People v. Superior Court of Riverside Cnty., S232639
| Decision Date | 26 June 2017 |
| Docket Number | S232639 |
| Citation | 3 Cal.5th 230,219 Cal.Rptr.3d 436,396 P.3d 568 |
| Court | California Supreme Court |
| Parties | The PEOPLE, Petitioner, v. The SUPERIOR COURT of Riverside County, Respondent; Hossain Sahlolbei, Real Party in Interest. |
Paul E. Zellerbach and Michael A. Hestrin, District Attorneys, Elaina Gambera Bentley, Assistant District Attorney, Kelli M. Catlett and Emily R. Hanks, Deputy District Attorneys, for Petitioner.
No appearance for Respondent.
Brown White & Newhouse, Brown White & Osborn and Kenneth P. White, Los Angeles, for Real Party in Interest.
Francisco J. Silva, Sacramento, and Long X. Do for California Medical Association as Amicus Curiae on behalf of Real Party in Interest.
Liu, J.Government Code section 1090 prohibits public officers and employees from making contracts in which they have a financial interest when they act in their official capacities. Knowing and willful self-dealing can result in criminal liability. In this case, the District Attorney of Riverside County seeks to prosecute Dr. Hossain Sahlolbei under section 1090 for allegedly influencing the public hospital where he worked to hire another doctor and then profiting from that doctor's contract. The Court of Appeal held that because Sahlolbei was an independent contractor and not an employee of the hospital, section 1090 does not apply to Sahlolbei. We conclude that independent contractors are not categorically excluded from section 1090. Liability under the statute can extend to independent contractors who have duties to engage in or advise on public contracting. Because Sahlolbei's duties brought him within the scope of the statute, we reverse.
Sahlolbei was a surgeon at Palo Verde Hospital (the Hospital) in Blythe, Riverside County. The Hospital is a public entity under California law. It is undisputed that Sahlolbei was an independent contractor and never an employee of the Hospital. In addition to providing medical services as the Hospital's codirector of surgery, Sahlolbei served on the Hospital's medical executive committee (the Committee). The Committee, comprised of members of the medical staff, is independent of the Hospital and advises the board of governors of the Hospital (the Board) on the Hospital's operations, including physician hiring. Sahlolbei was at times the chief of staff or the vice-chief of staff of the Committee, and he is alleged to have had considerable influence over the Board's decisions in those roles.
The prosecution alleges that Sahlolbei in 2009 recruited an anesthesiologist, Dr. Brad Barth, to work at the Hospital. Sahlolbei negotiated a contract with Barth under which Barth would receive $36,000 a month with a one-time relocation fee of $10,000. But Sahlolbei pressured the Board into hiring Barth for $48,000 a month with a one-time relocation fee of $40,000 as well as a directorship position of $3,000 a month. Sahlolbei allegedly threatened to have the medical staff stop admitting patients to the Hospital if the Board did not agree to his terms. Sahlolbei instructed Barth to have Barth's paychecks deposited directly into Sahlolbei's account, out of which Sahlolbei remitted to Barth the $36,000 a month on which they had agreed. The Board was not aware that Sahlolbei was profiting from Barth's contract. When this was brought to the Board's attention, the Hospital renegotiated Barth's contract to pay Barth directly.
The Riverside County District Attorney charged Sahlolbei with grand theft and violation of Government Code section 1090, which provides in relevant part: "Members of the Legislature, state, county, district, judicial district, and city officers or employees shall not be financially interested in any contract made by them in their official capacity, or by any body or board of which they are members." (Gov. Code, § 1090, subd. (a) ; all undesignated statutory references are to this code.) A willful and knowing violation of section 1090 is punishable by a fine of up to $1,000 or imprisonment, and disqualification "from holding any office in this state." (§ 1097, subd. (a); People v. Honig (1996) 48 Cal.App.4th 289, 333–336, 55 Cal.Rptr.2d 555 (Honig ).)
The trial court dismissed the section 1090 count. It considered itself bound by People v. Christiansen (2013) 216 Cal.App.4th 1181, 157 Cal.Rptr.3d 451 (Christiansen ), which held that independent contractors cannot be held criminally liable under section 1090. A divided panel of the Court of Appeal agreed with Christiansen and upheld the dismissal. The court also held that there was no evidence Sahlolbei was acting in an official capacity or performing an authorized public function. Justice Hollenhorst dissented, arguing that Christiansen was wrongly decided. He would have found that independent contractors can be criminally liable under section 1090 where the contractor exerts "considerable" influence over the contract decisions of a public entity. We granted review.
Whether section 1090 applies to independent contractors is a question of statutory construction that we review de novo. (Lexin v. Superior Court (2010) 47 Cal.4th 1050, 1072, 103 Cal.Rptr.3d 767, 222 P.3d 214 (Lexin ).) Section 1090 does not define "officer" or "employee." In Reynolds v. Bement (2005) 36 Cal.4th 1075, 32 Cal.Rptr.3d 483, 116 P.3d 1162 (Reynolds ), we observed that where " ‘a statute refer[s] to employees without defining the term[,] courts have generally applied the common law test of employment.’ " (Id . at p. 1087, 32 Cal.Rptr.3d 483, 116 P.3d 1162, quoting Metropolitan Water Dist. v. Superior Court (2004) 32 Cal.4th 491, 500, 9 Cal.Rptr.3d 857, 84 P.3d 966.) Sahlolbei argues that because it is undisputed Sahlolbei was not an employee of the Hospital under the common law test, Reynolds disposes of this case.
Like the Court of Appeal, Sahlolbei relies primarily on Christiansen . In that case, the defendant Karen Christiansen, as Director of Planning and Facilities of the Beverly Hills Unified School District, advised the district to enter into contracts with Johnson Controls. (Christiansen , supra , 216 Cal.App.4th at pp. 1184–1187, 157 Cal.Rptr.3d 451.) At the same time, Christiansen's consulting business—of which she was the sole proprietor—was advising Johnson Controls on how to win business at another school district. (Id. at pp. 1185, 1187, 157 Cal.Rptr.3d 451.) Separately, Christiansen advised the district on a bond measure to raise funds to pay for seismic retrofits of school buildings, among other things. (Id. at p. 1187, 157 Cal.Rptr.3d 451.) Christiansen also advised the district to retain her consulting company for project management services for various projects funded by the bond, which the district did. (Ibid. ) Christiansen was convicted on four counts of violating section 1090 for these actions. (Id. at p. 1183, 157 Cal.Rptr.3d 451.) The Court of Appeal reversed, reasoning that section 1090 does not define "employee" and therefore Reynolds ties the definition to the common law test of employment. (Christiansen , at pp. 1188–1189, 157 Cal.Rptr.3d 451.) The court held that because Christiansen was an independent contractor and not an employee of the district under the common law test, section 1090 did not apply to her actions. (Christiansen , at p. 1190, 157 Cal.Rptr.3d 451.)
But the Court of Appeal in Christiansen misconstrued Reynolds . As Reynolds makes clear, its rule regarding the interpretation of "employees" was a specific application of the general rule that we do not presume the Legislature intends to abrogate the common law unless it " ‘ " ‘clearly and unequivocally’ " ' " says so. (Reynolds , supra , 36 Cal.4th at p. 1086, 32 Cal.Rptr.3d 483, 116 P.3d 1162.) The Reynolds rule therefore applies when the common law test of employment would have been appropriate in the same context at common law. But as we explained in S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341, 256 Cal.Rptr. 543, 769 P.2d 399, the common law test of employment is not always appropriate beyond the tort context in which it was originally developed. (Id. at pp. 350–351, 256 Cal.Rptr. 543, 769 P.2d 399.) Outside of tort, rather than "rigidly" applying the common law test, we look to the " ‘history and fundamental purposes' " of the statute at issue to determine whether the Legislature intended the test to apply. (Ibid. []; Martinez v. Combs (2010) 49 Cal.4th 35, 64, 109 Cal.Rptr.3d 514, 231 P.3d 259 [].) In Reynolds itself, we observed that the plaintiff in that case "ha[d] not persuaded us that one may infer from the history and purposes of [the statute at issue] a clear legislative intent to depart ... from the common law" as to the question at issue. (Reynolds , at p. 1087, fn. 8, 32 Cal.Rptr.3d 483, 116 P.3d 1162.) Here, the history and purposes of section 1090 convince us that the Legislature, rather than intending to limit section 1090 in accordance with the common law test of employment, intended the statute to cover certain independent contractors.
We start with the legislative history of the 1963 revisions to section 1090. Prior to those revisions, section 1090 extended only to "officers."
(Former § 1090, Stats. 1961, ch. 381, § 1, p. 1435.) As now, a "public officer" was generally understood to be one who satisfied two criteria: "First, a tenure of office ‘which is not transient, occasional or incidental,’ but is of such a nature that the office itself is an entity in which incumbents succeed one another ..., and, second, the delegation to the officer of some portion of the sovereign functions of government, either legislative, executive, or judicial." (Spreckels v. Graham (1924) 194 Cal. 516, 530, 228 P. 1040 (Spreckels ), quoting Coulter v. Pool (1921) 187 Cal. 181, 187, 201 P....
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