Opinion
A151686
12-19-2018
DAVID J. SCHOLL, Plaintiff and Appellant, v. CITY OF DIXON et al., Defendants and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Solano County Super. Ct. No. FCS047260)
Plaintiff David J. Scholl, owner of Dixon's Independent Voice, a newspaper of general circulation, appeals a judgment entered in favor of defendants City of Dixon and various present and former city officials, including Suellen Johnston, Jim Lindley, Jack Batchelor, Steven Bird, Jerry Castanon, Sr., and Scott Pederson (collectively the city). He contends the court erred in sustaining without leave to amend the city's demurrer to his second amended complaint and petition for writ of mandate, which sought damages and declaratory and injunctive relief on claims arising out of the means by which the city effectively denied his newspaper a contract for the publication of legal notices. We conclude that the demurrer was properly sustained to some of his causes of action but that the court erred in sustaining the demurrer to causes of action for violations of Scholl's First Amendment rights and of section 20169 of the Public Contract Code.
Background
Scholl's second amended complaint alleges in relevant part as follows: For fiscal years 2010 to 2016, the city awarded the annual publication contract to two newspapers: Dixon's Independent Voice (the Voice) and the Dixon Tribune (the Tribune). Scholl lives in Dixon and has published the Voice weekly for 21 years. The Voice is printed in Sacramento County, 23 miles from Dixon. The Tribune, which is published three times a week, is owned by Gibson Publishing of Vallejo and is printed in Solano County, 46 Miles from Dixon. The request for proposal (RFP) used to solicit bids for fiscal years 2010 to 2016 required that the newspaper be adjudicated a newspaper of general circulation and be published once a week, and that the contract be awarded to the lowest bidder.
At a meeting on July 8, 2014, the city council directed the staff to revise the RFP for the 2016-2017 contract to eliminate the lowest bidder requirement. The council unanimously rejected the staff's suggestion that the RFP increase the publication requirement to twice a week and reaffirmed the requirement for weekly publication. However, at the meeting on November 25, 2014, the city council adopted the following changes to the RFP: (1) the newspaper must be printed in Solano County; (2) the newspaper must be printed three times per week; and (3) the newspaper must not change its format from that used for the previous six months.
The complaint alleges that "between the July 8, 2014 and the November 25, 2014 meetings, . . . an election to the council was held and the two incumbents [Dane Besneatta and Thom Bogue] were defeated. Both of those incumbents held [the Voice] largely responsible for their defeat as [the Voice] endorsed two other candidates—one who was elected and the other who came in third for the two seats up for election. [¶] . . . At the November 25, 2014 council meeting, while the incumbents who had lost were still in office pending certification of the election results, they changed their previous positions on the issue. . . . Respondents Batchelor, Bird and Castanon voted to include [the new] provisions and were joined by outgoing council members Thom Bogue an Dane Besneatta]."
The complaint further alleges that "members of the Dixon City Council, plus the Mayor, have repeatedly over the years made clear the true motivation behind imposing bid provisions which the Independent Voice could not match. Each year during discussions on the legal notices contract bid they each have emphatically and on the record publicly castigated the Independent Voice for its content. . . . As one example, Councilmember Jerry Castanon, Sr., directly stated on the record . . . that he would 'not allow the Independent Voice to get one dime of city money.' [¶] . . . As another example, Councilman Dane Besneatta sent a threatening email to [the Voice] in which he wrote, 'Clearly, you do not publish a "news" paper but rather a tabloid hit piece suited to your personal and political leanings just as you handle most everything you are involved with. Because of the lack of credible news-worthiness it is my intention to request that the agreement with your publication and the city regarding public notices be reviewed as I do not think it is appropriate to continue having notices published in such a biased and disingenuous publication.' "
The Voice's bid for the 2016-2017 fiscal year contract was returned as nonresponsive because it did not meet the publishing requirements. According to the complaint, the Tribune was awarded the contract despite the fact that its bid was higher than the bid submitted by the Voice and its circulation was lower than the Voice's circulation.
The second amended complaint alleges five causes of action. The first cause of action alleges that the new requirements in the RFP were imposed in retaliation for Scholl's exercise of his right to free speech. The second cause of action alleges that the city violated Scholl's right to equal protection by imposing different requirements on the RFP for legal publication than other city RFPs or contracts. The third cause of action alleges that the city violated the Public Contract Code by imposing requirements designed to prevent him from being able to qualify to win the bid. The fourth cause of action alleges that the requirement that the newspaper be printed in Solano County is an illegal restraint of trade under the Sherman Act, 15 United States Code section 1. Finally, the fifth cause of action seeks a writ of mandate under Code of Civil Procedure section 1085 based on allegations that Scholl has "a clear present, and beneficial right" to be awarded the contract under section 5.02.060 of the Dixon Municipal Code, which gives preference to local vendors for city contracts.
The second amended complaint skips from the fourth cause of action to the "sixth" cause of action. We refer to Scholl's cause of action for writ of administrative mandate as the fifth cause of action.
The trial court sustained without leave to amend the city's demurrer. Judgment was entered thereafter. Scholl timely filed a notice of appeal.
Discussion
1. Standard of Review
"When reviewing a judgment dismissing a complaint after a successful demurrer, we assume the complaint's properly pleaded or implied factual allegations are true, and we give the complaint a reasonable interpretation, reading it in context. [Citation.] We also consider judicially noticeable matters. [Citation.] If we see a reasonable possibility that the plaintiff could cure the defect by amendment, then we conclude that the trial court abused its discretion in denying leave to amend. If we determine otherwise, then we conclude it did not. [Citation.] The plaintiff has the burden of proving that an amendment would cure the defect." (Campbell v. Regents of University of California (2005) 35 Cal.4th 311, 320.)
2. The First Cause of Action: Violation of First Amendment Rights
To prevail on a claim under 42 United States Code section 1983 that a contract with a local entity was terminated or not renewed in retaliation for protected speech activities, a plaintiff must show "that 'by his actions [the defendant] deterred or chilled [the plaintiff's] political speech and such deterrence was a substantial or motivating factor in [the defendant's] conduct.' " (Mendocino Environmental Center v. Mendocino County (9th Cir. 1999) 192 F.3d 1283, 1300; Bd. of County Comm'rs v. Umbehr (1996) 518 U.S. 668, 685 [Plaintiff "must show that the termination of his contract was motivated by his speech on a matter of public concern."].) The determination of whether the defendant's action deterred or chilled the plaintiff's political speech is objective. "[T]he proper inquiry asks 'whether an official's acts would chill or silence a person of ordinary firmness from future First Amendment activities.' " (Mendocino Environmental Center, p. 1300.) "Intent to inhibit speech . . . can be demonstrated either through direct or circumstantial evidence." (Ibid.)
Initially, the trial court determined Scholl did not establish that he "engaged in constitutionally protected activity." The court's conclusion was based, it appears, on a finding that Scholl did not have a pre-existing commercial relationship with the city. (See Bd. of County Comm'rs v. Umbehr, supra, 518 U.S. at p. 685 [holding that the First Amendment protects parties with "a pre-existing commercial relationship with the government" but declining to "address the possibility of suits by bidders or applicants for new government contracts who cannot rely on such a relationship"]; McClintock v. Eichelberger (3rd Cir. 1999) 169 F.3d 812, 815 [First Amendment protection from retaliation in public contracting extends only to parties with a pre-existing commercial relationship with the government.].) The city has made no attempt to defend the court's order on this ground. Given the allegations in the complaint that the Voice had been awarded the contract for each of the prior six years, we agree that the demurrer was not properly sustained on this ground.
The city contends the demurrer was properly sustained because the second amended complaint fails to allege that the denial of a publishing contract would chill or silence a person of ordinary firmness from further First Amendment activities. The complaint is not "silent" on this issue as the city suggests. After detailing numerous issues concerning which Scholl has published criticism of city council actions and endorsed opponents of council members in city elections, the complaint states, "Government entities are prohibited from retaliating against the Press—or any individual—for the expression of viewpoints. . . . [¶] . . . Such retaliation has a chilling effect on the exercise of freedom of the press and freedom of speech as it would dissuade persons of ordinary firmness from criticizing city officials and city government." These allegations are sufficient to withstand the demurrer.
The city also contends the trial court properly determined that Scholl "has not demonstrated that any constitutionally protected activity was a substantial or motivating factor in [the city's] conduct." The city argues that the statement by Castanon and letter by Besneatte are insufficient to establish motive and that improper motivation cannot be reasonably inferred from the city's decision to impose reasonable requirements for qualification in the RFP. But Scholl's complaint alleges that the requirements are not reasonable and that they were imposed for an improper retaliatory purpose. These allegations are also sufficient to overcome the demurrer.
Finally, the city contends that insofar as Scholl seeks damages under this and other causes of action, his claim is barred by his failure to submit a claim with the city as required by the Government Claim Act (Gov. Code, §§ 810 et seq., 905, 911.2) and related sections of the Dixon Municipal Code. While Government Code section 905 may apply to Scholl's claim for damages, it does not apply to his claims for other types of relief. (Minsky v. City of Los Angeles (1974) 11 Cal.3d 113, 117; Madera Community Hospital v. County of Madera (1984) 155 Cal.App.3d 136, 148.) In addition to seeking damages, Scholl's complaint seeks an order requiring the city to remove the offending provisions and prohibiting it from imposing such provisions in future years. Insofar as Scholl's complaint seeks injunctive or declaratory relief, the cause of action is not barred by his failure to comply with the Government Torts Claim Act. Accordingly, the trial court erred in sustaining the demurrer to this cause of action.
3. The Second Cause of Action: Violation of Equal Protection
To state a cause of action based on a violation of equal protection, a plaintiff must allege: (1) he was treated differently than other similarly situated persons; (2) the different treatment was intentional; and (3) there was no rational basis for the difference in treatment. (Village of Willowbrook v. Olech (2000) 528 U.S. 562, 564; Genesis Environmental Services v. San Joaquin Valley Unified Air Pollution Control Dist. (2003) 113 Cal.App.4th 597, 605.) "To satisfy the first element, plaintiffs must not only demonstrate a disparity in treatment but also that 'the level of similarity between [him] and the persons with whom they compare themselves must be extremely high.' " (Squires v. City of Eureka (2014) 231 Cal.App.4th 577, 594.)
Scholl does not contest the city's assertion that he has not alleged and cannot allege differential treatment as between the Voice and the Tribune. Rather, Scholl's complaint alleges broadly that the provisions imposed in the RFP for publishing legal notices "are not mirrored in any other RFPs or contracts by the City of Dixon" and that the city applies a preference for locally owned businesses to other RFPs but failed to apply the same preference under the RFP at issue here. He offers a single example of other allegedly similar situated persons: The city "has a much larger and more expensive contract for fuel, but does not require the fuel to be refined in Solano County." These allegations lack the specificity required to support a claim for violation of equal protection. Scholl has not indicated that this defect can be cured by amendment. Accordingly, the court properly sustained without leave to amend the demurrer to the second cause of action.
4. The Third Cause of Action: Violation of the Public Contract Code
Public Contract Code section 20169 requires that the legislative body both "publish a notice inviting bids" and that it "contract for the publication of legal notices." Both are subject to the legislative body's exercise of discretion. (See Devine v. Freedom Newspapers (1952) 112 Cal.App.2d 664, 666 [statute relating to publication of notice calling for bids for publishing legal notices leaves the terms of the publishing contract largely to discretion of city council]; Diablo Beacon Printing & Publishing Co. v. City of Concord (1964) 229 Cal.App.2d 505, 508 [city council has broad discretion in awarding contract for publication of legal notices].) Contrary to the city's argument, Scholl does not contend that the city abused its discretion is awarding the contract to the Tribune. Rather, his third cause of action alleges, albeit somewhat ambiguously, that the city violated section 20169 by including in its request for bids "the three provisions designed to prevent the petitioner from being able to qualify to win the bid for the City of Dixon Legal Notices." He argues that the city council abused its discretion by inviting bids subject to requirements that are unreasonable, retaliatory, and frustrate the purpose of the Public Contract Code. Whether there is a reasonable justification for these requirements, or whether the requirements were designed solely to retaliate against Scholl by making it impossible for his newspaper to comply, is a factual issue that cannot be resolved on demurrer. The trial court erred in sustaining the demurrer to the third cause of action.
Public Contract Code section 20169 reads: "Annually before the beginning of the fiscal year, in cities where there is more than one newspaper of general circulation printed and published, the legislative body shall publish a notice inviting bids and contract for the publication of legal notices required to be published in such a newspaper. The contract shall include the printing and publishing of all such legal notices during the fiscal year."
5. The Fourth Cause of Action: Violation of The Sherman Act
In order to prevail on a cause of action for violation of section 1 of the Sherman Act, "a plaintiff must show (1) there was an agreement, conspiracy, or combination between two or more entities; (2) the agreement was an unreasonable restraint of trade under either a per se or rule of reason analysis; and (3) the restraint affected interstate commerce." (American Ad Mgmt., Inc. v. GTE Corp. (9th Cir. 1996) 92 F.3d 781, 784.) The trial court found that Scholl's allegations fail to establish any of the required elements.
Section 1 of the Sherman Act reaches unreasonable restraints of trade effected by a "contract, combination . . . or conspiracy" between separate entities. It does not reach conduct that is "wholly unilateral." (Copperweld Corp. v. Independence Tube Corp. (1984) 467 U.S. 752, 768.) The court explained, "The distinction between unilateral and concerted conduct is necessary for a proper understanding of the terms 'contract, combination ... or conspiracy' in § 1. Nothing in the literal meaning of those terms excludes coordinated conduct among officers or employees of the same company. But it is perfectly plain that an internal 'agreement' to implement a single, unitary firm's policies does not raise the antitrust dangers that § 1 was designed to police. The officers of a single firm are not separate economic actors pursuing separate economic interests, so agreements among them do not suddenly bring together economic power that was previously pursuing divergent goals. Coordination within a firm is as likely to result from an effort to compete as from an effort to stifle competition. In the marketplace, such coordination may be necessary if a business enterprise is to compete effectively. For these reasons, officers or employees of the same firm do not provide the plurality of actors imperative for a § 1 conspiracy." (Id. at p. 769.) Although the City has not cited a case applying Copperweld to a decision by a legislative body, we see no reason why the analogy is not apt. Coordination among city council members, even to eliminate competition, does not necessarily reflect an anticompetitive intent. (See Fisher v. City of Berkeley (1984) 37 Cal.3d 644, 664 ["Unlike a private business, a municipal government's decision to displace competition is generally motivated by the purpose of furthering local health, safety or welfare."].) Accordingly, the court properly sustained without leave to amend the demurrer to the fourth cause of action.
6. The Fifth Cause of Action: For Writ of Mandate
"Section 1085 of the Code of Civil Procedure authorizes a trial court to issue a writ of mandate to compel an act which the law specifically requires. A petitioner seeking a writ of mandate under this section is required to show the existence of two elements: a clear, present and usually ministerial duty upon the part of the respondent, and a clear, present and beneficial right belonging to the petitioner in the performance of that duty." (Bergeron v. Department of Health Services (1999) 71 Cal.App.4th 17, 21-22.) "Where a statute leaves room for discretion, a challenger must show the official acted arbitrarily, beyond the bounds of reason or in derogation of the applicable legal standards. [Citation.] Where only one choice can be a reasonable exercise of discretion, a court may compel an official to make that choice." (California Correctional Supervisors Organization, Inc. v. Department of Corrections (2002) 96 Cal.App.4th 824, 827.)
Scholl does not dispute that the city council has broad discretion to award contracts for publication under Public Contract Code section 20169. He argues, however, that the city council had a ministerial duty to award the contract to the Voice under the city's ordinance that affords preference in city contracts to locally owned businesses. We disagree.
Dixon Municipal Code section 5.02.060 reads: "Except when prohibited by State or Federal law or the agency providing to contract funds, for all contracts awarded by the City through formal bidding, if the lowest responsible bid is submitted by a local vendor, that business shall be awarded the contract. If the lowest responsible bid is not submitted by a local vendor, the lowest responsive bid submitted by a local vendor may be awarded the contract; provided, that the total contract price is within five percent (5%) of the total contract price of the lowest responsible bid. . . ."
The complaint alleges that the RFP included requirements that the Voice could not meet so that Scholl was not a responsive bidder. The local ordinance, assuming it is applicable, does not require awarding a contract to a nonresponsive bidder. Nor could a writ of mandate compel the city to revise the contract requirements because such action, and the provisions to be included, unquestionably are discretionary and not a ministerial function. Accordingly, the court properly sustained without leave to amend the demurrer to the cause of action seeking a writ of mandate.
Disposition
The judgment is reversed and the matter remanded with directions vacate the order sustaining without leave to amend the demurrer to all causes of action of the second amended complaint, and to enter a new order overruling the demurrer to the first and third causes of action (and sustaining the demurrer to the remaining causes of action). Scholl is to recover his costs on appeal.
POLLAK, P.J. We concur: STREETER, J.
TUCHER, J.