Opinion
Plaintiff Costa Mesa City Employees’ Association (CMCEA) represents workers who are employed by the City of Costa Mesa (the City). In response to the City’s plan to contract out for a variety of City services, CMCEA filed suit against the City and its chief executive officer, Thomas Hatch (collectively defendants) for injunctive and declaratory relief. CMCEA contends the City’s proposed outsourcing plan violates state law as well as the parties’ collective bargaining agreement. Trial on the matter has not been heard, but on July 15, 2011, the trial court granted a preliminary injunction enjoining defendants from contracting with a private entity for any of the services that are performed by CMCEA members or laying off CMCEA members as a result of such contracting. In this appeal, the sole issue is the propriety of the preliminary injunction. Defendants contend it was improvidently granted, but we disagree and affirm the trial court’s ruling.
FACTS
Costa Mesa is a general law city. In 2004, it entered into a collective bargaining agreement with CMCEA regarding the terms of employment for City workers who are represented by CMCEA. The agreement was memorialized in a memorandum of understanding (MOU), which is effective until March 13, 2013. Article 1.5 of the MOU provides, “The wages, hours and other terms and conditions of employment currently in effect for the job classifications covered herein shall remain in effect unless modified, amended or deleted by this MOU or subsequent MOUs
Article 14 is entitled “Cost of Services.” Article 14.1 recognizes, “It is in the interest of the City of Costa Mesa and CMCEA to establish a consistent
In article 14.2, the parties agreed “that should a decision be made to contract out for a specific service which is at the time being performed by employees covered by this MOU, the employees affected will be given sufficient notice (a minimum of six months) in which to evaluate their own situation and plan for their future. To this end, the City will make every effort to transfer and utilize regular attrition in making the necessary adjustments. The City will assist employees in this endeavor through training and through preferential treatment (under meritorious consideration) when [filling] vacancies.”
The six-month notice requirement is reiterated in article 19, which pertains to layoff procedures. Particularly, article 19.2(B) provides, “In the event a decision is made by the City to contract out for a specific service performed by City employees, the City will give the affected employees a minimum of six (6) months advance notification in which to evaluate their own situation and assist in planning for the future. The City shall meet and consult with CMCEA on such matters as the timing of the layoff and the number and identity of the employees affected by the layoff.” Article 19.2(B) also provides that “thirty (30) calendar days before the effective date of layoff, the appointing authority shall notify the Administrative Services Director of the intended action with reasons therefore.”
On March 1, 2011, the City Council approved an outsourcing plan to contract out for a variety of City services, including street sweeping, graffiti abatement, animal control, jail operations, special event safety, information technology, graphic design, reprographics, telecommunications, payroll, employee benefit administration, building inspection, and park, fleet, street and facility maintenance. Thereupon, on March 17 and March 31, 2011, the City’s public services director sent layoff notices to over 100 City workers who are represented by CMCEA. The notices stated that in light of the City Council’s decision to contract out for City services, “it is necessary to issue this layoff notice to every affected employee in a position subject to outsourcing.” After informing the recipient he or she was such an employee, the notices provided, “[Y]ou will be subject to layoff effective your last scheduled work shift for the pay period ending September [30], 2011. This
The notices also advised that employees “who will be laid off should work closely with the Human Resources Division on questions, continuance of health benefits, retirement options and explanation of such programs as unemployed insurance benefits.” The notices concluded with the public services director’s “sincere[] regret that the City’s current conditions require that City employees be laid off.”
On May 16, 2011, CMCEA filed suit against defendants for injunctive and declaratory relief. Its complaint alleges the City’s outsourcing plan violates the Government Code in that it calls for the outsourcing of jobs that do not involve “special services.” (Gov. Code, §§ 37103, 53060.)
In targeting the City’s outsourcing plan, CMCEA requested a preliminary injunction to prevent the plan’s implementation while its lawsuit was pending. Addressing the need for preliminary relief, CMCEA claimed the City was in the process of preparing bids or requests for proposals (RFP’s) to be issued to various vendors. CMCEA believed the RFP’s would “be issued to vendors and returned within the next few weeks and [would] culminate in contracts for City services, thereby resulting in the layoffs of all or substantially all employees represented by” CMCEA.
CMCEA also claimed, “Unless and until injunctive relief sought herein is granted, the City will continue to undertake actions culminating in the contracting out to private vendors for non-special services in excess of the powers conferred to such a municipality and such contracting out will . . . consequently be void, unenforceable and ultra vires. Furthermore, . . . the City will cause great and irreparable injury to employees . . . whose services will be supplanted by private vendors by virtue of unlawful outsourcing contracts.”
In their opposition papers, defendants argued the MOU does not require the City to negotiate with CMCEA regarding the decision to outsource, but merely requires the City to consult with CMCEA regarding the impact of any outsourcing decisions that it arrives at. Defendants also argued the City has
Defendants also maintained a preliminary injunction was unwarranted because they had issued only one RFP to date (pertaining to the operation of the City’s jail facility), and regardless of how many RFP’s it ultimately issues, the City is not legally obligated to accept any bids it may receive from prospective vendors. Speaking to the nature of the bidding process, defendant Hatch, the City’s chief executive officer, declared, “While it is true that the City leadership is earnestly pursuing the outsourcing of City services in furtherance of ensuring the most cost-effective provision of public service, it remains possible that the RFP process will not result in the identification of a public or private entity or person qualified or willing to provide these or other services which may be the subject of future RFP’s.” Given this possibility, defendants argued it was too early to ascertain what would come of the RFP’s or how City workers might ultimately be affected by them. That is why the layoff notices were identified as being contingent in nature and subject to rescission by the City. All things considered, the City did not believe its outsourcing plan posed an imminent threat to CMCEA’s members so as to justify the issuance of a preliminary injunction.
In replying to defendants’ arguments, CMCEA conceded the City is statutorily authorized to contract out for services with another local agency. However, CMCEA insisted the City could not contract out for services to a private entity unless the contract involved special services. CMCEA also submitted declarations from several of its members who stated they had reviewed draft proposals of RFP’s the City intended to send out. According to these members, the services contemplated in those draft proposals have long been performed by City workers and do not “involve additional services, skills, expertise or training otherwise possessed or currently rendered” by City workers.
Defendants did not offer any evidence to dispute this assertion. In fact, in the RFP they issued for the City’s jail services, they recognized, “Since the inception of the Jail, the City Police Department has maintained a reputation for the efficient and effective handling of operations, supervision, and management of the facility.”
On July 5, 2011, the trial court held a hearing on CMCEA’s request for a preliminary injunction. Speaking to the City’s decision to send out the layoff
Ultimately, the court decided to grant CMCEA’s request for a preliminary injunction. It enjoined defendants from contracting with a nonlocal agency for any of the services currently being performed by CMCEA members or laying off CMCEA members as a result of such contracting. The trial was originally scheduled to begin in April of this year, but it has been continued pending this appeal.
I
Defendants contend the trial court erred in granting the preliminary injunction. We disagree.
“As its name suggests, a preliminary injunction is an order that is sought by a plaintiff prior to a full adjudication of the merits of its claim. [Citation.]” (White v. Davis (2003)
“To obtain a preliminary injunction, a plaintiff ordinarily is required to present evidence of the irreparable injury or interim harm that it will suffer if an injunction is not issued pending an adjudication of the merits.” (White v. Davis, supra,
If the threshold requirement of irreparable injury is established, then we must examine two interrelated factors to determine whether the trial court’s decision to issue a preliminary injunction should be upheld: “(1) the likelihood that the moving party will ultimately prevail on the merits and (2) the relative interim harm to the parties from issuance or nonissuance of the injunction.” (Butt v. State of California (1992)
In the end, the burden is on the party challenging the preliminary injunction to prove it was improperly granted. (ReadyLink Healthcare v. Cotton (2005)
As to the threshold requirement of irreparable harm, defendants concede job loss qualifies as such an injury. But they insist CMCEA’s members were not in imminent danger of losing their jobs when CMCEA filed suit because, at that time, the City had issued only one RFP for a single City service, that being jail operations. We disagree. CMCEA submitted declarations from a number of City workers who said they had reviewed drafts of proposed RFP’s for many other City services. This indicates that more RFP’s were in the works. Indeed, defendant Hatch, the City’s CEO, admitted in his declaration, “City leadership is earnestly pursuing the outsourcing of City services . . . .” While he said there was a “possibility” the RFP process would not actually result in the outsourcing of any jobs, it is readily apparent CMCEA’s members were in serious peril of being terminated.
That was made evident by the many layoff notices that the City sent out. The trial court’s interpretation of the notices as a “significant step” in the outsourcing process is supported by the fact the notices set September 30, 2011, as the expected date the recipients would be terminated. The notices
Defendants claim the preliminary injunction was prematurely issued because until any outsourcing contracts are finalized, there is no way of knowing which particular jobs are going to be outsourced or whether those jobs entail services that may be legally outsourced to the private sector. Defendants base their claim on Service Employees Internal Union v. Board of Trustees (1996)
Here, quite obviously, both the scope and consequences of the City’s proposed outsourcing plan are very different. Not only does the plan have the potential to impact over 100 members of the City’s workforce, there is no evidence that any of the affected members will be able to retain their jobs if the plan is implemented. Moreover, the plan doesn’t just target one particular position or department; rather, it is aimed at 18 different sectors of the City’s workforce that provide a wide array of services to the citizens of Costa Mesa. This sets the plan apart from Service Employees Internal Union v. Board of Trustees, and any of the other outsourcing cases cited by the parties in this proceeding.
In arguing the preliminary injunction was premature, defendants also emphasize the fact the layoff procedures set forth in the MOU require the City’s administrative services director to be notified 30 days before an employee is laid off as a result of any outsourcing decision. However, the MOU does not spell out what steps the director must take in terms of notifying the affected employee or CMCEA. Thus, it is unclear whether, as defendants contend, the 30-day period would provide a sufficient window of
n
Nor did the trial court abuse its discretion in determining CMCEA would incur greater interim harm without a preliminary injunction than the City would if one were issued. As explained in the previous part, CMCEA members who received layoff notices were faced with the daunting prospect of being terminated if the City’s outsourcing plan was not preliminarily enjoined. Job loss is always a serious matter, and in this postrecession era of high unemployment, it cannot be taken lightly. Defendants admit that losing a job, and the income it entails, amounts to irreparable harm. (White v. Davis, supra,
Notwithstanding the prospect of City workers losing their jobs, however, defendants contend, “The residents and taxpayers of Costa Mesa have a substantial interest in a local government that is able to provide better municipal services while improving its financial security.” Defendants also submit that, unless the preliminary injunction is lifted, the City cannot even attempt to further that interest by putting its outsourcing plan in motion.
We do not question the citizenry’s interest in cost-effective government. However, contrary to defendants’ claim, the trial court’s preliminary injunction does not prevent the City from moving forward with its outsourcing plan. It can still issue RFP’s, receive bids, and assess whether outsourcing is a prudent course of action for the particular services at issue. This would lay
Ill
We now turn to the merits of CMCEA’s claims. Regardless of the balance of interim harm, the preliminary injunction cannot be allowed to stand unless there is “some possibility” CMCEA will prevail on the merits of its action. (Butt v. State of California, supra, 4 Cal.4th at pp. 677-678; Aiuto v. City and County of San Francisco (2011)
CMCEA’s lawsuit alleges the City’s outsourcing plan violates both the parties’ MOU and state law. Regarding the MOU, it is clear article 1.5 generally prohibits the City from altering the terms or conditions of employment of CMCEA members. Articles 14 and 19.2(B) do contemplate the outsourcing of City services, which would be an exception to that general prohibition. But article 14 also sets forth an important condition that must be met before outsourcing may occur. In particular, article 14.1 provides “the ongoing evaluation of costs should be a collective process of sharing information on a participative basis to develop sound decisions and appropriate practices. The City is interested in involving the employee associations to the greatest degree in this regard; and, as such, agrees to make them part of discussions regarding the contracting of services.” (Italics added.)
There is nothing in the record that suggests the City involved CMCEA in any discussions regarding the evaluation of costs or the contracting of services. The City did send layoff notices to CMCEA members after it had already decided on its outsourcing plan, but there is no evidence it ever discussed these matters with CMCEA beforehand, as required by article 14.1.
Defendants argue the parties would not have bothered to include a six-month layoff notice requirement in their agreement, as set forth in article 14.2 and article 19.2(B), if it was barred from contracting out for City services. But this is a non sequitur. The MOU does not prohibit outsourcing altogether. Nor does it give CMCEA a veto over such plans. Per article 14.2, it simply requires the City to include the CMCEA in the process of evaluating costs and developing effective work practices, which may include the contracting
State law also supports CMCEA’s lawsuit. Under the California Constitution, “A county or city may make and enforce within its limits all local, police, sanitary, and other ordinances and regulations not in conflict with general laws.” (Cal. Const., art. XI, § 7.) This provision “is both a grant and a limitation upon the power of cities and counties to enact legislation.” (California Water & Telephone Co. v. County of Los Angeles (1967)
Similar principles govern a city’s contracting authority. On the one hand, it is beyond question that cities have the implied authority to enter into contracts to carry out their necessary functions. (Morrison Homes Corp. v. City of Pleasanton (1976)
In contrast to these two statutes, section 54981 does not limit a city’s contracting rights to the acquisition of special services. Rather, it provides more broadly that “[t]he legislative body of any local agency may contract with any other local agency for the performance by the latter of municipal services or functions within the territory of the former.” (§ 54981.) However, by its terms, section 54981 only authorizes contracts between local agencies, such as cities. It does not authorize a city to contract with a private entity for city services.
And that is the crux of this case. It is CMCEA’s position that sections 37103 and 53060 generally prohibit cities from contracting with a private entity, unless the contract is for special services. If that is the case, then any effort by the City to contract with a private entity for nonspecial services would be suspect as being violative of those particular statutes, as well as the state Constitution because, as we have explained, a city is not empowered to act in contravention of state law. (Cal. Const., art. XI, § 7.)
Defendants argue that is not in fact the case. In their view, the special services statutes are intended solely to allow cities to bypass the competitive bidding process when contracting for special services, not limit their right to contract for such services. However, in cases involving the special services statutes, the issue is typically not whether the government may properly contract out for the services in question absent competitive bidding. Instead, the question is whether the agency has the basic underlying authority to contract out for the subject services in the first place. (See, e.g., Montgomery v. Superior Court (1975)
Consistent with this approach, the Attorney General has determined the special services statutes constitute a limitation on the power of local agencies to outsource services, as opposed to the particular method by which they may do so. In fact, in 1993, the Attorney General issued an opinion that addresses the fundamental question presented in this case, i.e., whether such statutes allow the outsourcing of nonspecial services to achieve cost savings for the government. (
Relying on San Francisco v. Boyd (1941)
In any case, Boyd is distinguishable because unlike Costa Mesa, which is a general law city, the city in question there was a charter city. As such it had nearly complete control over its municipal affairs and was not bound by the general laws of the state. (Boyd, supra, 17 Cal.2d at pp. 616-618.) This was an important consideration in the Supreme Court’s decision to uphold the private contracting arrangement at issue in that case. (Ibid.) see generally Riveros v. City of Los Angeles (1996)
Nor are we swayed by the 1991 Attorney General opinion cited by defendants that concludes cities have the implied authority to contract with a private entity to operate a local jail or detention facility. (74 Ops .Cal. Atty. Gen. 109 (1991).)
There are two reasons why the Attorney General’s 1991 opinion on privately operated jails is not persuasive here. First, the Attorney General did not address any of the special services statutes. Yet, as explained above, the Attorney General himself recognized in 1993 that those statutes generally limit the contracting authority of local agencies to the acquisition of services that are specialized. Opinions sanctioning the outsourcing of government services without reference to the special services statutes are simply not that helpful in determining the legality of the City’s outsourcing plan in this case. (See, e.g., California School Employees Assn. v. Kern Community College Dist. (1996)
Still, in arguing in favor of the City’s outsourcing plan, defendants maintain the special services statutes were never intended to restrict a city’s authority to contract out for any particular type of services. In support of this contention, defendants rely on an interdepartmental memo that was written by a deputy attorney general to Governor Earl Warren when section 53060 was enacted back in 1951.
In our view, sections 53060 and 37103 are actually quite germane to the plan in that they limit a city’s right to contract with private entities. By implication, and as interpreted over the years, the statutes generally prohibit a
DISPOSITION
The trial court’s order granting CMCEA’s request for a preliminary injunction is affirmed. CMCEA is awarded costs on appeal.
Moore, J., and Aronson, J., concurred.
On October 10, 2012, the opinion was modified to read as printed above. Appellants’ petition for review by the Supreme Court was denied November 28, 2012, S206157.
Notes
Unless noted otherwise, all further statutory references are to the Government Code.
Relying on Johnston v. Board of Supervisors (1947)
That is not to say, as CMCEA contends, that cities only have those powers expressly conferred on them by the Legislature. As amicus curiae California Contract Cities Association correctly notes, our Supreme Court has long recognized that cities derive their authority from both the Legislature and the California Constitution. (Hurst v. City of Burlingame (1929)
Sections 37103 and 53060 also authorize local agencies to pay special service providers such compensation as they deem proper.
Section 31000 states, “The board of supervisors may contract for special services on behalf of the following public entities: the county, any county officer or department, or any district or court in the county. Such contracts shall be with persons specifically trained, experienced, expert and competent to perform the special services. The special services shall consist of services, advice, education or training for such public entities or the employees thereof. The special services shall be in financial, economic, accounting . . . , engineering, legal, medical, therapeutic, administrative, architectural, airport or building security matters, laundry services or linen services.”
In the wake of this opinion, the Legislature enacted Penal Code section 6031.6, which, as noted above, expressly authorizes cities to do this.
In Kern, the court did not address the special services statutes and was dealing with the right of a nonmerit school district to contract for private services. Nonmerit school districts are not subject to the statutory provisions limiting the right of merit school districts to utilize the services of nonclassified employees. (California School Employees Assn. v. Kern Community College Dist., supra, 41 Cal.App.4th at pp. 1011-1012; accord, Service Employees Internat. Union v. Board of Trustees, supra,
The memo was actually submitted to us by CMCEA. We grant CMCEA’s request to judicially notice it. (Evid. Code, §§ 452, subd. (c), 459, subd. (a).)