One the one hand, I get it, and understand why Justice Mallano does what he does here. It's one thing to settle a case, and this sounds like a good case to settle. But it's another thing to condition the settlement on the Court of Appeal's willingness to vacate the trial court's judgment. Parties can't necessarily toy with a judgment for their own benefit, even if they both agree. There's a decision here. The State Board of Equalization was rightly slammed in that decision for doing stuff it shouldn't have done (and not doing stuff it should have done). Why not let it stand? Why let the parties vacate it?
On the other hand, the Court of Appeal's holding that it's "contrary to the public interest" to vacate the lower court's judgment seems a bit silly. Justice Mallano says that to do so "would not only imply the agency acted properly, it would also undermine the effectiveness of the judgment in exposing the agency‘s deficiencies in handling the administrative appeal." Not really true. As to the first point, a decision to vacate a judgment in light of a settlement doesn't at all imply that the lower court's view was wrong. It expresses no view whatsoever on the merits. The only thing it really implies is that the parties settled their dispute. End of story.
As to the second point, it's really hard to argue that vacating an unpublished decision of a trial court would "undermine the effectiveness of the judgment in exposing the agency‘s deficiencies in handling the administrative appeal." No one reads those decisions. And even if they did, that "exposure" still exists even after the decision is vacated. The trial court still said it. The Court of Appeal didn't review or reverse it on the merits. It is what it is.
I'm just not sure that it makes sense to disapprove a valuable settlement "as a reminder to the agency that it must comply with the laws that restrict its decisionmaking authority." That reminder exists by virtue of the trial court's expression of its opinion. Moreover, that reminder is presumably reflected in a very concrete sense in the terms of the settlement. That's actually meaningful. Whether an opinion of a trial court that no one reads is vacated pursuant to a settlement, by contrast, seems largely a mere formality.
Justice Mallano's view that there's something like a "permanent record" for state agencies out there reminds me a little bit of parties who insist that settlement agreements include a provision that says that by settling, no party admits or denies liability. Uh, duh. No joke. There's no reason to include such a provision. There's no "record" out there. A settlement agreement merely means that you've settled. Nothing more, nothing less. So too here.
The best that can be said for the Court of Appeal's decision-- and I think it might make sense on this level -- is to say something slightly different: to merely say "You haven't shown why you need the lower court's decision to be vacated, since all it did was to remand, so I'm not going to comply with your request to vacate a decision based solely on what looks like vanity." If there's no reason shown to vacate a decision, okay, why not let it stand?
That said, I'm not sure that's really the standard, and in going beyond this, I'm not sure the Court of Appeal's really right that the "public interest" cares one iota about whether the trial court's "rebuke" formally persists. Plus, if it really is important to the parties to vacate this decision, I'd hate to tube a completely valuable settlement -- which, again, this one appears to be -- because of some amorphous "public interest" that nowhere near justifies the expenditure of hundreds of thousands of dollars in taxes going to lawyers so that various counties can fight over their respective shares to a pot of money only slightly larger than their fees. Just let 'em split it up how they want. Not worth the money (at least collectively) to fight about it.
Hopefully it'll all work out fine, and the parties will simply delete that provision of the agreement and settle anyway. Let's hope. For everyone's sake.