Judge: Mary H. Strobel, Case: 23STCP00760, Date: 2023-04-04 Tentative Ruling

Case Number: 23STCP00760    Hearing Date: April 4, 2023    Dept: 82

            Petitioners California Hospital Association and Robert Vlach (“Petitioners”) petition for a writ of mandate directing Respondents Holly Wolcott, in her official capacity as Los Angeles City Clerk (“Clerk”), and the City of Los Angeles (collectively, “Respondents”) to refrain from taking any action to validate initiative petition signatures, place on the ballot, or otherwise adopt into law an initiative petition entitled “Limit Healthcare Executive Compensation in Los Angeles” (“Initiative.”)  Respondents and Real Parties in Interest Calvin Karl Skinner, Jr., Maky Peters, Keisha Stewart, Jonathan Everhart, and Esmeralda Grubbs (“Real Parties”) separately oppose the petition. 

Judicial Notice

Petitioners’ Request for Judicial Notice (“RJN”) Exhibits A and B – Granted.

Respondents’ RJN Exhibits A and B, and Declaration of Jinny Pak, Exhibits A-F – Granted. 

Real Parties’ RJN Exhibits A-C – Granted. 

Petitioners’ Supplemental RJN Exhibits C and D – Granted. 

Background

The Initiative

            The Initiative, if adopted, would limit the annual compensation of any healthcare executive, as defined, in the City of Los Angeles.  Specifically, in pertinent part, the Initiative states:

            Sec. 107.00.  Findings and Purposes

This Ordinance, adopted by the People of the City of Los Angeles, makes the following Findings and has the following Purposes:

….[¶]

The compensation paid to chief executive officers, executives, managers, and administrators of hospitals and other healthcare facilities is often excessive, unnecessary, and inconsistent with the mission of providing high-quality, affordable medical care for all. This is especially true in light of the glaring inequalities that the ongoing Covid-19 pandemic has exposed. Excessive compensation diverts funds that could be invested in providing high-quality care and expanding access to affordable medical care for all City residents, undermining public confidence that the chief concern of our major healthcare providers is serving the community, not enriching individuals. It is particularly problematic at nonprofit hospitals that do not live up to their obligations to serve the poor and uninsured. Executives, managers, and administrators of hospitals and other healthcare facilities can be reasonably compensated without receiving more than the President of the United States of America, currently $450,000 per year. At $450,000 per year in compensation, Los Angeles hospitals and healthcare facilities will be more than able to attract and retain effective executive leadership.

Sec. 107.01. Healthcare Executive Compensation.

a)    Covered Compensation from any source for any Covered Executive shall not exceed the total compensation for the President of the United States, currently $450,000, as set forth in section 102 of Title 3 of the United States Code.

(Pet. RJN Exh. A [bold italics added].) 

The Initiative defines “Covered Compensation” as follows:

c) "Covered Compensation" means all remuneration paid, earned, or accrued in a fiscal year for work performed or services provided, including the cash value of all remuneration in any medium other than cash, included benefits, except as otherwise specified herein.

(1) Covered Compensation includes, but is not limited to, wages; salary; paid time off; bonuses; incentive payments; lump-sum cash payments; the fair market value of below market rate loans or loan forgiveness; housing payments; payments for transportation, travel, meals, or other expenses in excess of actual documented expenses incurred in the performance of duties; payments or reimbursement for entertainment or social club memberships; the cash value of housing, automobiles, parking, or similar benefits; scholarships or fellowships; the cash value of dependent care or adoption assistance or personal legal or financial services; the cash value of stock options or awards; payments or contributions for insurance, deferred compensation earned or accrued, or for severance or its equivalent.

(2) Covered Compensation includes severance or similar post-service or post-employment arrangements.

(3) Covered Compensation does not include contributions or payments required to be made to or from employee benefit plans covered by the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq. (ERJSA), nor the cost of any benefit or remuneration to the extent the inclusion of that benefit or remuneration in calculating total annual compensation would cause the limitation established by this subdivision to be preempted by federal law or to violate the state or federal constitution.

(Ibid.)

City Approves Initiative for Signature Petition Circulation

            On July 14, 2022, Real Parties submitted the proposed initiative to Clerk along with a request for a title and summary for the proposed initiative petition.  (Pak Decl. ¶ 4, Exh. A.) 

            On July 25, 2022, the Clerk, through the Election Division, transmitted to Real Parties the Official Petition Title and Summary prepared by the City Attorney.  (Id. ¶ 6, Exh. B.) 

            On September 12, 2022, Real Parties submitted a draft petition to the Election Division.  On September 16, 2022, the Election Division approved the format of the initiative petition and informed Real Parties that they could begin circulating the petition for voter signatures.  (Id. ¶ 9, Exh. C.) 

On February 14, 2023, Real Parties submitted their signed petition to Clerk for verification of signatures.  The Election Division is now in the process of examining the petition to determine whether it contains sufficient valid voter signatures to qualify for presentation to City Council. (Id. ¶¶ 10-14, Exh. E-F.)  If Real Parties have collected the requisite number of valid signatures, the City Council will set the measure for the ballot, thus causing the measure to be presented to voters.  Alternatively, the City (through its City Council) is empowered to “[a]dopt the proposed ordinance, without alteration.” (L.A. Mun. Charter § 452; Resp. RJN Exh. A.)

Writ Proceedings

            On March 8, 2023, Petitioners filed their verified petition for writ of mandate.

            On March 14, 2023 the court granted Petitioner’s ex parte application for a briefing schedule and hearing.  The court set the petition for hearing on April 4, 2023. 

            On March 14, 2023, Petitioners filed their opening brief in support of the petition.  On March 24, 2023, Respondents and Real Parties filed their oppositions.  On March 28, 2023, Petitioners filed a reply.

Standard of Review

The writ petition is brought pursuant to Elections Code section 13314 and CCP section 1085.[1]  There are two essential requirements to the issuance of an ordinary writ of mandate under Code of Civil Procedure section 1085: (1) a clear, present and ministerial duty on the part of the respondent, and (2) a clear, present and beneficial right on the part of the petitioner to the performance of that duty.  (California Ass’n for Health Services at Home v. Department of Health Services (2007) 148 Cal.App.4th 696, 704.) 

An agency is presumed to have regularly performed its official duties.  (Evid. Code § 664.) Petitioners “bear[] the burden of proof in a mandate proceeding brought under Code of Civil Procedure section 1085.”  (California Correctional Peace Officers Assn. v. State Personnel Bd. (1995) 10 Cal.4th 1133, 1154.) 

“‘On questions of law arising in mandate proceedings, [the court] exercise[s] independent judgment.’ …. Interpretation of a statute or regulation is a question of law subject to independent review.”  (Christensen v. Lightbourne (2017) 15 Cal.App.5th 1239, 1251.) 

Because Petitioners challenge a voter initiative prior to an election, the following special rules apply.  “Declaring it 'the duty of the courts to jealously guard this right of the people' [citation], the courts have described the initiative and referendum as articulating 'one of the most precious rights of our democratic process' [citation]. '[I]t has long been our judicial policy to apply a liberal construction to this power wherever it is challenged in order that the right not be improperly annulled. If doubts can reasonably be resolved in favor of the use of this reserve power, courts will preserve it.' ”  (Rossi v. Brown (1995) 9 Cal.4th 688, 695.)  “[I]t is usually more appropriate to review constitutional and other challenges to ballot propositions or initiative measures after an election rather than to disrupt the electoral process by preventing the exercise of the people's franchise, in the absence of some clear showing of invalidity.”  (Costa v. Sup.Ct. (2006) 37 Cal.4th 986, 1005.)  However, “a procedural challenge—that is, a challenge based upon an allegation that a proposed initiative measure has failed to comply with the essential procedural requirements necessary to qualify an initiative measure for the ballot (for example, an initiative petition's alleged failure to have obtained the requisite number of qualified signatures)—may be brought and resolved prior to an election.”  (Costa, supra at 1006.) 

In this case, the petition could be construed as challenging the substance of the Initiative, specifically the proper interpretation of the limitation on compensation in section 107.01 and the definition of “Covered Compensation” of the proposed ordinance.  These arguments about the substance of the Initiative are disfavored in preelection review.  However, Petitioners’ arguments that Real Parties and Respondents made false statements in or about the Initiative petition could be construed as procedural in nature and appropriate for review prior to the election.  In either case, the court finds Petitioners’ arguments unpersuasive for the reasons discussed below. 

Analysis

Petitioners Do Not Show a Violation of Section 702(b) of City’s Election Code or Section 18600 of the California Election Code

            Petitioners contend that the Initiative petition, the City Attorney’s title and summary, and the proposed ordinance itself contain “false statements of fact concerning the justification for its compensation limitation – that the U.S. President is compensated $450,000 per year.”  (OB 10.)  Petitioners contend that these alleged false and misleading statements violate section 702(b) of the City’s Election Code and also section 18600 of the state Elections Code.  (OB 4-10.) 

            Section 702(b) states, in pertinent part:

(b) Persons circulating, as principal or agent, or having charge or control of the circulation of, or obtaining signatures to, any local initiative, referendum, or recall petition shall not:

(1) Intentionally misrepresent or intentionally make any false statement concerning the contents, purport or effect of the petition to any person who signs, or who desires to sign, or who is requested to sign, or who makes inquiries with reference to it, or to whom it is presented for his or her signature.

(2) Willfully and knowingly circulate, publish, or exhibit any false statement or misrepresentation concerning the contents, purport or effect of any initiative, referendum, or recall petition for the purpose of obtaining any signature to, or persuading or influencing any person to sign, that petition.

            (Resp. RJN Exh. B.)

Violation of section 702(b) is a misdemeanor.  (Los Angeles City Election Code (“LACEC”) § 116.)  California Elections Code section 18600 is worded similarly to section 702(b) and states that every person who violates its provisions is guilty of a misdemeanor.  (See OB 7-8.)

A violation of sections 702(b) an 18600 could be a basis for a trial court to enjoin circulation of an initiative petition, even though these are “penal statutes.”  (RP Oppo. 8; see San Francisco Forty-Niners v. Nishioka (1999) 75 Cal.App.4th 637, discussed infra.) 

            Petitioners contend that the Initiative Petition, proposed ordinance, and City Attorney’s summary are false and misleading because “the President of the United States is compensated considerably more than $450,000 per year…. [¶] In fact, the President is ‘compensated’ in excess of $1 million annually…. Troublingly, the Initiative’s false statements of fact form the very justification for the limits in the Initiative itself ….”  (OB 1, citing Declaration of Brad Williams.) 

Section 102 of Title 3 of the U.S. Code, which is incorporated in section 107.01 of the proposed ordinance, is entitled “Compensation of the President.”  That section states:

The President shall receive in full for his services during the term for which he shall have been elected compensation in the aggregate amount of $400,000 a year, to be paid monthly, and in addition an expense allowance of $50,000 to assist in defraying expenses relating to or resulting from the discharge of his official duties. Any unused amount of such expense allowance shall revert to the Treasury pursuant to section 1552 of title 31, United States Code. No amount of such expense allowance shall be included in the gross income of the President. He shall be entitled also to the use of the furniture and other effects belonging to the United States and kept in the Executive Residence at the White House. [emphasis added.]

(Pet. RJN Exh. B.) 

            The proposed ordinance accurately states that the U.S. President’s monetary compensation, under section 102 of the U.S. Code, is currently $450,000. 

Petitioners cite federal statutes outside of section 102 (e.g. 3 USC §§ 103 and 105) and also the “editorial notes” of section 102 to argue that the U.S. President’s compensation is greater than $450,000.  (OB 4-7; Reply 8-9.)[2]  However, the proposed ordinance limits “Covered Compensation” to “the total compensation for the President of the United States, currently $450,000, as set forth in section 102 of Title 3 of the United States Code.”  (Pet. RJN Exh. A [bold italics added].) 

Petitioners rely on a declaration of Brad Williams, a partner at a consulting firm that “provides economic and fiscal analyses on a wide range of public policy issues, including economic forecasting, economic impact analysis, pensions, and state and local government taxation and finance.”  (Williams Decl. ¶ 4.)  Williams provides a financial analysis of other benefits provided to the U.S. President, including in sections 102, 103, and 105 of Title 3 of the U.S. Code.  He concludes that “the annual compensation of the President of the United States under a conservative application of the definition of ‘covered compensation’ under the proposed initiative is at least $1,211,980, consisting of $907,800 in wages and the taxable value of other monetary allowances, plus $304,180 for the present-day value of deferred compensation.”  (Id. ¶ 14; see also Id. ¶¶ 4-13.) 

While not argued by the parties, the court notes that the other provisions cited by Petitioner differ from those regarding “compensation of the President” set forth in section 102.  The travel expenses provided for in 3 U.S.C. section 103 are a discretionary appropriation by Congress not to exceed $100,000.  3 U.S.C. section 105, entitled “Assistances and services for the President” “authorize[s] to be appropriated” each year sums as may be necessary for the “official entertainment expenses of the President.”  And the “Former Presidents Act” found in the note to 3 U.S.C. Section 102 sets forth a monetary allowance only for former Presidents.  

            Petitioners’ arguments and cited evidence do not prove a violation of LACEC section 702(b) or Elections Code section 18600.   Even assuming that other federal statutes or the “notes” to section 102 could increase the compensation of the President to more than $450,000, as opined by Brad Williams, those statutes and “notes” to section 102 were not cited as a basis for the limit on compensation in the proposed ordinance.  Given the express reference to $450,000 in compensation and “section 102 of Title 3 of the United States Code,” sections 107.00 and 107.01 of the proposed ordinance may be reasonably interpreted as referring only to the annual monetary compensation of the U.S. President, during his or her term in office, as stated in section 102 of the U.S. Code. 

Petitioners point out that the proposed ordinance’s definition of “Covered Compensation” is broad and includes items such as “payments for transportation, travel, meals, or other expenses in excess of actual documented expenses incurred in the performance of duties; payments or reimbursement for entertainment or social club memberships; the cash value of housing, automobiles, parking, or similar benefits; scholarships or fellowships; the cash value of dependent care or adoption assistance or personal legal or financial services; the cash value of stock options or awards; payments or contributions for insurance, deferred compensation earned or accrued, or for severance or its equivalent.”  (OB 4.)  In reply, Petitioners contend that it is “internally inconsistent” to interpret section 107.01 as limiting the compensation of healthcare executives to “total compensation” of the President as stated in section 102 of Title 3, while also giving a broad interpretation to the definition of “Covered Compensation” of healthcare executives.  (Reply 7-8.)

While an argument could be made regarding internal inconsistency, this argument does not prove that Real Parties or Respondents made any false statements of fact.  The drafters of the Initiative could have elected to include other benefits accruing to the President in the limit on compensation of healthcare executives, but chose instead to specifically reference section 102 of Title 3 of the United States Code.  Section 102 is entitled “Compensation of the President” and states the President shall receive “in full for his services during the term” for which the President has been elected the sums set forth in that code section. 

San Francisco Forty-Niners v. Nishioka (1999) 75 Cal.App.4th 637 is distinguishable.  In Nishioka, proponents circulated an initiative in San Francisco to repeal two previous initiative measures adopted by the voters for the construction of a new football stadium.  The trial court found that the initiative petition contained false and misleading statements of fact which were made deliberately to induce electors to sign the petition, in violation of Elections Code section 18600.  The Court of Appeal affirmed, finding that substantial evidence supported the trial court’s factual finding.  The Court of Appeal noted that the “appellants do not contest and thereby virtually concede their initiative petition contained false statements.”  (Id. at 645.)  The Court of Appeal reasoned as follows:

Appellants circulated an initiative petition essentially to reverse a democratic election and repeal Propositions D and F. To convince voters there was a need to repeal these measures and thus induce them to sign their petition, appellants falsely represented the purported invalidity of the propositions and their enactment, as well as their purported adverse impact on the City. While appellants did not misrepresent the contents or effect of the initiative measure—that it would in fact repeal Propositions D and F—appellants made false statements concerning the purport of the initiative…. [¶]

Appellants misled voters as to the tenor, substance and purpose of their initiative by claiming it was justified by facts which were materially false. In essence the petition stated that the voters should repeal Propositions D and F because the previous election was fraudulent, the funding of the stadium would cost San Franciscans more than the represented limit of $100 million, and the two-thirds majority required by Proposition 218 placed the results in question. These misleading falsehoods violated the rationale of section 18600 and justified the trial court's issuance of a writ.

(Id. at 646-647.) 

Based on the “uncontroverted record,” the Court held that "in the narrow and hopefully rare instance where an initiative petition contains misleading assertions of fact that are false beyond dispute, a writ may issue to prevent the circulation of the undisputed falsehoods."  (Id. at 650.)  “This rule does not apply to expressions of opinion nor to factual matters which are subject to question or dispute.”  (Ibid.) 

            As discussed above, the proposed ordinance expressly limits “Covered Compensation” to “the total compensation for the President of the United States, currently $450,000, as set forth in section 102 of Title 3 of the United States Code.”  (Pet. RJN Exh. A [bold italics added].)  The proposed ordinance did not expressly incorporate other potential items of compensation for the U.S. President from the United States Code or from “notes” of section 102.  Unlike in Nishioka, Petitioners do not show that the Initiative petition, title and summary, or proposed ordinance contain any indisputably false statements of fact.   Further, even if there could be differences of opinion regarding the proper interpretation of section 102 or the limit on compensation in section 107.01 of the proposed ordinance, that would not prove that the proposed ordinance should be enjoined prior to the election.  Petitioners do not show that the Initiative petition, title summary, or proposed ordinance made “misleading assertions of fact that are false beyond dispute.” Under Nishioka, “expressions of opinion” and “factual matters which are subject to question or dispute” are not grounds to enjoin the circulation of an initiative petition. 

            The court finds that Real Parties or Respondents did not intentionally make any false statement or representation concerning the contents, effect, or purport of the petition or Initiative in violation of sections 702(b) and 18600.  To the extent different interpretations of the limit on compensation in section 107.01 are possible, these matters of opinion do not prove violations of sections 702(b) and 18600 and provide no basis to enjoin the Initiative prior to the election. 

The City Attorney’s Title and Summary Are Proper

            LACEC section 706(c) provides, in pertinent part: “The City Attorney shall prepare an official petition title and a fair and impartial official petition summary of the primary provisions of the proposed initiative ordinance to be included on all copies of the petition to be circulated by the proponents for signature. The official title and summary shall not exceed 175 words and shall be in language as not to be intentionally an argument or designed to create prejudice either for or against the measure and shall not be false or misleading.”  (Resp. RJN Exh. B.) 

            Relatedly, California Elections Code section 9204 provides: “Any elector of the city may seek a writ of mandate requiring the ballot title or summary prepared by the city attorney to be amended…. A peremptory writ of mandate shall be issued only upon clear and convincing proof that the ballot title or summary is false, misleading, or inconsistent with the requirements of Section 9203.” 

“The ballot title and summary must reasonably inform the voter of the character and real purpose of the proposed measure.”  (Horneff v. City and County of San Francisco (2003) 110 Cal.App.4th 814, 820.)  “Only in a clear case should a title ... [or summary] be held insufficient.”  (Ibid.)  Because title and summary preparation "can be a difficult task where multiple 28 interpretations ... are possible," drafters are "afforded considerable latitude."  (Yes on 25, Citizens For An On-Time Budget v. Superior Court (2010) 189 Cal.App.4th 1445, 1452.) 

Petitioners only challenge the first sentence of the City Attorney’s summary of the Initiative on the grounds that it contains false or misleading statements of facts about the total compensation of the U.S. President.  (OB 12-13.)  The City Attorney’s title and summary closely track the language of the proposed ordinance.  (Pet. RJN Exh. A.)  “The electorate can hardly be deceived by [an] essentially verbatim recital of the straightforward text of the measure itself.”  (Yes on 25, Citizens For An On-Time Budget v. Superior Court (2010) 189 Cal.App.4th 1445, 1453.)  Although the summary did not specifically cite section 102 of Title 3, the title and summary reasonably informed the voters of the character and purpose of the proposed ordinance, including with respect to the dollar amount of the limitation on compensation.  Further, “only in a clear case should a title [and summary] so prepared be held insufficient.”  (Ibid.)  Reasonable minds could differ as to whether the City Attorney should have cited section 102 of Title 3 in a summary of the ordinance.  Accordingly, Petitioners do not show a violation of LACEC section 706(c).

Clerk Properly Performed Her Ministerial Duties

“[A]n elections official's ‘duty is limited to the ministerial function of ascertaining whether the procedural requirements for submitting an initiative measure have been met.’”  (Alliance for a Better Downtown Millbrae v. Wade (2003) 108 Cal.App.4th 123, 133.)  Here, Clerk properly followed the procedures for approving the Initiative petition for circulation and conducting an initial review of the signatures and circulator affidavits.  (See Pak Decl. ¶¶ 5-14; see Charter §§ 450-455; LACEC §§ 700-711.)  Petitioners develop no argument to the contrary. 

Based on the declaration of Brad Williams, Petitioners contend that Clerk has a ministerial duty to reject the Initiative petition on the grounds that it includes false and misleading statements.  (OB 13-15.)  As discussed above, Petitioners do not show that the Initiative petition, the proposed ordinance, or title and summary contain false statements or misrepresentations.  Accordingly, Clerk has no ministerial duty to reject the Initiative petition on the grounds asserted by Petitioners.

Furthermore, as Respondents argue, an elections official cannot reject an initiative petition based on extrinsic evidence or for reasons that “are discretionary or go beyond a straightforward comparison of the submitted petition with the statutory requirements for petitions.”  (Alliance for a Better Downtown Millbrae, supra, 108 Cal.App.4th at 133.)  To the extent Petitioners contend Clerk had a duty to reject the Initiative petition based on the Williams declaration or similar extrinsic evidence, Petitioners’ argument is unpersuasive in light of Alliance for a Better Downtown Millbrae, supra. 

Petitioners Do Not Show that the Definition of “Compensation” is Clearly Invalid; and Preelection Review Is Disfavored

As discussed above, Petitioners raise arguments about how section 107.01 and the definition of “Covered Compensation” of the proposed ordinance should be interpreted.  Petitioners contend that the proposed ordinance is ambiguous or “internally inconsistent” in that it expressly incorporates only the President’s monetary compensation from section 102 of Title 3 of the U.S. Code, but not the “notes” of section 102, and not other benefits that arguably could be considered “compensation” of the President.  Such arguments about the substance of the proposed ordinance prior to the election are disfavored. 

“Preelection review of ballot measures is appropriate where the validity of a proposal is in serious question….”  (Gates v. Blakemore (2019) 39 Cal.App.5th 32, 38.)   “The standard is one of great deference ….’” (Save Stanislaus Area Farm Economy v. Board of Supervisors (1993) 13 Cal.App.4th 141, 150.) “Absent such a [clear] showing, detailed consideration of the substance of an initiative—and, indeed, of the whole practice of using initiatives to amend general plans—should await postelection review of an approved initiative.”  (Id. at 153.)  “[B]ecause this type of [substantive] challenge is one that can be raised and resolved after an election, deferring judicial resolution until after the election … often will be the wiser course.” (Independent Energy Producers Ass’n v. McPherson (2006) 38 Cal.4th 1020, 1030.)

Applying this deference, and for the other reasons discussed above, the petition is denied. 

Conclusion

            The petition is DENIED.