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Quote of the Day - The gods of men are sillier than their kings and queens, and emptier and more powerless. - Maxwell Anderson
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Pay First, Litigate Later Even If You Already Won Once

Who Made Up These Rules? Oh, Right It's The Government

Litigants would go through the roof if they were required to first pay the claim of the opposing party before even stepping on to the dance floor in the Courthouse.  But, that's the rule when the government sues you:  pay the state before you barely find out who's on your dance card. 

Even if you've already beat back the government's claims against you beforehand.  I kid you not.

Let's get to the facts here:  California Logistics is a delivery company.  It hires drivers on an ad hoc basis to deliver goods belonging to others.  It has classified these drivers as independent contractors.  Several times before both administrative and court proceedings, California Logistics beat the state's challenges against this classification, where the state unsuccessfully tried to classify the drivers as employees.

Not satisfied with losing, the Employment Development Department levied a $1.2 million assessment against California Logistics, who once again employed its attorneys and said, "Not again?  We've won this issue before."

And it has.  Several times.  The EDD, however, is not persuaded it should have lost and challenged those rulings again.  Don't believe it?  Let me explain.

There are two doctrines in the law that we're all familiar with:  res judicata and collateral estoppel.  Ok, you may not be familiar with the Latin term or the procedural term, but as I said before, they mean "I already won this issue in prior proceedings, I shouldn't have to fight about it again."  And that meaning makes perfect sense in most cases.

Except when you're talking about a provision in the California Constitution, the supreme law of the land.  At least in California, that is.  Here's how it works:  the Latin and procedural concepts are common law rules.  In the hierarchy of rules, those two concepts are at the bottom of the legal ladder, and the state's Constitution is at the top.

So, when there's a conflict between the two, the Constitution's requirement to pay first, litigate later wins.  Here, the Constitutional requirement is in Section 32, which relates to taxes.  You know, the funds the government needs to run. 

The requirement makes sense in the abstract.  If we could all challenge our obligations to pay taxes before paying them, then the state would grind to a halt without money. 

The Court looked at it this way, citing to the precedent of a prior challenge brought by several utility companies in support of the EDD's position:  "There, three public utility companies filed an action seeking to compel the State Board of Equalization to adjust the assessment of their real property in accordance with a recently enacted constitutional provision (Proposition 13).  The utilities argued that to bar their suit under section 32 would deny them an adequate judicial remedy because they would be forced to litigate in more than 50 counties in order to recover their alleged overpayments.  The [state's supreme] court declined to recognize an  ' "inadequate remedy at law" ' exception to section 32.  The court cited the policies underlying section 32 and stressed that section 32 ' "means what it says." ' That has not changed. [citations omitted.]"

Call me silly, but it seems to this writer if the Constitutional issue has already been resolved, California Logistics should not be required to pay the assessment first before litigating the same thing again and again and again.  A court higher than me will have to straighten out this one.

Printer friendly page Permalink Email to a friend Posted by J. Craig Williams on Wednesday, March 26, 2008 at 23:07 Comments Closed (0) |
 
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