Docket No. S102371
Metro. Water of S.C. v. Sup. Ct.
Filed 2/26/04
IN THE SUPREME COURT OF CALIFORNIA
METROPOLITAN WATER DISTRICT
OF SOUTHERN CALIFORNIA,
Petitioner,
S102371
v.
Ct.App. 2/1 B148446
THE SUPERIOR COURT OF LOS
ANGELES COUNTY,
Los Angeles County
Super. Ct. No. BC191881
Respondent;
DEWAYNE CARGILL et al.,
Real Parties in Interest.
____________________________________)
)
CDI CORPORATION et al.,
Petitioners,
v.
Ct.App. 2/1 B148451
THE SUPERIOR COURT OF LOS
ANGELES COUNTY,
Los Angeles County
Super. Ct. No. BC191881
Respondent;
DEWAYNE CARGILL et al.,
Real Parties in Interest.
1
Defendant Metropolitan Water District of Southern California (MWD)
contracts with the California Public Employees’ Retirement System (CalPERS)
for the latter to provide retirement benefits to MWD’s employees. The single
issue of law presented here is whether, under the Public Employees’ Retirement
Law (PERL) (Gov. Code, § 20000 et seq.)1 and MWD’s contract with CalPERS,
MWD is required to enroll in CalPERS all workers who would be considered
MWD’s employees under California common law. MWD contends it may
exclude from enrollment workers, such as plaintiffs, who are paid through private
labor suppliers, even if they would be employees under the common law test. We
conclude, as did the lower courts, that the PERL incorporates common law
principles into its definition of a contracting agency employee and that the PERL
requires contracting public agencies to enroll in CalPERS all common law
employees except those excluded under a specific statutory or contractual
provision.
We understand, as MWD argues, that public employers must occasionally
hire additional workers for projects lasting an extended period of time and that, in
some cases, enrolling those workers in CalPERS may involve a needless expense.
But while many temporary workers (generally, those employed for no more than
six months at a time or 125 days in a fiscal year) are excluded from CalPERS
(§ 20305, subd. (a)(3)), the PERL contains no broad exclusion for long-term,
full-time workers hired through private labor suppliers. Any change in the PERL
to accommodate such long-term temporary hiring must come from the Legislature,
not from this court, which cannot remake the law to conform to MWD’s hiring
practices. Moreover, although the PERL permits participating agencies to seek
1
Hereafter all statutory references are to the Government Code unless
otherwise indicated.
2
agreement from CalPERS for exclusion of selected categories of employees
(§ 20502), MWD has not negotiated an exception to its CalPERS contract for its
long-term project workers. Again, this court is not empowered to remake the
parties’ agreement even were we of the view that such an amendment would be
desirable.
The present writ proceeding, which arises from the trial court’s pretrial
decision on a single legal issue in this complex litigation, presents only the
question of whether the PERL requires enrollment of all common law employees.
We therefore do not decide whether plaintiffs are in fact common law employees
of MWD, nor do we express any opinion as to whether plaintiffs, in the event they
are determined to be MWD’s employees as defined in the PERL, are therefore
entitled to enrollment in CalPERS as of the dates they were first employed. Still
less do we decide whether plaintiffs are MWD’s employees for any purpose other
than CalPERS enrollment or whether they are entitled to any benefits as
employees under other provisions of law.
FACTUAL AND PROCEDURAL BACKGROUND
MWD, a public agency engaged in procuring, storing, and delivering water,
hires and employs many employees under a merit system set forth in its
administrative code, which establishes procedures for the selection of employees
and provides those employees with various benefits; these recognized employees
are also enrolled in CalPERS retirement plans pursuant to the MWD-CalPERS
contract. In addition, however, MWD has entered into contracts with several
private labor suppliers to provide it with workers. MWD classifies these workers
as “consultants” or “agency temporary employees” and neither enrolls them in
CalPERS retirement plans nor provides them with benefits specified in the MWD
administrative code.
3
Plaintiffs are named individual workers hired through labor suppliers, and a
proposed class of such workers, who allege MWD misclassified them as
consultants and agency temporary employees and for that reason illegally denied
them the ordinary benefits of MWD employment, including CalPERS enrollment.2
Plaintiffs’ petition and complaint sought writ relief compelling MWD to provide
class members with compensation, benefits, and employment rights in accordance
with the agency’s administrative code and, in particular, to enroll class members in
CalPERS.
Plaintiffs also named as defendants several of MWD’s labor suppliers,
alleging they had violated the unfair competition law (Bus. & Prof. Code, § 17200
et seq.) by assisting MWD to avoid its statutory obligations to plaintiffs; plaintiffs
sought injunctive relief and other equitable remedies on this cause of action. The
trial court permitted CalPERS to intervene in the action; its complaint seeks a
declaration that the PERL requires enrollment of all MWD’s common law
employees not specifically excluded by statute or the MWD-CalPERS contract.
In a case management order, the trial court identified the following
question, labeled Issue A, for pretrial resolution: “Whether MWD is mandated by
the [PERL] to enroll all common law employees in CalPERS.” After extensive
briefing and argument on MWD’s motion for summary adjudication and
CalPERS’s motion for decision, both concerning Issue A, the court ruled that
MWD is mandated by the PERL to enroll all common law employees in CalPERS.
2
Plaintiffs also include some individuals who allegedly were hired directly
by MWD but misclassified as “district temporary employees” and, for that reason,
have been denied the ordinary benefits of MWD employment. The complaint
does not make clear whether these plaintiffs have also been denied CalPERS
enrollment. The parties’ contentions on the single issue before us, entitlement to
CalPERS enrollment, have focused solely on those plaintiffs hired through labor
suppliers; our discussion will therefore do the same.
4
MWD and the labor suppliers sought review in the Court of Appeal by
petition for writ of mandate. The Court of Appeal, after issuing an order to show
cause, denied the petition by opinion, holding the trial court had resolved Issue A
correctly. We granted MWD’s and the labor suppliers’ petitions for review.
The issue upon which we granted review is a purely legal one that can be
decided without exploring the details of plaintiffs’ relationship with MWD and the
labor suppliers. Suffice it to say that plaintiffs alleged, and have produced some
evidence to show, that they worked at MWD for indefinite periods, in some cases
several years; that MWD managers interviewed and selected them for
employment; that they were integrated into the MWD workforce and performed, at
MWD offices or worksites, duties that are part of MWD’s regular business; that
MWD supervisors directly oversaw and evaluated their work, determined their
hourly rates of pay, raises, and work schedules, approved their timesheets, and had
the power to discipline and terminate them; and in general that MWD had the full
right to control the manner and means by which they worked, while the labor
suppliers merely provided MWD with “payroll services.” Such facts, if proven,
might support an argument that plaintiffs are MWD’s employees under the
established common law test (see Tieberg v. Unemployment Ins. App. Bd. (1970) 2
Cal.3d 943; Rest.2d Agency, § 220), which is used by CalPERS administrators to
distinguish employees from independent contractors.3 But these allegations,
3
MWD argues that CalPERS has not historically applied the common law
test to leased workers, and one of the minority opinions accuses CalPERS of
“misleading procrastination” in this respect. (Dis. opn. of Baxter, J., post, at p. 2.)
But CalPERS insists it has done so consistently from as early as 1944, when
MWD first sought to join the system, and cites three occasions on which it
determined that leased workers were in fact employees under the common law
test. Unlike the dissent, we decline to express an opinion on CalPERS’s conduct,
a matter that is simply not before us. Resolution of the sole question presented—
(footnote continued on next page)
5
which MWD has denied for lack of knowledge or information, have not yet been
tried.
DISCUSSION
Under the PERL, the CalPERS system covers not only state employees but
also employees of “contracting agencies,” that is, public entities, such as MWD,
that have chosen to participate in CalPERS by contract with the CalPERS
governing board. (§§ 20022, 20460.)
A CalPERS “member”—the status to which plaintiffs claim they are
entitled—is an “employee who has qualified for membership in this system and on
whose behalf an employer has become obligated to pay contributions.” (§ 20370,
subd. (a).) More specifically, “local miscellaneous members” include “all
employees of a contracting agency who have by contract been included within this
system, except local safety members.” (§ 20383.)4 Under section 20281, a person
hired as an employee of the state or a contracting agency “becomes a member
upon his or her entry into employment.” As these provisions indicate, only an
agency’s employees—not those performing services for the agency on other
terms—may be enrolled in CalPERS. The PERL makes this rule explicit in
section 20300, subdivision (b), which excludes from CalPERS membership
“[i]ndependent contractors who are not employees.”
The contract between a participating agency and CalPERS may exclude
some of the agency’s employees, but “[t]he exclusions of employees . . . shall be
based on groups of employees such as departments or duties, and not on individual
(footnote continued from previous page)
whether MWD is obliged to enroll all its common law employees—does not
depend on CalPERS practices.
4
According to the complaint, none of the plaintiffs are safety employees,
who are excluded under the MWD-CalPERS contract.
6
employees.” (§ 20502.) Furthermore, the CalPERS board may disapprove a
contract amendment proposing an exclusion “if in its opinion the exclusion
adversely affects the interest of this system.” (Ibid.) Finally, employees of
contracting agencies may not decline membership for which they qualify:
“Membership in this system is compulsory for all employees included under a
contract.” (Ibid.) The MWD-CalPERS contract follows the above provisions of
section 20502; it states that all “[e]mployees other than local safety members”
shall become members of CalPERS unless excluded by law or by the agreement,
and excludes only a single group, “safety employees.”
The above establishes that both under the provisions of the PERL, to which
MWD became subject when it entered into its contract with CalPERS (§ 20506),
and under the contract itself, MWD is obliged to enroll in CalPERS all its
employees other than safety employees and those, such as certain part-time and
temporary employees (§ 20305), excluded by the PERL. Our question, then, is
what the PERL means by “employee.”
As to contracting agencies, the PERL gives the term no special meaning,
stating simply that “employee” means “[a]ny person in the employ of any
contracting agency.” (§ 20028, subd. (b).) In this circumstance—a statute
referring to employees without defining the term—courts have generally applied
the common law test of employment. “ ‘[W]here Congress uses terms that have
accumulated settled meaning under . . . the common law, a court must infer, unless
the statute otherwise dictates, that Congress means to incorporate the established
meaning of these terms.’ [Citations.] In the past, when Congress has used the
term ‘employee’ without defining it, we have concluded that Congress intended to
describe the conventional master-servant relationship as understood by common-
law agency doctrine.” (Community for Creative Non-Violence v. Reid (1989) 490
U.S. 730, 739-740, italics added; accord, People v. Palma (1995) 40 Cal.App.4th
7
1559, 1565-1566 [“as a general rule, when ‘employee’ is used in a statute without
a definition, the Legislature intended to adopt the common law definition and to
exclude independent contractors”].) California courts have applied this
interpretive rule to various statutes dealing with public and private employment.5
The federal courts have applied it specifically to the question of qualification for
retirement benefits.6 Unless given reason to conclude the Legislature must have
intended the term to have a different meaning in section 20028, subdivision (b),
we also can only adhere to the common law test. We proceed to consider MWD’s
and the labor suppliers’ arguments for a contrary reading of the PERL.
Observing that the PERL should be read as a whole, MWD points to
several provisions of the law that, it contends, show the legislative intent that a
contracting agency’s worker is to be covered only if the funds from which the
worker is paid are controlled by the agency, a criterion it asserts plaintiffs do not
meet because their paychecks were issued by the labor suppliers, not MWD. We
agree the provisions of the PERL should be read in the context of the entire law.
(City of Huntington Beach v. Board of Administration (1992) 4 Cal.4th 462, 468.)
5
See, e.g., Tieberg v. Unemployment Ins. App. Bd., supra, 2 Cal.3d at pages
946-950 (unemployment insurance law); McFarland v. Voorheis-Trindle Co.
(1959) 52 Cal.2d 698, 702-706 (workers’ compensation exclusivity); Service
Employees Internat. Union v. County of Los Angeles (1990) 225 Cal.App.3d 761,
769-770 (public employment collective bargaining law).
6
Nationwide Mutual Insurance Company v. Darden (1992) 503 U.S. 318,
322-323 (“employee,” as used in Employee Retirement Income Security Act
(ERISA), is defined by the common law test); see Wolf v. Coca-Cola Company
(11th Cir. 2000) 200 F.3d 1337, 1340-1342 (leased worker may be employee,
under common law test, for purposes of ERISA, but is not entitled to benefits
because specifically excluded by terms of employer’s plan); Vizcaino v. United
States District Court for the Western District of Washington (9th Cir. 1999) 173
F.3d 713, 723-724 (Restatement test applied to determine whether temporary
agency employees were employees of Microsoft for purposes of participation in
Microsoft’s employee stock purchase plan).
8
For the reasons stated below, however, we do not agree that only those on the
MWD payroll may be considered MWD employees for purposes of enrollment in
CalPERS.
While subdivision (b) of section 20028, concerning employees of
contracting agencies, contains no control-of-funds limitation, subdivision (a) of
the same statute, concerning employees of state agencies, does; subdivision (a)
defines “employee,” in relevant part, as “[a]ny person in the employ of the state
. . . whose compensation . . . is paid out of funds directly controlled by the state
. . . excluding all other political subdivisions, municipal, public and quasi-public
corporations.” (Italics added.)7
MWD contends subdivision (b) of section 20028 should be read as
containing the same control-of-funds limitation as section 20028, subdivision (a)
because, prior to the PERL’s 1945 codification, the provisions of the two present
subdivisions were part of a single paragraph; no reason exists for the Legislature
to have required direct agency control in one case (state agencies) but not in the
other (contracting agencies); and to make such a distinction would violate the
constitutional equal protection rights of any state agency workers excluded from
CalPERS because they are paid from funds not directly controlled by the state.
7 Section
20028,
subdivisions (a) and (b) provide in full: “ ‘Employee’
means all of the following: [¶] (a) Any person in the employ of the state, a county
superintendent of schools, or the university whose compensation, or at least that
portion of his or her compensation that is provided by the state, a county
superintendent of schools, or the university, is paid out of funds directly controlled
by the state, a county superintendent of schools, or the university, excluding all
other political subdivisions, municipal, public and quasi-public corporations.
‘Funds directly controlled by the state’ includes funds deposited in and disbursed
from the State Treasury in payment of compensation, regardless of their source.
[¶] (b) Any person in the employ of any contracting agency.”
9
We find these arguments unpersuasive. As the Court of Appeal explained,
“[w]here the Legislature makes express statutory distinctions, we must presume it
did so deliberately, giving effect to the distinctions, unless the whole scheme
reveals the distinction is unintended.” Here, every indication is that the distinction
was purposeful. Though the precodification version of the law contained
provisions regarding state agencies and contracting cities in the same paragraph,
indeed the same sentence, that text, like the two subdivisions today, nonetheless
clearly distinguished between the two categories of employees and imposed a
direct-control-of-funds limitation only as to employees of state agencies.8 The
legislative intent to make this distinction, shown by the plain language of section
20028 and its predecessors, is confirmed by other parts of the PERL permitting
state employees who are reassigned to positions in which their compensation does
not come from a source directly controlled by the state nevertheless to continue to
participate in CalPERS. (§§ 20284, 20772; cf. § 21020, subd. (d).) These
provisions, like the limitation on employment in section 20028, apply only to
employment by the state, not by a contracting agency, strongly suggesting the
distinction in section 20028 was not accidental.
A rational legislative basis for the distinction is, moreover, readily
apparent. The direct-control-of-funds limitation in subdivision (a) of section
20028 prevents local government employees working in programs indirectly
funded by the state from claiming state employment. (See, e.g., Adcock v. Board
of Administration (1979) 93 Cal.App.3d 399, 402-403 [under predecessor to
8
See Statutes 1939, chapter 927, section 3, pages 2605-2606, defining an
employee as “any person in the employ of the State of California whose
compensation . . . is paid out of funds directly controlled by the State . . . and, for
the purposes of this act, any person in the employ of any contracting city who is
included by contract under the retirement system.”
10
§ 20028, subd. (a), inheritance tax referee paid from state tax revenues controlled
by county treasurer is not eligible for CalPERS state service credit].) Contracting
agencies, unlike the state, are not typically engaged in indirect funding of other
government entities’ programs, and a contracting agency, also unlike a state
agency, may seek exclusion, under section 20502, of categories of employees not
paid out of funds directly controlled by the agency. MWD’s claim that the
distinction in section 20028 between state and contracting agency employees must
have been a drafting error resulting from the creation of two subdivisions from a
single statutory paragraph is therefore without merit, as is its claim that the
distinction violates equal protection principles because it lacks a rational basis.
MWD also argues that failing to read a control-of-funds limitation into
section 20028, subdivision (b) will have the absurd and burdensome consequence
of enrolling thousands of contracting agency workers in CalPERS with no
prospect those employees will ever receive retirement benefits. This claim rests
on the PERL provisions arguably basing the amount of retirement benefits upon
compensation paid from funds controlled by the employing agency. (See
§§ 21354 [benefits for local miscellaneous members determined in part from
member’s “final compensation”], 20069, subd. (a) [“state service” is service “for
compensation”], 20630 [“compensation” is “remuneration paid out of funds
controlled by the employer”].)
As CalPERS points out, however, other provisions of the PERL may permit
retirement benefits to be calculated on a basis not formally dependent on state or
contracting agency employer control of funds. (See §§ 20024 [service credit
available for “service in employment while not a member but after persons
employed in the status of the member were eligible for membership” as well as for
“state service”], 20037 [“final compensation” dependent on member’s
“compensation earnable”], 20636 [“compensation earnable” dependent on
11
member’s “payrate” and “special compensation,” both defined without reference
to employer control of funds].) We agree with the Court of Appeal that “MWD
has not established that the sections it cites constitute the only tests for
determining benefit levels.”
More to the point, the PERL’s enrollment mandate is separate from the
right to collect retirement benefits. A contracting agency must enroll all
employees who are not excluded from the system by law or contract. (§ 20502;
see also § 20281 [new contracting agency employee “becomes a member upon his
or her entry into employment”].) The right of any member to receive benefits, on
the other hand, is in the first instance for CalPERS itself to decide, after hearing if
necessary, when such benefits are sought. (§§ 20123, 20125, 20134.) Even if, as
MWD claims, service credit and final compensation are dependent on whether the
contracting public agency controlled the funds from which the employee was paid,
CalPERS correctly claims the authority to determine, subject to judicial review,
“the existence, level and effect of such control following evidentiary hearings” on
entitlement to benefits. In a given case, CalPERS may well determine that an
employee whose paycheck was issued by a private labor supplier, but whose rate
of pay and hours of work were set by the employing contracting agency, whose
timesheets were subject to approval by that agency’s supervisors, and for whose
work the labor supplier was paid an amount calculated from the agency-dictated
pay rate (all of which, the record suggests, were true of at least some plaintiffs
here), was compensated from funds controlled, within the meaning of section
20630, by the contracting public agency. (See People v. Groat (1993) 19
Cal.App.4th 1228, 1232-1234 [local government manager who approved her own
timesheets thereby controlled disbursement of public funds within meaning of
criminal misappropriation statute]; People v. Qui Mei Lee (1975) 48 Cal.App.3d
12
516, 519, 523 [same, as to county medical director with authority to approve
invoices from private hospitals, which were actually paid by county auditor].)9
No absurd or obviously unintended result is necessarily created, therefore,
by reading section 20028, subdivision (b) according to its plain language, as not
containing the direct-control-of-funds limitation found in section 20028,
subdivision (a). To the contrary, it is MWD’s interpretation of the statute, under
which a public agency employee paid through a third party would automatically be
disqualified from CalPERS membership, that would undermine the legislative
purpose of the PERL. As the trial court cogently observed in its Issue A ruling,
MWD’s construction “would allow . . . contracting agencies to unilaterally avoid
their enrollment obligations by setting up a variety of third-party wage and benefit
mechanisms, or by bypassing internal merit hiring systems, both of which appear
inconsistent with the legislative requirement in section 20502 that contracting
agencies must enroll all employees absent a statutory exclusion or a contractually
agreed upon exclusion expressly approved by the CalPERS Board.”
9
Justice Baxter argues this court should decide as a matter of law that
plaintiffs are ineligible for CalPERS membership because that the labor suppliers
issued their paychecks is undisputed. (Dis. opn. of Baxter, J., post, at p. 8, fn. 5.)
This analysis assumes that the entity issuing a paycheck necessarily has sole
control (within the meaning of the PERL) of the funds from which the worker is
paid. But as experience and the decisions cited above indicate, control over
disbursement of funds may be exercised by persons other than those who actually
write the checks. MWD’s asserted control over whether, how long, and at what
wages its leased employees work might well be sufficient to constitute control
over the funds from which they are paid, funds that MWD supplies through its
payments to the labor suppliers. Because the degree and nature of the control
exercised by MWD is a matter of disputed fact (see ante, at pp. 5-6), so far
unresolved either by trial or by CalPERS hearing, the legal question of how much
control is enough is not ripe for decision.
13
MWD also makes two related public policy arguments for construing the
PERL to exclude workers hired through labor suppliers: first, MWD observes that
if such workers are hired without going through the agency’s normal merit
selection procedures (in MWD’s case, set out in its administrative code), but can
obtain full employee benefits, merit selection programs will be undermined; and
second, MWD argues that public agencies often need temporary workers solely for
individual public works projects, which may take years to complete, and that
giving such employees full civil service rights, including restrictions on discharge,
will result in unnecessarily increased public staffing costs.
MWD tethers neither argument to provisions of the PERL, and we are
aware of nothing in the PERL to support an exclusion based on either rationale.
Participation in the CalPERS retirement system does not depend on whether an
agency chooses to classify an employee as eligible for benefits under civil service
or local merit selection rules. Such an interpretation could lead, contrary to the
letter and spirit of the law, to a patchwork of standards set by local agencies rather
than a uniform definition set and applied by the CalPERS administering board.
(See §§ 20125 [CalPERS board has sole authority to “determine who are
employees”], 20502 [board may disapprove agency proposal to exclude a group of
employees]; City of Los Altos v. Board of Administration (1978) 80 Cal.App.3d
1049, 1051-1052 [legislative intent was for a single system-wide standard of
eligibility, not various standards set by individual participating agencies]; see also
Com. on Pensions of State Employees, Rep. to Leg. (Dec. 1928) p. 10 [proposed
state pension law “has been drawn on the assumption that all state employees shall
participate in the system, without regard to whether or not they have civil service
status”].) Nor, given the express exclusion of “seasonal, limited-term . . . or other
irregular” workers who are employed for fewer than six months at a time or 125
14
days (or 1,000 hours) in a fiscal year (§ 20305, subd. (a)(3)), can we infer an intent
to exclude, more broadly, all workers hired for a long-term public works project.
Though we cannot rewrite the PERL to relieve MWD of the consequences
it foresees from application of the law to its employment practices, MWD itself
seemingly has the power to avoid at least some of them. As CalPERS observes,
“[i]t was MWD who chose to hire [plaintiffs] through the providers instead of
through its own merit selection system.” If, as it claims, MWD fears “favoritism,
cronyism and political patronage” will result from giving workers hired outside
the merit selection system employee status, the agency retains the option of
applying its merit selection system more broadly to avoid these evils.
To the extent MWD complains of having to provide long-term project
workers the employment security and other benefits provided for in its
administrative code, we stress that no such result follows from our plain language
reading of the PERL: a determination that long-term project workers are entitled
to enrollment in CalPERS would not necessarily make those workers permanent
employees for purposes of MWD’s administrative code or entitle them to benefits
provided by MWD to its permanent employees.10 For both past and present
workers, entitlement to local agency benefits is a wholly distinct question from
entitlement to CalPERS enrollment and, as to MWD’s future hires, of course,
nothing in the PERL prevents it from amending its own code.
The private labor suppliers, citing several statutes and regulations that
permit dual employers of the same worker (joint employers or coemployers) to
share or allocate between them certain responsibilities of employment, argue the
10
We say nothing here, of course, regarding plaintiffs’ entitlement, or lack
thereof, to the MWD administrative code benefits sought in their petition and
complaint. Only the issue of the PERL’s interpretation is before us.
15
PERL, too, should be construed to recognize coemployment. They maintain that
under a theory of coemployment the labor suppliers, rather than their clients such
as MWD, should be deemed the employers for purposes of the PERL, thus
excluding workers they supply from the public retirement system. No legitimate
basis exists, however, for finding a coemployment exception to the PERL.
The cited laws may be fairly read as showing a recognition of leased
workers as a special case in certain contexts.11 But none purports to abrogate the
common law test for employment, and none suggests that workers hired through
labor suppliers are, for purposes other than those treated by the cited statutes,
deemed employees only of the labor supplier. Nor, of course, has the Legislature
provided in the PERL for any coemployment exception to a contracting agency’s
duty to enroll employees in CalPERS. The only relevant legislative choice to date
has been to require enrollment of all persons in the “employ” of a contracting
agency. (§ 20028, subd. (b).) Where the Legislature has expressly provided for
separation of certain payments and benefits (workers’ compensation and
unemployment insurance) from employment as defined at common law, but has
11
See, e.g., Labor Code section 3602, subdivision (d) (where a worker has
multiple employers, one employer may contract with another for the payment of
workers’ compensation premiums and may thereby satisfy its statutory duty to
secure compensation); Unemployment Insurance Code section 606.5 (if labor
supplier meets definition of “leasing employer”—a supplier who also determines
the workers’ assignments and rates of pay and has the right to hire and fire the
workers—supplier is the employer for purposes of securing unemployment
insurance; otherwise, the “client or customer” remains the employer for
unemployment insurance purposes); California Code of Regulations, title 2,
section 7286.5 (for purposes of Fair Employment and Housing Act, worker
supplied through temporary services agency is employee of temporary services
agency “with regard to such terms, conditions and privileges of employment under
the control of the temporary service agency,” but is employee of client employer
as to “such terms, conditions and privileges of employment under the control of
that employer”).
16
not done so for public retirement benefits, the court may not write such an omitted
exception into the PERL statutes. As the Court of Appeal explained, “such
revision is a legislative, not a judicial, responsibility.”
No more persuasive is the labor suppliers’ claim that a worker hired
through a supplier waives his or her right to CalPERS membership by agreeing to
be hired in this manner. Contrary to the suppliers’ assertion that “[n]othing in
PERL indicates participation is mandatory,” the PERL states in so many words
that “[m]embership in this system is compulsory for all employees” not excluded
by other provisions of the PERL or by the local agency’s contract with CalPERS.
(§ 20502; see also § 20281 [employee of state or contracting agency becomes a
member upon entry into employment].) That rule protects the system itself, for, as
the commission that initially recommended establishment of a state pension
system explained, without mandatory membership some employees may prefer to
take their full salary and, absent the prospect of a pension, will be reluctant to
retire even when they are no longer productive: “The state can secure full value
for the money it contributes only through compulsory membership of all
employees. One employee should have no more right than another to continue at
full salary far beyond the period of full working efficiency.” (Com. on Pensions
of State Employees, Rep. to Leg., supra, p. 10; accord, State Civil Service, 22
Ops.Cal.Atty.Gen. 205, 206 (1953) [benefits under the PERL are established for a
public reason and may not be waived by private agreement].)12
12
In a variation on the waiver theory, Justice Baxter argues that because
plaintiffs “decided” to be employed through labor suppliers, they should have no
right to benefits ordinarily available to MWD employees. (Dis. opn. of Baxter, J.,
post, at p. 9.) But the record suggests plaintiffs were given no choice in the
matter. The named plaintiffs’ declarations generally indicate they were
interviewed and selected by MWD supervisors and told their employment would
be through a labor supplier. The dissent cites no evidence plaintiffs freely chose
(footnote continued on next page)
17
None of the federal decisions cited by the labor suppliers and the
concurring and dissenting opinion (Roth v. American Hospital Supply Corp. (10th
Cir. 1992) 965 F.2d 862; Hockett v. Sun Company, Inc. (10th Cir. 1997) 109 F.3d
1515; Capital Cities/ABC, Inc. v. Ratcliff (10th Cir. 1998) 141 F.3d 1405) is to the
contrary. The Roth court relied expressly on authority holding, under ERISA, that
participation in a pension plan may be knowingly and voluntarily waived (Roth v.
American Hospital Supply Corp., supra, at p. 867); under the PERL, as stated,
membership is compulsory for eligible employees of contracting agencies. Roth,
moreover, was not an ordinary leased worker but a chief executive officer who, in
negotiations over sale of his company, insisted that he continue to be employed by
the former parent company. The court limited its waiver holding to those facts,
noting that “[e]mployers should not take either our reasoning or result to mean that
they may coerce their employees to waive some or all of their benefits.” (Id. at
p. 868.) The Hockett court applied the common law test for employment; to the
extent it gave particular emphasis to the parties’ understanding of their
relationship, one of the established factors, it relied on its earlier decision in Roth.
(Hockett v. Sun Company, Inc., supra, at p. 1527.) Finally, in CapitalCities/ABC,
Inc v. Ratcliff, the same court held simply that the employees had, by express
contract, waived their rights to pension benefits. (CapitalCities/ABC, Inc v.
Ratcliff, supra, at p. 1410.) As already explained, such contractual waivers are not
recognized under the PERL.
(footnote continued from previous page)
to avoid “the rigors of a competitive merit system.” (Ibid.) All that plaintiffs
“decided” was to accept employment on the terms offered. In contrast, MWD,
exercising apparently unfettered freedom of choice, decided to hire plaintiffs
without using the procedures set forth in its administrative code. If any unfairness
to other employees results from that decision, it should not be attributed to
plaintiffs.
18
The concurring and dissenting opinion argues “it should be for the
Legislature, not this court,” to decide “whether a public agency should be
permitted to use leased workers to meet its labor needs.” (Conc. & dis. opn. of
Brown, J., post, at p. 13.) We absolutely agree. Nothing we say here precludes
the Legislature, if it so chooses, from amending the PERL to declare leased
workers to be the employees of the labor suppliers, as the Legislature in fact has
done for certain (but, notably, not all) labor suppliers in the unemployment
insurance context. (Unemp. Ins. Code, § 606.5.) But for this court to anticipate
legislative action and create an unprecedented exemption from the PERL by
replacing the established common law test of employment with a rule of complete
deference to the parties’ characterization of their relationship (conc. & dis. opn. of
Brown, J., post, at pp. 6-7, 9-10) would be, we believe, improper, especially as the
issue here is one of statutory interpretation, not of common law development.
Convinced the common law test must be rewritten so as to serve the “labor
consumer’s” purpose of “separat[ing] control from other terms of employment,”
the concurring and dissenting justice excoriates the court for failing to reach out to
embrace this “new labor paradigm.” (Conc. & dis. opn. of Brown, J., post, at pp.
6, 12.)13 But we believe the court exercises restraint consistent with the “[p]roper
exercise of our role” and fully discharges its “fundamental obligation” (conc. &
dis. opn. of Brown, J., post, at pp. 1, 16) by deciding the single statutory question
13
Even if we could properly reach the question of a “new labor paradigm” in
this case—despite the lack of even a hint of this idea in the statute at issue—we
would not necessarily be convinced this case calls for a fundamentally new
understanding of the employment relationship. MWD, a large public employer, is
already well organized to assume the risks and burdens of the employment
relationship for its scores or hundreds of employees. If the allegations in
plaintiffs’ complaint are true, MWD may have hired plaintiffs through labor
suppliers not to reduce the burden on its human resources department, but to avoid
providing them retirement and other employment benefits.
19
presented under the procedural posture of this case, Issue A of the case
management order, without exploring common law issues neither decided by the
lower courts nor briefed by the parties.
CONCLUSION
In sum, we conclude the PERL’s provision concerning employment by a
contracting agency (§ 20028, subd. (b)) incorporates a common law test for
employment, and that nothing elsewhere in the PERL, in MWD’s administrative
code, or in statutes and regulations addressing joint employment in other contexts
supports reading into the PERL an exception to mandatory enrollment for
employees hired through private labor suppliers.
Justice Baxter claims our decision will impose a “crushing burden” on
MWD and other contracting agencies by requiring them to make up previously
unpaid CalPERS contributions for leased workers. (Dis. opn. of Baxter, J., post, at
p. 3.) As previously stated (see maj. opn., ante, at p. 3), however, we do not hold
that plaintiffs or any other particular leased workers must be enrolled in CalPERS;
nor do we hold that plaintiffs, if found to be MWD employees, must be enrolled as
of their dates of initial employment. Moreover, as Justice Baxter himself
recognizes (dis. opn. of Baxter, J., post, at pp. 5-6), employees with fewer than
five years in qualifying service—presumably including most employees hired as
temporary workers through labor suppliers—are ineligible for CalPERS retirement
benefits, and a contracting agency’s contribution obligations are determined
actuarially, taking into account the employer’s eligibility experience. (See
§§ 20815, subd. (a), 21060.) Contributions attributable to temporary leased
employees should thus be substantially reduced. Finally, pursuant to section
20812, the CalPERS board may adopt a funding period of 30 years for
amortization of unfunded contributions from contracting agencies and “shall
approve new amortization periods based upon requests from contracting agencies
20
. . . that can demonstrate a financial necessity,” making the imposition of ruinous
lump sum liability even more unlikely. In short, Justice Baxter greatly overstates
the effect of the court’s decision.
DISPOSITION
The judgment of the Court of Appeal is affirmed.
WERDEGAR, J.
WE CONCUR:
GEORGE, C. J.
KENNARD, J.
MORENO, J.
21
CONCURRING AND DISSENTING OPINION BY BROWN, J.
This is a case of the tail wagging the dog—with a vengeance. The majority
purports to decide only whether real parties in interest1—workers leased by the
Metropolitan Water District (MWD) from independent labor suppliers—must be
enrolled as members of the California Public Employees’ Retirement System
(CalPERS). In reality, the majority has uncritically applied an arguably obsolete
common law definition of employee to a new labor paradigm and conferred an
authority on CalPERS—one never accorded by the Legislature—to unilaterally
determine the legality of public employers using leased workers. Proper exercise
of our role in defining the common law and according deference to the legislative
and executive branches should compel the court to decline plaintiffs’ invitation to
remake the civil service in the image of the pension system. I respectfully dissent.
I.
In its extensive case management order, the trial court considered threshold
issue A: “Whether [MWD] is mandated by the [Public Employees’ Retirement
Law] to enroll all common law employees in CalPERS.” Plaintiffs reason that,
under California’s common law definition of employee, they are unquestionably
1
In the action below, real parties in interest were the plaintiffs and
respondent Metropolitan Water District was the defendant. For clarity, I will refer
to the parties by these terms.
1
MWD employees. Therefore, if the Public Employees’ Retirement Law (PERL)
incorporates the common law test into its own definition of employee, plaintiffs
are entitled to CalPERS enrollment.
The trial court permitted CalPERS to file a complaint in intervention.
Consistent with plaintiffs’ interpretation, CalPERS sought declaratory relief that
would (1) interpret the term employee in the PERL in accordance with the
common law definition of that term, and (2) affirm CalPERS’s role as the first
arbiter of whether an individual is an employee of a public agency for purposes of
applying the PERL.
The majority purports only to resolve the threshold issue; but, of course, the
answer is not so simple. While enrollment in CalPERS does not directly resolve
whether plaintiffs are MWD’s employees for nonretirement purposes, or even
expressly determine their entitlement to CalPERS benefits, it inevitably gives
considerable momentum to their broader claims.
Thus, despite its disclaimers, the majority’s ostensibly narrow interpretation
of the PERL is effectively dispositive of the more significant underlying question
of plaintiffs’ employment status. To say that a covered employee is any employee
CalPERS says is a covered employee is a tautological response that not only
rewrites the statute, it alters the whole purpose of the pension law.
II.
The majority’s approach has several shortcomings. First, it conflicts with
and undermines the purpose and intent of the PERL. Second, it rewrites the
contractual relationship between MWD and CalPERS, between MWD and the
labor suppliers, and between the leased workers and the labor suppliers while
foisting on MWD an employment relationship it specifically contracted to avoid.
Third, it presupposes, without analytical support, that the current common law test
of “employee” is appropriate for determining the status of leased workers in this,
2
or any other, context. Finally, and in conflict with the separation of powers
doctrine, it preempts the Legislature from determining whether and in what
manner to treat leased workers differently in the public employment context.
A. PURPOSE AND INTENT OF THE PERL
“[O]ur first task in construing a statute is to ascertain the intent of the
Legislature so as to effectuate the purpose of the law.” (Dyna-Med, Inc. v. Fair
Employment & Housing Com. (1987) 43 Cal.3d 1379, 1386-1387). “The
Legislature enacted the Public Employees’ Retirement Law (Gov. Code § 20000 et
seq.), ‘to effect economy and efficiency in the public service by providing a means
whereby employees who become superannuated or otherwise incapacitated may,
without hardship or prejudice, be replaced by more capable employees . . . .’ ”
(Pearl v. Workers’ Comp. Appeals Bd. (2001) 26 Cal.4th 189, 193.) Courts also
deem civil service pensions to serve as an inducement to competent persons to
enter and remain in public service. (Packer v. Board of Retirement (1950) 35
Cal.2d 212, 217.)
Neither the explicit nor the implicit purpose of the PERL is served by a
determination that leased employees must be enrolled in CalPERS. These
employees have chosen to work for private employers, without additional pension
inducement and subject to termination at will when their services are no longer
needed. The rule of liberal construction applicable to the PERL serves to
effectuate the legislative intent of securing and retaining competent individuals for
public sector employment in the first instance. It does not support a construction
contrary to the statutory purpose, endorsing eligibility for workers clearly outside
the PERL’s intent. (See In re Retirement Cases (2003) 110 Cal.App.4th 426,
473.) In such circumstances, the court should approach its interpretive task with
utmost circumspection rather than with the blithe assumption that a superficial
construction suffices.
3
Indeed, while arguing that the purpose of the PERL should be liberally
construed, plaintiffs, seconded by CalPERS, invoke a canon of construction
intended to limit the scope of legislative enactments: that, as a general rule,
statutes will not be interpreted to alter common law rules absent a clear statement
to that effect. “ ‘ “A statute will be construed in light of common law decisions,
unless its language ‘ “clearly and unequivocally discloses an intention to depart
from, alter, or abrogate the common-law rule concerning the particular subject
matter . . . .” [Citations.]’ [Citation.]” ’ ” (California Assn. of Health Facilities v.
Department of Health Services (1997) 16 Cal.4th 284, 297.) Even assuming the
legal and analytical validity of this court-formulated precept in ordinary
circumstances where it occasions no great harm (see Corrigan & Thomas, “Dice
Loading” Rules of Statutory Interpretation (2003) 59 N.Y.U. Ann. Surv. Am. L.
231), plaintiffs here ask the court to rely on it to undermine a clearly expressed
legislative purpose, contrary to the court’s primary statutory construction
directive.
B. LEASED WORKERS AND THE COMMON LAW TEST OF “EMPLOYEE”
With respect to the common law, plaintiffs’ and CalPERS’s argument
contains a second fundamental analytical flaw—the uncritical assumption that
“employee” as defined under the current common law test applies without further
consideration to leased workers.
Plaintiffs, and by its language the majority (see maj. opn., ante, at pp. 5, 12,
14-15), assume the PERL incorporates a static common law definition of
employee under which control over performance of the work is the most
significant factor. This assumption erroneously ignores, or disregards, the essence
of the common law: the evolution of court-crafted jurisprudence to address new
circumstances and legal questions. Leased workers present a new paradigm, a
4
three-sided labor relationship in which control has been expressly separated from
other aspects of employment.
In support of their position, plaintiffs rely heavily on the Restatement
Second of Agency (1958) (Restatement), section 220, and its apparent focus on the
factor of control. Section 220, subdivision (1), defines a servant as “a person
employed to perform services in the affairs of another and who with respect to the
physical conduct in the performance of the services is subject to the other’s control
or right to control.” Section 220, subdivision (2)(a) lists 10 factors relevant to
distinguishing employees from independent contractors, the first factor being “the
extent of control which, by the agreement, the master may exercise over the details
of the work.”
This court has previously quoted with approval these provisions of the
Restatement and characterized control as “the principal test” (Tieberg v.
Unemployment Ins. App. Bd. (1970) 2 Cal.3d 943, 946 (Tieberg)) in defining
employment for purposes of the Unemployment Insurance Code. (See also
McFarland v. Voorheis-Trindle Co. (1959) 52 Cal.2d 698, 704-706; Industrial
Ind. Exch. v. Ind. Acc. Com. (1945) 26 Cal.2d 130, 135 [same in workers’
compensation context].) At the same time, we recognized that control is not
dispositive and that several other “ ‘secondary elements’ ” (Tieberg, at p. 950)
may be relevant in assessing employment status. (Id. at pp. 949-950; see also S.G.
Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341,
352; Laeng v. Workmen’s Comp. Appeals Bd. (1972) 6 Cal.3d 771, 777-778,
fn. 7.) Moreover, the court has never considered how these various elements
would affect the status of leased workers. It is far from clear the same factors
would predominate.
Indeed, the Legislature has taken the lead in suggesting that a distinct rule
should apply to leased workers. Section 606.5, subdivision (b), of the
5
Unemployment Insurance Code provides that, for purposes of that code, the
common law control test governs employee status in all cases except that of leased
workers, expressly recognizing they present a separate case. In other contexts as
well, the Legislature has made independent provision for worker leasing. (See
Lab. Code, § 3602, subd. (d) [addressing workers’ compensation coverage for
leased workers]; see also Cal. Code Reg., tit. 2, § 7286.5, subd. (b)(5) [defining
employment for purposes of workplace discrimination against an employee of a
“temporary service agency”]; cf. 29 C.F.R. § 825.106(b)-(e) (2003) [designating
the leasing employer as the employer for purposes of family leave].) Even
CalPERS’s own handling of the issue indicates—contrary to the position it takes
in this litigation—that it has heretofore recognized worker leasing as a distinct
phenomenon calling for development of a new “system-wide approach”; and the
State Administrators’ Handbook, from which CalPERS obtained its working
summary of the common law control test, elsewhere indicates special
considerations apply in these circumstances.
Undue emphasis on control assumes an overly reductionist approach to the
common law. However close a link between control over the way the work is
performed and employment in other contexts, in the case of worker leasing,
control is relatively insignificant because the purpose of the labor relationship is to
separate control from other terms of employment. Moreover, the worker enters
into and accepts, generally expressly, this three-sided labor relationship fully
aware of its purpose. As the Restatement recognizes, a relevant determinative of
an employer-employee relationship is “whether or not the parties believe they are
creating the relation of master and servant.” (Rest., § 220, subd. (2)(i); see also
Tieberg, supra, 2 Cal.3d at p. 949.) Since the parties’ intent dominates the
relationship among worker, labor supplier, and labor hirer, this element logically
6
should weigh more heavily than control of work performance in determining
employment status.
The Restatement is at best a snapshot of the common law as it existed in
1957. Because it follows the law—summarizing consensus and organizing
relevant legal principles—it cannot serve as a definitive guide to assessing a new
labor structure, one which reflects unprecedented economic, technological, and
demographic transformations in our society. This does not render the PERL, with
respect to the common law definition of employment, a moving target. The
fundamental common law conception of employment has not changed. Rather, to
the extent their significance varies from the original norm, the relevant factors
must be reweighed in this new context consistent with the intent of the parties.
The Restatement was formulated at a time when employee leasing in its
purest form did not even exist. Thus, it differentiates only between employees and
independent contractors, not employees and leased workers. Nor does the
Restatement or our cases dealing with employee lending discuss the paradigm of
labor supply and consumption. (See, e.g., Kowalski v. Shell Oil Co. (1979) 23
Cal.3d 168, 174.) For example, the labor relationship at issue here differs
distinctly from that of one employer lending another employer one of its skilled
employees for an occasional task. (See, e.g., Rest., § 227, com. c, illus. 3, p. 502.)
Contrariwise, a labor supplier is in the business of providing workers to consumers
temporarily in need of certain services. The latter situation represents an entirely
new labor relationship in which control of the work is exclusively within the
purview of the labor consumer; and, as all parties contractually agree, every other
aspect of employment is exclusively within the purview of the labor supplier.
Common law rules that evolved to address the traditional two-sided labor
paradigm are simply inapposite in this context.
7
Moreover, the Restatement developed its definition of employment
specifically in the context of assigning tort liability to employers under the
doctrine of respondeat superior. Here, the predominant consideration is the
statutory purpose of the PERL, which “is to effect economy and efficiency in the
public service by providing a means whereby employees who become
superannuated or otherwise incapacitated may, without hardship or prejudice, be
replaced by more capable employees” (Gov. Code, § 20001) and to attract the best
employees to public service. (Packer v. Board of Retirement, supra, 35 Cal.2d at
p. 215.) These statutory purposes are very different from the question of assigning
tort liability, a question plainly more closely aligned with the common law control
test than with pension entitlement. (Cf. Santa Cruz Poultry, Inc. v. Superior Court
(1987) 194 Cal.App.3d 575 [labor consumer is employer of leased worker for
purposes of workers’ compensation law].) There is no logical reason control
should determine employment status in the latter circumstance even if it does in
the former, particularly when the parties have expressly separated control from
every other aspect of employment.
In sum, ultimately the courts, not the Restatement, delineate the evolution
of the common law definition of employee and identify the factors that should
assume primary significance in any particular worker context.
Uncritical application of the Restatement’s control test fails to recognize
that the leased worker of today is unlike the lent employee of 1958. In Vizcaino v.
United States Dist. Ct. for the Western Dist. of Wash. (9th Cir. 1999) 173 F.3d 713
(Vizcaino), the Ninth Circuit Court of Appeals considered whether leased workers
(temporary agency employees) who provided services to Microsoft were
employees for purposes of participation in Microsoft’s employee stock purchase
plan. The court conceded “that the assessment of the triangular relationship
8
between worker, temporary employment agency and client is not wholly
congruent with the two-party relationship involving independent contractors.”
(Id. at p. 723.) Nevertheless, the court applied the Restatement—with its
dispositive emphasis on control—as a fixed body of law, failing to recognize the
common law as an organic element of the law intended to adapt itself to new
circumstances. (See also Wolf v. Coca-Cola Company (11th Cir. 2000) 200 F.3d
1337, 1340-1341 [leased worker may be employee of labor consumer for purposes
of Employee Retirement Income Security Act]; Burrey v. Pacific Gas & Electric
Company (9th Cir. 1998) 159 F.3d 388, 391-392.)
In my view, the better rule is expressed in Roth v. American Hospital
Supply Corp. (10th Cir. 1992) 965 F.2d 862 (Roth), in which the court considered
the claim of a leased worker that, for purposes of the Employee Retirement
Income Security Act (ERISA; 29 U.S.C. § 1001 et seq.), he was an employee of
the business that leased his services. The court found that ERISA incorporated the
common law definition of employee and specifically section 220 of the
Restatement. (Roth, at p. 866.) However, in applying the common law definition
in the context of worker leasing, the court noted that “[t]he issue . . . is one not
squarely addressed by the common law test . . . .” (Id. at pp. 866-867.) “Many of
the common law factors are, unsurprisingly, inapplicable to this inquiry.” (Id. at
p. 867.) Under the circumstances, the court concluded that control over the work
of the leased worker was less significant than the clear intent of the parties. (See
also Capital Cities/ABC, Inc. v. Ratcliff (10th Cir.) 141 F.3d 1405.)
Accordingly, the role of the court should not be to judge the propriety of a
labor relationship otherwise permitted by law, but to effectuate the intent of the
parties, particularly one they all knowingly and intentionally accept. Here, since
MWD intended to avoid entering into an employer-employee relationship with
plaintiffs, and they, in turn, willingly accepted their jobs on the terms offered, the
9
courts should recognize their mutual intent as the principal consideration in
determining plaintiffs’ employee status. Assuming MWD did not actively mislead
plaintiffs, they should not be allowed after the fact to redefine the agreed-upon
terms of the labor relationship. As the court in Roth explained, where parties
knowingly and intentionally separate control over work performance, a court
should not override that intent. (Roth, supra, 965 F.2d at p. 868.) This does not
“remake the law to conform to MWD’s hiring practices” (maj. opn., ante, at p. 2),
but discharges the court’s responsibility to reexamine and develop the common
law in new circumstances. (See Llewellyn, The Common Law Tradition (1960)
pp. 293-294.)
Contrary to the fundamental precepts of the common law, the majority here
views the question presented in statutory isolation, focusing on the PERL and
refusing to assess the unique position of leased workers. Like the lower courts, the
majority erroneously views worker leasing as bilateral. But by definition this is a
three-party labor relationship, the very purpose of which is to separate control over
work performance from every other aspect of employment and thus realign the
parties’ relationship whereby labor consumers are not employers. The majority’s
failure to recognize the legal significance of this distinct labor structure arbitrarily
adjudicates the obligations of the parties contrary to their original expectations.
C. CONTRACTUAL IMPAIRMENT
In this regard, the majority also fails to consider the impact of its holding
on contractual rights and expectations. While it disclaims the power “to remake
the parties’ agreement” (maj. opn., ante, at p. 3), its analysis accomplishes exactly
that. Given the contractual relationship between MWD and CalPERS, their
respective conduct over the course of nearly 60 years is highly relevant to
determining their understood intent. (See 1 Witkin, Summary of Cal. Law (9th ed.
1987) Contracts, § 689, pp. 622-623.)
10
For purposes of PERS entitlement, CalPERS has heretofore only used the
common law control test to distinguish independent contractors. Its long-term
dealings with MWD give no indication that CalPERS regularly or consistently
applied any version of that test to leased workers or that it had ever developed a
formal, system-wide policy with respect to leased workers. Similarly, nothing in
the record indicates CalPERS had, prior to this litigation, definitively interpreted
the PERL as including leased workers within its definition of employee. Nor did
MWD understand the PERL in that way.
Thus, even if MWD’s leased workers are employees for purposes of the
PERL, that holding cannot apply retroactively if the parties’ conduct indicates they
never interpreted their contract in that way. The majority’s contrary implication
imposes on MWD a potentially huge liability it had no basis for anticipating. (See
dis. opn. of Baxter, J., post, at p. 2.) If the historic understanding of the parties
with respect to the PERL is at odds with the court’s present construction of that
law, then the contract involves a mutual mistake of law and is, to that extent,
subject to rescission. (1 Witkin, Summary of Cal. Law, supra, Contracts, §§ 377,
378, pp. 344-345.) Any other conclusion would bind MWD to a contractual term
that no party bargained for or understood to exist. Nevertheless, the majority
completely ignores the legal significance of this contractual history.
D. PREEMPTION OF THE LEGISLATURE
Noting that the PERL contains “no broad exclusion for long-term, full-time
workers” (maj. opn., ante, at p. 2), the majority declares that “[a]ny change in the
PERL to accommodate such long-term temporary hiring must come from the
Legislature, not from this court, which cannot remake the law to conform to
MWD’s hiring practices.” (Id. at p. 2.) With due respect, this completely inverts
the statutory analysis. Given the historical perspective of leased workers, there is
no basis for finding the PERL would have contemplated leased workers in the first
11
instance; thus, there would be no reason for the Legislature to refer to them, either
by inclusion or exclusion. In other words, contrary to the majority’s unsupported
assumption, their absence from the statutory scheme has no legal significance. By
investing this purported omission of any reference to leased workers with legal
substance, the majority itself rewrites the statute—inferring that public employers
are prohibited from using leased workers outside the purview of the PERL.
The specific question raised in this case is whether a public agency that has
purchased labor from a labor supplier in lieu of hiring its own employees must
enroll these workers in CalPERS. Under this new three-sided model, the labor
consumer is no longer the employer of the worker. Instead, the employment
contract lies between the worker and a third party—a labor supplier—that
separately contracts with labor consumers to satisfy their labor needs. In the
abstract, this new labor paradigm appears to be simply a matter of personal choice
and private agreement. Disputes, however, arise when workers who have
willingly entered into employment contracts with labor suppliers then seek the
rights and benefits of employment with the labor consumers. In essence, these
workers ask the courts to redraw the boundaries of the three-sided relationship.
That task is clearly one the court should defer to the Legislature, which can
better assess the policy implications and balance the respective interests of the
public and individual workers. Indeed, the Legislature has already taken action
where it has thus far deemed it appropriate. (See Lab. Code, § 3602, subd. (d);
Unemp. Ins. Code, § 606.5, subd. (b); see also Cal. Code Reg., tit. 2, § 7286.5,
subd. (b)(5).) In effectively subverting the parties’ deliberate effort to separate
control from employment, the majority ignores this express validation of
employee leasing as an acceptable, and presumably desirable, economic
innovation. Contrary to the implication of the majority’s analysis, the Legislature
has already determined that control over work may be legally separable from
12
employment. The majority asserts no basis, other than a legislative vacuum, for
finding that the two are inseparable in the context of the PERL, particularly given
the PERL’s vague definition of employee.
The PERL does not mention common law control test. This test becomes
part of the statutory scheme only by virtue of judicial interpretation. Thus, while
plaintiffs argue the PERL incorporates the same common law rule that applies
outside the context of the PERL—they ignore the fact that nothing in the common
law rule prohibits a labor consumer from leasing workers—and having control
over their work—without thereby becoming an employer. Any other
interpretation of the common law would bring it into conflict with the
Legislature’s express approval of employee leasing.
Moreover, given the policy considerations, it should be for the Legislature,
not this court, to address the narrower question of whether a public agency should
be permitted to use leased workers to meet its labor needs. Unlike the broader
proposition of using leased workers generally, that narrower question raises
distinct concerns because these workers can provide a public agency with a means
to avoid certain costs and burdens that apply exclusively in the public employment
context, such as merit selection requirements and the possibility of suits under 42
United States Code section 1983. For that reason, the Legislature might
reasonably place restrictions on public agencies as regards their use of leased
workers. But, that is a legislative, not judicial prerogative. Whatever reservations
we may harbor in this regard, the legislative process should be allowed to work. If
limitations are appropriate, we must assume that the Legislature will act
accordingly. Until that time, the court’s function is to develop the common law to
meet the changing circumstances of the workplace.
Contrary to the majority’s implication, recognizing a special rule for
employee leasing does not carve out an exception to the PERL’s definition of
13
employee without any basis for such an exception in the statutory language.
(Cf. Gov. Code, §§ 20300 [excluding independent contractors], 20502 [allowing
for contractual exclusion of specified groups by contracting agencies].) Rather, in
identifying a special rule applicable to leased workers, this court would be
construing the common law, not the PERL, which incorporates the common law.
This case is not a referendum on the legality, morality, or any other aspect
of public agencies utilizing leased workers to supplement their workforce. That
question is completely separate from the one the majority purports to answer, one
that implicates policy concerns principally within the legislative purview and one
the Legislature has yet to directly address in this context. Given the legislative
vacuum, this court should be wary of arrogating to itself or CalPERS the authority
to determine whether this new class of workers is entitled to CalPERS
membership.
III.
In sum, I do not think the Legislature intended to strike a fatal blow to
worker leasing when, in 1943, it first enacted the PERL’s rather vague definition
of public agency employee. More likely, it did not even consider the issue at that
time. When it did consider the issue 43 years later in defining the employer-
employee relationship in another statutory context, the Legislature gave its
imprimatur to employee leasing by making express provision for it. This latter
point, more than any other, should settle the issue before us. The common law
definition of employee cannot work to foreclose an innovative labor relationship
that the Legislature has explicitly recognized. Rather, in deference to and
consistent with that legislative approval, we should interpret the common law to
accommodate worker leasing by adjusting the relevant test to reflect the
singularity of this new labor relationship, one in which the control factor assumes
less, and the intent of the parties greater, significance.
14
I agree with the majority’s rejection of MWD’s argument that subdivision
(b) of Government Code section 20028 “should be read as containing the same
control-of-fund limitation as section 20028, subdivision (a).” Such an
interpretation is unsupported by the statutory language (see maj. opn., ante, at p. 9)
and would improperly require this court to act in a legislative capacity.
(Id. at p. 2.) Nevertheless, the “foundational” principle cited by MWD and its
amici curiae—that CalPERS enrollment and CalPERS benefits should not be
available to workers unless they have received “compensation” from a CalPERS
employer—remains logically compelling and is the only position consistent with
the express purpose of the pension scheme.
Therefore, even if the majority’s determination that the PERL’s definition
of employee incorporates California’s common law is correct, I would also
conclude that the common law factors that are relevant to determining the
existence of an employer-employee relationship do not have the same weight in
every context, and that in the context of worker leasing, control over the manner in
which the work is performed is not determinative of an employment relationship
and does not override the express intent of the parties.2 Thus, while I agree MWD
2
On this basis, I would disagree with CalPERS’s long-standing conclusion
that the PERL incorporates the 20-factor federal test into its definition of
employee. (See Yamaha Corp. of America v. State Bd. of Equalization (1998) 19
Cal.4th 1, 7-8 [“[T]he binding power of an agency’s interpretation of a statute . . .
is contextual . . . . [¶] . . . [I]t may be helpful, enlightening, even convincing. It
may sometimes be of little worth. [Citation.]”].) First, nothing in the PERL
indicates the applicability of federal law in this context; and our decisions
discussing the common law definition of the employer-employee relationship
nowhere indicate approval of the 20-factor federal test. More importantly, the
federal test focuses exclusively on control, and for the reasons stated above, I see
no indication that the Legislature intended control to be determinative of
employment in the case of a leased worker, thereby prohibiting for purposes of the
PERL what the Legislature expressly approved in the Unemployment Insurance
Code.
15
is mandated by the PERL to enroll all common law employees in CalPERS, I also
conclude, contrary to the majority’s analysis, that a leased worker is not a common
law employee; and that the superficial answer to issue A is correct but incomplete.
A proper analysis of the underlying question is critical to the resolution of this
litigation. For this reason, I would disclaim what will surely be the ultimate effect
of the majority’s analysis. Rather, I would address the question directly and
discharge this court’s fundamental obligation to develop the common law in light
of changing circumstances.
BROWN, J.
16
DISSENTING OPINION BY BAXTER, J.
I respectfully dissent. In the case of a local public agency, such as
defendant Metropolitan Water District of Southern California (MWD), that has
voluntarily contracted with the California Public Employees’ Retirement System
(CalPERS) to include its eligible “employees” in CalPERS, the Public Employees’
Retirement Law (PERL; Gov. Code, § 20000 et seq.)1 grants service credit, upon
which all pension rights are based, only for work compensated from funds
controlled by the contracting agency itself. The agency’s obligation to make
pension contributions on a worker’s behalf—the sine qua non of the worker’s
membership in CalPERS—also depends entirely on service compensated by
agency-controlled funds. Plaintiffs here are workers employed by private labor
suppliers. Though plaintiffs were assigned to perform services for MWD, their
pay came entirely from the private employers, which used their own funds for that
purpose. Hence, these services neither qualified for CalPERS pension benefits,
nor gave rise to an obligation of MWD to pay contributions to CalPERS.
Accordingly, plaintiffs neither were nor are eligible “employees” of MWD who
must be enrolled as CalPERS members.
The majority’s contrary conclusion, wrong on the law, also has potentially
unfair, even calamitous, consequences for the agencies that have volunteered to
1
All subsequent unlabeled statutory references are to the Government Code.
1
provide their true employees with CalPERS benefits. CalPERS, which has
primary responsibility for determining who are “employees” covered by the
system (§ 21025), has long known that public agencies were making increased use
of leased workers. Indeed, CalPERS’s staff internally noted the “escalat[ing]”
implications of this practice for CalPERS pension purposes.
Yet, though it now supports plaintiffs’ belated claims for membership,
CalPERS never alerted contracting agencies that leased workers are the agencies’
own “employees” in this regard. It never required these workers’ enrollment in
the system, and it never assessed ongoing employer and employee contributions
toward their CalPERS pensions. On the contrary, internal memoranda indicate
that CalPERS avoided the issue except in scattered individual cases. CalPERS
deferred pertinent regulations and guidelines, decided only to “research[ ] further
[its] position,” and placed the problem on the “back burner,” meanwhile
conducting “a fact-driven review of each request for membership.” In 1996, a
knowledgeable CalPERS official stated internally that leased workers were
“justifiably excluded” under current conditions.
The result of CalPERS’s misleading procrastination is that MWD and many
other local contracting agencies, which have budgeted on the assumption that
leased workers were not their “employees” for pension purposes, may now have to
enroll significant numbers of such workers, nunc pro tunc, as CalPERS members.
Aside from future contributions to the system on the workers’ behalf, these
agencies may also now have to make up previously unpaid contributions that are
actuarially necessary to finance full pension rights of those leased workers who
have already worked long enough to “vest” in the system. I cannot join the
majority’s decision to expose financially strapped local agencies to this crushing
burden.
2
In reaching their result, the majority essentially reason as follows: Unless
the worker is expressly excluded by contract or statute (see, e.g., §§ 20300 et seq.,
20502), the PERL requires every “employee” of an agency, such as MWD, which
has agreed with CalPERS to participate in the CalPERS pension scheme
(hereafter, a local contracting agency), to be a member of CalPERS as of the
inception of the agency’s CalPERS contract, or the employee’s entry into
employment, whichever is later. (§§ 20281, 20283.) The statute broadly describes
an “employee” for this purpose as “[a]ny person in the employ of any contracting
agency.” (§ 20028, subd. (b).) Because section 20028, subdivision (b) does not
further define or limit “employ” or “employee” in this context, we must assume
the statute intends the multifactor common law test of employment. Hence, since
MWD’s contract with CalPERS did not expressly exclude workers furnished and
paid by private labor suppliers, MWD must enroll all such workers, not statutorily
ineligible for membership, who were MWD’s common law employees.
I believe this analysis is flawed. The majority reject the argument of MWD
and its amici curiae that workers are a local contracting agency’s “employee[s],”
for purposes of CalPERS enrollment, only if their work is compensated from funds
controlled by the agency itself. Focusing exclusively on section 20028, which
defines “[e]mployee,” the majority note that while subdivision (a) expressly limits
the employees of the state, a state university, or a county school superintendent to
those workers compensated from funds “directly controlled” by such entities or
officials, separate subdivision (b), applicable to the employees of “[local]
contracting agenc[ies],” contains no similar express limitation.
The majority dismiss the contention that by virtue of other provisions of the
PERL, a control-of-funds rule is implied in subdivision (b) of section 20028, and
restricts the class of eligible “[e]mployee[s]” who must be enrolled in CalPERS.
However, I find that interpretation persuasive.
3
We must construe specific statutory provisions in the context of the overall
scheme of which they are a part (e.g., Robert L. v. Superior Court (2003)
30 Cal.4th 894, 903; Horwich v. Superior Court (1999) 21 Cal.4th 272, 280;
Lungren v. Deukmejian (1988) 45 Cal.3d 727, 735), avoiding, if possible,
anomalous or absurd results that contravene the Legislature’s presumed intent
(see, e.g., Diamond Multimedia Systems, Inc. v. Superior Court (1999) 19 Cal.4th
1036, 1047). The PERL’s purpose is, of course, to establish a public employee
pension system administered by CalPERS and funded by employer and employee
contributions, and to determine eligibility for the system’s benefits. As MWD and
its amici curiae point out, the PERL makes clear that one who claims CalPERS
pension benefits through a local contracting agency may only obtain such benefits
for service compensated from funds controlled by the agency itself.
Because CalPERS membership simply reflects the member’s potential
eligibility for CalPERS benefits, it seems apparent that one cannot be a local
agency’s eligible “[e]mployee,” and thus a compulsory member of CalPERS, if his
or her only service fails, ab initio, to qualify for such benefits by reason of the
control-of-funds rule.
Moreover, the PERL states explicitly that a CalPERS “[m]ember” is “an
employee who has qualified for membership in this system and on whose behalf
an employer has become obligated to pay contributions.” (§ 20370, subd. (a),
italics added.) As I will explain, a contracting local agency’s obligation to make
pension contributions on behalf of a worker, like the worker’s eligibility for
benefits, is based solely on service compensated by agency-controlled funds.
The path to these conclusions is clear. We necessarily begin with the
PERL’s definition of “[s]tate service”—the basis upon which all CalPERS
eligibility, benefits, and contributions are calculated. Under section 20069,
subdivision (a), “ ‘[s]tate service’ means service rendered as an employee . . . of
4
. . . a contracting agency, . . . and only while he or she is receiving compensation
from that employer therefor . . . .” (Italics added.) Section 20630 provides, in
turn, that “[a]s used in this part, ‘compensation’ means the remuneration paid out
of funds controlled by the employer in payment for the member’s services . . . .”
(Italics added.)2
A member may retire “for service” only “if he or she has attained age 50
and is credited with five years of state service.” (§ 21060, italics added.) Upon
such “retirement for service (§ 21350), the “service retirement allowance” (ibid.)
of a “local miscellaneous member” is calculated on three variables—the member’s
age at retirement, his or her years of “service,” and his or her “final
compensation.” (§ 21354, italics added.) Under the statutory definitions set forth
above, the applicable years of “service” are only those years of work compensated
from funds controlled by the local contracting agency, and the worker’s final
“compensation” must itself have been paid from such funds. To put it simply, no
CalPERS service retirement allowance can be obtained or calculated except upon
the basis of work so compensated. (But cf. fn. 4, post.) Accordingly, one is not
eligible to receive a CalPERS service retirement allowance for work on behalf of a
local contracting agency if the work was compensated entirely from funds outside
the agency’s control.3
2
Section 20284 provides that when “an employee of the state,” as defined by
section 20028, subdivision (a), is assigned to work for which, “pursuant to statute
or duly authorized contract entered into by the state or the state agency by which
the person is employed,” he or she is compensated from “funds not directly
controlled by the state,” the person continues, while in that status, as an
“ ‘employee of the state,’ ” and the person’s work during such assignment “shall
be ‘state service’ notwithstanding [s]ections 20028 and 20069.” (Italics added.)
No similar expansion of the definition of “state service” applies to local
contracting agencies and workers who provide services to such agencies.
3
Similar principles apply to eligibility of a local miscellaneous member for a
disability retirement pension, and to the calculation of the final amount of such
(footnote continued on next page)
5
As noted, the CalPERS pension system is funded by contributions from
both CalPERS members and the public agencies that employ them. The normal
rate of the employee contribution for local miscellaneous members is “7 percent of
the compensation paid that member for service rendered on and after June 21,
1971.” (§ 20677, subd. (a)(2), italics added.) Hence, the employees’ contribution
is based solely on work compensated by funds controlled by the public agency.
The employer’s contribution is an amount calculated to produce, when
combined with its employees’ contributions, service retirement allowances for
eligible employees in the amounts specified by the PERL. (See §§ 21350, 21354.)
This contribution, actuarially determined on an annual basis, is not a uniform rate,
but must be assessed, as to each employer, on the basis of that employer’s “own
experience” with respect to its employees’ eligibility for retirement benefits.
(§ 20815, subd. (a); see also § 20814, subd. (b).)
Thus, the employer’s duty to contribute is limited to the amount actuarially
necessary, when combined with employee contributions, to pay pensions for its
eligible workers on the terms and conditions set by the PERL. As explained
above, that pension eligibility is based upon state service—service compensated
from funds controlled by the employer—and calculated on the basis of the
employees’ final compensation—compensation paid from funds controlled by the
employer. It follows that a CalPERS employer has no obligation to contribute on
(footnote continued from previous page)
pension. Thus, a local miscellaneous member is eligible for a CalPERS disability
retirement allowance only “if . . . credited with five years of state service.”
(§ 21150, italics added.) As indicated above, “state service” is service
compensated from funds controlled by the CalPERS employer. Moreover, the
final amount of a disability pension is based on the employee’s “final
compensation” and credited “years of service” (see §§ 21423, subds. (a), (b),
21427)—both of which require payment for service from funds controlled by the
CalPERS employer.
6
behalf of workers who have not rendered service, or received compensation, from
funds controlled by the employer, and are thus not eligible to receive CalPERS
retirement benefits. And persons for whom the employer is not obligated to
contribute need not be enrolled as CalPERS “[m]embers.” (§ 20370, subd. (a).)
That is the status occupied by the plaintiffs in this case.4
The majority suggest the issue whether plaintiffs must be enrolled as
CalPERS members—all the majority purport to decide here—is separate from
their eligibility, if any, for CalPERS retirement benefits. I disagree. As indicated
above, the statutory scheme, read as a whole, restricts and limits compulsory
CalPERS membership to those workers who can qualify for CalPERS retirement
benefits. Under the control-of-funds rule that underlies all eligibility for such
benefits, plaintiffs, whose work was entirely compensated by private labor
suppliers, are unable to do so. Indeed, as MWD and its amici curiae stress, the
Legislature cannot have intended to compel the meaningless act of CalPERS
4
The majority point to several sections of the PERL, cited by CalPERS,
which, they assert, suggest that a CalPERS pension need not always be calculated
exclusively upon the basis of work compensated from funds controlled by the
CalPERS employer. For example, section 20024 defines “current service”—one
component upon which the final amount of a pension is calculated (see. e.g.,
§ 21350, subd. (b))—to include not only “state service,” but also “service in
employment while not a member but after persons employed in the status of the
member were eligible for membership.” Whatever the technical meaning of this
provision, it does not undermine the requirement of minimum “state service”—
i.e., service compensated from funds controlled by the employer—as a
prerequisite to the eligibility of a local miscellaneous member for any retirement
pension, whether “service” or “disability.” (§§ 21060, 21150.) Similarly, to the
extent a pension is calculated on such bases as the worker’s “final compensation,”
“special compensation,” “compensation earnable,” and “payrate” (§§ 20037,
20636) none of these technical terms is defined to suggest that the “compensation”
referred to in these phrases is other than “compensation” as defined generally for
all PERL purposes, which “compensation” must be paid from funds controlled by
the employer. (§ 20630.)
7
enrollment for persons who, from the outset, are unable to qualify for CalPERS
benefits.5
The majority, like plaintiffs and their amici curiae, insinuate that to exclude
leased workers from CalPERS under a control-of-funds requirement is to
encourage and reward an easy subterfuge, by which public agencies may bypass
their merit hiring systems, and may deny the full benefits of public employment to
large numbers of persons who essentially function as employees. But plaintiffs
have raised no challenge to the legality of MWD’s use of leased workers. They
simply seek to “have their cake and eat it too.” They agreed to be employed, not
by MWD, but by private entities that leased their services to MWD. This choice
spared them the rigors of a competitive merit selection system in obtaining their
5
The majority suggest that membership enrollment is necessarily separate
from determinations of pension eligibility because CalPERS itself has the
authority to decide in the first instance, subject to judicial review, each individual
member’s eligibility for a CalPERS pension. (See § 21025.) I find these
principles irrelevant to the situation presented by this case. Certainly, CalPERS,
as the expert agency charged with administering the PERL, should take positions
on issues of coverage affecting CalPERS employers and members (see text
discussion, ante), and it may determine eligibility in individual cases by applying
the legal principles set forth in the PERL to decide disputed facts, or mixed
questions of fact and law. But courts may always decide pure questions of law on
undisputed facts. Here it is undisputed that plaintiffs’ paychecks were issued by
private labor suppliers, not by MWD. The suppliers charged MWD fees for the
workers’ labor, which fees were based on the workers’ agreed pay rate plus a
“markup” for the services of the companies that employed and supplied the
workers. Though the majority suggest otherwise, I believe this arrangement takes
plaintiffs out of eligibility for CalPERS membership or pension benefits, as a
matter of law, by virtue of the PERL’s control-of-funds rule.
Though CalPERS now supports plaintiffs’ position, the majority are not so
bold as to invoke the principle of deference to CalPERS’s expert agency
interpretation. Their restraint on this point is wise. As indicated above, CalPERS
dithered and delayed on the matter and never promulgated a formal construction of
the PERL in line with its apparent current stance.
8
positions. It may well have enhanced their take-home pay, as well as increasing
their flexibility and mobility. They have made no contributions to CalPERS, and,
as MWD and its amici curiae point out, they may already be covered under
pension plans provided by their private employers. Yet, without assuming the
burdens of competitive merit employment by a public agency, they now seek the
very benefits they decided to forgo.
Moreover, though the majority suggest otherwise, it is entirely rational for
the Legislature to determine, by means of a control-of-funds requirement, that
workers employed and paid by others, like independent contractors (§ 20300,
subd.(b)), should be excluded from CalPERS. In one case, the agency contracts
with an individual for his or her independent services; in the other, it contracts
with an independent entity for the services of persons the entity employs. The
evidence indicates that public agencies tend to use independent contractors and
leased workers in similar ways—to obtain flexible temporary assistance, or
focused technical or consulting skills, that are needed only on a special or
intermittent basis, without resort to the civil service system and its implications of
tenured employment. It is hardly remarkable that the Legislature would consider
both categories of workers to be appropriately excluded from the PERL’s
provisions for lifetime public pension benefits.
By concluding otherwise, after CalPERS’s long failure to provide guidance
to its contracting agencies, the majority impose, at this late hour, the potential for
new and unexpected financial liabilities, significant in amount, on local
government agencies throughout this state that already face unprecedented fiscal
challenges. As I have explained, the current legislative scheme does not dictate
such a result. Given the very substantial implications, it might now be well for the
Legislature to confront and consider directly the issue how the growing
phenomenon of leased workers is to be treated for public pension purposes.
9
In the meantime, I cannot join the majority’s reasoning, or their result. I
would reverse the judgment of the Court of Appeal.
BAXTER, J.
I CONCUR:
CHIN, J.
10
See last page for addresses and telephone numbers for counsel who argued in Supreme Court.
Name of Opinion Metropolitan Water District v. Superior Court
__________________________________________________________________________________
Unpublished Opinion
Original Appeal
Original Proceeding
Review Granted XXX 92 Cal.App.4th 1112
Rehearing Granted
__________________________________________________________________________________
Opinion No. S102371
Date Filed: February 26, 2004
__________________________________________________________________________________
Court: Superior
County: Los Angeles
Judge: Charles W. McCoy, Jr.
__________________________________________________________________________________
Attorneys for Appellant:
Jeffrey Kightlinger, Herny Torres, Jr.; Horvitz & Levy, Mitchell C. Tilner, Jon B. Eisenberg; Bergman,
Wedner & Dacey, Bergman & Dacey, Gregory M. Bergman, Daphne M. Anneet and Mark W. Waterman
for Petitioner Metropolitan Water District of Southern California.
Katten Muchin Zavis, Stuart M. Richter, Patricia T. Craigie, Justin M. Goldstein, Donna L. Dutcher;
Freedman & Stone and Marc D. Freedman for Petitioners CDI Corporation, Comforce Technical Services,
Inc., H.L. Yoh Company, MD Technical Services Company, Peak Technical Services, Superior Technical
Resources, Inc., Superior Staffing Services, Inc., Volt Information Sciences, Inc., Volt Management Corp.
and Westaff (USA), Inc.
Musick, Peeler & Garrett and Charles E. Slyngstad for County Sanitation District No. 2 of Los Angeles
County as Amicus Curiae on behalf of Petitioner Metropolitan Water District of Southern California.
McMurchie, Weill, Lenahan, Lee, Slater & Pearse and David W. McMurchie for California Special
Districts Association as Amicus Curiae on behalf of Petitioner Metropolitan Water District of Southern
California.
Jones, Day, Reavis & Pogue, Elwood Lui, Philip E. Cook; Brown, Winfield & Canzoneri, Nowland C.
Hong and Scott H. Campbell for County of Los Angeles as Amici Curiae on behalf of Petitioner
Metropolitan Water District of Southern California.
Myers, Nave, Riback, Silver & Wilson, Arthur A. Hartinger and Terry Roemer for 148 California Cities,
Counties, Towns and Districts, California Association of Sanitary Agencies, State Water Contractors,
California Special Districts Association and Association of California Water Agencies as Amici Curiae on
behalf of Petitioner Metropolitan Water District of Southern California.
__________________________________________________________________________________
Attorneys for Respondent:
No appearance for Respondent.
1
PAGE 2 - COUNSEL CONTINUED - S102371
Attorneys for Real Party in Interest:
Cochran-Bond Connon & Ben-Zvi, Cochran-Bond Law Offices, Walter Cochran-Bond; Law Offices of
William M. Samoska, Samoska & Friedman, Judy A. Friedman and Richard N. Grey for Real Parties in
Interest Dewayne Cargill, Anvar Alfi, John Sims, Paul Broussard, Joseph Zadikany, Sun Son, Charlotte
Manuel, Steven Minor and Lisa Nelson.
Steptoe & Johnson, Edward Gregory, Sheri T. Cheung, Jason Levin and Bennett Cooper for Real Party in
Interest California Public Employees' Retirement System.
Rothner, Segall & Greenstone, Anthony R. Segall, Glenn Rothner and Julia Harumi Mass for American
Federation of State, County and Municipal Employees Union, Local 1902, AFL-CIO as Amicus Curiae on
behalf of Real Parties in Interest.
Bendich, Stobaugh & Strong, David F. Stobaugh, Stephen K. Strong, Brian J. Waid; Krakow & Kaplan,
Rottman • Kaplan, Steven J. Kaplan; Kalisch, Cotugno & Rust, Lee Cotugno and Mark Kalisch as Amici
Curiae on behalf of Real Parties in Interest.
Carol R. Golubock and Patricia C. Howard for Service Employees International Union, AFL-CIO, CLC as
Amicus Curiae on behalf of Real Parties in Interest.
Davis, Cowell & Bowe, Richard G. McCracken and Andrew J. Kahn for Union of American Physicians
and Dentists as Amicus Curiae on behalf of Real Parties in Interest.
Tosdal, Levine, Smith, Steiner & Wax and Thomas Tosdal for Center on Policy Initiatives as Amicus
Curiae on behalf of Real Parties in Interest.
2
Counsel who argued in Supreme Court (not intended for publication with opinion):
Jon B. Eisenberg
Horvitz & Levy
15760 Ventura Boulevard, 18th Floor
Encino, CA 91436-3000
(818) 995-0800
Walter Cochran-Bond
Cochran-Bond Law Offices
One Wilshire Boulevard, Suite 2200
Los Angeles, CA 90017
(213) 629-8710
Bennett Cooper
Steptoe & Johnson
633 West Fifth Street, Suite 700
Los Angeles, CA 90071
(213) 439-9400
3
Opinion Information
| Date: | Docket Number: |
| Thu, 02/26/2004 | S102371 |
Parties
| 1 | Metropolitan Water District Of Southern California (Petitioner) Represented by Gregory Mark Bergman Bergman and Dacey 10880 Wilshire Blvd. Suite 900 Los Angeles, CA |
| 2 | Metropolitan Water District Of Southern California (Petitioner) Represented by Jon B. Eisenberg Horvitz & Levy 15760 Ventura Boulevard, 18th Floor Encino, CA |
| 3 | Metropolitan Water District Of Southern California (Petitioner) Represented by Henry Torres Attorney at Law 700 North Alameda Street Los Angeles, CA |
| 4 | Metropolitan Water District Of Southern California (Petitioner) Represented by Jeffrey Kightlinger 700 North Alameda Street 700 North Alameda Street Los Angeles, CA |
| 5 | Superior Court Of Los Angeles County (Respondent) 600 South Commonwealth Avenue, Dept. 308 Los Angeles, CA 90005 |
| 6 | Cargill, Dewayne (Real Party in Interest) Represented by Walter Cochran-Bond Cochran-Bond Law Offices One Wilshire Boulevard, Suite 2200 Los Angeles, CA |
| 7 | Cargill, Dewayne (Real Party in Interest) Represented by Judith Alissa Friedman Law Ofc William M Samoska 11835 W Olympic Blvd #650E Los Angeles, CA |
| 8 | Cargill, Dewayne (Real Party in Interest) Represented by Richard Norman Grey Attorney at Law 17801 Ventura Blvd Encino, CA |
| 9 | Alfi, Anvar (Real Party in Interest) |
| 10 | Cdi Corporation (Petitioner) Represented by Stuart M. Richter Katten, Muchin Zavis Rosenman 2029 Century Park East, Ste. 2600 Los Angeles, CA |
| 11 | Public Employees Retirement System (Real Party in Interest) Represented by Edward Gregory Steptoe & Johnson, LLP 633 West 5th Street, Suite 700 Los Angeles, CA |
| 12 | County Of Los Angeles (Amicus curiae) Represented by Elwood Lui Jones, Day, Reavis, Etal 55 W. Fifth St., Suite 4600 Los Angeles, CA |
| 13 | County Of Los Angeles (Amicus curiae) Represented by Nowland C. Hong Brown, Winfield & Canzoneri 300 S. Grand Ave., Suite 1500 Los Angeles, CA |
| 14 | City Of Carlsbad (Pub/Depublication Requestor) Represented by Ronald R. Ball City Attorney 1200 Carlsbad Village Dr. Carlsbad, CA |
| 15 | Shiell, Hall And Holgren Plaintiffs (Amicus curiae) Represented by Steven J. Kaplan Rottman * Kaplan 9350 Wilshire Blvd., Suite 300 Beverly Hills, CA |
| 16 | Shiell, Hall And Holgren Plaintiffs (Amicus curiae) Represented by David Stobaugh Bendich, Stobaugh & Strong 900 Fourth Ave., Suite 3800 Seattle, WA |
| 17 | Shiell, Hall And Holgren Plaintiffs (Amicus curiae) Represented by Stephen Strong Bendich, Stobaugh & Strong 900 Fourth Ave., Suite 3800 Seattle, WA |
| 18 | Union Of American Physicians And Dentists (Amicus curiae) Represented by Richard G. Mccracken Davis, Cowell & Bowe 100 Van Ness Ave 20th flo San Francisco, CA |
| 19 | Union Of American Physicians And Dentists (Amicus curiae) Represented by Andrew J. Kahn Davis Cowell & Bowe 100 Van Ness Ave., 20th Floor San Francisco, CA |
| 20 | 148 California Cities, Counties, Towns (Amicus curiae) Represented by Mary Theresa Roemer Meyers, Nave et al 777 Davis St., Suite 300 San Leandro, CA |
| 21 | Center On Policy Initiatives (Amicus curiae) Represented by Thomas Tosdal Tosdal, Levine, et al. 600 B Street, Suite 2100 San Diego, CA |
| 22 | California Special Districts Association (Amicus curiae) Represented by David W. Mcmurchie Mcmurchie, Weill, et al. 1030 15th St., Suite 300 Sacramento, CA |
| 23 | Holmgren Plaintiffs (Amicus curiae) Represented by Lee Cotugno Kalisch Cotugno & Rust 9606 Santa Monica Blvd., Penthouse Beverly Hills, CA |
| 24 | Service Employees International Union, Afl-Cio, Clc (Amicus curiae) |
| 25 | American Federation Of State, County & Municipal Employees (Amicus curiae) Represented by Anthony Segall Rothner, Segall & Greenstone 510 South Marengo Avenue Pasadena, CA |
| 26 | American Federation Of State, County & Municipal Employees (Amicus curiae) Represented by Julia Harumi Mass 510 South Marengo Avenue 510 South Marengo Avenue Pasadena, CA |
| 27 | American Federation Of State, County & Municipal Employees (Amicus curiae) Represented by Glenn Rothner Rothner, Segall, & Greenstone 510 South Marengo Avenue Pasadena, CA |
| Disposition | |
| Feb 26 2004 | Opinion: Affirmed |
| Dockets | |
| Nov 27 2001 | Petition for review filed By counsel for petitioner {Metropolitan Water District of Southern California} / 40(N) |
| Nov 27 2001 | Record requested |
| Nov 27 2001 | 2nd petition for review filed By counsel for petitioner {CDI Corporation et al.,} / 40(N) |
| Nov 27 2001 | Note: |
| Nov 28 2001 | Received Court of Appeal record one doghouse sent overnight --> Jorge |
| Dec 14 2001 | Answer to petition for review filed by counsel for real party Dewayne Cargill, et al. to petn/review fld by Metropolitan Water District of Southern California |
| Dec 14 2001 | Answer to petition for review filed by counsel for resp Dewayne Cargill, et al., to petn/review fld by CDI Corp, et al. |
| Dec 17 2001 | Request for depublication (petition for review pending) County of Los Angeles [non-party] |
| Dec 17 2001 | Request for depublication (petition for review pending) counsel for petitioner (CDI Corporation) |
| Dec 17 2001 | Answer to petition for review filed real party California Publc Employees Retirement System |
| Dec 19 2001 | Request for depublication (petition for review pending) City of Carlsbad (non-party) 40n |
| Dec 21 2001 | Opposition filed by counsel for rpi, [CalPERS] to [CDI's] Dec. 14th Depub Reqt. |
| Dec 21 2001 | Request for extension of time filed by counsel for Shiell, Hall, and Holmgren/Plaintiffs -- to file response to depub/request. |
| Dec 24 2001 | Opposition filed by: RPI("Cargill) to Depub/Request of CDI Corporation, et al. ("CDI Petitoners") |
| Jan 15 2002 | Received letter from: petnr Metropolitan Water Dist. |
| Jan 23 2002 | Petition for Review Granted (civil case) Petitions for review granted. Votes: George C.J., Kennard, Baxter, Werdegar , Chin, Brown & Moreno JJ. |
| Jan 23 2002 | Note: |
| Jan 25 2002 | Change of Address filed for: counsel for (CDI Corporation, et al,.) Law Firm of Katten Muchin Zavis |
| Feb 5 2002 | Certification of interested entities or persons filed by counsel for petitioner (Metropolitan Water District) |
| Feb 7 2002 | Received letter from: RPI [CalPERS] re: receipt of request for Certificate of Interested Entities or Persons |
| Feb 8 2002 | Certification of interested entities or persons filed by counsel for Real Parties in Interest ( Dwayne Cargill, et al.) |
| Feb 8 2002 | Certification of interested entities or persons filed counsel for petitioner ( CDI Corporation, et al.,) |
| Feb 11 2002 | Notice of intent to rely on CA brief (as opening brief) filed with permission by counsel for petitioner (CDI Corp, et al.,) ***OPENING BRIEF*** |
| Feb 11 2002 | Notice of intent to rely on CA brief (as reply brief) filed with permission by counsel for petitioner (CDI Corp, et al.,) ***REPLY BRIEF*** |
| Feb 11 2002 | Filed: with permission by counsel for petitioner (CDI Corp. et al.,) Appendices to Petition for Writ of Mandate |
| Feb 13 2002 | Request for extension of time filed by petnr. to file the opening brief on the merits. to 3-25-02 |
| Feb 15 2002 | Extension of time granted Petitioner (Metropolitan Water District of Southern Calif.) time to serve and file the opening brief on the merits is extended to and including March 25, 2002.**No further extensions will be granted** |
| Mar 13 2002 | Application filed to: file *CalPERS* consolidated *ANSWER BRIEF*, answering both MWD's and CDI's briefs. |
| Mar 13 2002 | Answer brief on the merits filed by counsel for Real Party in Interest (D. Cargill) |
| Mar 26 2002 | Opening brief on the merits filed by counsel for petitioner (Metropolitan Water District of Southern California) (40K) |
| Apr 24 2002 | Answer brief on the merits filed Real party in interest (CalPERS) |
| Apr 26 2002 | Application to file over-length brief filed Real party in interest; DeWayne Cargill, et al's, Answer Brief/Merits. |
| May 1 2002 | Received: Notice of Change of Firm Name from counsel for petitioner (CDI Corp., et al.) New name Katten Muchin Zavis Rosenman. |
| May 2 2002 | Answer brief on the merits filed with permission by counsel for (RPI) Dewayne Cargill et al,.) |
| May 8 2002 | Request for extension of time filed Counsel for petitioner (Metropolitan Water Dist.) requests extension of time to June 21, 2002, to file a consolidated reply brief on the merits. |
| May 10 2002 | Filed: by counsel for Real Parties in Interest (D. Cargill, et al,.) Errata to Answer Brief on the Merits. |
| May 16 2002 | Extension of time granted Petitioner's time to serve and file the consolidated reply brief is extended to and including June 21, 2002. ***No further extensions will be granted*** |
| Jun 21 2002 | Reply brief filed (case fully briefed) by petitioner |
| Jul 12 2002 | Received application to file amicus curiae brief; with brief Union of American Physicians and Dentists (non-party ) in support of Real Parties in Interest. |
| Jul 18 2002 | Permission to file amicus curiae brief granted Union of American Physicians and Dentists (non-party) in support of Real Parties in Interest. |
| Jul 18 2002 | Amicus Curiae Brief filed by: Union of American Physicians and Dentists. |
| Jul 18 2002 | Received application to file amicus curiae brief; with brief Center for Policy Initiatives in support of Real Parties in Interest. |
| Jul 19 2002 | Received application to file amicus curiae brief; with brief Calif. Special Districts Assoc. in support of petitioner. |
| Jul 19 2002 | Received application to file Amicus Curiae Brief 148 California Cities, Counties, Towns and Districts, et al. in support of petitioner. (brief under same cover) |
| Jul 22 2002 | Received application to file amicus curiae brief; with brief HOLMGREN PLAINTIFFS, supports real parties, Dewayne Cargill, et al., under separate covers. |
| Jul 22 2002 | Filed: applications of non-resident attorneys, David Stobaugh & Stephen K. Strong to appear pro hac vice so to submit a/c brf on hehalf of plaintiffs in (3) cases related to this. >>>> SHIELL, HALL, AND HOLMGREN |
| Jul 22 2002 | Received application to file amicus curiae brief; with brief American Federation for State, County and Municipal Employees Union, Local 1902, AFL-CIO (non-party) in support of Real Parties in Interest. |
| Jul 22 2002 | Received application to file amicus curiae brief; with brief Service Employees International Union, AFL-CIO, CLC (nonparty) in support of Real Parties in Interest. |
| Jul 23 2002 | Received application to file amicus curiae brief; with brief County of L. A., submitted concurrent with vols. I, II & III of a request for judicial notice each under separate covers supports petnr. Metro Wtr. Dist. |
| Jul 23 2002 | Permission to file amicus curiae brief granted by 148 Calif. Cities, Counties, Towns and Districts, et al. in support of petnr. Any answer may be filed w/in 20 days. |
| Jul 23 2002 | Amicus Curiae Brief filed by: 148 Calif. Cities etc. et al. in support of petnr. |
| Jul 23 2002 | Permission to file amicus curiae brief granted by Center on Policy Initiatives in support of RPIs. Any answer may be filed w/in 20 days. |
| Jul 23 2002 | Amicus Curiae Brief filed by: Center on Policy Initiatives in support of RPIs |
| Jul 23 2002 | Permission to file amicus curiae brief granted byCalif. Special Districts Association in support of petnr. Any answer may be filed w/in 20 days. |
| Jul 23 2002 | Amicus Curiae Brief filed by: Calif. Special Districts Assn. in support of petnr. |
| Jul 29 2002 | Filed: Real Parties DeWayne Cargill et. al., "Objection to County of Los Angeles' proposed Amicus Brief and Request for Judicial Notice." faxed to sf |
| Aug 2 2002 | Permission to file amicus curiae brief granted by the county of L.A. in support of petnr. any answers may be filed w/in 20 days. |
| Aug 2 2002 | Amicus Curiae Brief filed by: the County of L.A. in support of petnr. (the request for judicial notice remains lodged) |
| Aug 2 2002 | Application to appear as counsel pro hac vice granted for Stephen K. Strong for A/C |
| Aug 2 2002 | Application to appear as counsel pro hac vice granted by David F. Stobaugh for A/C |
| Aug 2 2002 | Permission to file amicus curiae brief granted by the "Shiell, Hall and Holmgren Plaintiffs" in support of RPIs. any answers may be filed w/in 20 days. |
| Aug 2 2002 | Amicus Curiae Brief filed by: Shiell, Hall and Holmgren Plaintiffs in support of RPIs. |
| Aug 6 2002 | Permission to file amicus curiae brief granted Service Employees International Union, AFL-CIO, CLC |
| Aug 6 2002 | Amicus Curiae Brief filed by: Service Employees International Union, AFL-CIO,CLC in support of Real Parties in Interest. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.. |
| Aug 6 2002 | Permission to file amicus curiae brief granted American Federation of State, County and Municipal Employees, Local 1902, AFL-CIO. |
| Aug 6 2002 | Amicus Curiae Brief filed by: American Federation of State, County and Municipal Employees, Local 1902, AFL-CIO in support of Real Parties in Interest. |
| Aug 12 2002 | Response to amicus curiae brief filed RPI California Public Employees' Retirement System (CalPers) answering 148 California Cities, et al., Calif. Special Districts Assoc., and The County of Los Angeles. |
| Aug 12 2002 | Request for judicial notice filed (in non-AA proceeding) supporting Answer Brief submitted by counsel for RPI Dewayne Cargill et al., |
| Aug 13 2002 | Response to amicus curiae brief filed RPI Cargill responding to Amicus briefs in support of ["MWD"] by: 148 Calif Cites, Counties, Towns and Special Districts, Calif Assoc of Sanitary Agencies State Water Contractors, >> the Calif Special Districts Assoc., and the Assoc., of Calif. Water Agencies The Calif. Special Districts Assoc., the Contractors and the County of Los Angeles. ---- collectively ["MWD Amici"] --- |
| Aug 13 2002 | Response to amicus curiae brief filed by counsel for petitioner (Metro. Water District of So. Cali.) to amicus curiae briefs of Center on Policy Initiatives, The American Federation of State, County and Municipal Employees and the Service Employees International Union. |
| Aug 30 2002 | 2nd record request Remaining record (Overnight Mail) |
| Aug 30 2002 | Received Court of Appeal record 5 doghouses [being sent o/n] |
| Sep 3 2002 | Received: Errata to Response to AC Briefs>>real parties Dewayne Cargill, etal |
| Feb 13 2003 | Received letter from: counsel for petitioner (Metrop. Water Dist. of So. Calif) re: Scheduling of Oral Argument. |
| Feb 14 2003 | 2nd record request (Rehearing petitions) |
| Oct 30 2003 | Case ordered on calendar 12-3-03, 1:30pm, San Jose |
| Nov 7 2003 | Application filed to: Divide oral argument time>>real parties Dewayne Cargill and Calif Public Employees' Retirement System |
| Nov 17 2003 | Order filed permission granted for two counsel to argue on behalf of RPIs. |
| Nov 17 2003 | Order filed The request to allocate 20 minutes to RPI Dewayne Cargill and 10 minutes to RPI CalPERS of RPIs' 30 min of oral argument time is granted. |
| Nov 18 2003 | Filed: Real Party CALPERS's application to designate a different attorney for oral argument |
| Nov 25 2003 | Order filed permission granted for petnr to allocate 10 min. of oral argument time to A/C County of L.A. |
| Nov 25 2003 | Filed: by counsel for petnr. (Metro Water Dist. of So. Calif.) Request for Permission to allocate Oral Argument time to Amicus Curiae County of L.A.. |
| Nov 26 2003 | Order filed permission granted for two counsel to argue on behalf of petnr. (20 min for petnr, 10 min for A/C County of L.A.) |
| Dec 3 2003 | Cause argued and submitted |
| Feb 26 2004 | Opinion filed: Judgment affirmed in full Majority Opinion by Werdegar, J. -- joined by: George, C.J., Kennard, Moreno, JJ. Concurring & Dissenting Opinion by Brown, J. Dissenting Opinion by Baxter, J. -- joined by Chin, J. |
| Mar 30 2004 | Remittitur issued (civil case) |
| Apr 5 2004 | Received: receipt for remittitur |
| Briefs | |
| Feb 11 2002 | Notice of intent to rely on CA brief (as opening brief) |
| Feb 11 2002 | Notice of intent to rely on CA brief (as reply brief) |
| Mar 13 2002 | Answer brief on the merits filed |
| Mar 26 2002 | Opening brief on the merits filed |
| Apr 24 2002 | Answer brief on the merits filed |
| May 2 2002 | Answer brief on the merits filed |
| Jun 21 2002 | Reply brief filed (case fully briefed) |
| Jul 18 2002 | Amicus Curiae Brief filed by: |
| Jul 23 2002 | Amicus Curiae Brief filed by: |
| Jul 23 2002 | Amicus Curiae Brief filed by: |
| Jul 23 2002 | Amicus Curiae Brief filed by: |
| Aug 2 2002 | Amicus Curiae Brief filed by: |
| Aug 2 2002 | Amicus Curiae Brief filed by: |
| Aug 6 2002 | Amicus Curiae Brief filed by: |
| Aug 6 2002 | Amicus Curiae Brief filed by: |
| Aug 12 2002 | Response to amicus curiae brief filed |
| Aug 13 2002 | Response to amicus curiae brief filed |
| Aug 13 2002 | Response to amicus curiae brief filed |
