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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ORIGINAL PROCEEDING. Petition for Writ of Mandate.

Writ issued.

Bill Lockyer, Attorney General, Jacob Appelsmith, Senior Assistant Attorney General, Alicia M.B. Fowler, Lyn Harlan and Noreen P. Skelly, Deputy Attorneys General, for Petitioners.

No appearance for Respondent.

Garcia & Associates, Gaspar Garcia, II, for Real Party in Interest.

Carole M. Arbuckle sued her employer, the State Board of Chiropractic Examiners and its executive director, Jeanine R. Smith (collectively the Board except where context indicates otherwise), alleging adverse employment actions were taken against her in retaliation for her whistleblower reports, specifically her allegation that a member of the Board allowed the members own chiropractic license to expire but improperly continued to act as a Board member. Arbuckle first filed a complaint with the State Personnel Board (SPB) but did not request a hearing after receiving an adverse Notice of Findings from the SPB executive officer. She then filed this civil tort suit. The Board unsuccessfully moved for summary judgment, arguing this suit was barred for her failure to exhaust administrative and judicial remedies. After the Board petitioned this court for a writ of mandate, we issued an alternative writ and stayed the proceedings.

The adverse notice of findings was deemed to be the final decision of the SPB when it went unchallenged. Had Arbuckle requested a hearing the SPB would either have granted it, resulting in a new SPB decision which could be challenged by a writ of administrative mandamus, or the SPB would have denied it, and adopted the notice of findings as its own decision, which similarly could be challenged. The fact that the SPB has discretion whether to grant a further hearing does not give a claimant the right to abort the administrative remedies and proceed to court. The statutes and pertinent regulations governing whistleblower claims contemplate a civil suit may be filed after the SPB finds in favor of the claimant or fails to issue findings, not where the SPB finds against the claimant and the claimant fails to to set that finding aside. The unchallenged notice of findings, deemed to be the SPB decision, is a quasi-judicial decision that no retaliation occurred: It bars Arbuckles suit under principles of issue preclusion (collateral estoppel). Accordingly, the Board was entitled to summary judgment and we shall issue a writ so ordering.

PROCEDURAL BACKGROUND

On June 17, 2002, Arbuckle filed her complaint with the SPB, which she amended on July 23, 2002. The gist was that although she had been a good employee, after she discovered that a Board members license had lapsed the Board retaliated against her in various ways.

On August 14, 2002, the SPB adopted regulations governing whistleblower complaints, effective immediately. The parties agree that those regulations govern this case. Those regulations were substantially amended in March 2006. For convenience, we provide the text of the former regulations in an appendix. We will cite to them as former Rule ____ to distinguish them from current provisions of the California Code of Regulations.

On November 6, 2002, Arbuckle filed a claim with the State Board of Control, which was rejected.

The SPB Executive Officer served a notice of findings on January 28, 2003, rejecting Arbuckles complaint. This is not a summary rejection, but a 16-page analysis of the facts and law based on his review of over 500 pages of documents submitted by Arbuckle and the Board. (See Gov. Code, 18675, subd. (b); further unspecified section references are to this code.) The decision discusses in detail the alleged protected acts Arbuckle took as a whistleblower and the alleged acts the Board took to punish her. It found that some of her acts qualified as protected disclosures in the rubric of whistleblower cases, but only two of her claims of adverse actions satisfied the legal standard. There was no nexus, or showing that a cause of those adverse actions was the disclosures, because Arbuckle failed to show that those who took the adverse actions knew about the disclosures. (See Patten v. GrantJointUnionHigh School Dist. (2005) 134 Cal.App.4th 1378, 1384; Morgan v. Regents of University of California (2000) 88 Cal.App.4th 52, 69-70.) In any event,the Board showed by clear and convincing evidence that the same employment actions would have been taken.

The notice of findings states Arbuckle could petition for hearing before the SPB no later than 30 days after service; If no party files a petition for hearing within 30 days following service of this Notice of Findings, this recommendation shall become the final decision of the [SPB]. If any party files a timely petition for hearing, this Notice of Findings shall become the final decision of the [SPB] if all such timely filed petitions for hearing are ultimately denied by the [SPB].

Arbuckle conceded in the trial court that she did not petition for a hearing, and that by operation of law the Notice of Findings became a final SPB decision, and that she did not seek judicial review by filing a writ of administrative mandate.

Instead, on February 21, 2003, before the 30 days in which to petition the SPB for a hearing elapsed, Arbuckle filed the instant suit. The complaint is difficult to understand because it is clogged with evidentiary facts and legal assertions, and fails to state claims in ordinary and concise language. (Code Civ. Proc., 425.10, subd. (a)(1); cf. Krug v. Meehan (1952) 109 Cal.App.2d 274, 277 [The complaint must allege ultimate facts, not evidentiary facts or conclusions of law].) However, Arbuckle does not dispute that it is based on the same facts as the SPB complaint.

On April 17, 2003, Judge Gray overruled a demurrer based on judicial exhaustion, finding that filing the claim with the SPB is the only requirement prior to suit. On December 1, 2004, Judge Cecil denied a summary judgment motion on the same ground.

On January 26, 2006, the Board again moved for summary judgment, alleging that an intervening California Supreme Court decision, Campbell v. Regents of University of California (2005) 35 Cal.4th 311 (Campbell), justified bringing a new motion because it changed the law. The relevant facts supporting and opposing the motion consist of the procedural history we have outlined, as well as judicial notice of pertinent statutes and regulations.

After Judge Chang denied the motion the Board filed this mandamus petition. We stayed the trial court proceedings and issued an alternative writ.

DISCUSSION

We will first briefly discuss the doctrines of administrative and judicial exhaustion. We will then outline the proceedings which were available to Arbuckle. We will then discuss the theories raised by Arbuckle in defense of her claimed entitlement to pursue a tort suit.

I. Administrative and Judicial Exhaustion

Administrative and judicial exhaustion questions may overlap and some cases speak of one when they mean the other. (Knickerbocker v. City of Stockton (1988) 199 Cal.App.3d 235, 240-245 [distinguishing the two and exposing confusion in other cases] (Knickerbocker).)

[I]n Westlake Community Hosp. v. Superior Court [(1976) 17 Cal.3d 465 (Westlake)], this court held that unless a party to a quasi-judicial proceeding challenges the agencys adverse findings made in that proceeding, by means of a mandate action in superior court, those findings are binding in later civil actions.^[fn.] This requirement of exhaustion of judicial remedies is to be distinguished from the requirement of exhaustion of administrative remedies. [Citation.] Exhaustion of administrative remedies is a jurisdictional prerequisite to resort to the courts. [Citations.] Exhaustion of judicial remedies, on the other hand, is necessary to avoid giving binding effect to the administrative agencys decision, because that decision has achieved finality due to the aggrieved partys failure to pursue the exclusive judicial remedy for reviewing administrative action. [Citation.]

In Westlake, supra, 17 Cal.3d 465, a hospitals revocation of a doctors staff privileges was upheld by the hospitals judicial review committee and board of directors. Without first challenging the boards final decision in an administrative mandate proceeding in superior court, the doctor filed a tort action in superior court. We held that plaintiff must first succeed in overturning the quasi-judicial action before pursuing her tort claim against defendants. . . . We explained that so long as such a quasi-judicial decision is not set aside through appropriate review procedures the decision has the effect of establishing the propriety of the [defendants] action. [Citation.] A quasi-judicial decision is set aside when a court in a mandate proceeding determines that the decision cannot stand either because of a substantive or procedural defect[.] [Citation.]

Paramount to the Westlake holding were these two reasons: (1) the interest in according proper respect to an administrative agencys quasi-judicial procedures by precluding a party from circumventing the established process for judicial review of such decisions by means of a petition for administrative mandate; and (2) providing a uniform practice of judicial, rather than jury, review of quasi-judicial administrative decisions. (Johnson v. City of Loma Linda(2000) 24 Cal.4th 61, 69-70 (Johnson).)

As we will explain, Arbuckles failure to overturn the notice of findings precludes her tort suit because it binds her as to all issues actually litigated. (Knickerbocker, supra, 199 Cal.App.3d at pp. 242-245.) Further, it is not usually enough to invoke an administrative forum, a claimant must pursue the matter through all extant administrative review procedures. (See Coachella Valley Mosquito & Vector Control Dist. v. California Public Employment Relations Bd. (2005) 35 Cal.4th 1072,1080 (Coachella); City of Fresno v. Superior Court (1987) 188 Cal.App.3d 1484, 1489 (Fresno); 9 Witkin, Cal. Procedure (4th ed. 1997) Appeal, 108, pp. 171-173.)

II. Whistleblower Claims

The SPB is a statewide agency entrusted by the California Constitution to administer the civil service system. (Cal. Const., art. VII, 3; see Alameida v. State Personnel Bd. (2004) 120 Cal.App.4th 46, 52-53; Gonzalez v. State Personnel Bd. (1995) 33 Cal.App.4th 422, 428.)

Two statutes relevant to this case provide remedies for workers punished for making protected whistleblower disclosures, but the remedies are quite different.

First, Labor Code section 1102.5 prohibits retaliation where any employeepublic or privatemakes a good-faith report of a suspected violation of a state or federal statute or regulation. Some federal decisions have held this statute requires exhaustion of remedies before the Labor Commissioner. (Neveau v. City of Fresno (E.D.Cal. 2005) 392 F.Supp.2d 1159, 1179-1180; Gutierrez v. RWD Technologies, Inc. (E.D.Cal. 2003) 279 F.Supp.2d 1223, 1225-1228.) Whether or not that is correct, the California Supreme Court has held that a party pursuing a Labor Code section 1102.5 claims must exhaust available internal administrative remedies. (Campbell, supra, 35 Cal.4th at pp. 331-333.) A public employee might be able to bypass such a remedy if there were a good excuse (e.g., futility), but not in the ordinary case. (Coachella, supra, 35 Cal.4th at pp. 1080-1082; see Hood v. HaciendaLa PuenteUnifiedSchool Dist. (1998) 65 Cal.App.4th 435, 439 [ 8547.8, subd. (c) case] (Hood).)

To get damages a state employee must invoke a second statutory scheme, the California Whistleblower Protection Act. ( 8547 et seq. (Act); see Hood, supra, 65 Cal.App.4th at pp. 439-440.) Under the Act, any person who engaged in the retaliation may be liable for damages. ( 8547.8, subd. (c); see Campbell, supra, 35 Cal.4th at p. 327 [construing parallel statute, 8547.10, subd. (c), applicable to University of California employees].)

First, under a statute cross-referencing the Act the SPB can award damages. The SPB investigates retaliation claims and The executive officer shall complete findings of the hearing or investigation within 60 working days thereafter, and shall provide a copy of the findings to the parties. ( 19683, subd. (a).) If he or she finds retaliation took place the offending manager may appeal to the SPB to contest that finding. (Id., subd. (b).)

If, after a hearing, the State Personnel Board determines that a violation of section 8547.3 occurred, or if no hearing is requested and the findings of the executive officer conclude that improper activity has occurred, the board may order any appropriate relief, including, but not limited to, reinstatement, backpay, restoration of lost service credit, if appropriate, compensatory damages, and the expungement of any adverse records of the state employee or applicant . . . who was the subject of the alleged acts of misconduct prohibited by Section 8547.3. (Gov. Code, 19683, subd. (c), italics added.)

The remainder of section 19683 explains what happens to the employee found by the SPB to have retaliated and requires the SPB to make reports to the Governor and Legislature. (Gov. Code, 19683, subds. (d)-(f).) The only portion of section 19683 describing the rights of the victim is subdivision (c), just quoted, which speaks in terms of findings that retaliation took place, that is, findings favorable to the complaining employee.

Second, the Act in some cases allows a civil suit. However, the scope of such suit is more limited than Arbuckle supposes. We quote the relevant passage in full:

In addition to all other penalties provided by law, any person who intentionally engages in acts of reprisal, retaliation, threats, coercion, or similar acts against a state employee or applicant for state employment for having made a protected disclosure shall be liable in an action for damages brought against him or her by the injured party. Punitive damages may be awarded by the court where the acts of the offending party are proven to be malicious. Where liability has been established, the injured party shall also be entitled to reasonable attorney's fees as provided by law. However, any action for damages shall not be available to the injured party unless the injured party has first filed a complaint with the State Personnel Board pursuant to subdivision (a), and the board has issued, or failed to issue, findings pursuant to Section 19683. (Gov. Code, 8547.8, subd. (c).)

There are two significant features of this statute. First, the statute speak of penalties.It applies in addition to all other penalties provided by law, and allows for punitive damages for malicious acts and attorney fees. Generally speaking, a penalty includes any law compelling a defendant to pay a plaintiff other than what is necessary to compensate him for a legal damages done him by the former. (Miller v. Municipal Court (1943) 22 Cal.2d 818, 837; see People ex rel. Dept. of Conservation v. Triplett (1996) 48 Cal.App.4th 233, 252.) Thus, this provision addresses how the employee may get penalties beyond the restorative award the SPB has made pursuant to Government Code section 19683, subdivision (c), quoted above.

Second, it applies where and only where the SPB has issued, or failed to issue, findings pursuant to Section 19683. The findings referred to in section 19683 are findings favorable to the employee, as just explained. Therefore, when a state employee files a whistleblower claim with the SPB there are three possibilities:

1) If the SPB issues findingsfavorable to the employee, it will make a restorative award (backpay and so forth) and the employee may file a tort suit seeking other damages (e.g., punitive damages). This allows an immediate restoration to the employee of salary and other benefits, while allowing him or her to choose whether to seek additional compensation via the civil tort system.

2) If the SPB fails to issue any findings, again a tort suit is authorized by Government Code section 8547.3, subdivision (c). This allows the employee to bypass the administrative forum because that forum failed to resolve the issue. Absent this provision, the employee would be relegated to filing a writ of mandate to compel the SPB to issue findings. (See California Correctional Peace Officers Assn. v. State Personnel Bd. (1995) 10 Cal.4th 1133, 1138, 1146.) This is consistent with other statutes, generally referred to as deemed approved statutes, which provide that an agency which fails to act on a matter within a certain time will be deemed to have acted in a certain way, to allow citizens to get on with their business without protracted and unjustified governmental delays by governmental agencies in making required decisions. (Bickel v. City of Piedmont (1997) 16 Cal.4th 1040, 1046.) Here, the SPB made findings when the decision of the Executive Officer was deemed to be the [SPB]s final Decision (former Rule 56.5) after Arbuckle failed to request a hearing.

3) If the SPB issues findings adverse to the employee, unless the employee succeeds in overturning that decision by a writ of administrative mandate, a civil tort suit on the same claim would be barred by judicial exhaustion (issue preclusion). Section 8547.3, read in context, does not allow a suit based on adverse findings. The SPB is an administrative agency endowed by the Constitution with quasi-judicial powers. (Larson v. State Personnel Bd. (1994) 28 Cal.App.4th 265, 273.) When a party to a quasi-judicial proceeding fails to challenge the agencys adverse findings by means of a writ of mandate action in superior court, the adverse findings are binding in later civil actions. (Johnson, supra, 24 Cal.4th at pp. 69-71; Knickerbocker, supra, 199 Cal.App.3d at p. 243.)

Any other conclusion would mean the administrative proceeding was a waste of time. (See Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1090 [refusing to give binding effect to those quasi-judicial findings would undermine the efficacy of such proceedings, rendering them in many cases little more than rehearsals for litigation] (Schifando); Knickerbocker, supra, 199 Cal.App.3d at p. 243 [it would render the administrative hearing a meaningless and idle act].) However, as a time-honored maxim of jurisprudence puts it, The law neither does nor requires idle acts. (Civ. Code, 3532.)

III. Arbuckles Appellate Claims

We now consider Arbuckles various claims why she should be allowed to pursue her civil tort suit without first overturning the notice of findings.

TO BE CONTINUED AS PART II.

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