California State Employees' Assn. v. State of California

• Decision Date: 22 March 1988
• Docket Number: No. C000698,C000698
• Citation: 199 Cal.App.3d 840,245 Cal.Rptr. 232
• Court: California Court of Appeals Court of Appeals
• Parties: CALIFORNIA STATE EMPLOYEES' ASSOCIATION et al., Plaintiff and Appellant, v. STATE of California et al., Defendants and Respondents.

Page 232

245 Cal.Rptr. 232

199 Cal.App.3d 840

CALIFORNIA STATE EMPLOYEES' ASSOCIATION et al., Plaintiff and Appellant, v. STATE of California et al., Defendants and Respondents.

No. C000698.

Court of Appeal, Third District, California.

March 22, 1988.

Review Denied June 9, 1988.

Gary P. Reynolds, Sacramento, and Howard Schwartz, California State Employees' Ass'n, for plaintiff and appellant

John K. Van de Kamp, Atty. Gen. and Faith Geoghegan, Deputy Atty. Gen., Talmadge R. Jones, Chief Counsel and Christine A. Bologna, Asst. Chief Counsel, Dept. of Personnel Admin., Sacramento, for defendants and respondents.

Ronald A. Zumbrun, Anthony T. Caso, Jonathan M. Coupal, and Richard M. Stephens, Pacific Legal Foundation, Sacramento, for amicus curiae, California Taxpayers Ass'n, in support of defendants and respondents.

PUGLIA, Presiding Justice.

In this appeal, we reject a facial challenge to the constitutionality of subdivision (a) of Government Code section 19130, which specifies the conditions under which the State of California can contract with "firms" in the private sector for the performance of personal services. (Gov.Code, § 19130 is set forth in full at Appendix A, post; all statutory references to sections of an undesignated code are to the Government Code.)

Plaintiff, California State Employees' Association, appeals from a judgment denying a petition for writ of mandate wherein plaintiff sought to have defendant State ordered to refrain from entering into personal service contracts pursuant to subdivision (a) of section 19130. (Sometimes referred to hereafter as "subdivision (a).") The trial court rejected plaintiff's claim that subdivision (a) is irreconcilable with Article VII of the California Constitution and therefore unconstitutional on its face.

Article VII, section 1, provides: "(a) The civil service includes every officer and employee of the state except as otherwise provided in this Constitution. [p] (b) In the civil service permanent appointment and promotion shall be made under a general system based on merit ascertained by competitive examination." Article VII creates the State Personnel Board (§ 2) to which enforcement and administration of the civil service laws are delegated (§ 3) and exempts certain positions from the civil service (§ 4) which otherwise shall embrace "... every officer and employee of the state." (§ 1) Article VII is implemented by the state Civil Service Act. (§ 18500 et seq.; see California State Employees' Assn. v. Williams (1970) 7 Cal.App.3d 390, 395, 86 Cal.Rptr. 305.)

Decisional law interprets Article VII as a restriction on the "contracting out" of state activities or tasks to the private sector. (State Compensation Ins. Fund v. Riley (1937) 9 Cal.2d 126, 134-135, 69 P.2d 985; Burum v. State Compensation Ins. Fund. (1947) 30 Cal.2d 575, 579-582, 184 P.2d 505; San Francisco v. Boyd (1941) 17 Cal.2d 606, 618-620, 110 P.2d 1036; Kennedy v. Ross (1946) 28 Cal.2d 569, 571-573, 170 P.2d 904; Stockburger v. Riley (1937) 21 Cal.App.2d 165, 167-169, 68 P.2d 741; California State Employees' Assn. v. Williams, supra, at p. 392, 86 Cal.Rptr. 305.) The restriction does not arise from the express language of Article VII. ( Id., p. 397, 86 Cal.Rptr. 305.) "Rather, it emanates from an implicit necessity for protecting the policy of the organic civil service mandate against dissolution and destruction." (Ibid.)

Subdivision (a) of section 19130 codifies State Personnel Board (Board) standards Subdivision (b) of section 19130 (Appendix A, post ) codifies judicially imposed conditions on the award of personal service contracts outside the civil service system. Plaintiff does not challenge the constitutionality of subdivision (b) but argues that the conditions codified therein are exclusive and that all government services not meeting those conditions are required by Article VII to be performed by persons selected and appointed under the state civil service system; since subdivision (b) of section 19130 makes no allowance for contracting with private firms to achieve cost savings, subdivision (a) in purporting to do so violates the merit principle of Article VII and is unconstitutional on its face.

                concerning the award of contracts to private "firm[s]" to perform [199 Cal.App.3d 845] work for the state in order to achieve cost savings. 1  These contracts are commonly referred to as personal service contracts.  Subdivision (a) permits personal service contracts "to achieve cost savings" only when a number of other conditions relating to civil service objectives are met.  Thus, the contract must not "undercut state pay rates" (subd.  (a)(2)), "cause the displacement of civil service employees" (subd.  (a)(3)), or "adversely affect the state's affirmative action efforts" (subd.  (a)(4)).  Subdivision (a) also requires the contract to contain specific provisions pertaining to the qualifications of the staff which will perform the work to be contracted out, as well as requiring "assurance that the contractor's hiring practices meet applicable nondiscrimination, affirmative action standards" (subd.  (a)(8)).  Subdivision (a) further requires that the contract be awarded "through a publicized, competitive bidding process" (subd.  (a)(7)), and that "the potential economic advantage of contracting [for personal services] is not outweighed by the public's interest in having a particular function performed directly by state government" (subd.  (a)(11))
                

Fundamental principles of constitutional adjudication inform our analysis. "Unlike the federal Constitution, which is a grant of power to Congress, the California Constitution is a limitation or restriction on the powers of the Legislature. [Citations.] Two important consequences flow from this fact. First, the entire law-making authority of the state, except the people's right of initiative and referendum, is vested in the Legislature, and that body may exercise any and all legislative powers which are not expressly or by necessary implication denied to it by the Constitution. [Citations.] ... [p] Secondly, all intendments favor the exercise of the Legislature's plenary authority: 'If there is any doubt as to the Legislature's power to act in any given case, the doubt should be resolved in favor of the Legislature's action. Such restrictions and limitations [imposed by the Constitution] are to be construed strictly, and are not to be extended to include matters not covered by the language used.' [Citations.]" (Methodist Hosp. of Sacramento v. Saylor (1971) 5 Cal.3d 685, 691, 97 Cal.Rptr. 1, 488 P.2d 161; see Binns v. Hite (1964) 61 Cal.2d 107, 111, 37 Cal.Rptr. 323, 389 P.2d 947.)

Section 19130 explicitly acknowledges the relevant constitutional provisions. (See § 19130, subds. (b)(1), (c).) "In such a case, the statute represents a considered legislative judgment as to the appropriate reach of the constitutional provision." (Pacific Legal Foundation v. Brown (1981) 29 Cal.3d 168, 180, 172 Cal.Rptr. 487, 624 P.2d 1215.) That judgment is entitled to significant weight and deference. All doubts must be resolved in favor of the Legislature's action.

It is conceivable, perhaps even likely, that a constitutional conflict with Article VII will arise in the application of subdivision (a). However, merely because it is possible to hypothesize such a conflict does not render subdivision (a) unconstitutional on its face. Plaintiff cannot prevail merely by showing that particular applications of the statute in the future might create a constitutional conflict. (Pacific Legal Foundation supra, at p. 180, 172 Cal.Rptr.

                487, 624 P.2d 1215;  Estate of Monks (1941) 48 Cal.App.2d 603, 614-615, 120 P.2d 167.)   Rather, it is plaintiff's burden to demonstrate that the statute "inevitably pose[s] a present total and fatal conflict with applicable constitutional prohibitions."  ( Pacific Legal Foundation supra, at p. 181, 172 Cal.Rptr. 487, 624 P.2d 1215.)
                

However, far from displacing or destroying the constitutional scheme, subdivision (a) of section 19130 is carefully crafted to permit personal service contracts to achieve cost savings only when they will have no detrimental effect on the integrity of the civil service system. Thus it requires more than a demonstration of cost savings to satisfy subdivision (a); it must also satisfactorily be shown that civil service objectives are protected, including maintenance of state pay rates (subd. (a)(2)), nondisplacement of civil service employees (subd. (a)(3)), affirmative action (subds. (a)(4), (a)(8)), and nondiscrimination (subd. (a)(8)). The statute combines considerations of efficiency and economy with other interests, including those of state employees. (California State Employees' Assn. v. State Personnel Bd. (1986) 178 Cal.App.3d 372, 381, 223 Cal.Rptr. 826.)

The purposes of Article VII as disclosed in the ballot argument of its predecessor, former Article XXIV, are not in conflict with subdivision (a) of section 19130. ² The constitutional provisions relating to the civil service were adopted in part "to promote efficiency and economy in state government." A statute dealing with the civil service which has cost savings as an object is hardly in conflict with notions of governmental efficiency and economy.

A second purpose of Article VII and its predecessor was to eliminate the "spoils system" of political patronage by establishing a merit system whereby appointments to public service positions are based upon demonstrated fitness rather than political considerations. ³ However, nothing within subdivision (a) of section 19130 permits the displacement of present employees by political appointees. Nor does it allow the state to bring in new employees through political appointment. To the contrary, all contracts awarded pursuant to subdivision (a) must be consistent with civil service objectives, including nondiscrimination and nondisplacement of civil service personnel. (Subds. (a)(3)...