White v. Davis

• Citation: 133 Cal.Rptr.2d 648,30 Cal.4th 528,68 P.3d 74
• Decision Date: 01 May 2003
• Docket Number: No. S108099.,S108099.
• Court: United States State Supreme Court (California)
• Parties: Steven WHITE, Plaintiff and Appellant, v. Gray DAVIS, as Governor, etc., et al., Defendants and Respondents. Howard Jarvis Taxpayers Association et al., Plaintiffs and Respondents, v. Steve Westly, as Controller, etc., Defendant and Appellant; California State Employees Association, Local 1000, SEIU, AFL-CIO, CLC, et al., Interveners and Appellants.

133 Cal.Rptr.2d 648

30 Cal.4th 528

68 P.3d 74

Steven WHITE, Plaintiff and Appellant, v. Gray DAVIS, as Governor, etc., et al., Defendants and Respondents.

Howard Jarvis Taxpayers Association et al., Plaintiffs and Respondents, v. Steve Westly, as Controller, etc., Defendant and Appellant; California State Employees Association, Local 1000, SEIU, AFL-CIO, CLC, et al., Interveners and Appellants.

No. S108099.

Supreme Court of California.

May 1, 2003.

Law Offices of Richard I. Fine & Associates, Richard I. Fine, Beverly Hills, Jeremy W. Faith, Los Angeles, Genalin Sulat, Carmela Tan, Los Angeles, Cheri M. Vu; Jonathan M. Coupal, Sacramento, and Trevor A. Grimm, Los Angeles, for Plaintiff and Appellant and for Plaintiffs and Respondents.

Daniel E. Lungren and Bill Lockyer, Attorneys General, Manuel M. Medeiros, State Solicitor General, Linda A. Cabatic and Andrea Lynn Hoch, Assistant Attorneys General, Louis R. Mauro, Acting Assistant Attorney General, Paul H. Dobson, Keith Yamanaka and Jennifer K. Rockwell, Deputy Attorneys General, for Defendant and Appellant and for Defendants and Respondents Gray Davis et al.

Bion M. Gregory, Richard Thomson, Sacramento; Eisen & Johnston Law Corporation and Marian M. Johnston, Sacramento, for Defendants and Respondents Bill Lockyer, Cruz M. Bustamante, Rob Hurtt and Curt Pringle.

Anne M. Giese, Gary P. Reynolds, Daniel S. Connolly, Sacramento, and Michael D. Hersh, for Interveners and Appellants Gary Gavinski and California State Employees Association, Local 1000, SEIU, AFL-CIO, CLC.

Dennis F. Moss, for Interveners and Appellants Professional Engineers in California Government and California Association of Professional Scientists.

Benjamin C. Sybesma, West Sacramento, Christine Albertine, Rancho Cucamonga, and Joel H. Levinson, West Sacramento, for Intervener and Appellant California Correctional Peace Officers' Association.

Carroll, Burdick & McDonough, Ronald Yank, San Francisco, Gary M. Messing, Sacramento, Laurie J. Hepler and Cathleen A. Williams for Intervener and Appellant California Union of Safety Employees.

Lynn S. Carman; Steinberg & Steinberg, Lawrence William Steinberg and Anita Steinberg, Santa Monica, for Interveners and Appellants Jerome Feitelberg and Alameda Drug Company, Inc.

David P. Lampkin, Los Angeles, R. Clayton Seaman, Jr., Jeralyn Keller, Pasadena, and Jonathan P. Milberg, for California Appellate Defense Counsel as Amici Curiae.

Lynn S. Carman, for Frederick S. Mayer as Amicus Curiae.

GEORGE, C.J.

Article IV, section 12 of the California Constitution provides in part that "[t]he Legislature shall pass the budget bill by midnight on June 15 of each year," but in recent years the timely adoption of the budget bill in California has proven to be the exception, rather than the rule. This proceeding arises out of two taxpayer actions that were filed in the wake of budget impasses that occurred in 1997 and 1998.¹ In the action filed in 1998, the trial court issued a preliminary injunction broadly barring the Controller from making payments from the state treasury in the absence of passage of the budget bill or an emergency appropriation—a preliminary injunction that largely would have shut down government operations in California, but for the Legislature's prompt enactment of an emergency appropriation and the Court of Appeal's subsequent order staying the effect of the preliminary injunction. In the Court of Appeal, the Controller contended that, contrary to the trial court's ruling in the 1998 case, a variety of payments lawfully may be made from the treasury during a budget impasse. Although the ultimate passage of budget bills in 1997 and 1998 rendered the appeals in these cases moot, the Court of Appeal — concluding that the issues presented by this proceeding are important and likely to recur, but will regularly evade timely appellate review—retained the matter to consider this contention.

After briefing and argument, the Court of Appeal, in a lengthy decision, ultimately concluded that the Controller may authorize the payment of state funds during a budget impasse in a variety of circumstances, including (1) when payment is authorized by a "continuing appropriation" enacted by the Legislature, (2) when payment is authorized by a self-executing provision of the California Constitution (for example, the payment of certain funds for public schools under art. XVI, § 8.5 of the Cal. Const., and the payment of elected state officers' salaries under art. III, § 4 of the Cal. Const.), and (3) when payment is mandated by federal law (for example, the prompt payment of those wages mandated by the federal Fair Labor Standards Act, and the prompt payment of benefits mandated under federal food stamp, foster care and adoption, child support, and child welfare programs). (White v. Davis (2002) 108 Cal.App.4th 197, 133 Cal.Rptr.2d 691 (White v. Davis I); see fn. 14, post.) The Court of Appeal reversed the trial court's judgment granting a preliminary injunction insofar as the injunction applied to these categories of payments, but otherwise affirmed the order.

The Controller and a number of state employee unions and associations that had intervened in the lower court actions (hereafter referred to as state employee interveners) filed petitions for review in this court, but the petitions challenged only two aspects of the Court of Appeal's decision. First, both the Controller and the state employee interveners, contending that the Court of Appeal erred in affirming in any respect the trial court's 1998 order granting the preliminary injunction, maintained that the trial court's issuance of a preliminary injunction in this action constituted a clear abuse of discretion in light of (1) prior case law holding that the alleged harm to a taxpayer's interest in the public treasury is insufficient to support the issuance of a preliminary injunction to bar the alleged improper expenditure of public funds, and (2) the circumstance that the harm posed by granting the broad preliminary injunctive relief sought by plaintiffs greatly outweighed the potential harm that would have resulted from denying such injunctive relief pending a full adjudication on the merits. Second, the state employee interveners challenged the Court of Appeal's conclusions regarding the payment of state employee salaries during a budget impasse, contending that the Court of Appeal erred in determining that state law did not authorize the Controller to pay all state employees their full and regular salaries in the absence of a duly enacted budget bill, and erred additionally in concluding that the federal Fair Labor Standards Act required the Controller, during a budget impasse, to pay state employees covered by that law only at the minimum wage rate for hours worked during the impasse.

We granted review to address only the two matters raised in the petitions for review: (1) the procedural question whether the trial court erred in granting a preliminary injunction in the underlying taxpayer action, and (2) the substantive question whether the Controller is authorized to pay state employees their full and regular salaries during a budget impasse.

With regard to the first issue, we conclude that the trial court in the 1998 action abused its discretion in granting a preliminary injunction and that the Court of Appeal erred in affirming in any respect the order granting the preliminary injunction.

With regard to the second issue, we conclude that the trial court erred in ruling that state employees who work during a budget impasse properly may be considered "volunteers" who obtain no right to the payment of salary or wages either under state or federal law, and also that the Court of Appeal erred insofar as that court concluded that state employees' entitlement "to compensation for work performed during a budget impasse does not accrue until the enactment of a budget or other proper appropriation." (White v. Davis I, supra, 108 Cal.App.4th 197, 226-227 133 Cal.Rptr.2d 691.) Instead, we conclude that under the applicable California statutes, state employees who work during a budget impasse obtain the right, protected by the contract clauses of the federal and state Constitutions, to the state's ultimate payment of their full salary for work performed during the budget impasse; that is, when state employees work during a budget impasse, the state becomes contractually obligated ultimately to pay employees the full salary they have earned. At the same time, however, we conclude that the Court of Appeal was correct in determining that state employees do not have a contractual right actually to receive the payment of salary prior to the enactment of an applicable appropriation, and that the Controller is not authorized under state law to pay those salaries prior to such an appropriation. Thus, state law contractually guarantees that state employees ultimately will receive their full salary for work performed during a budget impasse, but state law does not authorize the Controller to disburse state funds to the employees until an applicable appropriation has been enacted.

In addition, we conclude that, in light of the requirements of federal law, the Controller is required, notwithstanding a budget impasse and the limitations imposed by state law, to timely pay those state employees who are subject to the minimum wage and overtime compensation provisions of the federal Fair Labor Standards Act—a category that includes many, but not all, state employees—the wages required by that act.

I

As noted, this case arises out of two separate taxpayer actions, the first filed in 1997 concerning the 1997-1998 budget impasse (hereafter, the 1997 action), and the second filed in 1998 related to the 1998-1999 budget impasse (hereafter, the 1998 action). We briefly describe each of the actions.

A

On July 25, 1997, Steven White filed the 1997 action against the Governor and numerous other state...