On April 11, 2017, the California Court of Appeal held that while a charter city must satisfy the meet and confer obligations arising from governing-body-sponsored charter amendment ballot proposals, it did not have the same bargaining requirement for citizen-proponent-proposed charter amendments. The court annulled the ruling of the Public Employment Relations Board ("PERB") and held that the City of San Diego ("City") was not required to meet and confer over a citizen-proposed charter amendment before placing the initiative on the ballot. (City of San Diego v. Public Employment Relations Board (April 11, 2017, D069630) _ Cal.App.5th _, 2017 WL 1326317.)

Facts

In 2011, a private group in San Diego sought to place the Citizen’s Pension Reform Initiative ("Initiative") on the June 2012 ballot. This ballot proposal would amend the City’s Charter and replace the City’s defined benefit pension plan with a 401(k)-type plan for certain newly hired public employees. The San Diego Municipal Employees Association ("MEA") and other unions asked to meet and confer with the City regarding the Initiative, arguing that the mayor had set policy for the City Council by publicly soliciting support for the private group’s proposal. The City refused MEA’s requests to bargain.

On January 20, 2012, MEA filed an unfair practice charge with PERB, alleging that the City’s failure to meet and confer violated the Meyers-Milias-Brown Act ("MMBA"). Ten days later, the City Council adopted a resolution placing the Initiative on the ballot. The voters approved the Initiative in June 2012.

Procedural Background

In December 2015, PERB affirmed the Administrative Law Judge’s proposed decision that the City violated its duty to meet and confer. PERB determined that: (1) the mayor was a statutory agent of the City with actual authority to speak for and bind the City concerning bargaining proposals; (2) under the common law, the mayor acted with actual and apparent authority when publicly supporting the ballot proposal; and (3) the City Council knew about the mayor’s conduct and ratified it by placing the Initiative proposal on the ballot.

PERB acknowledged that it could not remedy this unfair practice by vacating the election results. Instead, it ordered the City to pay employees for lost compensation arising from the enactment of the Initiative.

The City filed a petition for writ of extraordinary relief with the California Court of Appeal.

Court of Appeal Decision

As a preliminary matter, Section 3505 of the MMBA requires public employers to bargain in good faith with union representatives as to mandatory subjects of bargaining. Further, Section 3504.5 of the MMBA requires that public entities provide reasonable written notice to unions such as MEA before proposing to a governing body any changes that relate to negotiable subjects.

The court noted that California’s Supreme Court harmonized these requirements in The People ex rel. Seal Beach Police Officers’ Assn. v. City of Seal Beach (1984) 36 Cal.3d 591, holding that a charter city must meet and confer before placing a governing body-sponsored amendment on the ballot. However, the court observed that the Seal Beach decision explicitly declined to resolve the issue in this dispute—whether the MMBA requires a charter city to meet and confer before placing a citizen-initiative proposal on the ballot. The court noted that the "meet and confer requirements of the MMBA by its express terms constrains only proposals by the ‘governing body.’" Given that a citizen-sponsored initiative does not involve a proposal by the governing body, the court found that there are no analogous meet-and-confer requirements for citizen-sponsored initiatives. The court observed that a contrary rule would run against the purposes of the MMBA, noting that a public agency "lacks authority to make any changes to a duly qualified citizen’s initiative." Consequently, an obligation to bargain "would require an idle act by the governing body."

The court also rejected PERB’s conclusion that "the participation of a few government officials and employees in drafting and campaigning for a citizen-sponsored initiative" converted it "into a governing-body-sponsored ballot proposal." Specifically, the court disagreed with PERB’s application of statutory and common law agency principles. First, the court held that the mayor did not act with the statutory authority of the City Council when he publicly supported the ballot proposal, as the City Council did not and could not delegate its legislative authority over ballot proposals to executive officials. Second, the court found that the City Council did not delegate actual authority to the mayor under common law, as there was no evidence that the City Council intentionally authorized the mayor to act on its behalf, or that the mayor believed he had such authority. Third, the court rejected PERB’s apparent agency theory, given that PERB improperly relied on evidence of the actions of the alleged agent (mayor) rather than the principal (City Council). The court found that PERB failed to show how the City Council "affirmatively did or said anything that could have caused or allowed a reasonable employee to believe" the mayor had been authorized to act on the City Council’s behalf.

The court annulled PERB’s "make whole" remedy and other findings, given that they "proceeded from [the] fundamental but legally erroneous premise" that the City should have met and conferred with MEA before placing the Initiative on the ballot.

This decision confirms that the public may use a ballot initiative to make changes that would otherwise require bargaining under the MMBA if a public agency itself were to attempt to initiate such changes.