STATE BOARD OF CHIROPRACTIC EXAMINERS v. SUPERIORCOURTOFSACRAMENTOCOUNTY

Filed 2/28/07 (reposted same date to note appx. [see p. 3] not included with computer version)

CERTIFIED FOR PUBLICATION

COPY

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

THIRD APPELLATE DISTRICT

(Sacramento)

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STORY CONTINUED FROM PART I..

A. Claim that any SPB findings authorize suit

Arbuckle contends she is entitled to file a civil action on her section 8547.8 claim once she received the notice of findings, regardless of what those findings were. We disagree. The proceeding before the executive officer was not a mere investigation as Arbuckle implies: It was a contested proceeding based on opposing evidentiary submissions. (Cf. McDaniel v. Board of Education (1996) 44 Cal.App.4th 1618, 1621-1622 [no hearing of any kind held].) In this case, the SPB was required by law to accept Arbuckles complaint and refer the matter to its Executive Officer, who was required to consider and did consider voluminous papers containing arguments as well as documentary evidence.

Under the then-applicable rules, the complainant had to file a written statement under penalty of perjury, with supporting documentation and list of witnesses, of the whistleblower report and the alleged retaliation therefor. (Former Rule 56.1(d).) Respondents had to file a written response with similar detail, and the complainant could file a written reply. (Former Rule 56.2(e)-(f).)

The SPB Appeals Division could continue investigation of the complaint after the responses, with or without a hearing[.] (Former Rule 56.2(g).) Within 60 days (unless the time was tolled or waived) the Executive Officer issued a Notice of Findings. (Former Rule 56.2(i).) In those cases where the Executive Officer concludes that the complainant failed to prove the allegations of retaliation by a preponderance of the evidence, the Notice of Findings shall, except in those instances where the findings address jurisdictional and/or procedural matters, specifically address each allegation contained within the complaint. (Former Rule 56.2(j).) If questions of fact remained, the Executive Officer could assign the case to an evidentiary hearing before an ALJ. (Former Rule 56.2(l).)

However If the Notice of Findings concludes no retaliation occurred, the complainant may file a Petition for Hearing before the [SPB]. (Former Rule 56.3(a).)

That petition had to be filed within 30 days of service of the findings and specify the factual basis for the petition. (Former Rules 56.3(b)-(c).)

Once the notice of findings went unchallenged 30 days after service, it became the decision of the SPB and it carried all of the force of a board decision. (Former Rule 56.5.) In other words, it became the decision of the body entrusted by the California Constitution to adjudicate matters within its purview, including claims of retaliation.

That the executive officer conducted his hearing on documentary submissions is of no moment. The executive officer shall administer the civil service statutes under rules of the [SPB]. (Cal. Const., art. VII, 3, subd. (b).) He or she shall perform and discharge under the direction and control of the board the powers, duties, purposes, functions, and jurisdiction vested in the board and delegated to him by it (Gov. Code, 18654) and shall administer the civil service statutes under rules of the board, subject to the right of appeal to the board (Gov. Code, 18654.5). Hearings are governed by rules prescribed by the SPB, but In the conduct of any hearing or investigation any informality in any proceeding or in the manner of taking testimony shall not invalidate any order, decision, or rule made, approved, or confirmed by the board. (Gov. Code, 18675, subd. (a).)

The fact this was not a hearing with live testimony, but instead what the Attorney General calls a documentary hearing does not undermine its validity. It is not the case that only a trial-like hearing is entitled to dignity. (Saleeby v. State Bar (1985) 39 Cal.3d 547, 565.) Further, Arbuckle could have included in a mandate petition the claim that the documentary-only hearing violated due process or that some irregularity in the conduct of that hearing rendered it unfair. (Las Virgenes Educators Assn. v. Las Virgenes Unified School Dist. (2001) 86 Cal.App.4th 1, 7 (Las Virgenes).)

Once the time passed in which to seek review, the Notice of Findings shall be deemed to be the Boards final Decision in the matter, and no named party to the action shall be deemed to have any right of further appeal to the Board. (Former Rule 56.5.)

Arbuckle posits an absurdity, as follows:

Requiring a claimant to request a hearing before the [SPB] creates two classes of claimants, which produces absurd results. One type of claimant would be denied a hearing by the SPB and would enjoy all of the protections of the Whistle Blower Protection Act, including an action for damages . . . including individual liability and attorneys fees, and punitive damages if malice were proven. The other class . . . would be persons for whom the SPB granted a hearing and lost at the hearing. This class of claimants would be required to file a writ of mandate after losing at the [SPB] . . . . Even if a claimant won the writ and ultimately prevailed at the SPB, the claimant would be deprived of the action for damages, individual liability, attorneys fees, and punitive damages. A claimant would only be entitled to the damages set forth in Government Code 19683(c), which only includes back pay, reinstatement, restoration of lost service credit, if appropriate, compensatory damages, and the expungement of any adverse records. Thus, requiring a claimant to request a hearing when they have no entitlement to the hearing, causes a splintering of claimants who are treated differently, . . .

This analysis is wrong on both counts. The first class of claimants, denied a hearing by the SPB and therefore consisting of those who lost in the notice of findings procedure, would be barred from recovery by the preclusive effect of the findings, deemed by law to the final SPB decision. (Former Rule 56.5.) The second class of claimants, if they overturned the SPB findings, would get the restorative award provided by section 19683, subdivision (c), and then could pursue the individuals responsible for punitive damages and attorney fees.

B. Claim that hearing not required by law

Arbuckles next theory begins with the fact that a writ of administrative mandate is available only in cases where by law a hearing is required:

Where the writ is issued for the purpose of inquiring into the validity of any final administrative order or decision made as the result of a proceeding in which by law a hearing is required to be given, evidence is required to be taken, and discretion in the determination of facts is vested in the inferior tribunal, corporation, board, or officer, the case shall be heard by the court sitting without a jury. (Code Civ. Proc., 1094.5, subd. (a).)

A hearing was conducted by the executive officer, based on written submissions and in the exercise of his delegated factfinding powers. But Arbuckle observes that the SPB could have denied her a hearing had she asked for one and therefore she reasons that no hearing was required by law. From this conclusion she asserts that she had no duty to exhaust administrative remedies.

She is wrong for several reasons.

First, A trial-type hearing is not necessary to satisfy the hearing requirement of section 1094.5 of the Code of Civil Procedure, so long as the agency is required to accept and consider evidence before making its decision. (Las Virgenes, supra, 86 Cal.App.4th at pp. 6-7.) The following passage is instructive:

This decision was not made in a bureaucratic vacuum leaving an inadequate paper trail, as the 600-plus page administrative record demonstrates. Significantly, courts and commentators have found that purely documentary proceedings can satisfy the hearing requirement of Code of Civil Procedure section 1094.5, so long as the agency is required by law to accept and consider evidence from interested parties before making its decision. [Citations.] (Friends of the Old Trees v. Department of Forestry & Fire Protection (1997) 52 Cal.App.4th 1383, 1391-1392.)

Second, the SPBs discretion regarding the petition for hearing was carefully circumscribed:

(e) In reviewing any such Petition for Hearing, the Board shall determine whether the Notice of Findings conforms to the requirements of Section 56.3(c)[sic], and whether the Notice of Findings is supported by substantial evidence.

(f) If the Petition for Hearing is denied, the Board shall issue a Decision that adopts the findings of the Executive Officer as its own decision in the matter.

(g) If the Petition for Hearing is granted by the Board, the Board shall issue a resolution rejecting the findings of the Executive Officer and assign the matter to an administrative law judge, who shall conduct an evidentiary hearing in accordance with those statutes and regulations governing the conduct of Board evidentiary hearings, and issue a Proposed Decision for the Boards review and consideration. (Former Rule 56.3.)

Thus, the SPBs discretion whether or not to grant a hearing was not as broad as Arbuckle implies. A hearing could be granted if and only if the SPB determined substantial evidence did not support the Notice of Findings or if those findings were procedurally defective. (Former Rule 56.3(e).) If substantial evidence supported the findings and they adequately addressed the issues, the SPB would adopt the Notice of Findings as its own decision in the matter. (Former Rule 56.3(f).) Otherwise, the SPB had to reject the Notice of Findings and assign the case to an ALJ for a new hearing, which could itself lead to an SPB decision. (Former Rule 56.3(g)-(i).) Thus, the documentary hearing, if challenged by a petition for a hearing by the SPB, would be reviewed and either adopted by the SPB or vacated and the matter rexamined by an ALJ. The SPB forum provided a facially fair and thorough hearing procedure required by law to evaluate claims of retaliation, a forum Arbuckle abandoned in midstream.

Third, the fact the SPB had discretion whether or not to grant a hearing is a red herring. In People ex rel. Cal. Regional Wat. Quality Control Bd. v. Barry (1987) 194 Cal.App.3d 158 a state board declined to grant a petition for review of a regional boards decision. We first pointed out that the fact the regional boards decision could not be reviewed by appeal but only by petition meant discretion whether or not to grant review was vested in the reviewing board. (Id. at p. 171.) But the fact the reviewing board had discretion not to grant the petition did not undermine the validity of the underlying decision: [W]hen the state board denied Barrys petition for review, the regional boards orders were final. At that point, Barry could have challenged those orders by way of mandate in the superior court . . . . (Id. at p. 177.) So, too, here: Had Arbuckle asked for and been denied a hearing, the SPB would have adopted the Notice of Findings (former Rule 56.3(f)) which could have been challenged by a writ of mandate.

Even if we concluded the documentary hearing was not a sufficient hearing required by law, Arbuckle would still not be free to ignore the results of this procedure.

The proper method of obtaining judicial review of most public agency decisions is by instituting a proceeding for a writ of mandate. [Citation.] Statutes provide for two types of review by mandate: ordinary mandate and administrative mandate. (Code Civ. Proc., 1085, 1094.5.) The nature of the administrative action or decision to be reviewed determines the applicable type of mandate. [Citation.] In general, quasi-legislative acts are reviewed by ordinary mandate and quasi-judicial acts are reviewed by administrative mandate. [Citations.] But judicial review via administrative mandate is available only if the decision[] resulted from a proceeding in which by law: 1) a hearing is required to be given, 2) evidence is required to be taken, and 3) discretion in the determination of facts is vested in the agency. [Citations.] [Citations.] Thus, ordinary mandate is used to review adjudicatory actions or decisions when the agency was not required to hold an evidentiary hearing. (Bunnett v. Regents of University of California (1995) 35 Cal.App.4th 843, 848, italics added (Bunnett).)

[T]he absence of an evidentiary hearing does not make mandate inapplicable: it merely affects the form of mandate that must be invoked, either ordinary or administrative. (Bunnett, supra, 35 Cal.App.4th at p. 849.) Thus, the fact the SPB had discretion to deny a hearing does not have the legal effect Arbuckle asserts, and does not give her leave to fail to ask for a hearing. (See DeCuir v. County of Los Angeles (1998) 64 Cal.App.4th 75, 82-83.)

The fact the SPB was not required to grant a petition for hearing had no bearing on Arbuckles ability to challenge the adverse quasi-judicial finding by a writ of administrative mandate prior to filing a civil suit.

When Arbuckle declined to challenge the notice of findings by requesting a hearing, those findings became findings of the SPB by operation of law, as she conceded in the trial court. (Former Rule 56.5.) That is, the executive officers finding of no retaliation became a quasi-judicial finding of the SPB. Because the undisputed evidence shows that Arbuckle has not set that finding aside, it precludes her civil action which is predicated on the same factual claims of retaliation. (Knickerbocker, supra, 199 Cal.App.3d at pp. 242-245.)

C. Compliance with the Tort Claims Act

Arbuckle contends her Labor Code section 1102.5 claim was exhausted because she filed a claim under the California Tort Claims Act ( 810 et seq.) and had no need to file a claim with the labor commissioner. Regardless of whether any employee must submit Labor Code section 1102.5 claims to the labor commissioner, Arbuckle, as a state employee, had to file her claim with the SPB to be able to get damages; because her claim was rejected she is barred by judicial exhaustion regardless of her compliance with the Tort Claims Act.

The doctrine of exhaustion of administrative remedies evolved for the benefit of the courts, not for the benefit of litigants, the state or its political subdivisions. . . . The claim-filing requirements of the Government Code are directly related to the doctrine of governmental immunity and exist for the benefit of the state, not the judicial system; they were adopted by the Legislature in the exercise of its legislative prerogative to impose conditions as a prerequisite to the commencement of any action against the public entity. [Citation.] The doctrine of exhaustion of administrative remedies has no relationship whatever to [the California Tort Claims Act]. (Bozaich v. State of California (1973) 32 Cal.App.3d 688, 698; see 1 Cal. Administrative Mandamus (Cont.Ed.Bar 2004) Laying the Foundation at the Administrative Hearing, 3.79, pp. 96-97.)

The presentation of a claim pursuant to the Tort Claims Act is a separate, additional prerequisite to commencing an action against the state or a local public entity and is not a substitute for the exhaustion of an administrative remedy. (Richards v. Department of Alcoholic Beverage Control (2006) 139 Cal.App.4th 304, 315.)

Arbuckle relies on cases involving a claim resolved under the Fair Employment and Housing Act (FEHA), within the jurisdiction of the Department of Fair Employment and Housing (DFEH). But in such cases a public employee need not exhaust an internal administrative remedy because that would duplicate the administrative remedy provided by DFEH and frustrate the Legislatures intent, which was to provide a different forum which an employee might find more favorable in a given case. (Schifando, supra, 31 Cal.4th at pp. 1085-1087; Ruiz v. Department of Corrections (2000) 77 Cal.App.4th 891, 897-898.) In the case relied on by Arbuckle, Murray v. Oceanside Unified School Dist. (2000) 79 Cal.App.4th 1338 (Murray), the trial court held a sexual orientation discrimination claim was barred because of an untimely tort claim. Murrayconcluded then-recent amendments to FEHA applied retrospectively to the claims and for that reason strict compliance with the Tort Claims Act was unnecessary, as FEHA contains its own time limitations which Murrays tort claim met. (Id. at pp. 1358-1361.) Murray does not support Arbuckles assertion that filing a tort claim exhausts administrative remedies for a non-FEHA claim,

particularly a whistleblower claim. (See Williams v. Housing Authority of Los Angeles (2004) 121 Cal.App.4th 708, 729-731 [as to non-FEHA-related claims, normal exhaustion rules apply].)

Instead, as we have explained, where an employee receives an unfavorable administrative decision, We serve judicial economy by giving collateral estoppel effect to that decision, which requires employees challenging administrative findings to do so in the appropriate forum, by filing a writ of administrative mandamus petition in superior court. (Schifando, supra,31 Cal.4th at p. 1090, discussing Johnson, supra, 24 Cal.4th 61.)

As a practical matter, even if a state employee need not submit a Labor Code section 1102.5 claim to the labor commissioner, he or she must submit the claim to the SPB in order to pursue the damage remedies available under Government Code section 8547.8, as Arbuckle did in this case. The filing of the Tort Claims Act has no bearing on the binding effect of the SPB finding as to issues actually adjudicated. (Knickerbocker, supra, 199 Cal.App.3d at pp. 242-245.)

D. The March 2006 Regulation

Arbuckle claims that the SPBs March 2006 revision of the whistleblower regulations support her position. Although Arbuckle concedes the revision does not directly govern this case, she reasons that it represents some administrative determination about the interplay between SPB remedies and a civil suit. The current relevant regulation reads in part as follows:

(b) In those cases where the Executive Officer concludes that the allegations of retaliation were not proven by a preponderance of the evidence, the Executive Officer shall issue a Notice of Findings dismissing the complaint. The Notice of Findings shall notify the complainant that his or her administrative remedies have been exhausted and that the complainant may file a civil complaint with the superior court pursuant to Government Code Section 8547.8(c). (Cal. Code Regs., tit. 2, 56.5.)

We will not defer to this new regulation as some sort of administrative interpretation of what the law used to be. First, plainly it changed the former regulation. Second, even if this could be read to mean that losing before the executive officer provides a ticket of admission to a jury trial, such an interpretation trenches on the legislative and judicial power to regulate what remedies are available and does not fall within the expertise of the SPB. The extent to which an administrative decision does or does not have any impact on a superior court suit is not a matter falling with the SPBs expertise; and its view of the matter, if indeed it intended to express any view on that matter, is entitled to littleif anyweight. (See Yamaha Corp. of America v. State Bd. of Equalization (1998) 19 Cal.4th 1, 11-13.) We deny the Boards request for judicial notice of the applicable rulemaking file.

As we have explained, the statutes provide that a state employee must file a complaint with the SPB and if she or he loses, a tort suit will be judicially precluded by operation of the statutes and well-settled legal doctrine, which cannot be altered by an SPB regulation. As the Board observes: Allowing an unsuccessful SPB litigant to simply ignore an adverse SPB result would render SPB proceedings meaningless, and would only encourage gamesmanship from complainants who save their evidence and efforts for judicial litigation. The Legislature could not have intended such a result.

Indeed, to the extent the new rule appears to discourage a litigant to follow the administrative proceedings to its end, it appears to be an effort to lighten the SPBs caseload, in defiance of the relevant statutes. An agency cannot issue a regulation undermining its statutory duties. (Bank of Italy v. Johnson (1926) 200 Cal. 1, 15; Caldo Oil Co. v. State Water Resources Control Bd. (1996) 44 Cal.App.4th 1821, 1827.) The new regulation authorizes civil suits which will then be barred by the failure to exhaust administrative and judicial remedies under the current statutory scheme. A regulation, such as this one, that is inconsistent with the statutes it purports to implement is invalid.

E. Conclusion

Arbuckles civil tort theory is that the Board retaliated against her because she reported that a Board member had continued to act on matters after allowing the members license to lapse. The Notice of Findings, deemed to be the SPB final decision because Arbuckle failed to request a hearing, is that no adverse action was taken against her because of this report. Hence, [she] should be required to set aside the [SPB]s decision in a writ of mandate proceeding as a prerequisite to

filing a civil tort suit. (Fresno, supra, 188 Cal.App.3d at p. 1489.) The SPB finding is presumptively valid until shown to be otherwise in the mandate action. (Fair Political Practices Com. v. Californians Against Corruption (2003) 109 Cal.App.4th 269, 282.) The SPB decision precludes the instant civil suit, which Arbuckle concedes is based on the same factual claims as her SPB complaint. (Knickerbocker, supra, 199 Cal.App.3d at pp. 242-245.)

DISPOSITION

Let a writ of mandate issue commanding the trial court to vacate its order denying the Boards motion for summary judgment and to enter a new order granting the motion. Arbuckle shall pay the Boards costs of this proceeding. (Cal. Rules of Court, rule 8.276.)

MORRISON , J.

We concur:

SCOTLAND, P.J.

NICHOLSON , J.

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