Filed 9/10/19 City and County of S.F. v. Uber Technologies, Inc. CA1/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION ONE

CITY AND COUNTY OF SAN FRANCISCO et al.,

Plaintiffs and Respondents,

v.

UBER TECHNOLOGIES, INC.,

Defendant and Appellant.

A152003

(San Francisco County

Super. Ct. No. CPF-17-515663)

UBER TECHNOLOGIES, INC.,

Plaintiff and Appellant,

v.

CITY AND COUNTY OF SAN FRANCISCO, OFFICE OF THE TREASURER-TAX COLLECTOR,

Defendant and Respondent.

A152024

(San Francisco County

Super. Ct. No. CPF-17-515627)

After Uber Technologies, Inc. appealed orders directing it to comply with an administrative subpoena issued by the San Francisco Tax Collector (Tax Collector), the Legislature enacted statutes that appear to invalidate the underlying legal justification for the subpoena. On appeal, Uber argues that the new legislation renders the subpoena invalid, whereas respondents Tax Collector, City and County of San Francisco, and the city’s treasurer argue that the new legislation does not render the subpoena invalid because the legislation concerns a municipal affair and cannot be applied to San Francisco. Because the determination of whether the legislation involves a municipal affair or a matter of statewide concern requires factual development, we remand to the trial court for further proceedings.

I.
FACTUAL AND PROCEDURAL
BACKGROUND

Uber is a “Transportation Network Company,” also known as a “TNC.” (See Pub. Util. Code, § 5431, subd. (c).) It offers a smartphone application, or “Uber app,” that, in Uber’s words, “connect[s] riders looking for transportation to independent transportation providers . . . looking for riders.” A rider who needs transportation uses the Uber app to connect with drivers, and Uber processes payment for rides.

San Francisco mandates that people and companies that “engage in business within the City” obtain a registration certificate. (S.F. Bus. & Tax Regs. Code, § 853(a), hereafter Bus. & Tax Code.) The City defines “engaging in business within the City” broadly to include a person who “performs work or renders services within the City for all or part of any seven days during a tax year.” (Bus. & Tax Code, § 6.2-12(g).) For a person making less than $100,000 a year, the cost of a registration certificate is $91.

The Tax Collector periodically requested information from Uber to determine whether Uber drivers were obtaining the required registration certificates. In January 2015, Uber provided spreadsheets listing the names, addresses, and amounts earned by certain drives for calendar years 2011, 2012, and 2013. Uber later complied with two additional requests, and provided information for 2014, 2015, and the first half of 2016. Based in part on the information provided by Uber for 2015 and the first half of 2016, the Tax Collector in 2016 mailed letters to more than 57,000 TNC drivers explaining the requirement to obtain a registration certificate. By May 2017, about 19,200 TNC drivers had obtained registration certificates, about 11,660 drivers had completed declarations stating why they were not required to register, and more than 26,000 drivers had not responded.

In December 2016, the Tax Collector sought information from Uber for the second half of 2016. This time, Uber did not comply. The Tax Collector in January 2017 issued an administrative subpoena demanding that Uber produce “data identifying all drivers that use/used the technology of Uber . . . to provide transportation or delivery services during the period July 1, 2016 through December 31, 2016, where any part of the trip occurred in San Francisco.” After the parties met and conferred about the scope of the subpoena, the City issued a new subpoena on March 20, 2017 (hereafter “the administrative subpoena”), which requested data on Uber drivers who had operated in San Francisco for seven or more days during the period July 1, 2016, to March 31, 2017.

Uber notified the City it would not voluntarily produce any information in response to the administrative subpoena. On May 1, 2017, the company filed a petition against the City’s Office of the Treasurer-Tax Collector to quash the subpoena (case No. CPF-17-515627). Ten days after Uber filed its petition to quash, San Francisco, the city’s treasurer, and the Tax Collector (sometimes collectively referred to as the City) filed their own petition for an order compelling Uber to comply with the administrative subpoena (case No. CPF-17-515663). Uber contended (both in its petition to quash and in its opposition to the City’s petition to compel) that the administrative subpoena was unreasonably overbroad, irrelevant, and burdensome; that it exceeded the scope of the Tax Collector’s authority; that the subpoena was a taking under the Fifth Amendment; and that the subpoena violated drivers’ rights to privacy and due process. The City countered in both proceedings that the Tax Collector had the authority to issue the subpoena to Uber and that Uber’s objections lacked merit. The petition to quash and the petition to compel were heard together in the trial court.

The trial court granted the City’s petition to compel (No. CPF-17-515663) and denied Uber’s petition to quash (No. CPF-17-515627). The court concluded in both proceedings that the Tax Collector was authorized to issue the administrative subpoena, that the subpoena served the valid purpose of investigating compliance with the registration requirements of the Business and Taxation Code (§ 6.2-12), that the subpoena was not overly broad, and that Uber had not shown that compliance would be unduly burdensome. Uber appealed in both CPF-17-515663 (A152003) and CPF-17-515627 (A152024), and this court consolidated the appeals on the parties’ stipulation.

After Uber filed its notices of appeal, the Legislature in September 2017 passed Senate Bill No. 182 (2017-2018-Reg. Sess.) (Senate Bill No. 182), effective January 1, 2018, governing business licenses for TNC drivers. (Bus. & Prof. Code, §§ 16550, 16550.1, 16550.2; Stats. 2017, ch. 769, § 1.) The Legislature made clear that the bill was directed at requirements such as those imposed by San Francisco: “It is the intent of the Legislature to limit any requirement for a business license imposed by a local jurisdiction on a participating driver for a transportation network company to a single business license, regardless of the number of local jurisdictions in which the participating driver operates.” (Bus. & Prof. Code, § 16550.) The law further provides that “[a]ny local jurisdiction that requires a driver to obtain a business license to operate as a driver for a transportation network company may only require that driver to obtain a single business license, regardless of the number of local jurisdictions in which the driver operates” and that “[t]he driver shall obtain a business license in the local jurisdiction in which the driver is domiciled.” (Bus. & Prof. Code, § 16550.2, subds. (a), (b).) And the new law applies retroactively: “Notwithstanding any other law, a business license issued to a driver by a local jurisdiction pursuant to this chapter shall be valid for the period of time determined by the local jurisdiction by law or regulation, except that the local jurisdiction shall not require a driver to obtain a business license that applies for a period before January 1, 2018, or that imposes any penalty or fee on a driver related to the driver’s failure to obtain a business license for providing transportation network services for a period before January 1, 2018.” (Id., subd. (e).)

Uber filed its opening brief in March 2018 and argued that the administrative subpoena was unenforceable under the new law and that the court need not address the issues raised in the trial court. The City responded that the enactment of Senate Bill No. 182 did not invalidate the administrative subpoena and that the trial court properly compelled compliance.

While briefing was proceeding in this court, the City initiated a separate action in the trial court against the State of California challenging the applicability of Senate Bill No. 182 to San Francisco as a charter city and asking that the court enjoin the state from enforcing the enacted legislation against the City. (City and County of San Francisco v. Becerra (Super. Ct. S.F. City and County, No. CPF-18-516041).) The state demurred to the petition. The court concluded that the City had adequately alleged facts showing that the legislation might not apply to San Francisco, that the question could not be decided as a matter of law, and that the parties should be allowed “to develop a factual record for resolution” of the questions presented. According to the trial court’s docket, the Attorney General filed an answer to the City’s amended petition in July 2018, and the only other filing in the case since then was a dismissal of the governor without prejudice.

The Attorney General also filed an amicus curiae brief in this appeal arguing that the enactment of Senate Bill No. 182 extinguished the underlying controversy in this case. He argues that we should dismiss the appeal as moot or, in the alternative, stay the case pending resolution of the Becerra litigation or hold that Senate Bill No. 182 is presumptively valid and preempts the administrative subpoena. The City opposes the Attorney General’s position. Uber did not respond to the amicus brief.

II.
DISCUSSION

In general, where a party appeals from an order compelling compliance with an administrative subpoena, the reviewing court looks to whether the governmental body is authorized by ordinance or similar enactment to issue the subpoena, whether issuance of the subpoena serves a valid purpose, and whether the material subpoenaed is pertinent to the subject matter of the investigation. (Connecticut Indemnity Co. v. Superior Court (2000) 23 Cal.4th 807, 810.) The court is not to assess the ultimate validity of the purpose for which the government’s inquiry is directed; instead, the court at this stage examines only whether the agency has the authority to undertake the inquiry. (Western Oil & Gas Assn. v. State Bd. of Equalization (1987) 44 Cal.3d 208, 214.) The court reviews de novo whether an administrative subpoena meets the standards for enforcement. (State ex rel. Dept. of Pesticide Regulation v. Pet Food Express (2008) 165 Cal.App.4th 841, 854.)

Had the Legislature not enacted Senate Bill No. 182, we would proceed to determine whether we agreed with the trial court’s conclusions that the Tax Collector is authorized under the Business and Tax Code to issue the administrative subpoena, that the subpoena serves a valid purpose of investigating compliance with the requirement to seek a business-registration certificate, and that the subpoena served a valid purpose to such a determination. The new legislation does not affect the first factor, the Tax Collector’s general authority under Business and Tax section 6.1-1 to issue administrative subpoenas to gather business records to determine compliance with registration requirements. But it does affect the second factor, whether the subpoena serves a valid purpose. Senate Bill No. 182 significantly limits the City’s ability to require TNC drivers to register with the City. The administrative subpoena requested information on any Uber driver who had operated in San Francisco for seven or more days during the period July 1, 2016, to March 31, 2017, which is relevant to the City’s requirement that people obtain a registration certificate if they do business in the City for seven or more days a year. (Bus. & Tax Code, §§ 6.2-12(g), 853(a).) Under newly enacted Business and Professions Code section 16500.5, subdivision (b), a TNC driver may be required to obtain a business license only in the local jurisdiction where the driver is domiciled, which means only Uber drivers who live in San Francisco would be required to register. Furthermore, and in any event, subdivision (e) of the statute states that no local jurisdiction shall require that drivers register for a period before January 1, 2018, meaning that the time period covered by the administrative subpoena would be irrelevant. Assuming the statute is valid, the subpoena would no longer serve a valid purpose. The parties thus ask the court to determine the validity of Senate Bill No. 182.

The Attorney General, as amicus, offers several reasons why the court should not consider Senate Bill No. 182 here. He claims that the legislation rendered the case moot because it extinguished the underlying controversy between the parties. True enough, “an appellate court will decide only actual controversies[, and]. . . an action which originally was based on a justiciable controversy cannot be maintained on appeal if the questions raised therein have become moot by subsequent acts or events.” (Finnie v. Town of Tiburon (1988) 199 Cal.App.3d 1, 10 [appellate court would not review denial of preliminary injunction to prevent election where election was subsequently held and reversal would be an idle act].) But there is still a live controversy between the parties. If, as the City argues, Senate Bill No. 182 is invalid as applied to charter cities such as San Francisco, the subpoena’s validity would still be at issue. This is distinguishable from a situation where the parties on appeal do not challenge the validity of new legislation and only dispute whether the legislation actually renders the controversy moot. (E.g., Paul v. Milk Depots, Inc. (1964) 62 Cal.2d 129, 132-134 [new regulation promulgated during pendency of appeal rendered controversy moot].) Here, far from conceding the validity of Senate Bill No. 182, the City has filed a separate lawsuit challenging the legislation.

Thus, the question is whether we should consider the validity of the legislation that went into effect after the notice of appeal was filed. The Attorney General cites the general rule that a reviewing court does not consider issues raised for the first time on appeal. He acknowledges, though, that this general rule does not apply to appeals involving changes in law affecting injunctive relief since “ ‘relief by injunction operates in futuro, [meaning] the right to such relief must be determined under the law which exists at the time of an appellate court’s decision.’ ” (Broadmoor San Clemente Homeowners Assn. v. Nelson (1994) 25 Cal.App.4th 1, 4; see also Bravo Vending v. City of Rancho Mirage (1993) 16 Cal.App.4th 383, 393 [settled that in appeals from judgments granting or denying injunctions, law applied is that which is current as of time of appellate court’s decision].) The Attorney General contends that this exception does not apply here because the case does not involve injunctive relief. But appellate courts, including this one, have not limited consideration of new legislation to cases involving injunctions. (Physicians Com. for Responsible Medicine v. Tyson Foods, Inc. (2004) 119 Cal.App.4th 120, 125, 127-128 [consideration of amendments to anti-SLAPP statute after notice of appeal filed]; see also In re Estate of Hoffman (2002) 97 Cal.App.4th 1436, 1446-1447 [consideration of changes in law affecting proposed challenge to trust]; Sagaser v. McCarthy (1986) 176 Cal.App.3d 288, 298-299 [appellate court ruled on constitutionality and validity of legislation passed during pendency of appeal in case arising under the California Environmental Quality Act].)

We agree with the Attorney General, though, that we should not consider the validity of Senate Bill No. 182 for a different reason: Development of a factual record in the trial court is appropriate before ruling on the issue. (Cf. In re Sheena K. (2007) 40 Cal.4th 875, 887-888 & fn. 7 [appellate court may exercise discretion to review pure question of law].) The parties dispute whether Senate Bill No. 182 concerns a municipal affair (meaning the statute is inapplicable to the City) or a matter of statewide interest (meaning the Legislature was authorized to enact the legislation). (See Barajas v. City of Anaheim (1993) 15 Cal.App.4th 1808, 1813 [“Under the ‘home rule’ doctrine, California’s Constitution reserves to charter cities the right to adopt and enforce ordinances that conflict with general state laws, provided the subject of the regulation is a ‘municipal affair’ rather than one of ‘statewide concern.’ ”].) True, “the question whether in a particular case the home rule provisions of the California Constitution bar the application of state law to charter cities turns ultimately on the meaning and scope of the state law in question and the relevant state constitutional provisions. Interpreting that law and those provisions presents a legal question, not a factual one.” (State Building & Construction Trades Council of California v. City of Vista (2012) 54 Cal.4th 547, 558 (City of Vista), italics added.) But additional facts may be necessary before the court can properly rule on the legal issue. “Courts accord great weight to the factual record that the Legislature has compiled [citations], and also to any relevant facts established in trial court proceedings. [Citation.] Factual findings by the Legislature or the trial court, however, are not controlling. [Citation.] The decision as to what areas of governance are municipal concerns and what are statewide concerns is ultimately a legal one.” (Ibid., italics added.) In other words, although the question is a legal one, the court looks to the factual record developed by both the Legislature and the trial court in ruling on the issue.

In the Becerra litigation, the trial court relied on City of Vista and California Fed. Savings & Loan Assn. v. City of Los Angeles (1991) 54 Cal.3d 1 (California Fed. Savings) in concluding that the City’s challenge to Senate Bill No. 182 should not be decided as a matter of law on demurrer. As the trial court noted, California Fed. Savings, which sets forth our Supreme Court’s analytical framework for determining whether a matter falls within the home-rule authority of charter cities, was decided after a bench trial at which experts testified. (California Fed. Savings, at pp. 6, 20, 22-23.) Even in cases where the issue has been decided as a matter of law on the sustaining of demurrer, the court has had the benefit of a complaint or petition whose facts it must accept as true. (E.g., O’Connell v. City of Stockton (2007) 41 Cal.4th 1061, 1066, 1076 [issue of whether state law preempted local ordinance decided following sustaining of demurrer]; Bay Cities Transit Co. v. Los Angeles (1940) 16 Cal.2d 772, 773 [issue of whether state had exclusive jurisdiction decided following sustaining of demurrer]; Fisher v. County of Alameda (1993) 20 Cal.App.4th 120, 123 [considering whether real-estate transfer tax violated Proposition 13 following sustaining of demurrer]; see also Los Angeles Ry. Corp. v. Los Angeles (1940) 16 Cal.2d 779, 780, 787-788 [determination of whether city ordinance conflicted with state regulation decided “upon a written stipulation of facts”].)

Here, this court has granted Uber’s request to take judicial notice of the legislative history for Senate Bill No. 182, so we have the Legislature’s factual findings. But the parties have not had the opportunity to develop a factual record in the trial court, and this court does not have the benefit of a petition or complaint setting forth facts we must accept as true in these proceedings in making a legal determination. (See Wilson v. Beville (1957) 47 Cal.2d 852, 859 [“Determination of the question whether the Legislature has undertaken to occupy exclusively a given field of legislation depends upon an analysis of the statute and a consideration of the facts and circumstances upon which it was intended to operate”].) Such a factual record may be especially important in a case involving TNCs, a relatively new subject of government regulation. City of Vista stressed that “the inquiry [into whether legislation addresses a statewide concern] is not wholly removed from historical, and hence factual, realities. In California Fed. Savings, supra, 54 Cal.3d at pages 17 to 18, for example, we said: ‘[C]ourts should avoid the error of “compartmentalization,” that is, of cordoning off an entire area of governmental activity as either a “municipal affair” or one of statewide concern. [Because] . . . “the constitutional concept of municipal affairs is not a fixed or static quantity . . . [but one that] changes with the changing conditions upon which it is to operate,” our cases display a growing recognition that “home rule” is a means of adjusting the political relationship between state and local governments in discrete areas of conflict. When a court invalidates a charter city measure in favor of a conflicting state statute, the result does not necessarily rest on the conclusion that the subject matter of the former is not appropriate for municipal regulation. It means, rather, that under the historical circumstances presented, the state has a more substantial interest in the subject than the charter city.’ ” (City of Vista, supra, 54 Cal.4th at pp. 557-558, italics omitted.) Although the concepts of business licenses and regulating streets are not new ones, there is little “historical” context to whether the regulation of TNCs is a matter of statewide concern.

For all of the foregoing reasons, we decline to rule on the validity of Senate Bill No. 182 for the first time on appeal without a factual record. On remand, the parties are free, of course, to request that these proceedings and the Becerra litigation be consolidated, so that a single trial judge may rule on both the validity of the legislation as well as its effect on the administrative subpoena.

III.
DISPOSITION

The City’s request for judicial notice filed on July 5, 2018, is granted. The orders compelling compliance with the administrative subpoena are reversed, and the matters are remanded to the trial court for further proceedings consistent with this opinion. Each side shall bear its own costs on appeal.

 

_________________________

Humes, P. J.

WE CONCUR:

_________________________

Margulies, J.

_________________________

Sanchez, J.

City and County of San Francisco v. Uber Technologies, Inc. A152003 & A152024