Why Proposition 22 (2020) was Upheld

Why the Court of Appeals Properly Held Proposition 22 was Within the Initiative Power

Recently, Proposition 22 (2020), which exempted app workers from California’s AB 5, was upheld by the California Court of Appeals, reversing a lower court decision to invalidate the measure as an unconstitutional use of the voter initiative power.¹

Opponents used two arguments to argue that Proposition 22 was unconstitutional in its entirety. First, opponents claimed that Section 4 of Article XIV of the California Constitution exclusively delegated the subject matter of Proposition 22 to the State Legislature. Second, opponents claimed Proposition 22 violated the California Constitution’s Single Subject Rule.

This article explains why the Court of Appeals properly rejected both arguments.²³

Article XIV, Section 4 of the California Constitution

Section 4 of Article XIV provides in part, “The Legislature is hereby expressly vested with plenary power, unlimited by any provision of this Constitution, to create, and enforce a complete system of workers’ compensation, by appropriate legislation, and in that behalf to create and enforce a liability on the part of any or all persons to compensate any or all of their workers for injury or disability, and their dependents for death incurred or sustained by the said workers in the course of their employment, irrespective of the fault of any party.”⁴

Opponents of Proposition 22 argued that this provision gave only the California State Legislature the power to enact laws relating to worker’s compensation, including whether a worker is classified as an employee or independent contractor. Because Proposition 22 regulates the classification of app workers, they argued a ballot initiative was an unconstitutional infringement upon the Legislature’s power. The trial court agreed with them and invalidated the law.⁵

Superficially, this may sound like a reasonable legal conclusion. However, in reaching this conclusion, the trial court ignored over 100 years of binding legal precedent and even contradicted the California Supreme Court.

It is important to start with some basics on the constitutional rights of Californians to exercise their initiative and referendum powers because our law is not taught in civics class.

In California, the voters are the sovereign and reserve the powers of initiative and referendum to ourselves.⁶ The powers of initiative and referendum are not granted to us by the government but instead are our own inherent pre-existing democratic rights.⁷ The courts zealously guard and protect these fundamental constitutional rights of the voters.⁸ While some restrictions on the powers of initiative and referendum exist, those are restrictions that voters create for ourselves, not restrictions imposed upon us by the other branches of government.⁹

As explained by former California Supreme Court Justice Joyce Kennard, the right of Californians to submit ballot measures to the public “is a fundamental legislative power that the people may exercise through the initiative process.”¹⁰ The power of the voters is generally co-extensive with that of the State Legislature.¹¹ The power of initiative is not limited to subject matter either; citizens may enact laws at the ballot box on whatever subject matter they wish.¹²

Even when enacting legislation that would normally require special legislative procedures that cannot be accomplished through an initiative, an initiative is still constitutionally valid.¹³ Moreover, courts interpret the intent of the voters in a voter initiative in the same manner that they interpret legislation passed by the State Legislature.¹⁴ When a ballot measure like Proposition 22 is challenged, any doubts about that ballot measure will be resolved in favor of its constitutionality.¹⁵

But does this analysis change when a constitutional provision expressly gives authority to the State Legislature to regulate in a certain area like Article XIV, Section 4 does? In 2006, the California Supreme Court definitively answered this question.

In Independent Energy Producers Association v. McPherson,¹⁶ the California Supreme Court considered the permissibility of a voter initiative on subject matter that Section 5 of Article XII of the Constitution, with nearly identical language as Section 4 of Article XIV, expressly gave authority to the State Legislature to regulate.¹⁷

Section 5 of Article XII of the California Constitution provides “The Legislature has plenary power, unlimited by the other provisions of this constitution but consistent with this article, to confer additional authority and jurisdiction upon the [Public Utilities Commission], to establish the manner and scope of review of commission action in a court of record, and to enable it to fix just compensation for utility property taken by eminent domain.”¹⁸

In McPherson, the California Court of Appeals had ordered a ballot initiative that added powers to the Public Utilities Commission, Proposition 80, struck from the ballot on the basis that only the Legislature had the authority to do so.¹⁹ The California Supreme Court, however, stayed the order, and allowed Proposition 80 to be placed on the ballot anyway.²⁰ Proposition 80 ultimately lost at the ballot box, which made the case moot, normally grounds for a court to not take a case, but the Court took the case anyway.²¹ The Court unanimously held that the voters could enact initiatives on this subject matter notwithstanding the language contained within Section 5 of Article XI.²²

As the Court explained, there are two different possible interpretations of the language of Article XII, Section 5: (1) the Legislature and only the Legislature could expand the power of the Public Utilities Commission, or (2) “that the Legislature or the electorate exercising its legislative power through the initiative process” could expand the power of the Public Utilities Commission.²³ As the Court held, “language in the Constitution establishing the authority of 'the Legislature' to legislate in a particular area must reasonably be interpreted to include, rather than to preclude, the right of the people through the initiative process to exercise similar legislative authority.”²⁴

Courts had previously reached this holding several times previously, often on taxation related issues. For example, constitutional language specified that “any change in State taxes enacted for the purpose of increasing revenues … must be imposed by an Act passed by no less than two-thirds of all members elected to each of the two houses of the Legislature … .”²⁵ In 1988, voters passed Proposition 99, a tax increase on cigarettes and other tobacco related products that directed its revenues towards solving tobacco related health problems²⁶. Opponents sued, arguing the tax increase was unconstitutional as because it was enacted at the ballot box and “only the Legislature can raise taxes.”²⁷ The California Supreme Court rejected the argument, holding the initiative power cannot be assumed to be repealed by implication.²⁸

In another example, the Constitution provides that “The Legislature, a majority of all the members elected to each of the two houses voting in favor thereof, may by law change the rate or rates of taxes herein imposed upon insurers.”²⁹ In 1989, voters passed Proposition 103, which contained a provision that raised the rate of California's insurance premium tax.³⁰ Opponents of Proposition 103 sued to invalidate the initiative as unconstitutional, arguing that the Constitution gave this power only to the State Legislature and State Board of Equalization.³¹ However, the California Court of Appeals rejected that argument to uphold the provision's constitutionality.³²

As the Court of Appeals explained, “Apart from procedural differences, the electorate's lawmaking powers are identical to the Legislature's.”³³ Moreover, “[t]he language ‘the Legislature may’ is found throughout article XIII and in many other places in the California Constitution. It would be absurd to attribute to the framers of the Constitution an intention to limit the initiative power in the many and varied contexts in which the phrase appears.”³⁴ In McPherson, the California Supreme Court expressly reaffirmed this conclusion of the Court of Appeals.³⁵

In doing so, the Court in McPherson grounded its holding on Section 5 of Article XII in part due to its prior interpretations of Section 4 of Article XIV, the very same provision that opponents of Proposition 22 claim makes this ballot initiative unconstitutional.³⁶ Indeed, the Court has twice interpreted Article XIV, Section 4 before and rejected the argument that the language absolutely preempted other constitutional branches of government from governing in the area.³⁷ They have held that if the arguments of Proposition 22 opponents were valid, a reference in the Constitution to the "Legislature" would also preclude a Governor's veto and judicial review.³⁸

The opponents of Proposition 22 have relied heavily upon a footnote in McPherson that explained the decision only applied to ballot initiatives that would expand the power of the Public Utilities Commission, and that the Court did not decide the issue of whether the voters could restrict the power of the Public Utilities Commission.³⁹ In upholding Proposition 22, the Court of Appeals noted this footnote only left open the possibility that future arguments could be presented on the issue in a future case, not definitively hold the voters could not restrict the powers of the Public Utilities Commission. And it should be noted that the California Supreme Court including a footnote that it could at a later time entertain a legal argument it did not decide in that particular case does not mean that the Court will ultimately accept the argument when considering it in the future.⁴⁰

But two additional objections exist to this argument. First, it makes little sense to rely upon one footnote of an opinion as definitive while ignoring another footnote within the very same opinion. Second, the question left open was whether the State Legislature has the power to restrict the Public Utilities Commission. If the argument could be successfully made that they don’t, then the voters might also lack that power through the initiative process. In the case of Proposition 22, no one doubts the Legislature’s ability to legislate in the area of employee classification.⁴¹

But what about the terms “unlimited by any provision of this Constitution” and “plenary power”? Don’t those mean anything?

In McPherson, the Court addressed whether the terms “unlimited by the other provisions of this constitution” and "plenary power" exclude the initiative and referendum process.⁴² The Court of Appeals had cited to those specific phrases to conclude that the power given to the Legislature to govern the Public Utilities Commission was absolute and that an initiative and referendum could not be held.⁴³ However, the Court rejected these interpretations.⁴⁴

The Court held the terms “unlimited by the other provisions of this constitution” and “plenary power” created, at most, ambiguity.⁴⁵ The Court looked at the legislative history and found no indication that the drafters had in any way wanted to limit the initiative power they had only recently enacted into the Constitution.⁴⁶

And as more recently held by the Court, “Without a direct reference in the text of a provision—or a similarly clear, unambiguous indication that it was within the ambit of a provision's purpose to constrain the people's initiative power—we will not construe a provision as imposing such a limitation.”⁴⁷ Thus, "the legislative power in California is shared by the Legislature and the electorate acting through its powers of initiative and referendum, not exclusively exercised by the Legislature."⁴⁸ Article XIV, Section 4 has no such linguistic limitation.⁴⁹ Accordingly, Proposition 22 was validly enacted by the voters.

Despite the predictions of some journalists that this case will be heard by the California Supreme Court, the Court does not have to grant review in this case and can let the opinion upholding Proposition 22 stand.⁵⁰ If they were to grant review and reverse, they would have to reverse longstanding precedent and interpret one provision of the Constitution differently from all others.

This raises the question. Why should the California Supreme Court reverse course now?

Perhaps the answer is that the Justices might believe that AB-5 is good public policy and believe that Proposition 22 undercuts labor unions. They might have voted against Proposition 22. They could strike down Proposition 22 to effectuate good public policy. However, that’s not the job of a court. Courts don’t make law or public policy or make decisions based upon their personal views.⁵¹ A bad law is not for a court to fix but for the political process to fix.⁵²

Courts follow precedents, even ones that individual Justices might personally dislike, when they have been consistently relied upon by lower courts, elected officials, and the legal profession as a whole.⁵³ Many times, Justices must uphold the constitutionality of laws or policies they personally disfavor, strike down laws or policies they personally support, or interpret law in a way they wish they did not have to.⁵⁴ Ultimately, Justices must do this as it is the only way to preserve the rule of law and the court's role in being an impartial arbiter of the law, as California's court system truly is.

Given the overwhelming precedent, the Court of Appeals correctly upheld the constitutionality of Proposition 22 as within the power of the voters and should the California Supreme Court grant review, it should affirm the decision.

Single Subject Rule

Opponents of Proposition 22 also argued that the initiative embraces more than one subject and should be invalidated as a result. The Court of Appeals correctly rejected this argument too.

The Constitution provides that “An initiative measure embracing more than one subject may not be submitted to the electors or have any effect.”⁵⁵ The effect of a ballot initiative that violates this rule is that the entire ballot initiative will be struck down as unconstitutional or blocked from the ballot altogether.⁵⁶ In some states, the single subject rule is very strictly interpreted and legislation passed via initiative can be struck down on the grounds that it embraced too many subjects.⁵⁷ In California, however, it is not, with legislation that might run afoul of the single subject rule in other states being held constitutional in California.⁵⁸ In California, courts employ what is known as the "reasonably germane" test to determine whether an initiative violates the single subject rule.⁵⁹

What does “reasonably germane” mean?

A voter initiative is reasonably germane if numerous provisions have one general subject or its various provisions govern things that are related and constitute a single scheme.⁶⁰ The “reasonably germane” standard is applied “in an accommodating and lenient manner so as not to unduly restrict … the people's right to package provisions in a single bill or initiative.”⁶¹ Even when there are multiple purposes to a piece of legislation, they can be construed as having one basic overarching purpose.⁶² That way, the initiative process can be used to enact legislation that accomplishes comprehensive and broad-based reform.⁶³

Indeed, numerous complicated legal statutes with broad schemes have been passed by the voters at the ballot box, all of which were upheld by the California Supreme Court as not violating the single subject rule, including:

• Proposition 13 of 1978⁶⁴

• The Political Reform Act of 1974⁶⁵

• The Victims’ Bill of Rights of 1982⁶⁶

• The Term Limits Act of 1990⁶⁷

The provisions of Proposition 22 are reasonably germane to one another. They relate to the regulation of app workers and their overall classification as independent contractors rather than as full-time employees.⁶⁸ The provisions govern the rights and safety of app workers.⁶⁹ The statute enacted is broad and comprehensive but no more so than the many pieces of significant legislation that have been passed at the ballot box. To change the doctrines controlling the single subject rule would be to reverse prior precedent. And again, there is no reason offered for doing so other than the unstated; support of AB-5 and dislike for the tech companies that supported it.

However, not only is that not the role of the California courts. Courts are not a super legislature, looking to impose their will or substitute their judgment for that of the voters or the other political branches.⁷⁰ In California, it is a role that Justices have often eagerly embraced, with Justices authoring opinions that are in opposition to their own party’s stated preference.⁷¹ The rule of law is supreme to party politics. And the rule of law here commands that Proposition 22 was enacted well within the confines of the single subject rule.

Conclusion

The California Court of Appeals ruled correctly in upholding the overall constitutionality of Proposition 22. The voters have the power to enact this legislation at the ballot box and there is no violation of the single subject rule. If the California Supreme Court grants review, it should affirm the decision.

1. The California Court of Appeals Upholds Proposition 22 (2020)

2. The Court of Appeals invalidated two provisions on separation of powers grounds. But left the rest of the statute in tact.

3. The author of this article is an attorney licensed to practice in the State of California and the District of Columbia. This article and all of the works on this Substack page are statements of the opinions of the author, only, and do not constitute legal advice; they are not intended to be relied upon by any individual or entity in any transaction or other legal matter, past, pending, or future. A paid subscription to this Substack page supports the author's scholarship and provides access to research that the author has compiled, but does not establish an attorney-client relationship. The author does not accept unsolicited requests for legal advice or representation, and this Substack page is not intended as legal advertising. The opinions expressed on this Substack page reflect the personal views of the author only.