Appellate Courts Reject Recreational Trail Immunity for Adjacent Hazards

August 2017
Number 47

Two decisions in the last three months have increased the potential for a public entity to be held liable for an injury suffered on one of its recreational trails. Appellate courts decidingGarcia v. American Golf Corporation (May 3, 2017, No. B267613) ___ Cal.App.5th ___ and Toeppe v. City of San Diego (July 27, 2017, No. D069662) ___ Cal.App.5th ___ held that a public entity cannot assert recreational trail immunity when an adjacent hazardous condition of the public entity’s property is unrelated to, or independent of, the trail. Previous decisions had broadly applied statutory recreational trail immunity to hazards on property adjacent to public trails.

The California Supreme Court denied review of the Garcia decision on August 9. As of this writing, no request for Supreme Court review has been filed in Toeppe.

Prior Law

Public entities generally are immune from liability for injuries caused by their recreational trails, pursuant to Government Code section 831.4. The statute specifically provides that a public agency is not liable for an injury caused by a “condition of” an “unpaved road” or “trail” used for general recreational purposes.

In the past, this immunity has been consistently interpreted to broadly protect public agencies from liability due to injuries from both design elements and locations of trails. InAmberger-Warren v. City of Piedmont (2006) 143 Cal.App.4th 1074, the plaintiff was bumped off a path and started to slip down a hill. The court held that recreational trail immunity extended to both the design of a trail (the lack of handrails) and the location (the placement next to a steep slope). One year later, in Prokopv. City of Los Angeles (2007) 150 Cal.App.4th 1332, the appellate court held that the “condition of” a bikeway included the design of a bicycle gate into which plaintiff had crashed, and that even though the injury occurred just off the bikeway itself, that the gateway to the bike path was “an integral part of the bike path.”

Earlier this year, in Leyva v. Crocket & Company, Inc. (2017) 7 Cal.App.5th 1105, an appellate court considered a case where the plaintiff was struck by a golf ball while on a publicly owned trail. The plaintiff argued that the lack of safety barriers on the adjacent golf course caused the injury, and that this condition was not a faulty design or condition of the trail. The appellate court disagreed and concluded that the immunity applied since the trail’s location next to the golf course was an “integral feature” of the trail, and the erection of a safety barrier would be equivalent to the installation of a handrail in Amberger.

The Garcia Decision

Factually similar to Leyva, the plaintiff in Garcia was a child in a stroller who was hit in the head by a golf ball while on a pedestrian walkway between a roadway and a golf course, which were all owned by a city. However, in Garcia the court concluded thatAmberger “did not hold that there must be immunity for every injury occurring on a trail when an adjacent public property was a contributing factor. … It identified the issue as whether the trail and an adjacent public property meet a relatedness test.” The court found that the trail and golf course did not pass this relatedness test, and it distinguished Leyva despite its strong factual similarities.

Consequently, the court issued a narrow holding: A public golf course cannot assert a recreational trail immunity defense when the trail abuts a public street; the course is a commercially-operated, revenue-generating enterprise; the course has a dangerous condition; and the dangerous condition caused harm to a user of the trail.

The Toeppe Decision

Issued by the same appellate district that issued Leyva, theToeppe decision used an approach similar to Garcia but stated a broader holding. The plaintiff was walking on a trail in a public park when a eucalyptus branch fell and injured her. The court distinguishedAmberger by saying that the tree was “independent of the trail” and that the dangerous conditions in the two cases were fundamentally different. The court also distinguished Leyva despite the fact that the hazardous condition in Leyva was off the trail and independent of it. The court concluded that the recreational trail immunity did not apply, holding that “this is not a case about trails. It is about trees.”

Impact on Public Agencies

Leyva still has some precedential value, but by tacitly disapproving that case, the Garcia and Toeppe cases seem to establish a new paradigm that limits public agency immunity for hazardous conditions
adjacent to recreational trails. Accordingly, public agencies may need to reassess the design, insurance, maintenance and use of their trails to minimize the risk of liability.

If you have any questions about these decisions or trail immunity 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:

William P. Curley III

Partner

Arne B. Sandberg

Senior Counsel

©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 School Funding Scheme Does Not Eliminate Immunity From Federal Damage Claims

August 2017
Number 46

Changes to California’s school funding scheme did not eliminate local school district and county office of education immunity from federal claims for damages, the Ninth Circuit Court of Appeals has ruled.

In Sato v. Orange County Department of Education (9th Cir. 2017) ___ F.3d ___, the Ninth Circuit affirmed that California school districts and county offices of education retain their absolute defense to claims for damages in federal court due to sovereign immunity under the United States Constitution’s Eleventh Amendment, regardless of changes to California’s school funding scheme resulting from Assembly Bill (AB) 97’s creation of the Local Control Funding Formula (LCFF).

The Eleventh Amendment

The Eleventh Amendment bars federal lawsuits for damages against California and “arms of the state.” While the Eleventh Amendment “sovereign immunity” defense does not extend to counties and municipal corporations, it does extend to California community college districts, school districts, and county offices of education.

Background

Michael Sato was a systems database architect for the Orange County Department of Education (OCDE). After OCDE fired Sato within weeks of starting his job, he filed a federal lawsuit alleging breach of contract, wrongful termination and various federal constitutional claims. The district court granted OCDE’s motion to dismiss Sato’s constitutional claims for damages based on its sovereign immunity under the Eleventh Amendment. Sato subsequently dismissed his state law breach of contract claim voluntarily and appealed the dismissal of his federal claims to the Ninth Circuit, which affirmed the district court’s ruling and held that AB 97 did not abrogate sovereign immunity for school districts and county offices of education as previously established inBelanger v. Madera Unified School District (9th Cir. 1992) 963 F.2d 248 and Eaglesmith v. Ward (9th Cir. 1996) 73 F.3d 857.

The central question before the Ninth Circuit in Sato was whether, after AB 97’s establishment of the LCFF, school districts and county offices of education retained their status as “arms of the state” entitled to Eleventh Amendment immunity. In concluding that such entities, including OCDE, remain arms of the state, the court analyzed five factors:

  • Whether a money judgment would be satisfied out of state funds;
  • Whether the entity performs central governmental functions;
  • Whether the entity may sue or be sued;
  • Whether the entity has the power to take property in its own name or only the name of the state; and
  • The corporate status of the entity.

Since state and local revenue for schools remain commingled in a single fund under state control, even under the new funding system, the court determined that any use of commingled funds to satisfy a judgment necessarily amounts to the use of state funds. The court also held that OCDE performs central government functions, relying on prior case law that says that California law treats public schooling as a statewide or central government function. The court held that the first and second factor weighed in favor of Eleventh Amendment immunity and that AB 97 did not impact the analysis of the remaining three factors.

Applying the five-factor test, the Ninth Circuit upheld the trial court’s decision and found that AB 97, which significantly reformed the financing and governance of California public schools, did not change the fact that school districts and county offices of education remain entitled to sovereign immunity under the Eleventh Amendment, thus barring claims for damages against them in federal court-whether based upon state or federal law.

Takeaways

Sato presented a novel argument: that the passage of AB 97, which reformed public education financing and decentralized education governance, abrogated previous Ninth Circuit decisions supporting that school districts and county offices of education are entitled to state sovereign immunity. However, the court held in Sato that school districts and county offices of education remain arms of the state and cannot be sued for damages in federal court.

The Eleventh Amendment defense for California’s community college districts also remains undisturbed by the Sato opinion.

Lozano Smith represented the Madera Unified School District in theBelanger case, which first established Eleventh Amendment immunity for California school districts facing damage claims in federal court.

For more information on the Sato decision or on school district and county office of education immunity from federal damage claims, 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:

Sloan R. Simmons

Partner

Lauren A. Lymen

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.

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.

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.

OCR Issues New Instructions on Transgender Student Complaints

July 2017
Number 36

The U.S. Department of Education’s Office for Civil Rights (OCR) has issued new instructions to its regional directors regarding how to handle complaints involving transgender students. The document is intended to offer OCR staff additional guidance in light of recent court developments and the Trump Administration’s withdrawal of the Obama Administration’s guidance on transgender students. (See 2017 Client News Brief No. 9.)

The instructions affirm that transgender students still have federal protections against discrimination, bullying and harassment and urge OCR investigators to “approach each case with great care and individualized attention” before dismissing and to look for a permissible jurisdictional basis for OCR to retain and pursue a complaint. They direct OCR staff to rely on Title IX regulations, federal court decisions and other OCR guidance in evaluating complaints of sex discrimination, whether or not an individual is transgender.

The instructions describe five scenarios in which OCR has jurisdiction over complaints involving transgender students, including:

  • Failure to promptly and equitably resolve a transgender student’s complaint of sex discrimination;
  • Failure to assess whether sexual harassment or gender-based harassment of a transgender student created a hostile environment;
  • Failure to take steps reasonably calculated to address sexual or gender-based harassment that creates a hostile environment;
  • Retaliation against a transgender student after concerns about possible sex discrimination were brought to the recipient’s attention; and
  • Different treatment based on sex stereotyping.

Notably, failure to allow students to use the restroom consistent with their gender is not on the list. In fact, the instructions offer restroom access as an example of a type of case that might be dismissed. This is a clear shift in the approach set out in the Obama Administration’s guidance, which required schools to allow transgender students access to bathrooms and locker rooms according to their gender identity.

Regardless of whether the instructions clarify the federal government’s stance on transgender students’ rights, pending a final judicial opinion interpreting federal laws, California school districts must continue to comply with the state’s heightened anti-discrimination restrictions under California law. Since January 1, 2014, California’s Assembly Bill (AB) 1266 has required that students be permitted to participate in sex-segregated school programs and activities, including athletic teams and competitions, and use facilities consistent with their gender identity, irrespective of the gender listed on a student’s records. (See 2014 Client News Brief No. 14. ) Other California laws additionally prohibit discrimination against students based on their gender identities.

Schools and local education agencies should ensure they have board policies and regulations which are designed to address the needs and legal rights of both transgender and non-transgender students. For further guidance on best practices with regard to transgender student issues, 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:

Sara E. Santoyo

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.

Appellate Court Orders Publication of Lease-Leaseback Decision, Making it Binding Precedent

June 2017
Number 32

On May 31, 2017, the First District Court of Appeal ordered publication of its decision in California Taxpayers Action Network v. Taber Construction, Inc. et al.(2017) 12 Cal.App.5th 115 (Taber), which upholds the validity of a lease-leaseback arrangement. This reversed the court’s initial decision not to publish the case. Publication of the Taber decision means that it serves as citable precedent upon which school districts and others may now rely.

In Taber, the Court of Appeal reviewed the validity of a lease-leaseback arrangement that was challenged on the grounds that it did not comply with Education Code section 17406, the lease-leaseback statute covering school districts. Agreeing withMcGee v. Balfour Beatty Construction, LLC (2016) 247 Cal.App.4th 235 (McGee), which was recently decided by the Second District Court of Appeal, the Taber court declined to follow the lease-leaseback holding ofDavis v. Fresno Unified School District (2015) 237 Cal.App.4th 261 (Davis) and to read Davis’ “genuine lease” and “financing” requirements into the lease-leaseback statute. On the other hand, the Taber court did agree with both Davis andMcGee that allegations that a lease-leaseback contractor acted as an officer or employee of the school district when performing pre-construction services was sufficient to allow a conflict of interest cause of action under Government Code section 1090 to proceed to trial. (For further discussion of the Taber decision, see 2017 Client News Brief No. 23.)

While the Taber decision represents the second appellate court ruling that specifically repudiates the holding of Davis, it does not overrule that case, as one Court of Appeal cannot overturn the ruling of another. In the event a lease-leaseback challenge is brought in state court, a trial court has the option of applying McGee,Taber or Davis. A trial court, however, will ordinarily follow an appellate opinion from its own district even though it is not bound to do so, meaning that trial courts in the First and Second Appellate Districts (generally, the greater San Francisco and Los Angeles areas) may be more inclined to follow Taber and McGee, respectively, while trial courts in the Fifth Appellate District (generally, the Central Valley) may be more inclined to follow Davis. Until and unless the California Supreme Court weighs in, uncertainty may remain.

If you have any questions about the legality of lease-leaseback and which appellate court decision may apply to your project, or about other project delivery methods, 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:

Travis E. Cochran

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.