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Second Contempt Motion v4 FINAL

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Second Contempt Motion v4 FINAL Powered By Docstoc
					 1   STEPHEN P. BERZON (SBN 46540)
     SCOTT A. KRONLAND (SBN 171693)
 2   STACEY M. LEYTON (SBN 203827)
     PEDER 1. THOREEN (SBN 217081)
 3   ANNE N. ARKUSH (SBN 254985)
     Altshuler Berzon LLP
 4   177 Post Street, Suite 300
     San Francisco, California 94108
 5   Telephone: (415) 421-7151
     Facsimile: (415) 362-8064
 6   sberzon@altshulerberzon.com
     skronland@altshulerberzon.com
 7   sleyton@altshulerberzon.com
     pthoreen@altshulerberzon.com
 8   aarkush@altshulerberzon.com

 9   Attorneys for Plaintiffs

10                                       UNITED STATES DISTRICT COURT
                                   FOR THE NORTHERN DISTRICT OF CALIFORNIA
11                                     SAN FRANCISCO/OAKLAND DIVISION

12   MIKESHA MARTINEZ, by and through her             )   Case No. C 09-02306 CW
     husband and next friend Carlos Martinez, LYDIA   )
13   DOMINGUEZ, ALEX BROWN, by and through            )
     his mother and next friend Lisa Brown, DONNA     )   CLASS ACTION
14   BROWN, CHLOE LIPTON, by and through her          )
     conservator and next friend Julie Weissman-      )   PLAINTIFFS' MOTION FOR CIVIL
15   Steinbaugh, HERBERT M. MEYER, LESLIE             )   CONTEMPT SANCTIONS AND FOR A
     GORDON, CHARLENE AYERS, WILLIE                   )   FURTHER MORE SPECIFIC
16   BEATRICE SHEPPARD, and ANDY                      )   PRELIMINARY INJUNCTION;
     MARTINEZ, on behalf of themselves and a class    )   MEMORANDUM OF POINTS AND
17   of those similarly situated; SERVICE             )   AUTHORITIES IN SUPPORT
     EMPLOYEES INTERNATIONAL UNION                    )
18   UNITED HEALTHCARE WORKERS WEST;                  )
     SERVICE EMPLOYEES INTERNATIONAL                  )   Date: TBD
19   UNION UNITED LONG-TERM CARE                      )   Time: TBD
     WORKERS; SERVICE EMPLOYEES                       )   Place: Courtroom 2, 4th floor,
20   INTERNATIONAL UNION LOCAL 521; and               )          Oakland Federal Courthouse
     SERVICE EMPLOYEES INTERNATIONAL                  )          1301 Clay Street
21   UNION CALIFORNIA STATE COUNCIL,                  )          Oakland, CA 94612
                                                      )
22                   Plaintiffs,                      )
                                                      )
23          v.                                        )
                                                      )
24   ARNOLD SCHW ARZENEGGER, Governor of              )
     the State of California; JOHN A. WAGNER,         )
25   Director of the California Department of Social  )
     Services; DAVID MAXWELL-JOLL Y, Director         )
26   of the California Department of Health Care      )
     Services; JOHN CHIANG, California State          )
27   Controller; FRESNO COUNTY; and FRESNO            )
     COUNTY IN-HOME SUPPORTIVE SERVICES)
28   PUBLIC AUTHORITY,                               )
                                                     )
                     Defendants.                     )
                                                     )
 1            NOTICE OF MOTION AND MOTION FOR CIVIL CONTEMPT SANCTIONS
                         AND FURTHER MORE SPECIFIC INJUNCTION
 2
             Please take notice that at a date and time to be set by the Court, in Courtroom 2, Oakland Federal
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     Courthouse, 1301 Clay Street, Oakland CA 94612, before the Honorable Claudia Wilken, Plaintiffs will
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     move the Court for civil contempt sanctions against Defendants Schwarzenegger, Wagner, Maxwell-
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     Jolly, and Chiang ("State Defendants") for presently violating this Court's July 13, 2009 Amended
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     Preliminary Injunction by failing to rescind approvals of rate reductions submitted by Santa Barbara and
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     Fresno County, and for a further more specific preliminary injunction to require the State to ensure that
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     providers will be paid the correct amount for the first pay period in July 2009 within seven days of the
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     date the provider submits his or her time sheet.
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             Despite the Court's unambiguous order that State Defendants "by close of business on July 14,
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     2009, rescind the State's approval of all county rate reduction requests which were submitted after
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     February 20,2009, to be effective July 1, 2009, and reinstate the State's approval of the pre-July 1 rates,"
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     State Defendants have failed to do so. Instead, State Defendants contacted counties by telephone to ask
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     whether they wanted to return to the pre-July 1 wages, refused to rescind approval of the rate decrease
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     request in Santa Barbara County on the ground that the county now did not want to return to that pre-
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     July 1 wage, and refused to rescind approval of the rate decrease request in Fresno County based on the
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     false assertion that the county had previously submitted two separate and independent rate requests.
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             Plaintiffs' motion for civil contempt sanctions is made pursuant to the inherent authority of the
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     Court on the ground that State Defendants are presently violating this Court's July 13, 2009 amended
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     preliminary injunction. See Stone v. City and County of San Francisco, 968 F.2d 850, 856 & n.9 (9th
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     Cir. 1992).
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             In addition, rather than take responsibility for paying IHSS providers the correct wage rate for the
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     first July pay period, State Defendants have placed the entire administrative burden on counties (other
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     than Santa Barbara and Fresno, as to whom they are violating the Amended Preliminary Injunction) to do
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     so. And they have provided counties no date by which to issue a supplemental paycheck on the first July
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     pay period. Despite the specificity of the Court's Amended Preliminary Injunction, State Defendants
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     have demonstrated once again that they will exploit every possible loophole and evade even clear
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     mandates. For this reason, Plaintiffs respectfully request that this Court issue a further more specific

       Plaintiffs' Mot. for Civil Contempt Sanctions and More Specific Prelim. Inj.; Mem. in Supp., Case No. C09-02306 CW
                                                               1
 1   preliminary injunction that State Defendants pay IHSS providers the correct amount for the first July

 2   2009 pay period no later than seven days after the provider submits his or her time sheet.

 3           This motion is based on this Notice of Motion and Motion, the accompanying Memorandum of

 4   Points and Authorities, the Declarations in connection with this Motion, the [Proposed] Order Granting

 5   Plaintiffs' Motion, the complete files and records of this action, and such other and further matters as the

 6   Court may properly consider.

 7
 8   Dated: July 16, 2009                                         Respectfully submitted

 9                                                                STEPHEN P. BERZON
                                                                  SCOTT KRONLAND
10                                                                STACEYM. LEYTON
                                                                  PEDER 1. THOREEN
11                                                                ANNE N. ARKUSH
                                                                  Altshuler Berzon LLP
12

13                                                          By:      lsi Stacey M Levton
                                                                  Stacey M. Leyton
14                                                                Attorneys for Plaintiffs

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28                                              TABLE OF CONTENTS


       Plaintiffs' Mot. for Civil Contempt Sanctions and More Specific Prelim. Inj.; Mem. in Supp., Case No. C09-02306 CW
                                                               2
 1   BACKGROUND.                . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..   2
               A.        Issuance of First Injunction.                . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..   2
 2
               B.        Non-Implementation of First Injunction                                                                                                  3
 3

 4             C.        Issuance of Amended Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..                       4

 5             D.        Non-Implementation of Second Injunction                                                                                                 4

 6   ARGUMENT                                                                                                                                                    7
               A.        State Defendants Are In Contempt Of This Court's Amended Preliminary Injunction ..                                                      7
 7
                          1.        Contempt standard                                                                                                            7
 8

 9                       2.         State Defendants Are Violating this Court's Injunction . . . . . . . . . . . . . . . . . ..                                  8

10                                  a.          Santa Barbara County . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..                  8

11                                  b.         Fresno County. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..               9

12                       3.         Remedy                                                                                                                       11
               B.        This Court Should Issue a Further More Specific Preliminary Injunction.                                          . . . . . . . . ..     12
13

14   CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..                 13

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       Plaintiffs' Mot. for Civil Contempt Sanctions and More Specific Prelim. Inj.; Mem. in Supp., Case No. C09-02306 CW
                                                                                  1
 1                                                       TABLE OF AUTHORITIES

 2                                                              FEDERAL CASES

 3   In re Crystal Palace Gambling Hall, Inc.,
             817 F.2d 1361 (9th Cir. 1987)                                                                                                   12
 4
     In re Dual-Deck Video Cassette Recorder Antitrust Litigation,
 5           10 F.3d 693 (9th Cir. 1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..   7, 8

 6   In re Dyer,
             322 F.3d 1178 (9th Cir. 2003)                                                                                                   12
 7
     Gompers v. Bucks Stove & Range Co.,
 8         221 U.S. 418 (1911)                                                                                                                8

 9   Stone v. City and County of San Francisco,
             968 F.2d 850 (9th Cir. 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..    1, 8
10
     United States v. Ayres,
11          166 F.3d 991 (9th Cir. 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..    11

12                                                           FEDERAL STATUTES

13   42 U.S.C. §1396a(a)(30)(A)                2

14                                                             STATE STATUTES

15   Section 12306. 1(d)(6) .........................................................                                                  passim

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       Plaintiffs' Mot. for Civil Contempt Sanctions and More Specific Prelim. Inj.; Mem. in Supp., Case No. C09-02306 CW
                                                                              11
 1                             MEMORANDUM             OF POINTS AND AUTHORITIES

 2           On July 13, 2009, the Court issued an Amended Preliminary Injunction intended to resolve any

 3   ambiguity regarding State Defendants' obligations under the previously-issued June 26 Preliminary

 4   Injunction. The Court could not have been clearer in setting forth the mandate that "State Defendants

 5   shall, by the close of business on July 14, 2009, rescind the State's approval of all county rate reduction

 6   requests which were submitted after February 20, 2009, to be effective July 1, 2009, and reinstate the

 7   State's approval of the pre-July 1 rates." 7/13/09 Amd. Prelim. Inj. 2:1-5.

 8           Quite amazingly, State Defendants have admitted to the Court that they will not comply with this

 9   injunction. Rather than rescinding the State's approval as ordered, State Defendants telephoned counties

10   to ask whether they wanted to maintain the pre-July 1 wages, and have inexplicably refused to rescind

11   approval of the Santa Barbara rate reduction request based on Santa Barbara's "refus[al] to consent" to

12   compliance with this Court's order.

13           In addition, State Defendants have ignored this Court's clear directive that Fresno County could

14   reduce its wage effective July 1, 2009 only "if it submitted two [rate change] requests," and that if it had

15   instead "submitted one Rate Change Request with a second reason for the request other than the passage

16   of § 12306.1(d)(6)," it would have to "submit a separate request based on a reason other than §

17   12306. 1(d)(6)" if it wanted to pursue a rate reduction. 7/13/09 Order Clarifying 6 n. 4. Fresno County

18   submitted one Rate Change Request on April 30, 2009 and a "second reason for th[at] request" on June

19   24,2009.   Despite this and the clear wording of this Court's Amended Preliminary Injunction, State

20   Defendants have informed this Court that they will give Fresno County's pre-Injunction Rate Change

21   Request full force and effect.

22           There is no room for a good faith misunderstanding of the meaning of this Court's Amended

23   Preliminary Injunction, and State Defendants should therefore be held in contempt for their continued

24   attempts to circumvent the authority of this Court.

25           In addition, with respect to counties other than Santa Barbara and Fresno, State Defendants have

26   placed the entire administrative burden on counties to ensure that IHSS providers are paid at the correct

27   wage rate for the first July pay period, and have informed counties there is no date by which such

28   payment must be made. State Defendants also have informed this Court, without explanation or reasons,


       Plaintiffs' Mot. for Civil Contempt Sanctions and More Specific Prelim. Inj.; Mem. in Supp., Case No. C09-02306 CW
                                                               1
 1   that they do not intend to change the levels of wages and benefits in the CMIPS system until July 23,

 2   2009 - 28 days after this Court's oral injunction, 27 days after its written injunction, 24 days after the

 3   first county notified the California Department of Social Services ("CDSS") that it wanted to maintain the

 4   pre-July 1 wage rate, and 10 days after this Court's Amended Preliminary Injunction. This means that

 5   payment of the full amount of pre-July 1 wages will not be included in the paycheck for the July 1st-15th

 6   pay period, and that supplemental paychecks will have to be issued sometime thereafter. While Plaintiffs

 7   believe this Court's orders have been very clear, State Defendants have demonstrated that they will

 8   exploit every possible loophole and evade even clear mandates. For this reason, Plaintiffs respectfully

 9   request that this Court issue a further more specific preliminary injunction that State Defendants pay

10   IHSS providers the correct amount for the first July 2009 pay period in checks that are issued no later

11   than seven days after the provider submits his or her time sheet.

12           State Defendants' actions undermine the authority of the Court and threaten to cause the very

13   harm to some of California's most vulnerable populations that - twice, now - the Court has explicitly

14   tried to prevent through issuance of its Preliminary Injunction and Amended Preliminary Injunction.

15                                                   BACKGROUND

16           Because the Court is by now well-aware of the circumstances underlying this action, Plaintiffs

17   offer an abbreviated background here. When implementing Welfare and Institutions Code

18   §12306.1 (d)( 6), State Defendants required that counties paying above $10.10 per hour in wages and

19   benefits submit a Rate Change Request to "to reflect the change in the maximum amount in which the

20   state will participate." Leyton Supp. Dec!' (Dkt. #145-2), Ex. B. In response, numerous counties

21   submitted Rate Change Requests seeking to reduce IHSS provider wages and benefits below the rates

22   currently paid.

23   A.      Issuance of First Injunction

24           After briefing and a hearing on June 25, 2009, this Court issued an oral Preliminary Injunction

25   followed by a written Preliminary Injunction and Order Granting Plaintiffs' Motion for a Preliminary

26   Injunction on June 26, 2009. This Court found that Plaintiffs had demonstrated a strong likelihood of

27   success on their claim that State Defendants failed to consider the factors set forth in 42 U.S.C.

28   §1396a(a)(30)(A) ("Section 30(A)") before enacting Section 12306. 1(d)(6), in violation of the federal


       Plaintiffs' Mot. for Civil Contempt Sanctions and More Specific Prelim. Inj.; Mem. in Supp., Case No. C09-02306 CW
                                                               2
 1   Medicaid Act. Order Granting Prelim. Inj. 10: 14-17. This Court further found that, absent injunctive

 2   relief, both IHSS consumers and providers would suffer irreparable harm as a result of the wage

 3   reductions caused by the implementation of Section 12306.1(d)(6). Id 10:25-11:21. Accordingly, the

 4   Court's Preliminary Injunction enjoined and restrained State Defendants "from implementing California

 5   Welfare and Institutions Code § 12306. 1(d)(6) without first conducting the analysis required by 42

 6   U.S.C. § 1396a(a)(30)(A), as described in Orthopaedic Hospital v. Belshe, 103 F.3d 1941, 1493 (9th

 7   Cir. 1997)." Prelim. Inj. 1:24-28.
     B.      Non-Implementation        of First Injunction
 8
 9           State Defendants' response to that injunction has from the beginning demonstrated a pattern of

10   bad faith evasion of this Court's mandates. State Defendants have excused their noncompliance by

11   offering implausible interpretations of this Court's orders and erecting false bureaucratic roadblocks to

12   compliance.

13           To begin, State Defendants took no timely action to notify the counties of the Court's injunction,

14   waiting five days despite having informed the Court that it would provide such notice "immediately."

15   Leyton Supp. Decl. (Dkt. #145-7), Ex. G; Dkt. #132, at 2. Even the belated notice provided no

16   information to counties regarding which wage and benefit rate would be in effect on July 1, 2009, or how

17   counties that had submitted rate change requests based solely upon § 12306. 1(d)(6) could ensure that the

18   pre-July 1 rates remain in effect. 7/13/09 Order Clarifying 3 :24-27.

19           Finally, on July 3,2009, CDSS issued an All-County Notice informing counties that the lower

20   rate will "remain in effect until counties submit new Rate Change Requests through the process outlined

21   in Welfare and Institutions Code Section 12306.1 and CDSS and DHCS approve those requests."

22   7/13/09 Order Clarifying 3:28-4:7. Counties were not told how long that process would take. Counties

23   that inquired were told by CDSS officials that it would take 60 days to restore the pre-July 1 wage rate.

24   Id 4:12-14; see also Mancini Decl. ~8 (Dkt. #147); McDevitt Supp. Decl., Ex. I (Dkt. #148-9); Malberg

25   Supp. Decl. ~4 (Dkt. #146). When asked why it would take 60 days even though CDSS had previously

26   processed Rate Change Requests that decreased rates in implementation of § 12306. 1(d)(6) much more

27   quickly, a CDSS official stated that CDSS had committed all resources to process those rate decreases

28


       Plaintiffs' Mot. for Civil Contempt Sanctions and More Specific Prelim. Inj.; Mem. in Supp., Case No. C09-02306 CW
                                                               3
 1   but would process Rate Change Requests asking that the pre-July 1 rate be maintained according to

 2   "normal" procedures. Leyton Supp. Decl. (Dkt. #145) ~13; see also 7/13/09 Order Clarifying 4:18-20.

 3
     c.      Issuance of Amended Injunction

 4           In response to what Plaintiffs believed was State Defendants' willful misreading of the Court's

 5   Preliminary Injunction, on July 8, 2009 Plaintiffs filed a motion seeking civil contempt or, in the

 6   alternative, an injunction that more specifically outlined State Defendants' obligations. The Court issued

 7   a more specific injunction on July 13, 2009. The additional language in that injunction eliminates any

 8   question that may have existed as to whether State Defendants are obligated to rescind their approvals of

 9   Rate Change Requests proposing decreases based on § 12306.1(d)(6):

10           IT IS FURTHER ORDERED that State Defendants shall, by the close of business on July
             14, 2009, rescind the State's approval of all county rate reduction requests which were
11           submitted after February 20,2009, to be effective July 1, 2009, and reinstate the State's
             approval of the pre-July 1 rates.
12
     7/13/09 Amd. Prelim. Inj. at 1:18-2: 16.
13
             Additionally, the Order Clarifying Injunction and Denying Plaintiffs' Motion For Civil Sanctions
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     provides that State Defendants "may notify the counties that they may submit new Rate Change Requests
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     if they wish to pursue a rate change for reasons other than the passage of § 12306.1(d)(6)."           7/13/09
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     Order Clarifying 6:12-15. With respect to Fresno County, the Court set forth:
17
             It is not clear from the papers submitted by the parties whether Fresno County submitted
18           one Rate Change Request with a second reason for the request other than the passage of §
             12306. 1(d)(6) or if it submitted two requests. Ifit submitted only one request, it must
19           submit a separate request based on a reason other than § 12306. 1(d)(6) if it wishes to
             pursue a rate reduction.
20
     7/13/09 Order Clarifying 6 nA.
21
     D.      Non-Implementation        of Second Injunction
22
             The afternoon of July 14, 2009, Plaintiffs' counsel learned from clients that CDSS official Eileen
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     Carroll had been contacting counties by telephone to ask whether they wanted to "revert" to the pre-July
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     1, 2009 wage. Plaintiffs' counsel immediately wrote to State Defendants' counsel stating that this was a
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     clear violation of the explicit terms of the Amended Injunction, which required State Defendants to
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     rescind approvals of all Rate Change Requests proposing rate decreases that were submitted after
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     February 20, 2009 regardless of whether counties wanted those decreases to take effect. Leyton Second
28
     Supp. Decl. (filed contemporaneously with this motion), Ex. D. The letter further asked that State

       Plaintiffs' Mot. for Civil Contempt Sanctions and More Specific Prelim. Inj.; Mem. in Supp., Case No. C09-02306 CW
                                                               4
 1   Defendants cease and desist from this contemptuous conduct. Id Shortly thereafter, the information

 2   from Plaintiffs' clients was confirmed in an article that appeared on the Sacramento Bee website, in which

 3   CDSS spokesperson Lizelda Lopez stated that CDSS was taking steps to "adjust[] the level of wages and

 4   benefits to the pre July 1st level for those counties that have requested it," but did "not have the authority

 5   to force counties to pay wages that they have not agreed to." Id, Ex. A. Ms. Lopez further stated that

 6   CDSS was contacting four counties that had purportedly not stated their intentions to CDSS, in order "to

 7   see whether they want to return to the higher, pre-July 1 rate." Id

 8           On July 15, 2009, Plaintiffs' counsel was informed that Ms. Carroll told at least one IHSS Public

 9   Authority that if the State prevailed in the lawsuit - that is, if it is eventually able to implement 12306.1 -

10   the county would be responsible for the state contribution above $9.50 retroactive to July 1, 2009.

11   Arkush Supp. Decl. (filed contemporaneously with this motion) ~2. That threat is wholly false but

12   nonetheless appears to have been an attempt to pressure counties to say that they did not want to

13   maintain the pre-July 1 rate.

14           On July 15, 2009, Plaintiffs received a copy of the notice that State Defendants represented had

15   gone out on July 14, 2009.1 That notice instructed that, in order to pay the pre-July 1 rates prior to July

16   23, counties would be required to "complete a 'spec transaction"          that would "take 20-25 minutes per

17   case." Dkt. #180 (All-County Welfare Director's Letter at 3). In San Benito County, which has only

18   420 IHSS consumers, this process would take 9-10 working days, and would occupy the two social

19   workers employed by the IHSS program full-time for one week, interfering with those social workers'

20   ability to conduct assessments and perform other necessary functions for the IHSS program. Delgado

21   Decl. ~~2-3; see also McDevitt Decl. ~~2-3 (process will take Solano County 500 staffhours and will

22   cost another county $200,000). Plaintiffs' counsel wrote State Defendants' counsel the afternoon of July

23   15 stating that we were unaware of any legal basis to place such responsibility on the counties when the

24   State was responsible for the need to issue the supplemental checks (because of its unlawful enactment of

25   Section 12306. 1(d)(6), and its delayed implementation of this Court's injunction), asking State

26

27
            1 State Defendants' counsel did not provide a copy of this notice to Plaintiffs' counsel, despite
28   numerous unanswered requests that a copy be provided, until it was e-filed late the afternoon of July 15,
     2009. Leyton Second Supp. Decl. ~~7-8, Ex. E.

       Plaintiffs' Mot. for Civil Contempt Sanctions and More Specific Prelim. Inj.; Mem. in Supp., Case No. C09-02306 CW
                                                               5
 1   Defendants to identify any such legal basis and to state whether they intended to reimburse counties for

 2   their expenses, and stating that we had been advised that the process could be automated and asking why

 3   such automation could not be employed. Leyton Second Supp. Decl., Ex. G. State Defendants have not

 4   responded to this letter.

 5           On July 14 and 15,2009, Plaintiffs' counsel also corresponded with counsel for State Defendants

 6   and the Fresno Defendants, stating that Fresno County had submitted a single Rate Change Packet (based

 7   on the enactment of § 12306. 1(d)(6)) to CDSS on April 30, 2009; that on June 16,2009 the Fresno

 8   County Board of Supervisors approved a secondary reason for that Rate Change Packet; and that on

 9   June 24,2009 Fresno County submitted to CDSS the approved Board agenda item as supporting

10   documentation for the April 30, 2009 Rate Change Packet. Leyton Second Supp. Decl., Ex. B. Thus,

11   Plaintiffs' letter explained, Fresno County had submitted "one Rate Change Request with a second reason

12   for the request other than the passage of § 12306.1(d)(6)," 7/13/09 Order Clarifying 6 n. 4, and that

13   under the terms of this Court's order, the State's approval had to be rescinded and Fresno County would

14   need to submit a new PA Rate Change packet for processing by the State if it intended to cut IRS S

15   wages and/or benefits based on a separate justification. Leyton Second Supp. Decl., Ex. B. Counsel for

16   Defendants responded only with the conc1usory statement that Fresno County's June 24,2009 submission

17   to CDSS was "a second rate change request" based on a justification other than § 12306.1(d)(6). Id,

18   Exs. C, H.

19           At 5:43 p.m. on July 15, 2009, State Defendants filed a "Letter from State Defendants to Judge

20   Wilken Re Complying with Amended Preliminary Injunction.'?             That letter stated that Santa Barbara

21   County had "refused to consent to pay the pre-July 1st level of wages and benefits," and that "State

22   defendants have no authority to force a county to pay any level higher than the minimum wage," and so

23   providers in Santa Barbara County would not be paid the pre-July 1 rate. State Defendants offered no

24   explanation as to why they would not comply with the Amended Injunction's mandate that they rescind

25

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             2 The letter indicates that State Defendants construe the Amended Preliminary Injunction to

28   permit rate change requests seeking increases from the pre-July 1st wage to go into effect. Dkt. #180 at
     2. Plaintiffs agree with this construction.

       Plaintiffs' Mot. for Civil Contempt Sanctions and More Specific Prelim. Inj.; Mem. in Supp., Case No. C09-02306 CW
                                                               6
 1   approvals of all wage decreases scheduled to take effect on July 1, 2009, and/or why Santa Barbara's

 2   consent would be needed for State Defendants to comply with this Court's order.'

 3           State Defendants' letter further stated that "it has been determined that Fresno County did submit

 4   a second Rate Change Request on June 24th based on a different basis than section 12306. 1(d)(6), and

 5   the State defendants approved that request on June 25th.,,4 Therefore, State Defendants also would not

 6   rescind approval of Fresno County's Rate Change Request, and Fresno County's wages and benefits

 7   would not remain at the pre-July 1 rate.

 8           Finally, the letter informed the Court that CDSS would not accomplish the changes to the payroll

 9   database to reflect the maintenance of the correct, pre-July 1 rate until July 23. As a result, supplemental

10   checks would need to be issued for the first pay period in July. The letter then stated that unspecified

11   DSS regulations required counties to process supplemental payments, that State Defendants had

12   instructed counties how to make such payments, and that "[i]t is up to the counties as to when exactly

13   these supplemental payments will be made."?

14
                                                       ARGUMENT
15
     A.      State Defendants Are In Contempt Of This Court's Amended Preliminary Injunction
16           1.      Contempt standard
17
             The Court may issue a contempt order if Defendants "(1) [ ] violated the court order, (2) beyond
18
     substantial compliance, (3) not based on a good faith and reasonable interpretation of the order, (4) by
19
     clear and convincing evidence." In re Dual-Deck Video Cassette Recorder Antitrust Litig., 10 F.3d 693,
20
     695 (9th Cir. 1993). A district court "has wide latitude in determining whether there has been a
21

22           3 Plaintiffs had previously been informed that Santa Barbara County intended to submit a Rate

     Change Request to inform CDSS that it wanted to maintain the pre-July 1 wage rate, and submitted a
23   declaration recounting communications with Santa Barbara County officials upon which this information
     was based. Nam Supp. Decl. (Dkt. #149) ~3.
24
            4Plaintiffs' counsel immediately asked State Defendants' counsel for a copy of the June 25, 2009
25   approval of this purported Rate Change Request, but have not received a response. Leyton Second
     Supp. Decl., Ex. I.
26
             S Plaintiffs are informed and believe that CDSS has processed supplemental payments in the past
27
     but have not yet been able to collect evidence of this fact in time to submit to this Court. Plaintiffs
28   request that if this information is inaccurate then State Defendants submit a declaration under penalty of
     perjury that CDSS has never itself processed such supplemental payments.

       Plaintiffs' Mot. for Civil Contempt Sanctions and More Specific Prelim. Inj.; Mem. in Supp., Case No. C09-02306 CW
                                                               7
 1   contemptuous deflianc]e of its order." Stone v. City and County of San Francisco, 968 F.2d 850, 856

 2   (9th Cir. 1992) (internal quotation marks omitted). The moving party must demonstrate by clear and

 3   convincing evidence that the alleged contemnor violated "a specific and definite order of the court." Id

 4   at 856 n.9. The burden then shifts to the opposing party to demonstrate that "they took every reasonable

 5   step to comply." Id        The contempt "need not be willful, and there is no good faith exception to the

 6   requirement of obedience to a court order." In re Dual-Deck, 10 F.3d at 695.

 7           2.        State Defendants Are Violating this Court's Injunction

 8                     a.        Santa Barbara County

 9           Under the Court's Amended Preliminary Injunction, State Defendants were under a clear and

10   unambiguous mandate to, "by close of business on July 14, 2009, rescind the State's approval of all

11   county rate reduction requests which were submitted after February 20, 2009, to be effective July 1,

12   2009, and reinstate the State's approval of the pre-July 1 rates." Amended Prelim. Inj. 2: 1-5. This

13   Amended Injunction does not give either State Defendants or the counties the option of refusing to

14   rescind the unlawfully approved Rate Change Requests. Instead, it specifies that counties "may submit

15   new Rate Change Requests if they wish to pursue a rate change for reasons other than the passage of §

16   12306.1(d)(6)."        Id 2: 13-16.

17           State Defendants have inexplicably refused to comply with this provision of the injunction.

18   Instead, State Defendants informed Santa Barbara County that it was up to the county whether or not to

19   reinstate pre-July 1 rates or pay the reduced wage rate that was approved after §12306.1 (d)( 6) was

20   enacted. Arkush Decl. ~5. When Santa Barbara informed the State that it wanted to pay the reduced

21   wage rate, the State did not require the county to submit a new Rate Change Request. Id               State

22   Defendants have refused to rescind their approval of the single Rate Change Request that Santa Barbara

23   County submitted during the specified time period.

24           "If a party can make himself a judge of the validity of orders which have been issued, and by his

25   own act of disobedience set them aside, then the courts are impotent, and what the Constitution now

26   fittingly calls 'the judicial power of the United States' would be a mere mockery." Gompers v. Bucks

27   Stove & Range Co., 221 U.S. 418, 450 (1911). That is precisely what State Defendants are seeking to do

28   here. As such, they must be held in contempt.


       Plaintiffs' Mot. for Civil Contempt Sanctions and More Specific Prelim. Inj.; Mem. in Supp., Case No. C09-02306 CW
                                                               8
 1                    b.         Fresno County

 2           In the Court's Order Clarifying Injunction and Denying Plaintiffs' Motion For Civil Sanctions, the

 3   Court held that State Defendants "may notify the counties that they may submit new Rate Change

 4   Requests if they wish to pursue a rate change for reasons other than the passage of § 12306.1(d)(6)."

 5   7/13/09 Order Clarifying 6:12-15 (emphasis added); see also Amd. Prelim. Inj. 2:13-16. The Court

 6   further stated that it is

 7           not clear ... whether Fresno County submitted one Rate Change Request with a second
             reason for the request other than the passage of § 12306. 1(d)(6) or if it submitted two
 8           requests. If it submitted only one request, it must submit a separate request based on a
             reason other than § 12306. 1(d)(6) if it wishes to pursue a rate reduction.
 9
     7/13/09 Order Clarifying 6 nA. As described below, it is now clear that Fresno County submitted only
10
     one Rate Change Request "with a second reason," and therefore cannot implement that request until it
11
     submits a second Rate Change Request.
12
             Fresno admits that its initial Rate Change Request, submitted to CDSS on April 30, 2009, "was
13
     specifically based on the State's enactment of Section 12306.1(d)(6)."         Leyton Second Supp. Decl., Ex.
14
     C at 1. Thereafter, on June 16, 2009, the Fresno Board of Supervisors approved an agenda item for a
15
     $1.00 decrease in wages and benefits based on the purported realignment shortfall. Id, Ex. C. That
16
     agenda item stated that there would be "no increase in net County cost associated with this action as the
17
     recommendation mirrors the recommendation adopted by the Governing Board on April 28, 2009." Id
18
     (June 16 Agenda Item 6 at 1). It further provided that the resolution "would add a secondary reason to
19
     the rate packet submitted by the State" (that is, the April 30, 2009 Rate Change Request) and would be
20
     "consistent with the State law change and the Public Authority Rate packet approved by the Governing
21
     Board on April 28, 2009." Id (June 16 Agenda Item 6 at 2 (emphasis added)).
22
             The supporting documents presented at that Board of Supervisors meeting included a PowerPoint
23
     presentation by the IHSS Public Authority, which listed as among the "[c]hanges that impact IHSS
24
     Program funding" the "State Reduction in Wages/Benefit participation (funding loss)." Leyton Second
25
     Supp. Decl., Ex. 1. That presentation included further detail on the fiscal impact of the reduction in state
26
     participation, and in a chart titled "County Share Impact - Putting it all together" projected costs based
27
     on the assumption that the reduction in state participation would be in effect. Id A Public Authority
28
     official also gave a presentation to the Board of Supervisors in which she presented information about the

       Plaintiffs' Mot. for Civil Contempt Sanctions and More Specific Prelim. Inj.; Mem. in Supp., Case No. C09-02306 CW
                                                               9
 1   fiscal impact upon the IHSS budget of the federal increased Medicaid share, the purported shortfall in

 2   realignment funds, and the reduction in the State's contribution caused by § 12306.1(d)(6).            Leyton

 3   Second Supp. Decl. ~15. She explained that the amount of the reduction recommended by the Public

 4   Authority was based upon the combined impact of those three budget changes. Id At no time during the

 5   testimony, presentation, public comment, or Board discussion did anyone state that § 12306. 1(d)(6) had

 6   been challenged or could be enjoined. Id ~16.

 7           On June 24, 2009, Fresno County submitted a letter to CDSS stating: "Enclosed is the approved

 8   Board agenda item supporting the Fresno County submission of State Form SOC 449 sent to you on

 9   April 30, 2009. Please note that there are no changes that will be made to the submitted SOC 449 form."

10   Leyton Second Supp. Decl., Ex. C (emphasis added)." The Board agenda item was enclosed. Id

11           Counsel for Defendants have nevertheless taken the position that the county submitted a second

12   rate change request. Leyton Second Supp. Decl., Exs. C (at 1-2), H. It clearly did not. There was only

13   one Rate Change Request, which was submitted on April 30, 2009, and which expressly noted that it was

14   being submitted "solely due to the State law change," i.e., the pending implementation of Section

15   12306.1(d)(6). Id., Ex. C (Apr. 30 Rate Change Request at 1 (emphasis addedj)." Thus, Fresno

16   submitted "only one request" with a "second reason" in support of that request - precisely what the

17   Court deemed insufficient in its Order Clarifying Injunction and Denying Plaintiffs' Motion for Civil

18   Contempt Sanctions. See 7/13/09 Order Clarifying 6.

19           This is not simply a technical distinction. At the time the Fresno County Board of Supervisors

20   voted to submit the realignment shortfall as a separate justification for the previously submitted Rate

21   Change Request, § 12306. 1(d)(6) was in effect and so Fresno County either had to reduce its rate or else

22   make up the shortfall that the cut in the State's contribution would have caused. The presentations to the

23   Board regarding the fiscal impact of the proposed rate cut presumed that § 12306. 1(d)(6) would be in

24
            6 By contrast, the April 30, 2009 letter from Fresno County to CDSS stated: "Enclosed for your
25   review and approval is the revised Fresno County In-Home Supportive Services (IHSS) Public Authority
     Rate Request Packet (State Form SOC 449)." Leyton Second Supp. Decl., Ex. C.
26
            7 State Defendants have taken the position in this litigation that a Rate Change Request is a formal
27
     packet with specified contents, and that a verbal request or request by letter is not a Rate Change
28   Request. Carroll Decl. (Dkt. #163-2) ~~6-7; see also Machado Decl. (Dkt. #163-3) ~~4-5. Their
     turnabout and current assertion that a letter qualified as a Rate Change Request is disengenuous.

       Plaintiffs' Mot. for Civil Contempt Sanctions and More Specific Prelim. Inj.; Mem. in Supp., Case No. C09-02306 CW
                                                               10
 1   effect and set forth the loss to the county that would result from that cut if the rate were not reduced.

 2   Leyton Second Supp. Decl. ~15, Ex. 1. The possibility that § 12306. 1(d)(6) could be enjoined was not

 3   discussed at the Board meeting. Id ~16. Without the submission of a new Rate Change Request, there is

 4   no way to know whether the county would want to move ahead with the rate cut even if the State

 5   funding were restored.

 6           The terms of this Court's order are clear, and so State Defendants should be ordered to certify

 7   immediately that Fresno County's rate will not be reduced effective July 1, 2009 unless a new Rate

 8   Change Request is submitted and approved pursuant to the State's normal procedures.

 9           3.      Remedy

10           To ensure that State Defendants immediately comply with this Court's Preliminary Injunction,

11   Plaintiffs ask this Court to impose monetary sanctions in the form of a conditional fine of $200,000 per

12   day payable to the Court, starting within 24 hours of the issuance of this Court's contempt order, if State

13   Defendants have not certified to the Court that they have rescinded "the State's approval of all county

14   rate reduction requests which were submitted after February 20, 2009, to be effective July 1, 2009,"

15   including those of Santa Barbara and Fresno County, "and reinstate [d] the State's approval of the pre-

16   July 1 rates." Amended Prelim. Inj. 2:2-5. See United States v. Ayres, 166 F.3d 991, 995 (9th Cir. 1999)

17   ("One of the paradigmatic civil contempt sanctions is a per diem fine imposed for each day a contemnor

18   fails to comply with an affirmative court order."). Particularly in light of State Defendants repeated

19   unwillingness to comply with the spirit and plain language of the Court's orders, a prospective sanction of

20   this magnitude is necessary to ensure that State Defendants actually and immediately comply with the

21   Amended Preliminary Injunction, rather than make an economic decision to continue their defiance of a

22   federal court order.

23           Plaintiffs further seek attorneys' fees to compensate them for the cost of bringing this contempt

24   motion. See In re Crystal Palace Gambling Hall, Inc., 817 F.2d 1361, 1366-67 (9th Cir. 1987)

25   (awarding monetary contempt sanctions to "compensate the contemnor's adversary for the injuries which

26   result from the noncompliance"); see also In re Dyer, 322 F.3d 1178, 1195 (9th Cir. 2003) ("attorneys'

27   fees are an appropriate component of a civil contempt award").
     B.      This Court Should Issue a Further More Specific Preliminary Injunction
28


       Plaintiffs' Mot. for Civil Contempt Sanctions and More Specific Prelim. Inj.; Mem. in Supp., Case No. C09-02306 CW
                                                               11
 1           Plaintiffs also respectfully request that this Court issue a further more specific preliminary

 2   injunction that requires State Defendants to pay IHSS providers the correct pay rate for the first July

 3   2009 pay period no later than seven days after the provider submits his or her time sheet. 8 While this

 4   Court has bent over backward to make its intent and the terms of its injunction clear, State Defendants

 5   continue to search for ways to defy that injunction and avoid paying IHSS providers the amounts they are

 6   owed in a timely fashion.

 7           Specifically, rather than ensuring that the CMIPS changes were made in time for the first July

 8   paycheck to reflect the correct rate, State Defendants have refused to implement such changes until July

 9   23,2009.    This means that, despite the Court's orders, providers will not be paid their full pre-July 1st

10   wages in their regular paycheck for the July 1-15 pay period, and State Defendants have set no time limit

11   for the payment of a supplemental paycheck. State Defendants have provided no specific reason for the

12   delay. This Court issued its injunction five days before July 1, 2009, leaving more than ample time for

13   these changes to be made. State Defendants should not be permitted to rely on their own delay in

14   compliance as justification for failing to pay IHS S providers the correct rate in a timely manner.

15           Further, State Defendants contend that their purported inability to change the CMIPS database

16   prior to issuance of the first July pay period paychecks means that supplemental checks for the difference

17   between the incorrect and correct amounts will be necessary, and that counties must undertake a process

18   that will require 20-25 minutes time per provider in order for these checks to issue. This constitutes a

19   significant burden on the counties. For example, San Benito County estimates that following the

20   procedures outlined by the State would require 9-10 working days. Delgado Decl. ~3. Solano County

21   estimated it would take 500 staff hours. McDevitt Decl. ~3. A third county estimated the cost to the

22   county would be $200,000. Id ~2. State Defendants are responsible for the issuance of checks in

23   incorrect amounts, because of the unlawful enactment and implementation of § 12306. 1(d)(6) and then

24   further because of State Defendants' failure to take timely action to implement this Court's Orders. The

25

26

27
28           This would ensure that providers are paid within the time frame in which they generally receive
             8

     payment. Barajas Decl. ~~4-5; Williams Decl. ~4.

       Plaintiffs' Mot. for Civil Contempt Sanctions and More Specific Prelim. Inj.; Mem. in Supp., Case No. C09-02306 CW
                                                               12
 1   State - not the counties - should be responsible for ensuring that correct, timely paychecks are issued to
                  9
 2   providers.

 3           As this Court has found, providers and their consumers will be irreparably harmed by the

 4   reduction in IHSS rates. These are low wage workers who will suffer as a result of the deprivation of

 5   dollars that they rely upon to survive. Accordingly, the Court should issue a further more specific

 6   preliminary injunction requiring State Defendants to pay IHSS providers in all counties where the State

 7   has rescinded its approval of Rate Change Requests that proposed rate decreases to take effect July 1,

 8   2009 at the correct, pre-July 1 rates in their regular paychecks for the pay period ending July 31, 2009;

 9   and to pay all IHSS providers the correct amount owed for the pay period ending July 15, 2009 in a

10   check or checks that issue no later than seven days after the provider submits his or her time sheet. 10

11                                                    CONCLUSION

12           For the foregoing reasons, Plaintiffs' motion for civil contempt sanctions should be granted and a

13   further more specific preliminary injunction should issue.

14   Dated: July 16, 2009                                       STEPHEN P. BERZON (SBN 46540)
                                                                SCOTT KRONLAND (SBN 171693)
15                                                              STACEY M. LEYTON (SBN 203827)
                                                                PEDER 1. THOREEN (SBN 217081)
16                                                              ANNE N. ARKUSH (SBN 254985)
                                                                Altshuler Berzon LLP
17
                                                                By:    lsi Stacey M Levton
18                                                                        Stacey M. Leyton

19                                                              Attorneys for Plaintiffs

20

21

22
              9 State Defendants' assertion that DSS regulations require counties "to process all supplemental
23   payments" (Dkt. #180 at 2), is both irrelevant - as the supplemental payments are required by federal
     court order and because of the actions of the State - and inaccurate. State Defendants apparently refer to
24   Social Services Standard 30-769.252, which provides that "[t]he county shall initiate
     emergency/supplemental checks" in certain situations, including "[p ]ayments for other unusual situations
25   not provided for by the regular payrolling process." But this regulation only provides that the counties
     "shall initiate" supplemental payments under given circumstances. Nothing in the standard prohibits the
26
     State from initiating a supplemental payment on its own.
27
            10 Such payment may be made in a single paycheck or in two (a regular and a supplemental).   The
28   proposed More Specific Preliminary Injunction also provides that in any county in which the State has
     approved an increase from the pre-July 1 rate, State Defendants shall pay such increased rate.

       Plaintiffs' Mot. for Civil Contempt Sanctions and More Specific Prelim. Inj.; Mem. in Supp., Case No. C09-02306 CW
                                                               13

				
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