COLLATERAL LOAN AND SECONDHAND DEALERS ASSOCIATION, Plаintiff and Appellant, v. COUNTY OF SACRAMENTO et al., Defendants and Respondents.
No. C070987
Third Dist.
Jan. 9, 2014
223 Cal. App. 4th 1032
Law Offices of Jon P. Webster, Jon P. Webster, James A. Arcellana and Raymond M. Yetka for Plaintiff and Appellant.
John F. Whisenhunt, County Counsel, and John Reed, Deputy County Counsel, for Defendants and Respondents.
OPINION
BUTZ, J.—Plaintiff Collateral Loan and Secondhand Dealers Association (CLSDA), a trade association of licensed pawnbrokers and secondhand dealers, brought this action for injunctive relief on behalf of members located in Sacramento County. CLSDA sought to prevent defendant Scott Jones (the Sheriff), sued in his official capacity as Sheriff of Sacramento County, from enforcing various provisions of Sacramento County Ordinance No. 1505 (the ordinance) that defendant County of Sacramento (defendant County or, collectively, defendants) enacted in December 2011, replacing title 4, chapter 4.30 of the Sacramento County Code. CLSDA argued the ordinance‘s creation of a detailed countywide reporting system for pawnbrokers and secondhand dealers conflicted with state law on the subject (i.e.,
After the hearing, the trial court granted a preliminary injunction as to only two minor provisions of the ordinance. It concluded that CLSDA had otherwise failed to demonstrate that it was likely to prevail on the merits of its claims. CLSDA filed a timely notice of apрeal from the trial court‘s order. (Courtesy Temporary Service, Inc. v. Camacho (1990) 222 Cal.App.3d 1278, 1286 [272 Cal.Rptr. 352] [order partially granting and partially denying preliminary injunction appealable].)
CLSDA contends chapter 4.30 of the Sacramento County Code expressly conflicts with state law in various respects.2 We agree. In light of this holding, we do not need to reach CLSDA‘s additional contention that the ordinance violates the right to privacy in financial information. We will
FACTUAL AND PROCEDURAL BACKGROUND
This action is essentially a facial challenge to defendant County‘s ordinance based on the provisions of state law; the facts adduced at the hearing generally are not material to our disposition. As a result, there is little factual or procedural background before our discussion of the applicable law.
The verified complaint identifies 11 of the 19 substantive sections of the ordinance as “duplicat[ing], contradict[ing] and add[ing] оn to ... an area of regulation fully occupied by general laws of this state,” and alleges the Sheriff was notifying the affected businesses that an electronic reporting (e-filing) system contained in the ordinance was mandatory. The complaint also alleged that the Sheriff had already identified a particular private vendor, Business Watch International (BWI), and acquisition of the hardware and software necessary for reporting to BWI would result in significant costs (about $850 before a discount, acсording to four proposals attached as exhibits to the complaint). CLSDA therefore requested injunctive relief, and a judicial declaration of the invalidity of the ordinance.
In support of the request for a preliminary injunction, CLSDA included three declarations. Its counsel stated that he had been working in support of legislation to fund a statewide uniform e-filing system through an increase in state license fees, which the Department of Justice (DOJ) would maintain (asking for judicial notice of the Feb. 2011 version of Assem. Bill No. 391 (2011-2012 Reg. Sess.)). Counsel was also familiar with BWI, and averred that the information it would collect would be stored on servers outside the state that are not under the control of the DOJ. He included a copy of the DOJ form (JUS 123) that CLSDA members were presently filing with police chiefs or sheriffs, which gathered the information specified in
In its tentative ruling, the trial court agreed that CLSDA was likely to prevail on its assertion that provisions in Sacramento County Code section 4.30.025, subdivision A (those which mandate a daily 10:00 a.m. deadline for mailing or e-filing the reports and the use of a sheriff‘s form) are inconsistent with state law, and that there was a threat of irreparable injury because violations were subject to criminal prosecution and a threat to licensure status. However, with respect to the claimed conflict between the creation in Sacramento County Code section 4.30.025, subdivision C of an e-filing system other than the contemplated DOJ-created system under state law (former
At the hearing on the preliminary injunction, CLSDA‘s primary focus was the ordinance‘s e-filing system. It conceded that participation was indeed voluntary, but argued that it was inconsistent with state law and impermissibly sought to give the covered businesses an ability to opt out of the paper
In August 2012, the Legislature enacted Assembly Bill No. 391 (2011-2012 Reg. Sess.) as an urgency measure. (Stats. 2012, ch. 172, §§ 2-6.) We will address its pertinent provisions in the Discussion.
DISCUSSION
I. General Preemption Principles
“Ordinarily, a party challenging the superior court‘s ruling on a motion for a preliminary injunction must demonstrate an abuse of discretion in evaluating the interrelated factors of the plaintiff‘s likelihоod of success and the magnitude of interim harm to the plaintiff if the preliminary injunction is denied.” (Efstratis v. First Northern Bank (1997) 59 Cal.App.4th 667, 671 [69 Cal.Rptr.2d 445].) “Where the ‘likelihood of prevailing on the merits’ factor depends upon a question of law rather than upon evidence to be introduced at a... full trial, the standard of review is not abuse of discretion but whether the superior court correctly interpreted and applied statutory law, which we review de novo.” (Id. at pp. 671-672.) We review a request for injunctive relief under the law in effect at the timе we render our decision. (6 Witkin, Cal. Procedure (5th ed. 2008) Provisional Remedies, § 402, p. 344.)4
On the subject of the regulation of pawnbrokers and secondhand dealers, the Legislature has expressly declared that it was enacting these provisions “to curtail the dissemination of stolen property and to facilitate the recovery of stolen property by means of a uniform, statewide, state-administered program of regulation... [] ... [][] ... [T]his article shall not be superseded or supplanted by the provisions of any ordinance or charter....” (
II. Local E-filing System
At the time of the trial court‘s ruling, former
Four months after the trial court‘s ruling, the newly enacted Assembly Bill No. 391 (2011–2012 Reg. Sess.) declared, “It is the intent of the Legislature to enact legislation that fully funds the cost of developing and implementing a single, statewide, uniform [e-filing] reporting system of the information required to be reported in accordance with
Sacramento County Code section 4.30.025, subdivision C states, “Upon the implementation of an [e-filing] reporting system by the Sheriff, every pawnbroker[ and] secondhand dealer ... may elect to commence reporting as required by this section by means of such [e-filing] reporting system in lieu of a paper form.” It may be that a cumulative and voluntary e-filing system, organized in a way to best suit local needs, would not necessarily be “per se inconsistent” with the state law interest in a single uniform e-filing system. (Malish, supra, 84 Cal.App.4th at p. 730.) However, the ordinance purports to allow Sacramento businesses to opt to use its e-filing system in lieu of their obligation under state law to file paper reports until 30 days after the state e-filing system is operative.
Consequently, CLSDA had demonstrated that it is likely to prevail on this issue, and the trial court has already concluded that enforcement of the ordinance otherwise poses a threat of irreparable injury. Therefore, the preliminary injunction must also restrain defendants from giving effect to the provision allowing businesses to opt out of filing paper forms.6
III. Other Conflicting Provisions of the Ordinance
Although CLSDA expressly called the attention of the trial court to other provisions of the ordinance that it believed conflicted with state law, the trial court did not address them in its ruling. Defendants also ignore them on appeal, focusing only on the e-filing provision. Whethеr or not this is a tacit concession of the invalidity of these other provisions, we agree that the preliminary injunction must extend to three of these as well.7
Sacramento County Code section 4.30.090 provides for the Sheriff to collect a license fee from each of the pawnbrokers and secondhand dealers “to provide for the direct and indirect costs of processing reported data and enforcing the provisions of [chapter 4.30].” It authorizes the licensees, in turn, “to charge the amount of . . . ($1.00) per transaction . . . to defray the cost of said fee.”
As CLSDA points out (without rejoinder from defendants), the Financial Code extensively prescribes the maximum compensation a pawnbroker can receive in interest: “no pawnbroker shall charge or receive compensation at a rate exceeding the sum of the following [rates].” (
B. Additional Reporting Requirements
In Sacramento County Code section 4.30.030, subdivisions A through G, the ordinance prescribes the collection of the information specified under various state laws, including
As we have explained, to the extent the ordinance is duplicative of state law, it is not preempted. But under the authority of Malish, supra, 84 Cal.App.4th at pages 735, 736, it cannot add to the reporting requirements of state law. Having demonstrated that it is likely to prevail on this issue
nevertheless undertake “the unusual, but practical, step of reaching and resolving the merits’ ” (ibid.) on these narrow questions of law.
C. Holding Requirements
Sacramento County Code section 4.30.050, subdivisions A and B prescribe a seven-day holding period after acquisition of any undefined “article or thing” after filing a report on it except for “tangible personal property,” which is subject to the same 30-day hold prescribed in
D. Pawnbroker Definition
Sacramento County Code section 4.30.015, subdivision D defines a “pawnbroker” as “a person engaged in... the business of lending money upon personal property, pawns or pledges; or the business of purchasing articles from the vendors or their assignees at prices agreed upon at or before the time of such purchase.” (Italics added.) CLSDA purports a lack of understanding of the meaning of the emphasized portion, but asserts (without rejoinder from defendants) that whatever meaning is intended in this definition, it cannot depart from either
We agree that for purposes of identification, holding, and reporting requirements, the reach of the ordinance must be coextensive with state law and
IV. The Issue of Severing the Ordinance Is Premature
In a one-paragraph argument, CLSDA contends “the remaining valid provisions of the ordinance cannot be saved because they cannot be considered volitionally severable.” It asserts it may raise this issue for the first time on appeal because it presents a pure question of law and “there is no reason to burden the parties with unnecessary proceedings below.”
Defendants are correct that this argument is premature. Absent a stipulation or other satisfactory showing that the parties submitted the cause on the merits, the final judgment on the merits has yet to be entered on the ordinance; all that the trial court issued was a provisional remedy. (Camp v. Board of Supervisors (1981) 123 Cal.App.3d 334, 357-358 [176 Cal.Rptr. 620]; Gray v. Bybee (1943) 60 Cal.App.2d 564, 571 [141 P.2d 32].) Thus, further proceedings in the trial court are not “unnecessary“; in fact, that court is still vested with jurisdiction over the merits of the matter. (Gray, at p. 571; see Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th 180, 191 [25 Cal.Rptr.3d 298, 106 P.3d 958] [neither affirmance nor reversal of preliminary injunction order eliminates need for additional proceedings on the merits].) The question of severability (or indeed, whether defendants even wish to continue to enforce the ordinance in light of the amendments of Assem. Bill No. 391 (2011-2012 Reg. Sess.)) can be addressed in the trial court in the process of obtaining a declaration of invalidity in the final judgment in this matter.
DISPOSITION
The trial court‘s order granting a preliminary injunction against enforcement of the ordinance is modified to include the subjects discussed in this opinion: Defendants cannot excuse e-filers from filing paper reports (Sac. County Code, § 4.30.025, subd. C); defendants cannot authorize the collection of a transaction fee (Sac. County Code, § 4.30.090); defendants cannot mandate the collection of reporting information not spеcified in
Nicholson, Acting P. J., and Hull, J., concurred.
On February 7, 2014, the opinion was modified to read as printed above.