Judge: Ralph C. Hofer, Case: 22BBCV00881, Date: 2022-07-29 Tentative Ruling

Case Number: 22BBCV00881    Hearing Date: July 29, 2022    Dept: D

                                                          TENTATIVE RULING

Calendar:    6
Date:               7/29/2022 
Case No: 21 BBCV00881  Trial Date: Feb. 27, 2023
Case Name: B&S Fitness System, Inc., et al. v. Newsom, et al.
                                     DEMURRERS TO SECOND AMENDED COMPLAINT (3)

Moving Party:            Defendants Governor Gavin Newsom, Attorney General Rob Bonta and State Public Health Officer and Director of Department of Public Health Tomas Aragon 
Defendants Dr. Barbara Ferrer and Sheriff Alex Villanueva 
Defendant Mayor Eric Garcetti      
Responding Party: Plaintiffs B&S Fitness Systems, Inc. dba World Gym Tujunga
 and Brian Hewitt      

RELIEF REQUESTED:
County Defendants
Ferrer and Villanueva 
Sustain demurrer to first through third causes of action of Second Amended Complaint 

State Defendants 
Sustain Demurrer to Second Amended Complaint 

Mayor Garcetti 
Sustain Demurrer to first through third causes of action of Second Amended Complaint 

CAUSES OF ACTION: from Second Amended Complaint  
1) Violation of The California Constitution, Right to Liberty (Cal. Const. Art. 1 sec.1) v. All Defendants 
2) Violation of The California Constitution Equal Protection (Cal. Const. Art. 1 sec. 7) v. All Defendants  
3) Impairing Contractual Obligations (Cal. Const. Art. 1 sec. 9)   v.  All Defendants 
4) Commandeering Private Property or Personnel v.  Defendant Newsom 

SUMMARY OF FACTS:
Plaintiff B&S Fitness Systems, Inc. dba Work Gym Tujunga and Brian Prewitt, its owner, bring this action against defendants Gavin Newsom, in his official capacity as Governor of California, Xavier Becerra, in his official capacity as Attorney General of California, Sonia Y. Angel, MD, MPH, in her official capacity as the Director and State Public Health Officer, Eric Garcetti, in his official capacity as Mayor of the City of Los Angeles, Barbara Ferrer, in her official capacity as the Los Angeles County Public Health Officer, and Alex Villanueva, in his official capacity as Los Angeles County Sheriff.  Plaintiffs allege that defendants issued various COVID -19 orders, including executive orders, shelter-in-place, stay at home, and shut down orders and have fought to enforce those orders, which plaintiffs allege have resulted in plaintiffs having difficult satisfying their financial obligations, being forced to lay off a significant numbers of employees, being forced to pause their membership dues, and attempts to renegotiate their lease, all in an attempt to stave off bankruptcy.  The SAC also alleges that plaintiffs have expended large sums of money in an effort to comply with defendants’ vague orders by performing deep cleaning, purchasing protective equipment, and simply keeping their business afloat. 
The SAC alleges that plaintiffs sought clarification regarding the orders, and the apparent arbitrary or selective enforcement thereof, to no avail, and that plaintiffs, operating a gym, were identified in a subcategory of such orders without being permitted to show that the logistics of their business operations did not fall within the scope of the criteria identified for that subcategory.  Plaintiffs also allege that the orders and blueprint posed ambiguities, and otherwise did not give lower risk businesses like plaintiffs’ gym a fair opportunity to assess when and under what circumstances it would be allowed to re-open or remain open.  Plaintiffs allege that in June of 2021, an executive order by the governor stated that the state had taken meaningful and decisive actions to reduce the spread of COVID-19, and it was appropriate to reevaluate existing public health directives, but then improperly delegated responsibility for further orders to the Department of Public Health.  The SAC also alleges that defendants have failed to comply with the Administrative Procedure Act (“APA”), issuing an order that strict compliance with the APA would prevent, hinder, or delay appropriate actions to prevent and mitigate the effects of the COVID-19 pandemic.  

It is alleged that the governor has given the Department of Public Health unlimited and unfettered delegation to continue to issue mandatory public health directives and govern the business activities of plaintiffs’ gym without being required to comply with the rulemaking or review process, which orders are being continually implemented, updated, and enforced by defendants, when this delegation of authority is well in excess of allowable agency action.  

It is alleged that while the governor may have lifted earlier restrictions, the June 11, 2021 executive order preserved the authority for the state, county and city public health organizations to reinstate restrictions, and to issue orders that may impose a burden on business operations.  Plaintiffs allege that there is no legitimate government basis for the continued broad suspension of the APA, and that defendants are implementing, updating and enforcing directives and measure without there presently being a rational basis for defendants’ actions, and that there is a reasonable expectation that defendants will impose restrictions again in the future.  

The SAC alleges that plaintiffs will continue to face further regulations as a non-essential business which will threaten its ability to stay open, continue to operate, and employ individuals from the community.  Plaintiffs allege that they have been damaged in the amount of approximately $600,000 as a result of the closures, citations, lost membership revenue, training employees on new COVID-19 procedures, legal consultations, citations, purchases for personal protective equipment, cleaning materials, and upgrades to the facility to comply with constantly changing COVID-19 orders.  


Moving defendants filed demurrers to the original complaint, which were set to be heard on February 25, 2022, and were taken off calendar as moot, as a First Amended Complaint was filed and served on February 14, 2022. 

Defendants then filed demurrers in response to the First Amended Complaint, which were heard on April 15, 2022. 

The demurrers were sustained with leave to amend, in a detailed minute order, on the ground the causes of action failed to state facts sufficient to constitute a cause of action. The demurrer brought by defendant Mayor Garcetti was sustained on the additional ground that the opposition appeared to focus on orders which were not issued or had any connection to the Mayor or the City. 

Defendants now challenge the sufficiency of the Second Amended Complaint. 

ANALYSIS:
Defendants Governor Gavin Newsom, Attorney General Rob Bonta (erroneously sued as his predecessor Xavier Becerra) and State Public Health Officer and Director of the California Department of Public Health Dr. Tomas J. Aragon (erroneously sued as his predecessor Dr. Sonia Y. Angell), all sued in their official capacities (together, “State Defendants”) demur to the SAC arguing that it fails to state facts to constitute any cause of action against defendants. 

Similar arguments are made by Mayor Garcetti and defendants Dr. Ferrer and Sheriff Villanueva in their demurrers to the SAC. 

First Cause of Action— Violation of The California Constitution, Right to Liberty (Cal. Const. Art. 1 sec.1)
The demurrers to this cause of action were previously sustained based on analysis that this cause of action and the second cause of action are subject to a rational basis review, and that the public health orders at issue survive such rational basis review.  

The court had also previously noted that to the extent plaintiff appeared to base the cause of action on actions which had not yet been taken under the June 21, 2021 Executive Order, there was an issue of ripeness, and that such an Order did not implicate any action taken by defendant the City/Mayor Garcetti. 

Defendants argue that since the court issued its order in April sustaining the demurrer to the First Amended Complaint, the State has not reimposed any restrictions on gyms, and there is no likelihood of such restrictions being imposed in the future, and that there has been no change in the law or factual allegations that would require the court to reconsider its decision on the substantive merits of the complaint. 

Defendants argue that the first cause of action continues to allege that defendants’ restrictions on gym operations in response to the COVID-19 pandemic “deprived Plaintiffs of the use, enjoyment and ability to operate their respective businesses….”  [SAC, para. 111]. 

California Constitution, Article 1, section 1 provides:
“All people are by nature free and independent and have inalienable rights. Among these are enjoying and defending life and liberty, acquiring, possessing, and protecting property, and pursuing and obtaining safety, happiness, and privacy.” 
 
Defendants again argue that plaintiffs’ allegations fail to support a cause of action under this section.  Defendants argue that the rights to liberty and property under this section are held to be not “absolute” and “do not operate as a curtailment of the basic power of the Legislature to enact reasonable police regulations.”  National Organization for Reform of Marijuana Laws v. Gain (1979) 100 Cal.App.3d 586, 598, citation omitted.   

As the court noted in its previous minute order, and as is the case again in connection with these demurrers, all parties, including plaintiffs, agree that the right to pursue an occupation under state law is not recognized as “fundamental,” and any alleged interference must be upheld if supported by a rational basis.  Graham v. Kirkwood Meadows Public Utility District (1994) 21 Cal.App.4th 1631, 1646.

Under rational-basis review, “the burden falls on the party seeking to disprove the rationality of the relationship between the classification and the purpose.’” U.S. v. Navarro (USDC 9th Cir. 2015) 800 F.3d 1104, 1113, citation omitted. 

Defendants point out that the court has previously reviewed the public health orders at issue and determined that they survive rational-basis review, which is why numerous other courts have concluded that the public health orders did not amount to a virtual imprisonment or otherwise violate Californian’s rights to liberty or property, which authorities have been previously considered by the court, and the court should again determine that the public health orders easily survive rational basis review.  

Plaintiffs in opposition argue that the cases cited by defendant and relied on by the court in the prior April 15, 2022 order did not reach the issue addressed by plaintiffs here regarding the State, County and City defendants’ orders and assertion of authority following the June 21, 2021 executive order.  Plaintiffs argue that the question raised here, which has not been addressed by the previous decisions or the court, is what the current and continuing rational basis is for the continued State of Emergency, and the unlimited, overly broad authority the Governor continues to vest in state and local entities.  

Plaintiffs recognize, in a footnote in the oppositions, that the court had previously considered such an argument previously made by plaintiff.  The court’s minute order states:
“Plaintiffs in opposition do not address the rational basis analysis with respect to any of the specific orders mentioned in the FAC except for the to the Governor’s June 21, 2021 Executive Order.  Plaintiffs argue that there is no statement identifying any rational basis for the present overly broad and arbitrary authority the Governor continues to vest in the State and County Public Health Organizations (“PHOs”) pursuant to that order, and that the order is unreasonable and arbitrary given the unlimited authority given to the State and local PHOs, which allows for arbitrary and capricious agency action.  Plaintiffs argue that the local health agencies can freely implement and enforce measures that do not accomplish the promotion of public health and safety - the object sought to be obtained….

In addition, it is not clear how this argument saves the cause of action, as plaintiffs appear to be quarrelling with actions which have not yet been taken under the June 21, 2021 Executive Order or the authority granted under it.  As argued in the reply papers, it is not clearly articulated how any action under that order has given rise to a violation of a constitutional right, and it is not clear how the Executive Order, which lifted many of the restrictions complained of by plaintiffs, can be arbitrary and capricious when it imposed no restrictions, and when case law has found orders directly imposing specific restrictions satisfy the rational basis test.  The argument seems to be that now that the science has evolved and the situation has calmed, the Executive Order improperly allows future implementation of orders with restrictions which would be arbitrary and capricious in this new environment.”
[Minute Order 4/15/22, pp. 7 and 8 of 16]. 

Plaintiffs argue that the court’s previous concern has now been addressed because by the express provisions of recent orders, as referenced in plaintiffs’ oppositions and in the SAC, the State, County and City have confirmed their authority to issue restrictions, even where such restrictions are more prohibitive than those imposed by the State, and the County and City does enforce orders and directives based on this authority.  Plaintiffs argue that such provisions include but are not limited to the Cal/OSHA COVID-19 Emergency Temporary Standards (ETS), the Cal/OSHA Aerosol Transmissible Diseases Standards, ventilation guidelines, and employee COVID exposure reporting requirements.    

The SAC alleges in the first cause of action
“114. Because of the continuing executive Orders that still have maintained the State of Emergency, Plaintiff’s business operations continue to be threatened by the presence of vague and continue, ad hoc, arbitrary health directives, orders, updated guidance, and other, many of which may subject Plaintiffs’ business to citation for lack of compliance. The confusion and vagueness thus continue to the present date, notwithstanding the purported re-opening under the Governor’s June 11, 2021 Order.
115. Plaintiff must continually make costly business decisions despite being governed by a confusing line of arbitrary, vague, and ambiguous orders, directives, as well as updated guidance, all of which are being continually implemented, updated, and enforced by Defendants.”
[SAC, paras. 114, 115].
No specific orders, directives, guidance, or orders are alleged.  It is also not alleged which such orders, if any, are being enforced by any defendant as to plaintiffs. 
The specific provisions and orders mentioned by plaintiffs in the opposition appear to be mentioned in the SAC in the general allegations:
“70. On Thursday, March 03, 2022, the County of Los Angeles PHO issued an updated Order captioned, “Post Winter Surge Community Monitoring and Continued Response Measures.” (Plaintiffs’’ RJN, Exh. B) It provided, in pertinent part, as follows: 
71. “As recognized by the State Public Health Officer, the continuance of certain community level mitigation measures, especially in high transmission risk settings, is appropriate.” (Page 2) 
72. This Order will be revised in the future, if needed, to reflect the State Executive Orders, California Division of Occupational Safety and Health’s (better known as Cal/OSHA) worksite requirements, State Public Health Officer Orders and guidance, and CDC recommendations. Should local COVID-19 conditions warrant, the County Health Officer may, after consultation with the Board of Supervisors, issue Orders that are more protective than those of the State Public Health Officer. (Page 3) 
73. In workplaces, most employers and businesses are subject to the Cal/OSHA COVID19 Emergency Temporary Standards (ETS) and some to the Cal/OSHA Aerosol Transmissible Diseases Standards and should consult those regulations for additional applicable requirements. The ETS allow local health jurisdictions to require more protective mandates. (Page 4) 
74. In workplace establishments and settings with active outbreaks, the site is required to cooperate with Public Health’s investigation of the outbreak, and quarantine and isolation may be extended for additional days by County Public Health outbreak investigators to help lower the risk of ongoing transmission at the site.
75. Ventilation Guidelines. All Businesses and governmental entities with indoor operations are urged to review the Ventilation Guidelines and implement ventilation strategies for indoor operations as feasible. See California Department of Public Health. (Page 8)
76. The Health Officer will continue monitoring epidemiological data to assess the impact of lifting restrictions and fully re-opening sectors. (Page 12)
77. This Order is consistent with the provisions in the Governor’s Executive Order N-60-20 and the State Public Health Officer’s May 7, 2020 Order, that local health jurisdictions may implement or continue more restrictive public health measures in the jurisdiction if the local health officer believes conditions in that jurisdiction warrant them. (Page 13)
78. Pursuant to Sections 26602 and 41601 of the California Government Code and Section 101029 of the California Health and Safety Code, the Health Officer requests that the Sheriff and all chiefs of police in all cities located in the Los Angeles County Public Health Jurisdiction ensure compliance with and enforcement of this Order. The violation of any provision of this Order constitutes an imminent threat and menace to public health, constitutes a public nuisance, and is punishable by fine, imprisonment or both. (Page 14)….
80. At the City level, the City still enforces the rules under [sic]. 
81. COVID-19 Prevention Emergency Temporary Standards: The COVID-19 Prevention Emergency Temporary Standards remain in effect. Under the provisions of the DIR, section 3205 [COVID-19 Prevention] section applies to all employees and places of employment, with certain enumerated exceptions. Employees [sic] like Plaintiffs must maintain written COVID-19 Prevention Program. Employers shall establish, implement, and maintain an effective, written COVID-19 Prevention Program, which may be integrated into the employer's Injury and Illness Prevention Program required by section 3203, or be maintained in a separate document. As provided at subd. (F) The employer shall review applicable orders and guidance from the State of California and the local health department related to COVID-19 hazards and prevention. These orders and guidance are both information of general application, including Interim guidance for Ventilation, Filtration, and Air Quality in Indoor Environments by the California Department of Public Health (CDPH), and information specific to the employer's industry, location, and operations. (https://www.dir.ca.gov/dosh/coronavirus/ETS.html)
82. As of March 25, 2021, the County of Los Angeles continues to issue Orders governing Plaintiffs’ business operations. As referenced in its published statement, the County has a Health Officer Order (HOO) with accompanying protocols that are issued to slow the spread of COVID-19. County Public Health’s Environmental Health division has been delegated primary responsibility for ensuring compliance with the HOO and the protocols. Failure by a business to correct the violations by the compliance date or the occurrence of repeated violations may result in further enforcement actions, including being assessed a fee for ensuring compliance. (http://publichealth.lacounty.gov/media/Coronavirus/docs/HOO/HealthOfficerEnforcementGuidance.pdf)
83. Even as of April 24, 2022, the City of Los Angeles continues issuing public orders through its Public Order Under City of Los Angeles Emergency Authority, which govern and even restrict Plaintiffs’ business activities and the way in which Plaintiffs must conduct its business or be subject to enforcement citations. As that Order provides, “Everyone should recognize that post-surge does not mean that the pandemic is over or that there will not be additional unpredictable waves of surges that will require monitoring and may require implementing different strategies to meet changing mitigation needs.” This is fa [sic]further signal that the City will continue to issue orders without APA compliance, and do so for an indefinite period (See https://www.lamayor.org/sites/g/files/wph1781/files/page/file/20220424%20SAFER%20LA%20ORDE R%202020.03.19%20%28REV%202022.04.24%29_0.pdf)
84. That order further provides, 
a. All individuals, businesses, and employers must follow the requirements included in this Order and the LACDPH Health Officer Order (dated April 21, 2022).
b. All local government entities, businesses, venue operators or hosts should implement measures, including posting conspicuous signage, to clearly communicate the masking requirements to all persons on their premises.
c. In workplaces, most employers and businesses are subject to the Cal/OSHA COVID-19 Emergency Temporary Standards (ETS) and some to the Cal/OSHA Aerosol Transmissible Diseases Standards and should consult those regulations for additional applicable requirements. The ETS allow local health jurisdictions to require more protective mandates.
d. In the event that an owner, manager, or operator of any business knows of three (3) or more cases of COVID-19 among their employees, assigned or contracted workers or  volunteers, within a span of 14 days, the employer must report this outbreak to the Los Angeles County Department of Public Health at (888) 397- 3993 or (213) 240-7821, or online at www.redcap.link/covidreport.”
[SAC, paras.  70-78, 80-84].  

It is difficult to tell from these allegations how each of these orders is alleged to violate due process under the first cause of action, and plaintiffs fail to provide any analysis concerning the lack of a rational basis for each order; plaintiffs appear to argue merely that cases previously relied upon by defendants, the court, and, in fact, by plaintiffs, address orders promulgated in earlier circumstances, based on earlier scientific knowledge and when there was a lack of vaccines and limited treatment options.   

There is no analysis of the subject orders, and plaintiffs have failed to submit the text of the orders to the court to evaluate, or to offer any specific legal analysis based on any alleged change in scientific or other circumstances, or information available to the promulgating entity at the time a specific order was made.   The oppositions quote the following standard from the Second District court of appeal:
“For purposes of substantive due process claims, the rational basis test is “the law must not be unreasonable, arbitrary or capricious but must have a real and substantial relation to the object sought to be obtained. [Citations.]” (Gray v. Whitmore (1971) 17 Cal.App.3d 1, 21, 94 Cal.Rptr. 904.)
County of Los Angeles Department of Public Health v. Superior Court of Los Angeles (2021 2nd Dist.) 61 Cal.App.5th 478, 490.

Plaintiffs do not attempt to apply this standard to any of the specified orders.  As noted above, under rational-basis review, “the burden falls on the party seeking to disprove the rationality of the relationship between the classification and the purpose.’” U.S. v. Navarro (USDC 9th Cir. 2015) 800 F.3d 1104, 1113, citation omitted.    

Plaintiffs have failed to meet this burden here and have failed to provide the court with sufficient facts or analysis to permit the court to find that there was no rational basis for any of the alleged orders plaintiffs claim to now rely upon.  The orders as alleged and argued by plaintiffs in the oppositions appear to require businesses such as plaintiffs to cooperate with the investigation of an outbreak and report an outbreak of three or more cases of COVID-19 within a span of 14 days to the Los Angeles County Department of Public Health.  [SAC, paras. 74, 83(d)].  The orders are alleged to “urge” such businesses to implement ventilation strategies for indoor operations “as feasible,” and to provide that businesses “should” implement measures, including posting signage, to communicate masking requirements. [SAC paras. 75, 84 (b)].  From a review of the allegations, these measures appear to have a rational relationship to the object of helping lower the risk of ongoing transmission at workplace establishments with active outbreaks.  [See SAC, para. 74].   

To the extent plaintiffs again argue that the Governor’s order improperly suspended application of the APA, the court previously rejected this argument, as under Government Code section 8571, the Governor is expressly permitted to suspend the application of the APA during a state of emergency:
“During a…state of emergency the Governor may suspend any regulatory statute, or statute prescribing the procedure for conduct of state business, or the orders, rules, or regulations of any state agency,…where the Governor determines and declares that strict compliance with any statute, order, rule, or regulation would in any way prevent, hinder, or delay the mitigation of the effects of the emergency.”
(Emphasis added).

Plaintiffs again do not argue that the Governor did not fully comply with the procedural requirements for suspending the APA, or clearly address the authorities cited in the court’s previous minute order pursuant to which it has been recognized that adequate safeguards are in place to address the concerns plaintiffs continue to raise.  See Newsom v. Superior Court (2021) 63 Cal.App.5th 1099, 1118 (noting the Emergency Services Act empowers the Legislature to declare an emergency terminated); Government Code section 8630 (a)- (d) (providing a local emergency must be approved by the County’s Board of Supervisors and renewed every 60 days, with the Board to “terminat(e)… the local emergency at the earliest possible date that conditions warrant.”)  

Moreover, in recent court of appeal authority cited in the State defendants’ moving papers, it was expressly held that, “the Governor’s law-making power under the Emergency act is not subject to the APA.”  640 Tenth LP v. Newsom (2022) 78 Cal.App.5th 840, 859.  

Plaintiffs have failed to sufficiently plead a cause of action under Article 1, Section 1, or to sufficiently satisfy the court’s previous concerns.  The demurrers to this cause of action again are sustained.  

Second Cause of Action—Violation of The California Constitution Equal Protection (Cal. Const. Art. 1 sec. 7)
California Constitution, Article 1, section 7 provides, in pertinent part, “(a) A person may not be deprived of life, liberty or property without due process of law or denied equal protection of the laws…”  

Defendants argue that the SAC continues to base this cause of action on the allegation that defendants violated this provision by their “arbitrary and irrational decision to classify Plaintiffs’ facilities as ‘non-essential.’”  [SAC, para. 135].

Defendants again argue that this claim fails as a matter of law, as the conduct of classifying plaintiffs’ facilities as non-essential is subject to rational basis review, and easily withstands such review.  The court previously has found that it was not irrational for California to create a state-wide plan and draw lines between types of businesses based on the risk that their operations would lead to increased community transmission of COVID-19, and that plaintiffs had failed to sufficiently allege an equal protection violation, based on consistent case law considering this issue with respect to gyms.  

Defendants argue that nothing set forth in the SAC alters this analysis or its outcome. 

Plaintiffs in the oppositions indicate that the SAC has been amended to state the following allegations:
134. Despite Defendants’ claims that their Orders promote health and welfare of the public, Plaintiffs’ facilities were classified as “non-essential” although their facilities offer physical therapy, chiropractic services, drug rehabilitation, mental and emotional counseling and health classes, to name a few.
135. Defendants’ arbitrary and irrational decision to classify Plaintiffs’ facilities as “nonessential” not only denied Plaintiffs the same protections under the law, but directly infringed upon Plaintiffs fundamental rights to pursue work, pursue financial and stable happiness, and protect their property interests.
136. Even though the blueprint has been rescinded, there is a continuing stigma, as a remnant of earlier Executive orders, that Plaintiffs’ fitness center is a non-essential business, and thus enforcement measures and enforcement activity tend to more closely scrutinize businesses like fitness centers.
[SAC, paras. 134-136]. 

Plaintiffs then argue, that “Plaintiffs incorporate the same rational basis argument that applied in the preceding section.”  [e.g., Opposition to State Defendants’ Demurrer, pp. 15-16].   As discussed above, that preceding section did not set forth a sufficient rational basis argument or analysis, and no such argument is offered in connection specifically with the alleged equal protection violation.  Although the SAC alleges that there is a “continuing stigma” that plaintiffs’ business is a non-essential business, the pleading concedes that the blueprint has been rescinded.  [SAC, para. 136].  There is no allegation of any enforcement measures or enforcement activity that has led to closer scrutiny of plaintiffs, or in connection with any particular order.  It is not explained how particular orders pertain unequally to fitness centers, as opposed to, for example, businesses with particular levels of outbreak.  The demurrers to this cause of action accordingly also are again sustained, as plaintiffs have failed to sufficiently state this cause of action. 

Third Cause of Action— Impairing Contractual Obligations (Cal. Const. Art. 1 sec. 9)   
California Constitution, Article 1, Section 9, provides, in pertinent party that “a law impairing the obligation of contracts may not be passed.”

In evaluating legislation that impairs private contractual rights, the court is to apply a “two-step test.’” Alameda County Deputy Sheriff Association v. Alameda County Employees’ Retirement Association (2020) 9 Cal.5th 1032, 1075, quotation omitted.   

First, “the court must determine whether the state law has, in fact, operated as a substantial impairment of a contractual relationship.” Alameda County, at 1075. quotation omitted. Second, “[i]f the state law is found to be a substantial impairment, the inquiry turns to [whether] … the state [has] a significant and legitimate public purpose behind the regulation, such as the remedying of a broad and general social or economic problem.” Alameda County, at 1075, quotation omitted. 
Where the government is not a contracting party, “‘courts properly defer to legislative judgment as to the necessity and reasonableness of a particular measure…’” Id. 

Defendants argue that the court has previously determined that plaintiffs’ allegation in connection with this cause of action, that the public health orders “impaired Plaintiffs’ abilities to perform under their membership and vendor contracts,” is not sufficient to support a claim.  [SAC, para. 146].  

The court, in its detailed minute order, reviewed the case law in this area, and determined that plaintiffs could not establish that there was substantial impairment, given the temporary nature of the business closures, and could also not establish that the restrictions on plaintiffs’ business was not an appropriate and reasonable way to advance the significant and legitimate public purpose of promoting public health during the pandemic.   Defendants argue that this analysis and outcome similarly applies to the SAC. 

Plaintiffs in opposition argue that the SAC now explains the continuing impairment of plaintiffs’ contractual obligations.  Specifically, plaintiffs rely on the following allegations from the SAC:
“150. Continuing, however, Plaintiffs are still incurring burdensome costs as a result of vague, uncertain, and arbitrary decisions and order, implemented under the delegation of authority pursuant to the Governor’s Executive Orders, that require Plaintiffs’ continued compliance.
151. Accordingly, Plaintiffs have suffered countless membership contracts canceled by their members due to Plaintiffs’ inability to perform and continue to suffer losses due to the limitations on Plaintiffs’ ability to expand operations as a result of the uncertainty of the continuing arbitrary orders and decisions authorized under the Governor’s State of Emergency Orders.” 
[SAC, paras. 150, 151]. 

Plaintiffs argue that these allegations now sufficiently plead a contract clause action as the continuing impact of the Executive Order operates as a substantial impairment of plaintiffs’ contractual relationships and are clearly arbitrary and no longer correlated to a public purpose, as the scientific information regarding transmission has evolved.  

The court’s minute order previously noted that to qualify as a “substantial impairment,” plaintiffs could not rely on a temporary order such as the subject Executive Order, as a “substantial impairment is more than a temporary alteration of a contractual relationship; rather it is a severe, permanent, and immediate change in a contractual relationship.” Xponential Fitness v. Arizona (USDC, D. Az) 2020 WL 3971908l, at *10, quotations omitted.  

The allegations of continuing obligations under orders similarly do not allege more than a temporary alteration of a contractual relationship, not a severe or permanent change.  To the extent plaintiff intends to rely on the alleged orders in the general allegations, it is not explained or analyzed how those matters such as, for example, continuing reporting of outbreak requirements, or duties to cooperate with outbreak investigations, or suggested communication concerning the masking requirements on the premises, have resulted in membership cancellation.   As discussed above, plaintiffs have also failed to even attempt to show that the subject orders were in fact arbitrary, rather than “an appropriate and reasonable way to advance a significant and legitimate public purpose.”  Apartment Association of Los Angeles County v. City of Los Angeles (9th Cir. 2021) 10 F.4th 905, 913-914.  
   
Plaintiffs do not provide the necessary analysis or point to any case law which would apply a contracts clause claim in this context.  The demurrers to this cause of action accordingly again are sustained. 

The State defendants also argue that the court should sustain its demurrer to the first three causes of action with respect to declaratory relief, as the claims asserted are moot.  The State defendants acknowledge that the court previously declined to rule that the case was moot because plaintiffs in the FAC sought retrospective damages.   A review of the SAC shows that there has been no change to the prayer for relief from the version included in the FAC.  The SAC again includes a general prayer for relief, evidently directed to all causes of action, in which plaintiff requests, among other relief, that the court:
“Award damages arising out of the Article 1, Section 19 of the California Constitution’s claims; Award Plaintiffs the reasonable value of the loss of the respective businesses by virtue of Defendants’ Orders pursuant to California Government Code Section 8572.”
[SAC, Prayer for Relief, para. a, p. 29:18-20]. 

The court had previously pointed out that defendants had not brought a motion to strike, only demurrers, and that, given the request for damages, the sustaining of a demurrer to the declaratory relief component of the causes of action would not dispose of any entire cause of action on the ground of mootness.  The court in its previous minute order noted:
“The demurrers accordingly are not sustained on this ground, but plaintiffs are encouraged on amendment to direct any relief sought in the prayer of the amended complaint to specific identified causes of action, and to be mindful of the issues of mootness and ripeness which have been raised by these defendants.”
[Minute Order 4/15/22, p. 14 of 16]. 

Plaintiffs have opted not to amend the pleading in this fashion with regard to the prayer for damages, and the State defendants have again opted not to challenge the prayers for declaratory relief by asserting a motion to strike.  The demurrer is not sustained on this ground.  However, the court has considered the fact that plaintiffs chose not to clarify their claims in this regard when given leave to amend and encouraged to do so, which the court finds lends further support to the court’s ruling, discussed below, sustaining the demurrers without leave to amend.  
Fourth Cause of Action—Commandeering Private Property or Personnel (v. Gov. Newsom only)
This cause of action is asserted against defendant Governor Newsom only. 

Government Code section 8572 provides, in pertinent part:
“In the exercise of the emergency powers hereby vested in him during a state of war emergency or state of emergency, the Governor is authorized to commandeer or utilize any private property or personnel deemed by him necessary in carrying out the responsibilities hereby vested in him as Chief Executive of the state and the state shall pay the reasonable value thereof.”

Defendant again argues that plaintiffs fail to allege that any of the orders restricting plaintiffs’ operations were issued under Section 8572, and requests judicial notice of the various orders, showing they were issued pursuant to Government Code section 8567, 8627, and 8665, and various provisions of the Health & Safety Code. [State Defendants’ RFJN, Exs. B, C].  The opposition does not address this argument, and the demurrer will again be sustained on this ground.  

Defendant also again argues that plaintiffs’ businesses were not “commandeered” or “utilized,” as there is no allegation that the Governor took physical possession of, or used, plaintiffs’ businesses, inventory, property, or personnel.  

Plaintiffs in opposition argue that the cause of action alleges such a claim because it alleges that “By virtue of this Executive Order, Defendant Newsome commandeered and utilized Plaintiffs’ business for the purpose of slowing the spread of COVID-19.”  [SAC, para. 162].  This allegation does not indicate any fact which would suggest that the Governor took physical possession of, or used, plaintiffs’ businesses, inventory, property or personnel.  Plaintiffs have failed to include a clear allegation on this point despite being permitted leave to amend to do so.   

Defendant also again argues that even if property had been commandeered by the Governor, plaintiffs’ claim for compensation under Section 8572 must be dismissed because plaintiffs have not alleged that they filed a claim with the Department of General Services before filing their lawsuit. 

Government Code section 8652 provides, in pertinent part:
“Before payment may be made by the state to any person in reimbursement for taking or damaging private property necessarily utilized by the Governor in carrying out his or her responsibilities under this chapter during a state of war emergency or state of emergency, or for services rendered at the instance of the Governor under those conditions, the person shall present a claim to the Department of General Services in accordance with the provisions of the Government Code governing the presentation of claims against the state for the taking or damaging of private property for public use, which provisions shall govern the presentment, allowance, or rejection of the claims and the conditions upon which suit may be brought against the state.”

Plaintiffs do not respond to this argument, and the SAC again fails to allege compliance with this required procedure. 

Finally, defendant again argues that the State’s police power, exercised in an emergency, grants absolute immunity from liability and bars claims for actions taken pursuant to the police power.  Farmers Ins. Exchange v. State of California (1985) 175 Cal.App.3d 494, 503 (“[t]he state's police power, exercised in an emergency to protect the public interest, provides a cloak of absolute immunity from liability under both article I, section 19 of the Constitution and Government Code sections 8572 and 8652.”) 
Under Government Code section 8655:
“The state or its political subdivisions shall not be liable for any claim based upon the exercise or performance, or the failure to exercise or perform, a discretionary function or duty on the part of a state or local agency or any employee of the state or its political subdivisions in carrying out the provisions of this chapter.”

As the court previously observed, “The actions here are discretionary, not mandatory function, and immunity applies to bar the claim as a matter of law.”  [Minute Order 4/15/22, p. 13 of 16]. 

Plaintiffs have accordingly failed to amend the pleading to address the court’s previous concerns, despite being permitted leave to do so.  The demurrer again is sustained to the fourth cause of action. 

Defendants request that the demurrers be sustained without leave to amend.   Plaintiffs request leave to amend but fail to indicate how the pleading could be further amended to cure it of the numerous defects identified in the previous demurrers, and in the court’s detailed minute order concerning the FAC, despite being given leave to amend to do so.  Plaintiffs also fail to explain how further amendment would address the issues raised in the demurrers to the SAC.   

  Where a complaint is successfully challenged on demurrer, it is plaintiff’s burden to demonstrate how the complaint might be amended to cure it of the defect.   Association of Community Organizations for Reform Now v. Department of Industrial Relations (1995) 41 Cal.App.4th 298, 302.  Plaintiffs have failed to meet this burden here and have failed to sufficiently amend the pleading despite being permitted leave to do so and having the detailed input of defendants and the court.   The demurrers accordingly now are sustained without further leave to amend. 

RULING: 
State Defendants’ Demurrer to Second Amended Complaint is SUSTAINED WITHOUT LEAVE TO AMEND.  The Second Amended Complaint, and each cause of action alleged therein, does not state facts sufficient to constitute a cause of action, as discussed above, and in this Court’s April 15, 2022 minute order.  The fourth cause of action is also barred based on government immunity and the failure of plaintiffs to allege compliance with government claim presentation requirements.  

State Defendants’ UNOPPOSED Request for Judicial Notice in Support of Demurrer to Second Amended Complaint is GRANTED.   

Mayor Eric Garcetti’s Demurrers to the Second Amended Complaint is SUSTAINED WITHOUT LEAVE TO AMEND.   The first through third causes of action of the Second Amended Complaint fail to state facts sufficient to constitute a cause of action, as discussed above, and in this Court’s April 15, 2022 minute order.  
  
Defendants Dr. Barbara Ferrer and Sheriff Alex Villanueva’s Demurrer to Plaintiffs’ Second Amended Complaint is SUSTAINED WITHOUT LEAVE TO AMEND.  The first through third causes of action of the Second Amended Complaint do not state facts sufficient to constitute a cause of action, as discussed above, and in this Court’s April 15, 2022 minute order.  

UNOPPOSED Request for Judicial Notice in Support of Defendants Dr. Barbara Ferrer and Sheriff Alex Villanueva’s Demurrer to Second Amended Complaint is GRANTED.  

GIVEN THE CORONAVIRUS CRISIS, AND TO ADHERE TO HEALTH GUIDANCE THAT DICTATES SAFETY MEASURES, DEPARTMENT D IS ENCOURAGING AUDIO OR VIDEO APPEARANCES

Please make arrangement in advance if you wish to appear via LACourtConnect/Microsoft Teams by visiting www.lacourt.org to schedule a remote appearance.  Please note that LACourtConnect/Microsoft Teams offers free audio and video appearance. Counsel and parties (including self-represented litigants) are encouraged not to personally appear.  With respect to the wearing of face masks, Department D recognizes that currently, the Los Angeles Department of Public Health strongly recommends masks indoors, especially when interacting with individuals whose vaccination status is unknown; for individuals who have a health condition that puts them at higher risk for severe illness; individuals who live with someone who is at higher risk; and for individuals who are around children who are not yet eligible for vaccines.  In accordance with this guidance, it is strongly recommended that anyone personally appearing in Department D wear a face mask.  The Department D Judge and court staff will continue to wear face masks.  If no appearance is set up through LACourtConnect/Microsoft Teams, or otherwise, then the Court will assume the parties are submitting on the tentative.