Costa Mesa City Employees' Ass'n v. City of Costa Mesa

• Decision Date: 17 August 2012
• Docket Number: G045730,Super. Ct. No. 30-2011-00475281
• Parties: COSTA MESA CITY EMPLOYEES' ASSOCIATION, Plaintiff and Respondent, v. CITY OF COSTA MESA et al., Defendants and Appellants.
• Court: California Court of Appeals Court of Appeals

COSTA MESA CITY EMPLOYEES' ASSOCIATION, Plaintiff and Respondent, v. CITY OF COSTA MESA et al., Defendants and Appellants.

G045730

Super. Ct. No. 30-2011-00475281

COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICT DIVISION THREE

Filed: August 17, 2012

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

OPINION

Appeal from an order of the Superior Court of Orange County, B. Tam Nomoto Schumann, Judge. Affirmed.

Jones Day, Thomas R. Malcolm, John A. Vogt, Nathaniel P. Garrett and Richard J. Grabowski, for Defendants and Appellants.

Carroll, Burdick & McDonough, Gregg McLean Adam, Jonathan Yank and Gonzalo C. Martinez; Silver, Hadden, Silver, Wexler & Levine, Stephen H. Silver and Richard A. Levine; Donald Drozd, for Plaintiff and Respondent.

Burke, Williams & Sorensen, Daphne M. Anneet and Melodie K. Larsen, as Amicus Curiae on behalf of Defendants and Appellants.

Plaintiff Costa Mesa City Employees' Association (CMCEA) represents workers who are employed by the City of Costa Mesa (the City). In response to the City's plan to contract out for a variety of city services, CMCEA filed suit against the City and its Chief Executive Officer Thomas Hatch (collectively defendants) for injunctive and declaratory relief. CMCEA contends the City's proposed outsourcing plan violates state law as well as the parties' collective bargaining agreement. Trial on the matter has not been heard, but on July 15, 2011, the trial court granted a preliminary injunction enjoining defendants from contracting with a private entity for any of the services that are performed by CMCEA members or laying off CMCEA members as a result of such contracting. In this appeal, the sole issue is the propriety of the preliminary injunction. Defendants contend it was improvidently granted, but we disagree and affirm the trial court's ruling.

FACTS

Costa Mesa is a general law city. In 2004, it entered into a collective bargaining agreement with CMCEA regarding the terms of employment for city workers who are represented by CMCEA. The agreement was memorialized in a Memorandum of Understanding (MOU), which is effective until March 13, 2013. Article 1.5 of the MOU provides, "The wages, hours and other terms and conditions of employment currently in effect for the job classifications covered herein shall remain in effect unless modified, amended or deleted by this MOU or subsequent MOUs . . . ."

Article 14 is entitled "Cost of Services." Article 14.1 recognizes, "It is in the interest of the City of Costa Mesa and CMCEA to establish a consistent policy regarding the City's approach to evaluating the cost of providing municipal services on a regular basis in which CMCEA has an interest. It is recognized that as prudent professionals, the ongoing evaluation of costs should be a collective process of sharing information on a participative basis to develop sound decisions and appropriate practices. The City is interested in involving the employee associations to the greatest degree in thisregard; and, as such, agrees to make them part of discussions regarding the contracting of services."

In article 14.2, the parties agreed "that should a decision be made to contract out for a specific service which is at the time being performed by employees covered by this MOU, the employees affected will be given sufficient notice (a minimum of six months) in which to evaluate their own situation and plan for their future. To this end, the City will make every effort to transfer and utilize regular attrition in making the necessary adjustments. The City will assist employees in this endeavor through training and through preferential treatment (under meritorious consideration) when [filling] vacancies."

The six-month notice requirement is reiterated in article 19, which pertains to layoff procedures. Particularly, article 19.2(B) provides, "In the event a decision is made by the City to contract out for a specific service performed by City employees, the City will give the affected employees a minimum of six (6) months advance notification in which to evaluate their own situation and assist in planning for the future. The City shall meet and consult with CMCEA on such matters as the timing of the layoff and the number and identity of the employees affected by the layoff." Article 19.2(B) also provides that "thirty (30) calendar days before the effective date of layoff, the appointing authority shall notify the Administrative Services Director of the intended action with reasons therefore."

On March 1, 2011, the City Council of Costa Mesa approved an outsourcing plan to contract out for a variety of city services, including street sweeping, graffiti abatement, animal control, jail operations, special event safety, information technology, graphic design, reprographics, telecommunications, payroll, employee benefit administration, building inspection, and park, fleet, street and facility maintenance. Thereupon, on March 17 and March 31, 2011, the City's Public Services Director sent layoff notices to over 100 city workers who are represented by CMCEA.The notices stated that in light of the City Council's decision to contract out for city services, "it is necessary to issue this layoff notice to every affected employee in a position subject to outsourcing." After informing the recipient he or she was such an employee, the notices provided, "[Y]ou will be subject to layoff effective your last scheduled work shift for the pay period ending September [30], 2011. This layoff notice is contingent upon [your position] being outsourced" and "is subject to being rescinded pending City Council's future action on this matter."

The notices also advised that employees "who will be laid off should work closely with the Human Resources Division on questions, continuance of health benefits, retirement options and explanation of such programs as unemployed insurance benefits." The notices concluded with the Public Service Director's "sincere[] regret that the City's current conditions require that City employees be laid off."

On May 16, 2011, CMCEA filed suit against defendants for injunctive and declaratory relief. Its complaint alleges the City's outsourcing plan violates the Government Code in that it calls for the outsourcing of jobs that do not involve "special services." (Gov. Code, §§ 37103, 53060.)¹ The suit also alleges the plan violates the parties' MOU because the City did not meet with CMCEA to determine which specific services should be contracted out and how to best mitigate layoffs; rather, it unilaterally decided to outsource a vast number of jobs without input from CMCEA.

In targeting the City's outsourcing plan, CMCEA requested a preliminary injunction to prevent the plan's implementation while its lawsuit was pending. Addressing the need for preliminary relief, CMCEA claimed the City was in the process of preparing bids or Requests for Proposals (RFP's) to be issued to various vendors. CMCEA believed the RFP's would "be issued to vendors and returned within the nextfew weeks and [would] culminate in contracts for City services, thereby resulting in the layoffs of all or substantially all employees represented by" CMCEA.

CMCEA also claimed, "Unless and until injunctive relief sought herein is granted, the City will continue to undertake actions culminating in the contracting out to private vendors for non-special services in excess of the powers conferred to such a municipality and such contracting out will . . . consequently be void, unenforceable and ultra vires. Furthermore, . . . the City will cause great and irreparable injury to employees . . . whose services will be supplanted by private vendors by virtue of unlawful outsourcing contracts."

In their opposition papers, defendants argued the MOU does not require the City to negotiate with CMCEA regarding the decision to outsource, but merely requires the City to consult with CMCEA regarding the impact of any outsourcing decisions that it arrives at. Defendants also argued the City has broad statutory and constitutional authority to contract out for city services. In fact, under the Government Code, it "may contract with any other local agency for the performance . . . of municipal services or functions . . . ." (§ 54981.) Thus, regardless of whether its outsourcing plan involves jobs that entail special services, the City may outsource them to another city or municipality.

Defendants also maintained a preliminary injunction was unwarranted because they had issued only one RFP to date (pertaining to the operation of the City's jail facility), and regardless of how many RFP's it ultimately issues, the City is not legally obligated to accept any bids it may receive from prospective vendors. Speaking to the nature of the bidding process, defendant Hatch, the City's Chief Executive Officer, declared, "While it is true that the City leadership is earnestly pursuing the outsourcing of City services in furtherance of ensuring the most cost-effective provision of public service, it remains possible that the RFP process will not result in the identification of a public or private entity or person qualified or willing to provide these or other serviceswhich may be the subject of future RFP's." Given this possibility, defendants argued it was too early to ascertain what would come of the RFP's or how city workers might ultimately be affected by them. That is why the layoff notices were identified as being contingent in nature and subject to rescission by the City. All things considered, the City did not believe its outsourcing plan posed an imminent threat to CMCEA's members so as to justify the issuance of a preliminary...