C038246

 

 

IN THE CALIFORNIA COURT OF APPEAL

 

THIRD APPELLATE DISTRICT

         

 

FAIR POLITICAL PRACTICES COMMISSION,

 

 

                                                                                       Plaintiff and Respondent,

 

                                                                vs.

 

CALIFORNIANS AGAINST CORRUPTION, CARL RUSSELL HOWARD, treasurer, and STEPHEN J. CICERO, treasurer,

 

                                                                                   Defendants and Appellants.

 

         

Appeal from Superior Court for the County of Sacramento

Hon. Charles C. Kobayashi

[Case No. 96AS00039]

            

 

 APPELLANTS’ OPENING BRIEF

         

 

 

 

 

LAW OFFICE OF BRUCE ADELSTEIN

Bruce Adelstein (Cal. Bar No. 157607)

11661 San Vicente Boulevard, Suite 1010

Los Angeles, California  90049

(310) 979-3565

FAX: (310) 820-1594

 

Attorney for Defendants and Appellants

CALIFORNIANS AGAINST CORRUPTION, CARL RUSSELL HOWARD, treasurer, and STEPHEN J. CICERO, treasurer

 

INTRODUCTION

The respondent Fair Political Practices Commission (“FPPC”) imposed an $808,000 fine — the largest fine in its history — on the appellants, a small grass-roots political organization, Californians Against Corruption (“CAC”), and its two  treasurers, Carl Russell Howard (“Howard”) and Stephen Cicero (“Cicero”).  The FPPC imposed this fine for omissions in the appellants’ financial disclosure reports and for recordkeeping violations.  Howard, who prepared these reports, had failed to disclose certain identifying information, like street addresses, occupation and employer information, for approximately 100 donors who total contributions were approximately $25,000.  Howard failed to disclose this information during a fiercely contentious election — the 1994 recall campaign against State Senator David Roberti — because of a well-founded fear of harassment.  After Robert’s campaign and the press had depicted CAC supporters as right-wing gun extremists, CAC’s offices and the home of a prominent CAC supporter had both been broken into, and several donors had received harassing phone calls.

This appeal arises from an enforcement action filed by the FPPC to obtain a civil judgment based on this fine.  Under  Government Code, section 91013.5, the FPPC may file suit and obtain a civil judgment based on an order imposing a fine if, among other things, it shows that the fine was “imposed following the procedures set forth in this title and implementing regulations.”  The case is conducted “following the procedures and rules of evidence as applied in ordinary civil actions.”

Howard and Cicero defended against this claim by arguing that (1) the fine was constitutionally excessive, and (2) the FPPC did not in fact follow its statutory and regulatory procedures.  Both of these claims are correct.

This fine is constitutionally excessive for numerous reasons.  The FPPC imposed such a large fine because it improperly aggregated violations, counting each non-itemized donor as four separate violations: (1) failure to itemize, and failure to provide (2) a street address, (3) occupation information, and (4) employer information.  Moreover, the FPPC imposed this fine without considering the defendants’ financial condition. CAC had raised less than $150,000 in its entire existence and is now defunct, and Howard and Cicero cannot afford to pay the fine.  But the FPPC investigator informed the FPPC that it was confident that CAC could pay the fine, and the FPPC imposed this fine after this false representation.  Also, the FPPC failed to consider Howard’s reason for failing to include identifying information about the donors as a mitigating factor.  And finally, the fine is disproportionate: the FPPC has imposed considerably lower fines on much more egregious conduct, and the FPPC would have imposed a much lower fine on these defendants if they had simply not filed any reports.

Similarly, the FPPC did not follow its statutory and regulatory procedures.  In addition to failing to consider mitigating evidence, the two FPPC officers who conducted the probable cause hearing and imposed the fine had not been properly appointed or delegated their authority.  The Government Code mandates that the FPPC as a body appoint such officers and delegate such authority, but here the Chairman of the FPPC, acting alone, made these appointments and delegated this authority.  In Horcher v. FPPC, a prior superior court action involving a different fined party, this issue was raised and resolved against the FPPC, and the FPPC is now collaterally estopped from asserting that this appointment or delegation was proper.

However, the trial court never reached the merit of these arguments, holding instead that Howard and Cicero^[1] could not raise these defenses in this proceeding.  Howard and Cicero had not appeared in the underlying FPPC proceeding, and the FPPC had imposed a default order against them.  They filed a petition for a writ of administrative mandamus, but this was dismissed because they failed to prosecute it diligently.  Because Howard and Cicero had not raised these defenses earlier, the court held that they could not be raised here.  The trial court granted summary judgment in favor of the FPPC.

The trial court was wrong.  Government Code, section 91013.5 requires that the trial court independently examine whether the FPPC properly followed its procedures and whether the fine is constitutional.  Neither collateral estoppel nor waiver under the exhaustion of judicial remedies doctrine precludes the trial court (or this court) from reaching the merits of Howard and Cicero’s defenses.  Howard and Cicero do not contend that there was no consequence for their failure to defend against the underlying administrative proceeding or to prevail on their writ petition.  To the contrary, Howard and Cicero concede that they have lost the ability to challenge the underlying factual determinations that the FPPC made.  However, they may still defend against the FPPC’s enforcement action by showing that on these facts, the fine was unconstitutional and that the correct procedures were not followed.

 

STATEMENT OF THE CASE

The FPPC imposed an $808,000 administrative fine on the defendants. (AA 218-219.)  The FPPC then sued under Government Code, section 91013.5, to obtain a civil judgment based on this fine.  (AA 1-17.)  The trial court granted the FPPC’s summary judgment motion (AA 485-488, 489-492), and entered a judgment in favor the FPPC for approximately $1.1 million for this fine and prejudgment interest (AA 493).

 

 

STATEMENT OF FACTS AND DETAILED PROCEDURAL HISTORY

A.        The Political Reform Act of 1974.

This case involves the application of the Political Reform Act of 1974, Government Code, section 81000 et seq. (the “Act”).  A short overview of the Act will help place the facts and procedural history of this case in context.

The Act is a comprehensive statute that governs campaign finance, lobbyists, and other election-related activities.  (See generally Gov. Code, § 81001.)  As relevant to this case, the Act mandates several campaign disclosure and recordkeeping requirements.  (See Gov. Code, § 84100 et seq.)  It also establishes the FPPC to enforce, administer, and implement the Act.  (Gov Code, § 83111.)

The FPPC.  Because the FPPC regulates political speech and political activities, the Act imposes very careful limitations and checks on the FPPC to help insure that its decisions are not politically motivated.  Thus, no more than three of the five members of the FPPC may be from the same political party.  (Gov. Code, § 83100.)  The governor must appoint two members from different political parties (Gov. Code, § 83101), and other elected state officials appoint the other three members (Gov. Code, § 83102).  The FPPC as a body must appoint its Executive Director, officers, directors, and employees.  (Gov. Code, § 83107.)

Many provisions require the FPPC to act as a commission.  However, unless otherwise restricted by law, the FPPC may delegate these duties to the chairman or the executive director.  “The Commission may delegate authority to the chairman or the executive director to act in the name of the Commission between meetings of the Commission.”  (Gov. Code, § 83108.)

Enforcement Procedures.  The FPPC can investigate possible violations of the Act.  (Gov. Code, § 83115.)  If the Chief of the FPPC’s Enforcement Division determines that there is probable cause to believe that a violation occurred, the chief shall prepare a “Probable Cause Report” (Cal.Code Regs., tit. 2, § 18361, subd. (d)(1).)  “The probable cause report shall contain a summary of the law and evidence gathered in connection with the investigation, including any exculpatory and mitigating information of which the staff has knowledge and any other relevant material and arguments.”  (Cal.Code Regs., tit. 2, § 18361, subd. (d)(1).)  The FPPC must serve a copy of this report on the subject of its investigation, and the subject may request an informal probable cause conference.  (Cal.Code Regs., tit. 2, § 18361, subd. (d)(3).)

The Government Code requires that the FPPC as a body determine whether there is probable cause to believe a violation occurred. “When the commission determines there is probable cause for believing this title has been violated, it may hold a hearing to determine if a violation has occurred.”  (Gov. Code, § 83116.)  However, by regulation, the FPPC has explicitly delegated this authority to the Executive Director.  “The Executive Director may then find there is probable cause to believe a violation has occurred . . . .”  (Cal.Code Regs., tit. 2, § 18361, subd. (d)(4).)  “If the Executive Director makes a finding of probable cause, he or she shall cause an Accusation to be prepared . . . .”  (Cal.Code Regs., tit. 2, § 18361, subd. (d)(4).) 

The FPPC must serve the Accusation on the suspected violator, and if the accused requests, the FPPC must hold a hearing pursuant to the Administrative Practices Act set forth in Government Code, §§ 11500 et seq.  (Gov. Code, § 83116; Cal.Code Regs., tit. 2, § 18361, subd. (d)(4).)   If the FPPC finds in fact that a violation occurred, it can impose a monetary penalty of up to $2,000 per violation.  (Former Gov. Code, § 83116.)^[2]

Judicial Review and Enforcement.  There are two levels of judicial review for an FPPC order imposing a fine.  First, a party subject to a penalty can file a petition for a writ of administrative mandamus.  “The inquiry in such a case shall extend to the questions whether the respondent has proceeded without, or in excess of jurisdiction; whether there was a fair trial; and whether there was any prejudicial abuse of discretion.”  (Code Civ. Proc., § 1094.5.)

Second, if the fined party is unsuccessful on his petition for a writ of administrative mandate (or does not file such a petition), the FPPC may bring an action to obtain a civil judgment.  “In order to obtain a judgment in a proceeding under this section, the commission or filing officer shall show, following the procedures and rules of evidence as applied in ordinary civil actions, all of the following:

(a) That the monetary penalties, fees, or civil penalties were imposed following the procedures set forth in this title and implementing regulations.

(b) That the defendant or defendants in the action were notified, by actual or constructive notice, of the imposition of the monetary penalties, fees, or civil penalties.

(c) That a demand for payment has been made by the commission or the filing officer and full payment has not been received.” (Gov. Code, § 91013.5.)

Neither the Act nor the case law interpreting it explains why there is a second level of review before the FPPC can obtain a civil judgment and how this level of review differs from, and is affected by, the writ petition.

 

 

B.        The Parties.

The FPPC is an administrative agency with the primary responsibility for enforcing the Act. (Gov. Code, §§ 83100, 83111.)  Since its establishment in the mid-1970s, the FPPC has imposed many fines, most of which were a few thousand dollars.  (See generally AA 291-292, 294-347.)^[3]

CAC is a “general purpose recipient committee” that was organized on March 26, 1992.  (AA 228.)  CAC is now defunct.  (AA 272.)  Howard and Cicero were treasurers of CAC.  (AA 215.)

 

C.        In Violation of Government Code, Section 83107, The Chairman of the FPPC Acting Alone Appoints Robert Tribe and Jeevan Ahuja As FPPC Officers.

The FPPC acting as a body must appoint certain officers.  “The Commission shall appoint an executive director . . . .” and “The Commission shall appoint and discharge officers, counsel, and employees . . . .”  (Gov Code, § 83107.)   In January 1995, the FPPC’s Executive Director resigned and the position remained vacant through at least November 1995.  (AA 431, 433.)

On January 18, 1995, Ravi Mehta, the Chairman of the FPPC, acting alone, appointed Robert Tribe as FPPC Chief Deputy Director and Jeevan Ahuja as FPPC Senior Commission Counsel.  (AA 400.)  Even though the statute and regulations state that the FPPC as a body or the Executive Director must conduct probable cause hearings (Gov. Code, §§ 83115.5, 83116; Cal.Code Regs., tit. 2, § 18361, subd. (d)(4)), Mehta claimed to delegate to Ahuja the authority to conduct probable cause hearings and to determine the existence of probable cause.  (AA 400.)

On July 6, 1995, Mehta — again acting alone — delegated to Steven Churchwell the authority to conduct probable cause proceedings and to determine the existence of probable cause.  (AA 401.)

 

D.        CAC Filed Incomplete Election Reports and Improperly Maintains Its Financial Records.

In 1993 and 1994, CAC was engaged in a contentious campaign for the recall of State Senator David Roberti.  (AA 143.)  The recall election was held in April 1994.  (AA 143.)  Roberti was a proponent of gun control, and his opponents including CAC were depicted in the media as right-wing pro-gun extremists.  (AA 277, 279, 283.)  During this campaign, CAC’s offices were broken into, the home of a leading CAC supporter was broken into, and several CAC supporters received death threats and other harassing telephone calls.  (AA 274, 275, 281.)

Between January 1, 1992 and June 30, 1994, CAC raised approximately $141,559 and spent approximately $103,091.  (AA 143.)  However, CAC committed several reporting and recordkeeping violations of the election laws, including failing to disclose the street addresses and other information about donors.  (See generally AA 221-235.)^[4]  The FPPC began investigating.

Howard viewed the Act as hostile towards non-professional grassroots organizations.  In March 1994, Howard stated in a newspaper interview that “He [Senator Roberti] and his buddies have rigged the system so that the little guy can’t participate without running afoul of technical violations. . . . I guess we won’t meet their little deadlines.”  (AA 156.)

In June 1994, Howard sent FPPC investigator William Motmans a letter discussing the investigation.  (AA 285-287.)  Howard explained why he had not disclosed the donors’ addresses:  “[T]he reason why we withheld donors’ full addresses (only providing name, city, and state) is that some of our donors are engaged in civil disobedience over the Roos-Roberti ban^[[5]] and thus we don’t feel comfortable releasing their home street addresses.  Our concerns were validated when the Daily News published the names of several of our donors who lived in the district, in an apparent attempt to embarrass, harass, and paint them as extremists.”  (AA 285.) 

Howard also offered to let Motmans review copies of all the checks from CAC and its donors.  (AA 285.)  Similarly, on October 25, 1994, Howard wrote to Motmans enclosing copies of bank statements and other correspondence, and offering to cooperate further.  (AA 289.)

On May 9, 1995, the FPPC issued a Report In Support of Finding Probable Cause, accusing CAC, Howard, and Cicero of committing 406 violations of the election laws.  (AA 140-157.)  The report listed Howard’s statement to the press as an aggravating factor.  (AA 156.)  However, the report did not list Howard’s explanation for omitting the donor’s addresses and other identifying information as a mitigating factor; instead, the report stated that there were no mitigating factors.  (AA 156.)  The FPPC mailed copies of this report to Howard and Cicero.  (AA 137-139, 158-159).

The FPPC held a probable cause hearing on June 14, 1995, with Acting Executive Director Jeevan Ahuja presiding.  (AA 160-161.)  At this time, Ahuja had not been appointed by either the FPPC or by the Executive Director (since that position was still vacant); but only by Mehta, acting unilaterally.  (AA 400, 401.)  CAC, Howard, and Cicero did not appear at the hearing.  (AA 160.)  Ahuja dismissed two of the 406 alleged violations and found that there was probable cause to believe that CAC, Howard, and Cicero committed the other 404 violations.  (AA 160-161.)

“Acting Executive Director” Tribe then issued a formal Accusation detailing these 404 alleged violations.  (AA 162-179.)  Like Ahuja, Tribe had been appointed by Mehta acting unilaterally, but not by the FPPC as a commission or by the Executive Director.  (AA 400, 401.)

On August 16, 1995, Cicero wrote to the FPPC, responding to the Accusation and discussing each of the 404 alleged violations.  (AA 215-217.)  Among other things, Cicero noted that “this campaign was a grass roots efforts involving a very few leaders, all of whom had full time jobs, and none of whom, including Russ Howard, were professional political activists.  Most campaign work was done by volunteers who were called in occasionally to do the grunt work.  This fact, in my view, makes the reporting requirements difficult if not impossible to comply with in a timely fashion.” (AA 215-216.)  Cicero noted that he would cooperate as requested, and did “not have the means to retain legal counsel.”  (AA 217.)

Under the Administrative Practices Act, the appellants had 15 days to request a hearing.  (Gov. Code, § 11506, subd(a)(1).)  None did so.  (AA 219.)  On October 20, 1995, Robert Tribe, as “Acting Executive Director” of the FPPC entered a Default Decision and Order finding that CAC, Howard, and Cicero had committed all 404 violations.  (AA 218-219.)  The FPPC entered the maximum fine of $2,000 per violation, or $808,000 total.  (AA 219.)

The FPPC found the appellants had committed the following violations:

(Reporting Violations)

Count 1:  CAC was required to file semi-annual campaign statements.  (Gov. Code, § 84200, subd. (a).)  CAC filed its July-December 1993 semi-annual statement 53 days late.  (AA 223, 228-229.)

Count 2:  CAC failed to file its January-June 1994 semi-annual statement.  (AA 223. 229.)

Count 3: CAC was required to report “late contributions” within 24 hours of receipt.  (Gov. Code, § 84203.)  A “late contribution” is a contribution of $1,000 or more made between the last reporting period and the election.  (Govt. Code, § 82036.)  CAC failed to report a $4,950 non-monetary contribution made on April 8, 1994.  (AA 223-224, 229.)

Counts 4 - 96: For each contribution of $100 or more, CAC was required to itemize the contribution, and then disclose, among other things, the person’s address, occupation, and certain information about the person’s employer.  (Govt. Code, § 84211, subd(f)(2)-(4).)  Between January 1, 1992 and June 30, 1994, CAC failed to report occupation information for 93 contributions.  (AA 221, 224, 229-230.)  This represented 100% of the contributions requiring such information.  (AA 229.)

Counts 97 - 187: Between January 1, 1992 and June 30, 1994, CAC failed to report employer information for 91 contributions.  (AA 221, 224, 230.)  This represented 98% of the contributions requiring such information.  (AA 230.)

Counts 188-250:  Between January 1, 1992 and June 30, 1994, CAC failed to itemize 63 contributions of $100 or more. (AA 221, 224, 230.)

Counts 251-355:  Between January 1, 1992 and June 30, 1994, CAC failed to report the street addresses of 105 contributions of $100 or more. (AA 221, 224, 230-231.)  This represented 100% of the contributions requiring such information.  (AA 224, 230.)  However, CAC did disclose the city and state of 98 of these 105 contributors.  (AA 230.)

Counts 356 and 357: CAC was required to disclose its contributions and expenditures.  (Govt. Code, § 84211, subd(a), (b).)  CAC’s contributions in 1992 were understated by $2,024, and its expenditures from 1992 - 1994 were understated by $10,408.  (AA 222, 225, 231.) 

Count 358 - 392: For each person to whom an expenditure of $100 or more was made, CAC was required to disclose, among other things, the person’s street address.  (Govt. Code, § 84211, subd. (j)(2).)  CAC failed to disclose the street addresses of 35 payees.  (AA 222, 225, 231.)

Counts 393 - 396: For each contribution CAC made, CAC was required to file “allocation pages” showing the amount and date of the contribution.  (Govt. Code, § 84211, subd. (j)(5).)  CAC failed to file four allocation pages to report such contributions.  (AA 222, 225, 231-232.)

Count 397: CAC was required to notify contributors of $5,000 or more that they may be required to file certain campaign reports.  (Govt. Code, § 84105.)  CAC failed to do so with two of its contributors.  (AA 222, 225, 232.)

(Recordkeeping Violations)

Counts 398-404:  CAC was required to maintain sufficient records to prepare the necessary filings.  (Govt. Code, § 84104.)  CAC failed to maintain adequate records of invoices and receipts (Count 398), bank statements (Count 399), copies of contributor checks or a receipt journal (Count 400), contributor’s employer and occupation information (Count 401), non-monetary contributions (Count 402), dates contributions were made (Count 403), and certain mass mailings (Count 404).  (AA 222, 232-234, 226-227.)

Thus, 352 of these 404 violations (Counts 4 - 355) were for failing to itemize contributions of more than $100 and failing to disclose these contributors street addresses, occupations, and employer information.  Another 35 violations (Counts 358 - 392) were for failing to disclose the street addresses of payees.

On November 2, 1995, the FPPC met and considered whether to impose the recommended fines.  (AA 468-471.)  The FPPC Chief of Enforcement Darryl East explained that the FPPC has not been able to obtain compliance for over two years and that the respondents have “blatantly spoken out in the media on their disregard for the laws of the FPPC.”  (AA 470.)  One commissioner asked East about the likelihood of collecting on such a large fine.  (AA 470.)   East did not indicate that CAC was defunct, that it had raised only $141,559 in its 3-year history, or that Cicero could not even afford an attorney.  Instead, “Mr. East responded that the CAC is still a viable committee, and that staff is in the process of searching for assets and he is, therefore, optimistic that collection efforts will be successful.”  (AA 470.)  The FPPC adopted the Default Decision and Order and imposed the full $808,000 fine.  (AA 220, 470.)

 

E.        The FPPC Sues Howard, Cicero, and CAC.

On January 3, 1996, the FPPC sued Howard, Cicero, and CAC under Government Code, sections 83116 and 91013.5, seeking to obtain a civil judgment based on its order imposing the $808,000 penalty.  (AA 1-17.)  On January 17, 1996, the appellants answered and filed a cross-complaint and petition for a writ of mandate, seeking to vacate the order.  (AA 38.)^[6]

 

F.        After the FPPC Proceedings Were Completed, The FPPC Acting As A Body Appoints Tribe As An Acting Co-Executive Director.

On April 4, 1996 — well after the FPPC proceedings involving these defendants were completed — the FPPC acting as a body appointed Tribe and Churchwell as “Acting Co-Executive Directors.”  (AA 415-416.)

 

G.        The Trial Court Dismissed The Defendant’s Writ Petition For Failure to Prosecute and Grants Summary Judgment for the FPPC.

The parties agreed to try the defendants’ writ petition before the FPPC’s enforcement action.  (AA 54-55.)  The defendants did not pursue their petition for over four years, and on May 12, 2000, the FPPC moved to dismiss the petition for delay in prosecution.  (AA 32-56.)  The trial court granted the motion and dismissed the writ petition.  (AA 107-109, 110-111.)^[7]

On December 4, 2000, the FPPC moved for summary judgment in its enforcement action.  (AA 112-248.)  The FPPC argued that the undisputed facts show that it had imposed the $808,000 fine pursuant to the procedures established by the Act and that the other requirements of Government Code, § 91013.5 were met. (AA 120-122).  Howard and Cicero defended against the motion on several grounds.  They argued that the fine was unconstitutionally excessive (AA 260-266) and that the FPPC’s order imposing the fine was void because the FPPC “acting executive director” had not been properly appointed by the FPPC as a body at the time of the probable cause hearing.  (AA 356-364.)  As support for this latter contention, the defendants requested that the court take judicial notice of several documents from Horcher v. FPPC, a Sacramento Superior Court case in which the trial court held that the Chairman Mehta’s unilateral appointment of Churchwell as “Acting Executive Director” during this time was improper.  (AA 380-433.)

The trial court granted Howard and Cicero’s request to take judicial notice but nonetheless granted the FPPC’s summary judgment motion.  (AA 485-488, 489-492.)  The trial court ruled that the FPPC’s order “may have been in excess of its jurisdiction and therefore voidable, but not void ab initio.”  (AA 490.)  Since the defendants had not challenged this order in the FPPC hearing and since their petition for a writ of administrative mandamus had been dismissed, it was simply too late for them to raise this argument as a defense in this lawsuit. (AA 490-491.)  Similarly, the trial court ruled that the defendants’ constitutional claims could not be raised here since the defendants did not appear at the administrative hearing.  (AA 487.)

The trial court entered judgment for the FPPC for $808,000 plus $287,513.33 in pre-judgment interest. (AA 493.)  Howard and Cicero appealed.  (AA 495-499.)

 

STATEMENT OF APPEALABILITY and STANDARD OF REVIEW

This is an appeal from a final judgment.  (AA 493.)  A final judgment is appealable.  (Code Civ. Proc., § 904.1, subd. (a).)  On appeal, a summary judgment is reviewed de novo.  (Hansen Mechanical, Inc. v. Superior Court (1995) 40 Cal.App.4th 722, 726-727.)

 

LEGAL ARGUMENT

 

I.          THE PROCEDURAL POSTURE AND SCOPE OF THE APPEAL.

A.        Summary of the Argument.

In the trial court and on appeal, Howard and Cicero defended against the FPPC’s lawsuit on two broad grounds: (1) the penalty in this case — $808,000 against a small defunct grass-roots organization and two individuals who cannot afford to pay the fine — was unconstitutionally excessive; and (2)  the FPPC did not follow its procedures in several important ways.  However, the trial court found that it was too late for Howard and Cicero to assert these claims because they had not appeared at the underlying FPPC hearing and had not prevailed on their writ of administrative mandamus.  (AA 490-491.)  The threshold issue in this case is whether Howard and Cicero may assert these defenses, given the case’s procedural posture.

Unless precluded by some legal rule, a defendant may always assert that the remedy the plaintiff seeks is unconstitutional or that the plaintiff has failed to meet a statutory element of his cause of action.  Collateral estoppel and the exhaustion of judicial remedies doctrine sometimes bar such defenses, but these doctrines are inapplicable here.

Many enforcement statutes permit an administrative agency to enforce an order imposing a penalty simply by filing a certified copy of the order with the court clerk.  The order then functions as an enforceable judgment, and the administrative agency can obtain a writ of execution, place a lien on the defendant’s property, and enforce the order the way any civil judgment is enforced.^[8]  However, the Legislature did not allow the FPPC to enforce its administrative orders in this summary fashion.  Instead, the Legislature required the FPPC to file a civil lawsuit and obtain a civil judgment.  (Gov.  Code, § 91013.5.)  By mandating that the FPPC pursue this civil lawsuit, the Legislature intended for the trial court to exercise the same level of review and scrutiny it does in any civil lawsuit.  This includes making the determination whether the statutory elements have been met and whether the fine is constitutional.

The trial court here found that it was simply too late for Howard and Cicero to raise these defenses.  While neither the trial court nor the FPPC ever precisely explained the legal basis for this conclusion, the trial court could have based its conclusion on one of three legal theories: (1) Howard and Cicero were collaterally estopped from asserting these defenses based on the implicit factual findings in the Default Decision and Order issued by the FPPC; (2) Howard and Cicero were collaterally estopped from asserting these defenses based on the implicit factual findings in the order dismissing of their petition for a writ of administrative mandamus; (3) Howard and Cicero waived their right to assert these claims under the doctrine of exhaustion of judicial remedies.  None of these arguments prevail, as Howard and Cicero demonstrate next.

 

B.        Howard And Cicero Are Not Collaterally Estopped From Asserting Their Defenses Based on Their Failure to Contest the Underlying Administrative Proceeding.

“Collateral estoppel precludes a party to an action from relitigating in a second proceeding matters litigated and determined in a prior proceeding.”  (People v. Sims (1982) 32 Cal.3d 468, 477.)  “Collateral estoppel may be applied to decisions made by administrative agencies ‘[w]hen an administrative agency is acting in a judicial capacity and resolves disputed issues of fact properly before it which the parties have had an adequate opportunity to litigate . . . .’ [Citation]” (Id. at p. 479, quoting U.S. v. Utah Constr. Co. (1966) 384 U.S. 394, 422, 86 S.Ct. 1545, 1560, 16 L.Ed.2d 642, emphasis added by California Supreme Court.)  Thus, the factual determinations made in the FPPC proceeding — what the parties did and failed to do, when certain events occurred — are certainly binding on the parties now, and Howard and Cicero do not contest them in this appeal.

However, collateral estoppel does not apply to the legal issues of whether the FPPC followed the proper procedures and whether the FPPC’s fine was unconstitutionally excessive.  The FPPC can only bring an action under Government Code, section 91013.5, if it already issued an order imposing a penalty.  If the FPPC’s underlying order could establish by collateral estoppel that it followed the correct procedures, the FPPC could then always establish that it used the correct procedures.  The statutory requirement contained in Government Code, section 91013.5 would then be redundant and irrelevant.  Such a result makes no sense.  By explicitly requiring the FPPC to establish this element, the Legislature must have intended that the FPPC must independently establish this element in the enforcement proceeding.

Perhaps for this reason, collateral estoppel does not apply in other enforcement proceedings.  For example, under the “Uniform Foreign Money‑Judgments Recognition Act,” Code of Civil Procedure, section 1713, et seq., foreign money judgments are enforceable in California.  (Code Civ. Proc., §§ 1713.2, 1713.3.)  However, if the foreign money judgment meets any one of nine criteria for non-recognition, a California court need not recognize the judgment.  (Code Civ. Proc., § 1713.4.)  California courts will permit a defendant seeking to avoid enforcement of this judgment to show one of these non-recognition criteria is met, and in making this determination, the court gives no deference to the foreign court’s resolution of such matters.  (Julen v. Larson (1972) 25 Cal.App.3d 325 [court concluded that foreign court did not have personal jurisdiction over the defendant without examining whether this issue was resolved in foreign court]; Bridgeway Corp. v. Citibank (2nd Cir. 2000) 201 F.3d 134, 142-144^[9] [Liberian judgment not recognized because Liberian courts during Liberian civil war did not provide “impartial tribunals or procedures compatible with the requirements of due process of law”]; Telnikoff v. Matusevitch (1997) 347 Md. 561, 702 A.2d 230 [British libel judgment was contrary to the public policy of Maryland, and thus unenforceable in Maryland under section 4(b)(3) of uniform act]; Bachchan v. India Abroad Publications (1992)154 Misc.2d 228, 585 N.Y.S.2d 661 [British libel action contrary to public policy of New York and thus unenforceable there].)

In contrast, when a second court must defer to an earlier court’s determination on a legal matter, the Legislature will typically mandate the standard of review explicitly in the statute.  For example, a federal court can grant a state prisoner’s habeas petition only if the state court’s decision was “contrary to, or involves an unreasonable application of, clearly established federal law as determined by the Supreme Court of the United States.”  (28 U.S.C. § 2254(d)(1); Tran v. Lindsey (9th Cir. 2000) 212 F.3d 1143 [explaining this standard].)

The Act here does not explain that the trial court must defer in any way to the FPPC’s decision.  To the contrary, the Act requires that the FPPC show that the statutory elements are met “following the procedures and rules of evidence as applied in ordinary civil actions.”  (Gov. Code, § 91013.5.)

Similarly, the FPPC cannot rely on collateral estoppel to preclude Howard from arguing that the fine was unconstitutionally excessive.  As part of a civil case, a defendant may always object to a judgment on the ground that it does not comply with the federal or state constitution, just as a defendant may object to a judgment on the ground that the plaintiff has not shown the required elements of his cause of action.  A court has not just the power, but also the responsibility, to refuse to enter an unconstitutional judgment or order.  For example, in City and County of San Francisco v. Sainez (2000) 77 Cal.App.4th 1302, the Court of Appeal noted that a statute that imposed a $1,000 per day fine for a violation did not give the trial judge discretion to impose a lower amount as a penalty, but nonetheless, the judge had such power as a constitutional matter.

“The judge correctly concluded that the Housing Code gave him no discretion to impose less than $1,000 per day of violation.   But he also stressed that he had the power and duty to decide whether the penalty violated due process as applied and that such factors as defendants’ culpability and financial situation were relevant to his task.”  (Id. at p. 1313.)

Other courts agree.  (See U.S. v. Advance Tool Co. (W.D. Mo. 1995) 902 F.Supp. 1011, 1018-1019 [district court reduced non-discretionary penalty from $3,430,000 to $365,000 because full penalty would have violated Excessive Fines Clause]; U.S. ex rel. Smith v. Gilbert Realty Co (E.D.Mich.1993) 840 F.Supp. 71 [district court reduced non-discretionary penalty from $290,000 to $35,000 because full penalty would have violated Excessive Fines Clause]; see generally Barnes Freight Line, Inc. v. I. C. C. (5th Cir. 1978) 569 F.2d 912, 923 [“[J]udges ‘must refuse to enforce administrative orders which they find to be unjust . . .’”], quoting NLRB v. Rex Disposables (5th Cir. 1974) 494 F.2d 588, 592.)

The enforcement statute here requires the court to use “the procedures . . . applied in ordinary civil actions,” (Gov. Code, § 91013.5), and this includes the power to refuse to enter an unconstitutional judgment.  Since the FPPC will always have an administrative order if it pursues an enforcement action, it will always be able to claim that the fine is constitutional because of collateral estoppel.  Nothing suggests that the Legislature intended the court in this enforcement action, unlike every other civil action, to be effectively precluded from ruling on whether the FPPC’s penalty was unconstitutional.

 

C.        Howard And Cicero Are Not Collaterally Estopped From Asserting Their Defenses Based on The Dismissal of Their Petition for Writ of Administrative Mandamus.

Howard and Cicero’s petition for a writ of administrative mandamus was dismissed on the ground that they failed to prosecute it.  The FPPC may argue that this dismissal collaterally estops Howard and Cicero from arguing that the proper procedures have not been following.

This argument does not prevail.  Before collateral estoppel can apply, “the decision in the prior litigation must be final and on the merits. . . .”  (Lucido v. Superior Court (1990) 51 Cal.3d 335, 341; Branson v. Sun‑Diamond Growers (1994) 24 Cal.App.4th 327, 346.  However, a dismissal for failure to prosecute “is not one upon the merits [citations] and it does not bar a subsequent action upon the same cause. [Citations.]” (Lord v. Garland (1946) 27 Cal.2d 840, 850; Gonsalves v. Bank of America (1940) 16 Cal.2d 169, 172‑173, 105 P.2d 118; [“it is a fundamental rule that a judgment is not res judicata unless it is on the merits, and a dismissal for delay in prosecution is not.”]; Stephan v. American Home Builders (1971) 21 Cal.App.3d 402, 406; Mattern v. Carberry (1960) 186 Cal.App.2d 570, 572 [“It is established California law that a dismissal for want of prosecution is not on the merits and therefore does not operates as res judicata to a subsequent proceeding”].)

Because the trial court never reached the merits of these defenses, collateral estoppel does not apply.

D.        The Exhaustion of Judicial Remedies Doctrine Does Not Bar Howard And Cicero From Asserting Their Defenses.

As shown above, the FPPC cannot rely on collateral estoppel to preclude Howard and Cicero from asserting their defenses in this action.  However, the FPPC may assert that the exhaustion of judicial remedies doctrine precludes Howard and Cicero from asserting these defenses.  Under this doctrine, if a party can challenge an administrative order by a writ of administrative mandamus and fails to do so, that party is bound by the factual findings of the agency.

This doctrine does not help the FPPC here.  Howard and Cicero do not dispute that they are bound by the FPPC’s factual findings.  Their contention is that these facts, along with other facts not in dispute, show that the FPPC did not follow its own procedures and that the penalty here is unconstitutionally excessive.  The exhaustion of judicial remedies doctrine does not preclude them from asserting these legal defenses based on FPPC’s factual findings.

The California Supreme Court explained the exhaustion of judicial remedies doctrine in Johnson v. City of Loma Linda (2000) 24 Cal.4th 61.  There, a city terminated one of its employees.  The employee claimed he was terminated in retaliation for opposing sexual harassment, and thus his termination violated FEHA and Title VII, but the city claimed that the employee was terminated for economic reasons.  The city personnel board — a quasi-judicial administrative agency — found as a factual matter that the employee was terminated for economic reasons.  After a long delay, the employee failed a lawsuit against the city and a petition for a writ of administrative mandamus.  The trial court dismissed the writ petition because of laches.  The court then held that the employee was bound by the board’s factual findings since he had not prevailed on his writ.

The California Supreme Court affirmed and explained the exhaustion of judicial remedies doctrine: “[U]nless a party to a quasi-judicial proceeding challenges the agency’s adverse findings made in that proceeding, by means of a mandate action in superior court, those findings are binding in later civil actions. [Footnote omitted].”  (Id. at pp. 69-70.)^[10]

The rule applies to factual findings.  “The rule is based on respect for the agency’s quasi-judicial factfinding procedure. [Citation.].” (McDaniel v. Board of Education of the Mountain View School District (1996) 44 Cal.App.4th 1618, 1622, citing Westlake Community Hosp. v. Superior Court (1976) 17 Cal.3d 465, 484.)  Other cases applying this doctrine limits the facts a party may assert in later litigation, but no case has applied the doctrine to limit a party’s legal defenses.  (See, e.g., Castillo v. City of Los Angeles (2001) 111 Cal.Rptr.2d 870, 2001 WL 1106132 [terminated employee who lost petition for writ of administrative mandamus challenging decision of city civil service commission was bound by factual findings of commission]; Briggs v. City of Rolling Hills Estates (1995) 40 Cal.App.4th 637 [landowner’s failure to challenge zoning decision by administrative mandate was bound by factual findings and precludes civil rights action];  Knickerbocker v. City of Stockton (1988) 199 Cal.App.3d 235 [police officer’s failure to challenge demotion precluded some, but not all, factual claims in subsequent lawsuit]; City of Fresno v. Superior Court (1987) 188 Cal.App.3d 1484 [employee’s failure to pursue writ of administrative mandamus bars action for damages based on same factual claims].)^[11]

No California case has explained when the doctrine of exhaustion of judicial remedies should not be applied.  However, the Wisconsin Supreme Court — in a case extremely similar to this one — has examined the doctrine carefully and set forth four factors to consider is determining whether to apply the doctrine.  In County of Sauk v. Trager (1984) 118 Wis.2d 204, 346 N.W.2d 756, the Sauk County zoning board found that the defendant Trager’s partially completed garage violated a recently enacted zoning ordinance.  The county zoning board ruled that Trager would have to remove the garage.  Trager could have sought judicial review of this decision by filing a writ petition, but simply failed to do so.  The county then sued Trager, seeking a mandatory injunction requiring him to remove the garage.  Trager defended against this claim on the ground that the ordinance did not apply to him.  The trial court agreed, held that zoning board’s decision was erroneous, and dismissed the county’s lawsuit.  On appeal, the Wisconsin Supreme Court affirmed.

The court rejected the county’s argument that Trager was precluded from asserting this argument because he failed to exhaust his judicial remedies.  The court began by noting that the exhaustion of administrative remedies doctrine covers three categories of cases:

“The exhaustion doctrine is typically applied when a party seeks judicial intervention before completing all the steps prescribed in the hierarchy of administrative agency proceedings. . . .

[¶]

“The exhaustion doctrine is also applied when a party does not follow the statutorily prescribed procedure for judicial review of an agency decision and seeks judicial review in a different forum or proceeding.   In such a case it is generally the party aggrieved by an administrative decision who seeks judicial assistance by initiating an action challenging the agency’s decision.

[¶]

“This case thus involves still another situation in which the exhaustion doctrine has been applied.  In this third type of case, the administrative agency initiates a civil proceeding to enforce the agency’s decision and the party aggrieved by the decision has not sought judicial review pursuant to the statutes but seeks to defend against the enforcement action by challenging the validity of the agency decision.”  (County of Sauk, supra, 118 Wis.2d at pp. 210-212, 346 N.W.2d at pp. 759-760.)

Thus, the first category refers to what California courts call exhaustion of administrative remedies; the second category refers to exhaustion of judicial remedies where party failing to obtain judicial review is the plaintiff in the second litigation, and the third category refers to exhaustion of judicial remedies where the party failing to obtain judicial review is a reluctant defendant in an action brought by the administrative agency itself.  Both Trager and this case fall in the third category. “Trager is the reluctant defendant in a court action initiated by the administrative agency.”  (Id. at 212, 346 N.W.2d at 760.)

The Trager court then reaffirmed the rule that review by writ petition was generally the exclusive method for challenging an administrative agency’s decision. (Id. at pp. 213-214, 346 N.W.2d at p. 761.)  However, this rule is not absolute, and a court should permit a defendant in an enforcement proceeding who did not prevail on a writ petition nonetheless to challenge an administrative decision if, on balance, the following four factors weigh in favor of permitting such a defense: (1) the legal issues are the same in the writ petition and the enforcement action, (2) there are no factual disputes being raised, (3) the administrative agency’s decision is suspect on its face, and (4) not permitting the defendant to present his defense would be harsh.  (Id. at p. 215-216, 346 N.W.2d at pp. 761-762.)  The court applied these factors, found they all weighed in favor of permitting Trager to raise his defenses, and reached these defenses on their merits.  (See also Town of Menasha v. B & B Race Car Engineering (1992) 172 Wis.2d 419, 493 N.W.2d 250 [following Trager and permitting a taxpayer who failed to follow statutory procedures for obtaining an exemption to argue as a defense in an enforcement action that he was not subject to the tax].)

California courts will not apply the exhaustion of judicial remedies doctrine in appropriate cases.  In Hypolite v. Carleson (1975) 52 Cal.App.3d 566, the Court of Appeal held that the doctrine would not be applied to plaintiffs in class action suit, almost all of whom had not exhausted their judicial remedies, because doing so “would also render a class action, which we have held to be proper in the present case, both unnecessary and meaningless.”  (Id. at p. 584.)  However, no California case has set forth comprehensive criteria identifying when the doctrine should and should not be applied.  Howard and Cicero contend that the Wisconsin Supreme Court’s four-factor test set forth in Trager, supra, does identify appropriate criteria, and this court should explicitly adopt this test.

Applying these four factors here shows that Howard and Cicero should not be barred from presenting their defenses.

First, Howard and Cicero’s defenses here are the same as they raised in their writ petition.  (See AA 24-25  ¶¶ 8. 9 [fine violated Excessive Fines Clause and was imposed in excess of jurisdiction].)

Second, Howard and Cicero are not presenting any factual disputes.  Their arguments are based on facts the FPPC determined to be true in the underlying case and other undisputed facts.

Third, the administrative agency’s decision is suspect on its face.  This fine was the largest fine the FPPC has ever imposed (AA 450), and it was imposed on a small grass-roots organization and two individuals, neither one of whom can afford to pay it.  It was imposed by two “Acting Executive Directors,” neither one of whom had been properly appointed.  (See Section III, post.)  Moreover, in determining the amount of the fine, the FPPC considered the fact that Howard “blatantly spoken out in the media on [his] disregard for the laws of the FPPC” (AA 470), and it failed to consider Howard’s reasons for failing to disclose identifying information about his donors.  These facts raise troubling questions about the propriety of this fine.

Fourth, not permitting Howard and Cicero to present his defense would be harsh.  CAC is defunct (AA 272), and neither Howard nor Cicero has the means to pay this enormous fine (AA 217, 272).  Moreover, there is a serious question as to whether the fine would be dischargeable in bankruptcy.  (See 11 U.S.C. § 523(a)(7) [exempting fines and penalties payable to the government from discharge under Chapter 7].)  This fine has the potential to ruin Howard and Cicero’s lives, inflicting huge losses on them and effectively precluding them from buying a house or accumulating assets.  It would be unduly harsh if the FPPC were permitted to obtain this huge judgment against Howard and Cicero without the trial court considering the merits of their constitutional and statutory challenges.

The FPPC may argue that this situation is analogous to a party who failed to raise an  argument in the trial court but then seeks to assert this argument on appeal.  This claim does not prevail.  “[A] party may advance a new theory on appeal when the issue is a question of law based on undisputed facts and involves an important question of public policy.”  (Luck v. Southern Pacific Transportation Co. (1990) 218 Cal.App.3d 1, 17, n. 10; Ward v. Taggart (1959) 51 Cal.2d 736, 742 [“Although this theory of recovery was not advanced by plaintiffs in the trial court, it is settled that a change in theory is permitted on appeal when ‘a question of law only is presented on the facts appearing in the record. . . .’ [Citations]”].)   And court are particularly reluctant to fine a party waived an important constitutional claim.  “Moreover, although California authorities on the point are not uniform, our courts have several times examined constitutional issues raised for the first time on appeal, especially when the enforcement of a penal statute is involved [citation], the asserted error fundamentally affects the validity of the judgment [citation], or important issues of public policy are at issue [citation].”  (Hale v. Morgan (1978) 22 Cal.3d 388, 394 [permitting party to argue on appeal that a fine was unconstitutionally excessive].)  Howard and Cicero have not waived their right to assert their defenses.

The FPPC may also argue that permitting Howard and Cicero to raise these defenses in this enforcement action will allow them to ignore the rules of procedure without suffering any adverse consequences.  However, Howard and Cicero have suffered adverse consequences.  By not participating in the original FPPC proceeding, they lost their right to defend against the FPPC’s charges on their merits before a tribunal empowered to resolve factual disputed in the first instances.  By not prosecuting their writ of administrative mandamus, they lost their right to challenge the FPPC’s factual determinations at all.  The only limited arguments that Howard and Cicero may present at this point are that the FPPC failed to meet the procedural requirements explicitly set forth in Government Code, section 91013.5 and that the penalty is unconstitutional based on undisputed facts.  As the Wisconsin Supreme Court noted when rejecting this same argument,

“Not many will be foolhardy enough to forego judicial review and run the risk of prosecution, of being barred from asserting defenses in an enforcement action, and of paying a substantial forfeiture.  Regardless of the outcome of this case there is sufficient incentive for an aggrieved party to comply with [writ petition] review procedures.”  (County of Sauk, supra, 118 Wis.2d at p. 217, 346 N.W.2d at pp. 762.)

In short, the Trager factors all weigh strongly in favor of not applying the exhaustion of judicial remedies doctrine.

 

E.        Conclusion.

The Legislature explicitly required the FPPC to seek an ordinary civil judgment to enforce its administrative penalties.  In doing so, the Legislature added a second layer of judicial review to FPPC proceedings before the FPPC could obtain a civil judgment.  Before the trial court provides the FPPC with a civil judgment to enforce a penalty, the Legislature intended for the trial court to confirm that the FPPC followed the correct procedures in imposing the penalty and that the penalty is not unconstitutional.  If these claims had actually been tried on their merits in the administrative writ proceeding, collateral estoppel would bar Howard and Cicero from relitigating these matters.  But the trial court never reached the merits of these claims, and neither collateral estoppel nor the doctrine of exhaustion of judicial remedies requires that the trial court ignore these judicial duties and enter a judgment based on an order that was imposed following the incorrect procedures or that is unconstitutionally excessive.  This court should decide Howard and Cicero’s defense on their merits.

 

II.        THE FPPC’S PENALTY IS UNCONSTITUTIONALLY EXCESSIVE.

 

A.        The Due Process Clause, the Excessive Fines Clause, and the Judicial Powers Clause All Prohibit An Administrative Agency From Imposing An Excessive or Unreasonable Fine.

The FPPC imposed an $808,000 penalty on a defunct grass-roots political organization and two individuals, none of whom cant pay this penalty, for filing late or incomplete reports and failing to keep proper records.  This is the largest fine the FPPC has ever imposed.  (AA 450.)  The FPPC imposed this fine without considering the parties’ wealth, income, or ability to pay, ignored mitigating evidence, and apparently was influenced by the fact that the parties failed to participate in the proceedings.  The fine is not compensatory; it is merely punitive.  The fine is disproportionate to fines imposed on others and to fines that could have been imposed on Howard and Cicero for more egregious violations.  As such, this fine is excessive and unreasonable.  As such, it violates three important constitutional provisions:  the Due Process Clause of both the federal and state constitution, the Excessive Fine Clause of both the federal and state constitutions, and the Judicial Powers Clause of the California constitution.

Courts do not favor imposing such penalties.  “‘Penalties and forfeitures are not favored by the courts, and statutes imposing penalties or creating forfeitures must be strictly construed.’ [Citation]” (Waterman Convalescent Hosp. v. Jurupa Community Services Dist. (1997) 53 Cal.App.4th 1550, 1556.)  One reason for careful judicial review of such fines is that the government has a systematic incentive to impose excessive fines, as the U.S. Supreme Court has recognized:

“There is good reason to be concerned that fines, uniquely of all punishments, will be imposed in a measure out of accord with the penal goals of retribution and deterrence.  Imprisonment, corporal punishment, and even capital punishment cost a State money;  fines are a source of revenue.   As we have recognized in the context of other constitutional provisions, it makes sense to scrutinize governmental action more closely when the State stands to benefit.”  (Harmelon v. Michigan (1991) 501 U.S. 957, 978 n.9, 111 S.Ct. 2680, 2693 n. 9, 115 L.Ed.2d 836.)

All three of these constitutional provisions prohibit unreasonable or excessive fines.  There is no bright line test for determining whether a fine is unreasonable or excessive; instead, all three of these constitutional provisions require that a court examine a variety of non-exclusive factors and determine, on balance, whether the fine is excessive or unreasonable.

In Hale v. Morgan, supra, 22 Cal.3d 388 (“Hale”), the California Supreme Court held that an excessive statutory penalty violated the Due Process Clause.  There, an individual landlord of a mobile home park disconnected the electric and water hookups to the mobile home of a tenant who had never paid his $65 monthly rent.  However, a statute imposed a $100 per day fine on a landlord who disconnects utilities.  The tenant sued and won a $17,300 judgment, representing the $100 daily fine imposed over 173 days.

The California Supreme Court reversed, holding that the fine was unconstitutionally excessive, and thereby violated the Due Process Clause of both the federal and state constitutions.  (U.S Const., 14th Amend.; Cal. Const. art. 1, § 7.)  The court noted that “a state may impose reasonable penalties as a means of securing obedience to statutes” but that “‘oppressive’ or ‘unreasonable’ statutory penalties may be invalidated as violative of due process.” (Id. at p. 398.)  To determine whether the penalty was oppressive or unreasonable, the court identified and examined several factors, such as the defendant’s wealth and the proportionality of the fine.^[12]  The court did not attempt to excuse the landlord’s conduct; it merely held that the imposed fine was excessive.  “[D]efendant’s response to plaintiff’s failure to pay rent was hardly exemplary. His conduct, while doubtless provoked, is subject to censure and justifies sanctions. [¶] We are of the view, however, that under all of the circumstances of this case the amount of the penalties is constitutionally excessive.”  (Id. at p. 405.)

Like the Due Process Clause, the Excessive Fines Clause of both the federal and state constitutions prohibit excessive fines.  “Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.”  (U.S. Const., 8th Amend.)  “Cruel or unusual punishment may not be inflicted or excessive fines imposed.”  (Cal. Const., art. 1, § 17.)  “This clause ‘limits the government’s power to extract payments, whether in cash or in kind, “as punishment for some offense.”’” (Austin v. United States (1993) 509 U.S. 602, 609-610, 113 S.Ct. 2801, 2805, 125 L.Ed.2d 488.)^[13]  In fact, one justice would have decided Hale on the ground that the Excessive Fines Clause, rather than the Due Process Clause, prohibited the unreasonable and excessive fine in that case.  (Hale,  22 Cal.3d at pp. 407-409 (Newman J., concurring).)

Similarly, the Judicial Powers Clause of the California Constitution limits an administrative agency’s authority to impose excessive fines.  “The judicial power of this State is vested in the Supreme Court, courts of appeal, superior courts, and municipal courts.” (Cal. Const., art. 6, § 1.)  In McHugh v. Santa Monica Rent Control Bd. (1989) 49 Cal.3d 348, the California Supreme Court analyzed this clause and explained that because most administrative agencies do not possess judicial power (id. at p. 355),^[14] the Judicial Powers Clause imposes substantive restrictions on the relief such agencies can award.  An agency

“may constitutionally hold hearings, determine facts, apply the law to those facts, and order relief — including certain types of monetary relief — so long as (i) such activities are authorized by statute or legislation and are reasonably necessary to effectuate the administrative agency’s primary, legitimate regulatory purposes, and (ii) the ‘essential’ judicial power (i.e., the power to make enforceable, binding judgments) remains ultimately in the courts, through review of agency determinations.”  (Id. at p. 372.)

The court upheld the authority of the rent-control board to determine whether a landlord charges excess rents (id. at p. 375), but it also held that the rent-control board could not constitutionally impose treble damages on the landlord because such power “poses a risk of producing arbitrary, disproportionate results that magnify, beyond acceptable risks, the possibility of arbitrariness inherent in any scheme of administrative adjudication.”  (Id. at p.  379.)

In Walnut Creek Manor v. Fair Employment and Housing Commission (1991) 54 Cal.3d 245, the Supreme Court revisited the Judicial Power Clause and held that an administrative agency does not have the power to award substantial punitive damages.  “Whereas the award of limited punitive damages is in keeping with the overall remedial thrust of the act, the award of substantial cumulative punitive damages, as in this case, would be disproportionately punitive and sharply at odds therewith.  Unlike the primarily equitable and corrective remedies authorized by section 12987, ‘[p]unitive damages . . . are neither equitable nor corrective; punitive damages serve but one purpose — to punish and through punishment, to deter.’ [Citation]” (Id. at p. 271.)  The court then upheld the administrative agency’s $1,000 punitive damage award, but suggested that a larger award would be in excess of agency’s powers.  (Ibid.)

Thus, even more than treble damages or excessive punitive damages, an excessive or unreasonable fine is, by its very nature, not “reasonably necessary to effectuate the administrative agency’s primary, legitimate regulatory purposes.”  In such a case, a smaller fine would serve these purposes without creating the risk of “arbitrary, disproportionate results.”

These three constitutional clauses limit the power of the government to impose excessive or unreasonable fines.  As Howard and Cicero show next, the fine imposed here violates all three of these provisions.

 

B.        The $808,000 Fine Imposed Here Is Excessive And Unreasonable.

In determining whether a fine is excessive or unreasonable, and thus whether it violates the Due Process Clauses, the Excessive Fines Clauses, or California’s Judicial Power Clause, courts examine several factors.  The legal inquiry is almost identical under these three provisions, and the factors court examine under these three provisions are identical and overlapping.  When these factors are applied to the fine in this case, they show unmistakably that this fine imposed here was excessive, unreasonable, and thus unconstitutional.

Defendant’s Inability to Pay The Fine.  The court must not enter a judgment for a penalty that the defendants simply cannot pay.  (Hale, 22 Cal.3d at p. 405; City and County of San Francisco v. Sainez, supra, 77 Cal.App.4th at p. 1322; People ex rel. State Air Resources Board v. Wilmshurst (1999) 68 Cal.App.4th 1332, 1350 .)^[15]  In Hale, the court noted that there were only four or five mobile homes at the defendant’s mobile home park, “a modest operation by a relatively unsophisticated landlord.” (Hale,  22 Cal.3d at p. 405.)  Similarly, in Balmoral Hotel Tenants Association v. Lee (1990) 226 Cal.App.3d 686, the Court of Appeal held that the trebling of emotional distress damages was excessive.  In reaching this conclusion, the court compared the judgment to the defendant’s net worth.

“The judgment here was much larger than would be permitted by the remedy of punitive damages, which will seldom exceed ten percent of the defendant's net worth. [Citation]  Its financial impact on appellant James Lee is catastrophic.  In a postrial motion, he claimed to have a net worth of $7,075,798 — a plausible figure in light of the evidence of his other real estate holdings.  If this figure is even roughly accurate, the judgment of $4.8 million will exceed 50 percent of his net worth. . . Reprehensible as Mr. Lee’s conduct may have been, such an award strikes us as unconscionable.”  (Id. at p. 696; see also id at 401 [noting “the harsh impact, approaching confiscation” of huge fines.])

Similarly, in U.S. v. Emerson (1st Cir. 1997) 107 F.3d 77, the defendant was charged with numerous violations of airplane safety regulations.  The district court examined the egregiousness of the violations, but then reduced the fine below what the government requested because of the defendant’s financial condition.  The Court of Appeals, affirming this lower fine, noted that “the district court’s judgment reflects a careful balance between Emerson’s means and the justifiable punishment for these latest violations.   Thus, the fine bears a reasonable relationship not only to the offense but also to the offender.”  (Id. at p. 81.)

Here, the defendants cannot pay this $808,000 fine.  CAC raised a total of only $141,559 in its entire history (AA 143) and is now defunct.  (AA 272.)  Howard is “virtually destitute” and his liabilities exceed his assets by over $50,000.  (AA 272.)  And Cicero did “not have the means to retain legal counsel.”  (AA 217.)  The fine is this case — $808,000, plus prejudgment interest of $287,513.33 (AA 493) — greatly exceed the defendants’ net worth and ability to pay.  It is excessive.

Lack of Proportionality.  One factors courts examine is proportionality; that is, how the imposed fine compares with a fine that would have been imposed for more serious or less serious transgressions.  “[A] punitive forfeiture violates the Excessive Fines Clause if it is grossly disproportional to the gravity of a defendant’s offense.” (U.S. v. Bajakajian, supra, 524 U.S. at p. 334, 118 S.Ct. at p. 2036, 141 L.Ed.2d 314; see also Hale, 22 Cal.3d at pp. 400, [“We find it noteworthy that the sanction imposed by section 789.3 is potentially more severe than that provided by the Legislature for other more serious transgressions by the landlord against the tenant.”], 405 [“Such a confiscatory result is wholly disproportionate to any discernible and legitimate legislative goal, and is so clearly unfair that it cannot be sustained.”] [noting that the plaintiff’s annual rent was only $780, while the fine imposed was $17,300].)

Here, the parties were fined $808,000.  This is the largest fine in the FPPC’s history.  (AA 450.)  The FPPC has imposed much smaller fines for much more serious offenses.  For example, in 1992, the FPPC imposed a $190,000 fine on Diane Feinstein in her unsuccessful race for governor because of gross violations of campaign contributions and expenditures.

“The campaign statements did not disclose expenditures of $3.5 million, accrued expenses of $380,000, and subvendor payments of $3.4 million. The guarantor of loans totaling $2.9 million, Feinstein’s husband, Richard Blum, was not disclosed. Monetary and non-monetary contributions totaling $815,000 were not reported on campaign statements and late contributions of $90,000 were not reported. Notices were not sent to 166 major contributors who made contributions of $5,000 or more advising them of possible filing requirements.”^[16]

Similarly, in 1992, the FPPC imposed a $100,000 fine on Pete Wilson for reporting violations in the same race.  Wilson failed to report $7.1 million which was paid to subvendors, failed to notify 244 contributors of $5,000 or more of their filing requirements,  failed to properly report $105,698 of late contributions, $14,000 of ordinary contributions, and $126,884 of expenses.  (AA 341.)

The fine here was $808,000, and it covered reporting violations of much smaller dollar amounts and affecting many fewer individuals.  Under Counts 4 - 355, Howard and Cicero failed to itemize donations and report certain donor information for contributions totaling approximately $25,000.  (See AA 221, 224 [failure to itemize and report donor information of contributions totaling $16,472 and a non-monetary contribution of $8,762].)  In contrast, Feinstein failed to report contributions of $905,000 (as well as a $2.9 million loan guarantee), and Wilson failed to report contributions of approximately $120,000.  Here, under Counts 358 - 392 Howard and Cicero failed to report information regarding expenditures of a few thousand dollars made to 35 payees. (AA 222, 225.)^[17] In contrast, Feinstein failed to report $3.9 million in expenditures and Wilson failed to report $7.1 million in payments to subvendors and another $126,884 in expenses.  Yet Feinstein’s and Wilson’s fines were a fraction of Howard and Cicero’s fine.

Similarly, the fine here was substantially higher than would have been imposed on these defendents for the much greater offense of not filing any reports. 352 of the 404 violations (Counts 4 - 355), representing $704,000 of the $808,000 fine, was imposed for failing to itemize donors who contributed over $100 and to specify their street addresses, occupations, employers.  Another 35 counts (Count 358-392), representing another $70,000 in fines, covered failing to itemize certain expenditures.  However, if CAC had failed to file any reports at all, its fine would have been at most only $12,000.^[18]  The FPPC used the incomplete information in each report to generate almost 400 violations.  Certainly, CAC’s incomplete reporting was less egregious than not filing a report at all.

Lack of Actual Harm Suffered By Government or Public.  Another factor courts consider in determining whether a fine is constitutional is the harm suffered by the government or the public.  In U.S. v. Bajakajian, supra, 524 U.S. 321, 118 S.Ct. 2028, 141 L.Ed.2d 314, the defendant tried to leave the country with $350,000 in cash without reporting it to the customs officials.  He owned the cash, it was legal for him to take it with him when he left the country, and he was not laundering money or engaged in other illegal activities; he simply failed to report it.  The U.S. Supreme Court rejected the government’s contention that the defendant must forfeit the full $350,000, holding that such a penalty would violate the Excessive Fines Clause.  In making this determination, the court noted that “[t]he harm that respondent caused was also minimal” because “[f]ailure to report his currency affected only one party, the Government, and in a relatively minor way.   There was no fraud on the United States, and respondent caused no loss to the public fisc.   Had his crime gone undetected, the Government would have been deprived only of the information that $357,144 had left the country.”  (Id. at p. 339, 118 S.Ct. at p. 2039.)

The same is true here.  Neither the government nor the public suffered a substantial tangible loss from Howard and Cicero’s reporting and recordkeeping violations.  There is no allegation that Howard and Cicero engaged in illegal fundraising, laundered money, or did any other type of fraudulent illegal activity.  Although the government and the public were deprived of information about CAC’s donations, donors, and expenditures, the fine here — like the forfeiture in Bajakajian for a similar failure to disclose information — was simply excessive relative to this harm.  In Bajakajian, the Supreme Court held that the failure to report $357,144 did not justify a fine of that amount.  Here, $704,000 of the $808,000 fine was for Howard and Cicero’s failure to report properly donations totaling $25,000.  (AA 221, 224).  This fine — representing 28 times the amount improperly reported — is excessive.  Similarly, $70,000 of the fine was for failure to report properly relatively modest expenditures of probably a few thousand dollars.  (AA 222, 225, 231.)  This too is excessive.

Charging Multiple Violations for Single Omissions.  In Walsh v. Kirby (1974) 13 Cal.3d 95, the California Supreme Court held that an administrative agency that accumulated violations against a liquor retailer had exceeded its authority.

“[T]he purposes of the statute are further frustrated by the imposition of heavy cumulative penalties upon a retailer when such penalties are used as weapons to effect a de facto revocation of a license without prior adequate notice of wrongdoing to a licensee. [Citation.]  Such de facto revocation is particularly apparent in the case of the small retailer as is illustrated here.”  (Id. at p. 104.)

Here, the FPPC has counted each failure to list a particular donor separately as four violations: (1) failure to itemize, and failure to provide (2) a street address, (3) occupation information, and (4) employer information.  (See generally AA 221, 224, 229-230 [Counts 4 - 355].).  It is true that these statutes permit the FPPC to charge multiple violations for a single omission, but the California Supreme Court has forcefully stated that courts should view such tactics with disfavor.  “Uniformly, we have looked with disfavor on ever-mounting penalties and have narrowly construed the statutes which either require or permit them.”  (Hale,  22 Cal.3d at p. 401, emphasis added.)  As was true in Walsh v. Kirby, supra, this fine has required CAC to shut down.  (AA 272.)  These aggregated penalties are excessive, unreasonable, and unconstitutional.

In short, the FPPC imposed a huge confiscatory fine on defendants who cannot afford to pay it, greatly out of proportion to fines imposed on others for considerably worse behavior, greatly out of proportion to the fine that could have been imposed on these defendants for more egregious violations, greatly out of proportion to the minimal harm caused by the defendants’ acts, and greatly out of proportion to the amount of funds CAC failed to report or improperly reported.  The FPPC obtained this huge fine by charging multiple violations for single omissions and then imposing the maximum fine possible on each charge.  This fine is excessive and unreasonable, and therefore unconstitutional.

 

III.       BECAUSE THE FPPC DID NOT FOLLOW ITS STATUTORY AND REGULATORY PROCEDURES, GOVERNMENT CODE SECTION 91013.5 PRECLUDES THE FPPC FROM OBTAINING A CIVIL JUDGMENT.

“In order to obtain a judgment in a proceeding under this section, the commission or filing officer shall show, following the procedures and rules of evidence as applied in ordinary civil actions, all of the following: [¶] (a) That the monetary penalties, fees, or civil penalties were imposed following the procedures set forth in this title and implementing regulations.”  (Gov. Code, § 91013.5.)

Here, the evidence shows that the FPPC did not follow its own procedures in two important respects.  The two “Acting Executive Directors” who brought the probable cause hearing, found that there was probable cause to proceed, and imposed the fine were not properly appointed.  Also, the FPPC failed to consider mitigating evidence it knew about when it imposed the maximum fine per violation.

If a statute or regulation mandates that either an administrative agency as a whole or a particular officer must conduct a specific hearing, the administrative agency lacks the power to delegate the authority to conduct the hearing to a different officer.  Any such attempted delegation exceeds the agency’s jurisdiction.  For example, in Usher v. County of Monterey (1998) 65 Cal.App.4th 210, a statute required a county’s governing body or an administrative law judge to determine whether certain employees were disabled for purposes of the Public Employees Retirement System.  However, the county delegated the authority to conduct this hearing to a “hearing officer” who found that a petitioner was not disabled.  The petitioner filed a petition for a writ of mandate, arguing that the hearing officer was not authorized to conduct the hearing.  The trial court issued the writ, and the Court of Appeal affirmed,^[19] holding that the purported delegation of authority was improper.  “We conclude that the County did not proceed in a manner required by law by failing to follow the mandate of Government Code section 21156 to appoint an administrative law judge to conduct the appeal hearing in this matter.”  (Id. at p. 219.)  Other courts have reached the same conclusion on similar facts.  (Langan v. City of El Monte (2000) 79 Cal.App.4th 608 [city improperly delegated authority to conduct hearing to a hearing officer in disability retirement benefits appeal hearing]; Moyer v. State Board of Equalization (1956) 140 Cal.App.2d 651 [city improperly delegated authority to conduct hearing on motion to reconsider suspension of liquor license]; National Automobile & Casualty Ins. Co. v. Downey (1950) 98 Cal.App.2d 586 [insurance commission improperly delegated authority to conduct hearing to deputy insurance commissioner].)

Here, Government Code requires the FPPC acting as a body — not its chairman acting unilaterally — to appoint the executive director and other employees.  “The Commission shall appoint an executive director . . . .  The Commission shall appoint and discharge officers, counsel, and employees . . . .”  (Gov Code, § 83107.)  Only the FPPC as a body, or the duly appointed Executive Director, has the authority to conduct probable cause hearings and find that probable cause exists.  (Gov. Code, § 83116; Cal.Code Regs., tit. 2, § 18361, subd. (d)(4).)

Neither Ahuja nor Tribe were properly appointed or delegated the authority to conduct a Probable Cause Hearing or to issue a Default Decision or Order.  Instead, Chairman Mehta, acting alone, appointed Tribe as the FPPC’s Chief Deputy Director, appointed Ahuja as the FPPC’s Senior Commission Counsel, and delegated to Ahuja the authority to conduct probable cause hearings and to determine the existence of probable cause.  (AA 400.)  Like the purported delegations of authority in Usher and the other cases cited above, the attempted delegation here was invalid and the hearings were in excess of the FPPC’s jurisdiction.

In an earlier lawsuit, Horcher v. FPPC, the FPPC litigated whether this delegation of authority was proper; the FPPC lost.  (See AA 380-433.)  Accordingly, the FPPC is collaterally estopped from rearguing this fact.  Collateral estoppel precludes a party from relitigating factual issues if five elements are met:

“‘First, the issue sought to be precluded from relitigation must be identical to that decided in a former proceeding.  Second, this issue must have been actually litigated in the former proceeding.  Third, it must have been necessarily decided in the former proceeding.  Fourth, the decision in the former proceeding must be final and on the merits.  Finally, the party against whom preclusion is sought must be the same as, or in privity with, the party to the former proceeding.’ [Citation.]” (Gikas v. Zolin (1993) 6 Cal.4th 841, 849, quoting Lucido v. Superior Court, supra, 51 Cal.3d at p. 341.)

The last four of these elements are clearly met.  However, in the trial court, the FPPC argued that the issues in Horcher were not identical to the issues here since Horcher involved Mehta’s July 1995 appointment of Churchwell, and this case involves Mehta’s January 1995 appointment of Ahuja and Tribe.  (AA 456-457.)  The trial court agreed, finding that “the defendants have failed to show that the identical issue was previously litigated.”  (AA 486.)

The trial court erroneously based this conclusion on an immaterial difference between the issues in the proceedings; such differences do not preclude collateral estoppel.  In County of Los Angeles v. County of Los Angeles Assessment Appeals Board No. 1 (1993) 13 Cal.App.4th 102, the County of Los Angeles had previously litigated against several car rental companies about the nature of the companies’ possessory interest at Los Angeles International Airport and the tax liability based on the nature of this interest.  The companies prevailed.  However, in subsequent years, the county assessed taxes against the companies at three airports (not just Los Angeles International) covering different agreements.  However, the county’s factual theory was the same as the one that had been rejected in the earlier proceeding, and all other relevant facts were the same.  Like the FPPC here, the county claimed that it was not collaterally estopped by the previous lawsuit because the identical issues were not presented.  The Court of Appeal rejected this claim. 

“Although the two cases involve different tax years and, for some of them, different agreements, the agreements with respect to LAX are materially identical, as is the physical situation to which they apply.  The prior judgment’s determination of the extent of the rent-a-cars’ possessory interests at LAX therefore appears to preclude the County's present effort to claim and assess broader possessory interests there. [¶] . . . . That this case involves later tax years does not separate the issues or render them nonidentical.”  (Id. at pp. 108-109.)

The same is true here.  There is certainly a factual difference between Mehta’s unilateral appointment of Churchwell in July 1995 and Mehta’s unilateral appointment of Ahuja and Tribe in January 1995.  But like the different airports, contracts, and tax years in County of Los Angeles, these appointments are “materially identical.”  The Horcher court rejected the FPPC’s claim that Churchwell’s appointment was valid because Mehta had the authority to unilaterally appoint him; the FPPC makes the identical argument here with respect to Mehta’s unilateral appointment of Ahuja and Tribe.  There is no material difference between these issues, and thus collateral estoppel applies.^[20]

In its reply papers, the FPPC argued that even if the appointments were improper, they were merely voidable, not void, and Howard and Cicero had lost their right to complain about these orders by not presenting this argument in the FPPC hearing and not prevailing on their writ of administrative mandamus.  (AA 457-459.)  The trial court agreed with this claim.  (AA 487-488, 490.)

Again, the trial court is wrong.  Howard’s claim is not just that the order is void or voidable; it is also that it was not imposed under the FPPC’s statutory and regulatory procedures.  Under Government Code, section 91013.5, this alone precludes the trial court from entering a civil judgment in favor of the FPPC, regardless of whether the order is void or voidable.  Moreover, as shown in detail above (see Section I, ante), Howard has not lost his right to assert that the proper procedures were not followed, either by collateral estoppel or the exhaustion of judicial remedies doctrine.

If the trial court were correct, this statutory requirement would be entirely superfluous.  That is, in any enforcement action, the defendants must either not have brought a petition for a writ of administrative mandamus or lost such a petition.  If the trial court’s conclusion were correct, then in the first situation, the defendants would have waived their right to claim that the FPPC failed to follow the proper procedures, and in the second situation the defendants would be barred by collateral estoppel.  In either case, the statutory requirement would be completely superfluous.

A far simpler explanation is that the statute means what it says.  The FPPC must demonstrate that it followed the mandated statutory and regulatory procedures when it imposed the fine.  It failed to do so here, and thus it cannot obtain a civil judgment.

Moreover, there is a second independent reason why the FPPC may not obtain a civil judgment.  The FPPC’s regulations require it to consider mitigating information it knew about.  “The probable cause report shall contain a summary of the law and evidence gathered in connection with the investigation, including any exculpatory and mitigating information of which the staff has knowledge and any other relevant material and arguments.”  (Cal.Code Regs., tit. 2, § 18361, subd. (d)(1).)

Here, the FPPC knew that Howard had refused to provide donors’ street addresses and other identifying information because of a well-founded fear that the donors would be harassed or subjected to criminal activity.  Roberti opponents were depicted in the media as right-wing pro-gun extremists (AA 277, 279, 283), and CAC’s offices were broken into, the home of a leading CAC supporter was broken into, and several CAC supporters received death threats and other harassing telephone calls.  (AA 274, 275, 281.)

In his June 1994 letter to FPPC investigator Motmans, Howard explained that he had not disclosed the donors’ addresses because of fear of harassment or intimidation:  “[T]he reason why we withheld donors’ full addresses (only providing name, city, and state) is that some of our donors are engaged in civil disobedience over the Roos-Roberti ban and thus we don’t feel comfortable releasing their home street addresses.  Our concerns were validated when the Daily News published the names of several of our donors who lived in the district, in an apparent attempt to embarrass, harass, and paint them as extremists.”  (AA 285.) 

Despite this knowledge, the probable cause report did not include Howard’s explanation for omitting the donor’s street addresses and other identifying information as a mitigating factor.  Instead, the report incorrectly stated that there were no mitigating factors.  (AA 156.)

This omission was material.  The FPPC relied on this report in deciding to impose the full $808,000 fine.  This explanation might not have prevented the FPPC from imposing a fine, but if the FPPC had known about this mitigating factor, there is a reasonable chance it would have imposed a smaller fine.

In short, the trial court has an obligation under Government Code, section 91013.5 to verify that the FPPC following its statutory and regulatory procedures in imposing a fine before issuing a judgment.  The FPPC failed to do so in two significant ways.  This failure to follow its own procedures precludes the FPPC from obtaining a civil judgment in this case.

CONCLUSION

For the reasons set forth above, the judgment should be reversed.

 

 

Dated: October 16, 2001     ___________________________________

Bruce Adelstein

Attorney for Appellants CALIFORNIANS AGAINST CORRUPTION, CARL RUSSELL HOWARD, treasurer, and STEPHEN J. CICERO, treasurer

TABLE OF CONTENTS

 

TABLE OF CONTENTS...................................................................................... i

 

TABLE OF AUTHORITIES............................................................................. iii

INTRODUCTION................................................................................................ 1

 

STATEMENT OF THE CASE............................................................................ 3

 

STATEMENT OF FACTS AND DETAILED PROCEDURAL

 HISTORY................................................................................................. 4

 

A.        The Political Reform Act of 1974............................................... 4

 

B.        The Parties...................................................................................... 7

 

C.        In Violation of Government Code, Section 83107, The Chairman of the FPPC Acting Alone Appoints Robert Tribe and Jeevan Ahuja As FPPC Officers..... 7

 

D.        CAC Filed Incomplete Election Reports and Improperly Maintains Its Financial Records. 8

 

E.         The FPPC Sues Howard, Cicero, and CAC............................... 13

 

F.         After the FPPC Proceedings Were Completed, The FPPC Acting As A Body Appoints Tribe As An Acting Co-Executive Director........................................ 13

 

G.        The Trial Court Dismissed The Defendant’s Writ Petition For Failure to Prosecute and Grants Summary Judgment for the FPPC.............................................. 14

 

STATEMENT OF APPEALABILITY and

STANDARD OF REVIEW.................................................................... 15

 

LEGAL ARGUMENT....................................................................................... 15

 

I.          THE PROCEDURAL POSTURE AND SCOPE OF THE APPEAL. 15

 

A.        Summary of the Argument.......................................................... 15

 

B.        Howard And Cicero Are Not Collaterally Estopped From Asserting Their Defenses Based on Their Failure to Contest the Underlying Administrative Proceeding.      17

 

C.        Howard And Cicero Are Not Collaterally Estopped From Asserting Their Defenses Based on The Dismissal of Their Petition for Writ of Administrative Mandamus.            21

 

D.        The Exhaustion of Judicial Remedies Doctrine Does

Not Bar Howard And Cicero From Asserting Their Defenses. 22

 

E.         Conclusion................................................................................... 29

 

II.        THE FPPC’S PENALTY IS UNCONSTITUTIONALLY EXCESSIVE.        30

 

A.        The Due Process Clause, the Excessive Fines Clause, and the Judicial Powers Clause All Prohibit An Administrative Agency From Imposing An Excessive or Unreasonable Fine........................................................................................................ 30

 

B.        The $808,000 Fine Imposed Here Is Excessive And Unreasonable.        35

 

III.       BECAUSE THE FPPC DID NOT FOLLOW ITS STATUTORY AND REGULATORY PROCEDURES, GOVERNMENT CODE SECTION 91013.5 PRECLUDES THE FPPC FROM OBTAINING A CIVIL JUDGMENT................................................. 42

 

CONCLUSION................................................................................................... 49

 

 

 

 

TABLE OF AUTHORITIES

 

 

Cases

 

Austin v. United States (1993)

509 U.S. 602, 113 S.Ct. 2801, 125 L.Ed.2d 488........................... 32-33

 

Bachchan v. India Abroad Publications (1992)

54 Misc.2d 228, 585 N.Y.S.2d 661....................................................... 19

 

Balmoral Hotel Tenants Association v. Lee (1990)

226 Cal.App.3d 686................................................................................ 36

 

Barnes Freight Line, Inc. v. I. C. C. (5th Cir. 1978)

569 F.2d 912............................................................................................ 20

 

Branson v. Sun‑Diamond Growers (1994)

24 Cal.App.4th 327................................................................................. 21

 

Bridgeway Corp. v. Citibank (2nd Cir. 2000)

201 F.3d 134...................................................................................... 18-19

 

Briggs v. City of Rolling Hills Estates (1995)

40 Cal.App.4th 637................................................................................. 23

 

Castillo v. City of Los Angeles (2001)

111 Cal.Rptr.2d 870, 2001 WL 1106132............................................ 23

 

Chamblin v. Municipal Court (1982)

130 Cal.App.3d 115................................................................................ 24

 

City and County of San Francisco v. Sainez (2000)

77 Cal.App.4th 1302.................................................................. 20, 33, 35

 

City of Fresno v. Superior Court (1987)

188 Cal.App.3d 1484.............................................................................. 24

 

County of Los Angeles v. County of Los Angeles Assessment

Appeals Board No. 1 (1993)

13 Cal.App.4th 102........................................................................... 45-46

 

County of Sauk v. Trager

(1984) 118 Wis.2d 204, 346 N.W.2d 756............................... 24‑27, 29

 

Gikas v. Zolin (1993)

6 Cal.4th 841........................................................................................... 44

 

Gonsalves v. Bank of America (1940)

16 Cal.2d 169.......................................................................................... 21

 

Hale v. Morgan (1978)

22 Cal.3d 388........................................................... 28, 31‑33, 35‑37, 41

 

Hansen Mechanical, Inc. v. Superior Court (1995)

40 Cal.App.4th 722................................................................................. 15

 

Harmelon v. Michigan (1991)

501 U.S. 957, 111 S.Ct. 2680, 115 L.Ed.2d 836................................... 31

 

Hypolite v. Carleson (1975)

52 Cal.App.3d 566................................................................................... 26

 

Johnson v. City of Loma Linda (2000)

24 Cal.4th 61..................................................................................... 22-23

 

Julen v. Larson (1972)

25 Cal.App.3d 325................................................................................... 18

 

Knickerbocker v. City of Stockton (1988)

199 Cal.App.3d 235.......................................................................... 23-24

 

Langan v. City of El Monte (2000)

79 Cal.App.4th 608................................................................................. 43

 

Lord v. Garland (1946)

27 Cal.2d 840.......................................................................................... 21

 

Lucido v. Superior Court (1990)

51 Cal.3d 335............................................................................. 21, 24, 44

 

Luck v. Southern Pacific Transportation Co. (1990)

218 Cal.App.3d 1..................................................................................... 28

 

Mattern v. Carberry (1960)

186 Cal.App.2d 570................................................................................ 21

 

McDaniel v. Board of Education of the Mountain View School

District (1996)

44 Cal.App.4th 1618............................................................................... 23

 

McHugh v. Santa Monica Rent Control Bd. (1989)

49 Cal.3d 348.................................................................................... 33-34

 

Moyer v. State Board of Equalization (1956)

140 Cal.App.2d 651................................................................................ 43

 

National Automobile & Casualty Ins. Co. v. Downey (1950)

98 Cal.App.2d 586................................................................................... 43

 

NLRB v. Rex Disposables (5th Cir. 1974)

494 F.2d 588............................................................................................ 20

 

People ex rel. State Air Resources Board v. Wilmshurst (1999)

68 Cal.App.4th 1332............................................................................... 35

 

People v. Sims (1982)

32 Cal.3d 468.................................................................................... 17, 24

 

Stephan v. American Home Builders (1971)

21 Cal.App.3d 402................................................................................... 21

 

Telnikoff v. Matusevitch (1997)

347 Md. 561, 702 A.2d 230................................................................... 19

 

Town of Menasha v. B & B Race Car Engineering (1992)

172 Wis.2d 419, 493 N.W.2d 250........................................................ 26

 

Tran v. Lindsey (9th Cir. 2000)

212 F.3d 1143......................................................................................... 19

 

U.S. ex rel. Smith v. Gilbert Realty Co (E.D.Mich.1993)

840 F.Supp. 71......................................................................................... 20

 

U.S. v. Advance Tool Co. (W.D. Mo. 1995)

902 F.Supp. 1011.................................................................................... 20

U.S. v. Bajakajian (1998)

 524 U.S. 321, 118 S.Ct. 2028, 141 L.Ed.2d 31............... 33, 37, 39-40

 

U.S. v. Emerson (1st Cir. 1997)

107 F.3d 77.............................................................................................. 36

 

U.S. v. Utah Constr. Co. (1966)

384 U.S. 394, 86 S.Ct. 1545, 16 L.Ed.2d 642...................................... 17

 

Usher v. County of Monterey (1998)

65 Cal.App.4th 210........................................................................... 43, 44

 

Walnut Creek Manor v. Fair Employment and Housing

Commission (1991)

54 Cal.3d 245.......................................................................................... 34

 

Walsh v. Kirby (1974)

13 Cal.3d 95............................................................................................. 41

 

Ward v. Taggart (1959)

51 Cal.2d 736.......................................................................................... 28

 

Waterman Convalescent Hosp. v. Jurupa Community Services

Dist. (1997)

53 Cal.App.4th 1550............................................................................... 31

 

Westlake Community Hosp. v. Superior Court (1976)

17 Cal.3d 465.......................................................................................... 23

 

 

Statutes, Regulations, and Constitutions

 

11 U.S.C. § 523(a)(7)......................................................................................... 27

 

28 U.S.C. § 2254................................................................................................. 19

 

California Constitution

art. 1, § 7................................................................................................... 32

art. 1, § 17................................................................................................ 32

art. 6, § 1................................................................................................... 33

 

 

California Code of Regulations

 tit. 2, § 18361.......................................................................... 5, 8, 44, 47

 

Code of Civil Procedure

§ 904.1...................................................................................................... 15

§ 1094.5...................................................................................................... 6

§ 1713....................................................................................................... 18

§ 1713.2................................................................................................... 18

§ 1713.3................................................................................................... 18

§ 1713.4................................................................................................... 18

§ 1713.8................................................................................................... 19

 

Food & Agr. Code

§ 12999.5................................................................................................. 16

 

Government Code

§ 11500 ...................................................................................................... 5

§ 11506.................................................................................................... 10

§ 81000....................................................................................................... 4

§ 81001....................................................................................................... 4

§ 82036.............................................................................................. 11, 37

§ 83100.................................................................................................. 4, 7

§ 83101....................................................................................................... 4

§ 83102....................................................................................................... 4

§ 83107............................................................................................ 4, 7, 43

§ 83108....................................................................................................... 4

§ 83111.................................................................................................. 4, 7

§ 83115....................................................................................................... 4

§ 83115.5................................................................................................... 7

§ 83116............................................................................... 5‑7, 13, 39, 44

§ 84100....................................................................................................... 4

§ 84104.................................................................................................... 12

§ 84105.................................................................................................... 12

§ 84200.............................................................................................. 10, 39

§ 84203.................................................................................................... 11

§ 84211.............................................................................................. 11, 12

§ 91013.5................................. 1, 3, 6, 13, 14, 16, 18‑20, 29, 42, 46, 48

 

Health. & Saf. Code

§ 25184.1................................................................................................. 16

 

 

Penal Code

section 12275............................................................................................ 9

 

U.S. Constitution

8th Amend................................................................................................ 32

14th Amend.............................................................................................. 32

 

Water Code

§Â 13328.................................................................................................... 16