Filed 8/7/13
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION TWO
MISSION SPRINGS WATER DISTRICT,
Plaintiff and Respondent, E055176
v. (Super.Ct.No. INC1105569)
KARI VERJIL, as Registrar of Voters, etc., OPINION
Defendant;
TIM RADIGAN BROPHY et al.,
Real Parties in Interest and
Appellants.
APPEAL from the Superior Court of Riverside County. Harold W. Hopp, Judge.
Affirmed.
Trevor A. Grimm, Jonathan M. Coupal, and Timothy A. Bittle for Defendants and
Appellants.
Benbrook Law Group and Bradley A. Benbrook for Citizens in Charge as Amicus
Curiae on behalf of Defendants and Appellants.
Slovak Baron & Empey, John O. Pinkney, and Charles L. Gallagher for Plaintiff
and Respondent.
1
Colantuono & Levin and Michael G. Colantuono for Association of California
Water Agencies, California Association of Sanitation Agencies, California State
Association of Counties, and League of California Cities as Amici Curiae on behalf of
Plaintiff and Respondent.
Mission Springs Water District (the District) increased its water and sewer rates.
Initiatives to roll back the increases gathered enough signatures to qualify for the ballot.
Rather than hold an election on the initiatives, however, the District filed this action
against the proponents of the initiatives1 (the Proponents) for a declaration that the
initiatives are invalid.
The Proponents filed a ―SLAPP motion‖ — i.e., a special motion to strike pursuant
to Code of Civil Procedure section 425.16 (SLAPP Act). For this motion to be granted,
the Proponents had to show that the action arose out of activity protected under the
constitutional right of petition or free speech, and the District had to fail to show a
probability of prevailing on its claims. The trial court denied the motion. It ruled that,
under our decision in City of Riverside v. Stansbury (2007) 155 Cal.App.4th 1582
(Stansbury), a declaratory relief action concerning the validity of an initiative does not
arise out of protected activity by the initiative‘s proponents.
1 The proponents of the initiatives, and hence the named real parties in
interest, are Tim Radigan Brophy, Douglas Ward Sherman, Mary K. Stephens, and Steve
Sobotta.
2
The Proponents ask us to reconsider Stansbury, asserting that it was poorly
reasoned. We conclude that Stansbury was sound when decided; however, in light of the
California Supreme Court‘s subsequent holding in Perry v. Brown (2011) 52 Cal.4th 1116
(Perry) that a preelection challenge to an initiative does implicate the personal
constitutional rights of the initiative‘s proponents, Stansbury is no longer good law.
Nevertheless, we also conclude that the trial court properly denied the SLAPP
motion, albeit for the wrong reason. The District showed a probability of prevailing on at
least one of its theories — that the initiatives would set the District‘s rates too low to
cover its costs, in violation of Water Code section 31007, and that the voters of a local
district cannot override this statewide requirement. Hence, we will affirm.
I.
FACTUAL BACKGROUND
In 2010, the District adopted water and sewer rate increases effective January 1,
2011. According to the District, the rate increases are necessary if it is to remain solvent
and to continue to carry out its vital public functions. According to the Proponents,
however, the rate increases are unjustifiably high, due in part to employee salaries, health
benefits, and pension benefits that are out of line with those prevailing in the private
sector.
The Proponents circulated petitions for two initiatives (one for water rates and one
for sewer rates) that would undo the rate increases and restore the preexisting rates. The
initiatives also provided that, every fiscal year, ―the District may adjust these . . . rates by
3
the percentage increase, if any, in the Consumer Price Index published by the federal
Bureau of Labor Statistics for the region applicable to the . . . District.‖
In May 2011, defendant Kari Verjil, the registrar of voters, notified the District
that the initiatives had received enough signatures. (See Elec. Code, §§ 9308, subd. (e),
9309, subd. (f).) At that point, the District was statutorily required to order that the
initiatives be placed on the ballot at the next general election. (Elec. Code, §§ 1405,
subd. (b), 9310, subd. (a)(2).)2 The District, however, did not do so. Instead, it filed this
action for declaratory relief.
II.
PROCEDURAL BACKGROUND
The District alleged that the initiatives were invalid because:
1. While Proposition 218 permits reducing local district rates by initiative, the
initiatives went beyond this authorization by also limiting future rate increases.
2. The initiatives were void for vagueness because they did not specify which
Consumer Price Index (CPI) was to be used for future rate increases.
3. The initiatives would cause the District to become insolvent.
2 The petitions requested that the initiatives be submitted to the voters ―at a
special election . . . or the . . . next regular election . . . .‖ This wording was probably
insufficient to require a special election. (See Elec. Code, § 9310, subd. (a).) According
to the Proponents themselves, the initiatives should have gone on the ballot in the next
general election, on November 8, 2011.
4
4. The initiatives, rather than enacting legislation directly, required the District
to enact legislation.
5. The initiatives unconstitutionally impaired the obligation of contract.
The Proponents filed a demurrer. In it, they argued that the initiatives were not
invalid on any of the five theories that the District was asserting.
Meanwhile, the Proponents also filed a SLAPP motion. They argued that the
action arose from the protected activity of exercising their right of petition. They also
argued that the District was not likely to prevail on the merits.
The trial court held a combined hearing on both the demurrer and the SLAPP
motion. After hearing argument, it denied the SLAPP motion. It reasoned that, under
Stansbury, the action did not arise out of any protected activity. It therefore did not reach
the question of whether the District had shown a probability of prevailing on the merits.
(See Code Civ. Proc., § 425.16, subd. (b)(1).)
At the same time, however, it overruled the demurrer. It ruled that at least one of
the District‘s theories — that the initiatives unconstitutionally limited future rate
increases — appeared to be meritorious.
5
III.
THE DISTRICT‘S CLAIM DOES ARISE OUT OF PROTECTED ACTIVITY,
BUT THE DISTRICT SHOWED A PROBABILITY OF PREVAILING
A. General SLAPP Act Principles.
The SLAPP Act states: ―A cause of action against a person arising from any act of
that person in furtherance of the person‘s right of petition or free speech under the United
States Constitution or the California Constitution in connection with a public issue shall
be subject to a special motion to strike, unless the court determines that the plaintiff has
established that there is a probability that the plaintiff will prevail on the claim.‖ (Code
Civ. Proc., § 425.16, subd. (b)(1).)
―The analysis of [a SLAPP] motion thus involves two steps. ‗First, the court
decides whether the defendant has made a threshold showing that the challenged cause of
action is one ―arising from‖ protected activity. [Citation.] If the court finds such a
showing has been made, it then must consider whether the plaintiff has demonstrated a
probability of prevailing on the claim.‘ [Citation.]‖ (Oasis West Realty, LLC v. Goldman
(2011) 51 Cal.4th 811, 819-820.)
―We review an order granting or denying a motion to strike under section 425.16
de novo. [Citation.]‖ (Oasis West Realty, LLC v. Goldman, supra, 51 Cal.4th at p. 820.)
6
B. The “Arising From” Requirement.
The Proponents contend that this action does arise out of protected activity. They
appear to concede that, under Stansbury, it does not, but they urge us either to ―revisit‖
Stansbury (capitalization omitted) or to carve out an exception to it.
―[T]o meet its burden ‗the defendant . . . must present a prima facie showing that
the plaintiff‘s causes of action arise from acts of the defendant taken to further the
defendant‘s rights of free speech or petition in connection with a public issue. . . .‘
[Citation.]‖ (Flatley v. Mauro (2006) 39 Cal.4th 299, 314 [discussing & quoting Paul for
Council v. Hanyecz (2001) 85 Cal.App.4th 1356, 1365]; see also Flatley, at pp. 316-318
[approving Paul for Council].)
―[T]he mere fact that an action was filed after protected activity took place does
not mean the action arose from that activity for the purposes of the anti-SLAPP statute.
[Citation.] Moreover, that a cause of action arguably may have been ‗triggered‘ by
protected activity does not entail that it is one arising from such. [Citation.] In the anti-
SLAPP context, the critical consideration is whether the cause of action is based on the
defendant‘s protected free speech or petitioning activity.‖ (Navellier v. Sletten (2002) 29
Cal.4th 82, 89.) ―The anti-SLAPP statute‘s definitional focus is not on the form of the
plaintiff‘s cause of action but, rather, the defendant‘s activity that gives rise to his or her
asserted liability — and whether that activity constitutes protected speech or petitioning.‖
(Id. at p. 92.)
7
To the best of our knowledge, this standard has been applied to actions challenging
initiatives only twice.
First, in City of Santa Monica v. Stewart (2005) 126 Cal.App.4th 43 (Stewart),
voters in Pasadena passed an initiative that prohibited city officials from accepting gifts
and campaign contributions from recipients of certain public benefits. (Id. at pp. 50-51,
54.) The city, however, claimed that the initiative was unconstitutional; it refused to
authenticate, certify and file copies of the initiative, which prevented the initiative from
going into effect. (Id. at p. 54.)
The Foundation for Taxpayer and Consumer Rights (FTCR), which had sponsored
the initiative, intervened in an action to compel the city to authenticate, certify, and file
copies of the initiative. (Stewart, supra, 126 Cal.App.4th at p. 54.) The city responded
by cross-complaining against FTCR for declaratory relief, asserting that the initiative was
unconstitutional. FTCR then filed a SLAPP motion. (Id. at p. 55.) The trial court denied
the SLAPP motion because it accepted the city‘s argument that the ―cross-action was not
motivated by a desire to punish FTCR or chill the exercise of its First Amendment rights.
Rather, the goal was only to obtain a judicial determination that the city was not required
to perform any of the ministerial duties necessary to certify the election results . . .
because the Initiative was unconstitutional.‖ (Id. at pp. 71-72; see also id. at pp. 55-56.)
The appellate court held that this was error, and the cross-complaint did arise out
of protected activity. Preliminarily, it rejected the city‘s argument that the cross-
complaint did not arise out of protected activity because it arose out of the passage of the
8
initiative. (Stewart, supra, 126 Cal.App.4th at pp. 72-73.) It explained, ―[E]ven if we
agreed that the act which led to the filing of the cross-complaint against FTCR was the
voters‘ approval of the FTCR-sponsored Initiative, that approval would represent, among
other things, a paradigmatic exercise of FTCR‘s and the voters‘ engagement in ‗conduct
in furtherance of the exercise of the constitutional right of petition or the constitutional
right of free speech in connection with a public issue or an issue of public interest.‘
[Citations.] Advocacy for an [i]nitiative and adoption of the measure are, without
question, a fundamental exercise of the First Amendment right to petition.‖ (Id. at p. 73,
italics added.)
The court went on to hold, however, that the cross-complaint actually arose out of
FTCR‘s acts of intervening in the action and demanding that the city perform its
ministerial duties of certifying and filing the initiative. (Stewart, supra, 126 Cal.App.4th
at pp. 73-75.) The court found that the ―gravamen‖ of the cross-complaint was not the
constitutionality of the initiative, but rather the dispute over the city‘s obligation to
perform its ministerial duties. (Id. at p. 74.)
The court concluded: ―FTCR was sued because it had the temerity to file a
complaint-in-intervention to force Pasadena to put the [i]nitiative into effect, and because
it sponsored the [i]nitiative and supported its constitutionality, all of which are clearly
protected activities.‖ (Stewart, supra, 126 Cal.App.4th at p. 75, italics added.)
Thereafter, in Stansbury, the defendants were the proponents of an initiative that
would have amended the eminent domain provisions of the Riverside city charter.
9
(Stansbury, supra, 155 Cal.App.4th at p. 1585.) The city filed a declaratory relief action
against them, seeking a declaration that the proposed initiative was invalid and did not
have to be placed on the ballot. (Id. at pp. 1586-1586.) The proponents filed a SLAPP
motion, which the trial court granted. (Id. at p. 1587.)
We held that this was error, because the complaint did not arise out of any
protected activity. We relied on City of Cotati v. Cashman (2002) 29 Cal.4th 69, which
had held that a city‘s declaratory relief action regarding the validity of a rent control
ordinance did not arise out of protected speech. We concluded that, in the case before us,
―[b]y its declaratory relief action, the City was simply asking for guidance as to the
constitutionality of the proposed initiative. Indeed, the City did nothing to limit
respondents‘ activities in connection with the initiative, nor did the City, by its action,
otherwise impact respondents‘ First Amendment rights. Moreover, it was proper for the
City to initiate its declaratory relief action as a means of disputing, in a preelection
challenge, the validity of the initiative. [Citations.]‖ (Stansbury, supra, 155 Cal.App.4th
at pp. 1590-1591.)
As we noted, ―[u]nderlying [the] position [of one of the proponents] is the faulty
premise that his right to petition is not complete and thus cannot be challenged — until
after the proposed initiative is placed on the ballot and the electorate determines whether
it should pass.‖ (Stansbury, supra, 155 Cal.App.4th at p. 1591; see also id. at p. 1592.)
We responded that this ―overlooks the fact there is no constitutional right to place an
invalid initiative on the ballot. [Citation.] Moreover, [it] ignores entirely the body of law
10
which recognizes preelection challenges to initiative measures.‖ (Id. at p. 1592.) We
concluded that ―if the trial court‘s ruling is allowed to stand, no one could ever challenge
an initiative‘s constitutionality prior to the election, which is contrary to law.‖ (Id. at
p. 1585.)
We distinguished Stewart, stating that ―[t]he cross-action [in Stewart] involved not
the constitutionality of the initiative, as in our case, but rather, the dispute over the
city‘s . . . duty to perform certain ministerial acts . . . . [Citation.] Thus, because the
cross-action ‗arose from‘ FTCR‘s protected act of filing litigation, it was properly subject
to a motion to strike under section 425.16.‖ (Stansbury, supra, 155 Cal.App.4th at
p. 1593.)
The Proponents argue that Stewart and Stansbury are ―irreconcilable‖ and that
Stansbury was ―wrongly decided . . . .‖ The District, on the other hand, argues that
Stansbury is controlling and that Stewart is distinguishable on the grounds we stated in
Stansbury.
The correctness of Stansbury turns on whether a declaratory relief action
challenging the validity of an initiative arises out of the proponents‘ exercise of their right
of petition. We indicated that the proponents‘ exercise of their right to petition was
―complete‖ once they had done everything necessary to qualify the initiative for the
ballot; hence, a challenge to actually placing the initiative on the ballot did not implicate
the proponents‘ right of petition. (See Stansbury, supra, 15 Cal.App.4th at p. 1591.) In
2007, when Stansbury was decided, there was little authority on this point. There was
11
Stewart, but it was not entirely clear; it could be read broadly, as the Proponents do, or
narrowly, as the District does and as we ultimately did in Stansbury.
In 2011, however, the California Supreme Court confronted the issue directly in
Perry. There, the Ninth Circuit had asked our Supreme Court to decide ―‗[w]hether . . .
the official proponents of an initiative measure possess either a particularized interest in
the initiative‘s validity or the authority to assert the State‘s interest in the initiative‘s
validity, which would enable them to defend the constitutionality of the initiative upon its
adoption or appeal a judgment invalidating the initiative, when the public officials
charged with that duty refuse to do so.‘‖ (Perry, supra, 52 Cal.4th at p. 1124.)
The Supreme Court began by observing, ―[I]n the past official proponents of
initiative measures in California have uniformly been permitted to participate as parties
— either as interveners or as real parties in interest — in numerous lawsuits in California
courts challenging the validity of the initiative measure the proponents sponsored. . . .
This court, however, has not previously had occasion fully to explain the basis upon
which an official initiative proponent‘s ability to participate as a party in such litigation
rests.‖ (Perry, supra, 52 Cal.4th at p. 1125.)
The court stated: ―In the preelection setting, when a proposed initiative measure
has not yet been adopted as state law, the official proponents of an initiative measure who
intervene or appear as real parties in interest are properly viewed as asserting their own
personal rights and interests — under article II, section 8 of the California Constitution
and the California statutes relating to initiative proponents — to propose an initiative
12
measure and have the measure submitted to the voters for approval or rejection. In
preelection cases, the official initiative proponents possess a distinct interest in defending
the proposed initiative because they are acting to vindicate their own rights under the
relevant California constitutional and statutory provisions to have their proposed
measure — a measure they have submitted to the Attorney General, have circulated for
signature, and have the exclusive right to submit to the Secretary of State after signatures
have been collected — put to a vote of the people.‖ (Perry, supra, 52 Cal.4th at p. 1146,
italics added.)
By contrast, the court noted, in postelection litigation, the existence of a personal
interest on the part of the official proponents is ―arguably less clear . . . .‖ (Perry, supra,
52 Cal.4th at p. 1147.) It then held that, ―at least in those circumstances in which the
government officials who ordinarily defend a challenged statute or constitutional
amendment have declined to provide such a defense or to appeal a lower court decision
striking down the measure, the authority of the official proponents of the initiative to
assert the state‘s interest in the validity of the initiative is properly understood as arising
out of article II, section 8 of the California Constitution and the provisions of the
Elections Code relating to the role of initiative proponents.‖ (Id. at p. 1151.)
When this court decided Stansbury, Perry had not yet been decided. Indeed, as the
Supreme Court itself noted, it had not yet articulated precisely why the proponent of an
initiative has standing to defend its validity. (Perry, supra, 52 Cal.4th at p. 1125.)
Accordingly, we suggested that a proponent‘s exercise of the right to petition is
13
―complete‖ once the proposed initiative has qualified procedurally to be placed on the
ballot; we indicated that, in a preelection challenge to the validity of the initiative, this
right simply is not involved. (Stansbury, supra, 155 Cal.App.4th at p. 1591.) Under
Perry, however — and in particular under the italicized language quoted above — this
view is no longer tenable. Rather, Perry now stands for the proposition that, when the
proponent of an initiative is a party to preelection litigation challenging the initiative, the
litigation arises out of the proponent‘s exercise of the constitutional right of petition.
This is true even when the plaintiff is a governmental entity requesting guidance
regarding the constitutionality of the proposed initiative. In Stansbury, we reasoned
essentially that a preelection declaratory relief action does not ―limit [the proponents‘]
activities in connection with the initiative, nor . . . otherwise impact [the proponents‘]
First Amendment rights.‖ (Stansbury, supra, 155 Cal.App.4th at p. 1591.) However, we
now know from Perry that this is incorrect. We also believed that Cotati was controlling,
even though it dealt with an ordinance rather than an initiative. (Stansbury, at p. 1591.)
Once again, however, Perry teaches us that initiative proponents have a constitutional
stake in preelection litigation over their initiative that is distinct from the general public‘s
stake in postenactment litigation over a statute.
Moreover, as the court in Perry noted, there is an inherent conflict of interest
between the proponent of an initiative and the affected governmental entity. ―[T]he
initiative process is specifically intended to enable the people . . . to enact statutes when
current government officials have declined to adopt (and often have publicly opposed) the
14
measure in question . . . .‖ (Perry, supra, 52 Cal.4th at p. 1125.) Whenever the affected
governmental entity files a declaratory relief action in which it seeks to keep an initiative
off the ballot, the action arises out of the proponent‘s right of petition.3
We adhere to the concern that we expressed in Stansbury about unduly inhibiting
preelection challenges to initiatives. However, our statement that ―if the trial court‘s
ruling is allowed to stand, no one could ever challenge an initiative‘s constitutionality
prior to the election‖ (Stansbury, supra, 155 Cal.App.4th at p. 1585) must be viewed in
context. In Stansbury, one of the proponents was arguing that the right to petition
prohibits any preelection challenge to an initiative. (Id. at p. 1591.) The trial court had
agreed, stating that ―‗to have a declaratory relief action before the initiative is ever
enacted is not something the Court should consider, because the initiative may not pass.‘‖
3 One of the Proponents‘ objections to Stansbury is that supposedly it allows
a local governmental entity to evade its mandatory duty to place an initiative on the ballot
by filing a declaratory relief action instead. They claim that one of the issues in this
appeal is whether a local governmental entity has a mandatory duty to place a
procedurally qualified initiative on the ballot, even when it claims that the initiative is
unconstitutional or invalid.
The filing of this declaratory relief action, however, is not what kept the initiatives
off the ballot. The District did not request or obtain any provisional relief from the trial
court; it simply decided, on its own, not to order an election. Filing the action does
enhance the District‘s appearance of good faith — it can claim it is merely awaiting
guidance from the court. However, the District could have refused to place the initiative
on the ballot without filing any action at all.
We are somewhat surprised that the Proponents have not cross-complained for any
coercive relief, such as a writ or a preliminary injunction, to compel a prompt election on
the initiatives. Absent a request for such relief, however, the issue of the existence or
scope of the District‘s mandatory duty simply is not before us.
15
(Id. at p. 1594, fn. 10.) It was this ruling that would have meant that no one could ever
bring a preelection challenge.
By contrast, holding that a preelection declaratory relief action regarding the
validity of an initiative arises out of the proponent‘s protected activity does not mean that
no one could ever bring a preelection challenge. Such a holding merely addresses the
first prong of the analysis of a SLAPP motion. It would still be open to the challenger to
show that, under the second prong, it has a probability of prevailing. As we will discuss
in more detail in part III.C., post, this is not a particularly high hurdle. Thus, such a
holding would simply mean that no one could bring a meritless preelection challenge.
Indeed, it is difficult to underestimate the likely impact of allowing SLAPP
motions in declaratory relief actions challenging the validity of initiatives. Admittedly, a
SLAPP motion requires the plaintiff to show that it has a probability of prevailing even
before it has obtained any discovery. A preelection challenge to the validity of an
initiative, however, is likely to present primarily issues of law. (See Senate of State of
Cal. v. Jones (1999) 21 Cal.4th 1142, 1153-1154 and cases cited [appropriate preelection
claims include claim that initiative is not legislative in character, amounts to a
constitutional revision rather than amendment, fails to contain accurate short title, or
violates single-subject rule].)
Also, to the extent that the preelection challenge is brought by the affected
governmental entity, it is likely that the entity already has much of the relevant factual
information. Here, for example, the District claims that the initiatives would cause it to
16
become insolvent. The information relevant to this claim, including information about
the District‘s revenues, expenses, and rate-setting practices, is in the District‘s own hands.
It does not need discovery on this issue.
The only other significant effect of allowing SLAPP motions is that, if the motion
is granted, the plaintiff will have to pay the defendant‘s attorney fees. (Code Civ. Proc.,
§ 425.16, subd. (c)(1).) Whenever the plaintiff is the affected governmental entity, these
fees must come, directly or indirectly, out of the pocket of the public. Once again,
however, for fees to be awarded, the action must be meritless. We would hope that local
governmental entities — which have ready access to the advice of counsel — will not
bring so many meritless challenges to initiatives as drain the public fisc.
―The purpose of the anti-SLAPP statute is to encourage participation in matters of
public significance and prevent meritless litigation designed to chill the exercise of First
Amendment rights. [Citation.]‖ (Fremont Reorganizing Corp. v. Faigin (2011) 198
Cal.App.4th 1153, 1165.) When a governmental entity brings a meritless preelection
challenge to the validity of an initiative, these legislative policies apply full force.
Finally, the District argues that the Proponents ―effectively ask this Court to
dispense with the first prong of the anti-SLAPP analysis in any and all challenges to the
constitutionality of proposed initiatives.‖ Not at all. We merely conclude that the first
prong is satisfied (at least when a proponent of the initiative is a party).
17
C. Probability of Prevailing.
We therefore turn to the second prong of the analysis — whether the District has
demonstrated a probability of prevailing on its claim.
―[A] SLAPP motion, like a summary judgment motion, pierces the pleadings and
requires an evidentiary showing.‖ (Simmons v. Allstate Ins. Co. (2001) 92 Cal.App.4th
1068, 1073.) ―‗[A]lthough by its terms [Code of Civil Procedure] section 425.16,
subdivision (b)(1) calls upon a court to determine whether ―the plaintiff has established
that there is a probability that the plaintiff will prevail on the claim‖ . . . , past cases
interpreting this provision establish that the Legislature did not intend that a court, in
ruling on a motion to strike under this statute, would weigh conflicting evidence to
determine whether it is more probable than not that plaintiff will prevail on the claim, but
rather intended to establish a summary-judgment-like procedure available at an early
stage of litigation that poses a potential chilling effect on speech-related activities.‘
[Citation.] ‗[T]he court‘s responsibility is to accept as true the evidence favorable to the
plaintiff . . . .‘ [Citation.] ‗[T]he defendant‘s evidence is considered with a view toward
whether it defeats the plaintiff‘s showing as a matter of law, such as by establishing a
defense or the absence of a necessary element.‘ [Citation.]‖ (Daniels v. Robbins (2010)
182 Cal.App.4th 204, 215.)
―[A]n anti-SLAPP motion may lie against a complaint for declaratory relief
[citation] . . . .‖ (South Sutter, LLC v. LJ Sutter Partners, L.P. (2011) 193 Cal.App.4th
634, 665-666.) Moreover, ―the mere existence of a controversy is insufficient to
18
overcome an anti-SLAPP motion against a claim for declaratory relief. [¶] To defeat an
anti-SLAPP motion, the plaintiff must also make a prima facie evidentiary showing to
sustain a judgment in the plaintiff‘s favor. [Citation.] In other words, for a declaratory
relief action to survive an anti-SLAPP motion, the plaintiff must introduce substantial
evidence that would support a judgment of relief made in plaintiff‘s favor.‖ (Id. at p. 670;
see also CKE Restaurants, Inc. v. Moore (2008) 159 Cal.App.4th 262, 272 [plaintiff‘s
evidence failed to show probability of prevailing on its declaratory relief claim].)
1. The propriety of a declaratory relief action.
Preliminarily, the Proponents argue that the District cannot bring a declaratory
relief action at all because Elections Code section 9380 provides the exclusive procedure
for challenging the validity of a local district initiative. That section provides that, once
the text of a proposed ordinance and the arguments for and against it have been submitted
(see Elec. Code, §§ 9312, 9315, 9317), there is a 10-day window during which ―any voter
of the jurisdiction in which the election is being held, or the elections official, himself or
herself, seek a writ of mandate or an injunction requiring any material to be amended or
deleted.‖ (Elec. Code, § 9380, subd. (b)(1).) ―A peremptory writ of mandate or an
injunction shall be issued only upon clear and convincing proof that the material in
question is false, misleading, or inconsistent with this chapter . . . .‖ (Id., subd. (b)(2).)
As the District notes, Elections Code section 9380 is not an appropriate vehicle for
its particular challenge. An action under Elections Code section 9380 can be brought
only by a voter or by the elections official; the District is neither. Moreover, the District
19
is not arguing that the ballot material regarding the initiatives is false, misleading, or
inconsistent with the Elections Code; it is arguing that the initiatives themselves are
unconstitutional and invalid. It has been held that Elections Code section 9380 and
similar provisions (see also Elec. Code, §§ 9092, 9190, subd. (b), 9295, subd. (b), 9509,
subd. (b), 13282, 13313) are ―not the sole avenue of relief for a party who seeks to
demonstrate that a proposed ballot measure is beyond the powers of the voters to adopt.
Rather, such a question of law may be raised by a nonvoter seeking declaratory relief
under [Code of Civil Procedure] section 1060 as to the respective rights and duties of the
parties and the construction of a written instrument, where the validity of a ballot measure
is concerned. [Citation.]‖ (City of San Diego v. Dunkl (2001) 86 Cal.App.4th 384, 398.)
2. Proposition 218 and Bighorn.
The District contends that the portion of the initiatives allowing future rate
increases indexed to the CPI is invalid under Proposition 218, as construed in Bighorn-
Desert View Water Agency v. Verjil (2006) 39 Cal.4th 205 (Bighorn).
―In 1996, California voters adopted Proposition 218, known as the Right to Vote
on Taxes Act, which added articles XIII C and XIII D to the California Constitution.
[Citation.]‖ (Beutz v. County of Riverside (2010) 184 Cal.App.4th 1516, 1520 [Fourth
Dist., Div. Two].) The principal purpose of Proposition 218 was to close a loophole in
Proposition 13, which limited the ability of local governments to impose taxes, by
similarly limiting their ability to impose assessments, fees, and charges. (Beutz, at
p. 1520.)
20
The particular provision of Proposition 218 that is relevant here is section 3 of
article XIII C of the California Constitution (article XIII C), which states:
―Notwithstanding any other provision of this Constitution, including, but not limited to,
Sections 8 and 9 of Article II, the initiative power shall not be prohibited or otherwise
limited in matters of reducing or repealing any local tax, assessment, fee or charge. The
power of initiative to affect local taxes, assessments, fees and charges shall be applicable
to all local governments . . . .‖
The California Supreme Court construed article XIII C, section 3 in Bighorn.
There, one E.W. Kelley qualified an initiative for the ballot that (1) reduced existing
water rates and (2) required the water district to obtain voter approval before increasing
water rates or imposing any new water rates. (Bighorn, supra, 39 Cal.4th at pp. 209-210.)
The Supreme Court held that, to the extent that the initiative reduced existing
water rates, it was ―expressly authorize[d]‖ by article XIII C, section 3. (Bighorn, supra,
39 Cal.4th at p. 216.) The water district had challenged the initiative under what the
Supreme Court called ―the exclusive delegation rule‖ (id. at p. 219); it argued that the
Legislature had granted the exclusive authority to set water rates to the water district‘s
board of directors, and thus had implicitly precluded the use of the initiative power to set
water rates. (Id. at pp. 217, 219.) The court held, however, that article XIII C, section 3
prevailed over the exclusive delegation rule: ―The Legislature is bound by the state
Constitution . . . , and the evident purpose of article XIII C is to extend the local initiative
power to fees and charges imposed by local public agencies. . . . [T]he Legislature‘s
21
authority in enacting the statutes under which the Agency operates must in this instance
yield to constitutional command.‖ (Bighorn, at p. 217.)
However, the Supreme Court also held that to the extent the initiative sought to
―impose voter-approval requirements for future increases in fees or charges,‖ it was not
authorized by article XIII C, section 3. (Bighorn, supra, 39 Cal.4th at p. 218.) It added:
―Kelley apparently concedes that in the absence of the authority granted by section 3 of
article XIII C, the exclusive delegation rule [citations] bars initiative measures that
infringe on the power of the Agency’s governing board to set its water delivery rate and
charges. Accordingly, . . . Kelley‘s initiative is invalid insofar as it seeks to impose a
voter-approval requirement on future actions by the [water district]‘s board of directors to
increase the existing water rate and other charges or to impose new charges.‖ (Id. at
p. 219, italics added.)
Finally, the court summarized its holding as follows: ―We have concluded that
under section 3 of . . . article XIII C, local voters by initiative may reduce a public
agency‘s water rate and other delivery charges, but also that section 3 of article XIII C
does not authorize an initiative to impose a requirement of voter preapproval for future
rate increases or new charges for water delivery. In other words, by exercising the
initiative power voters may decrease a public water agency‘s fees and charges for water
service, but the agency‘s governing board may then raise other fees or impose new fees
without prior voter approval. Although this power-sharing arrangement has the potential
for conflict, we must presume that both sides will act reasonably and in good faith, and
22
that the political process will eventually lead to compromises that are mutually acceptable
and both financially and legally sound. [Citation.] We presume local voters will give
appropriate consideration and deference to a governing board‘s judgments about the rate
structure needed to ensure a public water agency‘s fiscal solvency, and we assume the
board, whose members are elected [citation], will give appropriate consideration and
deference to the voters‘ expressed wishes for affordable water service.‖ (Bighorn, supra,
39 Cal.4th at p. 220.)
The District argues that the portion of the initiatives here that allows future rate
increases indexed to the CPI is analogous to the portion of the initiative in Bighorn that
required voter approval for future rate increases. The District concludes that, under
Bighorn, this portion of the initiatives is unauthorized under Proposition 218 and hence
invalid. The trial court agreed (at least in connection with the demurrer; it did not reach
this argument in connection with the SLAPP motion).
The problem with this contention is that Bighorn held this portion of the initiative
to be invalid only because there the proponent conceded that it violated the ―exclusive
delegation rule.‖ (Bighorn, supra, 39 Cal.4th at p. 219.) Here, the Proponents have made
no such concession. Thus, we must determine whether the exclusive delegation rule
applies.
Under the exclusive delegation rule, if the Legislature statutorily delegates the
exercise of certain authority exclusively to the governing body of a local governmental
entity, that implicitly precludes the exercise of the same authority by initiative. (DeVita v.
23
County of Napa (1995) 9 Cal.4th 763, 776; see also Bighorn, supra, 39 Cal.4th at p. 219
[citing DeVita].)
The Supreme Court has recognized ―certain guidelines‖ for determining whether
the exclusive delegation rule applies. (DeVita v. County of Napa, supra, 9 Cal.4th at
p. 776.) ―The paramount factors . . . are: (1) statutory language, with reference to
‗legislative body‘ or ‗governing body‘ deserving of a weak inference that the Legislature
intended to restrict the initiative and referendum power, and reference to ‗city council‘
and/or ‗board of supervisors‘ deserving of a stronger one [citation]; [and] (2) the question
whether the subject at issue was a matter of ‗statewide concern‘ or a ‗municipal affair,‘
with the former indicating a greater probability of intent to bar initiative and referendum
[citation].‖ (Ibid.)
For purposes of the exclusive delegation rule, the water district in Bighorn was
significantly different from the water district here. There, the water district was a special
district; it operated under the Bighorn Mountains Water Agency Law, an uncodified act.
(Bighorn, supra, 39 Cal.4th at p. 209.) The statute that assertedly delegated exclusive
authority provided: ―‗The board of directors, so far as practicable, shall fix such rate or
rates for water in the agency . . . as will result in revenues which will pay the operating
expenses of the agency, . . . provide for repairs and depreciation of works, provide a
reasonable surplus for improvements, extensions, and enlargements, pay the interest on
any bonded debt, and provide a sinking or other fund for the payment of the principal of
24
such debt as it may become due.‘‖ (Id. at p. 210, italics added, quoting Stats. 1969,
ch. 1175, § 25, pp. 2285–2286.)
Here, by contrast, the District is a county water district. The only statute the
District cites as delegating exclusive authority is Water Code section 31007, which
provides, as pertinent here:
―The rates and charges to be collected by [a county water] district shall be so fixed
as to yield an amount sufficient to do each of the following:
―(a) Pay the operating expenses of the district.
―(b) Provide for repairs and depreciation of works owned or operated by the
district.
―(c) Pay the interest on any bonded debt.
―(d) So far as possible, provide a fund for the payment of the principal of the
bonded debt as it becomes due.‖ (See also Wat. Code, §§ 30010, 30013 [defining
―district,‖ as used in Wat. Code, §§ 30000-33901, as county water district].)
Thus, unlike the statute at issue in Bighorn, Water Code section 31007 does not
refer to the governing body of the water district at all. Instead, using the passive voice, it
merely directs that rates and charges ―shall be . . . fixed,‖ without specifying how or by
whom. Thus, there is no basis for even a ―weak inference‖ (DeVita v. County of Napa,
supra, 9 Cal.4th at p. 776) that the Legislature intended to preclude the voters from using
the initiative power to fix rates and charges.
25
The District argues that Water Code section 31007 relates to ―public health and
water quality,‖ which are ―matters of statewide concern.‖ Actually, it relates more
narrowly to a county water district‘s budgeting practices and ability to repay its bonds;
arguably, these are predominantly local concerns. In any event, ―[a] state statutory
scheme does not restrict or preempt the power of an initiative simply because the
initiative includes some elements of statewide concern. [Citation.]‖ (Shea Homes
Limited Partnership v. County of Alameda (2003) 110 Cal.App.4th 1246, 1257; accord,
DeVita v. County of Napa, supra, 9 Cal.4th at pp. 780-781.) Rather, there must be ―‗a
clear showing of the Legislature‘s intent‘‖ to exclude the operation of the initiative
power. (DeVita, at p. 775.) There is no such showing in the text of Water Code section
31007.
We therefore conclude that the District has failed to show a probability of
prevailing on its claim that the initiatives are invalid under Bighorn. We need not decide
whether article XIII C, section 3 authorizes the portion of the initiatives that allows future
rate increases indexed to the CPI. Even assuming it does not, the general initiative power
does;4 and the Legislature has not manifested any intent, in accordance with the exclusive
delegation rule, to withdraw this power.
4 The Proponents contend that the voters‘ power to enact a local water district
initiative has both constitutional and statutory sources. They cite the California
Constitution, article II, section 8, article II, section 11, and article IV, section 1. They
also cite Elections Code sections 9300 et seq. and Water Code section 30830.
[footnote continued on next page]
26
3. Vagueness of the CPI indexing provision.
The District contends that the initiatives are void for vagueness because they do
not specify which CPI is to be used as the index for future rate increases.
―The underlying concern of a vagueness challenge ‗is the core due process
requirement of adequate notice.‘ [Citation.]‖ (Amaral v. Cintas Corp. No. 2 (2008) 163
Cal.App.4th 1157, 1180.) ―Statutes or ordinances that are not clear as to the regulated
conduct are void for three reasons: (1) to avoid punishing people for behavior that they
could not have known was illegal; (2) to avoid subjective enforcement of the laws based
on arbitrary and discriminatory enforcement by government officers; and (3) to avoid any
chilling effect on the exercise of First Amendment freedoms. [Citation.]‖ (Concerned
Dog Owners of California v. City of Los Angeles (2011) 194 Cal.App.4th 1219, 1231.)
Here, because the initiatives are not penal and do not restrict speech, vagueness review is
[footnote continued from previous page]
We do not agree that there is a general state constitutional right (i.e., other than
under article XIII C, section 3) to enact a local district initiative. Article II, section 8 and
article IV, section 1 concern the power to adopt statewide statutes by initiative. Similarly,
article II, section 11 concerns the power to adopt county and city initiatives. None of
these provisions grant the power to enact local district initiatives. (Board of Education v.
Superior Court (1979) 93 Cal.App.3d 578, 583 [school district].)
We do agree, however, that the Legislature has statutorily granted the power of
initiative to the voters of a local water district. Elections Code section 9300 provides that,
subject to exceptions not applicable here, ―ordinances may be enacted by any district
pursuant to this article . . . .‖ Elections Code sections 9301-9323 then go on to prescribe
the procedure for adopting a district ordinance by initiative. Moreover, specifically with
regard to water districts, Water Code section 30830 provides that ―[o]rdinances may be
passed by voters in accordance with Article 1 (commencing with Section 9100) of
Chapter 2 of Division 9 of the Elections Code.‖
27
at its lowest ebb, assuming it applies at all. (See Duffy v. State Bd. of Equalization (1984)
152 Cal.App.3d 1156, 1171-1172 [questioning whether vagueness review even applies to
nonpenal, nonspeech-related statutes].)
―When assessing a facial challenge to a statute on vagueness grounds, courts
should where possible construe the statute in favor of its validity and give it a reasonable
and practical construction in accordance with the probable intent of the Legislature; a
statute will not be declared void for vagueness or uncertainty if any reasonable and
practical construction can be given its language. [Citation.] . . . [A] statute not
sufficiently clear may be made more precise by judicial construction and application of
the statute in conformity with the legislative objective. [Citation.]‖ (Schweitzer v.
Westminster Investments, Inc. (2007) 157 Cal.App.4th 1195, 1206.)
We note that the California Constitution itself, as well as a host of California
statutes, all refer to ―the consumer price index‖ without specifying any particular one.
(E.g., Cal. Const., art. XIII A, § 2(b), Code Civ. Proc., § 726, subd. (g), Ed. Code,
§ 17457.5, subd. (d), Gov. Code, § 66427.5, subd. (f)(2), Health & Saf. Code, § 44060,
subd. (c)(3).) We would not lightly cast doubt on the validity of all of these statutes.
The initiatives‘ reference to ―the Consumer Price Index‖ is indeed ambiguous.
The CPI is not a single number, but rather ―a large family of indexes with thousands of
indexes published each month.‖
28
(, as of July 16,
2013.)5
―Where more than one statutory construction is arguably possible, our ‗policy has
long been to favor the construction that leads to the more reasonable result.‘ [Citation.]
. . . Thus, our task is to select the construction that comports most closely with the
[drafters‘] apparent intent, with a view to promoting rather than defeating the statutes‘
general purpose, and to avoid a construction that would lead to unreasonable, impractical,
or arbitrary results. [Citations.]‖ (Imperial Merchant Services, Inc. v. Hunt (2009) 47
Cal.4th 381, 388.)
The leading subgroups of the CPI are the CPI-U (for urban consumers), C-CPI-U
(chained, for urban consumers), and CPI-W (for urban wage earners and clerical
workers). (, as of July 16, 2013.)
The CPI-W excludes professional, managerial, and technical workers; the self-
employed; short-term workers; the unemployed; and retirees and others not in the labor
force. (, as of July 16, 2013.) As these
individuals make up a significant portion of the population that must pay for water, it
would not make sense to use the CPI-W for water rate calculations.
5 We take judicial notice of the online materials cited in this section. (See
Evid. Code, §§ 452, subd. (h), 459.) By means of our tentative opinion (see AA. App.,
Fourth Dist., Div. Two, Internal Operating Practices & Proc., VIII, Tentative opinions
and oral argument), we gave the parties notice of our intent to do so. (Evid. Code, § 455,
subd. (a).)
29
The C-CPI-U, unlike the CPI-U, assumes that, as prices increase, consumers will
substitute cheaper goods — for example, ―[i]f the price of pork increases while the price
of beef does not, consumers might shift away from pork to beef.‖
(, as of July 16, 2013.) However, the C-CPI-U
has not been generally adopted as an indexing mechanism. For example, according to the
Bureau of Labor Statistics, ―The C-CPI-U to our knowledge currently is not used in any
federal legislation as an adjustment mechanism.‖ (Ibid.) By this process of elimination,
it seems that the drafters of the initiatives must have had in mind the CPI-U.
The only other question is what mix of products the drafters intended the CPI to be
based on. There is a CPI for all items. This is also broken down into a CPI for food, for
energy, for all items other than food and energy, and for services. Each of these is broken
down still further; for example, the food CPI is broken down by food at home and food
away from home. (, as of July 16, 2013.)
The all-items CPI is the one most widely reported. Moreover, from the very fact that the
drafters did not specify a product mix, we conclude they had in mind the CPI for all
items. We therefore conclude that the initiatives refer to the CPI-U for all items for the
Los Angeles-Orange County-Riverside geographical area. (See
, Table 16, p. 49, as of July 16, 2013.)
We emphasize that we are resolving this issue for purposes of the SLAPP motion,
not necessarily for the litigation as a whole. The key point is that, on this record, a court
can readily determine which CPI was intended, and therefore the initiatives are not
30
unconstitutionally vague. (See Table Servs., Ltd. v. Hickenlooper (Colo. App. 2011) 257
P.3d 1210, 1215-1217 [constitutional amendment indexing minimum wage to ―the
Consumer Price Index used for Colorado‖ was not impermissibly vague].) If the parties
have evidence that some other CPI was intended, even though they did not present it in
support of or in opposition to the SLAPP motion, we do not mean to preclude them from
presenting it in subsequent litigation.
In a twist on its vagueness argument, the District also argues that the initiatives are
invalid because they require it to take future legislative action — i.e., to determine which
CPI to use. We recognize that an initiative must enact a statute; it cannot ―merely state
policies and direct the [governmental entity] to enact unspecified laws pursuant to those
policies.‖ (Widders v. Furchtenicht (2008) 167 Cal.App.4th 769, 785.) Here, however,
because it is possible to discern which CPI the initiatives were referring to, there is no
need for any further action by the District.
4. The fiscal consequences of the initiatives.
The District contends that the initiatives are invalid because they would (1) violate
Water Code section 31007; (2) interfere with the provision of an essential governmental
service; and (3) unconstitutionally impair the obligation of contract.
In opposition to the SLAPP motion, the District presented extensive and detailed
evidence that its 2011 water and sewer rate increases were absolutely necessary due to
revenue declines and cost increases, both of which were beyond its control. ―Between
2007 and 2010, [the District] experienced operating losses of $2.9 million to $3.5 million
31
annually.‖ If the initiatives pass and rates are rolled back, the District would be unable to
meet its costs, pay its debts, and stay in business; the potential consequences for the local
water supply would be disastrous.
The Proponents did not contradict this evidence. In this appeal, they belatedly
question some of the District‘s assumptions about future income and expense trends.
There is no evidence, however, that those assumptions are incorrect. In any event, as
already discussed (see part III.B., ante), we must accept the District‘s evidence as true.
i. Preelection review.
Preliminarily, the Proponents argue that, because the District‘s challenges based on
this evidence raise factual issues, they are not ripe for preelection review.
―‗[I]t is usually more appropriate to review . . . challenges to ballot propositions or
initiative measures after an election rather than to disrupt the electoral process by
preventing the exercise of the people‘s franchise, in the absence of some clear showing of
invalidity.‘ . . . [H]owever, ‗ . . . ― . . . this general rule applies primarily when a
challenge rests upon the alleged unconstitutionality of the substance of the proposed
initiative, and . . . the rule does not preclude preelection review when the challenge is
based upon a claim, for example, that the proposed measure may not properly be
submitted to the voters because the measure is not legislative in character or because it
amounts to a constitutional revision rather than an amendment. [Citations.]‖ [Citation.]‘
. . . [P]reelection review of an initiative measure may be appropriate when the challenge
is not based on a claim that the substantive provisions of the measure are unconstitutional,
32
but rests instead on a contention that the measure is not one that properly may be enacted
by initiative. [Citations.]‖ (Independent Energy Producers Assn. v. McPherson (2006)
38 Cal.4th 1020, 1029.)
―‗It is clear that a measure may be kept off the ballot if it represents an effort to
exercise a power which the electorate does not possess. [Citations.]‘ [Citation.]‖ (City
of San Diego v. Dunkl, supra, 86 Cal.App.4th at p. 400.) Here, the District claims that the
voters lack the power to enact the initiatives because the initiatives would set its water
rates below its costs and thus would force it to default on its debts and put it out of
business. At least for purposes of the SLAPP motion, this does not present a factual
issue, because the Proponents have not presented any contrary evidence. (See Reycraft v.
Lee (2009) 177 Cal.App.4th 1211, 1217 [Fourth Dist., Div. Two] [―[w]hen the facts are
undisputed, the legal significance of those facts is a question of law‖].)
Even if it did present a factual issue, however, the Proponents cite no authority for
the proposition that the mere existence of a factual issue precludes preelection review. To
the contrary, the Supreme Court has observed that ―an initiative petition‘s alleged failure
to have obtained the requisite number of qualified signatures‖ — an issue that would
appear to be quintessentially factual — can be litigated preelection. (Costa v. Superior
Court (2006) 37 Cal.4th 986, 1006.)
Finally, the Proponents do not dispute that at least some of the District‘s claims are
subject to preelection review. For example, they do not argue that we cannot reach the
District‘s claim that the initiatives are invalid under Bighorn. (See part III.C.2., ante.) In
33
Citizens for Responsible Behavior v. Superior Court (1991) 1 Cal.App.4th 1013 [Fourth
Dist., Div. Two], this court indicated that when an initiative is challenged on multiple
grounds, some of which may be heard preelection and others which, at least ordinarily,
may not, a court may proceed to resolve all the challenges on a preelection basis:
―[T]here is an analogy to the federal concept of ‗pendent jurisdiction.‘ That is, if we are
‗permitted‘ (as petitioner would have it) to conduct a preelection review of a particular
measure on the issue of the electorate‘s power, there is no logical reason why we should
be prohibited from reaching all the challenges raised to the measure. [¶] [A contrary]
rule would encourage multiple litigation of the most mischievous sort. Having found no
‗ultra vires‘ impropriety, a court would be compelled to permit a measure to be submitted
to the voters without addressing even the most patent issues of substantive invalidity. The
voters, having been apparently assured that the measure would be effective if approved,
would not unreasonably feel betrayed when the court later entertained a new challenge
which proved successful. We reject this position.‖ (Id. at p. 1023, fn. 5.)
ii. Water Code section 31007.
We turn, then, to whether the initiatives are invalid under Water Code section
31007. As already mentioned, Water Code section 31007 requires that a county water
district‘s rates be fixed high enough to cover certain specified costs.
Also as already mentioned, the water district in Bighorn was subject to a similar
statute. That statute could have been the basis for two distinct challenges to the proposed
initiative: (1) under the exclusive delegation rule, the water district‘s board of directors
34
had the exclusive power to set its water rates and charges; or (2) the particular water rates
and charges set by the initiative were insufficient to cover the water district‘s costs.
(Bighorn, supra, 39 Cal.4th at p. 210.)
The water district insisted that it was raising only the first issue. (Bighorn, supra,
39 Cal.4th at p. 210.) Thus, with regard to that issue, the Supreme Court held that article
XIII C, section 3 trumped the exclusive delegation rule. It explained: ―The Legislature is
bound by the state Constitution . . . , and the evident purpose of article XIII C is to extend
the local initiative power to fees and charges imposed by local public agencies. . . . [T]he
Legislature‘s authority in enacting the statutes under which the Agency operates must in
this instance yield to constitutional command.‖ (Bighorn, at p. 217.)
The Supreme Court declined to decide the second issue. It stated: ―[W]e are not
holding that the authorized initiative power is free of all limitations. In particular, we are
not determining whether the electorate‘s initiative power is subject to the statutory
provision requiring that water service charges be set at a level that ‗will pay the operating
expenses of the agency, . . . provide for repairs and depreciation of works, provide a
reasonable surplus for improvements, extensions, and enlargements, pay the interest on
any bonded debt, and provide a sinking or other fund for the payment of the principal of
such debt as it may become due.‘ [Citation.] That issue is not currently before us.‖
(Bighorn, supra, 39 Cal.4th at p. 221.)
We perceive a significant distinction between the two issues. The controlling
constitutional provision is article XIII C, section 3, which provides that local
35
governmental charges can be reduced or repealed by initiative. This is totally
irreconcilable with any statutory rule that a water district cannot set its charges by
initiative. However, it is not similarly irreconcilable with a statutory rule that a water
district must set its charges high enough to cover its costs.
―[T]he local electorate‘s right to initiative . . . is generally co-extensive with the
legislative power of the local governing body. [Citation.]‖ (DeVita v. County of Napa,
supra, 9 Cal.4th at p. 775.) There is a ―constitutionally based presumption that the local
electorate could legislate by initiative on any subject on which the local governing body
could also legislate.‖ (Id. at p. 777.)
Thus, if the state Legislature has restricted the legislative power of a local
governing body, that restriction applies equally to the local electorate‘s power of
initiative. For example, in deBottari v. City Council (1985) 171 Cal.App.3d 1204 [Fourth
Dist., Div. Two], we noted that Government Code section 65860 ―prohibits enactment of
a zoning ordinance that is not consistent with the general plan.‖ (deBottari, at p. 1210.)
We concluded that a local referendum, which, if passed, would have caused a city‘s
zoning ordinances to be inconsistent with the city‘s general plan, was invalid. (Id. at
pp. 1210-1212.) If the rule were otherwise, the voters of a city, county, or special district
could essentially exempt themselves from statewide statutes.
Article XIII C, section 3 does not alter this traditional limitation on the initiative
power. As already mentioned, it provides that ―[n]otwithstanding any other provision of
this Constitution, including, but not limited to, Sections 8 and 9 of Article II, the initiative
36
power shall not be prohibited or otherwise limited in matters of reducing or repealing any
local tax, assessment, fee or charge.‖ (Italics added.) Thus, it presupposes an otherwise
valid use of ―the initiative power.‖6 The voters of a local water district simply lack the
initiative power to exempt themselves from Water Code section 31007.
The Proponents may argue that a water district has the ability to pad its own
―operating expenses,‖ through inflated salaries, sweetheart pension deals, lavish offices,
etc.; the voters should be able to rein in such profligate expenditures by initiative. In this
case, however, despite the Proponents‘ suspicions, there is no evidence that the District‘s
budget is padded or abusive. It is arguable that ―operating expenses,‖ as used in Water
Code section 31007, should be construed to mean only expenses that are reasonable
and/or in good faith. On this record, however, we need not decide this issue.
Instead, we merely note that Proposition 218 also provides that, before increasing
any fee or charge, a local governmental entity must give affected property owners notice
and an opportunity to protest. If a majority of them do protest, ―the agency shall not
6 We are aware of a ―Statement of Drafters‘ Intent‖ regarding Proposition
218. (Howard Jarvis Taxpayers Assn., Right to Vote on Taxes Act: Statement of
Drafters‘ Intent (May 1996), available at , as of Apr. 19, 2013.) However, because this
statement was not included in the ballot pamphlet or otherwise presented directly to the
voters, it is irrelevant to the construction of Proposition 218. (Robert L. v. Superior Court
(2003) 30 Cal.4th 894, 904-905.)
In any event, according to the statement of intent, article XIII C, section 3 was
―merely‖ intended to ―‗constitutionalize[]‘‖ existing law to the effect that an initiative can
be used ―to reduce or eliminate government imposed levies . . . .‖ This supports our view
that article XIII C, section 3 was not intended to expand the initiative power.
37
impose the fee or charge.‖ (Cal. Const., art. XIII D, § 6, subd. (a)(2).) This gives the
voters substantial protection against rate increases that, in their opinion, are due to
extravagant costs. In this case, the District followed this procedure scrupulously;
however, only about one out of every 500 property owners filed a protest. Finally, the
voters always have the remedy of booting the members of the water district board out of
office.
In sum, then, under Water Code section 31007, the District could not set water
rates so low that they are inadequate to pay the costs listed in that section. We conclude
that the local electorate does not have the power to do so by initiative, and article XIII C,
section 3 was not intended to give it such power. The District has introduced
uncontradicted evidence that the initiatives, if enacted, would set water rates so low that
they would be inadequate to pay its costs. We therefore conclude that the District has
shown the probable validity of its claim that the initiatives are invalid under Water Code
section 31007.
In light of this conclusion, we need not decide whether the initiatives are invalid
because they would interfere with the provision of an essential governmental service or
because they would unconstitutionally impair the obligation of contract.
38
IV.
DISPOSITION
The order appealed from is affirmed. In the interest of justice, each side shall bear
its own costs.
CERTIFIED FOR PUBLICATION
RICHLI
J.
We concur:
RAMIREZ
P. J.
MILLER
J.
39
Mission Springs Water District v. Verjil
Court: California Court of Appeal
Date filed: 2013-08-07
Citations: 218 Cal. App. 4th 892
Copy CitationsCombined Opinion