PEOPLE v. S.C. (SAHLOLBEI)Petitioner’s Petition for ReviewCal.February 25, 2016| $232639 IN THE SUPREME COURT OF THE STATE OF CALIFORNIA THE PEOPLE, Petitioner, Vv Ss THE SUPERIOR COURT OF RIVERSIDE COUNTY, SUPREME COURT Respondent; F | L E D HOSSAIN SAHLOLBEI, _-FEB'2 5 2016 Real Party in Interest. Frank A. McGuire Clerk Deputy Fourth Appellate District, Division Two, No. EQ62380 Riverside County Superior Court No. INF1302523 The Honorable Michael Naughton, Judge PETITION FOR REVIEW MICHAEL A. HESTRIN District Attorney County of Riverside ELAINA GAMBERA BENTLEY Assistant District Attorney KELLI M. CATLETT Supervising Deputy District Attorney EMILY R. HANKS Deputy District Attorney County of Riverside 3960 OrangeStreet Riverside, California, 92501 Telephone: (951) 955-5400/(951) 955-6419 Fax: (951) 955-9566 Email: emilyhanks@rivcoda.org State Bar No. 230442 Attorneys for Petitioner S O R A S R Ci e S B E as g e SA RI : IN THE SUPREME COURT OF THE STATE OF CALIFORNIA THE PEOPLE, Petitioner, Vv S THE SUPERIOR COURT OF RIVERSIDE COUNTY, Respondent; HOSSAIN SAHLOLBEI, Real Party in Interest. Fourth Appellate District, Division Two, No. E062380 Riverside County Superior Court No. INF1302523 The Honorable Michael Naughton, Judge PETITION FOR REVIEW MICHAELA. HESTRIN District Attorney County of Riverside ELAINA GAMBERA BENTLEY Assistant District Attorney KELLI M. CATLETT Supervising Deputy District Attorney EMILY R. HANKS Deputy District Attorney County of Riverside 3960 Orange Street Riverside, California, 92501 Telephone: (951) 955-5400/(951) 955-6419 Fax: (951) 955-9566 Email: emilyhanks@rivcoda.org State Bar No. 230442 Attorneys for Petitioner TABLE OF CONTENTS TABLE OF CONTENTS...eeseeceereceeeeeeeeesesssessasessessssessaseseecsuceeeesessersseaseeee 1 TABLE OF AUTHORITIES...eeececceessesessssseseressesasessensessesessecesensensees il PETITION FOR REVIEW .......ccccecessccessecoeeseseseseseessecesesesseseucesesessesssscesssseeccnseaaess 1 ISSUE PRESENTED...ceceeeeeeeeneeceeeeesseeseesesseseseessssesseeseaeaseeseeaseesseseensesseneeaes 2 STATEMENT OF THECASEueeee eeeeeecseeessseesecsseesseeeneeecssssseesesssseesesessnsonsees 2 REASONSFOR GRANTING REVIEW...ciescseeeseeeeeeesenssssusssnsescneesaeeees 6 REVIEW IS NECESSARY TO SECURE UNIFORMITY OF DECISION AND TO SETTLE AN IMPORTANT QUESTION OF LAW REGARDING GOVERNMENT CODESECTION 1090’S APPLICABILITY TO INDEPENDENT CONTRACTORSo.ooeeccssesecseseseesessesesseeeescnesseesersesesseseenseesaesaes 6 CONCLUSION........ceccceeeneccscteereeeeeeeecseeeneeseeseseessssesseseeseneseesseeseseseaesansssseseeeaserseee 15 TABLE OF AUTHORITIES CASES Brandenburg v. Eureka Redevelopment Agency (2007) 152 Cal.App.4th 1350......9 California Housing Finance Agency v. Hanover/California Management & Accounting Center, Inc. (2007) 148 Cal.-App.4th 682.0...ccs6, 10, 11, 12 DepartmentofMotor Vehicles v. Industrial Acc. Com. (1939) 14 Cal. 2d 189.....10 Estate ofMoffitt (1908) 153 Cal. 359 oo. eeseseseeessssseessssseseeeeneesessessenesseseneenes 10 Hub City Solid Waste Service Inc. v. City ofCompton (2010) 186 Cal.App.4th LDAieeeeeccscsscscessceseecsessesecssseeseesseseseeeseseeeeecsecsesassaceusnneneeseeusessessseaaags 7,11, 12 Lexin v. Superior Court (2010) 47 Cal.4th 1050...eccsesseeeeeneteeeeseeeeeees 7, 8, 13 Martinez v. Combs (2010) 49 Cal.4th 35.00.eeceeseeseseeeessseesssesssseeseereassseeonaas 8 People v. Centr-O-Mart (1950) 34 Cal.2d 702 vc cccceceseeseeeseneeseeseesseereeeeeeeees 10 People v. Christiansen (2013) 216 Cal.App.4th 1181]... esescseeeeeseeeceeeteneeneeees 5 People v. Gnass (2002) 101 Cal.App.4th 1271 occeeeseseseeseeeseteneeseseneens 7, 12, 14 People v. Honig (1996) 48 Cal.App.4th 289 oo... ccccscesessesreeseeeneeeseees 10, 12, 14 People v. Watson (1971) 15 Cal.App.3d 28 w.occccccsssecseessesseeeseteteeseessetessseseeees 14 People v. Wong (2010) 186 Cal.App.4th 1433 wccccecscssseseseeeessesseeseesseeesees 14 S.G. Borello & Sons, Inc. v. Department ofIndustrial Relations (1989) AB Cal.3d B41 eeeccccssesecsecsecescsceceseessseseeceeescseesseeeeseesecssssessesessessssoeeoeees 8 Schaefer v. Berinstein (1956) 140 Cal.App.2d 278 .....ccsscessssseseeesesesseseerees 9,10 Stigall v. City of Taft (1962) 58 Cal.2d 565... ccccsseeseseseseenrereeseseteeeeeteees 10, 11 Sutter Hospital v. City ofSacramento (1952) 39 Cal. 2d 33 ...ececessseccssesersrerennees 10 Terry v. Bender (1956) 143 Cal.App.2d 198 oo. ecsccseeeesesrestsetseeseesensensseereeseneanes 9 Whitley v. Superior Court (1941) 18 Cal.2d 75.0... ccccsssessceseetesetesrenseseeesnesesees 10 STATUTES Government. Code § 1090 oooececscssescccteeeseeesececeeccnsenseeeeeseeecaersesdssseessesssessseeeseaeeeeesenesssesaseegspassim § 1097 ooececcccsccsccssssesesccesceccesseseeesseecseesessceseccseesseeecscsccsescsssesssessseseeseesesenesesseesesseaeasas 12 Penal Code § L861 ccccccccssceesseeseesseeesesceeeseesceseeeessesserereneeseeesecesesessseasesesssesesssssesesasseesarenes 5 § AQT oeeccccccsceccssescscecceecceseecssesesseseseesstseeseeseeseesessecesesesesssssavseseesseeseasenssessseeseaseseeseeasey 5 § 803 ..eccccsscsecccssessssecesscceceecesessecserecseesecseeseecuesscsecceesenerecsaseeseeneasseeseseessssseeseseeseessaned 5 § 95 oc ceccsccssesscssssesessecrsesescesecsceesseesseeeseeseesssessesessseasaceeeesseeueasesssesseesssssesseseseniaes 5,12 § 12022.6 wrcceccccssccsccscceeceesecescsceeeseenenecenesesesececserscsescseessssseeseeessesscsseeeessenesesssesereeseaey 5 OTHER AUTHORITIES California Rules of Court, Rule 8.500 00.0...ce eccssseceesseeteesseesseesenerseseessseseseeeenees 1 ii IN THE SUPREME COURTOF THE STATE OF CALIFORNIA THE PEOPLE, Petitioner, Vv S THE SUPERIOR COURT OF RIVERSIDE COUNTY, Respondent; HOSSAIN SAHLOLBEI, Real Party in Interest. TO THE HONORABLETANI CANTIL-SAKAUYE, CHIEF JUSTICE, AND TO THE HONORABLEASSOCIATE JUSTICES OF THE CALIFORNIA SUPREME COURT: Pursuant to rule 8.500 of the California Rules of Court, the People of the State of California respectfully request that this Court grant review in this matter to secure uniformity of decision andto settle an important question of law. (Cal. Rules of Court, rule 8.500, subd. (b)(1).) On January 20, 2016, the Court of Appeal, Fourth Appellate District, Division Two,filed an unpublished, non- unanimous opinion denying the People’s petition for writ of mandate or prohibition and holding that an individual performing work for and on behalf of a public entity in a capacity that qualifies as an “independent contractor”for purposes of commonlawtort liability cannotviolate the criminal provisions of Government Code section 1090. A copy of the Court of Appeal’s opinion and dissenting opinion are attached to this Petition. ISSUE PRESENTED Lf an individual performing work for and on behalf of a public entity qualifies as an “independentcontractor”for purposes of the commonlaw oftort liability, is that individual immune from the criminal provisions of Government Code section 1090? STATEMENT OF THE CASE Palo Verde Hospital (“PVH”)is a small public hospital in Blythe. PVH receives public funds to operate and qualifies as a public entity under California law. (Exh.' 3 at p. 128.) Real party worked at PVH as a surgeon. Like most of the doctors working at PVH he wasan independent contractor. (Exh. 3 at p. 167.) Real party also served as the Chief of Staff and Vice Chiefof Staff of the hospital’s Medical Executive Committee (““MEC”), a group of senior leadership of medicalstaff. (Exh. 3 at pp. 128, 137.) As such he advised the elected board of directors onhiring, firing, quality assurance, doctor privileges, doctor credentials, corrective actions against doctors, and other operations of the hospital district and served as a consultant to the Board. (Exh. 3 at pp. 93-94, 134-136.) Real party was the most powerful and influential member ofthe MEC. (Exh.3 at p. 156.) Real party was also employed by PVH as the Co-Medical Director of Surgical Services and On-Call Surgical Services, a position that also required serving as a consultant to the Board. (Exh. 3 at p. 157.) The contract for his Directorship position states that the position is as an “independent contractor.” (Exh.3 at pp. 168, 275.) In June 2009, real party contacted Dr. Brad Barth, an anesthesiologist who had previously worked at PVH years earlier. Dr. Barth was working in Missouri. Real party told Dr. Barth that he had the contract to provide anesthesia services at | “Exh.” Refers to the exhibits attached to the People’s petition for writ of prohibition or mandate filed in the District Court of Appeal. PVHand waslooking to hire a subcontractor at $36,000 a month and a one-time $10,000 relocation fee. (Exh. 3 at pp. 43, 46-48, 51-52, 54-55.) Dr. Barth agreed and signed a contract with real party. (Exh. 3 at pp. 50-51.) Real party did not have a contract with PVH to provide anesthesia services. (Exh. 3 at p. 130.) After securing a contract with Dr. Barth, real party negotiated a contract between Dr. Barth and PVH for more money, intending to keep the excess for himself. Real party represented to the PVH Board that Dr. Barth did not wantto negotiate his own contract. (Exh. 3 at p. 145.) This was also untrue. (Exh. 3 at p. 67.) Real party never told any memberofthe Board that he would be receiving fees under the contract he was negotiating between PVH and Dr. Barth. The Board members indicated that they would never have agreed to such an arrangement. (Exh.3 at p. 152.) The contract between real party and Dr. Barth contained a confidentiality provision andreal party repeatedly threatened Dr. Barth that he would sue him if he disclosed the contents of the agreement. Dr. Barth wasafraid to say anything to members of the hospital board about the agreementhe signed with real party for fear of being sued. (Exh. 3 at pp. 58-61, 68.) Dr. Barth moved back to Blythe in late September 2009 and began working at PVH. (Exh.3 at p. 52.) After he arrived in Blythe, real party told Dr. Barth that the hospital had decided to structure the contracta little differently and wanted the contract in Dr. Barth’s name. Real party said nothing about the arrangement was any different and it would not affect the contract Dr. Barth already had in place. (Exh. 3 at p. 61.) Dr. Barth would have to deposit the checks he received from PVHinto real party’s bank account and real party would then pay the wage he previously promised to Dr. Barth. Dr. Barth signed a second contract with real party. Dr. Barth did not think he had any alternatives. (Exh.3 at p. 62, 65-66.) Real party then had Dr. Barth sign two contracts with PVH, one for anesthesia services and onefor the Director of Anesthesia. The contracts said that Dr. Barth would be paid $48,000 a month, a one-time $40,000 relocation fee, and $3,000 a month for the Directorship position. (Exh. 3 at p. 72-73.) Pursuantto the contract between real party and Dr. Barth, Dr. Barth would deposit this money in real party’s bank account. Real party would then pay Dr. Barth $36,000 a month and a one-time relocation fee of $10,000. Real party kept the remaining money. (Exh.3 at p. 73.) In September 2012, when Dr. Barth’s contract expired, he was asked by the CEO of PVH,Peter Klune, whetherreal party was profiting from his contract. Dr. Barth admitted that much of the money was goingto real party. Klune was surprised and the hospital renegotiated a contract with Dr. Barth at a lowerrate that did not include paymentsto real party. (Exh. 3 at p. 90.) Real party was angry with Dr. Barth and threatened to suspendhis hospital privileges and sue him. (Exh.3 at pp. 91-92.) The contract with Dr. Barth wasnotthe first time real party had a signed agreement with a doctor requiring them to pay him a portion of his salary. In 2006, real party negotiated a contract between Dr. Mohammad Ahmad, an OB- GYN doctor, and PVH. The hospital paid $30,000 for Dr. Anmad’s OBGYN services, but real party only paid Dr. Ahmad $18,000,retaining the rest for himself. (Exh. 3 at p. 318.) The PVH Board was unawarethat real party was profiting from the contract at the time that it was entered. (Exh. 3 at p. 266.) When Dr. Ahmaddiscovered that real party was skimmingoff a portion ofhis salary, he reportedit to the Board. (Exh. 3 at p. 316.) The Board helped negotiate an end to the contract. (Exh. 3 at p. 318.) Soon afterwards, however,real party brought in another OBGYN andtookall of Dr. Ahmad’sclients away andheleft the hospital. (Exh. 3 at p. 319.) On September 24, 2013, the Riverside County District Attorney’s Office filed a felony complaint charging real party, as relevant here, with self-dealing regarding the contract for anesthesia services with Dr. Barth in October 2009 (count 1; Govt. Code, § 1090), and theft of money from Dr. Barth in October 2009 (count 2; Pen. Code, § 487).” The complaint further alleged enhancements pursuant to Penal Code section 186.11, subdivision (a)(2), and Penal Code section 12022.6, subdivision (a)(2), as well as tolling of the statute of limitations pursuant to Penal Codesection 803, subdivision (c). (Exh. 2.) The preliminary hearing was held on July 21, 2014 and July 22, 2014. Following the preliminary hearing,real party was held to answer on theft from Dr. Barth (count 2). The court did not hold real party to answeronthe self-dealing count (counts 1) based on the Second District Court of Appeal’s opinion in People v. Christiansen (2013) 216 Cal.App.4th 1181 (Christiansen), finding that real party could not be prosecuted under section 1090 because he was an independent contractor for purposesoftort law. (Exh. | at p 8.) On August4, 2014, the People filed an information with the same counts and allegations as the original complaint. (Exh. 4.) On September2, 2014,real party filed a motion to set aside the information pursuant to Penal Code section 995. Thetrial court granted real party’s motion as to count 1 based entirely on the Christiansen decision. (Exh. 8 at p. 544.) On November 24, 2014, the People filed a Petition for Writ of Prohibition and/or Mandate in the Fourth Appellate District, Division Two, challenging the trial court’s dismissal of count 1. The Court of Appeal invited a response from real party and thereafter the court issued an order to show cause directing the parties to file a formal return and traverse. On January 20, 2016, the Court of Appealissued a non-unanimousopinion denying the People’s petition. The majority opinion agreed with the Christiansen decision and adopted the common law tort distinction between independent contractors and employees into Government Codesection 1090. Becausereal party qualifies as an independent * Real party was originally charged with self-dealing andtheft related to the contract for obstetrics and gynecology services with Dr. Ahmad in January 2006, but those counts were dismissed as untimely. The People did not seek review of that decision. contractor for purposes of tort law, the majority opinion concludedthat he was immune from prosecution undersection 1090. Justice Hollenhorstfiled a dissenting opinion in which he found that Christiansen was wrongly decided and the commonlaw tort distinctions relied upon by the majority are irrelevant. The dissenting opinion finds that real party can be criminally prosecuted for a violation of Government Codesection 1090. REASONSFOR GRANTING REVIEW REVIEW IS NECESSARY TO SECURE UNIFORMITY OF DECISION AND TO SETTLE AN IMPORTANT QUESTION OF LAW REGARDING GOVERNMENT CODE SECTION 1090’S APPLICABILITY TO INDEPENDENT CONTRACTORS Reviewofthis case is necessary to secure uniformity of decision and settle an important question of law—can an independent contractor that performs public functions on behalf of a public entity and exerts considerable influence over the contracting decisions of the public entity violate the criminal provisions of Government Code’section 1090. The majority opinion of Court of Appeal in this case held that because real party’s employment contract with a public hospital identified his position as an “independentcontractor,” and real party qualifies as an independent contractor under the commonlaw oftort, real party escapes criminalliability under section 1090. In so holding, the majority adopts the reasoning of the Second District Court of Appeal in Christiansen, which held that independentcontractors, regardless of their role at a public entity, are immunefrom prosecution undersection 1090. But the opinion in this matter, and in Christiansen, contradict the holdings in California Housing Finance Agency v. Hanover/California Management & Accounting Center, Inc. (2007) 148 Cal.App.4th 682 (California Housing), Hub T A o r o 3 All further statutory references are to the Government Codeunless otherwise indicated. A e e e City Solid Waste Service Inc. v. City ofCompton (2010) 186 Cal.App.4th 1114, 1125 (Hub City), and People v. Gnass (2002) 101 Cal.App.4th 1271 (Gnass), all ofwhich recognize that an independent contractor can violate section 1090 if he or she performs public functions on behalf of the public entity. Without resolution from this Court, the applicability of section 1090 to independent contractors is subject to varying holdings. Given current economic pressures on public entities, more and more government functions are outsourced to independentcontractors. The Court of Appeal’s opinionin this case, as wellas the opinion in Christiansen, provides protection for these independent contractors to engagein self-dealing, undermining the purposeofsection 1090 to act as a prophylactic against the temptation to act in one’sself interest. Section 1090 provides, “Members ofthe Legislature, state, county, district, judicial district, and city officers or employees shall not be financially interested in any contract made by them in their official capacity, or by any body or board of which they are members. Norshall state, county, district, judicial district, and city officers or employees be purchasers at any sale or vendors at any purchase made bythemin their official capacity.” A violation of section 1090 requires the defendant governmentofficial or employeeparticipated in the making of a contract in his or herofficial capacity and the defendant had a cognizable financial interest in that contract. (Lexin v. Superior Court (2010) 47 Cal.4th 1050, 1074 (Lexin)). A criminal violation of section 1090 further requires a showing that the violation was knowingand willful. (/bid.; § 1097.) Thestatute serves as a “prophylactic against personal gain at public expense.” (Hub City, supra, 186 Cal.App.4th at p. 1125.) Section 1090 embodies the “self- evident truth, as trite and impregnable as the law ofgravitation, that no person can, at one and the sametime, faithfully serve two masters representing diverse or inconsistent interests with respect to the service to be performed.” (Lexin, supra, at p. 1073.) The majority holding of the Court of Appeal in this case found that the term “employee”in section 1090 mustbe interpreted in the identical manneras in commonlawtort. (Slip opn.at pp. 7-8.) Because an independent contractor does not constitute an employee for purposesof assigningtort liability, the Court of Appeal found section 1090 “does not apply to conduct of independent contractors.” (Slip opn. at p. 6.) Focusing exclusively on real party’s written contract with the public hospital, and not on his actions, the Court of Appeal concludedthat real party was an independent contractor and there was“atotal absence of evidence that Dr. Sahlolbei, during the timeat issue, was acting as an ‘employee’ of thedistrict.” (Slip opn. at p. 13.) This analysis is flawed and contradicts multiple Court of Appeal opinions and the opinion of the California Attorney General. Adopting the same reasoning as the Christiansen court, the majority opinion finds the term “employee” in section 1090 must be interpreted to adopt the commonlaw tort definition of employee. But, as recognized by this Court, section 1090 is not the codification of the common law oftort; section 1090 is the codification of the commonlaw ofconflicts ofinterest. (Lexin, supra, 47 Cal.4th at p. 1072.) This Court has previously held that commonlaw definitions do not apply in interpreting a statute when the history and fundamental purpose of the statute is different from the commonlaw rule. (S.G. Borello & Sons, Inc. v. DepartmentofIndustrial Relations (1989) 48 Cal.3d 341, 351-353; accord Martinez v. Combs (2010) 49 Cal.4th 35, 62-63.) Commonlawtort analysis differentiating between employees and independent contractors was developed to define an employer’s liability for injuries caused by his employee. (S.G. Borello, supra, 48 Cal.3d at p. 352.) Allocating financial responsibility for tortious acts is an entirely different objective, with an entirely different history, than protecting the public dollar from exploitation by self-interested individuals. In fact, as the dissent by Justice Hollenhorstin this case notes, “The issue in the section 1090 context is not the degree of control the putative employer has overits agent (as when courts consider whether to imputetort liability for injuries to third parties), but quite the opposite, the degree ofinfluence the public servant has over the public entity’s contracting decisions.” (Slip dissenting opn. at p. 5.) Adopting commonlawtort distinctions into section 1090 is not only unauthorized, it requires the court to interpret section 1090 in a manner inconsistent with the history and fundamental purpose of conflicts of interest law. Rather than import the irrelevant commonlaw tort definition of employee, the majority opinion should have considered the history of section 1090 and how the statute came to include the term “employee.” The earliest codifications of the conflict of interest prohibition, beginning back in 1851, were limited to “officers.” (Brandenburg v. Eureka Redevelopment Agency (2007) 152 Cal.App.4th 1350, 1362, citing Stats.1851, ch. 136, § 1-4, p. 522.) Despite this limitation, in 1956, the Court ofAppeal in Schaefer v. Berinstein (1956) 140 Cal.App.2d 278 (Schaefer), broadly interpreted section 1090’s prohibition on “officers” self- dealing to include a special city attorney hired for the limited purpose of rehabilitating tax-deeded and special assessment frozen propertiesin the city. (d. at p. 291.) That sameyear, the court in Terry v. Bender (1956) 143 Cal.App.2d 198 (Terry), came to the same conclusion, noting that section 1090’s prohibition on self-dealing would apply to an outside attorney serving in an advisory position to the city. (/d. at pp. 209-211.) Shortly thereafter, in 1963, the Legislature chose to expandthestatute beyond “officers,” adding the word “employee.” (Stats.1963, ch. 2172, § 1.) In an opinionissued shortly after the amendment, the Attorney General opined that the Legislature’s addition of the word “employee” was meantto codify the broad interpretation of Schaefer and Terry. (46 Ops.Cal.Atty.Gen. 74 (1965).) It seems clear that the Legislature in later amending section 1090 to include ‘employees’ intended to apply the policy of the conflicts of interest law, as set out in the Schaefer and Terry cases, to independent contractors who perform a public function and to require of those who serve the public temporarily the same fealty expected from permanentofficers and employees. It is a fundamental rule for the interpretation of a statute thatit is presumedto have been enacted or amendedinthe light of such existing judicial decisions as have a direct bearing upon it. Sutter Hospital v. City of Sacramento, 39 Cal. 2d 33, 38 (1952); Whitley v. Superior Court, 18 Cal.2d 75, 78 (1941); Estate ofMoffitt, 153 Cal. 359, 361 (1908), aff'd, 218 U.S. 404 (1910). Except wherethe statutory languageis clear and explicit, courts construe statutes with a view to promoting rather than to defeating their general purposes and their underlying policy. People v. Centr-O-Mart 34 Cal. 2d 702, 704 (1950); Department ofMotor Vehicles v. Industrial Acc. Com., 14 Cal. 2d 189, 195 (1939). Conflict of interest statutes are strictly enforced, Schaefer v. Bernstein, 140 Cal. App. 2d 278, 291 (1956), and should,therefore, be liberally construed. We conclude that a financial consultant whois employed by a public agency on a temporarybasis is an “employee” under section 1090. (46 Ops.Cal.Atty.Gen. at p. 79, emphasis added.) The majority opinion ofthe Court of Appeal in this case never once acknowledgesthe history ofthe conflict of interest statutes, instead focusing exclusively on irrelevant tort law distinctions. Recognizing the evolution of conflicts of interest law andthe history of liberal construction, multiple other Courts of Appeal have concludedthat an independent contractor who performsa public function can violate section 1090. In California Housing, Division Three of the Fourth Appellate District, upheld the use of a jury instructionstating, “The fact that someoneis designated an independent contractor is not determinative; the statute applies to independent contractors who perform a public function.” (California Housing, supra, 148 Cal.App.4th at p. 690.) The California Housing court rejected the defendant’s attempt to define the term employeeusingtort distinctions, finding “the common-law employee/independent contractor analysis is not helpful in construing the term ‘employee’ in section 1090.” (bid.) Unlike common law tort principles, conflict of interest statutes “cannot be given a narrow and technical interpretation that would limit [its] scope and defeat the legislative purpose.” (Id. at pp. 690-691, citing People v. Honig (1996) 48 Cal.App.4th 289, 314 [broadly interpreting the phrase “financially interested”]; Stigall v. City of 10 Taft (1962) 58 Cal.2d 565, 569 [broadly interpreting “contract”to include preliminary matters].) Thus, the California Housing court concluded the defendant “whoseofficial capacity carries the potential to exert ‘considerable’ influence over the contracting decisions of a public agency is an ‘employee’ under section 1090, regardless of whether he or she would be considered an independent contractor under common-law tort principles.” (California Housing, supra, at p. 693.) To hold otherwise would allow the defendant to “manipulate the employmentrelationshipto retain ‘official capacity’ influence, yet avoid liability under section 1090.” (/bid.) In Hub City, Division Four of the Second Appellate District adopted the rational of California Housing and concluded, “independent contractors whose official capacities carry the potential to exert considerable influence overthe contracting decisions of a public agency maynot have personalinterests in that agency’s contracts”andfall within the purview of section 1090. (Hub City, supra, 186 Cal.App.4th at pp. 1124-1125.) The defendant in Hub City held a contract with the City of Compton to perform waste managementservices for the city. It was undisputed that he was an independent contractorofthe city performing public functions on behalf of the city. Ud. at pp. 1119-1120.) On appeal, the defendant argued that there was insufficient evidence that he was a public official or employee under section 1090. The Hub City court rejected this claim despite the fact that under commonlawtort principles the defendant would be categorized as an independent contractor. (/d. at p. 1125.) “An individual’s status as an official underthat statute turns on the extent to which the person influences an agency’s contracting decisions or otherwise acts in a capacity that demandsthe public trust.” (/bid.) The defendant in Hub City performed public functions on behalf of the city — supervisingcity staff, negotiating contracts, and purchasing equipmentandreal estate on behalf of the city. Consequently, he fell within the ambit of section 1090 regardless of the outward label placed on the position. (Ibid.) . 11 Finally, in Gnass, the Fifth Appellate District upheld criminal prosecution of an attorney employedbya private law firm under section 1090. (People v. Gnass, supra, 101 Cal.App.4th at pp. 1278-1279.) In that case, the City of Waterford hired the attorney and his private law firm to perform city attorney functions. The attorney wasindicted based on multiple bond contracts in which he directly and indirectly received fees. He brought a motion pursuant to Penal Code section 995, arguing that he did not fall under section 1090. The Gnass court disagreed and found the attorney wasacting in an official capacity in negotiating the bond agreements and wassubjectto the prohibitions of section 1090 because he “wasin position to exert considerable influence overthe decisions”ofthe public entity. (/d. at pp. 1291-1292, 1298.) Thus, section 1090 authorized criminal prosecution of an outside attorney due to the public functions he performed, regardless of how the position might be categorized undertort law. (Ibid.) The majority opinionin this case distinguishes California Housing and Hub City because both cases were decidedin the civil context. (Slip opn.at p. 13.) This rationalis illogical and contradicts the plain languageofthe statute. It makes little sense to dismiss Hub City and California Housing because the matters before those courts were civil, while at the sametime finding civil case law regarding the meaning of employee dispositive. Additionally, the plain language ofsection 1090 drawsno distinction between the civil and criminal elements. Only section 1097 differentiates between civil and criminalliability, providing that criminal liability for section 1090 requires a knowing and willful violation. Nothing about the category of individuals subject to the prohibition on self-dealing is different for purposesofcivil and criminal liability. For that reason, courts routinely rely interchangeably on both civiland criminalcases in interpreting the statutory languageof section 1090. (See, e.g., Gnass, supra, 101 Cal.App.4th at pp. 1290- 1291 [relying on civil case law to find defendant, an outside attorney, acted in official capacity]; People v. Honig, supra, 48 Cal.App.4th at p. 313 [finding civil 12 cases “instructive on the construction and interpretation of’ elements other than the mental state of section 1090]).) Indeed, this Court has previously recognized that the only difference betweencivil and criminalliability is the scienter requirement. (Lexin, supra, 47 Cal.4th at p. 1074.) In creating a second difference (the category of individuals falling under the law), the majority opinion contradicts this Court’s prior decisions andthe plain language ofthestatute. The majority also seeks to distinguish each of the abovecases, claiming that unlike the defendants in California Housing, Hub City, and Gnass,real party was not performing a public function and exerting influence overthe contracting decisions of the public hospital. (Slip opn. at pp. 14-17.) The court’s analysisis based entirely on real party’s written contract with the public hospital, and disregards real party’s actual actions. The court finds, “there was no evidencethat at any time wasit part of Dr. Sahlolbei’s duties, either as a member ofthe MEC or as codirector of surgery, to find doctors to serve on the hospital staff or negotiate their salaries on behalf of the board.” (Slip opn. at p. 15.) But this conclusion ignores the fact that finding doctors to serve on the hospital staff and negotiating their salaries on behalf of the board is exactly the job real party regularly performed on behalf of the hospital. As the director of surgery,the chiefofstaff, and the “powerbroker” on the medicalstaff, real party recruited doctors on behalf of the hospital and then used his influence over the Board to ensure they were hired. Real party used his positions of authority within the public hospital to participate in the making of the hospital’s contract with Dr. Barth, a contract that secretly ensured large sums of moneyforreal party. (Slip dissenting opn.at pp 7- 8.) The majority opinion disregards real party’s role at the hospital as the power broker who called the shots on who washired and how muchthey werepaid simply because his written contract did not expressly include these terms and qualified his employmentfor purposesoftort law as an “independent contractor.” Asrecognized by Justice Hollenhorst’s dissenting opinion, the majority’s holding “effectively carves out a safe harbor for independent contractors to engage 13 in self-dealing, which is inconsistent with accomplishing section 1090’s prophylactic purposes.” (Slip dissenting opn. at p. 3.) Under the majority opinion’s rationale, a defendant can perform public functions on behalf of the public entity and exercise influence over contracting decisions in an official capacity, but hide behind anartificial label of “independent contractor” and thereby avoid the prohibition against self-dealing. Section 1090 should not be interpreted to reward such manipulation. Court after court has held in the context of interpreting section 1090, “[w]e must disregard the technical relationship of the parties and look behind the veil which enshroudstheir activities in order to discern the vital facts.” (Gnass, supra, 101 Cal.App.4th at p. 1290; People v. Honig, supra, 48 Cal.App.4th at p. 315; People v. Watson (1971) 15 Cal.App.3d 28, 37.) The court must ignore “[l]abels andtitles and fictional divides.” (People v. Wong (2010) 186 Cal.App.4th 1433, 1451.) Just as in Christiansen, the majority opinion in this case has made labels,titles, and the technical relationship of the parties dispositive, to the detriment of the prophylactic purpose behind section 1090. Reviewis necessary in this case to secure uniformity of decision on this significant issue. Without clarification from this Court, dramatically different determinations of the scope of section 1090 will persist. This inconsistency leaves doubt regarding the applicability of section 1090 to individuals designated as independent contractors. But the inconsistency also effects the interpretation of the statute more broadly, including whether section 1090 should be expansively interpreted to accomplish its prophylactic purposes or subject to a narrow reading, limiting the reach ofthe statute. The reach of section 1090, and its applicability to independentcontractors, is an important question of law. “[T]he realities of modern-day government economics make outsourcing of even core government functions commonplace, as public entities attempt to trim costs.” (Slip dissenting opn. at p. 3.) With more and more public entities utilizing independentcontractors to perform true public functions that place the independent contractorin a position to assert influence 14 over the contracting decisions of the public entity, it is of critical importance that the applicability of section 1090’s prohibition on self-dealing be clearly defined and the improper loophole created by the majority decision in this case be closed. CONCLUSION Accordingly, the People respectfully request that this Court grant this Petition for Review to secure uniformity of decision andto settle an important question of law. Dated: February 23, 2016 Respectfully submitted, MICHAELA. HESTRIN District Attorney County of Riverside ELAINA GAMBERA BENTLEY Assistant District Attorney KELLI M. C Supervising Députy District Attorney EMILY R. HANKS Deputy District Attorney 15 R A R Ar k g . CERTIFICATE OF WORD COUNT Case No. E062380/INF1302523 The text of the PETITIONFOR REVIEWconsists of 4,724 words as counted by the Microsoft Word Program used to generate the said PETITION FOR REVIEW. Executed on February 23, 2016. Respectfully submitted, MICHAEL A. HESTRIN District Attorney County of Riverside ELAINA GAMBERA BENTLEY Assistant District Attorney EMILY R. HANKS Deputy District Attorney 16 PROOF OF SERVICE BY MAIL Case Nos. E062380/INF 1302523 I, the undersigned, say: I am a resident of or employed in the County of Riverside, over the age of 18 years and not a party to the within action or proceeding; that my residenceor business address is 3960 Orange Street, Riverside, California. That on February 23, 2016, I served a copy of the paper to which this proof of service by mail is attached, PETITIONFOR REVIEW, bydepositing said copy enclosed in a sealed envelope with postage thereon fully prepaid, in a United States Postal Service mailbox, in the City of Riverside, State of California, addressed as follows: FOURTH DISTRICT KENNETH WHITE COURT OF APPEAL Brown White & Newhouse LLP Division Two Attorney for Hossain Sahlolbei 3389 Twelfth Street 333 South HopeStreet Riverside, CA 92501 40th Floor Los Angeles, CA 90071 ATTORNEY GENERAL’S OFFICE HON. MICHAEL NAUGHTON P.O. Box 85266 Riverside County Superior Court San Diego CA 92186-5266 Hall of Justice 4100 Main Street APPELLATE DEFENDER’S INC. Riverside, CA 92501 555 West Beech Street, Suite 300 San Diego, CA 92101 I certify (or declare) under penalty of perjury that the foregoing is true and correct. Executed on February 23, 2016, at Riverside, California. Pw we Nilo, DECLARANT 17 Filed 1/20/16 P. v. Superior Court (Sahlolbei) CA4/2 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 notcertified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not beencertified for publication or ordered published for purposesofrule 8.1115. IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICT DIVISION TWO THE PEOPLE, Petitioner, E062380 v. (Super.Ct.No. INF1302523) THE SUPERIOR COURT OF OPINION RIVERSIDE COUNTY, Respondent; HOSSAIN SAHLOLBEI, Real Party in Interest. ORIGINAL PROCEEDINGS;petition for writ of prohibition/mandate. MichaelJ. Naughton, Judge. (Retired Judge of the Orange Super. Ct. assigned by the Chief Justice pursuantto art. VI, § 6 of the Cal. Const.) Petition is denied Paul E. Zellerbach, Michael A. Hestrin, District Attorneys, and Emily R. Hanks, Deputy District Attorney, for Petitioner. No appearance for Respondent. Brown White & Newhouse, Brown White & Osborn and Kenneth P. White, for Real Party in Interest. Asrelevantto this petition, defendant and real party in interest Hossain Sahlolbei (Dr. Sahlolbei) was charged with violating Government Codesection 1090,! which generally prohibits acts constituting a conflict of interest on the part of “[m]embers ofthe Legislature,state, county, district, judicial district, and city officers or employees... .”? Thetrial court followed binding appellate precedent and dismissed the charge. The People seek review, and weaffirm thetrial court finding, that defendant is not subject to that statute. I. STATEMENT OF FACTS The operative facts relating to the alleged offense are not in dispute for the purposesof this petition. Palo Verde Hospital (PVH) is a “district hospital” which qualifies as a public entity. At all relevant times, Dr. Sahlolbei served as codirector of surgical services with PVH pursuant to a contract which specifically described him as an 1 All further statutory references are to the Government Code unless otherwise indicated. 2 Subdivision (a) of section 1090 reads, in full: “Members of the Legislature, state, county, district, judicial district, and city officers or employees shall not be financially interested in any contract made by them intheirofficial capacity, or by any body or board of which they are members. Norshall state, county,district, judicial district, and city officers or employees be purchasers at any sale or vendors at any purchase madeby themintheir official capacity.” The criminal penaltyis set out in section 1097. independent contractor. He also served on the Medical Executive Committee (MEC) either as chief of staff or vice chief of staff and had considerable influence over the hospital board andits decisions with respect to hiring andissuing credentials to physicians. Ontwooccasions Dr. Sahlolbei solicited an outside physician to provide contract services to PVH.* On each occasion Dr. Sahlolbei agreed that the physician would be paid X dollars per month for his services, and then negotiated an agreement with PVH’s board of directors to pay the physician X plus several thousand dollars per month. Dr. Sahlolbei retained the difference. These general allegations form the basis for the charge undersection 1090. The dispute is whether Dr. Sahlolbei can be held criminally liable under Government Code section 1090, which expressly governsthe actionsof “officers or employees”ofthe district. The trial court granted Dr. Sahlolbei’s motion to dismiss the charge pursuant to Penal Code section 995, and the People sought review by way of a petition for writ of prohibition/mandate. We issued an order to show cause and now deny the petition. 3 With respect to one ofthese physicians, Dr. Ahmad,thetrial court granted Dr. Sahlolbei’s motion to dismiss based on the statute of limitations. Thus, count 4, although based on the same legal theory as count 1, is not involvedin this petition. Rather than detail the facts presented with respect to the two transactions, we provide merely a general description. Il. DISCUSSION A. Standard ofReview “In determining if charges in an information can withstand a motion under [Penal Code] section 995, neither the superior court nor the appellate court may reweigh the evidence or determine the credibility of the witnesses. [Citations.] Ordinarily, if there is some evidence in support of the information, the reviewing court will not inquire into its sufficiency. [Citations.] Thus, an indictment or information should beset aside only whenthereis a total absence of evidence to support a necessary elementof the offense charged. [Citations.] [{] “[A]lthough there must be some showingasto the existence of each elementofthe charged crime[citation] such a showing may be made by meansof circumstantial evidence supportive of reasonable inferences on the part of the magistrate.” [Citation.] “Every legitimate inference that may be drawn from the evidence must be drawnin favor of the information.” [Citations.] Thus, the ultimate test is that “‘“[a]n information will not be set aside orprosecution thereon prohibitedifthere is some rational groundfor assuming the possibility that an offense has been committed 29993and the accusedis guilty of it.”’” [Citation.] [§] We review the evidence in support of the information to determine whetheras a matter of law it is sufficient, not whether the trial court’s ruling was reasonable. [Citations.]’ [Citation.]” (Salazar v. Superior Court (2000) 83 Cal.App.4th 840, 842.) B. Analysis To resolve the present matter we need look no farther than the plain language of section 1090, the case ofPeople v. Christiansen (2013) 216 Cal.App.4th 1181, and the commonlaw indicia of employment. In its relevant portion, section 1090 provides: “Members of the Legislature, state, county, district, judicial district, and city officers or employees shall not be financially interested in any contract made by them intheirofficial capacity, or by any body or board of which they are members.” Byits terms, the statute deals with officers or employees, not independent contractors. ‘“[OJur first task in construing a statute is to ascertain the intent of the Legislature so as to effectuate the purpose of the law. In determining such intent, a court must look first to the words of the statute themselves, giving to the languageits usual, ordinary import and according significance, if possible, to every word, phrase and sentence in pursuanceofthe legislative purpose....’ [{] ... ‘In the construction of a statute... , the office of the Judge is simply to ascertain and declare whatis in terms or in substance contained therein, not to insert what has been omitted, or to omit what has been inserted... .’ [Citations.] [{] .. . ‘“‘[A] court is not authorized to insert qualifying provisions not included and maynot rewrite the statute to conform to an assumed intention which does not appear from its language.’”’ [Citation.] ‘[C]ourts are not at liberty to impute a particular intention to the Legislature when nothing in the languageofthe statute implies such an intention. ...’ [Citation.]” (Vikco Ins. Services, Inc. v. Ohio Indemnity Co. (1999) 70 Cal.App.4th 55, 61-62.) By its terms, the statute applies to “employees”; it does not apply to conduct of independent contractors. Further, and within the context of due process, a statute imposing criminal liability must be sufficiently definite and describe with reasonable certainty those to whom the statute applies and the conductthat it proscribes. (People v. Honig (1996) 48 Cal.App.4th 289, 339; People v. Vincelli (2005) 132 Cal.App.4th 646, 650.) Byits express provisions, there is no indication that section 1090 applies to independent contractors. In People v. Christiansen, supra, 216 Cal.App.4th 1181, the appellate court reversed the defendant’s convictions of four counts of violating section 1090 on the basis that, as an independent contractor, she was not subject to the proscriptionsofthe statute. The court found that the term “employee” did not include an individual working as an independent contractor. (People v. Christiansen, supra, at p. 1183.) There, between 2004 and June of 2006, the defendant had been employed by a school district as its “Director of Planning and Facilities.” In 2006, she ceased being employed by the school district and became a consultant. It was during her tenure as a consultant that she financially benefited from contracts entered into betweenthedistrict and companies in which she was involved. The court, in reaching its conclusion that Christiansen was not an employee for purposes of section 1090, comparedindicia of her relationship with the schooldistrict as it existed between 2004 and 2006 against the period of time she served as a consultant. In so doing,it pointed out that section 1090 does not contain a definition of “employee” and that in Reynolds v. Bement (2005) 36 Cal.4th 1075, 1086-1087 the Supreme Court stated that unless the languageofa statute clearly indicates otherwise, it should be construed in light of the commonlaw. Specifically, the court in Reynolds commented that in the caseof“‘a statute referring to employees without defining the term—courts have generally applied the common law test of employment.’”4 (Id. at p. 1087, cited in People v. Christiansen, supra, 216 Cal.App.4th at pp. 1188-1189.) The Christiansen court then concluded that, “[b]ecauseit is undisputedthatat all relevant times Christiansen was an independent contractor, she was not an employee within the meaning of section 1090... .” (People v. Christiansen, supra, at p. 1189.) The court acknowledged that while the defendant’s job duties, in essence, remained the same, the consulting contract entered into with the district identified her as an independent contractor, not an employee. Further, as an employee, she had received employee benefits, such as medical and dental coverage along with vacation and sick leave; as an independent contractor, she was required to provide worker’s compensation insurance as well as generalliability insurance. Lastly, the court noted that neither as an employee nor a consultant was she allowedto enter into contracts on behalf of the schooldistrict. 4 In Reynolds, employees alleging wage and hourviolations under the Labor Code soughtto hold officers of their corporate employer directly liable. It was in this context that the court, applying the common law definition of “employee,” rejected the plaintiff's claims. (Reynolds v. Bement, supra, 36 Cal.4th at pp. 1087-1088.) While not specifically discussed in Christiansen, further commonlaw indicia of employment can be found in Ayala v. Antelope Valley Newspapers, Inc. (2014) 59 Cal.4th 522. “While the extent of the hirer’s right to control the work is the foremost consideration in assessing whether a common law employer-employeerelationship exists, our precedents also recognize a range of secondary indicia drawn from the Second and Third Restatements of Agency that may in a given case evince an employment relationship. Courts may consider ‘(a) whether the one performingservices is engaged in a distinct occupation or business; (b) the kind of occupation, with reference to whether, in the locality, the work is usually done underthe direction of the principal or by a specialist without supervision; (c) the skill required in the particular occupation; (d) whether the principal or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work; (e) the length of time for which the services are to be performed; (f) the method of payment, whetherby the time or by the job; (g) whether or not the work is a part of the regular business of the principal; and (h) whether ornotthe parties believe they are creating the relationship of employer-employee.’ [Citations.]” (/d. at p. 532.) With all of these criteria in mind, we now look to the facts placed before the court at the preliminary hearing upon which the Penal Code section 995 motion was granted. Evidenceof the relationship between Dr. Sahlolbei and the hospital district was provided through the testimonyof individuals directly associated with the hospital district and its board, and by various written agreements entered into between Dr. Sahlolbei and the district. Dr. Sahlolbei was a medical doctor independent of the hospital. He was associated with the district in three ways: (1) as a memberof the MEC in whichat times he waschiefof staff, (2) by having an on-call agreement with the hospital; and, (3) as codirector of the surgery department. Astestified to, the medical staff of the hospital was a self-governing body. The MECwasthe governing board of the medical staff. Members of the MEC wereselected by a vote of the doctors. The chief of staff was elected by the doctors. A chief ofstaff's primary duties were to make sure the by-laws were followed and to act as a go-between with the medical staff and the board. At times, Dr. Sahlolbei was chiefofstaff. The MEC made recommendationsto the board of the hospital district regarding the hiring of doctors and on issues of quality assurance. The boardrelied heavily on the MECto assess and review a prospective physician’s application. As chief of staff, Dr. Sahlolbei would appear before the board to present the recommendations of the MEC as to the hiring of doctors. The board hadthe final say as to which doctors were hired. Dr. Sahlolbei did not have the authority to provide anesthesia services for the hospital nor did he have the authority to contract with others or hire an anesthesiologist without board approval. Over 99 percent of the doctors under contract with the hospital were independent contractors. Dr. Sahlolbei was an independent contractor. As codirector of the surgery department, he acted as a consultant to the board. As codirector of the surgery department, he had a contract which provided that he was acting as an independent contractor. He was paid a stipend as director of the surgery department. The hospital and Dr. Sahlolbei also had an on-call agreement that required physicians to be available or have another physician available 24 hours a day seven days a week. Underthe on-call service agreement, Dr. Sahlolbei was an independentcontractor.> Ofparticular note is the “Surgical Services Co-Director Agreement.” In its relevant portions, the contract provided: “2. Co-Director Surgical Services. Co-Director’s duties as Co-Director shall include: “1. Directs the formation and content of monthly meetings of the Surgical Services Committee, “2. Assist Hospital in maintaining compliance with CMS Conditions of Participation, Title 22, JCAHO standards, and other customary regulations. “3. Devote necessary time to provide consultation to other practitioners of the medicalstaff. “4. Provides professional guidance and support to the Surgical Servicesstaff. “5. Supervises the development and implementation of the Departmental policy and procedures. “6. Assesses compliance with established Surgical Services policies and procedures, including standards of practice, and current evidence based research studies and/or strong theoretical rationales.” 5 Our record does not contain a copyof the on-call agreement. 10 Be “As the Co-Director of the Facility, Hospital shall pay Co-Director $3000.00 per month as a CoDirectorship fee as consideration for this agreement and for the performance and documentation ofthe services listed in Section 2 above. Co-Director shall devote a minimum of 15 hours per month to providing said services and shall documentthe time, nature and date of the services on a form to be provided by Hospital and provide the same to the CEO nolater than the 5th day of the month following the month whenthe services were provided.” The contract provided that defendant was to supervise the work of hospital employeesandassist in the training of employees. The agreement further allowed for either party to terminate the agreement without cause upon 60 days’ written notice. Pursuantto its terms, Dr. Sahlolbei, at his sole expense, was to maintain professional liability insurance of $1 million/$3 million. Asto Dr. Sahlolbei’s status, the following was provided: “Co-Directorshallact at all times under this Agreement as an independent contractor. The parties agree that Hospital shall not have and shall not exercise any control or direction over the manneror method by which Co-Director provides the services hereunder. Hospital shall not withhold from amounts paid to Physician, state or federal income tax withholding, FICA, FUTA, workers compensation, state unemployment or other amounts. Physician agrees to indemnify, hold harmless and defend Hospital from and against any amountthatit pays as a result of not withholding said amounts in the event that demand is made on 1] g e e t o k S R P Hospital to pay the sameor in the event that Hospital determinesthatit is legally obligated to pay said amounts.” Further, the contract had an indemnification clause in which Dr. Sahlolbei agreed to indemnify the hospital for liability on accountofhis negligence. Lastly, the contract provided: “In no event shall this Agreement be construed in any wayto prohibit, limit or restrain Hospital from entering into a contract or agreement, at any time, with any other Physician for the provision of medical services at Facility.” Asevident from the abovefacts, there was clearly no evidence that Dr. Sahlolbei was an employeeof the hospital district from the standpoint of being paid a salary or an hourly wage. Further, there was no evidencethat the district paid for any benefits or provided Dr. Sahlolbei with vacation or sick leave. There was no evidencethat the hospital district controlled the activities of Dr. Sahlolbei; in fact, from the provisions of the contract entered into between the district and Dr. Sahlolbei, the district disclaimed any right to control. While certainly there were things Dr. Sahlolbei needed to do as codirector of surgery, the duties outlined in the agreement were relatively nondescript and did not includethe right to hire hospital staff. Clearly, he was a specialist, and by the nature of his profession he worked without supervision. The contract was of limited duration, one year, and thedistrict did not directly control how Dr. Sahlolbei allotted the 15 hours expendedas the codirector of surgery. Further, both the testimony and the written agreement support the notion that Dr. Sahlolbei was an independent contractor, not an employee. While Dr. Sahlolbei, as chief of staff and as a member of MEC,did 12 appear before the board and consult as to the hiring of doctors and presumably on issues of quality control, there was no evidencethat he did so as anything other than as a representative of the doctors practicing at the hospital.® As such,webelieve there to be a total absence of evidence that Dr. Sahlolbei, during the timeat issue, was acting as an “employee”of the district. As such,the trial court properly granted his Penal Code section 995 motion as to count | of the information. To support its argument that section 1090 is applicable to “independent contractors,” the People rely primarily on the civil cases ofHub City Solid Waste Services, Inc. v. City ofCompton (2010) 186 Cal.App.4th 1114 (Hub City) and California Housing Finance Agency v. Hanover/California Management & Accounting Center, Inc. (2007) 148 Cal.App.4th 682. Initially, as stated in Christiansen: “Weexpress no opinion on the soundnessofthose opinionsin the civil context, but we hold that their expansion of the statutory term ‘employees’ to apply to independent contractors does not apply to criminal prosecutions for violation of section 1090. At least for purposes of criminal liability under section1090, an independent contractor is not an employee.” (People v. Christiansen, supra, 216 Cal.App.4th at p. 1189; accord, People v. Lofchie (2014) 229 Cal.App.4th 240, 252; see also Davis v. Fresno Unified School Dist. (2015) 237 © The record demonstrates that as to Dr. Barth, Dr. Sahlolbei appeared before the board as a representative of Dr. Barth. 13 Cal.App.4th 261, 300 [“Thestricter definition of the statutory terms adopted by the court in [Christiansen] is appropriate in the context of criminal prosecution . . .].)’ Christiansen’s holding aside, and even assumingthat section 1090 covers conduct by independent contractors, thereisstill a total absence of evidence that Dr. Sahlolbei wasacting in an official capacity or performing an authorized public function, as were defendants in Hubb City and California Housing Finance Agency. In Hub City, the City of Compton was awarded $22 million against defendant Aloyan. Aloyan had been an independent contractor with the city, in charge of its waste management. Duringhis relationship with the city he negotiated a contract with the city to privately provide waste management services. Shortly after city council approval he made campaign contributions to the city council members that voted to approve the contract. He additionally hired relatives of one of the council members. Of import to the court’s decision that section 1090 applied to Aloyan’s conduct wasthe fact that at the time of the conduct he was performing a public function authorized bythe city. As stated: “In May 2000, Compton entered into a management agreement with Aloyan’s company, AUS. Under the management agreement AUS wasan independent contractor but assumed manyofthe city’s waste management needs; [the city manager] described AUSas‘providing the private management’ ofthe city’s in-house waste operation... . Under the agreement Aloyan acted as the director of the in-house waste division, working 7 The People also rely on People v. Gnass (2002) 101 Cal.App.4th 1271, which will be discussed, post. 14 alongside city employees, overseeing day-to-day operations of Compton’s waste managementdivision, and taking responsibility for public education and compliance with state-mandated recycling and waste reduction efforts.” (Hub City, supra, 186 Cal.App.4th at pp. 1119-1120, fn. omitted.) “The evidence presentedat trial was sufficient to establish that Aloyan fell within the ambit of section 1090. Pursuant to the management agreement between AUS and Compton, Aloyan supervisedcitystaff, negotiated contracts, and purchased equipment and real estate on behalf of the city. His activities served a public function and he was intricately involved in the city’s waste managementdecisions.” (Hub City, supra, 186 Cal.App.4th at p. 1125.) In finding section 1090 applicable, the Hub City court focused on facts demonstrating that at all times Aloyan was performing a public function (in charge of the city’s in-house waste management) with the City of Compton;as such, he wasacting within an official capacity with the city. Such is not the case here. Here, there was no evidencethat at any time wasit part of Dr. Sahlolbei’s duties, either as a memberof the MECoras codirector of surgery, to find doctors to serve on the hospital’s staff or negotiate their salaries on behalf of the board. There is nothing in our record to indicate that Dr. Sahlolbei had a relationship with the district in which he performed public functions on behalf of the district such that he could be deemedto be acting within his official capacity. 15 The sameis true with California Housing Finance Agency. There, Attorney MecWhirk was general counsel for California Housing Finance Agency (CHFA) from 1984 to 1990. CHFA wasa direct lender, loan purchaser, and mortgage insurer. In 1991, McWhirk becameoutside counsel pursuant to a written agreement. While serving as outside counsel he formed a company with a straw person acting as president. He thereafter influenced CHFAasits attorney to enter into a contract with his companyfor his companyto administer loan payments being made to CHFA. Duringthelife of the contract, administration fees grew. Eventually an audit showed that McWhirk’s company had overcharged CHFA for those fees. McWhirk was sued on a numberoftheories, including one based on section 1090. The court affirmed the applicability of section 1090 to its facts. Its facts, however, are different than ours. There, McWhirk was the attorney for the governmental agency, who looked to him for advice. He was under contract to advise the board of CHFA. Whetherhired asa staff attorney or as independent counsel, he had an ongoing relationship with CHFA in which he was performing a public function in an official capacity. Here, Dr. Sahlolbei was not hired or paid bythe district to advise them on who they should hire or how muchthedistrict should pay. While as chief of staff, the board may havelistened to and accepted his recommendations, he was nonetheless acting independent of the board. In appearing before the board as it relates to Dr. Barth’s salary, the record is clear that he was appearing on behalf of Dr. Barth, not as a representative ofthe district performing a public function. There is simply nothing in our record to indicate thatthe district viewed 16 Dr. Sahlolbei as performing a public function, or at any time treated Dr. Sahlolbei as acting in an official capacity. Equally distinguishable is Gnass. There, as in California Housing Finance Agency, the defendant was an attorney who was an independentcontractor hired by the City of Waterford to advise on various bondissues; he also served as the attorney for the authority issuing the bonds; as such, he had a conflict of interest. The court found that as the attorney forthe city, he was performing a public function although he wastechnically an independent contractor. As such, he wasacting in an official capacity. The facts of the cases relied upon by the People simply do not exist here. There is nothing to suggest that Dr. Sahlolbei was ever in a role or had an ongoingrelationship with the district such that he performed public functions on behalf of the district. While Dr. Barth may have thought Dr. Sahlolbei had the authority to negotiate a contract, such perception wasbased solely on Dr. Sahlolbei’s representations. There is nothing in the record to suggest that he was exercising any ostensible authority granted to him by the hospital district. While certainly we do not say there is no criminal conduct, we do say that it does not fall within the parameters of section 1090. ll. DISPOSITION Thepetition is denied. NOT TO BE PUBLISHED IN OFFICIAL REPORTS KING 17 I concur: MILLER 18 [People v. Superior Court (Sahlolbei)—E062380 HOLLENHORST,J., Dissenting. I agree with the majority that defendant Hossain Sahlolbei’s behavior,as alleged, constitutes criminal conduct. I further agree that some existing case law, particularly People v. Christiansen (2013) 216 Cal.App.4th 1181 (Christiansen), supports the conclusion that the alleged conduct does not fall within the parameters of Government Code! section 1090, at least for purposes of criminalliability. In my view, however, Christiansen is incorrect to establish an absolute rule that an independent contractor for a public entity—as distinguished from an employee,as the two terms are defined under the common law of torts—mayneverbe subject to criminal ‘ liability for violating section 1090. I would therefore decline to follow Christiansen, and would find defendant’s motion to dismiss the section 1090 charge should not have been granted. The question of whether defendant’s behaviorfalls within the scope of section 1090 is “ultimately one of legislative intent, as ‘[o]ur fundamental task in construing a statute is to ascertain the intent of the lawmakerssoas to effectuate the purposeof the statute.’” (Martinez v. Combs (2010) 49 Cal.4th 35, 50 (Martinez).) Westart our coe analysis with the statutory language, but wherestatutory language “‘allows more than one reasonable construction, we may look to such aidsas the legislative history of the measure and maximsofstatutory construction. In cases of uncertain meaning, we may ! Further undesignated statutory references are to the Government Code. 1 also consider the consequencesofa particular interpretation, including its impact on public policy.’” (/d. at p. 51.) Thestatutory language of section 1090 allows for more than one reasonable construction. A numberof courts have construed the term “employee,” as used in section 1090, to encompassat least some individuals providing services as independent contractors. (E.g., California Housing Finance Agency v. Hanover/California Management & Accounting Center, Inc. (2007) 148 Cal.App.4th 682, 693 (California Housing) [“an attorney whose official capacity carries the potential to exert ‘considerable’ influence over the contracting decisions of a public agency is an ‘employee’ under section 1090, regardless of whether he or she would be considered an independent contractor under commonlawtort principles”]; Hub City Solid Waste Service, Inc. v. City ofCompton (2010) 186 Cal.App.4th 1114, 1125 (Hub City) [“An individual’s status as an official under [section 1090] turns on the extent to which the person influences an agency’s contracting decisions or otherwise acts in a capacity that demandsthe public trust.”].) In contrast, the Christiansen court construed the same statutory language to encompassonly those individuals who wouldbeclassified as an employee under the commonlawtest of employment,at least for the purpose of determining criminalliability for willful violation of section 1090. (Christiansen, supra, 216 Cal.App.4th at pp. 1189-1190.) The People have conceded that defendant“qualifies as an independent contractor under commonlawtort.” The plain language of section 1090 alone, therefore, does not answer the question presented by the case atbar. The fundamental purposeof section 1090is to act prophylactically against the temptation of self-dealing, which might compromisethejudgmentofa public official or employee or cast doubt onhis or her loyalty and allegiance, and to avoid the appearance of impropriety. (Carson Redevelopment Agency v. Padilla (2006) 140 Cal.App.4th 1323, 1330 (Carson).) Christiansen holds that someone whoprovidesservices as an independentcontractor, under the definition of the term developed in the commonlaw of torts, may not be held criminally liable for violating section 1090. (Christiansen, supra, 216 Cal.App.4th at pp. 1189-1190.) This holding effectively carves out a safe harborfor independent contractors to engagein self-dealing, which is inconsistent with accomplishing section 1090’s prophylactic purposes. (See Carson, supra, at p. 1335 [a “prophylactic statute such as section 1090 should be construed broadly to close loopholes; it should not be constricted and enfeebled.”].) Perhaps many, or even most, independent contractors are notin a position to benefit from improperself-dealings. Nevertheless, the realities of modern-day government economics makeoutsourcing of even core governmentfunctions commonplace, as public entities attempt to trim costs. (See, e.g., Service Employees Internat. Union, Local 1021, AFL-CIO vy. County ofSonoma (2014) 227 Cal.App.4th 1168, 1171; Costa Mesa City Employees Assn. v. City ofCosta Mesa (2012) 209 Cal.App.4th 298, 302.) The facts of Christiansen are a prime example. The defendantin that case was a former employee of a school district, who continued to provide the same services to the district under a new contract, but now as an independently contracted “consultant.” (Christiansen, supra, 216 Cal.App.4th at p. 1184.) These duties included 3 “identifying companies to perform workfor the District.” (Ud. at p. 1186.) The prosecution alleged that the defendant wasfinancially interested in four contracts entered into by the district on the defendant’s recommendation. (/d. at pp. 1186-1187.) Three of the contracts were betweenthe district and a companythat had also hired defendant’s company—an LLC,of which she was the sole member and owner—asa consultant, while the fourth was based on an amendmentto a contract between thedistrict and the defendant’s company. (Jbid.) The temptation for self-dealing for the defendant in Christiansen wasnodifferent than when the defendant had been an employee performing the sameservices for the district, and the policy reasons behind the section 1090 prohibition on self dealing were equally relevant. The Christensen court nevertheless concludedthat the defendant’s change from an employee to independent contractor insulated her from any criminal liability for violation of section 1090. (Christiansen, supra, 216 Cal.App.4th at p. 1190.) I find it unlikely that such a holding is consistent with the intent of the lawmakers, and it certainly does not tend to effectuate the prophylactic purpose of section 1090. (See Martinez, supra, 49 Cal.4th at p. 50.) Moreover,I find the Christiansen court’s reasoning in support of its conclusion unpersuasive. The Christiansen court relies on Reynolds v. Bement (2005) 36 Cal.4th 1075, 1086-1087 (Reynolds), for the proposition that a statute should be construed using commonlaw definitions of terms, unless the statute explicitly indicates otherwise. (Christiansen, supra, 216 Cal.App.4th at p. 1188.) The Reynolds decision involved interpretation of a Labor Codeprovision, and had adopted the commonlawtort definition 4 of the term “employee”in doing so. (Reynolds, supra, at p. 1087.) The Christiansen court ignored, however, that Reynolds had been abrogated on precisely that point. (Martinez, supra, 49 Cal.4th at pp. 62-63.) Additionally, the definition of “employee” used in Reynolds had developed in the specific context of determining when an employer should be heldliablein tort for injuries to third parties. (S.G. Borello & Sons, Inc. v. Department ofIndustrial Relations (1989) 48 Cal.3d 341, 352.) Christiansen makes no attempt to grapple with the circumstance that section 1090 arose not from tort law, but rather the common law of conflicts of interest, which has very different history and fundamental purpose. (Lexin v. Superior Court (2010) 47 Cal.4th 1050, 1072-1073 (Lexin).) The issue in the section 1090 context is not the degree of control the putative employer has over its agent (as when courts consider whether to impute tort liability for injuries to third parties), but quite the opposite, the degree of influence the public servant has over the public entity’s contracting decisions. (California Housing, supra, 148 Cal.App.4th at p. 690.) “Thus, the common law employee/independent contractor analysis is not helpful in construing the term ‘employee’ in section 1090.” (Jbid.) Finally, I am not persuaded that section 1090 maybeinterpreted differently depending on whetherthe case at bar is a criminalor a civil action. Onits face, section 1090 articulates a rule; section 1097 makes any willful violation ofthat rule, or aiding or abetting of a violation, a criminal offense. (§§ 1090, 1097.) Christiansen’s distinction betweenthe civil and criminal context not only lacks any basis in the statutory language or the legislative history. It also has no basis in prior case law. Before Christiansen, 5 courts routinely—and in my view properly—trelied on both civil and criminal cases in interpreting the statutory language of section 1090, regardless of the nature of the case at bar. (E.g., People v. Gnass (2002) 101 Cal.App.4th 1271, 1290-1291 (Gnass)[relying on civil cases to determine defendant had actedin official capacity for section 1090 purposes]; California Housing, supra, 148 Cal.App.4th at pp. 690-691 [citing People v. Honig (1996) 48 Cal.App.4th 289, 314 (Honig).) Indeed, Christiansen’s holding is inconsistent with the California Supreme Court’s recent articulation of the elements necessary to establish criminal liability for violating section 1090, which describes the intent element as the only difference betweenthe civil and criminal analysis. (Lexin, supra, 47 Cal.4th at p. 1074 [reciting elements of section 1090 violation, noting that “[p]roof of a violation of section 1097, the provision criminalizing violations of section 1090, requires a further showing that the section 1090 violation was knowing and willful.”].) Unlike the majority, I would reject Christiansen’s “narrow and technical”—and,in myview, simply incorrect—interpretation of section 1090, which limits the statute’s scope andtends to defeatits legislative purpose. (Honig, supra, 48 Cal.App.4th at p. 314.) Instead, I would apply the reasoning of California Housing and Hub City, and hold that an independent contractor (as that term is used in the context of the commonlaw of torts) may be an “employee”for the purpose of applying section 1090, at least wherethat person contracts with a public entity to perform services that carry “the potential to exert ‘considerable’ influence over the contracting decisions of a public agency... .” (California Housing, supra, 148 Cal.App.4th at p. 693.) 6 Myreview of the record also compels meto part ways with the majority’s conclusion that there is a “total absence” of evidence that defendant wasacting in an official capacity when he appeared before the hospital’s board and recommendedthatthe hospital enter into a contract with Dr. Barth. (Maj. opn., ante, at p. 14.) The majority, focusing on the terms of defendant’s written contract with the hospital, asserts that defendant “was not hired or paid by the district to advise them on whothey should hire or how muchthe district should pay.” (Maj. opn, ante, at p. 16.) This analysis, however, ignoresthat “in construing section 1090 in any particular situation, ““[w]e must disregard the technical relationship of the parties and look behind the veil which enshroudstheir activities in order to discern thevital facts.”’” (California Housing, supra, 148 Cal.App.4th at p. 691, quoting Honig, supra, 48 Cal.App.4th at p. 315.) Also, given the current procedural posture, we are boundto draw all reasonable inferences in favor of the information. (Lexin, supra, 47 Cal.4th at p. 1072.) Iam not persuadedthat the majority’s discussion does so. Viewedin the requiredlight, the evidence establishes that defendant’s official capacity as co-director of surgical services included the responsibility of acting as a consultant to the board of directors. The board, constituted primarily of individuals who are not themselves doctors, relies heavily on input from the hospital’s medical staff—of which defendant wasa part, by virtue of his position as co-director of surgical services— with respect to hiring doctors, in particular. Generally, this input is filtered through the Medical Executive Committee (MEC), the formal representative body of the medical staff. Defendant had served as an officer of the MEC at various times, but was a “power 7 broker” on the medical staff, regardless of whether he formally held an office on the MECat anyparticular pointin time. Furthermore, with respect to the contract at issue in this petition, defendant went beyond merely recommendingthat the hospital hire Dr. Barth. He attempted (successfully) to leverage the powerhe hadin his position as co-director of surgery to force the board to makethe hire on the terms defendant preferred. He threatened to “remove admissions”—essentially, a form of work slowdown, whereby a doctor or group of doctors direct elective patients to other facilities for treatment, reducing the hospital’s revenue—if the board did not sign the contract. It is no stretch to conclude that defendant’s influence on the hospital’s contracting decisions, both while acting in his capacity as co-director of surgical services, and in the other roles he had within the hospital that ultimately derive from that position, equals or exceedsthe influence of the defendants in the several cases that the majority discusses, and who were determined to fall within the scope of section 1090. (See Hub City, supra, 186 Cal.App.4th at pp. 1119- 1120 [independent contractor who had “assumed manyofthe city’s waste management needs”’]; California Housing, supra, 148 Cal.App.4th at p. 686 [outside counsel for government agency who “influenced” contracting decision]; Gnass, supra, 101 Cal.App.4th at pp. 1279-1280 [outside councilforcity, hired to advise on various bond issues].) While the majority attempts to distinguish these cases from the one at bar on their facts, I am not persuadedthat any of the differences observed should make a difference. In my view, the reasoning ofthese cases, and particularly their articulation of the scope of section 1090, is equally applicable here. 8 It may well be that defendant purported to appear before the board solely as a representative of Dr. Barth, not in his role as co-director of surgical services. But the majority goes too far, in my view, whenit states “the record is clear that [defendant] was appearing on behalf of Dr. Barth, not as a representative of the district... .” (Maj. opn., ante, at p. 17.) A fundamentalprinciple of conflict of interest law is that a person who wears several hats cannotjust set one of them aside and declare the absence ofa conflict. (See Lexin, supra, 47 Cal.4th at p. 1073 [the judgmentof a person with conflict of eeeinterest “‘cannot and should notbe trusted, even if he attempts impartiality.’”].) By negotiating on behalf of Dr. Barth with the board, defendant also necessarily, even if implicitly, advocated for the contract in his role as co-director of surgical services. If, as alleged, and as at least some evidence suggests, defendant did so while having a personal, financial interest in Dr. Barth’s hiring, defendant had precisely the sort of conflict of interest that section 1090 is designed to prevent, and that section 1097 makesa criminal offense where the violationis willful. For the above reasons,I respectfully dissent from the majority’s ruling affirming the dismissal of the charge atissue. HOLLENHORST Acting P. J.
