Hays v. Wood

• Decision Date: 30 November 1979
• Docket Number: S.F. 23830
• Parties: , 603 P.2d 19 Randall A. HAYS, as City Attorney, etc. et al., Plaintiffs, Cross-Defendants and Respondents, v. Barry WOOD, as City Councilman, etc., Defendant, Cross-Complainant and Appellant; Fair Political Practices Commission, Cross-Defendant and Respondent.
• Court: California Supreme Court

Page 102

160 Cal.Rptr. 102

25 Cal.3d 772, 603 P.2d 19

Randall A. HAYS, as City Attorney, etc. et al., Plaintiffs, Cross-Defendants and Respondents, v. Barry WOOD, as City Councilman, etc., Defendant, Cross-Complainant and Appellant;

Fair Political Practices Commission, Cross-Defendant and Respondent.

S.F. 23830.

Supreme Court of California, In Bank.

Nov. 30, 1979.

Barry Wood, in pro. per., and James W. Luther, Ukiah, for defendant, cross-complainant and appellant.

Robert P. Will, Carl Boronkay, Los Angeles, Richard Paul Gerber, Novato, Herbert M. Rosenthal, San Francisco, and Robert M. Sweet, Los Angeles, as amici curiae on behalf of defendant, cross-complainant and appellant.

Evelle J. Younger, Atty. Gen., Iver E. Skjeie, Asst. Atty. Gen., John Gordnier and Floyd D. Shimomura, Deputy Attys. Gen for plaintiffs, cross-defendants and respondents.

Daniel H. Lowenstein, Robert M. Stern, Lee C. Rosenthal, Sacramento, Natalie E. West, Newport Beach, and Michael J. Baker, San Francisco, for cross-defendant respondent.

Kenneth J. Guido, Jr., Washington, D. C., as amicus curiae on behalf of plaintiffs, cross-defendants and respondents and cross-defendant and respondent.

MANUEL, Justice.

This case involves a challenge to a portion of the Political Reform Act of 1974 (the Act). We are concerned with chapter 7 of the Act entitled "Conflicts of Interest," and examine, particularly, Government Code section 87207, subdivision (b)(2), ¹ which in general requires those public officials who are also attorneys or brokers to disclose the names of clients if the official's income from any client is equal to or exceeds $1,000 in a calendar year. We uphold the statute in its general operation but set aside, as in violation of constitutional equal protection provisions, that portion thereof which establishes a special disclosure threshold for attorneys and brokers.

The broad policy of the chapter, as expressed in section 87100, prohibits any public official from knowingly participating in or influencing a governmental decision in which he has a financial interest. On the assumption that this policy is served by a public awareness of the financial interests of government officials, chapter 7 requires affected public officers to make annual disclosures of sources of income. ( §§ 87200, 87203.) Under section 87207, the required disclosures include information about the sources of both (1) personal income directly received by the official, and (2) his or her share of income received by "business entities" in which the official has an interest.

Specifically, subdivision (a) of section 87207 provides that, in all cases, an official's disclosure statement must (1) identify each source of direct personal "income" equal to or exceeding $250, or $25 if the income was a gift, (2) state whether the amount of "income" from that source exceeded $1,000 or $10,000, (3) describe the consideration for which the "income" was received and (4) in the case of a gift, set forth the amount and date of receipt. In addition, under subdivision (b), applicable to "income" from business enterprises, the statement must contain: "(1) The name, address, and a general description of the business activity of the business entity; (P) (2) In the case of a business entity which provides Legal or brokerage services, the name of every person who paid fees to the business entity if the filer's pro rata share of fees from such person was equal to or greater than One thousand dollars ($1,000); (P) (3) In the case of a business entity not covered by paragraph (2), the name of every person from whom the business entity received payments if the filer's pro rata share of gross receipts from such person was equal to or greater than Ten thousand dollars ($10,000) during a calendar year." (Italics added.)

Defendant Barry Wood, an attorney in sole practice, assumed office as a City Councilman of the City of Ukiah on March 12, 1974. As an official covered by the Act, he filed annual disclosure statements covering the periods January 7, 1975, through March 12, 1975, and March 13, 1975, through March 9, 1976. Each statement complied substantially with the requirements of section 87200 et seq. However, with reference to subdivision (b)(2), defendant refused to disclose the names of clients who had paid him legal fees equaling or in excess of $1,000. ²

Plaintiff, as Ukiah's city attorney, thereupon commenced this action to compel the disclosures required by section 87207, subdivision (b). Defendant's answer asserted that the names of his clients were privileged information. He also sought, by means of a cross-complaint for declaratory relief, to establish the unconstitutionality of the disclosure requirements. The trial court upheld the validity of the sections and directed disclosure. This appeal followed.

Defendant renews his arguments that the challenged requirements are unnecessarily overbroad, impair the statutorily protected confidential relationship with his clients, and offend the equal protection clauses of the federal and state Constitutions.

A. Overbreadth.

We first consider the contention of defendant and amici that the entire business income reporting scheme of section 87207, subdivision (b), is unnecessarily and unconstitutionally overbroad. As applied to All occupations, they suggest, the statutory provisions for disclosure by public officials of information about private income intrude too extensively into the political, privacy, and associational rights of public officials and their clients and customers. It is well settled that the general operation of the political disclosure laws (as distinct from the quantitatively different treatment of particular occupations hereafter discussed in connection with defendant's separate equal protection argument) sufficiently touches "fundamental" constitutional interests to invoke a "strict scrutiny" standard of overbreadth review. (Buckley v. Valeo (1976) 424 U.S. 1, 66, 96 S.Ct. 612, 46 L.Ed.2d 659; City of Carmel-by-the-Sea v. Young (1970) 2 Cal.3d 259, 262-263, 266-268, 85 Cal.Rptr. 1, 466 P.2d 225; see County of Nevada v. MacMillen (1974) 11 Cal.3d 662, 671, 114 Cal.Rptr. 345, 522 P.2d 1345.)

We are aided in our analysis by the Nevada and City of Carmel cases, Supra, two earlier decisions in which we examined campaign laws similar to that herein presented. In each instance we inquired whether the financial disclosure provisions of the statutes in question were justified as constituting the narrowest possible means of discouraging political corruption, viewed in the light of their "chilling" effect on those seeking and holding public office.

In City of Carmel, supra, we considered the 1969 financial disclosure law (former §§ 3600-3704, hereafter the 1969 Act), and discussed the basic standards applicable to statutes of this nature. The 1969 Act required "every public officer" ( § 3700) and "each candidate" ( § 3702) for state or local public office to file, as a public record, a statement "describing the nature and extent" of each "investment" exceeding $10,000 at the time of filing of the statement (other than personal residence or recreational property). ( § 3700.) While readily accepting the validity of public disclosure as an appropriate technique, we found that the statute therein presented was too broad. We said that the law "encompass(es) indiscriminately persons holding office in a statewide agency regardless of the nature or scope of activity of the agency, as well as those whose offices are local in nature . . . ." More importantly, we noted, "No effort is made to relate the disclosure to financial dealings or assets which might be expected to give rise to a conflict of interest; that is, to those having some rational connection with or bearing" upon the actual functions of the official or his agency. (2 Cal.3d at p. 269, 85 Cal.Rptr. at p. 8, 466 P.2d at p. 232.) Rather, we observed, the 1969 Act covered, without distinction, All substantial commercial investments of the official, his spouse and children, regardless of their nature or location. We concluded that the law was not drawn as narrowly as possible to achieve its legitimate purpose and we invalidated it.

In 1973, the Legislature enacted a new disclosure statute designed to overcome the deficiencies of its predecessor. ( § 3600 et seq., superseded but not repealed by § 87100 et seq., hereafter the 1973 Act.) The 1973 Act applied only to candidates for, or incumbents of, certain designated high-level offices ( § 3700). As to those affected, it required disclosure of limited information about investments or real property in excess of $1,000, and of somewhat more detailed information, including identities, concerning each source of personal income (including gifts, loans, and business income) in excess of $250. Unlike the 1969 Act, the 1973 law did not require disclosure of the exact amounts of income or investment; rather, like the current Act, it called only for a statement whether each covered income or investment source exceeded $1,000 or $10,000. (Ibid.) Subdivision (c) of section 3700 provided that no such financial interest need be disclosed if it could not be "affected materially" by the official's public duties; under subdivision (d), only investments, income sources or property Within the official's jurisdiction could be so affected.

In County of Nevada v. MacMillen, supra, 11 Cal.3d 662, 114 Cal.Rptr. 345, 522 P.2d 1345, we upheld the 1973 Act, finding that it sufficiently remedied the flaws which we had observed in the 1969 version. We stressed that the 1973 law went only so far as necessary to discourage actual and substantial conflicts of interest. In particular we noted that, compared with the earlier statute, it applied to a more limited group of high-level offices and required less specific information about the investments covered. Most significantly, disclosure was required only as to those investments and...