IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA
August 1, 2008
HANAN H. BOWMAN AND JAMES R. HENCIER, PLAINTIFFS,
YOLO COUNTY, A PUBLIC ENTITY; YOLO COUNTY HOUSING AUTHORITY AND ITS BOARD OF COMMISSIONERS, A PUBLIC ENTITY; AND DOES 1 THROUGH 100, INCLUSIVE, DEFENDANTS.
The opinion of the court was delivered by: Garland E. Burrell, Jr. United States District Judge
Defendant Yolo County Housing Authority ("YCHA") moves to dismiss Plaintiffs' California Labor Code section 1102.5 ("section 1102.5") claim from Plaintiff's First Amended Complaint, arguing Plaintiffs have failed to exhaust applicable administrative remedies.
Plaintiffs, who were previously employed by Yolo County and YCHA, allege in their section 1102.5 claim that they were wrongfully terminated after they disclosed purported illegal activity at the YCHA. (First Am. Compl. ¶¶ 7-11.) Plaintiffs allege they were fired in retaliation for this disclosure in violation of Section 1102.5, which prohibits employers from "retaliat[ing] against an employee for disclosing information to a government or law enforcement agency, where the employee has reasonable cause to believe that the information discloses a violation of state or federal statute . . . ." Cal. Labor Code § 1102.5.*fn2
YCHA contends Plaintiffs' statutory section 1102.5 claim should be dismissed because "[a] litigant seeking damages under [section 1102.5] must exhaust administrative remedies before the Labor Commissioner prior to bringing suit." (Mot. at 4:3-4.) California Labor Code section 98.7 ("section 98.7") provides an administrative remedy before the Labor Commissioner which is available to employees who have been "discharged or otherwise discriminated against in violation of any law under the jurisdiction of the Labor Commissioner . . . ." Cal. Labor Code § 98.7(a).
"[T]o bring a claim under section 1102.5 . . .
[P]laintiff[s] must exhaust [their] administrative remedies . . . ." Lund v. Leprino Foods Co., 2007 WL 1775474, at *4 (E.D. Cal. June 20, 2007) (citing Campbell v. Regents of Univ. of Cal., 35 Cal. 4th 311, 329, 333-36 (2005) and Neveu v. City of Fresno, 392 F. Supp. 2d 1159, 1180 (E.D. Cal. 2005)).
Plaintiffs argue in their opposition however that they "have exhausted their administrative remedies because there are none or should be excused from doing so because there are none." (Opp'n at 2:7.)
Plaintiffs argue that the reference to an administrative remedy in "Labor Code 98.7 permissively (not mandatorily) allows a plaintiff/employee to file an administrative claim with the Labor Commissioner using this scheme" because section 98.7(f) "specifically allows for direct access to the court in a civil suit without first exhausting administrative remedies." (Opp'n at 6:4-8.) Section 98.7(f) states, "The rights and remedies provided by this section do not preclude an employee from pursuing any other rights and remedies under any other law." Cal. Labor Code § 98.7(f). However, as the court ruled in Gutierrez v. Technologies, Inc. when addressing this argument: it appears that the language in section 98.7(f) to the effect that section 98.7 does not preclude employees from pursuing remedies under any other law merely restates the general California rule that plaintiffs are not precluded from bringing civil actions based on California statutes after they have exhausted available administrative remedies. Section 98.7(f) should not be read . . . to allow employees to immediately file civil suits based on the provisions of the Labor Code in lieu of first pursuing the provided administrative remedies when the substantive Labor Code provision at issue . . . does not explicitly authorize a direct civil suit as an alternative to the use of administrative procedures. 279 F. Supp. 2d 1223, 1227 (E.D. Cal. 2003). Plaintiffs also argue Smith v. Rae-Venter Law Group, 29 Cal. 4th 345, 350 (2002) and Murphy v. Kenneth Cole Productions, Inc., 40 Cal. 4th 1094, 1115 (2007) hold that exhaustion of the section 98.7 administrative remedy is optional. However, neither Smith nor Murphy involved section 1102.5.
Plaintiffs also argue their Tort Claims Act claims met the exhaustion requirement. (Opp'n at 10:19-28.) However, the filing of a Tort Claims Act claim does not satisfy the purposes of the exhaustion of administrative remedies requirement. The Tort Claims Act requires only the filing of a claim, and its purposes are to provide the public entity defendant an opportunity to settle the case, investigate the facts, facilitate fiscal planning for potential liabilities, and avoid similarly caused injuries. Garcia v. Los Angeles Unified Sch. Dist., 173 Cal. App. 3d 701, 712 (1985). In contrast,
[t]he exhaustion requirement  facilitates the development of a complete factual record and allows the [administrative] agency to apply its expertise, both of which can assist later judicial review, if necessary. [Therefore,] [t]he 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. Dep't of Alcoholic Beverages Control, 139 Cal. App. 4th 304, 315 (2006) (emphasis added). Thus, Plaintiffs' argument that their claim filed under the Tort Claims Act satisfies the administrative exhaustion requirement is unpersuasive. Since Plaintiffs have failed to allege facts showing they exhausted applicable administrative remedies, their section 1102.5 claim must be dismissed.
YCHA requests Plaintiffs' statutory section 1102.5 claim be dismissed without leave to amend, since Plaintiffs "admit they did not do anything to exhaust [their administrative remedies] other than file a [Tort Claims Act claim]," and even though Plaintiffs have been given a chance to amend this claim following its dismissal on April 23, 2008, Plaintiffs' section 1102.5 claim "is still defective . . . ." (Reply at 1:23-27 (emphasis in original).)
"[L]eave to amend should be granted unless the court determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency." Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986). This determination involves consideration of factors such as "the presence or absence of undue delay, bad faith, dilatory motive, repeated failure to cure deficiencies by previous amendments, undue prejudice to the opposing party and futility of the proposed amendment." Moore v. Kayport Package Express, 885 F.2d 531, 538 (9th Cir. 1989). Plaintiffs have been given a chance to cure this deficiency and have failed to do so. Further, Plaintiffs' opposition indicates that Plaintiffs refuse to cure the deficiency at issue. "Because the deficienc[y] present in [P]laintiff[s'] original complaint w[as] repeated in [P]laintiff[s'] amended complaint, leave to amend a second time shall not be granted." See Smith v. Scribner, 2007 WL 1364968, at *3 (E.D. Cal. May 9, 2007). Accordingly, Plaintiffs' section 1102.5 claim is dismissed without leave to amend.
IT IS SO ORDERED.