Court Rules that City Council Vote to Approve a Contract is Not Protected Activity When the Council Members Have a Financial Interest in That Contract

Print This Post UPDATE: On August 13, 2014, the California Supreme Court unanimously voted to grant a petition for review in this case, to address the following issue: “Did votes by city officials to approve a contract constitute conduct protected under Code of Civil Procedure section 425.16 despite the allegation that they had a financial interest in the contract?”

In City of Montebello v. Vasquez, the City of Montebello (the City) sued several former Montebello city council members and a former city administrator, seeking declaratory relief for violations of Government Code § 1090, which prohibits city officers and employees from having a financial interest in any contract made by them in their official capacity. The City’s complaint alleged that the former administrator negotiated, and the former council members voted to approve, an exclusive contract with a waste hauling company, with the expectation that the company would financially support the council members’ campaigns. (The company did make significant contributions to their campaigns.) The city officers responded by filing an anti-SLAPP motion to strike the complaint.

The Public Enforcement Exemption

The Court of Appeal first explained that the City’s lawsuit was exempt from the anti-SLAPP law pursuant to the public enforcement exception in Code of Civil Procedure § 425.16(d), which states that the anti-SLAPP statute “shall not apply to any enforcement action brought in the name of the people of the State of California by the Attorney General, district attorney or city attorney, acting as public prosecutor.” Citing City of Colton v. Singletary, the court held that the City’s lawsuit was not brought in the name of the People of the State of California, nor was the City suing on an issue of statewide concern. The court stated that the “hauling contract concerns only Montebello and its citizens. We therefore conclude the public enforcement exemption does not apply.”

Applicability of the Anti-SLAPP Law

The Court then turned to the former council members’ argument that their legislative actions were protected activity under C.C.P. § 425.16. The court disagreed, holding that “[a] legislator’s vote and acts of governance mandated by law, without more, are not exercises of free speech.” Agreeing with San Ramon Valley Fire Protection District v. Contra Costa County Employees’ Retirement Association, the court stated that because many public entity decisions are arrived at after discussion and a vote at a public meeting, making challenges to such decisions subject to § 425.16 which would “chill the resort to legitimate judicial oversight over potential abuses of legislative and administrative power.” Because the former council members’ acts of voting represented the commitment of their legislative power to the approval of a city contract, it did not implicate their own right to free speech. “To hold otherwise would cause the anti-SLAPP statute to swallow all city council actions.” It also held that the negotiation of the contract by the former administrator did not implicate his free speech or petition rights.

Because the court found that the city officers failed to make a threshold showing that their challenged actions arose from protected activity, it did not reach the second prong of the anti-SLAPP analysis, and it affirmed the trial court’s denial of the anti-SLAPP motion.