Plantier v. Ramona Mun. Water Dist. ( 2019 )

IN THE SUPREME COURT OF
CALIFORNIA
EUGENE G. PLANTIER, as Trustee, etc., et al.,
Plaintiffs and Appellants,
v.
RAMONA MUNICIPAL WATER DISTRICT,
Defendant and Respondent.
S243360
Fourth Appellate District, Division One
D069798
San Diego County Superior Court
37-2014-00083195-CU-BT-CTL
May 30, 2019
Justice Corrigan authored the opinion of the court, in which
Chief Justice Cantil-Sakauye and Justices Chin, Liu, Cuéllar,
Kruger, and Groban concurred.
PLANTIER v. RAMONA MUNICIPAL WATER DISTRICT
S243360
Opinion of the Court by Corrigan, J.
Before a local governmental agency may impose or
increase certain property-related fees and charges, it must
notify affected property owners and hold a public hearing. The
hearing requirement arises from article XIII D, section 6 of the
California Constitution,1 which was added in 1996 by
Proposition 218.2 The question here is a narrow one. When an
agency considers increasing a property-related fee, must a fee
payor challenging the method of fee allocation first exhaust
“administrative remedies” by participating in a Proposition 218
hearing that addresses only a proposed rate increase? The
answer is no. Even if a Proposition 218 hearing could be
considered an administrative remedy, it would not provide an
adequate remedy for a challenge to the method used to allocate
the fee burden in this case.
I. BACKGROUND
The representative plaintiffs in this class action are
commercial property owners seeking to invalidate a wastewater
service charge imposed by the Ramona Municipal Water District
1
Unspecified references to “article” refer to articles of the
California Constitution.
2
The terms “fee” and “charge” as used in Proposition 218 are
synonymous (Bighorn-Desert View Water Agency v. Verjil (2006)
39 Cal. 4th 205, 214, fn. 4) and are used interchangeably
throughout this opinion.
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PLANTIER v. RAMONA MUNICIPAL WATER DISTRICT
Opinion of the Court by Corrigan, J.
(the District). They claim the District’s method for calculating
the charge violates one of the substantive requirements of
Proposition 218. The District contends the suit is barred
because the plaintiffs failed to exhaust administrative remedies
by raising their challenge at public hearings on proposed
increases to the rate charged for services. The trial court agreed
with the District but the Court of Appeal reversed and allowed
the action to proceed.
A. The District’s Wastewater Service Charge
The District provides water and wastewater (sewer)
services to businesses and residents in an unincorporated area
of San Diego County. It operates two wastewater treatment
plants that together serve at least 6,891 parcels.
The District is organized under the Municipal Water
District Law of 1911 (Wat. Code, § 71000 et seq.) and is
authorized to set, revise, and collect charges for services. (Wat.
Code, § 71670.) Under the District’s legislative code, sewer
charges are based on an “Equivalent Dwelling Unit” (EDU)
method. An EDU is a measure that equates to 200 gallons of
daily sewage. The EDU assignment method is used to allocate
fees proportionally to different parcels that require greater or
lesser services. Most single-family homes are assigned one
EDU, as is each dwelling unit in a condominium or townhouse.
Commercial parcels are assigned EDUs by a schedule
containing over 20 categories of commercial properties, like
restaurants, hotels, and office buildings. The EDU for
commercial parcels is based upon factors that differ depending
upon the parcel’s use. These factors include the square footage
of a restaurant or office building, the number of beds in a
hospital, and the number of guest rooms in a hotel.
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PLANTIER v. RAMONA MUNICIPAL WATER DISTRICT
Opinion of the Court by Corrigan, J.
A parcel’s annual sewer charge is calculated by
multiplying the parcel’s assigned EDUs by a “per-EDU” rate.3
Thus, the charge consists of two components: the number of
assigned EDUs and the applicable per-EDU rate. The sewer
charge typically appears on a parcel’s property tax bill. The
EDU assignment method treats properties individually based
on each parcel’s use. It is different from the rate, which is the
same for all fee payors served by a particular treatment plant.
Some fee payors will have a larger sewer charge than others.
This discrepancy is driven by the EDU assignment method, not
by imposition of different rates.
The District reviews its operations and maintenance costs
annually. After review in 2012, 2013, and 2014, the District
sought to increase its rates to cover costs. To comply with
Proposition 218, the District mailed out notices and held what
it describes as “Proposition 218 hearings.”
In each of those years, property owners were notified of an
intended rate increase. The proposed changes involved only the
rate and not the method of assigning EDUs to parcels. The 2012
and 2013 notices made no mention of the EDU assignment
method. The 2014 notice included a brief paragraph explaining
the EDU system but gave no indication the District was
considering any change in how EDUs are assigned.
All notices stated that “[a]ny property owner or any tenant
directly responsible for the payment of” sewer fees could submit
a written protest to the “proposed increases in the rates and
fees . . . .” The District informed property owners that its board
3
A different rate is used for each of the District’s two treatment
plants.
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PLANTIER v. RAMONA MUNICIPAL WATER DISTRICT
Opinion of the Court by Corrigan, J.
of directors would “hear and consider” all written and oral
protests “to the proposed rate increases” at the scheduled public
hearing. (Italics added.) Property owners were told that the
District would be authorized to impose the proposed rates unless
it received protests from a majority of affected fee payors.
The District received fewer than 15 written protests to
proposed rate increases in 2012, 2013, and 2014. None of the
written protests challenged the EDU system for calculating a
parcel’s sewer charge (number of assigned EDUs x per-EDU
rate) or the method of allocating EDUs. The District adopted
the proposed rate increases at the close of each public hearing.
B. Plantier’s Objection to the EDU Assignment Method
Since 1998, Eugene Plantier has owned a restaurant
served by the District.4 In early 2012, the District concluded the
restaurant released significant amounts of grease into the sewer
system. It also learned it had assigned only 2.0 EDUs to the
parcel instead of the 6.82 EDUs it deemed were more
appropriate based upon the property’s size and use. In June
2012, the District notified Plantier that the EDUs assigned to
his property were being changed from 2.0 to 6.82, resulting in a
substantial fee increase.
Plantier objected. In a July 2012 letter to the District, his
counsel urged that the assignment of EDUs based upon building
square footage was “arbitrary and discriminatory.” Counsel
expressed the intention to “exhaust [Plantier’s] administrative
remedies before proceeding to Judicial Review.” In August
2012, Plantier met with the District’s general manager and
questioned the practice of assigning EDUs based upon square
4
Ownership of the property is currently held by a family trust.
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Opinion of the Court by Corrigan, J.
footage rather than actual water use. Plantier’s objection was
placed on the board of directors meeting agenda.
The board ultimately considered the matter in December
2012. A consumer advocacy group wrote to the board on
Plantier’s behalf urging that the EDU-based rate structure
violates the proportionality requirement of Proposition 218,
which specifies that a property-related fee or charge may not
exceed the proportional cost of the service provided to the
property. (Art. XIII D, § 6, subd. (b)(3).) Plantier and advocacy
group representatives spoke at the meeting. The District denied
each of Plantier’s claims, including his objection to the EDU
assignment method.
In November 2013, Plantier and two other commercial
property owners5 submitted an administrative claim with the
District alleging that the EDU assignment method violates
Proposition 218’s proportionality requirement. The board
rejected the claim.
C. Procedural History
Following the board’s denial, Plantier and the two other
commercial property owners (collectively, plaintiffs) sued the
District in a putative class action. Plaintiffs allege the EDU
assignment method violates Proposition 218 because the charge
“is imposed without regard to the proportional cost of providing
a property with wastewater service.” They seek declaratory
relief and a refund of unlawful charges. The trial court certified
5
The other property owners are Progressive Properties
Incorporated, which owns an office building, and Premium
Development, LLC, which owns two different commercial
entities.
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PLANTIER v. RAMONA MUNICIPAL WATER DISTRICT
Opinion of the Court by Corrigan, J.
a class consisting of District customers who paid a sewer charge
on or after November 22, 2012.
The court bifurcated the bench trial. The first phase
addressed the potentially dispositive issue of whether plaintiffs
had exhausted their available administrative remedies before
suing. The District conceded that the plaintiffs exhausted one
remedy by submitting their November 2013 claim. The only
remaining question was whether Proposition 218 imposes yet
another exhaustion requirement that plaintiffs had not
satisfied.
The trial court concluded that Proposition 218 created an
additional unexhausted remedy. It relied in part upon Wallich’s
Ranch Co. v. Kern County Citrus Pest Control Dist. (2001) 87
Cal. App. 4th 878 (Wallich’s Ranch). The Wallich’s Ranch court
held that a party seeking to challenge an assessment under the
Citrus Pest District Control Law (Food & Agr. Code, § 8401 et
seq.; Pest Control Law) must first exhaust remedies by raising
its challenge at the agency’s annual budget hearing, thus
allowing the agency to respond, formulate a resolution, and
modify its budget if necessary. (Wallich’s Ranch, at p. 885.) The
court here reasoned that Wallich’s Ranch applies because the
Proposition 218 hearing procedure is inextricably intertwined
with the District’s annual budget process, which reviews costs
and determines the need for revisions in fees. It noted that
Proposition 218 requires the local agency to “consider all
protests” (art. XIII D, § 6, subd. (a)(2)) at the public hearing
required before fees are increased but that the agency obviously
could not consider a protest that was never made.
It was undisputed that none of the representative
plaintiffs participated in the Proposition 218 rate increase
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Opinion of the Court by Corrigan, J.
hearings by either submitting a written protest or speaking at a
hearing.6 It was also undisputed that the District did not
receive a single written or oral protest objecting to the EDU
assignment method at the hearings conducted in 2012, 2013,
and 2014.
Plaintiffs’ counsel urged that any protest at these
Proposition 218 hearings would have been futile. Counsel cited
the District’s repeated rejection of the EDU assignment
challenge at various meetings and in response to plaintiffs’
administrative claim. The trial court rejected the futility
argument because District witnesses testified that any
challenge to the EDU assignment method would have received
careful consideration at the Proposition 218 hearings.
The Court of Appeal reversed, holding that plaintiffs’
class action is not barred by their failure to participate in the
hearings. The appellate court reasoned that a challenge to a fee
on the ground it violates one of the substantive requirements of
article XIII D, section 6, subdivision (b) exceeds the scope of a
Proposition 218 hearing limited to protests over whether a
proposed fee should be imposed or increased. (See art. XIII D,
§ 6, subd. (a).) Further, even if plaintiffs’ challenge did come
within the scope of a hearing, any remedy it afforded is
inadequate. According to the appellate court, it is implausible
that a majority of parcel owners would submit written protests
under the circumstances presented here to trigger the majority
6
As used in this opinion, “participation” in a Proposition 218
hearing refers to either submitting a written protest or speaking
at the hearing. Even under the District’s view that a
Proposition 218 hearing is an administrative remedy that must
be exhausted, neither the District nor plaintiffs suggest that
mere attendance at a hearing suffices as participation.
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Opinion of the Court by Corrigan, J.
protest remedy of article XIII D, section 6, and invalidate a
proposed fee or fee increase. Addressing Proposition 218’s
requirement that an agency “ ‘consider all protests’ at the public
meeting,” the court stated that “merely having an agency
consider a protest—without more—is insufficient to create a
mandatory exhaustion requirement.” The Court of Appeal
concluded that Wallich’s Ranch is distinguishable.
II. DISCUSSION
We granted review to resolve whether a fee payor seeking
to challenge an agency’s method of calculating a property-
related fee must first participate in a Proposition 218 public
hearing at which the agency considers a proposed rate increase.
Review is de novo. (See Greene v. Marin County Flood Control
& Water Conservation Dist. (2010) 49 Cal. 4th 277, 287; Citizens
for Open Government v. City of Lodi (2006) 144 Cal. App. 4th 865,
873.)
A. Proposition 218
Proposition 218, approved by voters in 1996, is one of a
series of voter initiatives restricting the ability of state and local
governments to impose taxes and fees. (Jacks v. City of Santa
Barbara (2017) 3 Cal.5th 248, 258–260.) The first of these
measures was Proposition 13, adopted in 1978, which limited ad
valorem7 property taxes to 1 percent of a property’s assessed
valuation and limited annual increases in valuation to 2 percent
without a change in ownership. (Jacks v. City of Santa Barbara,
at p. 258; art. XIII A, §§ 1, 2.) To prevent local governments
7
“An ad valorem tax is a tax levied on property in proportion to
its value, as determined by assessment or appraisal.” (American
Airlines, Inc. v. County of San Mateo (1996) 12 Cal. 4th 1110,
1124.)
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Opinion of the Court by Corrigan, J.
from increasing special taxes to offset restrictions on ad valorem
property taxes, Proposition 13 prohibited counties, cities, and
special districts from imposing special taxes without a two-
thirds vote of the electorate. (Jacks v. City of Santa Barbara, at
p. 258; art. XIII A, § 4.) But local governments were able to
circumvent Proposition 13’s limitations by relying on Knox v.
City of Orland (1992) 4 Cal. 4th 132, 141, which held a “special
assessment” was not a “special tax” within the meaning of
Proposition 13. (See Apartment Assn. of Los Angeles County,
Inc. v. City of Los Angeles (2001) 24 Cal. 4th 830, 839.)
Consequently, without voter approval, local governments were
able to increase rates for services by labeling them fees, charges,
or assessments rather than taxes. (Ibid.)
To address these and related concerns, voters approved
Proposition 218, known as the “Right to Vote on Taxes Act,”
which added articles XIII C and XIII D to the California
Constitution. (Jacks v. City of Santa Barbara, supra, 3 Cal.5th
at p. 259.) Article XIII C concerns voter approval for many types
of local taxes other than property taxes. Article XIII D
addresses property-based taxes and fees.
Article XIII D allows only four types of local property
taxes: (1) an ad valorem tax, (2) a special tax, (3) an assessment,
and (4) a property-related fee. (Art. XIII D, § 3, subd. (a).)
Proposition 218 supplements Proposition 13’s limitations on ad
valorem and special taxes by placing similar restrictions on
assessments and property-related fees. (Apartment Assn. of Los
Angeles County, Inc. v. City of Los Angeles, supra, 24 Cal.4th at
p. 837.)
Article XIII D imposes distinct procedural and substantive
limitations. (§§ 4, 6.) The procedures an agency must follow
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Opinion of the Court by Corrigan, J.
before “imposing or increasing any fee or charge” are found in
subdivision (a) of article XIII D, section 6. 8 An agency seeking
to impose or increase a property-related fee must hold a hearing
and send written notice of the hearing to the owner of each
affected parcel. (Art. XIII D, § 6, subd. (a)(1).) The notice must
specify the amount of the proposed fee, the basis of calculation,
and the reason for the fee. It must note the date, time, and
location of the public hearing. (Ibid.) At that hearing, “the
agency shall consider all protests against the proposed fee or
charge.” (Id., § 6, subd. (a)(2), italics added.) In addition to
mandating that the agency “consider” all protests,
Proposition 218 establishes a majority protest remedy. “If
written protests against the proposed fee or charge are
presented by a majority of owners of the identified parcels, the
agency shall not impose the fee or charge.” (Ibid., italics added.)
Article XIII D does not define the term “protest” or explain what
form a written protest must take.9 Here, well over 3,000 written
protests would have been required to reject a rate increase.
Even when an agency is generally authorized to impose or
modify fees, so long as it complies with the notice and hearing
8
Subdivision (c) of article XIII D, section 6 establishes a
separate procedure applicable to certain property-related fees.
That procedure does not apply to fees for sewer, water, and
refuse collection services.
9
The legislation implementing Proposition 218 does not provide
any additional guidance concerning the required form or content
of a written protest. (See Gov. Code, §§ 53750–53756.)
However, that legislation does clarify that a written protest may
be submitted by an owner or tenant of an identified parcel as
long as only one protest per parcel is counted in determining
whether the majority protest threshold is met. (Gov. Code,
§ 53755, subd. (b).)
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Opinion of the Court by Corrigan, J.
requirements, Proposition 218 places other substantive
limitations on the agency. Those substantive limitations on
property-related fees appear in subdivision (b) of article XIII D,
section 6. Under these limitations: (1) revenues derived from
the fee may not exceed the cost of providing the property-related
service (id., § 6, subd. (b)(1)); (2) those revenues may not be used
for any purpose other than the one for which the fee was
imposed (id., § 6, subd. (b)(2)); (3) the amount of the fee “shall not
exceed the proportional cost of the service attributable to the
parcel” (id., § 6, subd. (b)(3), italics added); (4) a fee may not be
imposed for a service unless that service is available to the
property owner (id., § 6, subd. (b)(4)); and (5) a fee may not be
imposed upon property owners for a general governmental
service, like fire protection, if the service is available to the
general public in substantially the same manner as it is to
property owners (id., § 6, subd. (b)(5)).
Plaintiffs’ complaint here turns on the substantive
proportionality requirement of article XIII D, section 6,
subdivision (b)(3), italicized above. The requirement “ensures
that the aggregate fee collected on all parcels is distributed
among those parcels in proportion to the cost of service for each
parcel.” (Morgan v. Imperial Irrigation Dist. (2014) 223
Cal. App. 4th 892, 908.) The proportionality requirement
concerns the method used to allocate a property-related service’s
aggregate cost among fee payors. It is separate from an agency’s
obligation not to collect more revenue than necessary to provide
that service to all identified parcels. (See art. XIII D, § 6, subd.
(b)(1).) Plaintiffs’ complaint here is that the EDU assignment
method does not properly allocate costs among parcels served.
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B. Exhaustion of Administrative Remedies
Generally, “a party must exhaust administrative remedies
before resorting to the courts. [Citations.] Under this rule, an
administrative remedy is exhausted only upon ‘termination of
all available, nonduplicative administrative review
procedures.’ ” (Coachella Valley Mosquito & Vector Control Dist.
v. California Public Employment Relations Bd. (2005) 35
Cal. 4th 1072, 1080; see Abelleira v. District Court of Appeal
(1941) 17 Cal. 2d 280, 292–293.) “The rule ‘is not a matter of
judicial discretion, but is a fundamental rule of procedure . . .
binding upon all courts.’ ” (Campbell v. Regents of University of
California (2005) 35 Cal. 4th 311, 321.)
The exhaustion doctrine is primarily grounded on policy
concerns related to administrative autonomy and judicial
efficiency. (See Farmers Ins. Exchange v. Superior Court (1992)
2 Cal. 4th 377, 391.) The doctrine favors administrative
autonomy by allowing an agency to reach a final decision
without interference from the courts. (Ibid.) Unless
circumstances warrant judicial involvement, allowing a court to
intervene before an agency has fully resolved the matter would
“constitute an interference with the jurisdiction of another
tribunal.” (California Correctional Peace Officers Assn. v. State
Personnel Bd. (1995) 10 Cal. 4th 1133, 1151.) If exhaustion were
not required, a litigant would have an incentive to avoid
securing an agency decision that might later be afforded
deference. (See Tahoe Vista Concerned Citizens v. County of
Placer (2000) 81 Cal. App. 4th 577, 594.) Further, creating an
agency with particular expertise to administer a specific
legislative scheme would be frustrated if a litigant could bypass
the agency in the hope of seeking a different decision in court.
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PLANTIER v. RAMONA MUNICIPAL WATER DISTRICT
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As to judicial efficiency, the doctrine allows an
administrative agency to provide relief without requiring resort
to costly litigation. (Sierra Club v. San Joaquin Local Agency
Formation Com. (1999) 21 Cal. 4th 489, 501.) Even when an
administrative remedy does not resolve all issues or provide
complete relief, it still may reduce the scope of litigation. (See
Westlake Community Hosp. v. Superior Court (1976) 17 Cal. 3d
465, 476.) Requiring a party to pursue an available
administrative remedy aids judicial review by allowing the
agency to draw upon its expertise and develop a factual record
for the court’s consideration. (Sierra Club v. San Joaquin Local
Agency Formation Com., at p. 501.)
Here, the District claims a Proposition 218 rate hearing is
an “administrative remedy” plaintiffs were required to exhaust.
Before considering whether exhaustion is required under these
particular circumstances, we pause to narrow the inquiry.
We need not here formulate a general definition that a
procedure must satisfy to constitute an “administrative
remedy.” Such a question may vary among agencies and
legislative schemes. For purposes of this analysis, we will
assume that a Proposition 218 rate hearing is an
“administrative remedy” because that is the way the parties and
the courts below have framed the issue presented by this
dispute. We do not decide the broader question of whether,
when, and under what circumstances a public comment process
may be considered an administrative remedy. We consider only
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whether these Proposition 218 hearings were adequate to
resolve plaintiffs’ substantive challenge.10
Even when a procedure is considered an administrative
remedy, a party may be excused from exhausting it if an
exception applies. (Campbell v. Regents of University of
California, supra, 35 Cal.4th at p. 322; see 1 Cal. Administrative
Mandamus (Cont.Ed.Bar 2018) §§ 3.32–3.48, pp. 3-24 to 3-34.2
[listing exceptions].) One recognized exception arises if the
remedy is inadequate to resolve a challenger’s dispute.
(Glendale City Employees’ Assn., Inc. v. City of Glendale (1975)
15 Cal. 3d 328, 342.)
As a general matter, a remedy is not adequate unless it
“establishes clearly defined machinery for the submission,
evaluation and resolution of complaints by aggrieved parties.”
(Rosenfield v. Malcolm (1967) 65 Cal. 2d 559, 566.) City of
Coachella v. Riverside County Airport Land Use Com. (1989) 210
Cal. App. 3d 1277, 1287 held that a public hearing process did not
provide an adequate remedy because the agency was not
required to “do anything in response to submissions or
testimony received by it incident to those hearings.” Similarly,
in City of Oakland v. Oakland Police & Fire Retirement System
(2014) 224 Cal. App. 4th 210, 237, a public hearing process
without “clearly defined procedures” for the conduct of the
hearing and “no standards for decisionmaking” was determined
to be inadequate as a remedy.
10
This narrow analytical approach is driven in part by the
unique procedure set forth in Proposition 218. It should not be
interpreted to suggest that every public meeting at which a local
government adopts legislation constitutes an “administrative
remedy.”
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Opinion of the Court by Corrigan, J.
The primary procedural remedy afforded by article XIII D,
section 6, subdivision (a) is that a majority of fee payors may
reject a new or increased fee by submitting written protests.
(Art. XIII D, § 6, subd. (a)(2).) But a single written protest would
seldom, if ever, determine whether a proposed fee would be
rejected. That is particularly true here, where thousands of
individual property owners would have to protest in writing to
meet the rejection threshold.
Further, the District only gave notice that it sought to
raise the rate for all parcels serviced. It gave no notice that it
was proposing to change the EDU assignment method.
Accordingly, whatever the result of the public hearings on rates,
the board essentially would have been without authority to
modify the assignment method.
This is so because a change to the method for calculating
a fee is considered an increase in the fee for purposes of
Proposition 218 if it results in an increased amount being levied
on any person or parcel. (Gov. Code, § 53750, subd. (h)(1)(B).)
A methodological change in the allocation of costs among fee
payors will almost always result in some parcels paying a higher
fee to offset those that will now be required to pay less. If,
instead of rejecting plaintiffs’ challenge, the agency determined
it should change its EDU assignment method, it would have had
to give notice of an intended change as Proposition 218 requires.
The notice here, informing fee payors of a proposed rate
increase, would not permit the agency to tinker with the method
for calculating the fee, because a fee increase on certain fee
payors resulting from a methodological change would be beyond
the scope of the notice.
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Here, plaintiffs objected to the sewer charge by urging that
the EDU assignment method itself violates Proposition 218’s
proportionality requirement. They fully adjudicated their
challenge using the District’s own administrative procedures.
They now seek judicial intervention to challenge the District’s
rejection of their request for a change. The noticed Proposition
218 hearings did not offer them the possibility of any effective
relief. If a majority of property owners had rejected a proposed
fee increase, the District would lose the authority to adopt the
increase. The existing charge would have remained in place,
with the same rate structure, and plaintiffs’ proportionality
objection would have remained unresolved.
Even in the absence of a majority protest, the agency is
still required to “consider all protests against the proposed fee
or charge” at the public hearing. (Art. XIII D, § 6, subd. (a)(2).)
There is some dispute over whether “consider[ing]” all protests
is a requirement separate from the majority protest procedure.
Plaintiffs and amicus curiae Howard Jarvis Taxpayers
Association urge that “consider” in this context simply means to
count all written protests to see if a majority is achieved. That
contention is unpersuasive. Article XIII D, section 6,
subdivision (a)(2) provides that an agency may not impose a fee
if a majority of owners present written protests. It follows that
an agency must count all qualified protest votes it is required to
receive. Further, although an agency is required to count all
written protests, it must “consider” all protests at the hearing,
even those not reduced to writing. (Ibid.) Thus, to “consider” all
protests must mean more than simply counting the number of
written protests. To interpret “consider all protests” as simply
a vote-counting requirement would render that language
redundant. Interpretations that render statutory language
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meaningless are to be avoided. (People v. Hudson (2006) 38
Cal. 4th 1002, 1010.)
To “consider” means to “think about carefully” or to “take
into account.” (Webster’s 9th New Collegiate Dict. (1987) pp.
279–280.) The requirement to “consider all protests” (art.
XIII D, § 6, subd. (a)(2)) at a Proposition 218 hearing compels an
agency to not only receive written protests and hear oral ones,
but to take all protests into account when deciding whether to
approve the proposed fee, even if the written protesters do not
constitute a majority. The question remains whether requiring
an agency to “consider all protests” (ibid.) at a public hearing,
without more, constitutes an adequate administrative remedy
under the circumstances presented here.
While Proposition 218 arguably provides a framework to
hear relevant challenges (see art. XIII D, § 6, subd. (a)(2)), a fee
payor has little control over when or even if its complaints may
be heard. Here, it was purely coincidental that the District held
Proposition 218 rate increase hearings around the same time
plaintiffs pursued a proportionality challenge to the existing fee
structure. The District did so because of the conclusion it
needed to increase its fees to cover costs. If the District had
chosen to delay increasing its rates, there would have been no
need for a Proposition 218 hearing. Alternatively, the District
could have dispensed with a Proposition 218 hearing if it limited
any fee increases to an adjustment for inflation in compliance
with Government Code section 53756. In either case, plaintiffs
would have had no opportunity to have their methodology
challenge heard at a Proposition 218 hearing until the District
ultimately decided to make such a change and notice a hearing
to consider it.
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Proposition 218 also provides a limited opportunity for an
agency to evaluate protests. The requirement that a local
government “consider all protests” is restricted to considering
protests “[a]t the public hearing.” (Art. XIII D, § 6, subd. (a)(2).)
While an agency may continue a hearing to allow additional
time for consideration (see Gov. Code, § 53753, subd. (d)),
nothing compels the agency to do so. Further, nothing in
Proposition 218 or the legislation implementing it defines what
level of consideration must be given. A hearing convened to
consider protests to a proposed rate increase will generally be a
poor forum for evaluation of an established method for
allocating fees. That is particularly true when an objection to
the method is first raised at the hearing itself.
We note that plaintiffs’ complaint challenges the existing
structure for allocating fees, not any proposed new fee or
increased rate. The purpose of the notice and hearing
procedures in article XIII D, section 6, subdivision (a) is to
provide property owners an opportunity to protest the “proposed
fee or charge.” (Art. XIII D, § 6, subd. (a)(1) & (2), italics added.)
By contrast, the substantive requirements in section 6,
subdivision (b) govern existing as well as proposed fees. Section
6, subdivision (b) provides that an existing fee may not be
“extended” without complying with substantive requirements.
Thus, a Proposition 218 rate increase hearing is not a forum to
protest an existing rate structure that will remain unchanged
by the proposal. The District suggests otherwise, arguing that
the method for allocating fees is necessarily at issue in a
Proposition 218 rate increase hearing because that method will
effectively be reenacted when the proposed rate increase is
adopted. That argument misses the mark. In a hearing called
only to consider a rate increase, the existing allocation method
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PLANTIER v. RAMONA MUNICIPAL WATER DISTRICT
Opinion of the Court by Corrigan, J.
will be reenacted regardless of whether the rate increase is
adopted or rejected. Therefore, the District cannot legitimately
claim the method for calculating the fee is part of what is being
newly “proposed,” and thus subject to protest, because that
method will remain unchanged no matter the outcome of the
hearing.
Fundamentally, the Proposition 218 hearings held by the
District were inadequate because they did not allow the District
to resolve plaintiffs’ particular dispute. Even if the District had
considered the substance of plaintiffs’ proportionality objection
and concluded it had merit, the District would not have been
able to address the matter in the context of the pending
Proposition 218 hearing. As the District acknowledges, if a valid
methodological challenge were raised, the most an agency could
do is formulate a new fee proposal to resolve the challenge and
initiate a Proposition 218 hearing to consider that proposal. It
would be oddly burdensome to require an aggrieved party to
participate in a Proposition 218 hearing simply to raise an
objection that could only be addressed meaningfully in a
separate public hearing that is subject to its own notice
requirements. Further, an aggrieved party has no power to
compel an agency to conduct a public hearing to change the
method for imposing a fee. Because nothing requires the agency
to initiate a new Proposition 218 hearing, there is no guarantee
a challenge would be addressed even if valid.
The District argues that “consideration” necessarily
entails resolving any protests, presumably because objections
are impliedly either accepted or rejected when an agency’s board
ultimately votes on a proposed fee. The contention fails.
Adoption of a proposed fee increase does not resolve a
proportionality challenge to a fee’s calculation because the
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PLANTIER v. RAMONA MUNICIPAL WATER DISTRICT
Opinion of the Court by Corrigan, J.
agency is not empowered to change the method by which a fee is
calculated when considering whether to increase a preexisting
fee. An agency’s ultimate decision to adopt or reject a proposed
rate increase cannot be interpreted as a resolution of all issues
presented to it.
The District falls back on the principle that exhaustion of
remedies is required even if an administrative remedy does not
dispose of the entire dispute or afford the precise relief sought.
(See Sierra Club v. San Joaquin Local Agency Formation Com.,
supra, 21 Cal.4th at p. 501.) When a party challenges the
method used to calculate a fee, a Proposition 218 hearing limited
to a proposed fee increase does not simply offer incomplete relief,
it offers no relief at all. Moreover, the purpose for applying the
exhaustion rule even when complete relief is unavailable is that
exhaustion of remedies serves to ensure administrative
autonomy and promote judicial efficiency. (Sierra Club v. San
Joaquin Local Agency Formation Com, at p. 501.) But the
purposes of the exhaustion rule are not served by the public
hearing here. That process does not narrow the scope of the
claims and relieve the burden on the courts. It does not promote
the development of a factual record for review. And, it does not
give the administrative agency a meaningful opportunity to
apply its expertise because the agency will typically have no
power to modify a proposed fee to address a valid methodological
challenge.
For the reasons discussed above, a party may challenge
the method used to calculate a fee without first having
participated in a Proposition 218 hearing called to consider a
rate increase. Such a hearing does not provide an adequate
remedy for a methodological challenge. We do not decide and
express no view on the broader question of whether a
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PLANTIER v. RAMONA MUNICIPAL WATER DISTRICT
Opinion of the Court by Corrigan, J.
Proposition 218 hearing could ever be considered an
administrative remedy that must be exhausted before
challenging the substantive propriety of a fee in court.
Along with various amici curiae, the District contends that
allowing a party to sue without having first participated in the
Proposition 218 hearing process renders that process and the
duty to consider all protests meaningless. That is not so. This
hearing process did what it is intended to do: give a majority of
fee payors the chance to veto a rate increase and ensure the
decisionmakers are aware of public opposition. It would be a
meaningless exercise, however, to require a party to raise a
methodological challenge at a hearing where the agency has no
obligation to respond and cannot resolve the challenge.
As a final matter, it is necessary to address the import of
Wallich’s Ranch, supra, 87 Cal. App. 4th 878, the decision relied
upon by the trial court and distinguished by the Court of Appeal.
The District cites Wallich’s Ranch for the principle that a
“remedy exists if the law provides for notice, opportunity to
protest and a hearing.” Wallich’s Ranch does not stand for such
a broad proposition. But even if it could be interpreted to
describe a public comment procedure as a “remedy,” it does not
establish that the mere opportunity to comment at a public
hearing constitutes an adequate remedy.
In Wallich’s Ranch, the plaintiff brought an action against
various agencies seeking a refund of assessments imposed under
the Pest Control Law. (Wallich’s Ranch, supra, 87 Cal.App.4th
at p. 880.) Although the plaintiff raised a claim that the
assessments violated Proposition 218, the trial court concluded
the assessments were not governed by its provisions. (Id. at p.
882.) On appeal, the issue was limited to whether the plaintiff
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PLANTIER v. RAMONA MUNICIPAL WATER DISTRICT
Opinion of the Court by Corrigan, J.
had exhausted available remedies under the Pest Control Law.
(Id. at pp. 883–885.) The appellate court concluded the plaintiff
was required to exhaust administrative remedies by
participating in the public hearing process associated with the
adoption of the agency’s annual budget. (Id. at p. 885.) The
court in Wallich’s Ranch had no occasion to consider whether
Proposition 218 imposes a separate exhaustion requirement.11
Although the public hearing in Wallich’s Ranch had some
similarities to the Proposition 218 process, the decision is
distinguishable. 12 Under the Pest Control Law, an agency must
adopt a preliminary fiscal year budget and hold a public hearing
on that budget. (Food & Agr. Code, §§ 8559–8561.) Any owner
of citrus acreage subject to an assessment may protest in
writing. (Id., § 8564.) At the hearing, the agency must “hear
and pass upon all protests so made and its decision shall be final
and conclusive.” (Id., § 8565, italics added.) The Pest Control
Law gives the agency the authority to “make such changes in
the proposed budget as it finds are proper and advisable.” (Id.,
§ 8566.)
11
In distinguishing Wallich’s Ranch, the Court of Appeal noted
that the plaintiffs here had exhausted the remedy afforded by
the District’s own legislative code. By contrast, the plaintiff in
Wallich’s Ranch had not attempted to exhaust any available
administrative remedy. To be clear, our decision does not turn
on plaintiffs’ exhaustion of administrative remedies set forth in
the District’s legislative code. A party must exhaust all
available nonduplicative remedies. (Coachella Valley Mosquito
& Vector Control Dist. v. California Public Employment
Relations Bd., supra, 35 Cal.4th at 1080.)
12
The propriety of the holding in Wallich’s Ranch is not before
us. We express no view on whether it was correctly decided.
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PLANTIER v. RAMONA MUNICIPAL WATER DISTRICT
Opinion of the Court by Corrigan, J.
The Pest Control Law not only requires the agency to rule
upon any protests, it also gives the agency the authority to
adjust its budget and make any necessary changes in response
to protests. (Wallich’s Ranch, supra, 87 Cal.App.4th at p. 885.)
By contrast, an agency seeking to increase the rate at a
Proposition 218 hearing has no authority to resolve
methodological challenges or to modify the fee structure.
In addition, the Pest Control Law affords a property owner
an opportunity to be heard at least once a year, when an agency
adopts its fiscal year budget. (Food & Agr. Code, § 8560.)
Proposition 218 offers no guarantee a fee payor like Plantier will
be given an opportunity to be heard in that forum. It was purely
serendipitous that plaintiffs brought their proportionality
challenge around the same time the District held Proposition
218 hearings to consider increasing its rates.
Plaintiffs here seek judicial review of their claim that the
method used to allocate fees among parcels violates a
substantive limitation imposed by the state Constitution. It
would serve no purpose and make little sense to require that, in
order to do so, they must participate in a hearing convened to
consider a different question and at which they could not secure
relief.
Under appropriate circumstances, the exhaustion doctrine
appropriately provides a defensive shield for administrative
agencies to insulate their actions from judicial intervention until
a challenger gives the agency an opportunity to resolve the
dispute in the first instance. Here, however, the District seeks
to strike down claims not properly encompassed in the
Proposition 218 rate increase hearings. In effect, it seeks to use
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PLANTIER v. RAMONA MUNICIPAL WATER DISTRICT
Opinion of the Court by Corrigan, J.
the exhaustion doctrine as a sword rather than a shield. That
it cannot do.
III. DISPOSITION
The judgment of the Court of Appeal is affirmed.
CORRIGAN, J.
We Concur:
CANTIL-SAKAUYE, C. J.
CHIN, J.
LIU, J.
CUÉLLAR, J.
KRUGER, J.
GROBAN, J.
24
See next page for addresses and telephone numbers for counsel who argued in Supreme Court.
Name of Opinion Plantier v. Ramona Municipal Water District
__________________________________________________________________________________
Unpublished Opinion
Original Appeal
Original Proceeding
Review Granted XXX 12 Cal.App.5th 856
Rehearing Granted
__________________________________________________________________________________
Opinion No. S243360
Date Filed: May 30, 2019
__________________________________________________________________________________
Court: Superior
County: San Diego
Judge: Timothy B. Taylor
__________________________________________________________________________________
Counsel:
Patterson Law Group, James R. Patterson, Allison H. Goddard, Catherine S. Wicker; Carlson Lynch Sweet
Kilpela & Carpenter and Todd D. Carpenter for Plaintiffs and Appellants.
Trevor A. Grimm, Jonathan M. Coupal, Timothy A. Bittle and Laura E. Murray for Howard Jarvis
Taxpayers Association as Amicus Curiae on behalf of Plaintiffs and Appellants.
Procopio, Cory, Hargreaves & Savitch, Kendra J. Hall, Gregory V. Moser, John D. Alessio and Adriana R.
Ochoa for Defendant and Respondent.
Daniel S. Hentschke; Colantuono, Highsmith & Whatley, Michael G. Colantuono and Eduardo Jansen for
League of California Cities, California State Association of Counties, California Association of Sanitation
Agencies, California Special Districts Association and Association of California Water Agencies as Amici
Curiae on behalf of Defendant and Respondent.
Mary R. Casey; Bertrand, Fox, Elliot, Osman & Wenzel and Thomas F. Bertrand for Main Municipal
Water District as Amicus Curiae on behalf of Defendant and Respondent.
Counsel who argued in Supreme Court (not intended for publication with opinion):
Allison H. Goddard
Patterson Law Group
1350 Columbia Street, Suite 603
San Diego, CA 92101
(619) 756-6990
Laura E. Murray
Howard Jarvis Taxpayers Foundation
921 Eleventh Street, Suite 1201
Sacramento, CA 95814
(916) 444-9950
Kendra J. Hall
Procopio, Cory, Hargreaves & Savitch
525 B Street, Suite 2200
San Diego, CA 92101
(619) 238-1900