August 2006

Napa to Buy City Block for New Stores?

News that the City of Napa has been in confidential negotiations with the property owner of most of an acre of downtown commercial property surfaced on Tuesady after a closed session during which the terms of a possible purchase were discussed. The City has been attempting to promote mixed commercial-housing projects in downtown as a way of adding economic vitality to the area. None of the commercial tenants located in the area had any knowledge of the talks and one restaurant owner stated he recently extended his lease.

Cities and counties across the country have been using condemnation to promote ecomonic development to revitalize their communities. Californians will be called upon to vote on Proposition 90 this November to change the State's Constitution to prohibit such acquisitions.

At Will Language Upheld by California Supreme Court Despite Failing to Say that Employee Could be Fired Without Cause

Dore v. Arnold Worldwide Inc., 06 C.D.O.S. 7078

The Supreme Court has recently held that a letter of employment that defined at-will employment as the ability to terminate the employment relationship at "any time" was a valid at-will employment agreement even though it failed to affirmatively state that the employer has the ability to terminate an employee "without cause."

To read the Supreme Court's opinion click here.

This ruling is considered to be a huge victory for employers. Despite this ruling, employers are still urged to thoroughly and appropriately define at-will employment relationships.

Supreme Court Rules on Controversy Regarding Meet and Confer Requirements Pursuant to the MMBA

In 2002, the City of Claremont instituted a study designed at gathering information regarding the identity of individuals stopped by the City's police department. The purpose of the study was to determine whether individuals were being stopped based upon their race and/or ethnicity.

Pursuant to the study, police officers were required to fill out a form that gathered information about the officers' perception of the race and ethnicity of drivers prior to stopping their vehicles. Because the City did not meet and confer with the Police Association prior to implementing the requirement that officers fill out the forms, the Association filed a lawsuit alleging that the City violated the MMBA.

The Supreme Court held that the City was not required to meet and confer with the Association prior to implementing the study. The Supreme Court emphasized that it was not deciding whether a meet and confer duty would have existed if issues regarding officer discipline or privacy arose from the results of the study (because those questions were not before the Court). Based on this caveat, it is unclear what siginificance this ruling will have.

To read this decision click here.

New Rules for Office Holder Gift Giving

New public official ethics rules go into effect today! On August 23, 2006, a new Fair Political Practices Commission (FPPC) gift regulation goes into effect.

Title 2, Division 6, Section 18944 states that “a single gift given to both a public official and candidate (hereinafter “official”) and one or more members of the official’s immediate family is a gift to the official for the full value of the gift.” While somewhat ambiguous, the rules also attempt to state that a gift is not a gift, unless it confers “personal benefit” on a recipient or a member of his/her family. Factors for consideration of when a gift is a gift include whether there is an existing working or social relationship between the official and gift-giver.

Comment: It appears that the FPPC is attempting to address complaints voiced by some public officials that the FPPC regulations on gifts were restricting or subjecting to scrutiny certain presents or tokens of respect to spouses/dependent children that clearly were not attempts to curry favor with the public official or improperly influence the political process (e.g., monthly flower or plant exchanges between fellow members of a gardening club that the spouse has participated in for years).

For the full text of the Rule, please click here

Court of Appeal Holds that Correctional Supervisors are not Entitled to the Same Raise as their Subordinates

Attorney Authors: 

Wirth v. State

A California Court of Appeal upheld a Trial Court's determination that State correctional officers were not entitled to the same percentage raise as the employees that they supervise. The correctional supervisors based their claim on the language in Government Code section 19849.18 which provides that correctional officers are entitled to salary and benefit changes that are at least generally equivalent to changes granted to their rank and file subordinates. The Court held that the State did not violate that statute by granting the supervisors smaller percentage salary increases supplemented with other benefit increases.

To read the entire opinion click here.

Could California's Eminent Domain Reform Prop 90 Give Rise to Thousands of Claims as Oregon's Reform Measure? The Debate Heats Up

Since the U.S. Supreme Court's decision in Kelo, more than 30 state legislatures have either passed or considered laws limiting the government's use of eminent domain (the right to condemn private property for public use). Now, six Western states, including California in November (Proposition 90), have ballot initiatives to reform eminent domain.

The Pro-Prop 90 backers argue that drastic reform to the California state's constitution is necessary to stop the over use and abuse of eminent domain in the state. The anti-90 group argues that the proposition is too far reaching, too drastic and will have a significant and negative effect on land use, the environment, development, and affordability of even the most simple road widening project.

Oregon passed a similar measure (Measure 37) in 2004. At the time, Oregon had some of the toughest land-use regulations in the nation. However since, Measure 37, many longtime landowners have escaped regulations for protecting landscapes, the environment and neighborhoods. Oregon property owners have already field about 2,700 Measure 37 claims, aiming to develop about 143,00 acres. The claimants demand that the governments either waive the land-use restrictions or pay nearly $4 billion in compensation (for "taking" their land). In almost all of the claims settled to date, governments have ended up waiving the regulations.

To learn more about Proposition 90 please go to and

Claudia J. Gorham

Eminent Domain Department

IRS Revenue Ruling Specifies Actions Required for a Government Employer to Pick Up Employee Retirement Contributions

Attorney Authors: 

IRS Revenue Ruling 2006-43

The IRS recently issued a revenue ruling that discusses the actions that a governmental agency is required to undertake in order to "pick up" employee retirement contributions so that they can be treated as employer contributions pursuant to Section 414(h)(2) of the IRS Code. According to the ruling, a government employer is now required to take formal written action (i.e. ordinance, resolution or minutes of an authorized meeting) re-characterizing the employee contributions as employer contributions.

To read the ruling click here.

The revenue ruling also discusses a period of relief for employers who fail to meet the requirements by August 28, 2006, which is the effective date of the ruling. In order to qualify for the transition relief, the government employer must satisfy specific criteria listed in the ruling.