American Traffic Solutions v. City of Bellingham – Automated Traffic Safety Cameras

Posted September 9, 2011 by Kristin Eick
Categories: General Interest, Washington Court of Appeals

Division I of the Court of Appeals held on Tuesday that a proposed Bellingham initiative, which would prohibit the City from installing or using an automated traffic camera system unless approved by a majority of the city council and a majority of the voters, exceeded the lawful scope of the local initiative power.  An initiative is beyond the scope of the initiative power if it involves powers granted by the legislature to the governing body of a city, rather than the city as a corporate entity.  The Court reasoned that because RCW 46.63.170, authorizing the use of automated traffic safety cameras, specifies that in order to use automatic traffic safety cameras for the issuance of traffic infractions, the “appropriate local legislative authority” must first enact an ordinance allowing for their use, the exercise of the city council’s authority was not subject to initiative.

In addition, the Court reversed the trial court, which had granted the initiative sponsors’ special motion to strike ATS’s complaint and imposed penalties under the Anti-SLAPP (Strategic Lawsuits Against Public Participation) statute.  The Anti-SLAPP statute allows a defendant to make a special motion to strike any claim based on his or her “public participation and petition.”  In order to overcome a special motion to strike, the plaintiff may show that it will likely succeed on the merits of the claim.  Because the court concluded that ATS would likely succeed on the merits of its claim, it reversed the trial court’s decision.

However, the Court of Appeals denied ATS’s request for an injunction preventing the initiative from being placed on the ballot.  The court reasoned that, even if placed on the ballot and passed by a majority of the voters, the initiative would have no legal force.  Consequently, ATS could not establish “actual and substantial injury” to its contractual interests justifying injunctive relief.

A full copy of the opinion can be accessed here.

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Puget Sound Energy v. City of Bellingham – Utility Taxes

Posted September 7, 2011 by Kristin Eick
Categories: Utility Taxes, Washington Court of Appeals

In Puget Sound Energy v. City of Bellingham, Division I of the Court of Appeals affirmed the City’s tax assessment and penalties against PSE for unpaid utility tax.  Prior to the assessment, PSE paid city B&O tax on revenue generated by “non-utility” activities, such as billing initiation charges, connection and reconnection charges, disconnection visit charges, and late payment fees.   PSE paid city utility taxes only on the revenue it received from both the “per kilowatt hour energy charges” and the “basic or customer charges” paid by its Bellingham customers.  Reasoning that that “the business” of selling or furnishing light and power is not limited to the actual provision of electricity under Bellingham’s utility tax ordinance, the Court upheld the assessment.

The full opinion is available here.

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West v. Washington State Department of Natural Resources

Posted September 2, 2011 by Kristin Eick
Categories: Public Records Act, Washington Court of Appeals

In West, Division II of the Court of Appeals held that the Department of Natural Resources (DNR) violated the Public Records Act by not responding to West’s public records requests within five business days.  After the DNR received the requests, the assistant public records officer acknowledged receipt of the request the same day.  However, the public records administrator wrote to West eleven days later, stating that the DNR was “in the research phase of the eight records requests” received and that many of the requests could be quite voluminous.  She also asked clarification questions about the request and stated that she required a response to these questions before she could provide a reasonable estimate of time for the DNR’s response. 

 When a public agency receives a public records request, it must within five business days (1) provide the record; (2) provide an internet address and link on the agency’s web site to the specific records requested; (3) acknowledge receipt of the request and provide a reasonable estimate of the time the agency will require to respond to the request; or (4) deny the public record request.  RCW 42.56.520.  In this case, although the DNR acknowledged receipt of the request within five business days, failure to include a reasonable estimate of the time to respond resulted in a violation of the PRA.  Despite the DNR’s arguments that the PRA does not provide for a stand-alone remedy for failure to strictly comply with the five-day requirement, the court remanded the case to the trial court to assess an attorney fee and penalty award for the violation.

 However, the court also held that the DNR did not violate the Public Records Act because it failed to disclose a document that was inadvertently lost prior to the time the request was made.

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Governor’s Partial Veto of Medical Marijuana Bill ESSB 5073

Posted May 2, 2011 by Kristin Eick
Categories: General Interest

On Friday, April 29, 2011, Governor Gregoire exercised her partial veto powers, vetoing the portions of ESSB 5073 that would direct state employees of the Department of Health and Department of Agriculture to authorize and license commercial businesses that produce, process, or dispense cannabis.  Consequently, most of the surviving provisions of the bill afford increased protection for qualifying patients and their designated providers to grow cannabis for a patient’s use or to participate in collective gardens. 

Of importance for Washington cities and towns, the Governor approved Section 1102 of ESSB 5073.  Section 1102 provides that cities and towns may adopt and enforce any of the following pertaining to the production, processing, or dispensing of cannabis or cannabis products within their jurisdiction: zoning requirements, business licensing requirements, health and safety requirements, and business taxes.  Section 1102 further provides that nothing in the act is intended to limit the authority of cities and towns to impose zoning requirements or other conditions upon licensed dispensers, so long as such requirements do not preclude the possibility of siting licensed dispensers within the jurisdiction.  The Governor specifically stated in her veto message that she approved Section 1102 with the understanding that the provision that local governments’ zoning requirements cannot “preclude the possibility of siting licensed dispensers within the jurisdiction” was without meaning in light of the vetoes of other sections providing for licensed dispensers.  Consequently, the bill still provides local governments with the authority to establish land use regulations relating to collective gardens and, presumably, other producers, processors, and dispensaries if they were to be allowed under state law in the future.

 Also of interest to Washington cities and towns is that the Governor signed Section 404 of ESSB 5073.  Section 404 provides that, although a person may stop serving as a designated provider to a particular qualifying patient at any time, that person may not begin serving as a designated provider to a different qualifying patient until fifteen days have elapsed from the date the last qualifying patient designated him or her to serve as a provider.  This Section promises to make it far more difficult for existing medical marijuana dispensaries to comply with state law.

 The Governor made clear in her veto message that she remains open to legislation to exempt qualifying patients and their designated providers from state criminal penalties when they join in nonprofit cooperative organizations to share responsibility for producing, processing, and dispensing cannabis for medical use.  The Legislature may consider alternative bills during its Special Session, which convened on April 26.  OMW will continue to post updates on this blog if any activity on the cannabis bill occurs during the Special Session.

A link to the Governor’s veto message is provided here.

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Public Service Announcements for Candidates for Elected Office

Posted April 20, 2011 by Kristin Eick
Categories: General Interest

This blog article serves as a reminder that last year the legislature enacted RCW 42.17A.575, which provides that no municipal officer may speak or appear in a public service announcement that is broadcast, shown, or distributed in any form whatsoever during the period beginning January 1st and continuing through the general election if that official or officer is a candidate. 

A public service announcement means a communication that meets all of the following criteria.  The communication is:

(a) Designed to benefit or promote the community’s health, safety or welfare or nonprofit community events;

(b) Not selling a product or service;

(c) Sponsored by an organization with a history of routinely providing the community such outreach public service messages in the service area of the organization;

(d) Of primary interest to the general public and is not targeted to reach only voters or voters in a specific jurisdiction;

(e) Not coordinated with or controlled or paid for by a candidate’s authorized committee or political committee;

(f) Subject to the policies for public service announcements of the entity broadcasting, transmitting, mailing, erecting, distributing or otherwise publishing the communication including policies regarding length, timing, and manner of distribution; and

(g) One for which the arrangements to include a reference or depiction of the candidate or candidates in the communication were made at least six months before the candidate became a candidate.

Examples of public service announcements include but are not limited to communications regarding nonprofit community events, outreach or awareness activities such as: Breast cancer screening, heart disease, domestic violence, organ donation, emergency or other disaster relief for organizations such as the Red Cross, programs designed to encourage reading by school children, childhood safety, fund drives for charitable programs such as United Way, and similar matters. 

This law applies to all “municipal officers,” which is otherwise defined in state law as “all elected and appointed officers of a municipality, together with all deputies and assistants of such an officer, and all persons exercising or undertaking to exercise any of the powers or functions of a municipal officer.” RCW 42.23.020(2).

For the Public Disclosure Commission’s Interpretation of this statute, please click here.

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Medical Marijuana/Cannabis and Employment Considerations

Posted April 7, 2011 by Scott Snyder
Categories: Employment

The Washington State Legislature is currently considering ESSB 5073.  See the post below, dated March 21, 2011, for further discussion of the major effects of the bill.  ESSB 5073 is modeled upon a California measure providing regulation of the growth, processing, and distribution of medical marijuana.  The measure would change the designation from “marijuana” to “cannabis.”  Its major provisions include:

1.         Provisions for rule-making and licensing by the Department of Agriculture;

2.         Extending the protections from criminal prosecution to dispensaries, processors, and growers; and

3.         Permitting local jurisdictions to enact “reasonable” zoning and licensing provisions.

RCW 69.51A.060(4) currently provides:

(4)        Nothing in this chapter requires any accommodation of any onsite medical use of marijuana in any place of employment… or smoking medical marijuana in any public place….

Nothing in the new legislation proposes amendment of this section.

In 2009, Division II of the Washington Court of Appeals decided Roe v. TeleTech, 152 Wn. App. 388, 216 P.3d 1055 (2009).  The case involved a claim of wrongful termination against an employer who revoked a conditional offer of employment.  The perspective employee failed a drug test, but provided proof to the employer that she was following a health professional’s recommendation to use medical marijuana.  The employer’s policy required a pre-employment drug test and made an employee with a “confirmed positive drug test … ineligible for employment with the company.”  TeleTech, 152 Wn. App. at 392.  Following dismissal of her law suit by the Superior Court, the prospective employee, Jane Roe, appealed to the Court of Appeals, asserting an implied cause of action under the Medical Use of Marijuana Act (MUMA) and a tort action on policy grounds.  The Court of Appeals upheld the dismissal, finding that the structure of Initiative 692 was clearly aimed at creating a defense from criminal prosecution and not at extending workplace protections.  The appellant argued that since the provisions of the MUMA provided that “on-site ” use of medical marijuana was not protected, MUMA implied that off-site use was protected.  The Court of Appeals disagreed.  It applied the same reasoning in dismissing her tort action based on public policy grounds. 

Jane Roe, the prospective employee, has appealed and the case was argued to the State Supreme Court in February.  A decision is pending. 

Public employers and others with federally-required drug-free workplace policies should pay particular attention to the court’s holding.  Under federal law, marijuana is a Schedule I controlled substance which, by federal finding, has no valid medical use.  While five separate challenges to this classification have been brought in the last thirty years, all have been rejected by the Second Circuit.  Challenges that the federal criminal provisions are unconstitutional as applied to medical marijuana users have been rejected by the U. S. Supreme Court.  Gonzalez v. Raich, 545 US 1, 125 S. Ct. 2195 (2005). 

Scott Snyder of our firm will be making presentations at the Washington State Association of Municipal Attorneys (WSAMA) Spring conference, the Local Public Governmental Institute at its May convention, and at the Civil Service Convention in September.  These presentations will update the attendees regarding any enactments by the legislature, a decision by the State Supreme Court, as well as the impact of various federal statutes such as CDL provisions, the Drug-free Workplace Act and the Americans With Disabilities Act.  This is a rapidly developing field of law with a few surprises, no doubt, in store.

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Medical Marijuana Legislation Update

Posted March 21, 2011 by Kristin Eick
Categories: General Interest

The Washington Legislature is currently considering two bills relating to medical marijuana or cannabis.  The first bill, ESSB 5073, passed the Senate on March 2nd, with a vote of 29 yeas and 20 nays.  The House Committee on Health Care & Wellness held its first public hearing on ESSB 5073 on March 14th and will hold an executive session on March 21st. 

ESSB 5073 would establish a regulatory system for producing, processing, and dispensing cannabis intended for medical use; establish protections from criminal liability and arrest for qualifying patients, designated providers, health care professionals, licensed producers, licensed processors, and licensed dispensers; and establish a voluntary registry in which qualifying patients and designated providers may enroll and receive arrest protection.  The Department of Agriculture would administer the licensing program for producers and processors, and the Department of Health would establish a regulatory system to issue credentials to licensed dispensers.  Dispensers will only be able to sell cannabis that they have received from producers or processors, and they may only sell to qualifying patients, designated providers, or producers.  Prior to selling or delivering cannabis to a patient or designated provider, the dispenser will have to contact the patient’s health care provider to confirm the patient’s qualification for obtaining cannabis for medical use.  Importantly for cities and towns, the legislation provides that licensed dispensers may not sell cannabis in any city or town without first being authorized to do so by the city or town council.  Further, municipalities are able to adopt “reasonable” zoning requirements, business licensing requirements, or business taxes pertaining to the production, processing, or dispensing of cannabis products that are adopted pursuant to their authority and duties under the Growth Management Act.  There is no indication in the bill analysis and reports what the legislature considers to be a “reasonable” zoning, business licensing, or business tax requirement.  However, the legislation calls for a study to be completed by July 1, 2014, which would examine, among other factors, diversion of cannabis intended for medical use to nonmedical uses and incidents of home invasion burglaries, robberies, and other violent and property crimes associated with qualifying patients accessing cannabis for medical use, which could eventually become useful in creating a legislative record for municipalities in regulating producers, processors, and dispensers.  Finally, the legislation addresses cannabis producers and dispensaries currently in operation.  According to Section 1201 of the bill, the legislature intends that currently-operating producers and dispensaries become licensed, but they will not be able to become licensed until the Department of Agriculture and the Department of Health adopt their regulations.  Thus, currently-operating producers and dispensaries are likely to remain unlicensed until July 1, 2012, and consequently, owners run the risk of arrest between the effective date of ESSB 5073 and the time they become licensed.  Nevertheless, the legislature has provided an affirmative defense to those currently-operating producers and dispensaries if charged with a violation of state law in the interim.  To be eligible for this affirmative defense, the following criteria must be satisfied:

  • In the case of producers, solely provide cannabis to cannabis dispensaries for the medical use of cannabis by qualified patients;
  • In the case of dispensaries, solely provide cannabis to qualified patients for their medical use;
  • Be registered with the secretary of state as of May 1, 2011;
  • File a letter of intent with the department of agriculture or the department of health, as the case may be, asserting that the producer or dispenser intends to become licensed in accordance with ESSB 5073 and rules adopted by the appropriate department; and
  • File a letter of intent with the city clerk if in an incorporated area or to the county clerk if in an unincorporated area stating they operate as a producer or dispensary and that they comply with the provisions of this chapter and will comply with subsequent department rule making.

Upon receiving a letter of intent, the department of agriculture, the department of health, and the city clerk or county clerk must send a letter of acknowledgment to the producer or dispenser.  The producer and dispenser must display this letter of acknowledgment in a prominent place in their facility.  Left unanswered is whether this provision overrides city zoning and business license requirements that may apply.

In addition, the legislature is considering HB 1550, though the last action was a public hearing before the House Committee on Public Safety & Emergency Preparedness on February 8th.  HB 1550 would legalize possession of cannabis for adults over the age of 21 years old.  Under HB 1550, licensing, taxing, and selling cannabis would occur under the regulation of the Liquor Control Board (LCB).  A state tax of 15 percent per gram of cannabis sold would be imposed, and agricultural farmers wishing to produce, process, or package cannabis would have to obtain a license through the LCB at an annual cost of $5,000.  Cannabis and hemp products would be sold in liquor stores to adults (similar to alcohol) and regulated by the LCB.  However, it would be a gross misdemeanor offense to: (1) sell cannabis without a valid license; or (2) distribute cannabis to a juvenile under the age of 21 years old.  Adults could grow cannabis for personal use within certain specifications.  If passed, this bill would not take effect until July 1, 2013.

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Court of Appeals Analyzes Red Flag Program Clarification Act

Posted March 8, 2011 by Kristin Eick
Categories: Red Flags Rule

In the first case to discuss the Red Flag Program Clarification Act of 2010, the Court of Appeals dismissed the American Bar Association’s lawsuit against the Federal Trade Commission (FTC) as moot.  The American Bar Association filed suit in 2009 after the FTC issued an Extended Enforcement Policy, explaining that “professionals, such as lawyers or health care providers, who bill their clients after services are rendered,” would be considered “creditors” under the statute and, therefore, subject to the Rule’s requirements.  The Court determined that the Red Flag Program Clarification Act mooted the case because “the Clarification Act . . . clarifies that, to be a ‘creditor’ subject to the Red Flags Rule requirements, one must not only regularly extend, renew, or continue credit . . . , but must also ‘regularly and in the ordinary course of business,’ (i) obtain or use consumer reports, (ii) furnish information to consumer reporting agencies, or (iii) advance funds with an obligation of future repayment.”  The Court continued: “Most importantly, at least with respect to the matters in dispute in this case, the Clarification Act makes it plain that the granting of a right to ‘purchase property or services and defer payment therefore’ is no longer enough to make a person or firm subject to the FTC’s Red Flags Rule – there must now be an explicit advancement of funds.  In other words, the FTC’s assertion that the term ‘creditor,’ as used in the Red Flags Rule and the FACT Act, includes ‘all entities that regularly permit deferred payments for goods or services,’ . . .  is no longer viable.” 

Thus, the Court of Appeals confirmed the analysis of the Red Flag Program Clarification Act discussed in the previous blog posting.  Although the case involved the application of the Red Flags Rule to lawyers, the Court’s analysis should be equally applicable to municipal utilities, which were previously subject to the Red Flags Rule because of deferred payment for goods and services. 

However, the Court also noted that it would not prematurely comment on new rules that the FTC might promulgate to regulate lawyers.  As stated in the previous blog posting, the FTC has the authority to engage in rulemaking to include entities within the coverage of the Red Flags Rule that maintain accounts subject to a reasonably foreseeable risk of identity theft. 

A link of the Court’s opinion is provided here.

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Municipal Utilities and the Red Flag Program Clarification Act of 2010

Posted February 9, 2011 by Kristin Eick
Categories: Red Flags Rule, Uncategorized

As previously posted on this blog, the Federal Trade Commission (FTC) delayed enforcement of the Red Flag Rules until December 31, 2010, in large part due to extensive litigation and controversy regarding the scope of the Rules.  According to the FTC’s press release, during the delay period, Congress was scheduled to consider legislation that would alter the scope of entities covered by the Rule, and more specifically the definition of a “creditor.”

At the end of December 2010, Congress passed the Red Flag Program Clarification Act of 2010, which as expected, changed the definition of “creditor.”  Though Congress redefined the term creditor, it did not clearly include or exclude specific types of entities, such as utilities, from the purview of the Red Flags Rule.  In short, it is not clear whether municipal utilities are still required to comply with the Red Flags Rule.  However, until the FTC revises its guidance, it is best to begin enforcing the Identity Theft Prevention Program that your municipal utility adopted in anticipation of the December 31st deadline.

Before the Clarification Act was enacted, only “creditors” and “financial institutions” with one or more “covered accounts” were required to develop and implement a written Identity Theft Prevention Program.  A “creditor” was defined as an entity that regularly extended, renewed, or continued credit.  A “creditor” included businesses or organizations that regularly deferred payment for goods or services or provided goods or services and billed customers later.  Municipal utilities were considered “creditors” under this Rule both because utilities defer payment for services and because the FTC’s regulations specifically referenced utilities as an example of a “creditor.”

The Clarification Act, however, changed the definition of a “creditor.”  Now, a “creditor” is defined as any person who regularly extends, renews, or continues credit, and who regularly and in the ordinary course of business:

(1) obtains or uses consumer reports, directly or indirectly, in connection with a credit transaction; or

(2) furnishes information to consumer reporting agencies in connection with a credit transaction; or

(3) advances funds to or on behalf of a person, based on an obligation of the person to repay the funds or repayable from specific property pledged by or on behalf of the person.

Finally, Congress stated that the term “creditor” includes any other type of creditor, as the term was previously defined prior to the Clarification Act, if the Federal banking agencies, the National Credit Union Administration, or the Federal Trade Commission deem that the entity continues to be a “creditor” by regulation.  In order to enact such a regulation, the Federal banking agencies, the National Credit Union Administration, and the Federal Trade Commission must make a determination that such creditor offers or maintains accounts that are subject to a reasonably foreseeable risk of identity theft. 

Based upon the Congressional Record in both the House and Senate, it appears that Congress wanted to limit the scope of the Red Flags Rule to those creditors that use consumer reports, furnish information to consumer reporting agencies, and to those creditors that loan money.  However, the Act specifically gives some discretion to the FTC and other regulatory agencies to include creditors which offer or maintain accounts that are subject to a reasonably foreseeable risk of identity theft.  To date, the FTC has not updated its regulations to include any other “creditors” within the scope of the Act.

From this new definition of “creditor,” a few basic principles can be distilled:

(1) Municipal utilities met the “old” definition of a creditor, so if your utility regularly obtains or uses consumer reports or if it provides information to consumer reporting agencies, your utility is still subject to the Rules.  Because the definition of a “creditor” includes the indirect use of consumer reports, your utility is probably still subject to the Rules, for example, if it contracts with collection agencies that obtain or use consumer reports or that report delinquencies to a consumer reporting agency.

(2) If your utility (and any collection agencies you contract with) does not obtain or use consumer reports or furnish information to consumer reporting agencies, your utility is no longer covered by the Red Flag Rules, except in the rare circumstance that you loan funds to customers.  Some utilities may provide conservation loans, septic loans, or other utility-related loans to customers, in which case, your utility would be a “creditor” under subparagraph (3).

(3) Even if your utility does not obtain or use consumer reports, furnish information to consumer reporting agencies, or provide loans to customers, the FTC or another federal regulatory agency may enact regulations to include utilities within the scope of the Red Flag Rules in the near future.  The FTC cited utility accounts as sources of identity theft in its previous regulations, and therefore, it seems likely that the FTC will include utilities within the scope of the Red Flag Rules in its revised regulations.  Because of this likelihood, it may be wise to continue to implement your Identity Theft Prevention Program in the interim.

(4) Remember that the Clarification Act has not changed the definition of a “covered account.”  Even if your utility continues to be a “creditor” under the new definition, only those creditors which maintain “covered accounts” must develop and implement a written Identity Theft Prevention Program.  “Covered accounts” are those which are offered or maintained by a creditor “primarily for personal, family, or household purposes, that involves or is designed to permit multiple payments or transactions” or “for which there is a reasonably foreseeable risk to customers” of identity theft.

A link to the text of the Red Flag Program Clarification Act is provided here.

A link to the FTC’s webpage regarding Red Flag Rules is provided here.

If you have further questions regarding the Clarification Act or need assistance in drafting your Identity Theft Prevention Program please contact Kristin Eick at keick@omwlaw.com or 206-447-7000.

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Andrews v. Harrison Medical Center: Anti-Nepotism Policies

Posted January 24, 2011 by Kristin Eick
Categories: Employment, Washington Court of Appeals

In a recent unpublished case, the Washington Court of Appeals examined whether the public hospital district’s anti-nepotism policy violated Washington’s Law Against Discrimination (WLAD). The district’s policy stated that it would not offer employment, promotions, or transfers that would permit one relative to: (a) directly supervise or control the work of another, (b) evaluate or audit the work performance of another, (c) make or recommend salary decisions affecting the other, and/or (d) take disciplinary action affecting the other. Relatives included spouses, but did not include persons in “committed intimate relationships.” Under the WLAD, it is an unfair practice for any employer to refuse to hire any person because of marital status unless a bona fide occupational qualification or a business necessity applies. In addition, it is an unfair practice for any employer to discharge or bar from employment or discriminate in compensation or other terms or conditions of employment because of marital status.

The district argued that its anti-nepotism policy was based upon the business necessities presented by the situations in (a) through (d) above. However, the Andrewses argued that the district’s reasons were pretextual because the policy did not apply to persons in a “committed intimate relationship,” which would also raise the type of conflicts cited by the district. Though the district argued that the administrative burden of applying its anti-nepotism policy to committed intimate relationships was too great, the court ultimately remanded the case back to a jury to determine whether the policy was pretext for discrimination against married couples. This case serves as a reminder that discrimination based upon marital status is unlawful in Washington. If public employers adopt such a policy, it should include all types of committed relationships, unless there are specific, valid business reasons to exclude such relationships. In addition, public employers must take care to continue to follow applicable conflict of interest laws and ordinances, even if an anti-nepotism policy has not been adopted.

The opinion can be read in full here.

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