CITY AND COUNTY OF SAN FRANCISCO v. LOCAL 38

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Court of Appeal, First District, Division 3, California.

CITY AND COUNTY OF SAN FRANCISCO, Plaintiff and Respondent, v. United Association of Journeymen and Apprentice of the Plumbing and Pipefitting Industry of the United States and Canada, LOCAL 38, Defendant and Appellant.

A018535.

Decided: August 13, 1985

George Agnost, City Atty., Philip S. Ward, Steven Diaz, Deputy Dist. Attys., San Francisco, for plaintiff and respondent. Lawrence Alioto, San Francisco, for defendant and appellant.

Defendant and appellant United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, Local 38, appeals from a judgment entered in the Superior Court of San Francisco County after a jury returned a verdict in favor of plaintiff and respondent City and County of San Francisco in the amount of $4,080,000.   The judgment was predicated on a complaint for damages arising out of the participation of appellant and other unions in a public employee strike against respondent which took place from March 31, 1976, through May 8, 1976.

After the commencement of the strike, respondent requested a preliminary injunction against the striking unions and their leaders.   The trial court granted the preliminary injunction on April 12, 1976, and Division Two of the court upheld the granting of the preliminary injunction.  (City and County of San Francisco v. Evankovich (1977) 69 Cal.App.3d 41, 137 Cal.Rptr. 883).   In Division Two's opinion the court stated that in the absence of an authorizing statute, public employees do not have a right to strike.  (Id., at pp. 47–48, 137 Cal.Rptr. 883).

On March 29, 1977, about a year after the strike had begun, the present action was filed, wherein respondent sought under several theories damages resulting from the strike.   Defendants in the present action were a long list of unions and their officers and agents.   All defendants except appellant signed a consent decree with respondent and were dismissed from the action prior to judgment.

I.

In the instant case the trial court instructed the jury that the strike involved was illegal and that the only issue for them to determine is the amount of damages to be awarded respondent.   However, since this appeal was filed the California Supreme Court filed its decision in County Sanitation Dist. No. 2 v. Los Angeles County Employees' Assn. (1985) 38 Cal.3d 564, 214 Cal.Rptr. 424, 699 P.2d 835, wherein the court held that state and local government workers have the right to strike except when the public's health or safety is at risk.   It is appellant's position that County Sanitation requires a general, unqualified reversal without directions of the judgment in the present case.   Respondent argues that since it was determined in Evankovich that the strike under consideration was illegal, that appellant is precluded under the doctrine of res judicata or collateral estoppel from arguing again that the strike was lawful.

 If a second action is on the same cause of action as the first cause of action, the doctrine of res judicata precludes relitigation of the cause of action in the second action.  (Louis Stores, Inc. v. Department of Alcoholic Beverage Control (1962) 57 Cal.2d 749, 757, 22 Cal.Rptr. 14, 371 P.2d 758).   Since Evankovich concerns a different cause of action (an action for an injunction) than is involved in the instant case (an action for damages) the doctrine of res judicata is not involved but rather the doctrine of collateral estoppel.  (Ibid.)

“Traditionally, collateral estoppel has been found to bar relitigation of an issue decided at a previous proceeding ‘if (1) the issue necessarily decided at the previous [proceeding] is identical to the one which is sought to be relitigated;  (2) the previous [proceeding] resulted in a final judgment on the merits;  and (3) the party against whom collateral estoppel is asserted was a party or in privity with a party at the prior [proceeding].’ ”  (People v. Sims (1982) 32 Cal.3d 468, 484, 186 Cal.Rptr. 77, 651 P.2d 321).

 Appellant asserts “[c]ollateral estoppel cannot apply because there was never a determination on the merits of the prayer for injunction in Evankovich.   Despite dicta throughout the opinion to the effect that California law holds public strikes illegal, the Court in Evankovich did not hold on the merits that the 1976 strike was illegal;  the Court held merely that Judge Benson did not abuse his discretion in issuing a preliminary injunction against the strike.”   While we recognize that a preliminary injunctive order does not generally reach the merits of the permanent injunctive relief sought in the complaint, there is no question that the court in Evankovich held that the strike was illegal and thus the trial court properly enjoined the strike.  (City and County of San Francisco v. Evankovich, supra, at pp. 48, 49, 50, 137 Cal.Rptr. 883.)   Thus, it appears as to the issue of the legality of the strike all the elements of collateral estoppel have been met.   It has been held that the doctrine of collateral estoppel may not be followed if to do so would “ ‘ “be unjust to one of the parties or to third persons to apply one rule of law in subsequent actions between the same parties and to apply a different rule of law between other persons.” ’ ”  (City of Los Angeles v. City of San Fernando (1975) 14 Cal.3d 199, 230, 123 Cal.Rptr. 1, 537 P.2d 1250, see also Moore v. Panish (1982) 32 Cal.3d 535, 540, fn. 5, 186 Cal.Rptr. 475, 652 P.2d 32.)   However, a change in the law does not appear to justify ignoring the doctrine of collateral estoppel.  (Slater v. Blackwood (1975) 15 Cal.3d 791, 796–797, 126 Cal.Rptr. 225, 543 P.2d 593.)

 Although we have determined for the purposes of this case the trial court did not err in instructing the jury that the strike was illegal, we must still decide if respondent had the right to file an action for damages arising out of the strike.  Evankovich did not consider whether damages were a proper remedy for an illegal strike, the court merely decided that such a strike could be enjoined.  Pasadena Unified Sch. Dist. v. Pasadena Federation of Teachers (1977) 72 Cal.App.3d 100, 140 Cal.Rptr. 41, held that the conduct of an illegal strike was a tort for which damages may be recovered.   The California Supreme Court in County Sanitation did not overrule this decision since it determined that the strike in that case was legal.  (County Sanitation Dist. No. 2 v. Los Angeles County Employees Assn., supra, 38 Cal.3d 564, 592, fn. 40, 214 Cal.Rptr. 424, 699 P.2d 835.)   We feel compelled to follow Pasadena since that decision has not been overruled and since we have already determined that we are bound by Evankovich that this particular strike was illegal under the doctrine of collateral estoppel.

Accordingly, the trial court did not err in instructing the jury as a matter of law that the strike under consideration in the instant case was an unlawful strike and the only remaining issue was damages.

II.

The damages sought by respondent and argued to the jury were of three kinds:  (1) lost revenue;  (2) increased operating expenses;  and (3) employee overtime.   These were the only kind of damages proved at trial and argued to the jury.   Respondent sought a ruling that it was entitled to recover its gross losses, without any reduction for unpaid expense (i.e., unpaid salaries).   This was done on the theory that it is not the business of respondent to make money.   The trial court sustained respondent's objections to questions dealing with setoff for unpaid salaries and other costs not paid due to the strike.

Appellant asserts that in the private sector only net losses are recoverable in an employer's damage action against a union which has engaged in an unlawful strike.   Appellant states “to permit the City to recover gross lost revenues without any offset or deduction is without any precedent in the law of compensatory damages, but is reminiscent of penalties, ․”

Respondent on the other hand asserts that there is a substantial difference between public employment and private employment and in the rights of persons employed in these respective sectors of the community.  “In fact, most governmental activities are specifically undertaken to meet some articulated social objective such as keeping the peace, minimizing community health hazards (such as smog), reducing the congestion of city streets or encouraging development of jobs and commerce.   Most public undertakings in fact lose money.   Therefore, to use a ‘net’ damages theory in public employee-related actions is effectively to say that there are no damages when public services are interrupted.”

 It is established in California that public employee unions which engage in strikes are liable for the damages which are thereby proximately caused to a municipal employer.  (Pasadena Unified Sch. Dist. v. Pasadena Federation of Teachers, supra, 72 Cal.App.3d 100, 111–112, 140 Cal.Rptr. 41.)   In LRC v. Fall River Educators Assn. (1979) 105 L.R.R.M. 3157 a similar setoff argument as that advanced by appellant was considered and rejected.   In that case the court stated:  “It has been agreed that the total cost of the strike to the School Committee was three hundred fifty-five thousand dollars ($355,000.00).   That one million, ninety thousand dollars ($1,090,000.00) was forfeited by the school teachers․  Following the Association's argument to its logical end would compel the conclusion that it would be more economical for the teachers to remain on strike for the entire school year.   This reasoning ignores the realities and true ‘costs' of a strike by a city's teaching force.   The court concludes, therefore, that it is the $355,000 cost figure that is relevant in the present proceedings.”  (Id., at p. 3159.)

 A tortfeasor is entitled to mitigation of damages owed to the injured party only where it is equitable to reduce those damages.  (Dakota Gardens Apartment Investors “B” v. Pudwill (1977) 75 Cal.App.3d 346, 354, 142 Cal.Rptr. 126).  “Since mitigation is grounded on equitable precepts [citation], the trial court could prevent mitigation when it would have been inequitable to do otherwise.”  (Ibid.)  We are of the opinion that the trial court had sufficient reasons upon which to deny mitigation and reject appellant's argument for a setoff.   If appellant's argument for a setoff had been successful, appellant would not be liable for any damages for its participation in an illegal strike.   We find the reasoning of LRC v. Fall River Educators Assn. to be compelling.

III.

Next appellant contends that since it was held liable for all damage caused by the strike, it is clearly entitled to a setoff in the amount of value which the alleged joint tortfeasors conferred upon respondent in the settlement of the case.   Appellant asserts that it should be allowed a setoff under Code of Civil Procedure section 877, even though there was no cash consideration for the consent decree which the other unions entered into with respondent.

The consent decree dismissed the union leaders and the unions who signed the decree from the instant action.   Respondent summarizes the other points of the decree in the following manner:  “the participating codefendants will not strike the City for a period of five years;  the participating defendants will take specified steps to stop any strike against the City by their members;  the participating defendants will be subjected to specified monetary penalties for any future violations of the decree;  all participating defendants are amenable to substituted service for disputes arising out of the decree;  and the City will not pursue its claim for monetary damages for the 1976 City workers' strike (which is the subject matter of the present suit) against the participating defendants.”

Code of Civil Procedure section 877 provides:  “Where a release, dismissal with or without prejudice, or a covenant not to sue or not to enforce judgment is given in good faith before verdict or judgment to one or more of a number of tortfeasors claimed to be liable for the same tort—[¶ ] (a) It shall not discharge any other such tortfeasor from liability unless its terms so provide, but it shall reduce the claims against the others in the amount stipulated by the release, the dismissal or the covenant, or in the amount of the consideration paid for it whichever is the greater;  and [¶ ] (b) It shall discharge the tortfeasor to whom it is given from all liability for any contribution to any other tortfeasors.”

The problem with the application of Code of Civil Procedure section 877 to the instant case is that respondent received no actual money for the settlement.   It is respondent's position that the dollar amount actually received by the plaintiff from a settling tortfeasor is the only measure of any offset under Code of Civil Procedure section 877.   Appellant on the other hand asserts:  “Certainly noncash consideration is capable of valuation.   It would be a very narrow reading of C.C.P. § 877 to apply the statute only to cash payments.”

“ ‘Moreover, to preserve the incentive to settle which section 877 provides to injured plaintiffs, we conclude that a plaintiff's recovery from nonsettling tortfeasors should be diminished only by the amount that the plaintiff has actually recovered in a good faith settlement, rather than by an amount measured by the settling tortfeasor's proportionate responsibility for the injury.’ ”  (Knox v. County of Los Angeles (1980) 109 Cal.App.3d 825, 833, 167 Cal.Rptr. 463.)   The term “the amount that the plaintiff has actually recovered” would appear to mean the cash value of the consideration.   The case of Franck v. Polaris E–Z Go Div. of Textron, Inc. (1984) 157 Cal.App.3d 1107, 204 Cal.Rptr. 321 is helpful in resolving this particular issue.   In Franck the plaintiff entered a settlement with one of the tortfeasors wherein the plaintiff was to receive a certain amount at the time of the settlement and payments in the future.   Defendant contended in Franck that in consideration of the setoff since there was a reduction for the current value of monies to be received in the future that tax benefits should also be considered in determining the setoff.   The court in rejecting this argument stated three reasons for its rejection of this argument.   The third reason is pertinent to the instant case.  “Third, ‘the introduction of evidence of future tax consequences to affect the amount of an award in personal injury and wrongful death actions would open the door to intense speculation about the future on the part of the jury.   The ramifications of such a rule of law could be immense.’ ”  (Id., at p. 1118, 204 Cal.Rptr. 321.)

 Under the consent decree entered between respondent and the other defendants in the instant case, respondent would only receive monetary damages if the defendant went on strike.   That is, there is no present cash value to the consent decree.   Since it is impossible to tell if respondent will ever receive any money on account of the consent decree, any setoff would be based on a figure that would be arrived at by pure speculation.   Under the authority of Franck we are of the opinion that pure speculation should not be used in determining the value of the setoff under Code of Civil Procedure section 877.   Accordingly, the trial court did not err in failing to assign a monetary value to the noncash settlement reached with appellant's tortfeasors and to deduct same from the judgment.

IV.

Appellant contends that reversal is required because of juror misconduct.   In support of its new trial motion on this ground, appellant submitted three juror declarations.   Juror Norton declared that after deliberations commenced on Friday afternoon, the jurors took a vote, which was five for the defendant, four for the city, and three undecided.   On Monday morning, one juror brought in three or four newspaper articles, which he said concerned the case.   Juror Norton believed that ten jurors read the articles;  one juror commented that the other unions had settled with the city out of court.   Juror Norton also declared that after the jurors read the articles, “some of them argued that because all the other unions had settled with the city, the Plumbers Union should also be held responsible.”   Juror Faxon declared that the article was circulated around the room and that some jurors read it;  juror Blos declared that some of the jurors read articles brought in by juror Lee.

Respondent submitted four counter-declarations.   Juror Lee declared that at the commencement of trial, the court informed the panel that the case had originally involved about seventeen defendants, but that only one remained in the trial.   Lee admitted bringing two newspaper articles into the jury room, one indicating that there had been a settlement between certain defendants in the case and the city, the other reporting the attorneys' opening statements.   Lee passed the articles around, but only one other juror appeared to look at them.   Three other jurors also declared that the jury was informed that there had been originally seventeen defendants in this action, and that the jury did not discuss the articles or the settlement during its deliberations.   One of the jurors whose declaration was one of three offered by appellant also executed a declaration which was one of the four offered by respondent.   The jurors whose affidavits were offered by respondent essentially refuted the declaration of juror Norton.   After hearing argument, the trial court denied the motion for new trial.

 Declarations of jurors are admissible to impeach a verdict, subject to the limitations of Evidence Code section 1150.   That section distinguishes between admissible proof of objectively ascertainable overt acts, such as statements made, or conduct, or events, and inadmissible proof of the subjective reasoning processes of the individual juror, which can be neither corroborated nor disproved.  (People v. Hutchinson (1969) 71 Cal.2d 342, 349–350, 78 Cal.Rptr. 196, 455 P.2d 132 cert. den., 396 U.S. 994, 90 S.Ct. 491, 24 L.Ed.2d 457.)   In this case, therefore, we may consider those portions of the declarations describing overt acts, but must disregard any references to what individual jurors privately considered in reaching their verdict.  (See Hasson v. Ford Motor Co. (1982) 32 Cal.3d 388, 415, fn. 8, 185 Cal.Rptr. 654, 650 P.2d 1171, cert. dism. 459 U.S. 1190, 103 S.Ct. 1167, 75 L.Ed.2d 422 (1983).)

 The reading by jurors of newspaper accounts of a trial in which they are engaged is a violation of their duty and obligation not to receive or communicate information from sources outside the evidence in the case.   (People v. Lessard (1962) 58 Cal.2d 447, 454, 25 Cal.Rptr. 78, 375 P.2d 46;  see Hasson v. Ford Motor Co., supra, 32 Cal.3d at pp. 410–411, 185 Cal.Rptr. 654, 650 P.2d 1171.)   Juror Lee's conduct was unquestionably impermissible, as was the conduct of any other juror who read the article.

 A presumption of prejudice arises from any juror misconduct.   (People v. Honeycutt (1977) 20 Cal.3d 150, 156, 141 Cal.Rptr. 698, 570 P.2d 1050.)  “However, the presumption is not conclusive;  it may be rebutted by an affirmative evidentiary showing that prejudice does not exist or by a reviewing court's examination of the entire record to determine whether there is a reasonable probability of actual harm to the complaining party resulting from the misconduct.  [Citations.]  Some of the factors to be considered when determining whether the presumption is rebutted are the strength of the evidence that misconduct occurred, the nature and seriousness of the misconduct, and the probability that actual prejudice may have ensued.”   (Hasson v. Ford Motor Co., supra, 32 Cal.3d at p. 417, fn. omitted, 185 Cal.Rptr. 654, 650 P.2d 1171.)

In Hasson, the misconduct was inattentiveness during trial;  one juror read a novel and other jurors worked crossword puzzles while evidence was being presented.   Nevertheless, the court concluded that the presumption of prejudice was rebutted by an examination of the record, which revealed “no substantial likelihood” that actual prejudice might have resulted from the misconduct.   There was overwhelming proof of defendant's liability, and the jurors inattentive conduct was “neutral.”  (Id., at p. 417, 185 Cal.Rptr. 654, 650 P.2d 1171.)

The cases cited by the Supreme Court in Hasson for the proposition that the presumption of prejudice is not conclusive are also instructive.   Those cases establish that in reviewing the record to evaluate whether the presumption has been rebutted, the court should also consider whether the misconduct has lightened a party's burden of proof on a critical issue, impeached witnesses or contradicted a defense, or conveyed information which would bias jurors.  (See, e.g., People v. Phillips (1981) 122 Cal.App.3d 69, 80–82, 175 Cal.Rptr. 703;  People v. Bullwinkle (1980) 105 Cal.App.3d 82, 91–92, 164 Cal.Rptr. 163, overruled on other grounds in People v. Laiwa (1983) 34 Cal.3d 711, 728, 195 Cal.Rptr. 503, 669 P.2d 1278;  People v. Martinez (1978) 82 Cal.App.3d 1, 23–25, 147 Cal.Rptr. 208.)

 Of course, where one or more jurors reads a newspaper article which can only be considered prejudicial to a party, a new trial must be granted.   For example, in People v. Wong Loung (1911) 159 Cal. 520, 114 P. 829 defendant was being tried for murder.   A juror's wife read him an article stating that defendant had been previously convicted of another murder, was granted a retrial, but was released before that new trial because all records were lost in a fire.   Pointing out that it would have been misconduct for the prosecutor to attempt to introduce that information into evidence, the court concluded that it “must have been prejudicial.”  (Id., at pp. 523–529, 114 P. 829.)   In People v. Stokes (1894) 103 Cal. 193, 37 P. 207 during deliberations jurors read an article summarizing the evidence, mentioning evidence which the trial court had refused to admit, and reporting a rumor that the jury would fail to bring in a verdict because two of its members planned to “hang the jury.”   The Supreme Court found it impossible to conclude that the article would have had no effect on any members of the jury who might have been wavering, and ordered a new trial.  (Id., at pp. 196–200, 37 P. 207.)

 In comparison, the newspaper articles in this case were innocuous.   The articles did not lighten respondent's burden of proof or contradict appellant's defense.   They did not contain any prejudicial information about appellant.   Our review of the record persuades us that there is no reasonable possibility that the information about the settlement biased any of the jurors against appellant.   The jurors were all aware from the beginning of the trial that the action had originally involved numerous other defendants, and that only appellant remained as a defendant in the trial.   There were repeated references to that fact throughout the trial.   We conclude that there is no substantial likelihood that actual prejudice may have resulted from the juror misconduct, and that the presumption of prejudice was rebutted.   The trial court did not abuse its discretion in denying a new trial.

V.

Respondent contends in its cross-appeal that in addition to its demand for damages occasioned by appellant's disruption of the flow of municipal revenues, respondent should also have been awarded the value of governmental services that were interrupted by the 1976 strike.   The damages sought by respondent and argued to the jury were of three kind.   They were lost revenue, increased operating expenses and employee overtime.   This was the only kind of damage proved at trial, argued to the jury, or instructed upon by the trial court.   The present claim for general damages is raised for the first time on appeal, was not pursued in the trial court and must be rejected on this ground.

The judgment is affirmed.

WHITE, Presiding Justice.

SCOTT and BARRY–DEAL, JJ., concur.