Articles Posted in Litigation

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PREVAILING WAGE LAW is California’s “other” minimum wage. It requires workers to be paid union wages on publicly funded construction projects. But in recent years, the law in California has EXPANDED well beyond its initial purpose.  It has become a tool for workers to demand union wages on virtually any construction project in California. These claims can increase the cost of a major construction project by millions of dollars—and can be brought years after construction is complete.

The U.S. Court of Appeals Has Revived AB 219 Once Again!

In a dizzying turn of events, the U.S. Court of Appeals has revived AB 219 for a second time. Less than three weeks ago, I posted an article describing how the U.S. District Court issued a permanent injunction overturning AB 219, effectively striking it down for the second time. Now it’s back!

A Quick Recap

AB 219 took effect on July 1, 2016. It applied California prevailing wage requirements to the delivery of ready-mix concrete to public works. This was big news for two reasons: (1) it hit the ready-mix concrete industry—and all of the businesses that depend on it—very hard; and (2) it represents the first time that prevailing wage requirements have been imposed on material suppliers (as opposed to on-site contractors).

On June 30, 2016—the day before AB 219 took effect—eight ready-mix companies filed a lawsuit in federal court challenging the constitutionality of the new statute on Equal Protection grounds. In essence, they argued it was unfair to single out ready-mix concrete companies for special treatment, leaving all other material suppliers unaffected. Continue reading

Published on:

PREVAILING WAGE LAW is California’s “other” minimum wage. It requires workers to be paid union wages on publicly funded construction projects. But in recent years, the law in California has EXPANDED well beyond its initial purpose.  It has become a tool for workers to demand union wages on virtually any construction project in California. These claims can increase the cost of a major construction project by millions of dollars—and can be brought years after construction is complete.

The U.S. District Court in Los Angeles has struck down AB 219 as unconstitutional once again.

AB 219 took effect on July 1, 2016. It applied California prevailing wage requirements to the delivery of ready-mix concrete to public works. This was big news for two reasons: (1) it hit the ready-mix concrete industry—and all of the businesses that depend on it—very hard; and (2) it represents the first time that prevailing wage requirements have been imposed on material suppliers (as opposed to on-site contractors).

On June 30, 2016—the day before AB 219 took effect—eight ready-mix companies filed a lawsuit in federal court challenging the constitutionality of the new statute on Equal Protection grounds. In essence, they argued it was unfair to single out ready-mix concrete companies for special treatment, leaving all other material suppliers unaffected.

Since then, the Court battle has taken a number of dramatic twists and turns. AB 219 has been suspended, reinstated, overturned, and appealed, as follows:

  • Oct. 21, 2016—District Court issues preliminary injunction suspending enforcement of AB 219. [AB 219 not in effect.]
  • Oct. 24, 2016—State appeals the preliminary injunction.
  • Dec. 16, 2016—Court of Appeals stays the preliminary injunction pending appeal. [AB 219 back in effect.]
  • Mar. 14, 2017—District Court issues permanent injunction overturning AB 219. [AB 219 not in effect.]
  • Mar. 14, 2017—State appeals the permanent injunction.
  • Mar. 29, 2017—State files motion to stay the permanent injunction pending appeal.

If the Court of Appeals grants the stay, AB 219 will be back in effect once again!

What should ready-mix companies do now?

With all of this back and forth, what should ready-mix companies do? Should they stop complying with AB 219, since it has been declared unconstitutional by the District Court? Or should they continue complying until there is a final decision on appeal?

Companies should consult with their own legal counsel to decide on a course of action. Here are some important considerations:

  • Contracts. Even though AB 219 has been ruled unconstitutional, ready-mix companies must still comply with their contractual obligations. If they have contracts requiring them to pay prevailing wage or take other steps consistent with AB 219, they must continue to do so (or modify the contract).
  • Non-DIR Enforcement. The lawsuit challenging AB 219 was brought against the Director of the Department of Industrial Relations (DIR) and the Labor Commissioner, the chief enforcement official at DIR. DIR has therefore taken the position that the permanent injunction only prohibits the enforcement of AB 219 by DIR—not enforcement by other agencies such as Caltrans or by workers or unions in private lawsuits. So despite the District Court’s ruling, we can expect Caltrans to continue requiring and enforcing AB 219 on its projects; and some drivers might work with unions to file lawsuits against their employers. (Of course, ready-mix companies will argue that no agency or person should be allowed to enforce AB 219, since the District Court ruled it to be unconstitutional!)
  • Retroactive Enforcement. DIR has also taken the aggressive position that if AB 219 is upheld on appeal, DIR intends to retroactively enforce it going back to the date it first took effect, i.e., July 1, 2016. This policy seems patently unfair: it requires companies to comply with AB 219 even though the District Court has declared the law to be unconstitutional. It is not clear whether courts in the future will allow DIR to do this. Nonetheless, DIR’s position creates uncertainty and risk for ready-mix companies who choose not to comply with AB 219.

What’s Next?

DIR has moved for a stay of the permanent injunction, pending a final decision on appeal. The Court will decide on the stay in the next few weeks.

The parties are scheduled to file their appeal briefs in August and September 2017. Oral argument will likely be scheduled for early 2018, with a decision sometime later in the year.
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Jon Welner is a leading practitioner of prevailing wage law in California. He is a Partner at Jeffer Mangels Butler & Mitchell LLP (JMBM) and Chair of JMBM’s Prevailing Wage Group. Contact him at JWelner@jmbm.com.

JMBM’s Prevailing Wage Group advises and defends developers, contractors, and manufacturers on the most challenging and complex prevailing wage matters in California.

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By Neill Brower
The California Supreme court determined the California State University (“CSU”) could not rely solely on earmarked appropriations from the State Legislature for payment of “fair share” mitigation fees the CSU determined necessary for full mitigation of impacts, and the absence of specific legislative appropriations for mitigation fees did not render payment of mitigation fees infeasible. On August 3, 2015, the California Supreme Court filed its decision in City of San Diego v. Bd. of Trustees of the California State University, Case No. S199557, rejecting the notion that the contingent nature of State budgeting excused a failure to commit to enforceable mitigation for off-campus impacts resulting from on-campus development. Further, because the CSU relied on the purported infeasibility of paying mitigation fees as a basis for its Statement of Overriding Considerations, the Statement of Overriding Considerations was unsupported by substantial evidence as to that finding.

In this case, the CSU approved an Environmental Impact Report (“EIR”) to expand the San Diego State University (“SDSU”) campus to accommodate, among other significant components; a hotel, academic research, medical, social, administrative, and conference facilities; faculty and student housing; a 10,000-student enrollment increase; and associated increases in faculty and staff by 2030 school year. Among other impacts, the EIR determined the project would result in significant contributions to cumulative traffic impacts on off-campus roads in the City of San Diego and Caltrans jurisdictions. The EIR determined the specific improvements required to mitigate these impacts and calculated the “fair-share” fees necessary to construct those improvements.
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By Matthew Hinks
Governor Brown signed into law on September 27, 2014, AB2222, which amends the State’s Density Bonus Law (“DBL”), Gov’t Code §§ 65915, et seq. to establish significant constraints upon the use of the incentives provided by DBL in connection with certain real estate developments. The main purpose of AB2222 is to eliminate density bonuses and other incentives previously available unless the developer agrees to replace pre-existing affordable units on a one-for-one basis. The impact of the bill will be significant because it will remove the economic incentive to undertake density bonus projects where existing units are subject to rent control ordinances or similar restrictions.
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By Matthew Hinks
Sometimes in land use law, the most impactful court holdings come from the simplest of cases. That may be the situation with the new California Court of Appeal decision in Bowman v. California Coastal Commission, issued by the court on March 18, 2014.

Factual Background

Walton Emmick owned property in San Luis Obispo County. In May 2002, Emmick applied to the County for a Coastal Development Permit (“CDP”) to rehabilitate an uninhabitable home on the property. Emmick died in March 2003. The County subsequently issued the CDP (“CDP-1”) to Emmick’s successor, SDS, subject to a condition that SDS dedicate a lateral access easement for public access along the shorefront portion of the property. SDS did not appeal the condition.

In December 2004, SDS applied to the County for a second CDP (“CDP-2”) for construction of a new barn. The application included a request that the lateral access easement condition of CDP-1 be removed. The County approved CDP-2, including the removal of the coastal access condition. Environmental groups and coastal commissioners appealed the County’s decision to the California Coastal Commission. After hearing, the Commission determined that the easement condition contained in CDP-1 is “permanent and binding on the landowner” and conditioned its grant of CDP-2 upon implementation of the easement condition. SDS sued.
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By Matthew Hinks
In a victory for California property owners, the California Court of Appeal, on March 13, 2014, issued a new opinion holding that the State of California’s proposed entry onto hundreds of properties in Northern California for geological and environmental testing amounted to a taking under the state constitution. The opinion of the court in Property Reserve, Inc. v. Superior Court may have a profound impact upon major public works projects throughout the state.
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By Matthew Hinks
JMBM has prevailed in the Court of Appeal on behalf of its client in a well-publicized and hotly-contested development project in the City of Los Angeles. The court’s published opinion will come as welcome relief to property owners who got caught in the bureaucratic mire when the City chose to “re-interpret” a half-a-century-year-old ordinance dealing with subdivision proposals to apply to all large hillside lots. However, the lasting impact of the decision will be what the court had to say about the deference a municipal authority is entitled to in connection with the interpretation of city ordinances and regulations.
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Appellate Court Rules in Favor of Saudi Prince in Benedict Canyon Case
Rejects arguments that ordinance requires environmental review

In the much publicized case of a Saudi Prince seeking to build his residential estate, a unanimous three-judge panel of the Court of Appeal published a decision in which it affirmed a lower court judgment and ruled in favor of the Prince and against the City of Los Angeles, Bruce Karsh and Martha Karsh. In Tower Lane Properties v. City of Los Angeles, Bruce Karsh, Martha Karsh, the appellate court rejected the City and Karsh arguments that the residential project must first file a tentative tract map and undergo environmental and discretionary review before issuance of a building permit.

In reaching its conclusion, the court considered the plain meaning of the subject ordinance (Los Angeles Municipal Code 91.7006.8.2) as well as the City’s historical interpretation and application. The court found that the prior owner of the Prince’s property has been granted grading permits in 2005 and 2006, and that “…the Karshes obtained grading permits for nine projects on their large hillside property, all without undergoing any environmental review under the Ordinance.” The court concluded: “Thus, out of 22 grading permits for properties having hillside grading sites larger than 60,000 square feet, only one required any type of clearance, which was obtained without undergoing any environmental review.”

The court rejected the City’s efforts to interpret the Ordinance in such a manner as to require the Saudi Prince to undergo environmental review, concluding: “Because the City cannot point to a consistent and long-standing interpretation, its current interpretation is entitled to no deference.”

Tower Lane’s land use attorney, Benjamin M. Reznik of Jeffer Mangels Butler & Mitchell LLP in Los Angeles, stated that his client, who has been the target of allegedly unfair and at times vicious attacks by local residents and the media, feels completely vindicated by the court ruling. “The City continues to single out the Saudi Prince with new requirements never before applied to other property owners all in an effort to deny him the right to a building permit. This unfair treatment has to stop,” said Reznik.

Tower Lane Properties is an entity established by Saudi Prince Abdulazziz ibn Abdulazziz al Saud, who is currently the Deputy Foreign Minister of Saudi Arabia, to develop his family residence in the hills above Benedict Canyon. Next door neighbors Bruce and Martha Karsh have been leading and funding efforts to stop the Saudi Prince.

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By Matthew Hinks
The well-known “nexus” and “rough proportionality” tests from the United States Supreme Court’s opinions in Nollan v. California Coastal Commission, 483 U.S. 825 (1987) and Dolan v. City of Tigard, 512 U.S. 374 (1994) do not apply where a condition to issuance of a building permit does not otherwise constitute a taking. So says the California Court of Appeal in Powell v. County of Humboldt, a new published opinion that could potentially limit the reach of Fifth Amendment takings protections for California property owners.

Factual Background

Scott and Lynn Powell own property near the Arcata-Eureka Airport in Humboldt County. The previous owners of the property constructed a covered porch and carport without securing a building permit. In May 2008, the County gave notice to the Powells that unless they secured an “after-the-fact” permit for the porch and carport they would be subject to monetary penalties. The Powells thereafter filed a permit application, which included work to secure the porch foundation and strengthen the structures to bring them into compliance with building codes. The County informed the Powells that, pursuant to a County general plan requirement, the County would require, as a condition to issuance of the permit, that the Powells dedicate an aircraft overflight easement over their property granting the County the right to, among other things, allow flights and noise inherent thereto, and regulate the release of substances, light and electrical emissions, in the airspace over the property.
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by Matthew Hinks
Spot zoning – the practice of singling out a parcel of property for either more or less restrictive zoning regulations – does not always constitute an impermissible abuse of discretion according to a new opinion from the California Court of Appeal in Foothill Communities Coalition v. County of Orange that could potentially alter the way spot zoning is viewed in California.
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