Draconian results for California agencies in civil rights case

Ryan Wood, BridgeTower Media Newswires

The federal Civil Rights Act (CRA), enacted in 1964, has changed and evolved in many ways over the last several decades. In the beginning, Congress sought to protect individual civil liberties, and the CRA prohibited discrimination on the basis of race, color, religion, sex or national origin. It further provided safeguards against racial segregation and certain voter registration requirements. The CRA also provided a successful plaintiff with powerful remedies, including monetary damages and the recovery of attorneys’ fees.

Over time, the CRA started to become a vehicle to challenge public agencies on a wide range of topics, as long as there was a constitutional right implicated. In recent times, private businesses have been successful in challenging agencies under the CRA for unconstitutional treatment affecting their businesses. Unlike a typical writ of mandate action, which typically has a limited non-monetary remedy available, lawsuits under the CRA can be a powerful tool if supported by the facts of the case.

The draconian impact of the CRA recently shocked Sacramento County, California, when a jury awarded a mining operator more than $100 million in compensatory and punitive damages. In Hardesty v. Sacramento Metropolitan Air Quality Management District, the plaintiffs were operators of a sand and gravel mine. The mine had been in operation for nearly a century with “vested rights.” The vested rights gave the plaintiffs an advantage over potentially new competitor mines, because any competitors would have to acquire expensive permits, driving up their costs.

The plaintiffs alleged that one of their affluent competitors began a campaign to lobby and influence various public agencies to put the plaintiffs’ mining operation under intense scrutiny, and ultimately out of business. This political influence, which implicated a multitude of local and federal officials, resulted in an alleged rezoning of the plaintiffs’ mine and a requirement for a new use permit. According to the plaintiffs, the county increased the mining bond, initially by more than four times, and later by more than 50 times the original amount. Ultimately, the county precluded the plaintiffs from even selling stockpiles of previously mined materials, which left the materials worthless. Ultimately, the plaintiffs’ mine was put out of business, and according to the plaintiffs, county officials even expressed their “glee” in internal email correspondence.

The plaintiffs did not sue their competitor. Rather, the plaintiffs invoked the CRA and sued several public agencies and officials in federal court, including the county. The plaintiffs alleged a violation of equal protection and due process under the Fourteenth Amendment to the United States Constitution, among other causes of action. They sought compensatory and punitive damages in excess of $100 million.

On March 21, 2017, the jury returned a verdict and agreed with the plaintiffs, awarding $105 million in compensatory damages, plus nearly $2 million in punitive damages against three individual county officials.

Post-trial motions and appeals remain, so the matter is not yet final. However, the Hardesty verdict will undoubtedly cause local public agencies and officials to think twice before targeting one competitor in favor of a politically influential one. There is a fine line between aggressive regulatory compliance and a violation of constitutional civil rights, and so far in this case, the county has found itself squarely on the wrong side of that line.

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Ryan Wood is an attorney in Stoel Rives LLP’s construction and design practice group. Contact him at 916-319-4655 or ryan.wood@stoel.com.

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