AALRR Secures Dismissal of Taxpayer Action Against the City of Tracy

11.05.2024

AALRR recently achieved a significant victory for the City of Tracy, securing dismissal of a taxpayer action brought against the City for restitution, an injunction, and mandamus and declaratory relief.

On October 22, 2024, the San Joaquin Superior Court issued a ruling sustaining the City’s demurrer without leave to amend on all causes of action asserted against the City. The plaintiff, a resident of Tracy and local attorney, sued the City earlier this year, alleging it had improperly granted a retroactive pay raise to its City Attorney. The complaint—which also named the City Attorney and three of Tracy’s five Councilmembers as defendants in their personal and official capacities—further alleged the City Council had violated the Brown Act by discussing the pay raise during one or more closed sessions. Among other remedies, the plaintiff sought an order compelling the City Attorney and individually named Councilmembers to repay the City for the retroactive salary adjustment, and an order requiring the City Council to record its closed session deliberations.

In sustaining the demurrer, the court adopted the arguments made by AALRR on the City’s behalf. It agreed with the City that the plaintiff’s claims were subject to the Government Tort Claims Act, and that the plaintiff failed to satisfy the Act’s presentation requirements by submitting a pre-filing written claim for damages to the City. The plaintiff argued his claims fell outside the Act’s strictures because he did not seek monetary damages for himself but rather restitution on behalf of the City, but the court rejected this argument, holding that “[a]t its foundation, this case is a suit for money damages,” and that it made no difference that the plaintiff sought no money for himself. The plaintiff also asserted claims for injunctive and declaratory relief, remedies that don’t ordinarily necessitate compliance with the Tort Claims Act, but the court observed that these claims were entirely dependent on the plaintiff’s claim for restitution or disgorgement under Code of Civil Procedure 526a—California’s taxpayer statute—and were thus subject to the same fate.

As to his mandamus claim, which the plaintiff predicated on his allegation that the retroactive salary increase was a “wasteful” expenditure, the court recognized that “salary negotiations between the City and the City Attorney are within the City’s wide discretion,” and that “[c]ourts are not inclined to attempt to enjoin every expenditure that does not meet with a taxpayer’s approval.” The plaintiff failed to demonstrate that the retroactive salary increase was unnecessary or useless, or that it provided no public benefit, such that the expenditure was wasteful. Nor did he establish that the retroactive increase was unlawful under Article XI, Section 10(a) of the California Constitution, which prohibits local governments from paying “extra compensation” to a public officer or employee for work already performed. Citing longstanding case law, the court held that retroactive pay adjustments are not “categorically impermissible in all circumstances,” and that such payments do not violate the Constitution if they are made retroactive to a date on which the employee’s salary was indefinite or uncertain.

As to his allegation that the City Council violated the Brown Act by discussing the retroactive salary during one or more closed sessions, the Court agreed with the City that the plaintiff failed to file his lawsuit within 15 days of the City’s rejection of his cure-or-correct letter, as required by the Act. His claim under the Brown Act was therefore untimely and barred as a matter of law.

Lastly, the court held that because the plaintiff’s claims for monetary, injunctive, and mandamus relief failed, he lacked standing to pursue an Independent claim for declaratory relief. The court characterized the plaintiff’s claim for declaratory relief as “unnecessary and superfluous.”

Following entry of the Court’s order, the plaintiff voluntarily dismissed the lawsuit against the remaining Councilmembers named as defendants and the City Attorney.

The court’s decision is noteworthy because it endorses the general proposition that a city’s process for negotiating salaries with its workforce is a discretionary matter and that a taxpayer may not override it through a lawsuit. As the court put it, to allow a taxpayer to thwart such discretionary decision-making “would invite constant harassment of city and county officers by disgruntled citizens and could seriously hamper our representative form of government at the local level.”

The City issued a press release lauding the ruling, which it posted on its website HERE.