STEWART, J. —
PegaStaff is an agency that provides temporary staffing for its clients. A large part of PegaStaff's business was the provision of staffing to Pacific Gas and Electric Company (PG&E), through a staffing agency with which PG&E directly contracted, initially Corestaff Services, LP (Corestaff), and later Agile 1.
California's Public Utilities Commission (CPUC) adopted "General Order 156" to implement Public Utilities Code
PegaStaff filed suit against the CPUC, PG&E, Corestaff and Agile 1. Its claims against the CPUC consisted of constitutional challenges to Article 5 and General Order 156. The trial court determined that it did not have subject matter jurisdiction to consider PegaStaff's constitutional challenges, granted the CPUC's motion for judgment on the pleadings, and entered judgment in favor of the CPUC. The trial court also denied PegaStaff's motion to transfer its claims against the CPUC to the Court of Appeal.
On appeal,
The CPUC is an agency created by the California Constitution to regulate privately owned public utilities such as PG&E. (Cal. Const., art. XII.)
PegaStaff is a division of PegaSoft Corporation, a California corporation, that provides temporary staffing in the fields of information technology and engineering. Mark Arshinkoff, a White male, owns 100 percent of PegaSoft stock.
For nine years prior to filing suit, PegaStaff provided contract labor to PG&E through a program administered by Corestaff, another staffing company. PegaStaff's placement of workers at PG&E peaked in 2007 at about 40 workers. In that year, PegaStaff received about 400 job orders and revenue of about $4.5 million from PG&E. The revenue from PG&E comprised about 50 percent of PegaStaff's gross revenues for the year.
In October 2007, at the direction of PG&E, Corestaff created a tier structure whereby all WMDVBEs were placed in the first tier and all other businesses, such as PegaStaff, were placed in the second tier. First tier businesses received preference in job orders for temporary workers. Corestaff created the tiered system because its contract with PG&E required it to spend a substantial percentage of its purchasing/contracting dollars on WMDVBEs.
On September 29, 2009, PegaStaff filed suit. The operative first amended complaint (FAC) was filed on September 5, 2012, naming PG&E, Corestaff, Agile 1 and the CPUC as defendants. The FAC asserts 10 causes of action: (1) violation of Civil Code section 51.5 (barring discrimination by businesses based on enumerated characteristics), asserted against Corestaff and PG&E; (2) violation of California Constitution, article I, section 31 (barring discrimination by the state based on race, sex, color, ethnicity or national origin in the operation of public employment, public education or public contracting), asserted against the CPUC; (3) violation of the equal protection clause of the California Constitution (Cal. Const., art. I, § 7), asserted against the CPUC; (4) injunctive relief for violation of California's unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.), asserted against Corestaff and PG&E; (5) intentional interference with prospective economic advantage, asserted against PG&E; (6) negligent interference with prospective economic advantage, asserted against PG&E; (7) civil conspiracy, asserted against Agile 1; (8) intentional interference with prospective economic advantage, asserted against Agile 1; (9) negligent interference with prospective economic advantage, asserted against Agile 1; and (10) violation of the UCL, asserted against Agile 1. PegaStaff sought, among other relief, a declaration that Article 5 and General Order 156 are "unconstitutional, invalid, unenforceable and void, both on their face and as applied here."
On May 13, 2013, the CPUC filed a motion for judgment on the pleadings, asserting that section 1759 deprives the superior court of subject matter jurisdiction over PegaStaff's two claims asserted against it. PegaStaff opposed CPUC's motion but eight days before the hearing set for that motion moved for transfer to this court, should the trial court determine that it lacked jurisdiction.
A hearing on the parties' motions, as well as other matters, was held on July 11, 2013. At the hearing, the trial court stated that the CPUC's motion for judgment on the pleadings would be granted. The court also denied as untimely PegaStaff's motion to transfer. On July 15, 2013, the court filed an order formally making the rulings that it stated at the hearing. It granted the motion based on section 1759, concluding that it "lacks jurisdiction to review constitutional challenges to Sections 8281-8286 because it would interfere
The court entered judgment in favor of the CPUC on July 15, 2013. PegaStaff timely filed a notice of appeal on September 11, 2013.
The primary issue in this appeal is whether the trial court has subject matter jurisdiction over PegaStaff's constitutional claims against the CPUC. We conclude that the court correctly determined that it lacks jurisdiction.
Also at issue is whether the trial court erred in denying PegaStaff's motion to transfer to this court. We conclude that there was no error because the trial court did not abuse its discretion.
We review a trial court's ruling on a motion for judgment on the pleadings de novo. (Smiley v. Citibank (1995) 11 Cal.4th 138, 145-146 ]44 Cal.Rptr.2d 441, 900 P.2d 690].) We treat as true "`all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.'" (DiPirro v. American Isuzu Motors, Inc., supra, 119 Cal.App.4th at p. 972.)
Further, "[w]hether the superior court has subject matter jurisdiction over an action ... against the [CPUC] is a question of law we independently review." (Disenhouse v. Peevey (2014) 226 Cal.App.4th 1096, 1102 [172 Cal.Rptr.3d 549].)
The California Constitution establishes the CPUC and charges it with certain functions. (Cal. Const., art. XII, §§ 1-8.) As relevant here, the Constitution provides that the CPUC "may fix rates, establish rules, examine records, issue subpenas, administer oaths, take testimony, punish for contempt, and prescribe a uniform system of accounts for all public utilities subject to its jurisdiction." (Id., § 6.) It also provides that "[s]ubject to statute and due process, the [CPUC] may establish its own procedures." (Id., § 2.)
The Legislature used this power to enact the Public Utilities Act (§ 201 et seq.) and many other statutes comprising the Public Utilities Code, including section 701, which confers expansive authority on the CPUC: "The commission may supervise and regulate every public utility in the State and may do all things, whether specifically designated in [the Public Utilities Act] or in addition thereto, which are necessary and convenient in the exercise of such power and jurisdiction." The Public Utilities Code also includes Article 5, encouraging the procurement of goods and services by public utilities and their contractors from WMDVBEs. Article 5 declares as state policy "to aid the interests of [WMDVBEs] in order to preserve reasonable and just prices and a free competitive enterprise, to ensure that a fair proportion of the total purchases and contracts or subcontracts for commodities, supplies, technology, property, and services for regulated public utilities, including, but not limited to, renewable energy, wireless telecommunications, broadband, smart grid, and rail projects, are awarded to [WMDVBEs], and to maintain and strengthen the overall economy of the state." (§ 8281, subd. (a).)
The CPUC has conducted further rulemaking proceedings since 1988 to consider and adopt modifications to General Order 156, most recently in 1998, 2003, 2005, 2006, and 2011. (General Order 156, p. 1; see Re Rulemaking to Revise General Order 156 (1998) 83 Cal.P.U.C.2d 57; Decision Amending General Order 156 and Calling for Workshops (Nov. 13, 2003) Cal. P.U.C. Dec. No. 03-11-024 <http://docs.cpuc.ca.gov/PublishedDocs/ WORD_PDF/FINAL_DECISION/31751.PDF> [as of Apr. 29, 2015]; Order Amending General Order 156 to Achieve Greater Reporting Uniformity, (Dec. 15, 2005) Cal.P.U.C. Dec. No. 05-12-023 <http://docs.cpuc.ca.gov/ PublishedDocs/WORD_PDF/FINAL_DECISION/52095.PDF> [as of Apr. 29, 2015]; Order Instituting Rulemaking for the Purpose of Amending General Order 156 (Aug. 24, 2006) Cal.P.U.C. Dec. No. 06-08-031 [2006 Cal.P.U.C. Lexis 299]; Order Instituting Rulemaking for the Purpose of Reviewing and Potentially Amending General Order 156 etc., (May 5, 2011) 289 P.U.R.4th 112 [2011 Cal.P.U.C. Lexis 276].) Notably, in a 1996 proceeding it considered and adopted amendments proposed pursuant to a settlement with an individual who sued the CPUC in U.S. District Court challenging the constitutionality of the commission's WMDVBE Program. (See Re Rulemaking to Revise General Order 156 (1996) 65 Cal.P.U.C.2d 265, 267; Re Rulemaking to Revise General Order 156 (1998) 83 Cal.P.U.C.2d 57, 58, 70, fn. 1 [discussing Dec. No. 96-04-018 and Bras v. Cal.P.U.C., No. 92-0304-WHO]; see also Bras v. California Public Utilities Corn. (9th Cir. 1995) 59 F.3d 869.)
General Order 156 includes a section on goals for increasing the engagement of WMVDBEs in subcontracting opportunities. (General Order 156, § 8, pp. 16-19.) The goals section specifies minimum long-term goals that utilities must set in their plans. (Id., § 8.2, pp. 16-17.)
PegaStaff's two claims asserted against the CPUC challenge Article 5 and General Order 156 on California constitutional grounds, and PegaStaff seeks a declaration that they are unconstitutional and unenforceable. The trial court determined that under section 1759 it was without jurisdiction as to the challenge to Article 5 because to declare it unconstitutional would be to interfere with the CPUC in the performance of its official duties. The trial court also determined that under section 1759 it was without jurisdiction as to the challenge to General Order 156 because to declare it unconstitutional would be to annul an order of the CPUC.
PegaStaff contends that the court erred as to both jurisdictional findings, arguing that the CPUC's "official duties" are not implicated in its causes of action and that section 1759 does not address original claims for relief from the effects of General Order 156. We disagree.
The first question we consider is whether a declaration that Article 5 is unconstitutional would "interfere with the [CPUC] in the performance of its official duties" within the meaning of section 1759. PegaStaff's arguments are confusing, at best. Its first argument is that Article 5 does not expressly confer on the CPUC the power to set goals for utilities procurement from WMDVBEs, and that setting and enforcing such goals are not, therefore, part of the CPUC's official duties. From this premise, a decision on the constitutionality of Article 5 will not interfere with any such official duties. It further argues that if Article 5 is unconstitutional, then "the CPUC has no valid `official duties' under [those provisions] with which the superior court could interfere." It contends, citing BNSF Railway Co. v. Public Utilities Com. (2013) 218 Cal.App.4th 778 [160 Cal.Rptr.3d 492] (BNSF Railway), that setting WMDVBE procurement goals cannot be part of the CPUC's official duties because such goals are not "cognate and germane to the regulation of public utilities." Finally, PegaStaff urges us to construe section 1759 to
The first argument is entirely off the mark because it focuses on the validity of General Order 156, and not on the effect of the declaratory and injunctive relief PegaStaff seeks as to Article 5 itself. PegaStaff specifically requested a declaration that the provisions of Article 5 themselves are unconstitutional and an injunction against their enforcement. PegaStaff concedes that the CPUC's official duties are those set forth in the Constitution and statutes. If the superior court had held that Article 5 was unconstitutional, that would interfere with the CPUC's duties under that statute. Whether or not the General Order is authorized by Article 5 or constitutes a part of the CPUC's "official duties" is beside the point in deciding whether there is jurisdiction to consider the challenge to Article 5.
PegaStaff's further argument — that if Article 5 is unconstitutional it does not confer "valid duties" with which a superior court ruling could interfere — turns the jurisdictional statute on its head. PegaStaff's interpretation of "official duties" would require the superior court to decide the merits of PegaStaff's challenge in order to decide whether it has jurisdiction to rule on that very challenge. Section 1759 denies jurisdiction to "review" or "reverse" CPUC orders and decisions and to "enjoin, restrain, or interfere" with the CPUC's "performance of its official duties." PegaStaff's argument that the superior courts are free to hold CPUC-related statutes, orders and decisions invalid would entirely undermine section 1759's fundamental purpose of limiting judicial review over challenges to CPUC orders and actions so as to "expedite the[ir] final operative effect." (County of Sonoma v. State Energy Resources Conservation etc. Com. (1985) 40 Cal.3d 361, 368 [220 Cal.Rptr. 114, 708 P.2d 693] [in "channeling judicial review of PUC decisions" to Supreme Court (and later Court of Appeal), "the Legislature sought to expedite the final operative effect of those decisions"]; see Sexton v. Atchison etc. Ry. (1916) 173 Cal. 760, 764 [161 P. 748] (Sexton) ["The clear intent of the provision as a whole is to place the commission, in so far as the state courts are concerned, in a position where it may not be hampered in the performance of any official act by any court, except to the extent and in the manner specified in the act itself."]; Disenhouse v. Peevey, supra, 226 Cal.App.4th at p. 1102 [referring to "... Legislature's aims in placing limits on judicial review of commission actions"].)
The California Supreme Court held precisely that a century ago in Sexton. In that case, the plaintiff, a railroad shareholder, sought to challenge section 11 of the Public Utilities Act, which allowed commission
PegaStaff suggests that "the law has significantly changed since Sexton." But any doubt about the continued vitality of that decision is put to rest by Justice Baxter's opinion, writing for the unanimous court, in Greener v.
The Supreme Court reversed, observing that in Sexton it had "rejected" the arguments on which the Court of Appeal relied: "that the jurisdictional limitations of section 67 of the Public Utilities Act applied only to review of orders of the commission" and "that granting the requested injunction against [enforcement of the statute] would not interfere with the commission's performance of its duties because the commission had no duty to comply with an invalid statute." (Greener, supra, 6 Cal.4th at pp. 1041-1042.) The court concluded, as in Sexton, that "were the relief sought by plaintiffs granted, the effect of the superior court judgment would be to interfere with the Board in carrying out the duty imposed on it by the [challenged] statutes ...." (Id. at pp. 1042-1043.)
BNSF Railway does not hold otherwise. The court there held simply that the "`additional'" and unspecified but broad supervisory and regulatory powers the Legislature conferred on the CPUC under section 701 were limited to powers that are "`"cognate and germane to the regulation of public utilities."'" (BNSF Railway, 218 Cal.App.4th at p. 784.) The issue was whether those additional unspecified powers were broad enough to allow the CPUC to issue an order that contravened a specific state statute. (Id. at p. 785.) Our sister court held they were not. (Id. at p. 798.) Unlike the CPUC directive in that case, which was in direct conflict with the legislation, the question here concerns a challenge to the legislation itself.
Last, contrary to PegaStaff's final argument, the fact that the CPUC could not decline to enforce a statute duly enacted by the Legislature on the ground that it violates the state or federal Constitution does not require an interpretation of section 1759 that exempts such challenges from its limitation on superior court jurisdiction. PegaStaff contends that article III, section 3.5
Section 1759, subdivision (a) deprives the superior courts of jurisdiction to "review, reverse, correct, or annul any order" of the CPUC. This would seem to settle the question of whether the superior court may adjudicate a constitutional challenge to General Order 156, but PegaStaff argues that section 1759 addresses claims that are "in the nature of appellate review" and "does not address original claims for relief, but only CPUC decisions and orders thereon."
Section 1759 is in article 3 of chapter 9 of the Public Utilities Act. Article 3 addresses judicial review of CPUC decisions or orders after a hearing on a matter is held by the CPUC pursuant to the preceding articles, which address hearings (art. 1) and rehearings (art. 2). Article 3 provides for judicial review of CPUC decisions or orders by way of petition for a writ of review in the Court of Appeal or the Supreme Court. (§ 1756, subd. (a).) Accordingly, goes PegaStaff's argument, "review" as used in section 1759 refers to actions that are presented as petitions for writ of review in the superior court, and not to original claims for relief that have not been preceded by an administrative hearing by the CPUC: "the `review,' reversal or annulment to which Section 1759 refers is `writ review' of and relief from an inferior tribunal's decisions
PegaStaff also ignores the case law in which section 1759 has been invoked in suits against utility companies. In such cases, the courts have held section 1759 bars such suits in superior court if they would directly interfere with or undermine policies or regulatory programs of the CPUC. (See, e.g., People ex rel. Orloff v. Pacific Bell (2003) 31 Cal.4th 1132, 1144, 1145-1148, 1151-1156 [7 Cal.Rptr.3d 315, 80 P.3d 201] [and cases cited therein].) Moreover, Division Five of this court has opined that while superior courts have jurisdiction in original proceedings to enforce CPUC orders, section 1759 prevents them from considering a defense in such a proceeding that the CPUC order is invalid. (PG&E Corp. v. Public Utilities Com. (2004) 118 Cal.App.4th 1174, 1221 [13 Cal.Rptr.3d 630].) The courts have thus understood section 1759 to preclude any litigation in superior court that would interfere with CPUC policies and programs and not merely litigation that constitutes review of CPUC decisions.
For these reasons, we affirm the superior court's holding that section 1759 deprived it of jurisdiction to consider the constitutionality of General Order 156.
On July 3, 2011, PegaStaff served notice of its motion to transfer its claims against the CPUC to the Court of Appeal, specifying July 11, 2011, as the
Code of Civil Procedure section 396 provides: "(a) No appeal or petition filed in the superior court shall be dismissed solely because the appeal or petition was not filed in the proper state court. [¶] (b) If the superior court lacks jurisdiction of an appeal or petition, and a court of appeal or the Supreme Court would have jurisdiction, the appeal or petition shall be transferred to the court having jurisdiction upon terms as to costs or otherwise as may be just, and proceeded with as if regularly filed in the court having jurisdiction."
The judgment of the trial court is affirmed.
Kline, P. J., and Richman, J., concurred.