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On July 25, 2024, the California Supreme Court issued an important decision on the scope of the constitutional power of initiative in Hector Castellanos v. State of California (2024) 16 Cal.5th 588, affirming the constitutionality of Proposition 22 (2020) and extending a century of jurisprudence recognizing the fundamental role of direct democracy in California’s system of government.

Nielsen Merksamer partners Sean Welch, Kurt Oneto, and David Lazarus, along with retired Justice Art Scotland, who is of counsel at the firm, served as co-counsel of record for interveners Protect App-Based Drivers and Services, the coalition that sponsored Proposition 22, in the California Supreme Court and throughout the earlier stages of litigation in the lower courts. The firm also counseled the Yes on 22 coalition during the process of qualifying the measure for the ballot and submitting it to the voters.

The decision is a major win for our clients and an important confirmation of longstanding principles governing challenges to the constitutionality of initiative measures adopted by the voters. The unanimous decision of the Court, authored by Justice Liu, recognized the “duty of the courts to jealously guard the right of the people” to legislate via initiative and held that language in the California Constitution (article XIV, section 4) providing the Legislature with “plenary power, unlimited by any provision of this Constitution” to create and enforce a workers’ compensation system, does not preclude the People from exercising their constitutional power to propose and enact legislation that might affect workers’ compensation.

The Court’s reasoning reflects several important interpretative principles repeatedly emphasized by interveners throughout the litigation. First, the challenge brought by opponents of Proposition 22 closely resembled arguments rejected by the California Supreme Court in Independent Energy Producers Association v. McPherson, 38 Cal.4th 1020 (2006), a decision that similarly recognized a nearly identical provision of the California Constitution did not preclude the exercise of the initiative power. Second, nothing in the constitutional history supports interpreting article XIV, section 4 as stripping the People of their direct democracy powers, nor would it be logical or reasonable to infer that the voters in 1918, just seven years after adopting the power to legislate via initiative, would have acted to limit the use of their powers. In its analysis on this point, the Court extensively relied on its prior decision in Mathews v. Workmen’s Compensation Appeals Board, 6 Cal.3d 719 (1972), which recognized that the voters’ intent in 1918 was not to deprive the People of their direct democracy powers but rather to confirm the “constitutionality of the then existing workmen’s compensation statutes.” Third, it would be incoherent to interpret article XIV, section 4 as placing the Legislature on a pedestal, subject to no limits on its power to enact workers’ compensation legislation. As stated in the opinion, there is “no basis to single out the initiative power from other constitutional checks on the Legislature’s power such as the Governor’s veto power.”

Based on this reasoning, the California Supreme Court affirmed the Court of Appeal’s ruling and held that the test for worker classification in Proposition 22 (Business and Professions Code section 7451) does not conflict with article XIV, section 4 of the California Constitution.

Nielsen Merksamer is one of the preeminent political law, government law, and lobbying firms in the country, serving a national clientele that includes leading businesses, non-profits, trade associations, individuals, unions, and public agencies. Over the past four decades, Nielsen Merksamer has been legal counsel for either the opponents or proponents of more than 450 ballot measures, including most major California statewide initiatives or referenda, along with scores of local ballot measures. We advise our ballot measure clients on all aspects of campaigning, from initiative drafting, pre-election litigation, campaign finance law and disclosure, and post-election substantive challenges. https://nmgovlaw.com/