In San Diegans for Open Government v. Public Facilities Financing Authority of the City of San Diego, a 6-1 Supreme Court today holds that only parties to a government contract can sue under an anti-conflict law to undo the contract. However, the court’s opinion by Justice Carol Corrigan leaves open non-party standing to challenge the contract, although with possibly weaker remedies, under a different statute allowing lawsuits by taxpayers.
The case involves a taxpayer group’s claim that bonds issued to refinance debt incurred to build the San Diego Padres’ stadium violated Government Code section 1090, which prohibits government officers and employees from being “financially interested in any contract made by them in their official capacity, or by any body or board of which they are members.” Such a contract can be “avoided” under section 1092 “at the instance of any party except the officer interested therein.”
While the court majority construes “any party” to encompass only parties to the contract, Chief Justice Tani Cantil-Sakauye reads the term broadly to include taxpayers. In a concurring and dissenting opinion, she asserts that “[t]he likely result under the majority’s rule is that no one will bring a challenge to avoid a government contract afflicted with a conflict of interest” and she says the majority is attributing to the Legislature the creation of “a scheme that counts on the foxes to guard the henhouse, and leaves taxpayers helpless to halt even the most egregiously conflicted government bond issuances.”
The court reverses the Fourth District, Division One, Court of Appeal. It agrees with a 2015 opinion by Division Two of the same district. The court also disapproves a 2018 Sixth District opinion and its decision is contrary to dictum in a 2015 Fifth District opinion.