Taxpayer Lawsuit Alleges Legislature Violated the State Constitution to Fund HSR Projects

On December 13, 2016, the California High-Speed Rail Authority, CHSRA, met and gave preliminary approval to submit funding plans seeking $3.2 billion in HSR bond funding for the San Francisco to San Jose Peninsula Corridor project (the Caltrain Electrification project) and Central Valley HSR project. The same day, four individuals, three non-profit organizations, the Town of Atherton and Kings County filed a lawsuit, seeking a ruling that the CHSRA’s efforts to obtain construction funding not only failed to meet the statutory requirements of Proposition 1A, but were unconstitutional as well.

The case is the second
Tos v. California High-Speed Rail Authority, or Tos II and the plaintiffs are John Tos, Town of Atherton, Kings County, Morris Brown, Patricia Louise Hogan-Giorni, Anthony Wynne, Community Coalition on High-Speed Rail, Transportation Solutions Defense and Education Fund, and California Rail Foundation.

The Third District Court of Appeal had previously ruled that Prop. 1A, the 2008 $9.9 billion high-speed rail bond measure, created a "financial straitjacket" restricting the use of the bond funds. Many of the Plaintiffs had
written to the Legislature and written to the Director of the Department of Finance to express concerns about the unconstitutionality of AB 1889. Plaintiffs allege in their suit that the Legislature's passage of AB 1889 created a tool that attempts to evade the bond measure's restrictions. However, because AB 1889 fundamentally alters that voter-approved measure, plaintiffs allege it is unconstitutional, as are the funding plans that rely on it.

On January 3, 2017, CHSRA submitted a
package of Funding Plans to the Department of Finance, thereby triggering the ripeness of a challenge to the plans’ compliance with the requirements of Proposition 1A. (See the last two paragraphs here.)

On January 31, 2017, Plaintiffs filed their
First Amended Complaint in response to the threatened filing of a demurrer by CHSRA. Narrowing the issues to a facial challenge to the constitutionality of AB 1889 and CHSRA’s illegal use of public funds will allow for a much speedier resolution of the claims. Should this case not result in AB 1889 being found unconstitutional, compliance claims can be raised in later litigation. Newly added to the suit as a plaintiff is retired judge and former CHSRA Chair Quentin Kopp, who helped write Prop. 1A and has joined the case to defend that measure as the voters approved it.

Plaintiff co-counsel Stuart Flashman said, “The High-Speed Rail Authority has approved funding plans that rely on AB 1889 to undermine the clear voter-enacted restrictions built into Proposition 1A.”

Injunction on the Use of Bond Funds for Construction
On March 15, Plaintiffs filed an
Application for Temporary Restraining Order and Order to Show Cause. The Application is supported by a Memorandum of Points and Authorities, a Request for Judicial Notice, Counsel’s Declaration, Expert’s Declaration, Notice Declaration and the Proposed Order. Counsel appeared ex parte (informally) at 1:30 pm on Wednesday, March 22. CHSRA filed this Opposition. A TRO would prevent CHSRA from expending Prop. 1A funds for construction until a hearing can be held on a preliminary injunction. CHSRA provided documentation that no bonds would be sold prior to April 20, 2017. On that basis, the court determined a TRO was unnecessary, and set a hearing on a Preliminary Injunction at 11:00 am on April 19 in Department 54.

The Court will deem the submitted TRO papers from Plaintiffs as the filing for a Preliminary Injunction.
CHSRA filed an
Opposition to Plaintiff’s Motion, and the following Declarations with Exhibits: O’Grady, Jarvis and Glen.
Plaintiffs in turn filed a
Reply Brief, a Proposed Order, and an Objection to the Declaration of O’Grady.

CHSRA filed a
Demurrer, a Motion to Strike Allegations, and a Declaration in an effort to make this case disappear.
Plaintiffs filed an
Opposition to Demurrer, Opposition to Motion to Strike, and a Request for Judicial Notice in support of both Oppositions.
CHRA then filed a
Reply in Support of Demurrer, a Reply in Support of Motion to Strike, a Request for Judicial Notice, and an Objection to Plaintiff’s RJN
A hearing was held on April 26 on CHSRA’s Demurrer. The Court’s tentative ruling
denied the motion for preliminary injunction and sustained the demurrer. At the hearing, the Court adopted the ruling on the motion for preliminary injunction, and took the demurrer under submission. The final ruling adopted the tentative ruling sustaining the demurrer, effectively knocking the case out of court, but granted leave to amend the Petition.

Plaintiffs filed a
Second Amended Petition on May 25, 2017, in response.