Sacramento County Super. Ct. No. 03AS00948. Ct.App. 3 C052554. Judge: Shelleyanne W. L. Chang.
The opinion of the court was delivered by: Kennard, J.
The Legislature enacted the California Whistleblower Protection Act (Gov. Code, § 8547 et seq.)*fn1 (the Act) to protect the right of state employees "to report waste, fraud, abuse of authority, violation of law, or threat to public health without fear of retribution." (§ 8547.1.) In adopting the Act, the Legislature expressly found "that public servants best serve the citizenry when they can be candid and honest without reservation in conducting the people's business." (Ibid.) Therefore, the Act authorizes a state employee who is the victim of whistleblower retaliation to bring "an action for damages" in superior court (§ 8547.8, subd. (c), hereafter section 8547.8(c)) and to recover, if appropriate, punitive damages and attorney fees (ibid.), but the employee must "first file a complaint with the State Personnel Board . . . , and the board [must] . . . issue, or fail to issue, findings pursuant to Section 19683" (ibid., italics added).
Here, the employee filed a complaint with the State Personnel Board, and the board issued adverse findings. The Court of Appeal held that the employee had to succeed in having those adverse findings set aside before she could proceed with her court action for damages under section 8547.8(c), because otherwise the adverse findings would be binding in the damages action, precluding recovery. Because this holding undermines the Act's purpose of protecting whistleblower employees by assuring them the procedural guarantees and independent fact-finding of a superior court damages action, we reverse.
State employee Carole M. Arbuckle alleged the following.
She was hired as an office assistant by the State Board of Chiropractic Examiners (SBCE) and was eventually promoted to management services technician. At the SBCE, which issues licenses to chiropractors practicing in the state, Arbuckle's duties related to "cashiering and license renewal," although she was also involved in issuing citations for unlicensed practice. On May 11, 2001, she received a telephonic inquiry from an outside caller concerning the license status of Dr. Sharon Ufberg, the chairperson of the SCBE. She verified for this caller that Dr. Ufberg's license had expired several months earlier. Fifteen minutes later, Dr. Ufberg contacted her, saying she forgot to pay her renewal fee. Later that day, Dr. Ufberg paid the fee. Because the license had been invalid from January 1, 2001, through May 11, 2001, for failure to pay the renewal fee, Arbuckle noted that fact on an "information line" in the computer database. During the next few months, she issued numerous citations to other individuals for practicing under expired licenses, but when she inquired several times about issuing a citation to Dr. Ufberg, Jeanine R. Smith, the executive director of the SCBE, told her not to issue the citation.
In the wake of these events, Arbuckle confronted a stressful work environment, including numerous indignities, disputes, and acts of favoritism. Some of these incidents were minor in themselves, but together they constituted a breakdown of trust and cooperation in the workplace, and in particular a breakdown in the relationship between her and the SBCE's executive director, Jeanine Smith. Among other things, SBCE managers changed Arbuckle's duties, denied her requests for a modified work schedule and a light-duty assignment, cancelled her alternative work schedule, and transferred her to a different unit.
B. Administrative and Judicial Proceedings
On July 23, 2002, Arbuckle filed a complaint with the State Personnel Board, alleging whistleblower retaliation in violation of the Act. The board's executive officer conducted an investigation in accordance with board regulations, during which each side submitted detailed documentary evidence and written argument. Arbuckle, for example, submitted approximately 360 pages of documents in support of her complaint.
On January 24, 2003, the executive officer of the State Personnel Board issued a 16-page "Notice of Findings," recommending dismissal of Arbuckle's complaint. The executive officer concluded that some of the alleged whistleblower activity did not constitute "[p]rotected disclosure[s]" of "[i]mproper governmental activit[ies]" as those terms are used in the Act. (§ 8547.2, subds. (b), (d).) The executive officer further determined that some of the alleged acts of retaliation were not sufficiently adverse to constitute violations of the Act. In regard to the few remaining allegations, the executive officer found an insufficient showing of a nexus between Arbuckle's protected disclosure and the adverse employment actions the SBCE had taken against Arbuckle. The executive officer found persuasive the SBCE's evidence that the actions it had taken against Arbuckle were for reasons unrelated to Arbuckle's protected disclosures.
Under the regulations of the State Personnel Board that were then in effect (Cal. Code Regs., tit. 2, §§ 56-56.8, as adopted Register 2002, No. 34 (Aug. 23, 2002) p. 1712,*fn2 hereafter 2002 Regulations), a complaining employee who received adverse findings from the board's executive officer could file a petition for a hearing before the board. (2002 Regs., § 56.3, subd. (a).) The board could deny such a petition and adopt the findings of its executive officer (id., § 56.3, subd. (f)), or it could grant the petition and assign the matter to an administrative law judge (ALJ) for a hearing (id., § 56.3, subd. (g)). Here, the executive officer's findings expressly informed Arbuckle of her right to petition the board for this hearing before an ALJ: "Either party has the right to file a petition for hearing with the five-member State Personnel Board . . . . Any petition for hearing must be filed no later than 30 days following service of this Notice of Findings. If no party files a petition for hearing within 30 days . . . , this recommendation shall become the final decision of the State Personnel Board."
Arbuckle did not exercise this right. Instead, on February 21, 2003, she filed a damages action in superior court against the SBCE and its executive director, Jeanine Smith, claiming whistleblower retaliation in violation of Government Code section 8547.8. Arbuckle included a cause of action under Labor Code section 1102.5, which prohibits retaliation against an employee who reports a violation of state or federal law, and she also included a tort cause of action for violation of public policy (see Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167). The trial court sustained defendants' demurrer to the Tameny claim, and that issue is not before us. Defendants moved for summary judgment with regard to the remaining causes of action, arguing that Arbuckle had failed to exhaust her administrative and judicial remedies. The trial court denied the motion, but the Court of Appeal issued an alternative writ and stayed the proceedings in the trial court.
The Court of Appeal held that Arbuckle had failed to exhaust both administrative and judicial remedies. The court stated that exhaustion of administrative and judicial remedies in this case required more than merely filing a complaint with the State Personnel Board and receiving the findings of its executive officer; Arbuckle also needed to complete the administrative process by petitioning the board for a hearing before an ALJ, and if this hearing request was denied, she then needed to seek a writ of mandate from the courts in an effort to have the board's findings set aside. The Court of Appeal concluded that Arbuckle, by failing to take these steps, had in effect conceded her right to judicial review of the State Personnel Board findings, and the findings therefore had the same legal significance as a final judgment of a reviewing court. On that basis, the Court of Appeal held that the ...