Constitutionality of Binding Interest Arbitration

In 2000, Governor Davis signed SB 402 which created a mandatory system of binding interest arbitration for local police officers and firefighters. Not surprisingly, local governments considered SB 402 a direct attack on the “home rule” doctrine enshrined in the California constitution. Under the home rule doctrine, local governments have plenary authority to set the compensation of county employees. SB 402 altered this doctrine by vesting in a private arbitrator the authority to issue a binding decision setting employee compensation.

SB 402 quickly found its way to the California Supreme Court. In County of Riverside v. Superior Court (2003) 30 Cal.4th 278 ("Riverside"), the California Supreme Court had little trouble finding SB 402 unconstitutional. However, that wasn’t the end of it. In one of his last acts in office, Governor Davis signed SB 440. Like SB 402, SB 440 created a mandatory system of interest arbitration for local police and firefighters. However, in an attempt to cure the constitutional defects in SB 402, SB 440 provides that the arbitrator’s decision can be rejected by the governing body if it unanimously rejects the decision within five days. (Code Civ. Proc., §1299.7.)

In the eyes of local government, SB 440 is nothing more than SB 402 in disguise. The requirement that the local entity unanimously reject the decision within five days is so onerous that it effectively renders the arbitration decision binding. Initially, every superior court that considered SB 440 found it unconstitutional for the same reasons Riverside found SB 402 unconstitutional. (See, e.g., Sierra Madre Police Officers Association v. City of Sierra Madre (Los Angeles Superior Court, Case No. GS 010036; The Adelanto Community, etc. v. City of Adelanto (San Bernardino Superior Court, Case No. VCVVS037008); County of Tulare v. Tulare County Deputy Sheriffs Association (Tulare County Superior Court, Case No. 06-219977). Notably, none of the employee associations on the losing side of these cases filed an appeal.

[Correction: A notice of appeal was filed in the Tulare case, but the case settled]

Recently, the Sonoma County Superior Court became the first trial court in California to find SB 440 constitutional. (Sonoma County Law Enforcement Association v. County of Sonoma (Sonoma County Superior Court, Case No. SCV 242225).) In its decision, the court reasoned that:

"[G]iven the strict rules of constitutional interpretation, the statutory scheme [of SB 440] is not unconstitutional as it may be followed to avoid the binding nature of the arbitrator's decision. The County may reject the arbitrator's determination, or fail to act and succumb to the binding outcome. It is not the duty of this court to determine what motives the Legislature had in enacting this set of statutes. The law may be complied with, resulting in no obligation whatsoever to abide by the arbitrator's decision. As such, this court cannot find it to be facially unconstitutional."

Within days of the trial’s court decision, the First District Court of Appeal issued a temporary stay. The Court of Appeal also ordered the parties to submit briefs on whether the County’s writ seeking to overturn the trial court decision should be granted. (First District Court of Appeal, Case No. A122450.) Those briefs have now been filed. The parties are now awaiting a decision from the Court of Appeal as to whether it will intervene by writ; which seems likely given how quickly the Court issued its stay and the unsettled nature of the statute. Thus, it appears that an appellate decision on the constitutionality of SB 440 is well on its way.