Anyone planning to buy a loaf of bread or head of lettuce next year will need to plan ahead. Last weekend, Governor Newsom signed AB 853 into law. This bill provides that "no person shall acquire, directly or indirectly, any . . . assets of a retail grocery firm or retail drug firm unless both parties give . . . written notice to the Attorney General . . .". Cal. Corp. Code § 14700(a).
Although this bill was apparently intended by the author to address mergers and acquisitions in the food and drug retail industry, its express terms do not limit its application to change of control situations. It applies to any "person", which the Corporations Code defines to include individuals. Cal. Corp. Code § 18. The bill moreover applies to acquisitions of any assets. It is not limited to all or substantially all of a retail grocery firm's assets. Inventory is clearly an asset of a grocery firm. Finally, the bill provides no exceptions for ordinary retail transactions.
Another bizarre aspect of the bill is the lack of any California nexus. It does not, for example, state that any of the person, asset or firm must be in California.
What should a court do with this legislative mess? The California Supreme Court has said that when interpreting a statute:
We attempt to discern the Legislature's intent, "being careful to give the statute's words their plain, commonsense meaning. [Citation.] If the language of the statute is not ambiguous, the plain meaning controls and resort to extrinsic sources to determine the Legislature's intent is unnecessary."
Ennabe v. Manosa, 58 Cal. 4th 697, 713, 319 P.3d 201, 211 (2014) quoting Ste. Marie v. Riverside County Regional Park & Open–Space Dist., 46 Cal.4th 282, 288, 93 Cal.Rptr.3d 369, 206 P.3d 739 (2009). The words of SB 853 are plain and unambiguous and yet it is highly unlikely that the legislature intended the bill to be applied as it so plainly wrote it. Thus, a court will be tempted to fix SB 853 by reading limitations into the law that are simply not there. Quod scripsit, non scripsit.
Judicial statutory repair jobs create their own problems. First, it encourages legislators to be sloppy in drafting legislation. Rather than doing the hard work of getting it right, they may simply push a bill through knowing that a court will rectify their mistakes and oversights. Second, it infringes on the separation of powers. When a court fixes a statute such as AB 853, it must impose conditions and restrictions that were not expressed by the legislature. If, for example, a court decides that "any asset" does not mean what it says, the court must then define what asset purchases are subject to the law. As a result, the court necessarily moves from a judicial role into a legislative role.
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