The Sonoma County Board of Supervisors created the Sonoma County Development Commission (Commission) in 1984 in accordance with the Health and Safety Code. In 2009, the Commission entered into a contract with Sterling Co. Inc., in which Sterling agreed to provide the Commission with housing inspection services during periods of high workload. Service Employees International Union, Local 1021, AFL-CIO (SEIU) responded in a letter, stating that if the work performed by a contract employee rose to the level of a permanent, part-time employee, SEIU would expect the County to fund the position instead of continuing to contract out the work.
In 2012, the Commission sent SEIU a letter indicating its intent to cut costs by contracting out certain work normally performed by employees represented by SEIU. Specifically, the Commission said that it would eliminate three positions and thus lay off three full time employees. SEIU demanded that the Commission cease and desist. The Board authorized the County to contract out housing inspection services to Sterling. The Commission sent out three layoff notices, and SEIU filed a lawsuit.
The Commission demurred to SEIU's complaint, which the trial court sustained with leave to amend. When SEIU failed to file an amended complaint, the court dismissed the case. SEIU appealed, and the Court of Appeal affirmed.
The Court analyzed the language of Health and Safety Code sections 34144 and 34145. Section 34145 states, in part, that a community development commission may hire, employ, or contract for staff, contractors, and consultants. Section 34144 states, in part, that a commission may employ permanent or temporary employees as it requires and may also contract with the Department of Housing and Community Development or any other agency or entity for the furnishing of any necessary staff services associated with or required and which could be performed by the staff of a commission.
The Court held that the language of these statutes plainly demonstrates the intent to give the Commission free reign to contract for the services in question, regardless of whether the employees performing the services come from the private or public sector. If the Legislature wanted to prohibit the Commission from contracting with the private sector, it easily could have used restrictive terminology to do so. The Legislature did not state that commissions could only contract with public agencies or entities, and the Court refused to imply the presence of a word that the Legislature did not include.
SEIU argued that the Commission cannot outsource housing inspection services because of Government Code section 53060, which provides, in part, that a public or municipal corporation or district may only contract out "special services" in specified areas.
While Government Code section 53060 applies to the Commission, a public corporation, it is a general statute. Health and Safety Code sections 34144 and 34145 are specific statutes that apply only to community development commissions formed under the Health and Safety Code. It is well established that a special statute controls over a general statute because the special statute is viewed as an exception to the general statute. Thus, Health and Safety Code sections 34144 and 34145 control in this situation, not Government Code section 53060.
Finally, SEIU argued that the Commission's contracts with Sterling were void because the Commission lacked authority to enter into the contracts. It argued that the Board lacked authority to contract out services, and the Board cannot delegate to the Commission a power or authority that it does not possess. The Court rejected this argument, stating that while the Board created the Commission, the Commission's powers and authority are not delegated by the Board, but rather were established and circumscribed by the Legislature. Thus, there was no improper delegation of power.
For the foregoing reasons, the Court of Appeal affirmed the superior court's grant of the Commission's demurrer.
In our October 2012 Client Update, we reported on Costa Mesa City Employees Association v. City of Costa Mesa wherein the Association attempted to enjoin the City from outsourcing many positions. In that case, the Court of Appeal considered whether Government Code sections 37103 and 53060 allow a general law city to contract for "special services". Under Section 53060, a municipality may only contract for "special services and advice in financial, economic, accounting, engineering, legal, or administrative matters" with a party who is "specially trained and experienced and competent to perform the special services required." Similarly, Section 31000 prohibits a county from contracting out work unless the contracts are with "specially trained" persons for "special services…in financial, economic, accounting (including the preparation and issuance of payroll checks or warrants), engineering, legal, medical, therapeutic, administrative, architectural, airport or building security matters, laundry services or linen services." Whether a private party is "specially trained" and providing "special services" will depend on the facts of each situation. Agencies are encouraged to seek legal advice to determine whether a contracting relationship conforms with the Government Code.
Service Employees International Union, Local 1021, AFL-CIO v. County of Sonoma (2014) 227 Cal.App.4th 1168 [174 Cal.Rptr.3d 432].