Judge upholds constitutionality; case expected to go to high court

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Judge upholds constitutionality; case expected to go to high court

By Terri Somers, Union-Tribune (San Diego, California), April 22, 2006

A state judge upheld the constitutionality of California's novel $3 billion stem cell initiative yesterday in a ruling that is expected to immediately open the funding tap for the controversial research.

Although both sides in the case expect that it will ultimately end up in the state Supreme Court, stem cell backers say Judge Bonnie Sabraw's unequivocal ruling should make it easier for them to borrow money until the issue is fully resolved.

"We will win this fight against a small and politically motivated minority, step by step," said Robert Klein, an author of the initiative and chairman of the board overseeing its implementation.

Klein and other supporters of the initiative have repeatedly pointed to the ties legal challengers have to anti-abortion groups, which oppose embryonic stem cell research because it requires the destruction of human embryos.

But the plaintiffs, who refer to themselves as taxpayer advocates, have avoided raising the heated moral debate about embryonic stem cell research. Their primary argument is that the initiative, known as Proposition 71, is unconstitutional because state elected officials do not have control over the $3 billion in taxpayer funding that it would spend.

"We are disappointed but not surprised with the judge's ruling," said Dana Cody, a lawyer with the Life Legal Defense Fund, representing one of the plaintiffs, the People's Advocate. The other plaintiffs are the National Tax Limitation Foundation and the California Family Bioethics Council.

Stem cell research is a hot scientific area because stem cells have the ability to grow into the many different cells in the body, including blood, bone, neurons and all other tissue. It is hoped that these cells might one day lead to therapies to cure or stop the progression of devastating diseases.

Proposition 71, which makes $350 million annually available for stem cell research in California, was approved by voters in November 2004. The unique state taxpayer-funded initiative was created to circumvent federal regulations that limit crucial National of Institutes of Health funding for embryonic stem cell research.

The lawsuits filed in Superior Courts last April have prevented the state from selling the bonds to finance the grant-making California Institute for Regenerative Medicine, which was created under the initiative.

To keep the institute up and running while the legal wrangling continues, its backers have been scrambling to sell bond anticipation notes, a form of philanthropic loan.

The loans would be repaid once bonds are issued. But if the initiative ultimately is defeated by legal challenges, the loans become donations.

The ruling by Judge Sabraw of Alameda County Superior Court is expected to make it easier for the institute to sell the bond anticipation notes, Klein said. The institute has received state authorization to sell up to $200 million worth of notes so far, he said.

The judge's ruling is "an extraordinary step in advancing (the institute) to higher levels of funding, making the voters' mandate a reality," said Dr. Edward W. Holmes, dean of the University of California San Diego's Medical School and a member of the institute's oversight board.

No further lawsuits can be filed in an attempt to stop the state from issuing bonds to fund the initiative. That statute of limitations expired last year, Klein said.

However, new challenges could be filed against specific grants, he said. And that could halt funding for those grants, he said.

Sabraw listened to four days of court testimony last month and pored over dozens of legal filings and depositions before issuing her ruling that the challengers failed to show the initiative is "clearly, positively and unmistakably unconstitutional."

Cody and David Llewellyn, who represents the California Family Bioethics Council, said they expect to file an appeal within 30 days. Llewellyn said he may also file a motion with Sabraw within 10 days to ask her to revisit several issues that were not addressed in her ruling.

"Both sides have always said that the California Supreme Court is where the final decision will be made," Cody said.

Lawyers for the plaintiffs had argued that members of the stem cell institute's oversight board have conflicts of interest that prevent them from representing the interests of state taxpayers. They also alleged that policies and regulations governing the oversight board are not sufficient to protect taxpayers' interests.

Judge Sabraw saw it differently.

In a 42-page ruling issued yesterday afternoon, she said the evidence established that the application of Proposition 71 has been in compliance with its statutory framework, and that the institute and its board are operating in the same fashion as other state agencies.

Sabraw cited how each board member and the alternates have taken an oath of office and filed the standard forms for California officials, disclosing their financial holdings to make possible conflicts publicly visible.

The board has also either developed its own policies, or adopted state ones, for conflict of interest for board members, institute staff and members of advisory boards.

In deciding the case, the judge cited previous legal decisions to explain how she approached her ruling: "Our duty is clear: we do not consider or weigh the economic or social wisdom or general propriety of the initiative. Rather, our sole function is to evaluate it legally in the light of established constitutional standards."

Supporters of stem cell research said they hoped the ruling would put the matter to rest.

"We ask that the plaintiffs respect the decision of Judge Sabraw, and the mandate of over 59 percent of California voters, by dropping any intent to appeal," said Susan DeLaurentis, president and CEO of the Alliance for Stem Cell Research in Los Angeles. "To further delay this research, and extend the pain and suffering of millions who could benefit would be unconscionable, especially when it has been proven that their claims are without merit."

But opponents of the research said they were optimistic about their chances on appeal.

"I think this court is wrong on several legal elements," said Llewellyn, lawyer for the Bioethics Council. The appeals courts are more likely to look more critically at intricate aspects of the initiative, he said.

Meanwhile, funding of research grants is expected to accelerate.

Earlier this month, the institute issued $12.1 million in grants for the training of scientists across the state. The grants were funded with $14 million in bond anticipation notes that had been approved by a state finance committee. Klein has said he has commitments from philanthropists to buy a total of $50 million in bond anticipation notes.

He said he will seek to raise up to the $200 million limit, as funding is needed.

He expects that the next round of grants to be funded will be small innovation grants, which aim to give scientists seed money to pursue novel ideas until further funding is available.

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