An injunction prohibiting the city of Costa Mesa from outsourcing services to the private sector will remain in place until an employee lawsuit is resolved, a three-judge panel ruled Friday.
William Bedsworth, Eileen Moore and Richard Aronson from the state Court of Appeal unanimously upheld Orange County Superior Court Judge Tam Nomoto Schumann's 2011 order, which put a halt to Costa Mesa's plans to outsource some services to private companies.
"This is a huge boost for employee morale for a group of employees who have been working really hard under some pretty terrible circumstances," said Jennifer Muir, spokeswoman for the Orange County Employees Assn., which represents more than 100 Costa Mesa employees. "Maybe this will wake be a wake-up call to the City Council majority to stop spending millions of taxpayer dollars to pursue an ideological, political agenda."
Councilman Steve Mensinger said the ruling highlights what is at stake with Measure V — the proposed city charter — on November's ballot. He also argued that the judges couldn't be impartial because they are public employees too.
"This makes the charter that much more important in reforming the unsustainable employee benefits that we have in our city," he said. "Clearly, when you're asking judges to make decisions on pension reform and they're receiving the same benefit, it doesn't surprise me that they're unwilling to look at the unsustainability."
The charter would not undo current employee contracts, but would give the city more flexibility in outsourcing.
The panel agreed with Schumann's ruling that layoffs would cause irreparable harm to workers. The panel went a step further and said that the employees could win their lawsuit, noting that if Costa Mesa were a charter city — not a general law city, like it is now — sections of the employees' lawsuit would become moot.
Schumann's injunction was in response to a Costa Mesa City Employees Assn. lawsuit filed in May 2011 after the city sent out more than 200 notices to workers that their jobs would be outsourced by September of that year.
While the city maintained that the layoff notices didn't necessarily mean an employee would lose his or her job, the judges disagreed.
Employees who received notices "were faced with the daunting prospect of being terminated if the city's outsourcing plan was not preliminarily enjoined," the ruling states. "Job loss is always a serious matter, and in this post-recession era of high unemployment, it cannot be taken lightly."
Attorneys from the Jones Day law firm defended Costa Mesa's outsourcing plans, saying the city did not have to work with employees to decide whether the city should outsource, only in how to go about it after a decision had been made.
Furthermore, the city can outsource nonspecialized services other than operating a jail or doing city payroll, two jobs that can be privatized, according to previous court rulings.
"Since there is no evidence the city included CMCEA in the decision-making process that led to the city's outsourcing plan, the [contract] provides a basis for CMCEA's lawsuit and indicates 'some possibility' of success on its contract claim," according to the court's opinion. "There is no indication the Legislature intended to allow the city to outsource any of the other services at issue in this case. Nor is there any evidence the city's workforce is incapable of providing any of those services."
Since the original vote to outsource services last year, Costa Mesa has put more than a dozen city services out for bids and decided that some should stay in-house, while others like street sweeping and operating the jail should be privatized.
Costa Mesa cannot privatize any services until the employees' lawsuit is resolved, according to the injunction.
"The Court of Appeal's decision today recognizes that Costa Mesa has the authority to contract out jails, payroll and special services, and has remanded the case to the trial court for a trial on the merits," said Richard Grabowski, a Jones Day attorney defending Costa Mesa in the employee lawsuit. "As the contracting out of these services is the fiscally prudent thing to do, the city looks forward to having its day in court on those issues."