CITIZENS FOR PUBLIC ACCOUNTABILITY, et al., Petitioners, v. DESERT HEALTH SYSTEMS, INC., et al., Respondents, DESERT HOSPITAL DISTRICT, et al., Real Parties in Interest.
Citizens for Public Accountability, an unincorporated association of taxpayers residing in the Desert Hospital District, and various individual taxpayers (hereinafter referred to collectively as the “Citizens”), have appealed from a judgment which denied their petition for a writ of mandate. The appeal presents for determination the narrow issue of whether the boards of directors of certain nonprofit corporations, to which real party Desert Hospital District transferred all of its assets and to which it delegated the task of maintaining and operating its hospital, must hold their meetings in public pursuant to the Ralph M. Brown Act. (Govt.Code, §§ 54950 et seq.) The issue can actually be narrowed even further to a determination of whether such nonprofit boards are “legislative bodies” of Desert Hospital District as contemplated by section 54952.2 of the Government Code; if they are, they must meet in public. The decisional task is solely one of statutory construction. In our view, the trial court incorrectly decided that the nonprofit corporations' boards are not subject to the Brown Act, and so we shall reverse the judgment with directions.
UNDISPUTED FACTUAL BACKGROUND
Desert Hospital District (“the District”) is organized and exists under the Local Hospital District Law (Health & Saf.Code, § 32000 et seq). As such, it is a “local agency,” 1 which for many years has operated a hospital for the benefit of the District's residents.
Just before the onset of this litigation, the District accomplished what it characterizes as a “substantial restructuring,” i.e., it leased its hospital facilities to respondent Desert Hospital Corporation (DHC) 2 for a term of 30 years, beginning June 29, 1986. In connection with the lease, the District also transferred to respondent DHC certain non-leaseable assets such as inventory, supplies and cash reserves. Respondent DHC in turn assumed the liabilities of the District, and respondent DHC is obligated to pay rent to the District. These transactions, without consideration, involved the transfer by the District into private hands of almost $80 million worth of assets, including the District's license to operate a hospital.
Following the transfer, each of the District's publicly elected directors was named as a member to some or all of the several boards of directors of the private, nonprofit corporations noted in footnote 2.
Following this “restructuring,” the District nevertheless retained its taxing power, and accordingly will continue to collect about $1 million per year in taxes. Prospectively, the parties disagree about how these funds will be used. The District and respondents state that “the District continues to receive tax revenues. There is no agreement that requires the District to transfer these revenues to DHC. To the contrary, DHC's budget does not include these monies. The District, in its sole judgment, may rebate the tax to District residents, start a new facility or program, finance the acquisition of new equipment, support services at DHC, or make any other use of the revenues for health care.” For their part, the Citizens state that “for instance, although legally the District could not transfer its taxing powers—it receives in excess of $1 million in property taxes each year—to the Private Corporations, the Private Corporations in fact entirely control the disposition of the funds, since the District has no other place to spend the funds except on hospital operations.”
PROCEEDINGS IN THE TRIAL COURT
The day following the consummation of the several transactions above described, the Citizens filed a “Complaint for Injunctive and Declaratory Relief or Alternative Petition for Writ of Mandate.” Upon learning that the transactions which they had sought to forestall had already been consummated, they then filed an amended complaint for declaratory relief and petition for peremptory writ of mandate. By their amended pleading, they sought three things: (1) issuance of a peremptory writ of mandate commanding respondents to conduct all meetings in public “and to comply with the public disclosure requirements” of Government Code section 54950 et seq.; (2) a declaration that the District's transfer of the leases and assignment of rights to respondents constituted a delegation of the District's authority within the meaning of sections 54952 and 54952.2 of the Government Code, with the result that respondents must conduct their affairs in conformity with the Brown Act; and (3) recovery of reasonable costs and attorney's fees as authorized by section 54960.5 of the Government Code and section 1021.5 of the Code of Civil Procedure.
Simultaneously, the Citizens filed a notice of motion seeking the same relief as prayed for in their amended complaint. Respondents and the District filed extensive papers in opposition. Because of the nature of the parties' dispute, the trial court, when it finally heard the matter on its law and motion calendar, was faced with a wholly legal issue to decide.
The trial court denied the Citizens' motion and petition. The record contains no transcript of the oral proceedings when the motion was argued, and so the only indication in the record of the basis for the trial court's denial of the motion and petition is the minute order of October 28, 1986, which is herewith set forth in its entirety:
“The legislature has provided by Health and Safety Code Section 32121 for restructuring of District hospitals to enable them to be more competitive in the health-care field. Compliance with that section can effect a restructuring that will except the newly formed non-profit corporations from the provisions of the Brown Act.
“This, the District has done.
“Though the spirit of the Brown Act is violated, neither Government Code section 54952 nor Section 54952.2 applies to the restructured non-profit corporations as none of the directors of the District sits as a director on a non-profit corporation in his or her official capacity nor has the District retained any control of the non-profit corporations except as a lessor, all in compliance with Health and Safety Code Section 32126.
“The District continues, however, to be subject to the Brown Act in its remaining functions including that of overseeing the operations of the non-profit corporations to assure that its tenants conform to and abide by the requirements and provisions of Health and Safety Code Section 32128.
“The Writ is denied; each of the parties to bear its own costs.”
Although resolution of this appeal, as noted, involves a narrow issue of statutory construction, the underlying litigation, as perceived by the District and the respondent nonprofit corporations, arose out of a clash between the economic realities the District faced in the operation of its hospital and the salutory public policy imposed on local agencies by the Brown Act, i.e., that the meetings of their legislative bodies be held in public.
The elements of such clash began to emerge some years ago when public hospital districts discovered that, increasingly, they were unable to compete on an equal footing with private hospitals. Various legislation was enacted to remedy this problem. For example, in 1945, section 32126 of the Health and Safety Code was added, by means of which a hospital district could lease its hospital facility to a private operator for up to 10 years. In 1982, section 32126 was again amended to permit leases of an entire hospital for up to 30 years.
Also in 1982, the powers of a hospital district, as set forth in section 32121 of the Health and Safety Code, were expanded by the addition of subdivision (p), which enabled a district to transfer any part, but not the whole, of its assets, without consideration, to a nonprofit corporation whose directors were district residents “for operation and maintenance.” Subdivision (p) has since undergone additional legislative changes, with the legislative intent of making local hospital districts more competitive.3 The section as amended now allows the transfer of “any part” of a district's assets, either with or without consideration, to one or more nonprofit corporations, the initial members of whose boards of directors are district residents who have been approved by the district's board of directors.
One of the underlying questions of statutory interpretation before us here is whether the Legislature, in enacting these amendments as noted, intended to subvert the Brown Act requirements as to meetings held by the boards of such nonprofit corporations which have undertaken the management and control of hospital district assets.
The obvious starting point in answering this question is the Brown Act itself. Section 54950 of the Government Code sets the tone for the task of statutory interpretation here presented: “In enacting this chapter, the Legislature finds and declares that the public commissions, boards and councils and the other public agencies in this State exist to aid in the conduct of the people's business. It is the intent of the law that their actions be taken openly and that their deliberations be conducted openly.
“The people of this State do not yield their sovereignty to the agencies which serve them. The people, in delegating authority, do not give their public servants the right to decide what is good for the people to know and what is not good for them to know. The people insist on remaining informed so that they may retain control over the instruments they have created.”
The central proscription of the Brown Act is found in section 54953 of the Government Code which provides: “All meetings of the legislative body of a local agency shall be open and public, and all persons shall be permitted to attend any meeting of the legislative body of a local agency, except as otherwise provided in this chapter.”
The key words in the foregoing section are “local agency” and “legislative body.” We have already alluded to section 54951 of the Government Code which defines a “local agency” (see fn. 1, supra ), and in the case here it is not disputed that the District itself is the “local agency” for purposes of the Brown Act. As a consequence, our main task of statutory interpretation here resolves itself to a determination of whether the boards of the several respondent nonprofit corporations are “legislative bodies” of “a local agency,” i.e., of the District.
Section 54952 of the Government Code provides the basic definition of a “legislative body” as “the governing board, commission, directors or body of a local agency․” In 1981, that definition was broadened to encompass “any board, commission, committee, or similar multimember body which exercises any authority of a legislative body of a local agency delegated to it by that legislative body.” (Gov.Code, § 54952.2, emphasis added.) According to the Staff Analysis of the Assembly Committee on Governmental Organization which reviewed Senate Bill 879 which added section 54952.2 in 1981, the bill's purpose was to “expand the scope of the Brown Act to include any multimember body which exercises any function of a legislative body of a local agency which has been delegated to it by that legislative body.” (Emphasis added.)
The above-noted Staff Report makes it clear that the legislature intended that the open and public meeting requirements of the Brown Act must reach every conceivable kind of instrumentality engaged in the public's business. This intention was further manifested, if not emphasized, by the later addition of section 54951.1 and section 54951.7, which further extend the definition of a “local agency” to private nonprofit organizations under certain factual situations not here present.4
Respondents and the District urge that the enactment of sections 54951.1 and 54951.7 indicate a legislative intent otherwise to except private boards of directors from the requirements of the Brown Act. We disagree. Because of the pervasiveness of the legislative intent, reflecting the significant public policy here present, as evidenced by the broad language of section 54952.2 and the explanatory Staff Analysis, it is unlikely that the Legislature meant to exclude the boards of private nonprofit corporations to whom any local agency functions had been delegated from the long reach of the Brown Act if perchance they did not come under the ambit of the limited factual circumstances dealt with in section 54951.1 and in section 54951.7. In other words, these additional definitions, which characterized nonprofit corporations as “local agencies,” were not intended to limit the reach of the Brown Act, but rather were intended to assure, in the particular circumstances described in those two sections, that there would be no question but that these open and public meeting requirements would apply.
This interpretation and application of section 54952.2 of the Government Code is supported by an opinion of the Attorney General, No. 86–502, issued April 1, 1987, and involving similar facts in connection with Oakland–Alameda Coliseum, Inc. and its board of directors. There the City of Oakland and County of Alameda delegated to a private corporation their power to operate a sports complex in the City of Oakland. In response to a request from the Alameda County Counsel, the Attorney General concluded that the “[m]eetings of the Board of Directors of the Oakland–Alameda Coliseum, Inc. are subject to the open meeting requirements of the Ralph M. Brown Act, Government Code section 54950 et seq.”
In the course of his opinion, the Attorney General addresses the same purported conflict between section 54952.2 on the one hand, and sections 54951.1 and 54951.7 on the other, raised by respondents here. He states, “We focus first upon section 54951.7. It has been urged that this section should govern our issue since it is the special provision of the Ralph M. Brown Act which specifies and hence governs which nonprofit corporations formed to construct or acquire and operate public works projects fall within the requirements of the act. This follows by application of the rule of construction that a special statute governs a more general statute which also would encompass the same subject matter, whether enacted before or after the more general statute. (See, e.g., Bailey v. Superior Court (1977) 19 Cal.3d 970, 977, fn. 8, 140 Cal.Rptr. 669, 568 P.2d 394.) Accordingly, or so goes the argument, [because] the Oakland–Alameda Coliseum, Inc. does not fit the criteria set forth in section 54951.7, the Legislature intended to exclude it and similar nonprofit corporations from the requirements of the act. [Fn. omitted.]
“We, however, decline to follow this argument for the reason that this rule of construction, that the special provision controls the more general provision (no matter which was first enacted), requires that the two statutes be inconsistent or in conflict. (See, e.g., People v. Garcia (1986) 178 Cal.App.3d 887, 894 [223 Cal.Rptr. 884]; Code Civ.Proc. 1859). It is readily seen that there is no conflict between the language of sections 54951.7 and 54952.2. The former merely sets forth criteria for including certain nonprofit corporations within the scope of the Ralph M. Brown Act. The latter provision merely provides that certain multi-member bodies will be considered ‘legislative bodies.’ Section 54952.2 is coincidentally broad enough to include those nonprofit corporations included within the scope of 54951.7 which have been delegated powers of ‘legislative bodies'. In short, there is no conflict between these sections. There is at most an overlap in these statutory provisions.” (––– Ops.Cal.Atty.Gen. –––– No. 006–502, pp. 8–9, slip opn., emphasis added.)
Having determined, which we have, that the enactment of sections 54951.1 and 54951.7 did not evidence an intent to exclude the boards of nonprofit corporations from the requirements of the Brown Act in situations other than those described by sections 54951.1 and 54951.7, we next turn to the question of whether respondent boards here otherwise come within the ambit of the Brown Act pursuant to section 54952.2. In connection with this question, the issue to be determined is whether or not the boards of directors of the respondent nonprofit corporations can be said to be legislative bodies, i.e., whether they can be said to exercise any authority which has been delegated to them by the local agency, which in this case is the District. We note that in this regard, sections 54951.1 and 54951.7 are irrelevant, because those sections are concerned only with whether certain organizations are to be deemed to be local agencies, and they do not address the issue of whether the legislative body of an organization which is undisputably a local agency has delegated any of its authority to the board of directors of an organization which is not a local agency.
In looking to the words of a statute, the language must be given its usual and ordinary import (People v. Belleci (1979), 24 Cal.3d 879, 884, 157 Cal.Rptr. 503, 598 P.2d 473). According to Webster's New International Dictionary (2d ed. 1934) the word “delegate” is defined: “to entrust to the care or management of another; to transfer; assign; permit; ․” Per Black's Law Dictionary, “delegation” is defined as the “transfer of authority from one person to another.”
As appears from the record, real party Desert Hospital District leased its hospital facility to respondent DHC and in connection therewith transferred its license to operate a hospital on condition that DHC operate the hospital for the benefit of the residents of the District. The District also assigned to DHC all of its right, title and interest in and to all contracts, agreements, leases, deeds of trust, mortgages, indentures, promissory notes and receivables, and respondent DHC and the other successor nonprofit corporations assumed all the District's debts, liabilities, obligations, contracts, duties, and loss contingencies of every kind, character or description, whether accrued, absolute, contingent, or otherwise, existing at the closing date or thereafter arising.
By a separate contract, the District further conveyed and delivered all of its nondepreciable assets and properties of every kind, character and description, whether tangible, intangible, personal, or mixed, and wherever located, including, but not limited to, all other nondepreciable assets and properties, including supplies, materials, claims and rights under leases, contracts, notes, evidence of indebtedness, purchase orders, copyrights, service marks, trademarks, trade names, licenses, royalty rights, deposits, and rights and claims to refunds and adjustments of any kind.
In addition, several parcels of real property were irrevocably transferred by the District to DHC for no consideration. In all, close to $80 million in public assets were transferred.
As a consequence of the foregoing, there can be no question but that, literally, the hospital operation and maintenance functions of the District were delegated to respondent DHC, in that the board of directors of respondent DHC, would “operate and maintain the [transferred] assets for the benefit of the communities served by the district.” In doing so, DHC and the other respondents must exercise the same authority related to such assets as would have been exercised by the District's board of directors if there had been no transfer of assets. Thus, as defined by section 54952.2, the board of directors of respondent DHC, by reason of this massive transfer and resulting delegation, became a “legislative body” subject to the requirements of the Brown Act, insofar as it acts to exercise any of the powers falling within the scope of its delegated authority to operate a hospital for the benefit of the residents of Desert Hospital District.
The result we reach here in concluding that the District's board's delegation of authority to respondent nonprofit boards resulted in the nonprofit boards' metamorphosis into legislative bodies subject to the Brown Act is directly contrary to the result reached in Yoffie v. Marin Hospital District, 193 Cal.App.3d 743, 238 Cal.Rptr. 502, a case relied upon by respondents and the District.5
In Yoffie, precisely the same steps followed by Desert Hospital District were followed by Marin Hospital District, even to utilizing the same attorneys who are representing the District and respondents here. Similarly, Mr. Wheaton was also involved up there as he was here in seeking a writ of mandate to compel the boards of directors of the private non-profit corporations (to which the authority to operate a hospital for Marin Hospital District had been delegated) to hold their meetings in public. There, as here, the trial court denied the petition, and an appeal followed which resulted in the opinion cited.
The Yoffie court, in addressing itself to section 54952.2 of the Government Code, stated, “Appellants also contend that the District has delegated its authority to operate the hospital to MGH, making the board of the nonprofit corporation a legislative body of the District under section 54952.2. The trial court rejected appellants' reliance on this section. It reasoned that the section applies only when the legislative or governing body of a local agency delegates its authority, not when the authority of the agency itself is delegated. The distinction drawn by the [trial] court is difficult to understand or to apply, as a district can only act through its board. Nevertheless, it is the trial court's decision which we evaluate in this appeal, not its reasoning. (See Pasadena Medi–Center Associates v. Superior Court (1973) 9 Cal.3d 773, 779, [108 Cal.Rptr. 828, 511 P.2d 1180].)”
“Among their arguments, respondents urge that section 54952.2 was intended to apply only to the delegation of authority to executive committees or ‘similar subparts' of existing legislative bodies, and not to boards of private corporations. Read in isolation, section 54952.2 contains no such limitation. It refers broadly to delegation of authority to ‘any board, commission, committee, or similar multimember body․’ (Italics added.) If we assume for the sake of argument that what occurred here can be characterized as a delegation of certain of its authority by the District's board to MGH's board, section 54952.2 might seem to compel the conclusion that the MGH board is a legislative body of the District.” (Yoffie v. Marin Hospital District, supra, 193 Cal.App.3d 743, 750, 238 Cal.Rptr. 502.)
The foregoing analysis in Yoffie could not have stated our interpretation of section 54952.2 any better. However, what follows in Yoffie is perplexing indeed. The Yoffie court thereafter proceeded to discount its initial analysis of section 54952.2 by stating that it must be “harmonized” with sections 54951.1 and 54951.7, overlooking the fact that these two sections purport to define local agencies and not legislative bodies. (See fn. 4, supra.) In this discounting of section 54952.2, Yoffie went in precisely the opposite direction from that taken by the Attorney General in his opinion quoted above.
At this point of the analysis, necessary to the resolution of this problem, as noted above, we reiterate that we are not concerned, even remotely, with whether respondent nonprofit corporations are “local agencies.” The question to be determined is whether respondent nonprofit corporations' boards of directors must be deemed to be “legislative bodies” of the District. The Yoffie court itself recognized that this was indeed a pivotal issue: “The question, then, is whether MGH or its board can be deemed the legislative body of the District under any section of the Act” (Yoffie v. Marin Hospital District, supra, 193 Cal.App.3d 743, 749, 238 Cal.Rptr. 502), but it failed to follow through by answering this question. Instead, having reasoned logically that the delegations of authority described in section 54952.2 could have occurred, the Yoffie court failed to attach any controlling legal significance to section 54952.2, instead concluding that the Brown Act did not apply to the nonprofit corporations' boards of directors because the nonprofit corporations, to whose boards authority had been delegated, did not otherwise fit the definitions of a local agency found in section 54951.1 and section 54951.7. Thus, the Yoffie holding turns on a very narrow, if not illogical, interpretation, which in effect holds that no private corporate board can ever be a legislative body, regardless of the powers delegated to it, unless that private corporation also comes within the definition of “local agency” as defined by either section 54951.1 or section 54951.7.
Analytically, such a holding is based on the premise that sections 54951.1 and 54951.7 are specific statutes which are inconsistent with the “more general” section 54952.2 (Yoffie v. Marin Hospital District, supra, 193 Cal.App.3d 743, 751, 238 Cal.Rptr. 502), and, therefore, that those sections must be read as inconsistent to section 54952.2, and that other exceptions are not to be implied or presumed. However, as the Attorney General observed, supra, section 54951.7 (and, presumably, section 54951.1) are not inconsistent with section 54952.2, because the former are concerned with “local agencies,” and the latter with “legislative bodies.” Yoffie's conclusion of inconsistency, as noted, is arrived at by interpreting sections 54951.1 and 54951.7 to apply “when the Legislature intended a private entity to be deemed a local agency or the board of a private corporation to be deemed the legislative body of a local agency within the meaning of the Act.” (Id., at p. 751, 238 Cal.Rptr. 502, emphasis added.) However, as already noted, sections 54951.1 and 54951.7 do not refer to legislative bodies, while section 54952.2 does. In the statutory scheme, therefore, as their respective numbering indicates, sections 54951.1 and 54951.7 are specific statutes which, if they are inconsistent with or an exception to any other statute, are so with reference to section 54951 (see fn. 1, supra ), the general definition of a local agency, and, similarly, section 54952.2 is a specific statute which, if it is inconsistent with or an exception to any other statute, is so with reference to section 54952, supra, the general definition of a legislative body. Moreover, because sections 54951.1, 54951.7 and 54952.2 are themselves all specific statutes, sections 54951.1 and 54951.7 cannot be inconsistent with section 54952.2 in the manner announced by Yoffie.
We also note that in reaching the result that it did, i.e., that the Brown Act does not apply to the transferees of Marin Hospital District, the Yoffie court seemed to place significant if not equal reliance on what it saw flowing from the 1985 amendment of subdivision (p) of section 32121 of the Health and Safety Code, supra. Before amendment to its present form, that subdivision, authorizing the transfer of assets from a public hospital district to a private nonprofit corporation, as occurred both here and in Yoffie, included a limitation of such transfers to corporations “which have directors who are appointed by the board of directors of the hospital district and who are all residents of the district ․ (emphasis added.)” Thereafter, subdivision (p) was amended to add subparagraph (1) which includes language stating that “[t]he initial members of the board of directors of the nonprofit corporation or corporations shall be approved by the board of directors of the hospital district and shall be residents of the District (emphasis added.)”
According to Yoffie, and of course as argued here by the District and respondents, “․ the foregoing amendments to the Health and Safety Code evidence the Legislature's determination that the open meeting requirements of the Brown Act must yield to some extent in light of the unique competitive problems of hospital districts.” (Yoffie v. Marin Hospital District, supra, 193 Cal.App.3d 743, 754–755, 238 Cal.Rptr. 502.)
This brings into focus the questionable assumption necessary to their conclusion, only implied and not stated either by the Yoffie court or by the District and respondents here, that all of this flexibility and competitive bolstering will be wholly undone unless the boards of respondent nonprofit corporations are permitted to meet in secret. While it must be taken as fact, as recognized by the Legislature in enacting subdivision (p) of section 32121 of the Health and Safety Code, that public hospital districts are at a competitive disadvantage vis-a-vis private hospitals, and that therefore the transfers which occurred here and in Marin County were necessary to afford the flexibility to make them competitive (see fn. 3, supra ), it has been assumed by the Yoffie court and by the District and respondents here, almost to the stature of gospel, that the court may consider evidence related to the need for secret meetings, and may interpret the relevant code sections with an eye to such evidentiary matter.
Such evidence, however, could and should have been presented to the Legislature, rather than to the courts, with the result, should the Legislature have determined that the facts indicated that such boards needed to meet in secret in order to preserve a competitive edge for the district hospitals being managed by such delegate boards, that it could and would then have readily provided an exception to the Brown Act as part of SB 194 enacted in 1986.
It is clear, however, that the Legislature did not intend to create such an exception because in that bill, Stats.1986, ch. 185, when the Legislature codified section 32106(b)–(e) of the Health and Safety Code having to do with the public meetings of the boards of directors of hospital districts, although it made specific provision for closed meetings to discuss hospital trade secrets, involving the matter of the competitive disadvantage which would otherwise obtain, it did not take any action with reference to those situations involving nonprofit corporations referred to in section 32121, subdivision (p) of the very same Health and Safety Code. As stated in San Diego Union v. City Council, 146 Cal.App.3d 947, 196 Cal.Rptr. 45, in dealing with a different Brown Act issue, “ ‘It is assumed that the Legislature has in mind existing laws when it passes a statute. [Citations.] “The failure of the Legislature to change the law in a particular respect when the subject is generally before it and changes in other respects are made is indicative of an intent to leave the law as it stands in the aspects not amended.” [Citations.]’ ” (Id., at p. 956, 196 Cal.Rptr. 45.) Thus, it is not the court's place to make a judicial exception to the Brown Act for particular nonprofit boards, particularly in the face of the clear language of the relevant statutes and the compelling policy underlying the Brown Act as pronounced in myriad cases over the 35 years since it was enacted. (See, for example, Sacramento Newspaper Guild v. Sacramento County Bd. of Suprs., 263 Cal.App.2d 41, 47, 69 Cal.Rptr. 480.)
The court in Yoffie, of course, did not perceive itself as creating a judicial exception to the Brown Act. Instead, it believed it was merely divining the Legislature's intent as purportedly manifested by a change in the statute's wording: “we must also presume that when the Legislature changed that language [appointed to approved], it intended a substantive change in the law.” (Yoffie v. Marin Hospital District, supra, 193 Cal.App.3d 743, 754, 238 Cal.Rptr. 502.) That change in the law “presumed” by the Yoffie court represents an exception to section 54953 of the Government Code, which section commands that the meetings of legislative bodies of local agencies must be public. However, section 54958 of the Government Code provides that “the provisions of this Chapter shall apply to the legislative body of every local agency notwithstanding the conflicting provision of any other state law.” (Emphasis added.) In short, there are to be no repeals or exceptions to the Brown Act by implication.
As a matter of statutory interpretation, it is our view that it flies in the face of the foregoing quotation of authority to conclude that the amendment of subdivision (p) of section 32121 of the Health and Safety Code to change “appointed” to “approved” operated to relieve the delegate boards from the requirements of the Brown Act, especially considering that the Legislature, while dealing with the precise subject matter of secret meetings of hospital district boards (in the same legislative session) declined expressly to enact any exceptions to the Brown Act, other than section 32106 of the Health and Safety Code, for the benefit of these delegate boards.
To give such a meaning to so slight a change would be to countenance a repeal by implication because of a factual assumption, not apparently addressed by the Legislature, that public meetings in and of themselves under the present state of the law would nullify the competitive equality gained by this kind of restructuring.
Moreover, if the change of “appointed” to “approved” indicates anything, it indicates that the District's board of directors exercises even less control over the nonprofit boards than under the earlier version of section 32121, which further supports the legal reality that the District's board has delegated its authority to the boards of respondents.6
In sum, by reason of the “restructuring” which the District has undertaken here, there has been a delegtion of authority by it to the boards of directors of respondents as contemplated by section 54952.2 of the Government Code, with the result that those boards are “legislative bodies” of the District. As such, they are required by section 54953 of the Government Code to conduct their meetings in public.
After we filed the foregoing opinion, respondent DHC petitioned for rehearing, contending that we had mistakenly “found that the District had transferred to DHC the former's license to operate a hospital. We made no such “finding”; we only recited what the record revealed, at least impliedly. The Lease Agreement and exhibits thereto indicate, as a matter of contractual interpretation to which no contrary evidence was adduced, that the District did transfer its license to DHC. Paragraph 16.7 of the Agreement specifically provided, “Lessor [the District] shall have delivered to Lessee [DHC] the license issued by the State of California to operate the Hospital.” Furthermore, Exhibit “C” to the Agreement defined “Transferred Assets” as “All of the nondepreciable assets and properties owned by Transferor and used in the operation of Desert Hospital (“Hospital”), of every kind, character and description, whether tangible, intangible, personal, or mixed, and wherever located, ․ [excluding only certain items, none of which consisted of the license in question]. [¶] The Transferred Assets specifically include, but are not limited to: ․ (b) All other nondepreciable assets and properties, including ․ licenses, ․”
In any event, and regardless of whether or not the District's license to operate a hospital was transferred to DHC, the evidence was overwhelming that the District, because of the transfer of all of its other assets to DHC, had delegated to DHC those functions for which the District's board would otherwise have been responsible, thus bringing DHC squarely within the ambit of section 54952.2 of the Government Code.
The judgment is reversed, and the trial court is directed to enter a new and different judgment granting the petition for a writ of mandate and awarding the declaratory relief sought in paragraph 2 of the prayer of the First Amended Complaint.
Petitioners are also entitled, on motion to the trial court, to an award of attorney's fees, according to proof, as authorized by section 54950.5 of the Government Code.
1. Section 54951 of the Government Code reads, “As used in this chapter, ‘local agency’ means a county, city, whether general law or chartered, city and county, town, school district, municipal corporation, district, political subdivision, or any board, commission or agency thereof, or other local public agency.”
2. The legal organizational structure underlying respondent DHC, as its sole member, is respondent Desert Health System, Inc., which is also the sole member of respondent Desert Hospital Foundation. Otherwise, respondent Desert Health System, Inc. is the shareholder of Desert Hospital Enterprises, a for-profit corporation. These corporations will be referred to collectively as “respondents.” However, the sole transferee and lessee of the District's assets and facilities is respondent DHC.
3. “The Legislature finds and declares that it has expanded and revised the statutes governing local hospital districts in recent years in order to permit those districts to remain competitive in the ever changing health care environment, including among other changes, the addition of subdivision (p) to Section 32121 of the Health and Safety Code by Chapter 1594 of the Statutes of 1982 and the further amendment of that provision by Chapter 836 of the Statutes of 1983. The Legislature declares that the purpose of the latter provision was to permit a local hospital district to transfer its assets to a nonprofit corporation for the nonprofit corporation to operate and maintain for the benefit of the hospital district. The Legislature declares that it did not intend to permit the board of directors of a local hospital district to transfer all of its assets to a nonprofit corporation, without consideration, and then to dissolve the district. Instead, the Legislature intended for the board of directors of hospital districts to continue to govern the affairs of the districts; to maintain control over the activities of the nonprofit corporations to the extent permitted by any transfer agreement; and to exercise influence, to the extent possible, over the members of the board of directors of the nonprofit corporations who the Legislature required to be appointed by the hospital district board of directors.” (Stats.1985, c. 382, § 5.)
4. Section 54951.1: “For the purposes of this chapter, and to the extent not inconsistent with federal law, the term ‘local agency’ shall include all private nonprofit organizations that receive public money to be expended for public purposes pursuant to the ‘Economic Opportunity Act of 1964’ (P.L. 88–452; 78 Stat. 508).” (Fn. omitted.)Section 54951.7: “ ‘Local agency’ includes any nonprofit corporation, created by one or more local agencies, any one of the members of whose board of directors is appointed by such local agencies and which is formed to acquire, construct, reconstruct, maintain or operate any public work project.”
5. Since the briefs were filed in this case, a petition for hearing in the California Supreme Court has been denied in Yoffie.
6. Further indicators of the lessening of the transferor District's own authority, and hence an affirmance of the delegation of authority, can be found in the fact that (1) the amended version of Health & Safety Code section 32121(p) states that only the initial members of the transferee nonprofit board must be approved by the District's board, whereas the earlier version stated that the transferee board members, whether initial or not, were required to be appointed by the District's board, and (2) the Legislative comment to section 32121 (see fn. 3, supra ), states that District boards can only “maintain control over the nonprofit boards to the extent permitted by any transfer agreement” and can only “exercise influence” over those boards “to the extent possible.”
McDANIEL, Acting Presiding Justice.
HEWS and DABNEY, JJ., concur.