International Longshoremen's and Warehousemen's Union v. Los Angeles Export Terminal, Inc.

• Decision Date: 14 January 1999
• Docket Number: No. B112263,B112263
• Citation: 81 Cal.Rptr.2d 456,69 Cal.App.4th 287
• Court: California Court of Appeals Court of Appeals
• Parties: , 99 Daily Journal D.A.R. 537 INTERNATIONAL LONGSHOREMEN'S AND WAREHOUSEMEN'S UNION et al., Plaintiffs and Respondents, v. LOS ANGELES EXPORT TERMINAL, INC., Defendant and Appellant.

Page 456

81 Cal.Rptr.2d 456

69 Cal.App.4th 287, 99 Daily Journal D.A.R. 537

INTERNATIONAL LONGSHOREMEN'S AND WAREHOUSEMEN'S UNION et al., Plaintiffs and Respondents, v. LOS ANGELES EXPORT TERMINAL, INC., Defendant and Appellant.

No. B112263.

Court of Appeal, Second District, Division 3, California.

Jan. 14, 1999.

As Modified on Denial of Rehearing Feb. 10, 1999.

Review Denied April 14, 1999.

Jones, Day, Reavis & Pogue, Gerald W. Palmer, Erich R. Luschei and Erin E. Nolan, Los Angeles, for Defendant and Appellant.

Leonard, Carder, Nathan, Zuckerman, Ross, Chin & Remar, Robert Remar, Beth A. Ross, and Arthur A. Krantz, San Francisco, for Plaintiffs and Respondents.

KLEIN, P.J.

Defendant and appellant Los Angeles Export Terminal, Inc. (LAXT) appeals a judgment and postjudgment order in favor of plaintiffs and respondents International Longshoremen's and Warehousemen's Union (ILWU), three of its affiliated locals, ILWU Local 13, ILWU Local 63 and ILWU Local 94, and three individuals, James Spinosa, John Vlaic and Mike Freese, each of whom is an officer or agent of one of the local affiliates (collectively, ILWU).

The essential issue presented is whether LAXT's board of directors is subject to the open meeting requirements of the Ralph M. Brown Act (the Brown Act or the Act) (Gov.Code, § 54950 et seq.). ¹

For the reasons discussed below, we conclude LAXT, a private corporation in which the Harbor Department of the City of Los Angeles (the Harbor Department) is a shareholder, is subject to the Brown Act. The judgment and postjudgment order are affirmed.

FACTUAL AND PROCEDURAL BACKGROUND

In 1981, the Board of Harbor Commissioners, which is entrusted by sections 138 and 139 of the Los Angeles City Charter (City Charter) with power and authority over the Harbor Department and the Port of Los Angeles, adopted Resolution 4531. Said resolution approved in concept the development of a major coal terminal on Terminal Island and set forth a series of steps to expedite related environmental studies and review. The Port commissioned a feasibility study which was to determine the viability of the project.

Thereafter, 28 private companies based in Japan, six domestic companies and the Harbor Department negotiated and reached agreement on a complex contractual arrangement known as the Shareholders' Agreement. Under the agreement, LAXT would be formed as a private, for profit corporation to design, construct and operate a dry bulk handling facility for the export of coal on land leased from the Harbor Department. LAXT was to be capitalized with $120 million. The Harbor Department, as a 15 percent shareholder, would contribute $18 million and would be entitled to nominate three of the 19 LAXT board members.

Pursuant to a Charter provision requiring the Los Angeles City Council (City Council) to approve contracts with a payment commitment On February 23, 1993, the City Council adopted Ordinance No. 168614, stating: "The Shareholders' Agreement is hereby approved and the Mayor of Los Angeles, or the President of the Board of Harbor Commissioners or the Executive Director of the Harbor Department is hereby authorized to execute said agreement."

extending beyond three years, the Shareholders' Agreement was submitted to the City Council for its consideration.

On March 31, 1993, articles of incorporation were filed with the Secretary of State by a Los Angeles deputy city attorney.

The corporate entities and the Harbor Department entered into the Shareholders' Agreement on April 12, 1993.

The Shareholders' Agreement contained, inter alia, a condition that the project would not go forward unless the parties unanimously approved the terms of the lease between LAXT and the Harbor Department. The Board of Harbor Commissioners approved the lease on June 14, 1993.

The lease specified a term of 35 years, including a 10-year option. Under the City Charter, leases having a duration exceeding five years require City Council approval. Because of the lease's duration, it was submitted to the City Council, which approved it on July 27, 1993.

The lease then was executed by LAXT and "THE CITY OF LOS ANGELES, by its Board of Harbor Commissioners," effective August 30, 1993.

LAXT's organization, shareholder funding, election of directors, project design and construction then proceeded. On November 16, 1995, LAXT's board of directors authorized LAXT to enter into a Terminal Operating Agreement with Pacific Carbon Services Corporation (PCS).

1. Proceedings.

Following LAXT's approval of the Terminal Operating Agreement with PCS, ILWU initiated this action on March 4, 1996 by filing a petition for writ of mandate which sought to nullify said agreement as well as injunctive relief. ILWU alleged PCS was a "non-union" or "anti-union" employer which would employ workers at LAXT and its facilities "at substandard wages and under substandard terms and conditions of employment that will severely harm the prevailing standards in the Port of Los Angeles." ILWU alleged LAXT's board of directors was a legislative body within the meaning of the Brown Act and therefore was required to conduct its meetings publicly.

ILWU sought an injunction requiring LAXT's board of directors to conduct its future affairs in accordance with the Brown Act, and a judicial determination that the PCS agreement was null and void because LAXT's board of directors had approved the PCS agreement without complying with the procedural requirements of the Brown Act calling for open public meetings. ILWU also sought an award of attorney fees pursuant to section 54960.5 of the Act.

2. Trial court's ruling.

The matter was tried on briefs, declarations and exhibits. After hearing arguments by counsel, the trial court ruled LAXT's board of directors is a "legislative body" subject to the Brown Act.

The statement of decision provides in relevant part: The construction and operation of the port facility herein would be a pure governmental function, but for the City's arrangement with LAXT. The construction and operation of a port facility is a properly and lawfully delegable activity of the City in that such activity constitutes the performance of administrative functions. (County of Los Angeles v. Nesvig (1965) 231 Cal.App.2d 603, 616, 41 Cal.Rptr. 918.) The City's actions in forming LAXT "amount to the creation of LAXT by the City's elected legislative body, the Los Angeles City Council." LAXT is a private entity created by the elected legislative body of a local agency in order to exercise authority that may lawfully be delegated by the elected governing body to a private corporation or entity, within the meaning of section 54952, subdivision (c)(1).) Therefore, the Brown Act applies to the LAXT board of directors. On February 2, 1996, ILWU made a proper demand that LAXT comply with the Brown Act. "All actions taken by the Judgment was entered on March 7, 1997.

LAXT [b]oard of [d]irectors within the 90 days preceding [ILWU's] demand, November 4, 1995 through February 2, 1996, are null and void, ..." (§ 54960.1, subd. (a).)

3. Postjudgment proceedings.

On April 25, 1997, the trial court denied LAXT's motion to vacate the judgment and enter a judgment of dismissal, as well as LAXT's motion for a new trial. In addition, pursuant to section 54960.5, the trial court awarded attorney fees to ILWU, as the prevailing party, in the sum of $60,660.

This appeal followed.

CONTENTIONS

LAXT contends the trial court erred: in determining the LAXT board of directors is a legislative body subject to the Brown Act; in denying LAXT's posttrial motions to vacate the judgment and for a new trial; in awarding attorney fees to ILWU and in the amount awarded.

DISCUSSION

1. Standard of review.

The central issue is the applicability of the Brown Act, specifically, whether LAXT's board of directors is a legislative body within the meaning of section 54952, subdivision (c)(1)(A), so as to be subject to the Act. As an appellate court, "we 'conduct independent review of the trial court's determination of questions of law.' [Citation.] Interpretation of a statute is a question of law. [Citations.] Further, application of the interpreted statute to undisputed facts is also subject to our independent determination. [Citation.]" (Harbor Fumigation, Inc. v. County of San Diego Air Pollution Control Dist. (1996) 43 Cal.App.4th 854, 859, 50 Cal.Rptr.2d 874.)

2. The Brown Act's purpose, scope and broad construction.

The Brown Act (§ 54950 et seq.), adopted in 1953, is intended to ensure the public's right to attend the meetings of public agencies. (Freedom Newspapers, Inc. v. Orange County Employees Retirement System (1993) 6 Cal.4th 821, 825, 25 Cal.Rptr.2d 148, 863 P.2d 218.) To achieve this aim, the Act requires, inter alia, that an agenda be posted at least 72 hours before a regular meeting and forbids action on any item not on that agenda. (§ 54954.2, subd. (a); Cohan v. City of Thousand Oaks (1994) 30 Cal.App.4th 547, 555, 35 Cal.Rptr.2d 782.) The Act thus serves to facilitate public participation in all phases of local government decisionmaking and to curb misuse of the democratic process by secret legislation of public bodies. (Cohan, supra, 30 Cal.App.4th at p. 555, 35 Cal.Rptr.2d 782.)

The Act's statement of intent provides: "In enacting this chapter, the Legislature finds and declares that the public commissions, boards and councils and the other public agencies in this State exist to aid in the conduct of the people's business. It is the intent of the law that their actions be taken openly and that their deliberations be conducted openly. [p] The people of this State do not yield their sovereignty to the agencies which serve them. The people, in delegating authority, do not give their public servants the right to decide what is good for the people to know and what is not good for them to know. The people insist on remaining informed so that they may retain control over the...