Filed 5/1/03
IN THE SUPREME COURT OF CALIFORNIA
STEVEN WHITE,
Plaintiff and Appellant,
S108099
v.
Ct.App. 2/4 B122178
GRAY DAVIS, as Governor, etc., et al.,
Los Angeles County
Defendants and Respondents. )
Super. Ct. No. BC175284
HOWARD JARVIS TAXPAYERS
ASSOCIATION et al.,
Plaintiffs
and
Respondents,
v.
Ct.App. 2/4 B123992
STEVE WESTLY, as Controller, etc.
Los Angeles County
Defendant and Appellant;
Super. Ct. No. BC193174
CALIFORNIA STATE EMPLOYEES
ASSOCIATION, LOCAL 1000, SEIU,
AFL-CIO, CCL, et al.,
Intervenors and Appellants.
Article IV, section 12 of the California Constitution provides in part that
“[t]he Legislature shall pass the budget bill by midnight on June 15 of each year,”
but in recent years the timely adoption of the budget bill in California has proven
to be the exception, rather than the rule. This proceeding arises out of two
taxpayer actions that were filed in the wake of budget impasses that occurred in
1997 and 1998.1 In the action filed in 1998, the trial court issued a preliminary
injunction broadly barring the Controller from making payments from the state
treasury in the absence of passage of the budget bill or an emergency
appropriation ― a preliminary injunction that largely would have shut down
government operations in California, but for the Legislature’s prompt enactment
of an emergency appropriation and the Court of Appeal’s subsequent order staying
the effect of the preliminary injunction. In the Court of Appeal, the Controller
contended that, contrary to the trial court’s ruling in the 1998 case, a variety of
payments lawfully may be made from the treasury during a budget impasse.
Although the ultimate passage of budget bills in 1997 and 1998 rendered the
appeals in these cases moot, the Court of Appeal concluding that the issues
presented by this proceeding are important and likely to recur, but will regularly
evade timely appellate review retained the matter to consider this contention.
After briefing and argument, the Court of Appeal, in a lengthy decision,
ultimately concluded that the Controller may authorize the payment of state funds
during a budget impasse in a variety of circumstances, including (1) when
payment is authorized by a “continuing appropriation” enacted by the Legislature,
(2) when payment is authorized by a self-executing provision of the California
Constitution (for example, the payment of certain funds for public schools under
article XVI, section 8.5 of the Constitution, and the payment of elected state
officers’ salaries under article III, section 4 of the California Constitution), and
1
For convenience, we use the term “budget impasse” to refer, with regard to
any year in which the budget bill has not been enacted into law before July 1 (the
beginning of the state’s fiscal year), to the situation that exists between July 1 and
the date the budget bill is enacted into law.
2
(3) when payment is mandated by federal law (for example, the prompt payment
of those wages mandated by the federal Fair Labor Standards Act, and the prompt
payment of benefits mandated under federal food stamp, foster care and adoption,
child support, and child welfare programs). (White v. Davis (2002) 98
Cal.App.4th 969 (White v. Davis I); see fn. 14, post.) The Court of Appeal
reversed the trial court’s judgment granting a preliminary injunction insofar as the
injunction applied to these categories of payments, but otherwise affirmed the
order.
The Controller and a number of state employee unions and associations that
had intervened in the lower court actions (hereafter referred to as state employee
intervenors) filed petitions for review in this court, but the petitions challenged
only two aspects of the Court of Appeal’s decision. First, both the Controller and
the state employee intervenors, contending that the Court of Appeal erred in
affirming in any respect the trial court’s 1998 order granting the preliminary
injunction, maintained that the trial court’s issuance of a preliminary injunction in
this action constituted a clear abuse of discretion in light of (1) prior case law
holding that the alleged harm to a taxpayer’s interest in the public treasury is
insufficient to support the issuance of a preliminary injunction to bar the alleged
improper expenditure of public funds, and (2) the circumstance that the harm
posed by granting the broad preliminary injunctive relief sought by plaintiffs
greatly outweighed the potential harm that would have resulted from denying such
injunctive relief pending a full adjudication on the merits. Second, the state
employee intervenors challenged the Court of Appeal’s conclusions regarding the
payment of state employee salaries during a budget impasse, contending that the
Court of Appeal erred in determining that state law did not authorize the
Controller to pay all state employees their full and regular salaries in the absence
of a duly enacted budget bill, and erred additionally in concluding that the federal
3
Fair Labor Standards Act required the Controller, during a budget impasse, to pay
state employees covered by that law only at the minimum wage rate for hours
worked during the impasse.
We granted review to address only the two matters raised in the petitions
for review: (1) the procedural question whether the trial court erred in granting a
preliminary injunction in the underlying taxpayer action, and (2) the substantive
question whether the Controller is authorized to pay state employees their full and
regular salaries during a budget impasse.
With regard to the first issue, we conclude that the trial court in the 1998
action abused its discretion in granting a preliminary injunction and that the Court
of Appeal erred in affirming in any respect the order granting the preliminary
injunction.
With regard to the second issue, we conclude that the trial court erred in
ruling that state employees who work during a budget impasse properly may be
considered “volunteers” who obtain no right to the payment of salary or wages
either under state or federal law, and also that the Court of Appeal erred insofar as
that court concluded that state employees’ entitlement “to compensation for work
performed during a budget impasse does not accrue until the enactment of a
budget or other proper appropriation.” (White v. Davis I, supra, 98 Cal.App.4th
969, 998.) Instead, we conclude that under the applicable California statutes, state
employees who work during a budget impasse obtain the right, protected by the
contract clauses of the federal and state Constitutions, to the state’s ultimate
payment of their full salary for work performed during the budget impasse; that is,
when state employees work during a budget impasse, the state becomes
contractually obligated ultimately to pay employees the full salary they have
earned. At the same time, however, we conclude that the Court of Appeal was
correct in determining that state employees do not have a contractual right actually
4
to receive the payment of salary prior to the enactment of an applicable
appropriation, and that the Controller is not authorized under state law to pay
those salaries prior to such an appropriation. Thus, state law contractually
guarantees that state employees ultimately will receive their full salary for work
performed during a budget impasse, but state law does not authorize the Controller
to disburse state funds to the employees until an applicable appropriation has been
enacted.
In addition, we conclude that, in light of the requirements of federal law,
the Controller is required, notwithstanding a budget impasse and the limitations
imposed by state law, to timely pay those state employees who are subject to the
minimum wage and overtime compensation provisions of the federal Fair Labor
Standards Act — a category that includes many, but not all, state employees — the
wages required by that act.
I
As noted, this case arises out of two separate taxpayer actions, the first filed
in 1997 concerning the 1997-1998 budget impasse (hereafter, the 1997 action),
and the second filed in 1998 related to the 1998-1999 budget impasse (hereafter,
the 1998 action). We briefly describe each of the actions.
A
On July 25, 1997, Steven White filed the 1997 action against the Governor
and numerous other state officials, a taxpayer action alleging the improper
expenditure of public funds. On September 22, 1997, White filed a first amended
complaint, alleging that the Legislature had failed to pass a budget for the 1997-
1998 fiscal year by the constitutionally required date of June 15, 1997, and that
from June 15 to August 18, 1997, when a budget finally was enacted, the
Controller improperly had disbursed funds from the state treasury to welfare
recipients, state employees, members of the Legislature, and other individuals
5
without the enactment of an emergency appropriation bill. The complaint
maintained that “[w]ithout any appropriations, the government of the State of
California should have closed,” and sought declaratory and injunctive relief.
Defendants filed a demurrer to the complaint, and on March 13, 1998, the
trial court sustained the demurrer without leave to amend, concluding that the
action was moot as to the 1997-1998 fiscal year because a budget for that year had
been enacted, and that the action was premature as to the following fiscal year.
White filed an appeal from the dismissal of the 1997 action.
B
On June 24, 1998, the Howard Jarvis Taxpayers Association and Steven
White (hereafter plaintiffs) initiated the 1998 action, another taxpayer action
seeking declaratory and injunctive relief against the Controller. The complaint
stated that the Legislature had not passed a budget by June 15, 1998, and asserted
that “[t]he Constitution of the State of California does not have any provision to
allow the state government to function without a budget, absent emergency bills.
Under the Constitution . . . , without an emergency bill, the state government must
close.” The complaint further alleged that the Controller was likely to disburse
funds despite this asserted constitutional restriction, and sought both interim and
permanent injunctive relief.
On July 9, 1998, the trial court issued a temporary restraining order barring
the Controller from paying out funds absent the enactment of a budget or an
emergency appropriation, unless payments were authorized by a continuing
appropriation or federal law. Thereafter, the trial court granted intervenor status to
6
several state employee unions and associations as well as several individual state
employees.2
On July 21, 1998, after conducting a hearing, the trial court granted a
preliminary injunction barring the Controller from disbursing any funds in the
absence of a budget, with the exception of (1) funds properly appropriated prior to
July 1, 1998, for expenditure in the 1998-1999 fiscal year, (2) funds properly
appropriated pursuant to emergency bills, and (3) payments of minimum wages
and overtime compensation required under the federal Fair Labor Standards Act
for work performed prior to July 21, 1998. In the course of its decision, the trial
court determined that state employees who continued to work during the budget
impasse after the entry of its order did so as “volunteers,” and prohibited the
Controller from making any payments for such work. The trial court also found
that continuing appropriations “have no constitutional basis and simply represent
examples of expenditures from the state treasury that have no unique position over
other required expenditures.” As part of its injunctive order, the trial court also
ordered plaintiffs to post a $100,000 bond.
The Controller and the state employee intervenors immediately appealed
from the order granting the preliminary injunction, and requested the Court of
Appeal to stay the preliminary injunction by supersedeas.3 On July 22, 1998 —
2
The following state employee unions and associations were granted
intervenor status: California State Employees Association, Service Employees
International Union, Local 1000, AFL-CIO, CLC ; Professional Engineers in
California Government; California Association of Professional Scientists;
California Correctional Peace Officers Association; and California Union of
Safety Employees.
3
At the same time, the Controller and intervenors filed petitions for an
original writ of mandate in the Supreme Court. This court transferred the petitions
to the Court of Appeal, which consolidated them with the appeals in this
(footnote continued on next page)
7
the day after the trial court issued its preliminary injunction — the Legislature
enacted an emergency appropriation to fund vital services and pay the salaries of
state employees through August 5, 1998. On July 28, 1998, the Court of Appeal
issued a writ of supersedeas staying the trial court’s preliminary injunction
pending consideration of the appeal. That stay has remained in effect throughout
the pendency of the appeal. The 1998-1999 budget bill ultimately was passed and
signed into law on August 21, 1998.
C
The Court of Appeal consolidated the appeals from the 1997 and 1998
actions and decided the cases in a single opinion. (White v. Davis I, supra, 98
Cal.App.4th 969.) Because the budget bills for both the 1997-1998 and 1998-
1999 fiscal years had been enacted prior to the resolution of the appeal, the Court
of Appeal turned first to the issue of mootness, dismissing the appeal from the
1997 action as moot but retaining the appeal from the 1998 action for decision.
The Court of Appeal explained that an appellate court has “ ‘discretion to decide
otherwise moot cases presenting important issues that are capable of repetition yet
tend to evade review’ ” (98 Cal.App.4th at p. 980, quoting Conservatorship of
Wendland (2001) 26 Cal.4th 519, 524, fn. 1), and that the issues presented here
“are of profound public significance and arise with some frequency, but escape
review with the enactment of a budget.” (98 Cal.App.4th at p. 980.)
In addressing the validity of the broad preliminary injunction issued by the
trial court in the 1998 action, the Court of Appeal noted that the Controller
contended in the trial court and on appeal that there are numerous circumstances
(footnote continued from previous page)
proceeding and ultimately dismissed the petitions as moot. No one has challenged
the Court of Appeal’s disposition of those mandate actions.
8
under which payment of public funds is authorized even in the absence of the
enactment of the annual budget act: (1) when payment is authorized by a
“continuing appropriation” enacted by the Legislature, (2) when payment is
authorized by a self-executing provision of the California Constitution, and
(3) when payment is required by federal law. The Court of Appeal proceeded to
address each of these categories, emphasizing that its decision was limited to the
provisions of law discussed by the parties on appeal, and that its decision did not
purport to determine “whether other provisions of law may authorize or mandate
the disbursement of funds during a budget impasse.” (White v. Davis I, supra, 98
Cal.App.4th 969, 978, fn. 1.)
Because the Court of Appeal’s discussion of the numerous issues before it
reveals the complexity of the task of determining which payments of public funds
lawfully may be made during a budget impasse, we believe it is useful to review at
some length that court’s analysis and conclusions.
1. Continuing Appropriations
The Court of Appeal initially scrutinized the category of “continuing
appropriations.” In California Assn. for Safety Education v. Brown (1994) 30
Cal.App.4th 1264, 1282, the court explained that “[a]n appropriation is a
legislative act setting aside ‘a certain sum of money for a specified object in such
manner that the executive officers are authorized to use that money and no more
for such specified purpose.’ [Citation.] A continuous [or continuing]
appropriation runs from year to year without the need for further authorization in
the budget act. [Citations.]” (Fn. omitted, italics added.) Government Code
section 16304 evidences the Legislature’s approval of such appropriations.4
4
Government Code section 16304 provides in relevant part: “An
appropriation shall be available for encumbrance during the period specified
(footnote continued on next page)
9
As the Court of Appeal noted, the Controller’s brief cited a considerable
number of statutes and voter-approved initiatives that establish continuing
appropriations independent of the budget act, authorizing payments for items such
as tax refunds, disability and retirement payments, and payments to bond holders.5
(footnote continued from previous page)
therein, or, if not otherwise limited by law, for three years after the date upon
which it first became available for encumbrance. An appropriation containing the
term ‘without regard to fiscal years’ shall be available for encumbrance from year
to year until expended. [¶] . . . [¶]
“Appropriations for the following purposes are exempt from limitations as
to period of availability in any appropriation, and shall remain available from year
to year until expended:
“(a) Payment of interest and redemption charges on any portion of the
bonded debt of the state.
“(b) Transfers of money from any fund for the benefit of elementary
schools, high schools, community colleges, the University of California, or any
interest and sinking fund in the State Treasury.
“(c) Money transferred to revolving funds specifically created by law,
including, but not limited to, the Architecture Revolving Fund and the Water
Resources Revolving Fund.
“(d) Appropriations available for the acquisition of real property to the
extent that such appropriations have been encumbered by the filing of
condemnation proceedings on behalf of the State of California prior to the
expiration of the period of availability of the appropriation.
“(e) Money transferred to and expendable from funds other than the fund in
which originally deposited, pursuant to the provisions of law earmarking or
appropriating for expenditure certain classes of revenue or other receipts.
“(f) Continuing provisions of law appropriating for specific purposes
certain classes of revenue or other receipts, upon their deposit in a particular fund
in the State Treasury or upon their collection by an agency of this state.”
5
In a brief filed in the Court of Appeal, the Controller cited, as a “small
sampling” of current enactments authorizing continuing appropriations, the
following provisions authorizing continuing appropriations for (1) disability
income payments (Unemploy. Ins. Code, § 3012), (2) income tax refunds (Rev. &
Tax. Code, § 19611), (3) the Local Revenue Fund (Welf. & Inst. Code, § 17600),
(4) the Local Public Safety Account (Gov. Code, § 300052, subd. (a)),
(5) contributions to the Teachers Retirement Fund (Ed. Code, § 22955),
(footnote continued on next page)
10
Plaintiffs did not claim in the trial court or in the Court of Appeal that any of the
provisions cited by the Controller were not intended to create continuing
appropriations, but rather argued that, as a general matter, continuing
appropriations are not constitutionally permissible. The trial court agreed with
plaintiffs, and its preliminary injunction barred the Controller from making
payments during a budget impasse pursuant to any continuing appropriation. The
Court of Appeal disagreed with the trial court on this fundamental issue, holding
that legislative or voter-approved measures authorizing continuing appropriations
independent of the budget act are constitutionally valid.
In reaching this conclusion, the Court of Appeal began by observing that
under the California Constitution “[g]enerally, the Legislature ‘may exercise any
and all legislative powers which are not expressly or by necessary implication
denied to it by the Constitution.’ (Methodist Hosp. of Sacramento v. Saylor (1971)
5 Cal.3d 685, 691.)” (White v. Davis I, supra, 98 Cal.App.4th 969, 983-984.) In
Methodist Hosp. of Sacramento, our court explained this fundamental point at
greater length: “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
(footnote continued from previous page)
(6) retirement and disability payments (Ed. Code, § 22307), (7) the operations of
the California Highway and Infrastructure Finance Agency (Health & Saf. Code,
§§ 51000, 50154), (8) the Local Agency Investment Fund ( Gov. Code,
§ 16429.1), (9) bond-related payments (Gov. Code, §§ 15814.16, 15814. 48), and
(10) voter-approved general obligation bond payments (Gov. Code, § 8879.10;
Pen. Code, § 7428; Pub. Util. Code, § 99693.)
11
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.’ [Citation.]” (Methodist Hosp. of
Sacramento v. Saylor, supra, 5 Cal.3d at p. 691.)
The Court of Appeal then turned to the terms of the two state constitutional
provisions upon which plaintiffs relied. Article IV, section 12, subdivision (c) of
the California Constitution provides in relevant part: “The Legislature shall pass
the budget bill by midnight on June 15 of each year. Until the budget bill has been
enacted, the Legislature shall not send to the Governor for consideration any bill
appropriating funds for expenditure during the fiscal year for which the budget bill
is to be enacted, except emergency bills recommended by the Governor or
appropriations for the salaries and expenses of the Legislature.” Article XVI,
section 7, provides: “Money may be drawn from the Treasury only through an
appropriation made by law and upon a Controller’s duly drawn warrant.”
The Court of Appeal observed that “nothing in . . . article IV, section 12,
expressly bars continuing appropriations. On its face, section 12 prohibits the
Legislature from sending specified appropriation bills to the Governor prior to the
enactment of a budget, and it provides for exceptions to this prohibition; it does
not otherwise limit the Legislature’s authority to enact appropriations.” (White v.
Davis I, supra, 98 Cal.App.4th 969, 984.) Similarly, article XVI, section 7, simply
provides that money may be drawn from the Treasury “only through an
12
appropriation made by law . . . .” (Italics added.) That provision does not limit the
form in which an appropriation may be adopted.
In addition to noting that the relevant constitutional provisions do not on
their face preclude the Legislature from enacting continuing appropriations, the
Court of Appeal further explained that the predecessor to current article IV,
section 12 — former article IV, section 34 — had been interpreted by this court to
permit the Legislature to enact continuing appropriations that are available for
expenditure independent of the budget act (see, e.g., Gillum v. Johnson (1936) 7
Cal.2d 744, 758; Railroad Commission v. Riley (1923) 192 Cal. 54, 56-58), that
there was no indication that the drafters or the voters intended any change in
meaning in this regard when article IV was substantially revised in 1966 and the
current provisions of article IV, section 12, were adopted, and that subsequent
Court of Appeal opinions have recognized the existence of continuing
appropriations (see, e.g., California Assn. for Safety Education v. Brown, supra,
30 Cal.App.4th 1264, 1283). (White v. Davis I, supra, 98 Cal.App.4th 969, 984-
988.) Accordingly, the Court of Appeal concluded that continuing appropriations
are constitutionally permissible, and it set aside the preliminary injunction insofar
as it rested on the trial court’s contrary determination.6
6
The Court of Appeal noted that because the trial court had concluded that
continuing appropriations as a general matter are constitutionally impermissible,
the trial court did not make individual determinations as to whether each of the
particular statutes or laws cited by the Controller validly establish a continuing
appropriation. The Court of Appeal further explained that because the trial court
did not address the individual continuing appropriations, and because a full
showing had not been made regarding those measures, the Court of Appeal would
not itself address whether any of the provisions establish continuing appropriations
independent of the budget act. (White v. Davis I, supra, 98 Cal.App.4th 969, 982.)
13
2. Payments Authorized by the State Constitution
The Court of Appeal next considered the Controller’s contentions that a
number of provisions of the California Constitution authorize the payment of
funds from the state treasury independent of the budget act.
(a) Article III, section 4
The Court of Appeal first addressed the Controller’s contention that the
payment of salaries of elected state officers is authorized by article III, section 4,
of the California Constitution without a specific budget act appropriation. That
constitutional provision states in relevant part: “[S]alaries of elected state officers
may not be reduced during their term of office. Laws that set these salaries are
appropriations.” (Italics added.) The Controller maintained that because the
salaries of state officers are set by statute, the Controller may authorize the
payment of these salaries independent of a budget act or emergency appropriation.
The Court of Appeal agreed with the Controller’s position, explaining that
not only did the explicit constitutional language of article III, section 4, establish
that the statutes setting those salaries themselves operate as appropriations for
purposes of the Constitution, but that this conclusion found support in the decision
of Brown v. Superior Court (1982) 33 Cal.3d 242, which states that “though a bill
setting salaries of elected state officers is not an appropriation bill it nonetheless
takes effect as an appropriation once it has been enacted.” (33 Cal.3d at pp. 249-
250, fn. 6.)
(b) Article XVI, Section 8
The Court of Appeal next addressed the Controller’s contention that article
XVI, section 8 of the California Constitution — a provision establishing a
minimum level of education funding enacted as part of the voter initiative
popularly known as Proposition 98 — authorizes the disbursement of funds
independent of a budget act or emergency appropriation. On this point, the Court
14
of Appeal rejected the Controller’s contention and agreed with the earlier decision
of County of Sonoma v. Commission on State Mandates (2000) 84 Cal.App.4th
1264, 1290, that “Proposition 98 does not appropriate funds. . . . The power to
appropriate funds was left in the hands of the Legislature. Proposition 98 merely
provides formulas for determining the minimum to be appropriated every budget
year. The state’s obligation is to ensure specific amounts of moneys are applied
by the state for education.” Accordingly, the Court of Appeal concluded that the
provisions of article XVI, section 8 “do not constitute a self-executing
authorization to disburse funds.” (White v. Davis I, supra, 98 Cal.App.4th 969,
993.)
(c) Article XVI, Section 8.5
The Court of Appeal next addressed the Controller’s argument that article
XVI, section 8.5, of the California Constitution — an additional educational
funding provision, also adopted as part of Proposition 98 — authorizes the
disbursement of funds independent of a budget act or emergency appropriation.
After analyzing the somewhat complex features of this provision, the Court of
Appeal ultimately agreed with the Controller that article XVI, section 8.5 provides
an independent basis for the disbursement of funds.
As the Court of Appeal explained, article XVI, section 8.5 operates in
conjunction with another provision of the California Constitution, article XIII B,
which generally limits governmental spending. “As originally enacted, article
XIII B required that all governmental entities return revenues in excess of their
appropriation limits to the taxpayers through tax rate or fee schedule revisions. In
Proposition 98, . . . article XIII B was amended to provide that half of state excess
revenues would be transferred to the state school fund for the support of school
districts and community college districts.” (Hayes v. Commission on State
Mandates (1992) 11 Cal.App.4th 1564, 1580, fn. 7.)
15
Along with the amendment of article XIII B in Proposition 98, the voters
adopted article XVI, section 8.5. Article XVI, section 8.5, subdivision (a)
provides that in addition to the education funding required under article XVI,
section 8, “the Controller shall during each fiscal year transfer and allocate all
revenues available [under the relevant provisions] of article XIII B to that portion
of the State School Fund restricted for elementary and high school purposes, and
to that portion of the State School Fund restricted for community college purposes,
respectively, in proportion to the enrollment in school districts and community
college districts respectively.” Article XVI, section 8.5, subdivision (c), in turn,
provides that “[f]rom any funds transferred to the State School Fund pursuant to
subdivision (a), the Controller shall each year allocate to each school district and
community college district an equal amount per enrollment in school districts from
the amount in that portion of the State School Fund restricted for elementary and
high school purposes and an equal amount per enrollment in community college
districts from that portion of the State School Fund restricted for community
college purposes.” Finally, article XVI, section 8.5, subdivision (d) provides that
“[a]ll revenues allocated pursuant to subdivision (a) shall be expended solely for
the purposes of instructional improvement and accountability as required by law.”
In analyzing whether the provisions of article XVI, section 8.5 authorize
the disbursement of funds without the need for a legislative appropriation, the
Court of Appeal noted that in California Teachers Assn. v. Hayes (1992) 5
Cal.App.4th 1513, the appellate court, in discussing this constitutional provision,
declared: “The measure is self-executing; it requires no legislative action. . . . [¶]
. . . Section 8.5 does not extend the Legislature’s spending power to excess
revenues; rather it imposes a self-executing, ministerial duty upon the Controller
to transfer such excess revenues to a restricted portion of the school fund and
thence to allocate such revenues to school districts and community college
16
districts on a per-enrollment basis. Section 8.5 specifically restricts the purposes
for which those funds may be expended.” (5 Cal.App.4th at p. 1530.)
The Court of Appeal below agreed with California Teachers Assn.’s
description of the effect of this provision, and held that “[a]s such, article XVI,
section 8.5, bears the earmarks of a continuing appropriation entrenched by the
voters in the state Constitution. We therefore conclude that this provision contains
a self-executing authorization to disburse funds.” (White v. Davis I, supra, 98
Cal.App.4th 969, 995.)
3. Payments Pursuant to Federal Law
After addressing the Controller’s contentions regarding the permissibility of
authorizing payments from the treasury absent a budget bill or emergency
appropriation, pursuant to continuing appropriations and various provisions of the
California Constitution, the Court of Appeal turned to the third general category
asserted by the Controller as providing a basis for the payment of state funds
during a budget impasse — payments that are required to comply with federal law.
In analyzing this claim, the Court of Appeal recognized at the outset that in
light of the supremacy clause of the federal Constitution (U.S. Const., art. VI, cl. 2
[“Laws of the United States . . . shall be the supreme Law of the Land; and the
Judges of every State shall be bound thereby, any Thing in the Constitution or
Laws of any State to the Contrary notwithstanding”]), the requirements of federal
law necessarily prevail over any restrictions that state law may place on the
disbursement of state funds. (See, e.g., McCulloch v. Maryland (1819) 17 U.S. (4
Wheat.) 316, 427; Cipollone v. Liggett Group, Inc. (1992) 505 U.S. 504, 516
[“state law that conflicts with federal law is ‘without effect’”].) Thus, the Court of
Appeal concluded that when federal law places an obligation upon the state
promptly to make payments of public funds, the Controller is authorized to make
such payments independent of the enactment of a budget bill or emergency
17
appropriation. The Court of Appeal held that the pertinent question in each
instance is whether the applicable federal law in fact requires the state to make the
payment or payments during the time period in question.
The Court of Appeal then discussed a number of federal statutes asserted by
the Controller to require the disbursement of public funds notwithstanding a
budget impasse.
(a) Fair Labor Standards Act
The Court of Appeal first addressed the question whether the Controller is
required under the Fair Labor Standards Act (29 U.S.C. § 201 et seq.) (FLSA) to
disburse funds to pay the salaries of state employees during a budget impasse.
The trial court had concluded that the state was required by the FLSA to pay the
wages required by that act only for work performed prior to the date of the trial
court’s preliminary injunction — determining that state employees would be
“volunteers” not entitled to compensation with regard to work performed after the
trial court issued its injunction. The Court of Appeal rejected this conclusion,
determining that the state is obligated to pay in a timely fashion the wages
required by the FLSA for all work performed during a budget impasse. That court
also concluded, however, that, contrary to the arguments set forth by the state
employee intervenors, state employees “do not have an entitlement to their full
salaries (over and above the compensation required under the FLSA) pursuant to
the contract clauses of the United States and California Constitutions.” (White v.
Davis I, supra, 98 Cal.App.4th 969, 995.)
Because the question of the payment of state employee salaries during a
budget impasse is one of the issues upon which review was sought and granted,
we describe in detail the Court of Appeal’s resolution of the salary issue.
The Court of Appeal began its analysis by explaining that the FLSA —
which by its terms applies to public employers, including a state (29 U.S.C.
18
§ 203(d), (e)(2)(C)) — requires an employer to pay minimum wages (29 U.S.C.
§ 206(a)) and overtime compensation (29 U.S.C. § 207(a)(1)) to those employees
to whom those provisions apply, and provides for the recovery of unpaid
minimum wages, unpaid overtime compensation, and liquidated damages.
(29 U.S.C. § 216(b).)7 The Court of Appeal also noted that the federal courts have
held that, as a general matter, “ ‘the FLSA is violated unless the minimum wage is
paid on the employee’s regular payday . . . .’ (Biggs v. Wilson (9th Cir. 1993) 1
F.3d 1537, 1541 [cert. den. (1994) 510 U.S. 1081].)” (White v. Davis I, supra, 98
Cal.App.4th 969, 996, italics added.)
Although nothing in the FLSA specifically addresses a state’s obligation to
pay wages required under the act during a budget impasse, the Court of Appeal
explained that in Biggs v. Wilson, supra, 1 F.3d 1537, the Ninth Circuit squarely
held that California had violated the FLSA in July 1990 by failing to pay the
wages owed to public transportation employees under the FLSA during a budget
impasse. In this proceeding, no one has questioned the validity of the
interpretation or application of the FLSA set forth in Biggs — namely that under
7
The Court of Appeal recognized that the United States Supreme Court
recently held that individual employees may not initiate actions under the FLSA
against a state that has not waived its immunity under the Eleventh Amendment to
the United States Constitution (see Alden v. Maine (1999) 527 U.S. 706, 754), and
that a lower federal court had held that California has not waived this immunity
(Baird v. Kessler (E.D.Cal. 2001) 172 F.Supp.2d 1305, 1312). The Court of
Appeal nonetheless pointed out that the FLSA authorizes the Secretary of Labor to
seek the payment of minimum wages and overtime compensation “owing to any
employee or employees” under the FLSA (29 U.S.C. § 216(c)) and thus that the
state remains obligated to comply with the provisions of the FLSA. (White v.
Davis I, supra, 98 Cal.App.4th 969, 996, fn. 10; see also Alden v. Maine, supra,
527 U.S. at p. 755 [explaining that the high court’s holding in that case “does not
confer upon the State a . . . right to disregard the Constitution or valid federal
law”].)
19
the FLSA, the state is required to pay the wages owed under that act on the
employees’ regular payday, notwithstanding the existence of a budget impasse.
The Court of Appeal noted that although the trial court in this case had
acknowledged the Biggs decision, the trial court had concluded that under that
decision the Controller was authorized to pay the minimum wages and overtime
compensation required under the FLSA only for work performed prior to the date
of the preliminary injunction, because state employees who continued to work
after that date were “volunteers” not entitled to compensation under the FLSA.
The Court of Appeal reasoned that the trial court apparently had concluded “that a
budget impasse nullifies the relationship between the state and its employees, and
that employees who continued to work despite notification of this nullification fall
outside the protection of the FLSA.” (White v. Davis I, supra, 98 Cal.App.4th
969, 996.) The Court of Appeal treated the trial court’s ruling as raising three
issues: “(1) whether there is a continuing employment relationship between the
state and its employees during a budget impasse; (2) whether this relationship, if it
exists, falls within the scope of the FLSA; and (3) whether state employees are
entitled to payment of their salaries during a budget impasse absent an
appropriation, over and above the compensation requirements found in the FLSA.”
(Ibid.) The appellate court proceeded to address each of those issues.
(i) Continuing Employment Relationship
In discussing this issue, the Court of Appeal first recognized that although
“ ‘[p]ublic employment, by and large, is not held by contract, but by statute,’ ”
“public employment [nonetheless] may give rise to obligations regarding
compensation treated as contractual under the contract clauses of the federal and
state Constitutions.” (White v. Davis I, supra, 98 Cal.App.4th 969, 996, citation
omitted.)
20
The Court of Appeal noted that the Legislature had enacted two statutes —
Government Code sections 1231 and 1231.1 relating to the status of public
employees and to the payment of their salaries in the event of a budget impasse.
Government Code section 1231 provides in part: “No state officer or employee
shall be deemed to have a break in service or to have terminated his or her
employment, for any purpose, nor to have incurred any change in his or her salary
or other conditions of employment, solely because of the failure to enact a budget
act for a fiscal year prior to the beginning of that fiscal year.” Government Code
section 1231.1 provides: “Funds from each appropriation made in the budget act
for any fiscal year may be expended to pay to officers and employees whatever
salary that would have otherwise been received had the budget act been adopted
on or prior to July 1, of that fiscal year.”
The Court of Appeal then stated: “In interpreting these statutes, we seek a
construction that is constitutionally sound. [Citation.] ‘Under our Constitution the
creation of an enforceable contract with the state requires compliance with the
constitutional debt limitation provisions of article XVI, section 1, or a valid
appropriation in support of the contract under article XVI, section 7. [Citations.]
In this respect our law is consistent with federal law and the law of nearly every
state in the Union. [Citations.] Persons who deal with the government are held to
have notice of this limitation upon the authority to enter into contracts.
[Citation.]’ [Citation.]” (White v. Davis I, supra, 98 Cal.App.4th 969, 997.)
The Court of Appeal observed that “[n]othing supports a determination that
Government Code sections 1231 and 1231.1 establish an obligation to pay
employee salaries in conformity with . . . the debt limitation provisions of
California Constitution, article XVI, section 1. [Citation.] Nor do the parties
dispute that the salaries at issue here are generally paid pursuant to an
appropriation on the general treasury fund, rather than pursuant to a continuing
21
appropriation or constitutional mandate.” (White v. Davis I, supra, 98 Cal.App.4th
969, 998.)
The Court of Appeal concluded that “[u]nder these circumstances,
Government Code sections 1231 and 1231.1 cannot establish an employment
relationship that entitles state employees to their salaries during a budget impasse
absent an appropriation, given the constitutional limitations that we have
described.” (White v. Davis I, supra, 98 Cal.App.4th 969, 998.) Instead, the Court
of Appeal held that “these statutes, if constitutionally sound, authorize a
continuing employer-employee relationship during a budget impasse under which
entitlement to compensation for work done during the budget impasse arises only
upon the satisfaction of a condition precedent, namely, the enactment of a budget
or other proper appropriation.” (Ibid., italics in original.)
The Court of Appeal continued: “Although the employer-employee
relationship at issue here is ultimately governed by statute, we discern no reason
rooted in the state Constitution barring the Legislature from subjecting the
entitlement to wages earned during a budget impasse to an analogue of a condition
precedent. Thus, the entitlement of state employees to compensation for work
performed during a budget impasse does not accrue until the enactment of a
budget or other proper appropriation. Furthermore, given the friction of
democratic politics — which Government Code sections 1231 and 1231.1
impliedly recognize — state employees assume the risk that satisfaction of this
condition may be delayed due to the Legislature’s inaction during a budget
impasse. [Citations.]” (White v. Davis I, supra, 98 Cal.App.4th 969, 998.)
In sum, with regard to the question of a continuing employment
relationship, the Court of Appeal ultimately concluded that state employees who
work during a budget impasse do have a continuing employment relationship with
the state, but it is one under which an employee’s “entitlement to compensation for
22
work done during the budget impasse arises only upon . . . the enactment of a
budget or other proper appropriation.” (White v. Davis I, supra, 98 Cal.App.4th
969, 998.)
(ii) Scope of the FLSA
The Court of Appeal then turned to the question whether the type of
employment relationship that it just had described — that is, an employment
relationship in which an employee’s entitlement to compensation for work done
during a budget impasse is subject to a condition precedent — falls within the
scope of the FLSA. Although that court indicated it had found “little case
authority addressing the extent to which the FLSA applies to employer-employee
relationships subject to such a condition precedent” (White v. Davis I, supra, 98
Cal.App.4th 969, 999), the court ultimately concluded that the type of continuing
relationship that state employees have with the state during a budget impasse does
fall within the protection of the FLSA during such an impasse. (Ibid.) Reiterating
that the FLSA “requires wages to be paid in a timely fashion” (ibid.), the Court of
Appeal thus concluded that “the FLSA requires the prompt payment of minimum
wages and overtime compensation for work performed during a budget impasse,
with due reference to the state employee’s established work period.” (Ibid.)
(iii) Compensation Over and Above the FLSA Requirements
The final issue that the Court of Appeal addressed regarding state employee
salaries was the question whether state employees are entitled to receive
compensation during a budget impasse, beyond that required under the FLSA, by
virtue of the contract or due process clauses of the federal and state Constitutions.
As the Court of Appeal recognized, both the state and federal Constitutions
contain provisions prohibiting the state from passing any law “impairing the
obligation of contracts.” (U.S. Const., art. I, § 10; Cal. Const., art. I, § 9.)
Although the federal contract clause has been interpreted to be “directed only
23
against impairment by legislation and not by judgment of courts” (Tidal Oil Co. v.
Flanagan (1924) 263 U.S. 444, 451), the Court of Appeal noted that the state
contract clause has been construed also to apply to judicial action. (Bradley v.
Superior Court (1957) 48 Cal.2d 509, 519.) Because the state employee
intervenors in this case contended that a judicial order — the trial court’s
preliminary injunction — constituted an impermissible impairment of contract in
prohibiting the Controller from authorizing the full and regular payment of salaries
to which the employees contended they were contractually entitled, the appellate
court limited its consideration to the state contract clause.
In addressing the employees’ contract clause claim, the Court of Appeal
began by explaining that “[u]nder the state contract clause, ‘[n]either the court nor
the Legislature may impair the obligation of a valid contract . . . .’ [Citation.]
However, the contract clause does not protect contracts that are prohibited by law
or against public policy. [Citations.]” (White v. Davis I, supra, 98 Cal.App.4th
969, 1001, italics added by White v. Davis I.)
The Court of Appeal then stated that “[g]enerally, ‘no contractual
obligation may be enforced against a public agency unless it appears the agency
was authorized by the Constitution or statute to incur the obligation; a contract
entered into by a governmental entity without the requisite constitutional or
statutory authority is void and unenforceable.’ ” (White v. Davis I, supra, 98
Cal.App.4th 969, 1001.)
The Court of Appeal concluded: “In our view, the state Constitution
precludes the state from incurring an obligation to pay employee salaries during a
budget impasse in the absence of a proper appropriation, and thus the failure to
pay full salaries under such circumstances does not constitute an impairment of
contract under the state contract clause.” (White v. Davis I, supra, 98 Cal.App.4th
969, 1001.) The Court of Appeal reasoned that a contractual obligation to pay
24
salaries in the absence of an appropriation “would directly undermine the
appropriation requirement in article XVI, section 7 of the state Constitution. As
our Supreme Court explained in Humbert v. Dunn (1890) 84 Cal. 57, 59, this
requirement, which is taken from the United States Constitution, ‘had its origin in
Parliament in the seventeenth century, when the people of Great Britain, to
provide against the abuse by the king and his officers of the discretionary money
power with which they were vested, demanded that the public funds should not be
drawn from the treasury except in accordance with express appropriations therefor
made by Parliament [citation]; and the system worked so well in correcting the
abuses complained of, our forefathers adopted it, and the restraint imposed by it
has become a part of the fundamental law of nearly every state in the Union.’ In
view of the fundamental nature of this requirement, we conclude that the state
cannot undertake obligations protected by the contract clause that directly
contravene it. To hold otherwise would gut the requirement.” (White v. Davis I,
supra, 98 Cal.App.4th at p. 1002.)
The Court of Appeal, in similarly denying the employees’ claim that the
preliminary injunction violated the due process clause insofar as it denied them the
payment of their full salaries during a budget impasse, reasoned that “[u]nder
principles of contract interpretation, ‘ “ ‘all applicable laws in existence when an
agreement is made, which laws the parties are presumed to know and to have in
mind, necessarily enter into the contract and form a part of it . . . .’ ” ’ ” “For this
reason, state employees must be deemed to have notice of the limitation on the
payment of their salaries during a budget impasse.” (White v. Davis I, supra, 98
Cal.App.4th 969, 1002.)
(iv) Conclusion on State Employee Salary Issue
In view of the foregoing conclusions, the Court of Appeal ultimately held
that “the preliminary injunction must be reversed to the extent that it denies state
25
employees the compensation required under the FLSA during a budget impasse
. . . .” (White v. Davis I, supra, 98 Cal.App.4th 969, 1003.)
(b) Other Federal Law
In addition to the FLSA, the Controller contended in the Court of Appeal
that a number of other federal laws require the disbursement of public funds
during a budget impasse. The Controller asserted that such payments are required
pursuant to the state’s participation in the federal (1) food stamp program
(7 U.S.C. § 2011 et seq.), (2) foster care and adoption programs (42 U.S.C.
§§ 670-679b), (3) child support programs (42 U.S.C. §§ 651-669b), and (4) child
welfare services program (42 U.S.C. §§ 620-628).
In analyzing this contention, the Court of Appeal stated that it found
guidance in two federal decisions, Pratt v. Wilson (E.D.Cal. 1991) 770 F.Supp.
539 and Dowling v. Davis (9th Cir. 1994) 19 F.3d 445. In Pratt, the plaintiffs
brought a federal action challenging the Controller’s cessation, during the 1990
budget impasse, of payments that were partially funded under the former federal
Aid to Families with Dependent Children (AFDC) program. The court in Pratt
held that under the supremacy clause the state was required to make AFDC
payments during the budget impasse notwithstanding the appropriation
requirements of the state Constitution, reasoning that once a state had elected to
participate in the AFDC program it was required to comply with the governing
federal statutes and regulations mandating timely payments.
In Dowling v. Davis, supra, 19 F.3d 445, the plaintiffs brought a somewhat
similar federal action challenging the Controller’s delay, also during the 1990
budget impasse, of payments under the Medi-Cal program (Welf. & Inst. Code
§ 14000 et seq.) (partially funded through the federal Medicaid law (42 U.S.C.
§ 1236)) and under the In-Home Support Service program (Welf. & Inst. Code,
§ 12300) (partially funded by a federal block grant). In Dowling, unlike Pratt, the
26
court held that the delay in payments did not violate federal law, concluding that
“[d]elayed payment is an inherent feature of the Medicaid statutory and regulatory
framework,” that the federal block grant supporting the In-Home Support Service
program did not require timely payments, and that the state statute governing the
In-Home Support Service program predicated the continuing existence of the
program on an appropriation in the state budget act. (19 F.3d at pp. 447-448.)
The Court of Appeal held that “[i]n view of Pratt and Dowling, the key
issue is whether the federal laws cited by the Controller require timely payments
during a budget impasse.” (White v. Davis I, supra, 98 Cal.App.4th 969, 1004.)
The Court of Appeal then carefully reviewed the controlling statutory
provisions and regulations governing each of the federal programs identified by
the Controller to determine whether federal law mandates timely payment. With
regard to the food stamp program, the foster care and adoption programs, and the
child support program, the Court of Appeal concluded that the relevant statutes
and regulations require the prompt payment of benefits and prompt provision of
services specified by those programs, and thus that the Controller properly may
disburse funds during a budget impasse to comply with such federal mandates.
(White v. Davis I, supra, 98 Cal.App.4th 969, 1104-1105.) With regard to the
child welfare services program, however, the Court of Appeal concluded that the
applicable federal regulations mandated the timely disbursement only of those
funds necessary to comply with certain notice and hearing requirements imposed
by the federal regulations on the child welfare services program, and it held that
only such funds may be properly disbursed by the Controller during a budget
impasse. (Id., at pp. 1005-1006.)
4. Adequacy of Injunction Bond
After addressing the validity of the various grounds upon which the
Controller maintained that payments properly could be made during a budget
27
impasse, the Court of Appeal took note of the Controller’s and state employee
intervenors’ additional contention that the trial court had failed to require plaintiffs
to post an adequate injunction bond. As noted above, in granting the preliminary
injunction the trial court ordered plaintiffs to post a $100,000 bond.
As the Court of Appeal recognized, Code of Civil Procedure section 529,
subdivision (a), provides generally that “[o]n granting an injunction, the court or
judge must require an undertaking on the part of the applicant to the effect that the
applicant will pay to the party enjoined any damages, not exceeding an amount to
be specified, the party may sustain by reason of the injunction, if the court finally
determines that the applicant was not entitled to the injunction.” As past cases
have explained, “the trial court’s function is to estimate the harmful effect which
the injunction is likely to have on the restrained party and to set the undertaking at
that sum.” (ABBA Rubber Co. v. Seaquist (1991) 235 Cal.App.3d 1, 14.)
The Court of Appeal determined, however, that it was unnecessary for it to
address the claimed inadequacy of the injunction bond in view of (1) its
conclusion that the preliminary injunction must be set aside in part, and
(2) plaintiffs’ representation that they were not seeking further relief from the trial
court. (White v. Davis I, supra, 98 Cal.App.4th 969, 1006-1007.)
5. Disposition by the Court of Appeal
In its disposition, the Court of Appeal dismissed the appeal in the 1997
action as moot. With regard to the 1998 action, the court stated: “The preliminary
injunction . . . is reversed to the extent that it bars the Controller from disbursing
funds pursuant to (1) continuing appropriations, (2) article III, section 4, and
article XVI, section 8.5 of the state Constitution, (3) the [f]ederal [Fair] Labor
Standards Act (29 U.S.C. § 201 et seq.), and (4) the federal funding mandates that
we have identified applicable to the food stamp program (7 U.S.C. § 2011 et
seq.,), foster care and adoption programs (42 U.S.C. § 670 et seq.), child support
28
program (42 U.S.C. §§ 651-669b), and child welfare services program (42 U.S.C.
§§ 620-628). The preliminary injunction is otherwise affirmed. In view of
[plaintiffs’] abandonment of further action in the trial court, we do not remand the
matter for modification of the preliminary injunction. . . .” (White v. Davis I,
supra, 98 Cal.App.4th 969, 1007.)
II
As noted above, only the Controller and several state employee intervenors
sought review from the Court of Appeal’s decision,8 and the petitions for review
challenged only two aspects of that decision. The Controller’s principal objection
is to the Court of Appeal’s treatment of the preliminary injunction issue: the
Controller maintains that under the general principles governing the issuance or
denial of a preliminary injunction, the trial court in the 1998 case should not have
granted a preliminary injunction in any respect, and that the Court of Appeal
consequently erred in upholding the preliminary injunction in part. The state
employee intervenors principally challenge the Court of Appeal’s conclusions
with regard to the payment of state employee salaries during a budget impasse,
contending that the Court of Appeal should have held that the Controller is
authorized to pay all state employees their full and regular salaries during a budget
impasse. No party has challenged any other aspect of the Court of Appeal’s
decision and none of the numerous additional issues passed upon by the Court of
Appeal has been briefed or argued in this court, and thus we have no occasion to
8
A petition for review was filed by the California State Employees
Association (CSEA), and a separate petition for review jointly was filed by the
California Correctional Peace Officers Association (CCPOA) and the California
Correctional Union of Safety Employees (CAUSE).
29
address any of those additional issues here.9 Moreover, as noted above, the Court
of Appeal itself confined its discussion only to the particular provisions of law that
were raised by the parties on appeal, and did not purport to determine whether any
other provision of law may authorize or mandate the disbursement of funds during
a budget impasse.10
Accordingly, we shall address only the two general issues presented on
review: (1) Did the trial court err in granting a preliminary injunction in this
case?, and (2) Is the Controller authorized to pay all state employees their full and
regular salaries during a budget impasse? We turn first to the preliminary
injunction issue.11
9
As we explain more fully below, however, because the other issues
discussed by the Court of Appeal are important in their own right, we shall order
the Court of Appeal opinion in this matter to be published in the Official Reports.
(See, post, p. 45, fn. 14.)
10
An amicus curiae brief has been filed in this court by the California
Appellate Defense Counsel (CADC), asserting that under the supremacy clause of
the federal Constitution (U.S. Const., art. VI, § 2) attorneys who are appointed to
represent indigent defendants in criminal prosecutions are entitled to obtain
payment for their services during a budget impasse because the state is obligated
by the Sixth and Fourteenth Amendments of the federal Constitution to provide
such representation. Unlike the state employee intervenors, however, CADC did
not seek to intervene in this proceeding in the trial court, and the contention raised
in its brief was not addressed by either the trial court or the Court of Appeal.
Under these circumstances, we conclude that it is not appropriate to address the
issue in this proceeding, and we express no view on the merits of this assertion.
For similar reasons, we do not address the claims raised in a separate
amicus curiae brief challenging the validity of the state’s failure during a budget
impasse to make payments to those persons or entities that furnish goods or
services to or on behalf of the state.
11
Two requests for judicial notice have been filed in this case. No objection
to either request has been received.
The Controller requests that we take judicial notice of (1) the date that the
budget act for the 1998-1999 fiscal year (Stats. 1998, ch. 324) was enacted, (2) the
(footnote continued on next page)
30
III
The Controller’s principal contention before this court is that the Court of
Appeal erred in upholding the preliminary injunction in any respect. The
Controller argues that the trial court’s issuance of a preliminary injunction was
contrary to well established principles governing the circumstances in which a trial
court in a taxpayer action may enjoin a public official from expending funds prior
to a full adjudication of the merits of the taxpayer’s claim. As we explain, we
agree that the trial court erred in granting the preliminary injunction.
As its name suggests, a preliminary injunction is an order that is sought by
a plaintiff prior to a full adjudication of the merits of its claim. (See 6 Witkin,
Cal. Procedure (4th ed. 1997) Provisional Remedies, § 287, p. 228.) To obtain a
preliminary injunction, a plaintiff ordinarily is required to present evidence of the
irreparable injury or interim harm that it will suffer if an injunction is not issued
(footnote continued from previous page)
effective dates of the emergency appropriation enacted after the issuance of the
trial court’s preliminary injunction (Stats. 1998, ch. 213, § 1, enacting Sen. Bill
No. 267 (1997-1998 Reg. Sess.)), and (3) the legislative history of Senate Bill No.
267. All of these items are proper subjects of judicial notice (Evid. Code, § 452,
subd. (c) [official acts of the legislative branch of the State of California]), and
accordingly the request to take judicial notice is granted.
CAUSE and CCPOA, two of the state employee intervenors, request the
court to take judicial notice of (1) the current salary ranges for certain state public
safety employees as set forth in the salary schedule in the current agreement
between CAUSE and the state, and (2) the current salary ranges for state
correctional workers as set forth in the Department of Personnel Administration’s
California Civil Service Pay Scales. Although the relevance of this material is
debatable, the material appears to be properly subject to judicial notice under
Evidence Code section 452, subdivisions (c) (official acts of the executive branch
of the State of California) and (h) (facts that are not reasonably subject to dispute
and are capable of immediate and accurate determination by resort to sources of
reasonably indisputable accuracy). Accordingly, the request to take judicial notice
of this material is granted.
31
pending an adjudication of the merits. (See City of Torrance v. Transitional
Living Centers for Los Angeles, Inc. (1982) 30 Cal.3d 516, 526.)
Past California decisions further establish that, as a general matter, the
question whether a preliminary injunction should be granted involves two
interrelated factors: (1) the likelihood that the plaintiff will prevail on the merits,
and (2) the relative balance of harms that is likely to result from the granting or
denial of interim injunctive relief. As explained in IT Corp. v. County of Imperial
(1983) 35 Cal.3d 63, 69-70: “This court has traditionally held that trial courts
should evaluate two interrelated factors when deciding whether or not to issue a
preliminary injunction. The first is the likelihood that the plaintiff will prevail on
the merits at trial. The second is the interim harm that the plaintiff is likely to
sustain if the injunction were denied compared to the harm that the defendant is
likely to suffer if the preliminary injunction were issued.” As the court in IT Corp.
further noted: “The ultimate goal of any test to be used in deciding whether a
preliminary injunction should issue is to minimize the harm which an erroneous
interim decision may cause. [Citation.]” (Id. at p. 73, italics added.)
A number of Court of Appeal decisions have addressed the proper
application of these general principles relating to preliminary injunctions in the
particular circumstance of a taxpayer action that is brought to enjoin the alleged
improper expenditure of public funds. In Cohen v. Board of Supervisors (1986)
178 Cal.App.3d 447 (Cohen II), the Court of Appeal, in a decision on remand
from this court (see Cohen v. Board of Supervisors (1985) 40 Cal.3d 277
(Cohen I)), addressed the question whether the relative “balance of harms” in that
case supported the trial court’s decision denying a preliminary injunction in a
taxpayer action that challenged the validity of a recently enacted city ordinance
imposing various regulations and restrictions on escort services within the city.
The action challenged the ordinance on a variety of grounds, including a claim that
32
it was facially unconstitutional under the First Amendment. Noting that one of the
plaintiffs in the case had brought suit solely as a resident taxpayer under section
526a of the Code of Civil Procedure to enjoin the alleged illegal expenditure of
public funds, the court in Cohen II observed that this plaintiff’s “interest appears
to be limited to his taxpayer’s pocketbook, an interest which is sufficient to confer
statutory standing to maintain this action and bring it to final judgment
permanently enjoining unlawful expenditures (Blair v. Pitchess (1971) 5 Cal.3d
258, 267-270), but which to our knowledge has never been held to satisfy the high
degree of existing or threatened injury required for the prejudgment injunctive
relief sought here.” (178 Cal.App.3d at p. 454, italics added.) The court in Cohen
II went on to expressly reject the plaintiff taxpayer’s argument that its assertion
that the ordinance was unconstitutional, and that the public funds that would be
expended to enforce the ordinance would therefore be unlawfully incurred, was
itself sufficient to demonstrate the type of irreparable injury that would justify
granting a preliminary injunction. (Id. at pp. 454-455.) Accordingly, on this
ground alone, the court in Cohen II affirmed the trial court’s order in that case
denying the taxpayer’s request for a preliminary injunction.
In Loder v. City of Glendale (1989) 216 Cal.App.3d 777(Loder I), the Court
of Appeal considered the question of interim harm in reviewing the validity of a
trial court order granting a preliminary injunction in a taxpayer action challenging
the validity of a recently adopted city drug testing program as violative of federal
and state constitutional restrictions on unreasonable searches and seizures.
Following the reasoning of the decision in Cohen II, the Court of Appeal in
Loder I held that the plaintiff’s “status as a taxpayer by itself was insufficient to
entitle her to a preliminary injunction. . . . [W]hile plaintiff’s alleged status as a
taxpayer affords her standing to maintain this action, her harm for preliminary
injunction purposes is limited to defendants’ alleged improper use of tax funds.
33
This monetary harm is insufficient to justify the issuance of a preliminary
injunction.” (216 Cal.App.3d at pp. 784-785.) On this basis, the court in Loder I
reversed the trial court’s order granting a preliminary injunction, taking care at the
same time to note that “[n]othing in this opinion is intended to reflect on, or
express any opinion as to the validity of the City’s drug testing program or any
part of it.”12
In Leach v. City of San Marcos (1989) 213 Cal.App.3d 648 (Leach), the
Court of Appeal reached the same conclusion as the courts in Cohen II and Loder I
with regard to the general principle that a taxpayer’s claim of an illegal
expenditure of public funds ordinarily is not sufficient in itself to warrant the
issuance of a preliminary injunction. In Leach, a taxpayer challenged the validity
of a redevelopment plan adopted by the defendant city, and sought a preliminary
injunction to prevent the city from taking any further action to implement the
challenged plan. Although the taxpayer presented evidence to support his claim
that the redevelopment plan at issue might well not conform with the applicable
Community Redevelopment Law, he presented no specific evidence indicating
that an injunction was necessary to prevent irreparable harm pending a trial on the
merits of the claim, and the trial court denied the preliminary injunction. On
appeal, the Court of Appeal affirmed the denial of a preliminary injunction,
concluding that even though the taxpayer had demonstrated a likelihood of success
on the merits, the trial court properly had denied a preliminary injunction on the
ground that the taxpayer had failed to demonstrate sufficient interim harm. The
12
After a trial on the merits, the trial court in the Loder case granted a
permanent injunction enjoining the application of the Glendale drug testing
program as applied to some employment positions, and on appeal of that judgment
this court in Loder v. City of Glendale (1997) 14 Cal.4th 846 (Loder II) addressed
the validity of the program.
34
court in Leach stated that “even if the record here demonstrated the imminent
expenditure of tax increment revenues, such an expenditure would not support a
preliminary injunction in favor of a private citizen.” (213 Cal.App.3d at p. 662.)
After quoting at length the pertinent portions of Cohen II, the court in Leach
observed that, “[c]ontrary to Leach’s argument, we find no meaningful distinction
between his status as a taxpayer whose burden might be increased by the plan and
the plaintiff in Cohen II whose tax dollars might have been unlawfully spent
enforcing the escort ordinance. While the redevelopment plan may eventually
impose a larger burden on taxpayers outside the plan area than enforcement of an
escort ordinance, Leach has not suggested how much of a burden he would suffer,
and most importantly, how that burden would affect him. Given these
circumstances, his status as a taxpayer will not support a preliminary injunction.”
(Id. at p. 663.) Accordingly, the court affirmed the trial court order denying a
preliminary injunction.
In the present proceeding, plaintiffs brought their 1998 action solely in their
capacity as taxpayers and relied upon their interest as taxpayers in claiming that
they would be irreparably harmed by the alleged impropriety of the payments of
public funds that the Controller proposed to authorize during the budget impasse.
Plaintiffs suggested that such payments not only violated the state Constitution,
but also eliminated significant public pressure that (in the absence of such
payments) would be brought to bear upon the Legislature to comply with its
constitutional obligation to timely enact a budget bill. Under the Court of Appeal
decisions discussed above, a taxpayer’s general interest in not having public funds
spent unlawfully (including not having such funds spent in alleged contravention
of fundamental constitutional restrictions), while sufficient to afford standing to
bring a taxpayer’s action under Code of Civil Procedure section 526a and to obtain
a permanent injunction after a full adjudication on the merits, ordinarily does not
35
in itself constitute the type of irreparable harm that warrants the granting of
preliminary injunctive relief. Under these appellate decisions, the granting of a
preliminary injunction in the present case arguably would be improper on this
ground alone.
In this case, however, we need not decide whether interim harm to a
taxpayer’s interest is ever in itself sufficient to justify a preliminary injunction
barring the expenditure of public funds during a budget impasse, because even if
there may be some circumstances in which granting a preliminary injunction
might be warranted in a taxpayer’s action (for example, if the Controller continues
to approve expenditures that have been held unlawful by a controlling judicial
precedent), in the case before us we believe it is clear that in light of both the
relative balance of harms and the lack of clear authority supporting the merits of
plaintiffs’ broad claim, the trial court abused its discretion in granting a
preliminary injunction.
In support of their claim of irreparable injury if a preliminary injunction
were not issued, plaintiffs alleged that “[t]he failure to grant the injunction will
allow the flagrant violation of the Constitution to continue as it has for the past
dozen years causing extreme hardship and sometimes bankruptcy to the numerous
small businesses and other suppliers of goods and services to the State who have
not been paid due to the failure of the Legislature to timely pass and the Governor
to timely approve a State Budget, while illegally paying themselves. [¶] The
respect for the Constitution has and will be destroyed by this illegal activity. If the
Legislature and the Governor wish to continue their illegal activity, the correct
method is to seek an Amendment to the Constitution to legalize such activity.”
In advancing this claim of irreparable injury, however, plaintiffs failed to
cite any authority to support the contention that a taxpayer’s interest in forestalling
an alleged continuing violation of the state Constitution constitutes the type of
36
irreparable injury that will support granting a preliminary injunction, and, as we
have seen, the Court of Appeal decisions cited above have rejected just such a
contention.
Further, as part of their claim of irreparable harm, plaintiffs referred to the
hardship sustained by small businesses and other suppliers of goods and services
to the state that are not paid during a budget impasse. Although plaintiffs did not
expressly explain how the granting of a preliminary injunction prohibiting the
Controller from making any payments to state employees or other persons would
relieve the hardship suffered by such small businesses and other vendors during a
budget impasse, plaintiffs’ contention apparently was based upon the strategic
assumption that the trial court’s granting of a preliminary injunction prohibiting
the Controller from making any payments during a budget impasse would place
pressure on the Legislature to enact a budget bill promptly, and in that indirect
manner might result in relieving the hardship suffered by small businesses or other
vendors during the budget impasse. Even if we assume that plaintiffs, in their
capacity as taxpayers, have standing to rely upon the interim harm that would be
sustained by such businesses or other vendors, the suggestion that a trial court may
issue a preliminary injunction broadly prohibiting the Controller from authorizing
the expenditure of public funds for the purpose of placing pressure on the
Legislature to pass a budget in a timely fashion is problematical. The relevant
provision of the California Constitution that requires passage of the budget bill “by
midnight on June 15” (Cal. Const., art. IV, § 12) does not purport to authorize a
preliminary injunction against the Controller as a “sanction” or “lever” against the
Legislature for failing to enact a budget on time, and thus any legal action seeking
an injunction against the Controller’s expenditure of funds during a budget
impasse necessarily must rest on the asserted illegality of a particular challenged
expenditure or expenditures, rather than on the conduct of the Legislature. Indeed,
37
in light of the separation of powers doctrine (Cal. Const., art. III, § 3), courts must
be especially sensitive about intruding upon the Legislature’s fundamental and
essentially political legislative and budget powers, and must be vigilant not to
depart from established principles governing preliminary injunctions simply in
order to lend support to an effort to increase the leverage on the Legislature to pass
a budget bill.
Thus, the principal properly cognizable harm alleged by plaintiffs that
would be prevented by the granting of a preliminary injunction would be the
indirect fiscal harm they as taxpayers would suffer by the Controller’s payment of
those public funds that the Controller concluded properly could be made during
the budget impasse, but that plaintiffs contended were not properly authorized by
the Constitution.
In its opposition to the request for a preliminary injunction, the Controller
cited and relied upon the numerous Court of Appeal opinions, described above,
holding that a taxpayer’s claim that public funds may be improperly expended
does not itself constitute sufficient harm to support the issuance of a preliminary
injunction. The Controller further pointed out that when the budget act for the
then-current fiscal year was enacted, that act, like prior budget acts, would be
retroactive to the beginning of the fiscal year (Gov. Code, §§ 1231.1, 1231.2),13
13
As noted above, Government Code section 1231.1 provides: “Funds from
each appropriation made in the budget act for any fiscal year may be expended to
pay officers and employees whatever salary that would have otherwise been
received had the budget act been adopted on or prior to July 1, of that fiscal year.”
Government Code section 1231.2 provides: “Funds from each
appropriation made in the budget act for any fiscal year may be expended to pay
any obligation incurred between the commencement of that fiscal year and the
effective date of the budget act for that fiscal year, which would otherwise have
been authorized by the budget act of that year had that act been adopted, on or
(footnote continued on next page)
38
and thus even if the trial court were to assume, as plaintiffs contended, that some
or all of the expenditures that the Controller proposed to authorize during the
budget impasse could not lawfully be paid at that time, the asserted loss to the
treasury in any event would be temporary, because the subsequently enacted
budget act ultimately would provide the necessary appropriation for such
expenditures. The Controller argued that under these circumstances plaintiffs
certainly had not demonstrated the type of irreparable harm that would support a
preliminary injunction.
Moreover, in contrast to the lack of irreparable harm that assertedly would
result from the denial of a preliminary injunction, the opposition papers filed by
both the Controller and the state employee intervenors strongly emphasized the
serious and widespread hardship that would be imposed by the granting of the
preliminary injunction sought by plaintiffs. As our summary of the Court of
Appeal’s decision in this case makes clear, the public funds at issue in this case
affected the availability of the essential necessities of life for tens of thousands of
Californians. The opposition papers pointed out that granting the broad
preliminary injunction sought by plaintiffs — precluding the Controller from
making any payments authorized by continuing appropriations or from paying any
wages to state employees for work done after the preliminary injunction was
granted or making other payments required by federal law — would deprive
current state employees, persons receiving state pensions or disability benefits,
persons receiving food stamps, persons caring for adopted children with special
needs, and thousands of others, of funds necessary to feed, house, and clothe
(footnote continued from previous page)
prior to July 1 of that year, subject to the same limitations, conditions, and
requirements.”
39
themselves and their families for the duration of the budget impasse. The
Controller also noted that granting a preliminary injunction would prevent the
state from making payments to bondholders — thereby exposing the state to
potentially costly litigation and damage claims — and would deny local
governmental entities access to the funds such entities had invested in the Local
Agency Investment Fund, a special fund in the state treasury that was created for
the purpose of providing a safe and reliable investment option to local
governments. (See Gov. Code, § 164294.1.) Finally, the Controller observed that
if the injunction were to result in the scenario that plaintiffs asserted was
required — the closure of state government — the injunction would have a “dire
effect on numerous important state services involving safety, health and education,
and thus could dramatically impact the public at large.”
In granting a preliminary injunction, the trial court did not provide any
indication that it had considered or weighed the hardship that would be imposed
by granting such an injunction against the hardship that would result from denying
an injunction. Instead, the order granting the preliminary injunction rested simply
on the trial court’s agreement with the merits of plaintiffs’ constitutional claim.
The order stated that, in the court’s view, article IV, section 12, subdivision (c) of
the California Constitution prohibits the Controller from authorizing any payments
prior to the enactment of a budget bill (other than pursuant to the exceptions
embodied in article IV, section 12). The order further concluded that “so-called
‘continuing appropriations’ have no constitutional base” and expressed the view
that the holding in Biggs v. Wilson, supra, 1 F.3d 1537, requiring the state to pay
the wages required by the FLSA during a budget impasse, did not apply to the
present situation, because “if the state employees choose to continue to work with
knowledge of no authority to appropriate money to pay them, there can be no
violation of the FLSA. The employees would simply be volunteers.”
40
In granting a preliminary injunction without considering the relative harms
that would be imposed by denying or granting a preliminary injunction, the trial
court erred. As discussed above, the controlling authorities make it clear that in
evaluating a request for a preliminary injunction a court must consider two
factors — both the likelihood of success on the merits, and the relative harms that
would flow from denying or granting a preliminary injunction.
Although the Controller and state employee intervenors argued in the Court
of Appeal that the preliminary injunction should be set aside in its entirety because
of the trial court’s failure to consider the balance of hardships, and because the
hardship resulting from granting a preliminary injunction dramatically outweighed
any hardship that the plaintiff-taxpayers would incur if a preliminary injunction
were denied, the Court of Appeal declined to set aside the preliminary injunction
in its entirety and held instead that the injunction granted in this case properly
could be upheld in part even if the balance of harms did not favor plaintiffs
based upon “ ‘a sufficiently strong showing of likelihood of success on the
merits . . . .’ (Common Cause v. Board of Supervisors (1989) 49 Cal.3d [432,]
447.)” (White v. Davis I, supra, 98 Cal.App.4th 969, 1002-1003.)
We agree with the Controller that the decision in Common Cause v. Board
of Supervisors, supra, 49 Cal.3d 432, provides no basis for upholding the
preliminary injunction issued by the trial court in the present case. The relevant
passage in Common Cause upon which the Court of Appeal relied reads in full:
“The likelihood of success on the merits and the balance-of-harms analysis are
ordinarily ‘interrelated’ factors in the decision whether to issue a preliminary
injunction. [Citations.] The presence or absence of each factor is usually a matter
of degree, and if the party seeking the injunction can make a sufficiently strong
showing of likelihood of success on the merits, the trial court has discretion to
41
issue an injunction notwithstanding that party’s inability to show that the balance
of harms tips in his favor.” (49 Cal.3d at pp. 446-447.)
As the Controller observes, although this passage indicates that in some
instances a trial court may grant a preliminary injunction upon a sufficiently strong
showing of likelihood of success even when the party seeking the injunction
cannot show that the balance of harms “tips” in its favor (Common Cause, supra,
49 Cal.3d at p. 477), the decision in Common Cause did not suggest that when a
party makes a sufficient showing of likely success on the merits a trial court need
not consider the relative balance of hardships at all, or that when the balance of
hardships dramatically favors the denial of a preliminary injunction a trial court
nonetheless may grant a preliminary injunction on the basis of the likelihood-of-
success factor alone. As noted, a principal objective of a preliminary injunction
“is to minimize the harm which an erroneous interim decision may cause” (IT
Corp. v. County of Imperial, supra, 35 Cal.3d 63, 73, italics added), and thus a
court faced with the question whether to grant a preliminary injunction cannot
ignore the possibility that its initial assessment of the merits, prior to a full
adjudication, may turn out to be in error.
In this case, the balance of harms dramatically favored denial of the
preliminary injunction. The principal legitimate interest of plaintiffs that allegedly
would be harmed by denying a preliminary injunction was their general interest as
taxpayers in not having public funds disbursed unlawfully, an interest that the
appellate court decisions discussed above found insufficient in itself to warrant the
granting of a preliminary injunction. On the other hand, granting the preliminary
injunction would cause great immediate harm to the many persons who would be
deprived of vital funds, frequently necessary to obtain the necessities of life, and
would threaten the continued delivery of a wide range of essential public services.
42
Furthermore, even if the relative hardships posed by granting or denying a
preliminary injunction were more evenly balanced, the trial court’s preliminary
injunction in this case could not be upheld on the theory that plaintiffs had made a
sufficiently strong showing of likelihood of success on the merits. As noted
above, in the trial court plaintiffs advanced the very broad position that, under the
California Constitution, if the Legislature fails to pass a budget bill on time, “state
government must shut down” in the absence of an emergency appropriation.
Plaintiffs, however, failed to cite any case authority to support their reading of the
state Constitution, and, as the Court of Appeal’s opinion in this case demonstrates,
such a reading of the relevant constitutional provisions is untenable and contrary
to established precedent. Under California law, the Controller and other public
officials in the executive branch have been given the initial and primary
responsibility for ascertaining the payments that lawfully may be made from the
treasury during a budget impasse. These officials, of course, have the obligation
to follow the law and must comply with controlling judicial decisions that have
determined whether a particular category of payments properly may be made
during a budget impasse. As explained by the Court of Appeal’s decision,
however, there are numerous grounds on which the Controller properly may
authorize the payment of funds from the treasury even when a budget bill has not
yet been enacted, and the question whether a particular payment or category of
payments validly may be made often involves complex legal issues. Plaintiffs’
broad legal argument that the Constitution bars virtually all such payments clearly
was not so unquestionably meritorious as to obviate any need to consider the
balance of relative harms. Accordingly, the trial court’s action in granting a
preliminary injunction cannot be defended on the ground that plaintiffs had made a
sufficiently strong showing of their likelihood of success on the merits.
43
In sum, we conclude that the trial court abused its discretion in issuing a
preliminary injunction in the 1998 action, and that the judgment of the Court of
Appeal must be reversed insofar as it affirms in any respect the granting of a
preliminary injunction.
IV
As discussed, the complaint filed by plaintiffs advanced the very broad
position that, in the absence of enactment of a budget bill or an emergency
appropriation, “the state government must close.” The complaint did not
challenge on a point-by-point basis the validity of specific categories or types of
payments authorized by the Controller during a budget impasse. In responding to
plaintiffs’ request for a preliminary injunction, the Controller cited a number of
categories of payments that assertedly could be made during a budget impasse, in
support of the Controller’s position that a preliminary injunction should not be
granted. In granting the preliminary injunction, the trial court largely rejected the
claim that payments during a budget impasse could be authorized on the various
grounds relied upon by the Controller.
On appeal, the Court of Appeal, after finding that the question of what
payments the Controller is authorized to make during a budget impasse constitutes
an issue of great importance but one that often will evade timely appellate review,
undertook to address the merits of the Controller’s claims that payment of public
funds during a budget impasse properly may be made when payment is authorized
by (1) a continuing appropriation, (2) a self-executing state constitutional mandate,
or (3) a federal mandate, and, within these categories, by particular constitutional
or statutory provisions.
Although the petitions for review filed in this court contended that the trial
court erred in granting a preliminary injunction in any respect and maintained that
the injunction should be set aside in its entirety, the petitions did not question the
44
Court of Appeal’s decision to address the substantive merits of the issue whether
disbursement of public funds may be authorized during a budget impasse on the
various grounds advanced by the Controller. Instead, the petitions for review
challenged the Court of Appeal’s conclusion with respect to one of the categories
of payments the payment of salaries for state employees during a budget
impasse.
In light of our conclusion in part III of this opinion that the preliminary
injunction that was issued in this case must be set aside in its entirety because the
trial court failed to apply the applicable standards properly in granting the
injunction, it would be possible to dispose of this matter on that ground alone
without reaching the merits of the substantive payment-of-salary issue raised by
the petitions. As the Court of Appeal recognized, however, the question of what
payments the Controller is authorized to make during a budget impasse is the type
of issue that arises frequently but often may evade timely appellate review. Under
the circumstances, we conclude it is appropriate to address the state employee
salary issue that has been briefed in this court, in order to provide guidance to the
Controller and other public officials in the event of a future budget impasse.
Because the salary issue is the only substantive matter upon which review was
sought and granted, we confine our substantive discussion to that category of
payments.14
14
Under the current California Rules of Court, a Court of Appeal opinion that
is superseded by a grant of review ordinarily is not published in the Official
Reports, but this court has authority after granting review, or after decision, to
order the opinion of the Court of Appeal published in whole or in part. (Cal. Rules
of Court, rule 976(d).) In Agricultural Labor Relations Bd. v. Tex-Cal Land
Management, Inc. (1987) 43 Cal.3d 696, 709, footnote 12, we explained that the
efficient use of this court’s review jurisdiction — in which we may grant or limit
review to only some of the issues addressed in the Court of Appeal decision —
(footnote continued on next page)
45
The state employee intervenors maintain that all state employees are
entitled to timely payment, on their regular payday, of their full and regular
salaries for work performed during a budget impasse, notwithstanding the absence
of a duly enacted budget bill. They assert that payment of full state employee
salaries during a budget impasse is required under both state and federal law. We
begin with a discussion of California law.
A. California Law
1. State Constitutional Impairment-of-Contract Clause
The California State Employees Association (CSEA) argues that under the
provision of the California Constitution barring the impairment of contracts (Cal.
Const., art. I, § 9), the state is constitutionally required during a budget impasse to
pay state employees, on their regular payday, their regular and full salaries for
work performed during that period. CSEA relies upon a line of California
(footnote continued from previous page)
“suggests that . . . significant Court of Appeal opinions should be available as
citable precedent with respect to issues not reached by us on subsequent review.”
In Tex-Cal, upon finding that the Court of Appeal opinion in that case was
“worthy of publication in that regard” (ibid.), we ordered the Court of Appeal
opinion to be published in the Official Reports, but at the same time expressly
cautioned that “our order of publication does not necessarily imply agreement with
the Court of Appeal’s analysis on issues not addressed in our opinion.” (Ibid.)
In this case, as in Tex-Cal, we find that the issues that were decided by the
Court of Appeal but upon which review was not sought are significant issues, and
that the discussion of those issues in the Court of Appeal’s opinion is worthy of
publication. Accordingly, in order to preserve that court’s analysis of those issues
as citable Court of Appeal precedent, we shall order the Court of Appeal opinion
to be published in the Official Reports. As we have explained above, however,
because these additional issues have not been briefed or argued in this court, we
express no opinion on the merits of those issues, and we emphasize that the Court
of Appeal opinion shall constitute citable authority not of this court but of the
Court of Appeal.
46
decisions holding that, in California, public employment gives rise to certain
obligations, protected by the contract clause of the Constitution, including “the
right to the payment of salary which has been earned.” (Kern v. City of Long
Beach (1947) 29 Cal.2d 848, 853; see also Olson v. Cory (1980) 27 Cal.3d 532,
538.) CSEA argues that the Controller is authorized to pay a state employee’s
salary on his or her regular payday even in the absence of a duly enacted and
available appropriation, because the failure to pay an employee’s salary at such
time would amount to an unconstitutional impairment of contract.
As CSEA acknowledges, it is well established that the terms and conditions
of public employment, unlike those of private employment, generally are
established by statute or other comparable enactment (e.g., charter provision or
ordinance) rather than by contract. (See, e.g., Boren v. State Personnel Board
(1951) 37 Cal.2d 634, 641.) Nonetheless, a long line of California cases
establishes that with regard to at least certain terms or conditions of employment
that are created by statute, an employee who performs services while such a
statutory provision is in effect obtains a right, protected by the contract clause, to
require the public employer to comply with the prescribed condition.
Kern v. City of Long Beach, supra, 29 Cal.2d 848, is perhaps the seminal
decision in this line of authority. In Kern, at the time the plaintiff firefighter had
begun his employment with the defendant city, the city charter provided that after
20 years of service a firefighter would be entitled to receive a retirement pension
equal to 50 percent of his or her annual salary. A month before the plaintiff in
Kern completed the required 20 years of service, the city revised the charter and
purported to eliminate all pension benefits as to all persons not then eligible for
retirement. In Kern, the plaintiff challenged the validity of the city’s action, and
this court concluded that the city “by completely repealing all pension provisions,
has attempted to impair its contractual obligations. This it may not
47
constitutionally do, and therefor the repeal is ineffective as to petitioner.”
(29 Cal.2d at p. 856.) In the course of reaching this determination, the court in
Kern explained that its conclusion was “not in conflict with language appearing in
some cases to the general effect that public employment is not held by contract.
[Citations.] These cases involve the right to remain in an office or employment, or
to the continuation of civil service status. Although there may be no right to
tenure, public employment gives rise to certain obligations which are protected by
the contract clause of the Constitution, including the right to the payment of salary
which has been earned. Since a pension right is ‘an integral portion of
contemplated compensation’ [citation], it cannot be destroyed, once it has vested,
without impairing a contractual obligation.” (Id. at p. 853.)
In Olson v. Cory, supra, 27 Cal.3d 532, another case invalidating an
attempt retroactively to reduce vested pension rights, the court similarly stated:
“We recognize the often quoted language that public employment is not held by
contract and therefore is not protected by the contract clause. [Citations.] Those
and other cases involve purported rights to remain in office or to continued public
employment. On the other hand, we deal here with the right to compensation by
persons serving their terms of public office to which they have undisputed rights.
‘[P]ublic employment gives rise to certain obligations which are protected by the
contract clause of the Constitution. . . .’ [Citations.] Promised compensation is
one such protected right. [Citation.] Once vested, the right to compensation
cannot be eliminated without constitutionally impairing the contract obligation.”
(27 Cal.3d at pp. 537-538, italics added.)
Other cases have recognized that the state may violate the impairment-of-
contracts clause not only by directly reducing the pension benefits an employee is
entitled to receive, but also by failing to fulfill its obligation — created by
statute — to make continuing contributions to its employees’ retirement fund so as
48
to preserve the actuarial soundness of the fund. (See, e.g., California Teachers
Assn. v. Cory (1984) 155 Cal.App.3d 494; Valdes v. Cory (1983) 139 Cal.App.3d
773.)
As CSEA maintains, these past California cases clearly establish that
although the conditions of public employment generally are established by statute
rather than by the terms of an ordinary contract, once a public employee has
accepted employment and performed work for a public employer, the employee
obtains certain rights arising from the legislative provisions that establish the
terms of the employment relationship rights that are protected by the contract
clause of the state Constitution from elimination or repudiation by the state. As
noted, a number of cases have stated broadly that among the rights protected by
the contract clause is “the right to the payment of salary which has been earned.”
(E.g., Kern v. City of Long Beach, supra, 29 Cal.2d 848, 853.) None of the cases
upon which CSEA relies, however, specifically address the question whether the
rights obtained by a public employee under state law include the right to receive
payment of earned salary in the absence of an available appropriation. To answer
that question we must examine the applicable California constitutional provisions
and statutes to determine which rights such provisions purport to provide.
A number of constitutional and statutory provisions relate to the question
whether a state employee who works during a budget impasse obtains a right,
protected by the contract clause, to receive payment for such work prior to the
enactment of an available appropriation. We note that unlike past cases that have
generally involved impairment-of-contract challenges to new or revised legislative
provisions that purport to alter the compensation or other conditions of
employment set forth in earlier legislative measures after an employee already has
performed services, in this case there has been no recent change in the relevant
constitutional or statutory provisions.
49
To begin with, as noted above, article XVI, section 7 of the California
Constitution provides that “[m]oney may be drawn from the Treasury only
through an appropriation made by law and upon a Controller’s duly drawn
warrant.” As the Court of Appeal observed, this constitutional requirement ―
which has counterparts in the United States Constitution (U.S. Const., art. II, § 9,
cl. 7) and in most state constitutions ― “had its origin in Parliament in the
seventeenth century, when the people of Great Britain, to provide against abuse by
the king and his officers of the discretionary money power with which they were
vested, demanded that public funds should not be drawn from the treasury except
in accordance with express appropriations therefor made by Parliament [citation];
and the system worked so well in correcting the abuses complained of, our
forefathers adopted it, and the restraint imposed by it has become a part of the
fundamental law of nearly every state in the Union.” (Humbert v. Dunn, supra, 84
Cal. 57, 59.)
Consistent with the directive of article XVI, section 7 of the California
Constitution, Government Code section 12440 provides: “The Controller shall
draw warrants on the Treasurer for the payment of money directed by law to be
paid out of the State Treasury; but a warrant shall not be drawn unless authorized
by law, and unless, except for refunds authorized by Section 13144, unexhausted
specific appropriations provided by law are available to meet it.”
With regard to the payment of state employee salaries, Government Code
section 9610, enacted in 1943, provides: “The fixing or authorizing the fixing of
the salary of a State officer or employee is not intended to and does not constitute
an appropriation of money for the payment of the salary. The salary should be
paid only in the event that moneys are made available by another provision of
law.” (Italics added; cf. Cal. Const., art. III, § 4 [dealing with elected state
officers].) This statute sets forth the basic understanding that statutes or other
50
measures that set salaries for state employees are not themselves appropriations
for such salaries, and further makes clear that the payment of a salary to a state
employee depends upon the availability of an appropriation to pay the salary.
The foregoing provisions do not specify that an appropriation for state
employee salaries can be made only in the budget act, and in some instances state
employee salaries currently are paid from continuing appropriations,15 but
appropriations for most state employee salaries traditionally have been adopted as
part of the annual budget act. In any event, the constitutional and statutory
provisions set forth above clearly require that some applicable appropriation be
available before a state employee’s salary actually may be paid from public funds.
In addition to the provisions just discussed, Government Code sections
1231 and 1231.1 address the effect of a budget impasse upon the employment
relationship between the state and its employees and the payment of salary for
work performed during a budget impasse. As previously noted, section 1231,
enacted in 1969, provides: “No state officer or employee shall be deemed to have
a break in service or to have terminated his or her employment for any purpose,
nor to have incurred any change in his or her authority, status, or jurisdiction or in
his or her salary or other conditions of employment, solely because of the failure
to enact a budget act for a fiscal year prior to the beginning of that fiscal year. [¶]
A person entering state service on or after the beginning of a fiscal year and before
15
As CSEA points out, under current law the salaries of some state employee
are payable from a continuing appropriation. (See, e.g., Ins. Code, § 11770 et seq.
[“The assets of the [State Compensation Insurance Fund] shall be applicable . . . to
the payment of the salaries and other expenses charged against it . . . .”]; see also
Board of Osteopathic Examiners of California v. Riley (1923) 192 Cal. 158
[ordering Controller to pay salaries of members of the Board of Osteopathic
Examiners pursuant to a continuing appropriation from a special fund into which
fees paid by osteopaths were deposited].)
51
the effective date of the budget act for that fiscal year and who otherwise is a state
officer or employee, shall be deemed a state officer or employee from the time he
or she entered state service, notwithstanding the failure to enact a budget act for
that fiscal year.” And section 1231.1, which derives from a provision first enacted
as an urgency measure in 1976, provides: “Funds from each appropriation made
in the budget act for any fiscal year may be expended to pay to officers and
employees whatever salary that would have otherwise been received had the
budget act been adopted on or prior to July 1, of that fiscal year.”
By its terms, Government Code section 1231 establishes that the
employment relationship between the state and state employees is not dependent
upon the passage of the annual budget bill and continues to exist during a budget
impasse, and further provides that the conditions of employment — including an
employee’s salary — remain in effect during the budget impasse. Contrary to the
contention of the state employee intervenors, however, section 1231 does not
indicate a legislative intent to authorize the actual payment of salary to employees
prior to the passage of a budget act that includes a requisite appropriation of funds
for such salaries. Particularly when read in conjunction with Government Code
sections 9610 and 1231.1, we believe that section 1231 reasonably must be
interpreted to recognize that under state law the actual payment of a state
employee’s salary is dependent upon the availability of a duly enacted
appropriation. Indeed, it is because of that limitation that section 1231.1
establishes that once a budget ultimately is enacted, appropriations included in that
budget are available to pay for work performed during the budget impasse. If
section 1231 afforded employees the right actually to receive their full pay during
a budget impasse, there would have been no reason to provide in section 1231.1
that funds from appropriations in the budget act “may be expended to pay to . . .
employees whatever salary that would have otherwise been received had the
52
budget act been adopted on or prior to July 1, of that fiscal year.” (Italics
added.)16
Accordingly, we conclude that in light of article XVI, section 7, of the
California Constitution, and Government Code sections 12440, 9610, 1231, and
1231.1, the employment rights of state employees reasonably must be viewed as
16
Although the state employee intervenors contend that one of the
“conditions of employment” protected by Government Code section 1231 during a
budget impasse is a public employee’s right to the timely payment of salary, they
have not cited any statute or other authority that specifically creates such a right.
Labor Code section 204, which imposes an obligation of timely payment of wages
upon employers in California generally, is not applicable to the payment of wages
of employees who are directly employed by the state. (Lab. Code, § 220.) In any
event, assuming that state employees generally enjoy a right, protected by the
contract clause, to the timely payment of earned salary when appropriated funds
are available to pay such salary, the state employee intervenors have not
persuasively demonstrated how such a general right to the timely payment of
salary properly can apply during the period of a budget impasse, in light of the
constitutional and statutory provisions we have discussed above.
For similar reasons, we find inapposite the numerous out-of-state cases that
have considered the validity of a variety of “pay lag” and mandatory furlough
measures. (See, e.g., University of Hawaii Professional Assembly v. Cayetano
(9th Cir. 1999) 183 F.3d 1096; Mass. Community College Council v. Com. (Mass.
1995) 649 N.E.2d 708.). In general, these cases hold that a variety of state statutes
that postponed the payment of employee salaries for one or more pay periods or
that imposed mandatory furloughs without pay in order to save the state money
during a budget crisis were invalid under the impairment-of-contract clause. None
of the cases, however, involved the question whether public employees have a
right, protected by the contract clause, to obtain timely payment of salary in the
absence of an available appropriation. Indeed, in Mass. Community College
Council, supra, 649 N.E.2d 708, the court specifically noted that “[t]here is no
suggestion that the Legislature had not appropriated funds to pay the
compensation called for under the collective bargaining agreements. Indeed, the
furlough program was designed to generate revenue surpluses that would be
available at the end of the fiscal year to help balance the budget.” (649 N.E.2d at
pp. 711-712.) Accordingly, we do not find these decisions on point.
53
including a condition that the actual payment of an employee’s salary is dependent
upon the existence of an available appropriation.
In arguing against this conclusion, CSEA points to a footnote in this court’s
decision in Jarvis v. Cory (1980) 28 Cal.3d 563, 574, footnote 6, which it claims
supports its contention that state employees are entitled to receive payment of their
salaries during a budget impasse. In our view, however, the footnote in Jarvis v.
Cory upon which CSEA relies actually confirms the common understanding that
state employees whose salaries are paid from appropriations in the annual budget
act do not have a right, under state law, to receive immediate payment of their
salary prior to the enactment of a budget.
In Jarvis v. Cory, supra, 28 Cal.3d 563, this court rejected a claim that a
legislative enactment that authorized a lump-sum payment to state employees at
the end of a fiscal year constituted a payment of “extra compensation” and as such
was prohibited by article IV, section 17 of the California Constitution. In the
course of upholding the validity of the legislation, the decision in Jarvis v. Cory
included a footnote — footnote 6 — that reads in full: “Although no appropriation
for payment of salaries existed from July 1 to July 6, when the budget bill was
finally passed, state employees faithfully attended work as usual during that period
and were ultimately compensated as if their salaries had been established from the
beginning of the fiscal year. This procedure has practically become an annual
event, and illustrates not only that state employees have often worked without
guarantee of salary yet ultimately received compensation, but also that in
interpreting article IV, section 17 [the state constitutional provision barring ‘extra
compensation . . . after service has been rendered ’], a sensible recognition of the
imperfect and cumbersome machinery of state government has long been the
prevailing practice. Strict interpretation would impose needless constraints on the
ability of the state to function, and we find unacceptable the proposition that the
54
Constitution was intended to annually bring state government to a grinding halt.”
(28 Cal.3d at p. 574, fn. 6.)
Footnote 6 in Jarvis v. Cory, supra, 28 Cal.3d 563, 574, clearly reflects the
court’s view that the “extra compensation” clause of the California Constitution
should not be interpreted “to annually bring state government to a grinding halt”
by barring the Legislature from authorizing the payment of past-accrued state
employee salaries from appropriations that are included in a budget bill enacted
after the work in question has been performed. In our view, however, there is
nothing in this footnote to suggest that the court in Jarvis v. Cory anticipated that
state employees would receive payment of their salaries prior to enactment of the
budget bill. On the contrary, because the footnote refers to state employees who
“have often worked without guaranty of salary” and observes that such employees
“were ultimately compensated as if their salaries had been established from the
beginning of the fiscal year” (28 Cal.3d at p. 574, fn. 6, italics added), we believe
this footnote reasonably must be understood simply to confirm the common
understanding that, as a matter of state law, the Controller may pay the salaries of
state employees only after an applicable appropriation has been enacted. Other
cases reflect the same understanding. (See, e.g., California State Employees’
Assn. v. Flournoy (1993) 32 Cal.App.3d 219, 231 [“[I]t is clear that [the practice
of the Board of Regents] with regard to personnel salary increases has been to
apply for, and obtain, a legislative appropriation with which to pay the salary
increases”]; Theroux v. State of California (1984) 152 Cal.App.3d 1, 9 [“[The
State and the Controller] have argued that the funds remaining from the initial
appropriation are inadequate to pay appropriate salary adjustments to all entitled
employees once the restrictions are removed [as required by the Theroux
decision]. However, should that prove so, we must ‘presume the Legislature will
55
give meaning to our ruling and “that the proper steps will be taken to appropriate
the amount required” to pay such [adjustments].’ ”])
Although we thus conclude that state employees have no right under the
contract clause to the immediate payment of salary in the absence of a duly
enacted appropriation for payment of such salaries, it should be emphasized that
this conclusion does not mean that state employees who work during a budget
impasse do so as “volunteers,” not entitled to compensation, as suggested by the
trial court. Government Code section 1231 expressly provides for the continuation
of the employment relationship between the state and its employees during a
budget impasse, without any change “in salary or other conditions of
employment.” In light of this provision, and the holdings in past cases that a
public employee’s “right to the payment of salary earned” is “protected by the
contract clause of the Constitution” (Kern v. City of Long Beach, supra, 29 Cal.2d
848, 853), we conclude that employees who work during a budget impasse obtain
a right, protected by the contract clause, to the ultimate payment of salary that has
been earned. As indicated by the above quoted passage in Jarvis v. Cory, supra,
28 Cal.3d 562, 547, footnote 6, in the past the Legislature always has paid
employees for work performed during such a period, and Government Code
section 1231.1 now makes it clear that when a budget ultimately is enacted with
appropriations for salaries, these appropriations are available for payment of work
performed during the budget impasse.17
17
We have no occasion in this case to consider what remedy or remedies state
employees may have in the unlikely event that the state fails to pay employees
fully for work performed during a budget impasse, or whether any remedy would
include compensation for any loss sustained as a result of a delay in payment. As
explained above, however, we conclude that employees who work during a budget
impasse obtain the right, protected by the contract clause, to the ultimate payment
of their earned salary, and nothing in the Court of Appeal’s opinion should be read
(footnote continued on next page)
56
Nonetheless, because the California Constitution and the applicable statutes
establish that the Controller is not authorized actually to pay salaries to state
employees in the absence of a duly enacted appropriation, that condition or
qualification on the right to compensation necessarily comprises one term or
condition of employment that is an integral part of a state worker’s employment
rights that are protected by the constitutional contract clause. Accordingly, we
conclude that, contrary to the contention of CSEA, the state constitutional contract
provision does not afford state employees the right to obtain the actual payment of
salary from the treasury prior to the enactment of an applicable appropriation.18
2. Dills Act
CSEA argues alternatively that if, under state law, an appropriation is
necessary for the payment of state employee salaries, as we have determined
above, we should conclude that whenever the Legislature has approved a state
employee memorandum of understanding pursuant to the provisions of the Dills
Act (Gov. Code, § 3512 et seq., formerly known as the State Employer-Employee
Relations Act), such approval in itself properly must be viewed as, in effect, a
“continuing appropriation” of the funds necessary to meet the salary obligations
set forth in the memorandum of understanding, and thus that the payment of
(footnote continued from previous page)
to suggest that these employees properly may be found to have “assumed the risk”
that they never will be paid for such work.
18
Because we conclude that state employees do not have a contractual right to
receive payment of their salaries prior to the enactment of an applicable
appropriation, we have no occasion to determine whether in the event these
employees possessed such a contractual right the Controller would have the
authority to pay their salaries in the absence of an appropriation. (Cf. Tevis v. City
& County of San Francisco (1954) 43 Cal.2d 190, 200; Theroux v. State of
California, supra, 152 Cal.App.3d 1, 7-9.)
57
salaries of employees covered by such a memorandum of understanding may be
made in the absence of a budget act appropriation. As we shall explain, in our
view the provisions of the Dills Act fail to support CSEA’s argument.
As the Court of Appeal explained in Department of Personnel
Administration v. Superior Court (1992) 5 Cal.App.4th 155, 180-181:
“ ‘Although the [Dills Act] affords state employees significant new rights, the
Legislature at the same time placed definite limits on the scope of representation
and retained substantial control over state employee compensation and many other
terms and conditions of state employment. . . . The act . . . provides that as to
matters within the scope of representation, a memorandum of understanding
requiring the expenditure of funds does not become effective unless it is approved
by the Legislature in the annual Budget Act (§ 3517.6); under this provision,
virtually all salary agreements are subject to prior legislative approval.’ ”
(Original italics and fn. omitted, new italics added.)19
Although Government Code section 3517.6 specifically provides that any
provision of a memorandum of understanding that requires the expenditure of
funds — as obviously does a provision embodying a salary agreement “shall
19
Government Code section 3517.6 states in relevant part: “If any provision
of the memorandum of understanding requires the expenditure of funds, those
provisions of the memorandum of understanding shall not become effective unless
approved by the Legislature in the annual Budget Act. If any provision of the
memorandum of understanding requires legislative action to permit its
implementation by amendment of any section not cited above [i.e., specified
statutory provisions that may be superseded by a conflicting provision of a
memorandum of understanding], those provisions of the memorandum of
understanding shall not become effective unless approved by the Legislature.”
Government Code section 3517.7 provides in relevant part: “If the
Legislature does not approve or fully fund any provision of the memorandum of
understanding which requires the expenditure of funds, either party may reopen
negotiations on all or part of the memorandum of understanding.”
58
not become effective unless approved by the Legislature in the annual Budget Act”
(italics added), CSEA argues that it would undermine the effectiveness of a multi-
year memorandum of understanding if the Legislature, after initially approving
such a memorandum, retained the right during the period covered by the
memorandum to refuse to appropriate in a subsequent annual budget the funds
required by the agreement. We have no occasion in this case to determine what
remedy, if any — other than the reopening of negotiations prescribed by section
3517.7 (see fn. 19, ante) — state employees or their representatives may have if
the Legislature effectively repudiates one or more provisions of a multi-year
memorandum of understanding by declining to appropriate the necessary funds to
meet its obligations under the memorandum of understanding. In light of the
explicit language of section 3517.6 (“unless approved by the Legislature in the
annual Budget Act” (italics added)), however, we cannot agree that the
Legislature’s initial approval of the memorandum of understanding in a non-
budget act, or its appropriation of funds in one or more (but not all) of the annual
budgets of a multi-year contract, properly can be viewed as a continuing
appropriation, authorizing the Controller to pay salaries set forth in the
memorandum of understanding in a new fiscal year without enactment of an
applicable appropriation in that year’s budget act.20
20
The case of Association of Surrogates v. State (N.Y. 1991) 577 N.E.2d 10,
upon which CSEA relies, does not support a contrary conclusion. In Association
of Surrogates, the New York Court of Appeals held that under the applicable New
York statute, the legislature’s ratification of a three-year public employee
collective bargaining agreement constituted “approval” of the entire three-year
obligation expressed in the contract and precluded the Legislature from thereafter
altering the provisions of the agreement by unilaterally instituting a “pay lag”
under which, in one of the years covered by the agreement, employees were to be
paid for only 50 rather than 52 weeks of work, with the withheld amounts to be
repaid to the employees upon the termination of their employment, at the
(footnote continued on next page)
59
3. Equity and Policy Reasons
Finally, CSEA argues that state employees, like all other employees, should
be able to work secure in the knowledge that they will timely receive their full
salaries, and that, as a matter of equity and sound public policy, “[s]tate employees
who report to work during a budget impasse and continue to faithfully serve the
people of the State of California deserve nothing less.” We could not agree more
with this proposition. The California Constitution contemplates that the
Legislature will pass a budget in time to provide timely payment of all of the
state’s regular obligations, and public employees certainly are treated inequitably
when, through no fault of their own, they are deprived of the prompt payment of
their salaries. Furthermore, we also agree with CSEA that, as a matter of policy,
this situation is almost certainly detrimental to the state as an employer because,
“if state employees must confront financial uncertainty each summer as to whether
they will receive their full and regular salaries, they [may well] look elsewhere for
employment.” But these points, however well founded, simply highlight the
crucial importance of timely enactment of a budget bill or some other legislative
(footnote continued from previous page)
employees’ then-current rate of salary. (577 N.E.2d at pp. 12-16.) Although the
court in Association of Surrogates concluded that the newly-adopted pay lag
mechanism was invalid, the court did not suggest that the legislature’s approval of
the multi-year agreement authorized the actual payment of funds from the treasury
without an applicable annual appropriation. On the contrary, the court in that case
expressly stated that “[a]s with any other expenditure of funds by the State, money
for public employees’ salaries must be appropriated by the Legislature each year”
(id. at p. 12, italics added), and further noted that “[p]laintiffs do not dispute the
necessity for a legislative appropriation before State funds may be paid as salary to
public employees.” (Ibid.) Thus, the court in Association of Surrogates did not
hold that the legislature’s approval of a multi-year agreement properly could be
viewed as constituting a continuing appropriation, obviating the need for an annual
appropriation.
60
measure appropriating funds for the payment of state employee salaries. Our
agreement with these sentiments affords us no authority to disregard well-
established principles of state law that authorize the payment of state employee
salaries only when there is an applicable and available appropriation.
B. Federal Law
1. Federal Contract Clause and Due Process Clause
As explained above, we have concluded that state employees have no
contract right, under California law, to the immediate payment of salary during a
budget impasse, because one of the conditions that is part of their employment
contract is that the Controller is authorized to pay their salary only if there is a
duly enacted appropriation from which such payment may be made. For this
reason, the federal constitutional contract clause does not provide any support for
the employees’ claim, and similarly there is no violation of the federal due process
clause, because the state has not deprived the employees of a right they otherwise
possess.
2. Fair Labor Standards Act (FLSA)
The Court of Appeal held that under the federal supremacy clause,
California nevertheless is required to comply with the FLSA, which requires
timely payment of those wages required by the federal act, that is payment of such
wages on the regular payday of those workers to whom the minimum wage and
overtime compensation provisions of the FLSA apply. In a brief in this court, the
Controller takes the position that the Court of Appeal’s opinion did not purport to
determine the amount of wages the FLSA requires an employer to pay on the
regular payday — that is, whether the FLSA requires payment of the employee’s
full regular wages, or payment only of wages computed at the minimum wage
rate — and the Controller suggests that this court need not resolve that issue
either. The state employee intervenors, however, read the Court of Appeal’s
61
opinion as holding that the FLSA requires only the prompt payment of minimum
wages and overtime compensation. Although the opinion is somewhat ambiguous
on this point,21 we believe in any event that it is appropriate to clarify our
understanding of what the FLSA requires with regard to the amount of salary
payments that must be made during a budget impasse, so as not to leave the
Controller without guidance on this issue.
We begin with the governing language of the FLSA. The basic minimum
wage provision of the act provides in relevant part: “(a) Every employer shall pay
to each of his employees who in any workweek is . . . employed in an enterprise
engaged in commerce . . . , wages at the following rates: (1) . . . not less than [the
current designated minimum wage].” (29 U.S.C. § 206.) The relevant overtime
compensation provision of the FLSA provides in relevant part: “(a)(1) Except as
otherwise provided in this section, no employer shall employ any of his employees
. . . for a workweek longer than forty hours unless such employee receives
compensation for his employment in excess of the hours above specified at a rate
not less than one and one-half times the regular rate at which he is employed.”
(29 U.S.C. § 207.) These minimum wage and overtime compensation provisions
21
On the one hand, the Court of Appeal states in a footnote: “We do not
resolve the extent to which the FLSA applies to the different categories and
classes of state employees, or the extent to which the compensation required under
the FLSA may fall short of any state employee’s full salary. These questions have
not been presented to us, and we do not address them.” (White v. Davis I, supra,
98 Cal.App.4th 969, 995, fn. 9.) On the other hand, in another footnote the Court
of Appeal states: “Citing Donovan v. Crisostomo (9th Cir. 1982) 689 F.2d 869,
876, the state employee intervenors argue under the FLSA, employees who work
overtime must receive the requisite overtime wages plus their full straight time
pay. However, they do not cite any authority that the FLSA requires the full
payment of straight time wages in all circumstances, and we are unaware of any
such authority.” (White v. Davis I, supra, 98 Cal.App.4th at p. 1000, fn. 12.)
62
of the FLSA apply to most, although by no means all, state employees; thus, for
example, those employees “employed in a bona fide executive, administrative, or
professional capacity” generally are “exempt” from ― that is, they do not enjoy
the benefit of ― these provisions of the FLSA. (29 U.S.C. § 213(a)(1).)22
Employees to whom the minimum wage and overtime compensation provisions of
the FLSA apply are generally referred to as “nonexempt employees,” and
employees to whom those provisions do not apply are referred to as “exempt
employees.”
Although the United States Supreme Court has not yet directly addressed
the issue whether the FLSA requires prompt payment of a nonexempt employee’s
wages or overtime compensation, the lower federal courts consistently have
interpreted the act to require the prompt payment of minimum and overtime
wages. (See, e.g., Biggs v. Wilson, supra, 1 F.3d 1537; Olson v. Superior Pontiac-
GMC, Inc. (11th Cir. 1985) 765 F.2d 1570, 1579, as mod., 776 F.2d 265, 267;
United States v. Klinghoffer Bros. Realty Corp. (2d Cir. 1961) 285 F.2d 487, 491;
see also Brooklyn Sav. Bank v. O’Neil (1945) 324 U.S. 697, 707 & fn. 20, 709.)
In Biggs v. Wilson, supra, 1 F.3d 1537, the Ninth Circuit addressed the
question whether a state’s failure to pay its employees on their regular payday
during a budget impasse violates the FLSA. In Biggs, California highway
maintenance workers were not paid any wages on their regular payday (July 16,
1990) because of a budget impasse and did not receive wages for that pay period
22
No issue has been raised in this case in either the trial court or on
appeal regarding which particular state employees (or state employee positions)
are subject to the minimum wage and overtime compensation provisions of the
FLSA and which employees are exempt from such provisions, and thus we have
no occasion to address that issue here.
63
until July 30-31, when the state budget finally was enacted and signed into law.
Thereafter, the workers brought suit against the state under the FLSA, and the
Ninth Circuit held that the state’s failure to pay the employees on their regular
payday violated the FLSA, concluding that the existence of a state constitutional
provision prohibiting the payment of funds in the absence of an available
appropriation did not excuse the state’s obligation to comply with the
requirements imposed by federal law. (1 F.3d at pp. 1543-1544.)
There is some ambiguity in the language of the opinion in Biggs as to
whether that decision purported to hold that the FLSA requires the prompt
payment of an employee’s regular salary or only the prompt payment of wages
based on the minimum wage. Some language in the opinion, at least at first blush,
appears to support the position that the FLSA requires the prompt payment of an
employee’s regular salary. Thus, for example, the trial court order that was
affirmed in Biggs states in part that “ ‘[i]t is therefore declared that defendant’s
failure to issue plaintiffs’ paycheck when due violates the Fair Labor Standards
Act.’ ” (Biggs v. Wilson, supra, 1 F.3d at p. 1538, fn. 2.) Further, at the
conclusion of the opinion in Biggs, the court of appeals stated: “We therefore hold
that state officials’ failure to issue the class’s paychecks promptly when due
violates the FLSA. Paychecks are due on payday. After that, the minimum wage
is ‘unpaid.’ ” (1 F.3d at p. 1544.)
When the opinion in Biggs v. Wilson, supra, 1 F.3d 1537, is read as a
whole, however, it is clear that the opinion properly must be understood as holding
that an employer complies with the FLSA so long as it pays those employees who
are subject to the FLSA at the minimum wage rate on payday, and not that the
FLSA requires an employer to pay employees their regular wage on payday. The
basic reasoning of the Biggs decision is that the minimum wage required by the
FLSA must be paid promptly, not that the FLSA requires the payment of an
64
employee’s salary above the minimum wage. In describing the provisions of the
FLSA, the court’s opinion in Biggs states: “The FLSA provides for the recovery of
unpaid minimum wages, unpaid overtime compensation, and liquidated
damages. . . . These provisions necessarily assume that wages are due at some
point, and thereafter become unpaid.” (1 F.3d at p. 1539.) Nothing in the FLSA
provides for the recovery of unpaid regular wages above the minimum wage.
Furthermore, after explaining why it believed the language of the statute itself was
inconsistent with the state’s contention that the statute contained no prompt
payment requirement, the opinion in Biggs states: “Holding that the FLSA is
violated unless the minimum wage is paid on the employee’s regular payday also
comports with such case law as there is.” (Id. at p. 1541, italics added.) Finally,
in rejecting the argument that the existence of a budget impasse should relieve the
state of its obligation under the FLSA, Biggs states: “The FLSA does not require
California to pass a budget on time; it only requires California to do what all
employers must do — pay its employees the minimum wage on payday.” (1 F.3d
at p. 1543, italics added.)
Accordingly, we conclude that, under Biggs, the state is required to comply
with the FLSA during a budget impasse, but that the state satisfies the
requirements of the FLSA by paying nonexempt state employees (who do not
work overtime) at the minimum wage rate for the straight-time hours (that is,
nonovertime hours) worked by those employees during the pay period. For
nonexempt employees who do not work overtime, the FLSA does not require the
prompt payment of full salary.
By contrast, under the applicable federal regulation (29 C.F.R. § 778.315
(2002)), whenever a nonexempt employee works overtime, the FLSA requires the
employer to pay the employee his or her full regular salary for the employee’s
straight time as well as at least one and one-half times the employee’s regular
65
salary for overtime hours worked. (See Fidelity Federal Sav. & Loan Assn. v.
de la Cuesta (1982) 458 U.S. 141, 153 [“Federal regulations have no less pre-
emptive effect than federal statutes.”].) The applicable regulation states in this
regard: “Overtime compensation, at a rate not less than one and one-half times the
regular rate of pay must be paid for each hour worked in the workweek in excess
of the applicable maximum hours standard. This extra compensation for the
excess hours of overtime work under the Act cannot be said to have been paid to
an employee unless all straight time compensation due him for the nonovertime
hours under his contract (express or implied) or under any applicable statute has
been paid.” (29 C.F.R. § 778.315 (2002), italics added.) In Donovan v.
Crisostomo, supra, 689 F.2d 869, 876, the court explained the rationale underlying
this regulation, noting that without such a limitation “[a]n employer could
effectively eliminate the premium paid for overtime by [reducing an employee’s]
straight time wages in an amount equal to or greater than the overtime premium.”
In sum, in order to comply with the FLSA, the state, during a budget
impasse, must timely pay nonexempt employees who do not work overtime at
least at the minimum wage rate for all straight hours worked by the employee, and
must timely pay nonexempt employees who work overtime their full salary for all
straight time worked plus one and one-half times their regular rate of pay for
overtime.
In a declaration accompanying the opposition to the request for a
preliminary injunction filed in the trial court, the Controller maintained that it was
not feasible to determine and adjust all of the payments to state employees “to
only pay the federally required minimum wage instead of the wages to which each
employee is entitled prior to [the applicable] payroll deadlines.” The Controller
asserted it was thus necessary to pay all state employees covered by the FLSA
their full regular wages in order to assure compliance with the requirements of that
66
act. The trial court never addressed this claim, and the Court of Appeal took note
of the question but declined to address it for the first time on appeal. (White v.
Davis I, supra, 98 Cal.App.4th 969, 1003, fn. 13.)
In a supplemental brief filed in this court, the Controller has reiterated the
claim that it is infeasible or impossible for the state to timely pay only the
minimum compensation required by the FLSA, emphasizing the state’s current use
of a “negative payroll” system and the difficulty of “segregating those employees
who worked overtime from those who did not work overtime” and the further
difficulty of “determining whether an employee worked a full 40 hours each week
or may have worked less due to being on unpaid leave or being ill,” and of making
such determinations quickly enough to comply with the timely payment
requirements of the FLSA. On the record before us we have no means of
evaluating or resolving the Controller’s factual claim of impossibility, but even if
it is administratively infeasible, given the state’s current payroll system, for the
state, prior to preparing an individual employee’s paycheck, to determine with
certainty whether a particular nonexempt employee will or will not work overtime
during a given pay period or to determine the exact number of straight-time hours
the employee will work, we are somewhat skeptical of the contention that the state
would be found to have violated the FLSA if, during a budget impasse, the state
(1) pays full regular wages and overtime compensation to those nonexempt
employees who it reasonably anticipates will work overtime during a given pay
period, (2) pays minimum wage rate for all straight-time hours an employee is
scheduled to work during the pay period to those nonexempt employees who it
reasonably anticipates will not work overtime during a given pay period, and (3) in
the following pay period, pays employees all additional sums that are due under
the FLSA for the prior pay period based on information that the state obtains
through reporting forms that it collects on or immediately following the preceding
67
payday. (Cf. Walling v. Harnischfeger Corporation (1945) 325 U.S. 427, 432-433
[“Section 7(a) [the overtime provision of the FLSA] does not require the
impossible. If the correct overtime compensation cannot be determined until some
time after the regular pay period the employer is not thereby excused from making
the proper computation and payment. Section 7(a) requires only that the
employees receive a 50% premium as soon as convenient and practicable under
the circumstances.” (Italics added.)]; see also 29 C.F.R. § 778.106 (2002) [“When
the correct amount of overtime compensation cannot be determined until some
time after the regular pay period . . . the requirements of the Act will be satisfied if
the employer pays the excess overtime compensation as soon after the regular pay
period as is practicable. Payment may not be delayed for a period longer than is
reasonably necessary for the employer to compute and arrange for payment of the
amount due and in no event may payment be delayed beyond the next payday after
such computation may be made.”].)
In any event, as already noted, the Controller’s claim of infeasibility was
not fully litigated below, and thus we do not believe it would be appropriate to
attempt to definitively resolve the claim at this juncture. It is sufficient at this
point to make clear that, by virtue of the supremacy of federal law, the state is
obligated to comply with the minimum requirements of the FLSA during a budget
impasse, notwithstanding the lack of an available appropriation.
V
For the reasons set forth in part III, ante, we conclude that the Court of
Appeal erred in upholding in part the preliminary injunction granted by the trial
court. The judgment of the Court of Appeal is reversed insofar as it upheld in part
the preliminary injunction, and the matter is remanded to the Court of Appeal with
directions to set aside the preliminary injunction in its entirety. Further, as
explained above (see fn. 14, ante, p. 45), without ruling on the additional issues
68
resolved by the Court of Appeal that we have not addressed in our present opinion,
we order that the Court of Appeal’s opinion be published in the Official Reports.
(Cal. Rules of Court, rule 976(d).)
GEORGE, C.J.
WE CONCUR:
KENNARD, J.
BAXTER, J.
WERDEGAR, J.
CHIN, J.
BROWN, J.
MORENO, J.
69
See last page for addresses and telephone numbers for counsel who argued in Supreme Court.
Name of Opinion White v. Davis
__________________________________________________________________________________
Unpublished Opinion
Original Appeal
Original Proceeding
Review Granted XXX 98 Cal.App.4th 969
Rehearing Granted
__________________________________________________________________________________
Opinion No. S108099
Date Filed: May 1, 2003
__________________________________________________________________________________
Court: Superior
County: Los Angeles
Judge: Robert H. O’Brien and Emilie H. Elias
__________________________________________________________________________________
Attorneys for Appellant:
Law Offices of Richard I. Fine & Associates, Richard I. Fine, Jeremy W. Faith, Genalin Sulat, Carmela
Tan, Cheri M. Vu; Jonathan M. Coupal and Trevor A. Grimm for Plaintiff and Appellant and for Plaintiffs
and Respondents.
Daniel E. Lungren and Bill Lockyer, Attorneys General, Manuel M. Medeiros, State Solicitor General,
Linda A. Cabatic and Andrea Lynn Hoch, Assistant Attorneys General, Louis R. Mauro, Acting Assistant
Attorney General, Paul H. Dobson, Keith Yamanaka and Jennifer K. Rockwell, Deputy Attorneys General,
for Defendant and Appellant and for Defendants and Respondents Gray Davis et al.
__________________________________________________________________________________
Attorneys for Respondent:
Bion M. Gregory, Richard Thomson; Eisen & Johnston Law Corporation and Marian M. Johnston for
Defendants and Respondents Bill Lockyer, Cruz M. Bustamante, Rob Hurtt and Curt Pringle.
Gary P. Reynolds, Anne M. Giese, Daniel S. Connolly and Michael D. Hersh for Interveners and
Appellants Gary Gavinski and California State Employees Association, Local 1000, SEIU, AFL-CIO,
CLC.
Dennis F. Moss for Interveners and Appellants Professional Engineers in California Government and
California Association of Professional Scientists.
Benjamin C. Sybesma, Christine Albertine and Joel H. Levinson for Intervener and Appellant California
Correctional Peace Officers’ Association.
Carroll, Burdick & McDonough, Ronald Yank, Gary M. Messing, Laurie J. Hepler and Cathleen A.
Williams for Intervener and Appellant California Union of Safety Employees.
Page 2 - counsel continued - S108099
Attorneys for Respondent:
Lynn S. Carman; Steinberg & Steinberg, Lawrence William Steinberg and Anita Steinberg for Interveners
and Appellants Jerome Feitelberg and Alameda Drug Company, Inc.
David P. Lampkin, R. Clayton Seaman, Jr., Jeralyn Keller and Jonathan P.
Milberg for California Appellate Defense Counsel as Amici Curiae.
Lynn S. Carman for Frederick S. Mayer as Amicus Curiae.
71
Counsel who argued in Supreme Court (not intended for publication with opinion):
Richard I. Fine
Law Offices of Richard I. Fine & Associates
468 North Cambden Drive, Suite 200
Beverly Hills, CA 90210
(310) 277-5833
Jennifer K. Rockwell
Deputy Attorney General
1300 I Street
Sacramento, CA 94244-2550
(916) 445-6998
Anne M. Giese
California State Employees Association
1108 “O” Street, Suite 327
Sacramento, CA 95814
(916) 326-4208
Gary M. Messing
Carroll, Burdick & McDonough
2100 21st Street
Sacramento, CA 95818-1708
(916) 456-2100
72
Opinion Information
| Date: | Docket Number: |
| Thu, 05/01/2003 | S108099 |
Parties
| 1 | Connell, Kathleen (Defendant and Appellant) Represented by Attorney General - Sacramento Office Jennifer K. Rockwell, Deputy Attorney General P.O. Box 944255 1300 I St., 11th Floor Sacramento, CA |
| 2 | Howard Jarvis Taxpayers Association (Plaintiff and Appellant) Represented by Jonathan M. Coupal Howard Jarvis Taxpayers Association 921 - 11th Street, Suite 1201 Sacramento, CA |
| 3 | California State Employees Association, Local 1000 (Intervener and Appellant) Represented by Anne M. Giese California State Employees Association 1108 "O" Street, Suite 327 Sacramento, CA |
| 4 | California Correctional Peace Officers Association (Intervener and Appellant) Represented by Joel H. Levinson Calif. Correctional Peace Officers Association 775 Riverpoint Drive, Suite 200 West Sacramento, CA |
| 5 | California Union Of Safety Employees (Intervener and Appellant) Represented by Gary M. Messing Carroll, Burdick & Mc Donough 2100 21st Street Sacramento, CA |
| 6 | Professional Engineers In California (Intervener and Appellant) Represented by Dennis F. Moss Spiro, Moss, Barness & Harrison LLP 11377 W. Olympic Blvd., Suite 1000 Los Angeles, CA |
| 7 | Davis, Gray (Defendant and Respondent) Represented by Jay-Allen Eisen Eisen & Johnson Law Corporation 980 Ninth Street, Ste. 1400 Sacramento, CA |
| 8 | Davis, Gray (Defendant and Respondent) Represented by Robert Andrew Pratt Office of the Legislative Counsel 925 L Street, #900 Sacramento, CA |
| 9 | White, Steven (Plaintiff and Appellant) |
| 10 | California Appellate Defense Counsel (Amicus curiae) Represented by Jonathan P. Milberg Appellate Associates 300 N Lake Ave #520 Pasadena, CA |
| 11 | Mayer, Frederick S. (Amicus curiae) Represented by Lynn S. Carman Attorney At Law 1035 Cresta Way #3 San Rafael, CA |
| Disposition | |
| May 1 2003 | Opinion: Reversed |
| Dockets | |
| Jul 5 2002 | Received Court of Appeal record one doghouse sent overnight |
| Jul 5 2002 | Petition for Review with request for Stay filed (civil) in Sacramento by Kathleen Connell, as State Controller etc. |
| Jul 5 2002 | Record requested by e-mail this morning for record to be sent overnight. |
| Jul 8 2002 | 2nd petition for review filed by counsel for Intervenors/Aplts Calif. Union of Safety Employees and Calif. Correctional Peace Officers' Assn. (filed in Sac.) |
| Jul 8 2002 | 4th petition for review filed intervenor and appellant PROFESSIONAL ENGINEERS IN CAL |
| Jul 9 2002 | Stay application filed (separate petition pending - civil) by Int/Aplts. CSEA, Local 1000, SEIU, AFL-CIO, CLC. (entitled "Petn for Writ of Supersedeas") |
| Jul 9 2002 | 3rd petition for review filed by counsel for Intervenors/Aplts. Calif. State Emp. Assn., Local 1000, SEIU, AFL-CIO, CLC, Gary Gavinski, Tim Behrens and David Okumura. (filed in S.F., timely per CRC 40k) |
| Jul 15 2002 | 2nd record request B122178 (Overnight Mail Requested) |
| Jul 15 2002 | Received Court of Appeal record 1 doghouse B122178 [being sent o/n] |
| Jul 16 2002 | Received Court of Appeal record 2 doghouses in B123992 [being sent o/n] |
| Jul 30 2002 | Received: answer to petition for review--late>>Respondents Howard Jarvis Taxpayers Assn. |
| Jul 31 2002 | Answer to petition for review filed with permission. |
| Aug 9 2002 | Reply to answer to petition filed in Sacramento by the Attorney General for Kathleen Connell, California State Controller, Defendant and Appellant |
| Aug 14 2002 | Petition for Review Granted (civil case) (PETITIONS). The stay issued by the Court of Appeal shall remain in effect pending final determination of this matter, or pending further order of this court. Votes: George, CJ., Kennard, Baxter, Werdegar, Chin, Brown and Moreno, JJ. |
| Aug 21 2002 | Request for extension of time filed for aplt State Controller to file the opening brief on the merits, to 10/15. |
| Aug 26 2002 | Request for extension of time filed for aplts Calif. Union of Safety Emp. and Calif. Correctional Peace Officers' Assn. to file the opening brief on the merits, to 10/15 |
| Aug 30 2002 | Extension of time granted to 10-15-02 for all aplts to file the opening briefs on the merits. |
| Oct 15 2002 | Opening brief on the merits filed by aplt State Controller. |
| Oct 15 2002 | Request for judicial notice filed (in non-AA proceeding) by aplt State Controller |
| Oct 15 2002 | Opening brief on the merits filed by aplt Calif. State Employees Assn. |
| Oct 15 2002 | Opening brief on the merits filed Appellants California Union of Safety Employees and California Correctional Peace Officers' Association |
| Oct 15 2002 | Request for judicial notice filed (in non-AA proceeding) by Appellants Calif. Union of Safety Employees and Calif. Correctional Peace Officers' Association Exhibit "A" attached (original) |
| Nov 25 2002 | Received: answer brief/merits--late>>respondents Howard Jarvis Taxpayers Assn and Steven White |
| Dec 2 2002 | Application filed to: file late answer brief/merits>>respondents Howard Jarvis Taxpayers Assn & Steven White |
| Dec 4 2002 | Answer brief on the merits filed by resps Howard Jarvis Taxpayers and Steven White (Ct's permission for late filing) |
| Dec 17 2002 | Received letter from: respondents Howard Jarvis Taxpayers Assn and Steven White |
| Dec 23 2002 | Reply brief filed (case not yet fully briefed) by attorneys for Intervenors and Appellants CSEA, Local 1000, SFL-CIO, CLC, Gary Gavinski, Tim Behrens and David K. Okumura. |
| Dec 23 2002 | Reply brief filed (case fully briefed) by appellants California Union of Safety Employees and California Correctional Peace Officers' Association. |
| Dec 24 2002 | Reply brief filed (case fully briefed) by aplt State Controller |
| Dec 27 2002 | Received: errata to aplt State Controller's reply brief. |
| Jan 22 2003 | Received application to file amicus curiae brief; with brief California Appellate Defense Counsel |
| Jan 22 2003 | Additional issues ordered The parties are directed to file supplemental briefs addressing the following issue: Assuming, solely for purposes of this question, that the various provisions of state law relied upon by the public employee organizations do not provide a basis upon which the Controller may pay a state employee his or her full and regular salary during a budget impasse, and assuming further, again solely for purposes of this question, that the state could satisfy the requirements imposed by the federal Fair Labor Standards Act (FLSA) simply by timely paying an employee covered by that act who does not work overtime a sum based on the minimum wage rate for hours worked, does the Controller nonetheless have the authority to pay such a covered employee his or her full and regular salary during a budget impasse if the Controller determines (1) that in light of the logistics entailed in obtaining the data and making the adjustments that would be required to pay such employees only the minimum sum required by the FLSA, it would be administratively infeasible for the state to make such adjustments within the time necessary to ensure the prompt payment of wages required by the FLSA, or, alternatively, (2) that in view of the additional administrative expense that would be entailed in making the necessary adjustments in a timely fashion, it would be less costly for the state to comply with the requirements of the FLSA simply by paying the full and regular salaries of state employees covered by that legislation? The parties shall file simultaneous supplemental letter briefs on this issue on or before February 6, 2003, and any party may file a reply letter brief on or before February 11, 2003. |
| Jan 24 2003 | Permission to file amicus curiae brief granted by Calif. Appellate Defense Counsel. Any answers may be filed w/in 20 days. |
| Jan 24 2003 | Amicus Curiae Brief filed by: Calif. Appellate Defense Counsel. |
| Feb 4 2003 | Received application to file amicus curiae brief; with brief by Frederick S. Mayer. |
| Feb 6 2003 | Filed: Supplemental brief of aplt State Controller, by A.G. (filed in Sac) |
| Feb 6 2003 | Filed: Supplemental brief by intervenor-aplt Calif. State Employees Assn. (filed in sac) |
| Feb 6 2003 | Filed: Supplemental Brief of intervenor-aplts Cal. Union of Safety Employees and Cal. Correctional Peace Officers Assn. |
| Feb 6 2003 | Filed: supplemental brief by counsel for resp Howard Jarvis Taxpayers Assoc. & Steven White |
| Feb 10 2003 | Permission to file amicus curiae brief granted by Frederick S. Mayer. Any answer due w/in 20 days. |
| Feb 10 2003 | Amicus Curiae Brief filed by: Frederick S. Mayer. |
| Feb 11 2003 | Filed: letter reply brief by counsel for appellants' Howard Jarvis Taxpayers Assoc. to suplemental letter briefs filed w/ the court by the Controller, CSEA, CCPOA |
| Feb 11 2003 | Filed: Letter reply brief of intervenor-aplts Calif. Union of Safety Employees and Calif. Correctional Peace Officers Assn. to the letter brief of Howard Jarvis Taxpayers Assn. |
| Feb 13 2003 | Filed: Letter reply brief of aplt Controller to the letter brief of aplts White and Howard Jarvis Taxpayers. (timely per CRC 40k) |
| Mar 3 2003 | Response to amicus curiae brief filed by aplts H.J. Taxpayers Assn. and White to the A/C briefs of Calif. defense Counsel and F. Mayer |
| Mar 3 2003 | Received: one brief responding to a/c briefs of Califonia Appelalte Defense Counsel and Frederick Mayer received by appellants Howard Jarvis Taxpayers Assoc., Steven White.. |
| Mar 6 2003 | Case ordered on calendar 4-1-03, 9am, L.A. |
| Mar 12 2003 | Received document entitled: Application of Frederick S. Meyer for permission to present oral argument. |
| Mar 17 2003 | Filed: Aplts' joint appln to divide oral argument time, for five additional minutes and in opposition to appln of A/C Frederick Mayer. |
| Mar 20 2003 | Order filed The court has received appellants' joint application to split oral argument into three segments and for the allocation of five additional minutes for oral argument. Appellants' request for additional time for oral argument is denied. The court is primarily interested in hearing argument on the questions whether the preliminary injunction was properly issued in this case and whether state or federal law authorizes the Controller to pay state employees who do not work overtime their full regular salary in the absence of the enactment of an applicable appropriation, and it expects all counsel who argue in this case to be prepared to address these points and to answer questions directed to these issues. On that understanding, the request to divide appellants' 30 minutes of oral argument into three segments of 10 minutes each is granted. If appellants wish to reconsider the division of time in light of this order, appellants should advise the court of that circumstance on or before March 26, 2003. The application of amicus curiae Frederick S. Mayer for permission to present oral argument is denied. (See Cal. Rules of Court, rule 29.2(g).) |
| Mar 25 2003 | Received letter from: A/C Calif Appellate Defense Counsel |
| Apr 1 2003 | Cause argued and submitted |
| Apr 7 2003 | Filed: Request from aplts Safety Employees, Correctional Peace Officers and State Employees Assn. to file supplemental letter brief. |
| Apr 8 2003 | Received letter from: California State Employees Association, dated April 4, 2003, re: attorney of record for {"CSEA"] faxed to sf. |
| Apr 16 2003 | Order filed The request, submitted by state employee intervenors on April 7, 2003, that the court accept for filing a supplemental brief regarding a case upon which counsel was questioned at oral argument is granted. Any other party may file a reply by letter on or before April 21, 2003, in the San Francisco office of the Supreme Court. The filing of the letter brief and any reply chall not affect the date of submission of this matter. The matter remains submitted as of April 1, 2003. |
| May 1 2003 | Order filed Pursuant to rule 976(d) of the California Rules of Court, the Reporter of Decisions is directed to publish in the Official Reports the Court of Appeal opinion in the above entitled case (that is, the Court of Appeal opinion that was previously published at 98 Cal.App.4th 969). |
| May 1 2003 | Opinion filed: Judgment reversed insofar as it upheld in part the preliminary injunction, and the matter is remanded to the Court of Appeal with directions to set asided the preliminary injunction in its entirety. Further, as explained above (See fn. 14, ante, p. 45), without ruling on the addtitional issues resolved by the Court of Appeal that we have not addresses in our present opinion, we order that the Court of Appeal's opinion be published in the Ofiicial Reports. (Cal. Rules of Court, Rule 976(d).). Majority Opinion by George, CJ., ------Joined by Kennard, Baxter, Werdegar, Chin, Brown and Moreno, JJ. |
| Jun 11 2003 | Remittitur issued (civil case) |
| Dec 18 2003 | Note: transmitted case record to L.A. (Supreme Ct.) for delivery to Court of Appeal |
| Briefs | |
| Oct 15 2002 | Opening brief on the merits filed |
| Oct 15 2002 | Opening brief on the merits filed |
| Oct 15 2002 | Opening brief on the merits filed |
| Dec 4 2002 | Answer brief on the merits filed |
| Dec 23 2002 | Reply brief filed (case not yet fully briefed) |
| Dec 23 2002 | Reply brief filed (case fully briefed) |
| Dec 24 2002 | Reply brief filed (case fully briefed) |
| Jan 24 2003 | Amicus Curiae Brief filed by: |
| Feb 10 2003 | Amicus Curiae Brief filed by: |
| Mar 3 2003 | Response to amicus curiae brief filed |
