a government contract who submits a superior bid and loses out only because a competitor manipulated the bid selection process through illegal conduct has been the victim of actionable intentional interference; and (2) an actionable economic expectancy arises once the public agency awards a contract to an unlawful bidder, thereby signaling that the contract would have gone to the second lowest qualifying bidder.
In her dissenting opinion, Justice Grimes asserted that the plaintiff must allege it had a preexisting economic relationship with a third party with probable future benefit, and mere interference by another bidder is not sufficient to establish that relationship.
HSU v. California Department of Toxic Substances Control, S225332—Review Granted and Held—June 10, 2015
The Court granted review and deferred further action pending the Court’s consideration and disposition of a related issue in John v. Superior Court, S222726, which presents the following issue: Must a defendant who has been declared a vexatious litigant and is subject to a prefiling order (Code Civ. Proc., § 391.7, subd. (a)) obtain leave of the presiding judge or justice before filing an appeal from an adverse judgment?
HSU v. California Department of Toxic Substances Control, S226143—Review Granted and Held—June 10, 2015
The Court granted review and deferred further action pending the Court’s consideration and disposition of a related issue in John v. Superior Court, S222726, which presents the following issue: Must a defendant who has been declared a vexatious litigant and is subject to a prefiling order (Code Civ. Proc., § 391.7, subd. (a)) obtain leave of the presiding judge or justice before filing an appeal from an adverse judgment?
Trabert v. Consumer Portfolio Services, S225749—Review Granted and Held—June 10, 2015
Petition for review after the Court of Appeal reversed an order denying a petition to compel arbitration in a civil action. The Court ordered briefing deferred pending its decision in Sanchez v. Valencia Holding Co. LLC, S199119 (#12-33), which includes the following issue: Does the Federal Arbitration Act (9 U.S.C. § 2), as interpreted in AT&T Mobility LLC v. Concepcion (2011) 563 U. S. 321, preempt state law rules invalidating mandatory arbitration provisions in a consumer contract as procedurally and substantively unconscionable?
Plaintiff purchased a used vehicle from a car dealer under a preprinted industry-drafted installment sales contract. The dealer then assigned the contract to the creditor assignee, Defendant. Defendant later repossessed Plaintiff’s vehicle, and Plaintiff filed a class action alleging Defendant’s repossession/default notices were defective under consumer statutes. Defendant moved to compel arbitration under a lengthy arbitration provision in the parties’ sales contract. In opposition, the Plaintiff argued the arbitration agreement was unenforceable because it contained two sets of unconscionable provisions: (1) provisions creating exceptions to the finality of the arbitrator’s decisions; and (2) provisions allowing the parties to seek relief outside the arbitration process through self-help remedies or small claims court. The trial court found both sets of challenged provisions were unconscionable and denied Defendant’s motion to compel arbitration.
The Court of Appeal, Fourth District, Division One, held in a published decision, Trabert v. Consumer Portfolio Services, Inc. (2015) 234 Cal.App.4th 1154, that the arbitration agreement was not permeated with unconscionable provisions. The provisions held to be unconscionable were collateral to the core purpose of both the arbitration agreement and the sales contract. The court thus held that only one discrete portion of the arbitration agreement – provisions setting forth finality exceptions that are contained in two consecutive sentences – were unconscionable and thus unenforceable. Striking these two sentences would leave intact the rest of the lengthy arbitration provision and sales agreement. The court ruled that the parties therefore should arbitrate their dispute and would be limited to challenging the award under the statutory provisions. This would ensure that the parties would receive the benefit of their bargain.
Universal Protection Service v. Superior Court (Franco), S225450—Review Granted and Held—June 10, 2015
The court ordered briefing deferred pending decision in Sandquist v. Lebo Automotive, Inc., S220812 (#14-127), which presents the following issue: Does the trial court or the arbitrator decide whether an arbitration agreement provides for class arbitration if the agreement itself is silent on that issue?
In 2008, Franco signed an agreement to arbitrate any and all disputes with his employer, defendant Universal, including employment disputes. The agreement states that the arbitration is to be conducted “in accordance with the National Rules for the Resolution of Employment Disputes set forth by the American Arbitration Association [AAA].” In 2014, Franco, on behalf of herself and others similarly situated, filed a claim for class arbitration with the AAA. Universal responded by filing a declaratory relief action in the trial court. It sought judicial declarations that (1) the court, not an arbitrator, decides whether class, collective or other representative arbitration is available under the arbitration agreement; and (2) the arbitration agreement required Franco to arbitrate her claims on an individual basis only.
The Court of Appeal, Fourth District, Division One, held in a published opinion, Universal Protection Service, L.P. v. Superior Court (2015) 234 Cal.App.4th 1128, that the parties’ agreement to resolve their arbitration under the AAA rules constitutes clear and unmistakable evidence of their intent that the arbitrator, not the court, interpret the arbitration agreement and decide whether it permits arbitration of class and/or representative claims.
Review Denied (with dissenting justices)
None.
Depublished
None.
