Court of Appeal Invalidates Tiered Rate For Parcel Tax Measure

December 2012
Number 79

In Borikas v. Alameda Unified School District (December 6, 2012) __ Cal.App.4th __ (2012 WL 6084027), the court of appeal issued an important decision regarding school district parcel taxes. The court held that a tiered-rate parcel tax exceeded the school district’s taxing authority and was invalid because the rate structure was not uniform for all taxpayers and parcels.

This case is significant as an increasing number of schools districts have obtained voter approval for parcel tax measures with tiered-rate tax structures, as opposed to flat-rate tax structures. Tiered-rate tax structures generally have different rates for residential and non-residential use parcels, such as residential rates based on the number of housing units on each parcel, and non-residential rates based on the square footage of the parcel. It was previously understood that these tiered-rate structures complied with state law requiring that such taxes typically must apply uniformly to all taxpayers or all property within the school district, under principals of tax law. Since each type of parcel would pay the same tax, school districts have taken the position that there is adequate uniformity to comply with the statutory requirements. Borikas indicates that, for at least the time being, school districts are not authorized to use a tiered-rate parcel tax because it does not apply uniformly to all parcels in the school district.

In Borikas, plaintiffs challenged Alameda Unified School District’s 2008 voter-approved parcel tax measure (Measure H) that taxed residential parcels at $120 per year, commercial/industrial parcels of less than 2,000 square feet at $120 per year, and commercial/industrial parcels of more than 2,000 square feet at $.15 per square foot, up to a maximum of $9,500 per year. Measure H also included exemptions for residential parcels owned and occupied by senior citizens or by those receiving Supplemental Security Income, regardless of age.

The trial court in Borikas ruled in favor of the school district, concluding that so long as like parcels are treated in a like way and the division of parcels into different classes has a rational basis, Government Code section 50079’s requirement of uniformity and equal protection of the law is satisfied. The trial court also found that the statute allowed Measure H’s exemptions for some senior and disabled taxpayers. This was the second time that Alameda Unified School District’s tiered-rate structure was upheld in a trial court.

The court of appeal partially reversed the trial court, holding that the tiered-rate parcel tax was invalid, but that Measure H’s exemptions for some senior and disabled taxpayers were expressly allowable under section 50079. The Borikas court read section 50079 literally as requiring that special taxes apply “uniformly” to everyone and all lots within the district, regardless of whether what sits on those lots is radically different from what sits on other lots.

The court acknowledged in passing that school districts and other local governmental entities are more dependent than ever on the revenues from parcel taxes, but any “fix” to the wording of the statute must come from the legislature and not the courts.

Alameda Unified School District is considering appealing this decision to the California Supreme Court and has until approximately January 15 to make that decision. At the same time, we are exploring with our affected clients and CSBA possible legislation to clarify districts’ right to use tiered-rate parcel tax structures going forward and to save the parcel tax measures already approved with such structures. We will keep school districts apprised of future developments in this important area. In the meantime, we urge districts that have passed tiered-rate parcel taxes or that are considering new or renewal parcel tax measures to work closely with their legal counsel in determining how to respond to this important development.

If you have any questions about the Borikas decision, or parcel taxes generally, or would like assistance with preparing a parcel tax measure, please feel free to contact one of our eight offices located statewide. You can also visit our website, follow us on Facebook, or download our Client News Brief App.

Written By

Jeffrey L. Kuhn
Shareholder
Fresno Office
jkuhn@lozanosmith.com

Aria Link
Law Clerk
Monterey Office
alink@lozanosmith.com

©2012 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

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An Employer’s Honest Belief That An Employee Took Medical Leave For An Improper Reason Is Not Enough To Justify a Dismissal

December 2012
Number 78

Under the California Family Rights Act (CFRA), an employer must reinstate an employee to the same or a comparable position upon returning from an approved medical or family care leave (Gov. Code §12945.2(a).) CFRA is silent as to when an employer may lawfully dismiss an employee if it suspects that the employee is misusing his/her leave. The recent decision of Richey v. AutoNation, Inc. (November 13, 2012) __ Cal.App.4th __ (2012 WL 5492902) provides some guidance in this area and serves as a reminder that based on the strict language of CFRA, employee leave issues must be dealt with carefully-particularly before a dismissal or reinstatement decision is made.

Avery Richey had worked as a sales manager at Power Toyota for over three years when he decided to open a family restaurant as a side business venture in 2007. Concerned that the restaurant was distracting him from his job, Power Toyota supervisors met with Richey to discuss attendance and performance issues. In 2008, Richey suffered a back injury at home and his physician certified that he was unable to perform his duties at Power Toyota. The dealership granted his request for CFRA leave.

One of Richey’s supervisors sent him a letter advising him that the company had a policy which precluded employees from engaging in other employment, including self-employment, while on leave. Richey did not to respond to this letter because he believed that the policy, as stated in the employee handbook, did not apply to him as a business owner. The employee handbook for Power Toyota provided, “You are not allowed to accept employment with another company while you are on approved [CFRA] leave.”

In responding to reports that Richey was working at his restaurant during his leave, one of his supervisors sent another employee to drive by the restaurant. The employee parked outside for a few minutes and saw Richey sweeping, bending over, and using a hammer to hang a sign. On two other occasions, Power Toyota employees observed Richey taking orders and acting as a cashier at the restaurant. Based on these observations, Power Toyota terminated Richey based on its honest belief that he was engaging in outside employment while on leave.

Richey filed a lawsuit alleging a violation of CFRA. The court of appeal ruled that Power Toyota was not entitled to terminate Richey based on its honest belief that he was misusing medical leave. The court held that application of the honest belief defense deprived Richey of his statutory right to reinstatement, which is based on the important public policy of giving employees an opportunity to take leave from work for significant family or medical reasons without jeopardizing their job security. The court determined that in order to dismiss an employee that misuses approved leave, an employer cannot simply rely on an imprecisely worded and inconsistently applied company policy. The employer also bears the burden of conducting an adequate investigation and developing sufficient facts to establish that the employee actually engaged in misconduct warranting a dismissal. Finally, the court recognized that the mere fact that an employee is able to perform a different job does not necessarily mean he or she is able to perform the essential duties of the current job for which his or her leave was granted.

It is important for employers to thoroughly investigate and document suspected misuse to ensure that a dismissal or refusal to reinstate would not violate the employee’s leave rights under the CFRA. It is also essential for employers to have clearly defined medical and family care leave polices and ensure that employees understand their rights and responsibilities during an approved leave.

If you have any questions regarding the Richey decision and how it may impact your existing leave policies, or if you have questions regarding employee leave rights in general, please feel free to contact one of our eight offices located statewide. You can also visit our website, follow us on Facebook, or download our Client News Brief App.

Written By

Dulcinea Grantham
Shareholder and Labor & Employment Practice Group Co-Chair
Walnut Creek Office
dgrantham@lozanosmith.com

Sara Elena Santoyo
Law Clerk
Fresno Office
ssantoyo@lozanosmith.com

©2012 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

Without Evidence Of Discriminatory Bias, Employer’s Business Reason For Termination Upheld

December 2012
Number 77

In Batarse v. Service Employees International Union, Local 1000 (2012) 209 Cal.App.4th 820, the court addressed whether an employee’s offered evidence of retaliatory conduct was sufficient to overcome the employer’s business reasons for termination in a suit alleging racial discrimination under the California Fair Employment and Housing Act (FEHA). The court of appeal ruled in favor of the employer and held that without evidence of discriminatory motive, the case did not have merit.

The plaintiff, a former attorney, applied for a position with Service Employees International Union, Local 1000 (SEIU) that required him to provide representation services to union members. When asked in the job interview why he stopped practicing law, he cited his divorce and issues with his law partners. The plaintiff was hired for the position.

The plaintiff claimed he was required to work with an “unpleasant and offensive” local union president who soon wanted him fired. He complained to a co-worker that his mistreatment by the local union president was based on his race and/or gender. Soon after this, SEIU’s general counsel terminated him. In support of the termination, the employer cited to, among other things, the plaintiff’s provision of false information in his employment application and failure to disclose that the bar had previously disciplined him for his failure to respond to client inquiries and competently perform legal services. The plaintiff did not dispute his state bar history.

After the plaintiff filed suit for racial discrimination, SEIU moved for summary judgment, arguing that he could not offer any evidence to rebut its legitimate reasons for terminating him or proof of discriminatory intent. The trial court granted the summary judgment motion. The court of appeal agreed, ruling that an employee must present evidence that the employer’s conduct was intentionally discriminatory, and not just “wrong, mistaken, or unwise.”

Under FEHA, there is a three-part evidence test. First, an employee has the burden to show that discrimination could have occurred. If such a prima facie case is shown, then the burden of producing evidence shifts to the employer, who must offer a legitimate, nondiscriminatory business reason for its conduct. If the employer meets that burden, then the employee must provide evidence that the offered business reason is untrue or that the employer acted with a discriminatory motive. Batarse explains how an employee failed to meet the last part of this test.

The court held that the plaintiff’s evidence of discriminatory intent was insufficient. He claimed, for example, that “he was replaced by a Hispanic individual” who was “no more qualified than [he was] for the position,” but did not cite evidence to support his claim. The plaintiff also presented affidavits intended to show the local union president’s “inability or refusal to get along with Caucasian males.” However, the court found such evidence failed to prove any racial bias, calling it “mere opinion” about one’s “conduct and motivations.” The evidence appeared to show that the local union president directed her “abhorrent behavior” at everyone, not just towards a specific race or gender. Additionally, the plaintiff’s retaliation claim lacked merit because there was no evidence the person who made the decision to terminate him knew of the plaintiff’s race or that he had complained about any discrimination. Nothing presented by the plaintiff disproved the business reasons for termination or proved unlawful bias.

Batarse supports the principle that if an employer has a good faith, legitimate business reason for terminating an employee, the courts will shift the burden to the employee to provide “substantial” evidence that the reason was false/pretextual and/or done with discriminatory animus. If you have any questions about this decision, or how it impacts your current litigation or pending claims, please feel free to contact one of our eight offices located statewide. You can also visit our website, follow us on Facebook, or download our Client News Brief App.

Written By

Mark K. Kitabayashi
Shareholder and Litigation Practice Group Chair
Los Angeles Office
mkitabayashi@lozanosmith.com

Steve Ngo
Senior Counsel
Santa Rosa Office
sngo@lozanosmith.com

©2012 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.