Supreme Court Strikes Down Denial of Government Grant to Church

July 2017
Number 45

The United States Supreme Court struck down as unconstitutional a state policy excluding churches from participating in a government benefit program solely based on their religious status. This is a reminder that public agencies cannot deny religious institutions participation in government programs designed to promote a public benefit solely because of the institution’s religious character. (Trinity Lutheran Church of Columbia, Inc. v. Carol S. Comer (2017) 582 U.S. ___.)

Trinity Lutheran Church sought to replace its gravel playground for its preschool and daycare center with a rubber surface. The Missouri Department of Natural Resources offered reimbursements to qualifying nonprofit organizations that installed playground surfaces made from recycled tires. Although Trinity ranked fifth among the 44 grant applicants, it was deemed categorically ineligible under the department’s view that it could not provide financial assistance directly to a church.

Trinity sued in federal court, alleging the department’s failure to approve its application violated the Free Exercise Clause of the First Amendment. The federal district court and Eighth Circuit Court of Appeals ruled in the
department’s favor, but the Supreme Court reversed, finding that the department’s policy violated the Free Exercise Clause. The Supreme Court held that what constituted discrimination by the department was not the denial of the grant to Trinity, but rather the refusal to allow Trinity to compete with secular organizations for a grant solely because it is a church.

In reaching this conclusion, the court disagreed with the department’s reliance on Locke v. Davey, a prior Supreme Court opinion in which the Court held that the Free Exercise Clause was not violated when the State of Washington denied a scholarship to a recipient planning to pursue a theology degree. The Trinity court found the scholarship recipient in Locke was not denied a scholarship because of who hewas; he was denied a scholarship because of what he proposedto do with it (i.e., use it to pay for a religious education), as opposed to Trinity, which was denied a grant simply because of what it is – a church. The Trinity court confirmed that denying a generally available benefit solely on account of religious identity imposes a penalty on the free exercise of religion.

The decision has potential impacts with regard to school vouchers. Many voucher supporters are viewing Trinity as a victory. Voucher opponents do not interpret Trinity as opening the door for states to expand school vouchers based upon a footnote which states that the decision does not address religious uses of funding or other forms of discrimination.

Nevertheless, the Supreme Court has already sent two cases back to their state supreme courts for reconsideration due to the Trinity opinion. One is a 2015 judgment from the Colorado Supreme Court striking down a school voucher program held to have violated the state’s constitution, which prohibits public funding of religious schools. The second is a 2015 New Mexico case which upheld a state-funded textbook lending program that excluded religious and private schools based on the New Mexico state constitution. As such, while the opinion inTrinity focuses on a grant applicant’s religious identity, the issue of unlawful discrimination based upon religion in the context of government vouchers for religious schools is likely the next fight in this legal arena.

For more information on the Trinity opinion or issues of religion and public agencies, please contact the authors of this Client News Brief or an attorney at one of our eight offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Michael E. Smith

Partner

©2017 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.

Supreme Court Finds Trademark Disparagement Clause Unconstitutional

July 2017
Number 44

The United States Supreme Court has held that trademarks are private speech protected by the First Amendment, even if some find the ideas they express offensive.

In Matal v. Tam (2017) 582 U.S. ___, the Court held the Lanham Act’s disparagement clause to be unconstitutional because it discriminated based on a viewpoint. The Court, noting that the First Amendment is a bedrock principle of government, wrote that the public expression of ideas may not be prohibited merely because some may find the ideas offensive.

In Matal, a dance-rock band named the The Slants applied for federal trademark registration of the band’s name. The application was denied under the Lanham Act’s disparagement clause because the band name is a derogatory term for individuals of Asian descent.

The Court concluded that trademarks are private speech protected by the First Amendment, not government speech, since concluding otherwise would mean the government could silence or muffle expression of disfavored viewpoints by simply affixing a government seal of approval such as a trademark. The Court also rejected the contention that the disparagement clause is commercial speech.

In holding that denial of the trademark application was an unconstitutional bar on private speech, the Court rejected the notion that a trademark is a form of government subsidized speech because the Patent and Trademark Office does not pay money to parties seeking registration of a mark – an applicant for registration must pay a filing fee. The Court also struck down the argument that the disparagement clause is constitutional under a “government program” doctrine which is based on a merger of government speech and subsidy cases.

School districts should keep in mind that staff and students have a right to freedom of speech while on school grounds, subject to certain limitations. Therefore, before regulating the speech of a student or a staff member, districts should ensure that the regulation is not based on the content of the viewpoint being expressed, even if that viewpoint might be offensive to the school board or others in the school community. As a general rule, districts should assume that the speech is lawful and then do a careful analysis to determine if the speech can be regulated before acting.

For more information on the Matal case or on free speech issues in general, please contact the authors of this Client News Brief or an attorney at one of our eight offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Michael E. Smith

Partner

©2017 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.

New Law Removes Restriction on Funding Student Field Trips

July 2017
Number 43

A bill signed by Governor Jerry Brown on July 10 allows school districts to pay the expenses of students participating in field trips or excursions to other states, the District of Columbia or a foreign country. Assembly Bill (AB) 341 goes into effect on January 1, 2018.

Education Code section 35330(b)(3) currently prohibits the use of school district funds to pay the expenses of a student participating in a field trip or excursion to any other state, the District of Columbia or a foreign country. The bill deletes this provision.

The bill notes that the Local Control Funding Formula identifies student engagement as a state priority that local school districts must address and says that out-of-state travel increases student access to educational opportunities, including competitions and televised events.

Until the bill goes into effect, school districts wishing to use district funds to cover students’ out-of-state or country travel expenses must obtain a waiver from the State Board of Education. Since 2011, the State Board has approved eight waivers authorizing a school district to pay a student’s out-of-state or country field trip expenses, the bill says.

In order to reflect this new authority, school districts may need to update their board policies and administrative regulations.

If you have any questions regarding use of school district funds for educational out-of-state and international travel, please contact the author of this Client News Brief or an attorney at one of our eight offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

©2017 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.

Lawmakers Extend Deadline for Proposition 39 Energy Efficiency Funding and Create New Program

July 2017
Number 42

State lawmakers have extended the deadlines to apply for and encumber money dedicated to energy efficiency projects at schools and community colleges – the program known as Proposition 39 – and have created a new program to fund such projects indefinitely.

Proposition 39 was scheduled to sunset June 30, 2018. Now, Senate Bill (SB) 110 has extended the deadline for encumbering Proposition 39 funds by one year, to June 30, 2019. At the same time, the bill creates the Clean Energy
Job Creation Program, which will administer funds for energy efficiency projects at school districts, charter schools, county offices of education and community colleges. The program opens for business at the start of the
2018-19 fiscal year.

After the bill’s passage, the California Energy Commission sent out a notice extending the deadline for submitting an energy expenditure plan to January 12, 2018. The original deadline had been August 1, 2017. Amendments to an existing energy expenditure plan that request additional funds must also be submitted by January 12, 2018.

Under SB 110, in order to take advantage of Proposition 39, agencies now have until June 30, 2019 to encumber those funds. The California Energy Commission defines “encumbrances” as “obligations in the form of purchase orders, contracts, salaries, and other commitments chargeable to an appropriation for which a part of the appropriation is reserved.”

After March 1, 2018, SB 110 reappropriates the remaining money in the existing Proposition 39 fund based on the number of school districts, charter schools and county offices of education that have not yet submitted energy expenditure plans. The bill devotes $75 million to loans or grants for school bus replacements or retrofits, prioritizing funding to agencies with the oldest school buses or those operating in disadvantaged communities. It also authorizes $100 million for low- and no-interest revolving loans for projects and technical assistance aimed at expanding clean energy generation and improving energy efficiency, prioritizing funding based on diversity in geographic and agency size, energy savings and the percentage of low-income students served.

Any remaining money from Proposition 39 will be used to provide competitive grants to school districts, charter schools and county offices of education for energy efficiency and generation projects, with 10 percent going to education agencies with 1,000 or fewer students, 10 percent going to agencies with between 1,001 and 2,000 students and the rest going to larger education agencies.

Under the new Clean Energy Job Creation Program beginning in 2018-19, 11 percent of available funds will be allocated to the Chancellor of the California Community Colleges for distribution to community college districts for energy efficiency projects, and the California Energy Commission will distribute the rest to school districts, charter schools and county offices of education.

Projects will be selected based on in-state job creation and energy benefits. Priority for grants made through the new program will be given based on the number of students eligible for free and reduced-price meals, geographic diversity, school type and local area workforce needs. Funding will be available as appropriated in the annual budget act. Both the reallocated funds and money provided to local education agencies under the new program must be encumbered within nine months of allocation to those agencies.

Lozano Smith will provide additional details about the new program as they emerge. If you have any questions about SB 110, Proposition 39 or energy efficiency projects in general, please contact the author of this Client News Brief or an attorney at one of our eight offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

©2017 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.

California Travel Ban Does Not Apply to Local Agencies

July 2017
Number 41

A California law that bars state agencies from funding travel, and from requiring employees to travel, to states that permit discrimination on the basis of sexual orientation, gender identity or gender expression – and Attorney General Xavier Becerra’s recent expansion of the list of states covered by the ban – have raised questions regarding whether the law applies to cities, counties, school districts and community college districts.

While there is no definitive legal guidance on the issue, the law expressly applies to state agencies, departments, boards, authorities and commissions, including the University of California and the California State University system. As “state agencies,” it appears the law also applies to the California Community Colleges Chancellor’s Office and the California Department of Education. AB 1887 does not state that it applies to cities, counties, school districts or community college districts, nor do these entities appear to be state agencies under the law.

The acting general counsel of the California Community Colleges Chancellor’s Office agrees: In a June 29 legal update, he said that while the restrictions apply to the chancellor’s office itself, community college districts are local education agencies that are not covered by the ban. Still, the letter cautioned local community college districts that the chancellor’s office may not be able to approve a request for state-funded travel to any of the states covered by the ban.

Effective January 1, 2017, Government Code section 11139.8 (enacted by Assembly Bill (AB) 1887) prohibits California state agencies, departments, boards, authorities and commissions from requiring any state employees, officers or members to travel to other states that permit discrimination on the basis of sexual orientation, gender identity, or gender expression and also, from approving a request for state-funded or state-sponsored travel to a state that has passed such a law.

AB 1887 prohibits travel to any state that has enacted a law after June 26, 2015 that voids or repeals existing state or local protections against discrimination on the basis of sexual orientation, gender identity or gender expression or permits discrimination against same-sex couples or their families on those bases.

The original list of states covered by the ban included Kansas, Mississippi, North Carolina and Tennessee. On June 22, Becerra added Alabama, Kentucky, South Dakota and Texas to the list after those states approved laws that permit such discrimination.

Exceptions to the travel restrictions include:

  • Enforcement of California law, including auditing and revenue collection;
  • Litigation;
  • To meet contractual obligations incurred before January 1, 2017;
  • To comply with requests by the federal government to appear before committees;
  • To participate in meetings or training required by a grant or required to maintain grant funding;
  • To complete job-required training necessary to maintain licensure or similar standards required for holding a position, in the event that comparable training cannot be obtained in California or a different state not subject to the travel prohibition; and
  • For the protection of public health, welfare or safety, as determined by the affected agency, department, board, authority, commission or legislative office.

If local government agencies intend to use state grant money for travel to any of the states covered by the ban, they should check to determine if the travel restrictions are included as a condition of the grant. In addition,
local agencies may have adopted their own policies that mirror AB 1887.

Additional information about AB 1887 and the states the travel ban applies to is available on the Attorney General’s website. For more information on AB 1887, please contact the authors of this Client News Brief or an attorney at one of our nine offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Stephanie M. White

Associate

©2017 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.

State’s Top Court Rules that Contractors Can be Prosecuted for Conflict of Interest

July 2017
Number 40

The California Supreme Court has ruled that an independent contractor can be criminally liable for a conflict of interest under California Government Code section 1090, expanding the universe of penalties a contractor can face for violating the statute and reversing a prior appellate court ruling that exempted contractors from criminal liability for such conflicts.

The Court’s decision in People v. Superior Court (Sahlolbei) (June 26, 2017, No. S232639) ___ Cal.5th ___ only applies to independent contractors who have been entrusted with entering into transactions on behalf of the public agency. But due to an expansion of government and public contracting in which regular employees and even consultants can have control over the public purse, the decision has broad implications for all California public agencies.

Section 1090 prohibits public officers and employees from making contracts in which they have a financial interest when acting in their official capacities. Generally, any contract made in violation of section 1090 is void and cannot be enforced. Criminal penalties for a willful violation include a fine of up to $1,000 or imprisonment, and a lifetime ban on holding public office.

Hossain Sahlolbei worked as a surgeon at a Riverside County hospital and served on the hospital’s executive committee, both in an independent contractor capacity. Sahlolbei negotiated a $36,000 per month contract with an anesthesiologist at the committee’s behest plus $10,000 for moving expenses. He then pressured the hospital to hire the anesthesiologist for $48,000 a month, with $40,000 for moving expenses. Sahlolbei instructed the anesthesiologist to deposit his paychecks into Sahlolbei’s bank account, and the surgeon paid the anesthesiologist $36,000 a month and pocketed the rest. He was later charged with violating section 1090.

In reversing the appellate court’s judgment dismissing the charge, the Supreme Court held that independent contractors are not categorically excluded from prosecution under section 1090 and that an independent contractor who has been retained or appointed by a public agency and whose actual duties include engaging in or advising on public contracting is charged with acting on the agency’s behalf. This makes such contractors fully subject to the statute. The Supreme Court found that Sahlolbei violated section 1090 because there was evidence that hospital leadership asked him to assist in identifying doctors to recruit to the hospital, which he actually did and directly profited from.

As the Supreme Court provided in a hypothetical, a stationery supplier that sells paper to a public agency would ordinarily not be liable under section 1090 if it advised the agency to buy pens from its subsidiary, because the
supplier was not engaging in a transaction on the agency’s behalf. However, a person who was initially hired by an agency as an officer or employee with contracting responsibilities and then rehired as an independent contractor to perform the same duties would be subject to section 1090.

The Court also expressly reversed the Second District Court of Appeal decision in People v. Christiansen (2013) 216 Cal.App.4th 1181 (Christiansen), reasoning that the Legislature intended for section 1090 to apply to certain contractors in both the civil and criminal liability contexts. In Christiansen, a school district’s planning and facilities director, who served the district as an independent contractor, was prosecuted for violating section 1090 after she advised the school district to hire her consulting company for facilities management services, among other self-dealings. The appellate court held that prior courts’ expansion of the statutory term “employees” to apply to independent contractors made them civilly but not criminally liable under section 1090. The Supreme Court disagreed with that conclusion.

Since Christiansen, California courts have applied civil liability under section 1090 to independent contractors in a series of “lease-leaseback” cases involving companies that provided “preconstruction” consulting services to school districts that later hired them as lease-leaseback contractors. (See 2017 Client News Brief No. 32,
2016 Client News Brief No. 29 and 2015 Client News Brief No. 30.) The Supreme Court decision in Sahlolbei raises the possibility that such contractors can now be either or both civilly and criminally liable under section 1090.

The Supreme Court limited its decision by refusing to express a view on whether an independent contractor can be held criminally liable under section 1090 for conduct that occurred during the time frame between the decisions in Christiansen and Sahlolbei.

Public agencies should be aware that independent contractors, including consultants, cannot “change hats” to obscure their participation in public contracting. In reviewing any transaction between an independent contractor and a public agency for a conflict, the focus should be on the substance, not the form, of the transaction. Transactions in which a public agency hires a consultant to perform work about which the consultant previously advised the public agency as well as those in which a public agency hires a former employee as a consultant when both roles include similar work are particularly prone to conflicts of interest and should be carefully evaluated for legality prior to any engagement.

If you have any questions about this decision or conflict of interest law in general, please contact the authors of this Client News Brief or an attorney at one of our nine offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Iain J. MacMillan

Associate

©2017 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.

Employers Must Provide Information on Rights of Domestic Violence, Sexual Assault and Stalking Victims

July 2017
Number 39

California employers with 25 or more employees must now inform their employees in writing about the legal rights of domestic violence, sexual assault and stalking victims. Employers, including public agencies, must provide this information using the form prepared by the California Labor Commissioner or in a notice that is substantially similar to the Labor Commissioner’s form in content and clarity. The form must be provided to new employees upon hire and to other employees upon request.

California law permits victims of domestic violence, sexual assault and stalking to take time off from work to seek court intervention to help ensure the health, safety or welfare of themselves or their children. Victims may also take time off to seek medical attention, to obtain psychological counseling and other support services or to participate in safety planning.

Victims must give employers reasonable advance notice of their intention to take time off, unless providing advance notice is not feasible. If a victim takes an unscheduled absence, his or her employer must not take any action if the victim, within a reasonable time, provides proof that the absence was covered under the law. Victims may also request reasonable safety accommodations at work, which employers must provide. Employers may not retaliate or discriminate against a victim for taking time off or requesting reasonable accommodations.

Assembly Bill (AB) 2337, which became effective January 1, 2017, introduced a new requirement that employers with 25 or more employees inform employees of these rights. Employers were excused from compliance with this requirement until the Labor Commissioner prepared an information form and posted it on its website. The Labor Commissioner recently published the form, entitled “Rights of Victims of Domestic Violence, Sexual Assault and Stalking,” which is available here (English) and here(Spanish).

Violations of the laws governing victims’ leave and accommodations can result in civil liability and, in some cases, criminal liability. If you have any questions regarding victims’ leave and accommodations or other employment-related matters, please contact the authors of this Client News Brief or an attorney at one of our nine offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Steven A. Nunes

Associate

©2017 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.