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Gary Monk v. Sacramento Metropolitan Fire District


December 13, 2011


(Super. Ct. No. 04AS00665)

The opinion of the court was delivered by: Nicholson , Acting P. J.

Monk v. Sacramento Metropolitan Fire Dist.



California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

Plaintiff Gary Monk sued his former employer, defendant Sacramento Metropolitan Fire District (the District), after he entered into a settlement agreement and agreed to retire in exchange for the District terminating a disciplinary proceeding against him. In his suit, Monk alleged causes of action for retaliation in violation of Labor Code section 1102.5, wrongful discharge in violation of public policy, constructive discharge, and breach of an implied contract to terminate only for cause.

Following trial, two theories went to the jury: retaliation in violation of Labor Code section 1102.5, and constructive discharge. The jury found the District liable for retaliation and awarded Monk economic damages in the form of lost pension benefits of $574,191 and non-economic damages of $100,000. However, the jury also determined Monk had not been constructively discharged.

The District moved for a new trial, judgment notwithstanding the verdict, and to vacate the judgment. The trial court denied the new trial motion, but it granted in part the judgment notwithstanding the verdict and the motion to vacate as to the jury's award of $574,191 in economic damages. The court ruled Monk was not entitled to economic damages in the form of lost pension benefits because the jury determined he had not been constructively terminated.

Both Monk and the District appeal. Monk challenges the trial court's denying him economic damages because he was not constructively terminated. He claims the court's ruling is in error because either (1) substantial evidence supports a factual determination that the District actually terminated Monk; or (2) the jury's finding of no constructive discharge did not foreclose an award of damages based on the theory the District left Monk with no viable alternative but to accept the District's terms of termination.

The District challenges the verdict finding it committed retaliation in violation of Labor Code section 1102.5. It claims (1) there was insufficient evidence to sustain the jury's finding of retaliation; (2) claims for any damages due to retaliation arising from disciplinary proceedings against Monk, including the $100,000 awarded in non-economic damages, were barred under the statute of limitations and the settlement agreement; and (3) the court erred in admitting certain hearsay evidence.

We disagree with the arguments asserted by both parties and affirm the judgment in its entirety.


Monk claimed the District initiated a series of disciplinary actions against him in retaliation for his reporting a potential violation of law by District personnel to a government or law enforcement agency. The disciplinary actions culminated in his retiring from the District. In this case, Monk asserted the retaliation for his reporting violations of law by a government agency to a law enforcement agency violated Labor Code section 1102.5, and his retirement was a constructive discharge. Because both parties raise substantial evidence arguments on appeal, we describe the facts adduced at trial in depth.

1. Monk's background

Monk was a long-time member of the fire service. He began his career in 1978 as a firefighter, and later served as an inspector and primary fire investigator. In 1998, he became the supervising arson investigator for the Sacramento County Fire Protection District, a predecessor entity to the District. (For the sake of convenience, we refer to both entities as the District.) During his service, Monk received positive work evaluations. He was active in community service, and served a one-year term as the president of the Sacramento County Firefighters Association.

In 1998, Monk became the supervisor to Scott Lewis, an arson investigator. As a supervisor, Monk was responsible for assigning Lewis to investigate fires and for reviewing and approving Lewis's reports prior to sending them to the sheriff's department.

2. 2000 discipline proceedings against Scott Lewis

Monk worked under the direction of Fire Marshal Vernon Brown. Brown was part of the District's management structure. He reported directly to the fire chief. He would notify the fire chief of any problems dealing with employee performance, such as if the employee was filing false reports. In late 1999, Monk and Fire Marshal Brown met with Deputy District Attorney Richard Margarita to discuss some of Lewis's actions in the field. Margarita believed Lewis had behaved inappropriately on a number of occasions and was subjecting the District to potential liability.

At that meeting, Monk informed Margarita of an incident involving Lewis of which Margarita was not yet aware. On December 3, 1999, Lewis made a vehicle stop on U.S. 50. Lewis was not on duty at the time, but he was using a District van. Lewis arrested and handcuffed the driver, one Polly Johnson, and issued her a citation for misdemeanor reckless driving. However, Lewis made a false police report. He claimed a sheriff's deputy had arrested and cited Johnson, not him.

In a 10-page letter dated January 14, 2000, and addressed to Fire Marshal Brown, Margarita detailed a number of situations where Lewis had engaged in conduct he believed exposed the District to a significant risk of liability. One was the Polly Johnson incident where Lewis falsified a police report. Another incident involved another traffic stop. This time, Lewis held a person at gunpoint believing the suspect was involved in a felony. Lewis requested backup from the sheriff's department. Several sheriff's vehicles came with lights and sirens on. However, the suspect was the wrong person. Margarita knew Lewis had performed this vehicle stop even though Lewis had already been directed by Brown not to engage in vehicle stops.

Other incidents involved Lewis's investigation into an arson investigation known as the Sirsi incident. Lewis conducted a probation search on a storage locker used by John Sirsi. He asked Sirsi's girlfriend, a Ms. Webber, to identify the items he recovered, believing some of them to have been stolen. Lewis claimed Webber told him Sirsi had fled Sacramento to Idaho to avoid prosecution for insurance fraud.

Based on Lewis's report of Webber's statement, Margarita contacted the FBI to request they obtain a warrant and arrest Sirsi in Idaho. The FBI requested Lewis provide them with a declaration of the facts surrounding Webber's statement. Margarita instructed Lewis on at least three separate occasions to prepare the declaration, but he never did. When asked why, Lewis said he was too busy or going to school.

Margarita later learned, however, that Webber never told Lewis that Sirsi had fled to Idaho. This explained to Margarita why Lewis had not prepared the declaration.

Lewis had identified one Scott Gray as a suspect in the Sirsi incident, and had determined Gray had two warrants out for his arrest, one of which was a no-bail warrant. Lewis informed Margarita he was going to arrest Gray. Margarita advised Lewis to involve investigators from the district attorney's office, but Lewis said he did not have time to do that. Lewis went and met with Gray, but despite the no-bail warrant for Gray's arrest, Lewis did not arrest him. Instead, he performed another vehicle stop on a Ms. Sumner and without probable cause. Margarita claimed Lewis should have arrested Gray once he knew about the no-bail warrant.

Based on these incidents, Margarita concluded Lewis was a "liar" running "amuck" whose actions were unlawful and put others at risk of harm and the District at risk of liability. Margarita recommended to his superiors at the District Attorney's office that Lewis be prosecuted.

After Margarita sent his letter to Brown, Brown contacted him to discuss another falsified police report prepared by Lewis. Lewis participated in a search of a residence and seized some drugs. He reported he had destroyed the drugs, but the drugs subsequently reappeared. Margarita again expressed his concern about Lewis, and he recommended Lewis be terminated.

Brown shared Margarita's letter with interim Fire Chief Gary Costamagna and the District's human resources manager, Teresa Means. Means said she would take the lead on disciplining Lewis.

Following her investigation, Means disciplined Lewis by demoting him to a firefighter but staying the demotion. In the notifying letter dated February 7, 2000, Means stated the District had concluded Lewis's involvement with law enforcement incidents unrelated to arson investigations was excessive; there were a number of improprieties between ancillary reports and actual incident reports; and he failed to follow directions not to have any further involvement in law enforcement activities unrelated to arson. The District demoted Lewis to line firefighter, but stayed the demotion for 12 months on condition of good behavior.

By letter dated the next day, February 8, 2000, Means reinstated Lewis's authorization to carry a firearm, his peace officer status, and his regular arson inspector duties as of February 9, 2000, at 7:30 a.m. All equipment he had surrendered during the District's investigation, including his firearm, was to be reissued to him at that time.*fn1

3. 2000 discipline proceedings against Monk

Meanwhile, about a week and a half after Margarita sent his January 14 letter to Brown, Monk and Lewis were both working a fire called the Anderson truss fire. Monk had placed Lewis in charge of the fire, and Lewis had made assignments to various investigators from other fire departments that came to assist with the fire. Monk then saw Brown relieve Lewis of his duties. At that point, Monk took over as the incident commander on the fire. The other investigators asked Monk where Lewis had gone and who was in charge. Monk told them Lewis had been relieved of duty and he was assuming the role of incident commander.

Around this same time, Monk taught an arson investigation class at the sheriff's academy for reserve deputies. During a break, one of the students approached him and asked if there were any job openings with the District. Monk told the student there were none at that time. Monk also said, "We do have one individual who got in trouble for doing some things and who knows what will happen, but if you're interested, apply for the job." Monk did not provide the student with Lewis's name.

To Monk's surprise, on February 8, 2000, Lewis reported for work and showed Monk the February 8 letter written by Means reinstating Lewis as an arson investigator and all equipment he surrendered during the investigation to be returned to him, including his firearm. Monk knew nothing about this letter or its contents. Monk returned to Lewis a red light Monk had earlier removed from Lewis's vehicle. Monk had not taken Lewis's firearm from him, so he suggested Lewis wait until Monday when the fire marshal returned to speak with him about getting his gun. At some point that day, the acting fire marshal asked Monk if he had seen the February 8 letter and directed him to return Lewis's equipment to Lewis. Monk told the acting fire marshal he had returned the equipment he had taken from Lewis.

On February 25, 2000, Means suspended Monk immediately and placed him on paid administrative leave pending the outcome of the District's investigation and disciplinary action. Means also suspended Monk's peace officer status and took away his firearm. Means told him he was being suspended because he had spoken about the Lewis matter with persons outside the District at the Anderson truss fire and with cadets at the sheriff's academy.

Monk sent a written response to the suspension to Brown, with copies to Means and Costamagna. He did not deny the allegations, but he was not aware of any District policy or provision of the Memorandum of Understanding (MOU) between Monk's union and the District that stated his actions were inappropriate. He accused the District of violating its own policies. Means had filed a report of occurrence, which is an incident report form that is not to be used for personnel matters and is to be copied to all persons involved. Means had filed the inappropriate form and had not given him a copy. Also, District policy required a notice of proposed disciplinary action be given to the employee before suspending him. Monk did not receive a notice of proposed disciplinary action when he was suspended.

Monk also questioned the disproportionate action taken against him when compared with the action taken by the District against Lewis. Lewis had committed possible criminal acts, but he was allowed to continue working an administrative job while he was being investigated and was not suspended. Monk accused the District of acting based on impermissible motives, and he asked for a meeting with Brown, Means, and Costamagna.

Brown responded to Monk's letter on March 8, 2000, by simply telling Monk to direct all of his communications to Means.

On March 10, 2000, Means delivered to Monk a notice of proposed disciplinary action, informing Monk the District intended to demote him from supervising arson inspector to arson inspector. Means accused Monk of violating the MOU by committing "inexcusable discourteous treatment" and acting in a way that brought discredit to the District. The notice scheduled a Skelly hearing for March 20.*fn2

However, on March 24, 2000, Means issued Monk a second notice of proposed discipline. This notice amended the March 10 notice by accusing Monk of insubordination. The notice stated Monk had refused to reinstate Lewis to his arson investigator position and refused to return his equipment when Lewis furnished Monk with Means's letter of February 8 reinstating him and when the acting fire marshal directed Monk to reinstate Lewis and return his equipment. Means alleged Monk left work for the weekend without complying with the acting fire marshal's directive. The Skelly hearing was set for April 3.

Following the Skelly hearing on April 3, Chief Costamagna, who also served as the hearing officer, imposed the proposed discipline on Monk and demoted him to arson investigator for insubordination and for discussing Lewis's personnel matter with others.

Until he testified at trial, Costamagna did not know that Monk had imparted any information to the District Attorney's office about Lewis lying on a police report. The issue to Costamagna was a breach of duty by a supervisor. Regarding the insubordination, Costamagna was never told that Monk told Lewis when he came back to work that he did not know where Lewis's gun was and he would have to get it from the fire marshal. Means was the person advising Costamagna on Monk's disciplinary action.*fn3

A little more than three weeks after being demoted, Monk received a third notice of proposed discipline from Means. This notice, dated April 27, 2000, proposed terminating Monk from his employment with the District for allegedly engaging in outside employment while on duty for the District and where such employment could result in a conflict of interest. The notice alleged Monk, while on duty and in a District vehicle, went to the scene of an arson investigation and gave to the property manager a business card bearing the name of Pacific Rim Investigative Services and Monk's name. The investigation had already been assigned to Supervising Investigator Thomas McKinnon and was in progress. Monk went to the scene without direction from McKinnon and began interviewing witnesses. The notice claimed his presence was unnecessary and his tendering a business card suspect. A Skelly hearing was set for May 9, 2000.

When McKinnon saw Monk at the scene, Monk was not wearing any District gear. He did not have his badge or gun. He wore coveralls that are not worn by District personnel. McKinnon obtained a copy of Monk's private business card from the property manager. McKinnon also spoke with an insurance carrier representative. The representative stated she had hired Monk to do the investigation. When McKinnon told her Monk had just left the scene, she said Monk could not do the fire because it would be a conflict of interest.

Following the Skelly hearing, Monk was disciplined on May 12, 2000, by being demoted to a line firefighter instead of being terminated. Costamagna wrote that Monk's actions at a minimum were confusing to the property manager, and at most could be viewed as conducting business for the insurance carrier on District time. Costamagna made no finding that Monk's actions were intentional.

Costamagna ordered Monk to be recertified as a firefighter in less than three weeks. At the time, Monk was 47 years old and suffering from diabetes and hypertension. He had not been a firefighter for about 10 years. Monk thought the imposition of a short time frame to recertify was unfair, as new probationary firefighters are given one year to certify. Nevertheless, he successfully recertified within the allowed time.

Included in our record are letters from the insurance carrier representative and Pacific Rim Investigative Services addressed to Means acknowledging Monk worked part-time for Pacific Rim, that the carrier had contacted Monk in that capacity to inspect the fire, and that Monk had informed the carrier he could not do it because the fire was within the District's jurisdiction. However, he told the carrier he was going to inspect the site anyway and he would let her know what he saw.

At trial, Costamagna stated he was not aware of a letter indicating an insurance carrier had asked Monk to look at the scene and that Monk had responded he could not do the work due to a conflict of interest but he would view the scene and give the carrier a "verbal" at no charge. Costamagna never received that letter from Means.

Monk appealed these disciplines to binding arbitration. By decision dated May 15, 2001, the arbitrator concluded the District had failed to show "just cause" in certain elements of the disciplinary actions. He ordered the disciplinary penalty be limited to a reduction in rank to the rank of arson investigator. He also ordered the District to reinstate Monk immediately to that rank and provide back pay and benefits.

Following the arbitration, the District assigned Monk to perform weed abatement for fire prevention purposes. Means also ordered him to undergo a lie detector test. More than two months passed before the District assigned Monk back to work as an arson investigator.

In September 2001, Monk filed an action against the District seeking an injunction to enforce his rights under the Public Safety Officers Procedural Bill of Rights Act (Gov. Code, § 3300 et seq.) (POBR lawsuit). He asserted the District's actions concerning his Skelly hearings and the disciplinary process had violated that act.

4. 2002 disciplinary proceedings against Monk

By 2002, the District had been formed by merger with other various fire protection districts and had been in operation for over a year. Rick Martinez served as the District's fire chief. Means continued working for the new District as its human resources manager under a new title, deputy chief of human resources.

In February 2002, Monk was notified he would be deposed in a civil action Polly Johnson had filed against the District, Lewis, and others in November 2000. He was deposed on February 27, 2002.*fn4

On April 9, 2002, Means issued Monk a fourth notice of proposed discipline, placed him on administrative leave with pay, and suspended his peace officer status. This notice accused Monk of insubordination, dishonesty, and other failure of good behavior. The proposed discipline was termination of employment. Means forbade Monk from having contact with any district employee except union representation, and she prohibited him from entering any District facility. She also restricted Monk from contacting her office for any purpose other than providing a phone number where he could be reached.

Means alleged three separate incidents that justified Monk's termination. First, despite being ordered in July 2001 not to discuss while on duty the possibility of suing the District, Monk had discussed his legal action while on duty and had used it to attempt to intimidate his supervisor.

Second, Monk had lied to his superior. Investigator McKinnon, now the District's supervising arson investigator, had asked Monk to order certain photos from DMV. On January 11, 2002, Monk said he had done so, but DMV was backed up and could not give him an estimated completion date. However, a few moments after this conversation, McKinnon heard Monk on the phone ordering the photos from DMV. When McKinnon confronted Monk about the deception, Monk said, "That is on me. I won't do that again." Means had learned about this incident from a memo McKinnon had authored and sent to her. That memo was dated February 28, 2002, the day after Monk had been deposed in the Polly Johnson litigation.

Third, Monk made statements about an investigator in another agency. After a fatal fire on February 10, 2002, Monk recorded an interview he had with a citizen on March 8, 2002. In the interview, Monk made comments that questioned the conduct of an agent from the Bureau of Alcohol, Tobacco, and Firearms (ATF). As a result of his comments, ATF was now refusing to work with the District on any investigations to which Monk was assigned. In addition, Monk had told the citizen if she thought his comments were unsatisfactory to contact her local elected official or the District. Despite having time to record this interview, Monk had yet to file even a preliminary report on the fire.

Means scheduled a Skelly hearing on these charges for April 17, 2002.

At trial, Monk testified as to each allegation. Regarding conversations about suing, Monk admitted he had conversations with District personnel during working hours about suing the District, about possibly suing McKinnon, and about McKinnon maybe being subject to criminal liabilities. He admitted receiving a counseling memo from the District directing him not to do that, but he believed he was directed not to discuss these matters during work hours at the District. Monk claimed he did not have these discussions at the District. He also admitted his union had cautioned him in a letter not to discuss his legal issues while at work or with individuals other than his attorney.

Regarding the alleged lie to McKinnon, Monk stated the call McKinnon overheard was when he reordered the photos. He had called DMV when he was asked to do so, and was told DMV could not get to it. Monk offered to call back later, and the DMV employee agreed. Without explaining his meaning, Monk admitted saying to McKinnon, "That one is on me. I won't do that again."

The incident regarding statements Monk made about an ATF investigator arose from a complaint made by a citizen to Monk about the investigator. The citizen had called Monk to inform him the ATF investigator had used his girlfriend to conduct some of the investigation; specifically, to ask hospital personnel whether the surviving victim of the fire would kill his family. With the citizen's permission, Monk tape recorded the citizen's statement, transcribed it, and turned in a copy of the transcription and a report of the matter to McKinnon.

Monk had told the citizen that because the ATF agent worked for a different agency, any concerns she had about the agent would become political. Monk suggested if she had continuing concerns, she could contact her elected official. Monk also told her that because of the politics, he did not want to get involved with any investigation of this matter. He also provided the citizen with the District's office phone number in the event she was not satisfied with his response on this issue.

A few days after turning in the report to McKinnon, Monk received an irate phone call from the ATF agent mentioned in his report. The agent had apparently received a copy of the report from McKinnon. The agent informed Monk ATF would not work with him on future cases.

At the Skelly hearing on April 17, 2002, Monk appeared with his counsel and some witnesses he wanted to testify on his behalf, including the citizen who contacted him regarding the ATF agent. The hearing officer was Deputy Chief Jim Ritter. Monk testified at trial he had experienced no disputes or problems with Ritter before, and he had no reason to believe Ritter would be unfair to him in the hearing.

The hearing, however, never commenced. Means refused to allow Monk's witnesses to testify, claiming live testimony was not appropriate at a Skelly hearing. Monk's attorney and Means got into a heated discussion over the issue. Means agreed to allow Monk to call witnesses if his attorney could provide legal authority that supported his position. Means also stated any written statements by witnesses could be considered at the Skelly hearing. Following this dispute, the hearing did not proceed. At no time did Monk present his evidence opposing the proposed discipline to the District.

Monk's attorney and Means exchanged correspondence attempting to resolve this debate. Monk's attorney acknowledged he could not find any reported authority on point, but he continued to argue for presentation of witnesses. Nevertheless, he confirmed Monk had not waived his right to a Skelly hearing, and they would proceed with the hearing without calling live witnesses. Monk's attorney was then in a trial, and he agreed to work with Means to schedule a date when he was available.

By letter dated April 25, 2002, Means acknowledged Monk's attorney's scheduling dilemma, but stated the District required a hearing date within the next week. If that could not be accomplished, the District would assume Monk had waived his right to a hearing. A waiver of the hearing would result in the District imposing the proposed discipline, termination.

After having additional discussions with Means, Monk's attorney forwarded to Means a letter proposing settlement of Monk's dispute with the District. Monk would agree to retire upon reaching age 50, a point in time when his lifetime medical insurance coverage vested, and he would dismiss his POBR lawsuit against the District, if the District would agree to withdraw the April 9, 2002, notice of proposed discipline, place Monk on annual leave and sick leave until he reached retirement at age 50, and at that time provide Monk all retirement and health benefits as if his retirement were under ordinary retirement circumstances.

Monk understood if he was terminated before his lifetime medical coverage vested at age 50, he would lose that retirement benefit. That coverage was important to him because of his ongoing health problems. He believed it was not worth the risk of losing those benefits by fighting the pending discipline in a Skelly hearing and, if necessary, by means of arbitration because he had not been treated fairly so far and it was unlikely the District would change its pattern of conduct. He felt he was given no choice but to retire because he needed lifetime medical coverage.

Monk and the District entered into a written settlement agreement dated August 9, 2002. In the agreement, the parties stated they desired to resolve the pending disciplinary action against Monk and the pending litigation against the District. The District agreed to hold the proposed disciplinary action against Monk in abeyance, and Monk agreed to retire according to the terms noted above. The District agreed to terminate the disciplinary proceeding upon the effective date of Monk's retirement. Monk agreed to dismiss with prejudice his action against the District and "any and all other claims" against the District "for alleged violations of the California Public Safety Officers Procedural Bill of Rights . . . ." The agreement did not contain a waiver of any other known or unknown claims or of Civil Code section 1542's limitation on the scope of a general release to only known claims.

Monk retired effective February 25, 2003, and has been receiving full retirement benefits since then.

5. This lawsuit

364 days after retiring, Monk filed this action against the District on February 24, 2004. It went to trial in October 2008. Two causes of action went to the jury: retaliation under Labor Code section 1102.5 and constructive discharge. As stated above, the jury found the District liable for retaliation but not for constructive discharge. By means of a special verdict on the retaliation count, the jury determined Monk reported Lewis's conduct to the Deputy District Attorney and testified at a deposition filed against Lewis and the District; the District engaged in conduct that, taken as a whole, materially and adversely affected the terms and conditions of Monk's employment; Monk's reporting to the Deputy District Attorney and testifying at his deposition were a motivating reason for the District's conduct affecting his employment; the District's conduct was a substantial factor in causing harm to Monk; and the District's actions against Monk were a continuing course of conduct. The jury awarded Monk future economic damages in the form of lost pension benefits of $574,191 and non-economic damages of $100,000.

As to the constructive discharge count, the special verdict form asked the jury to determine whether Monk had been subjected to working conditions that violated public policy, in that he was treated intolerably in retaliation for reporting the conduct of Lewis to the District Attorney and for testifying at a deposition in Polly Johnson's lawsuit against Lewis and the District. The jury answered this question "no" and ended its consideration of the constructive discharge claim.

The District moved for a new trial, judgment notwithstanding the verdict (JNOV), and to vacate the judgment. The trial court denied the new trial motion, but it granted the JNOV motion and motion to vacate as to the jury's award of $574,191 in economic damages in the form of lost pension benefits. Because the jury determined Monk was not constructively terminated, he was not entitled to economic damages in the form of lost pension benefits. The court did not disturb the jury's award of $100,000 in non-economic benefits.

Both Monk and the District appeal. We turn first to the District's appeal.



District's Appeal

The District challenges the judgment finding it committed retaliation in violation of Labor Code section 1102.5. It argues (1) Monk's claim for any damages, including the $100,000 awarded in non-economic damages, due to retaliation arising from the 2000 disciplinary proceedings and the 2002 disciplinary proceedings was barred under the statute of limitations for damages arising from the 2000 proceedings and under the settlement agreement for damages arising from the 2002 proceedings; (2) there was insufficient evidence to sustain the jury's finding of retaliation; and (3) the court committed prejudicial error by admitting certain hearsay evidence. We disagree with each of the District's claims.

A. Application of Statute of Limitations and Settlement Agreement

The District argues Monk's claim for retaliation is barred. It is allegedly barred by a one-year statute of limitations to the extent it arises from the 2000 disciplinary proceedings, and by the 2002 settlement agreement to the extent the claim arises from the 2002 disciplinary proceedings. We disagree with each argument.

1. Claim based on 2000 disciplinary proceedings

In its motion for JNOV, the District argued Monk's retaliation claim, to the extent it arose from the 2000 disciplinary proceedings, was barred by a one-year statute of limitations that had not been tolled by any continuous course of conduct. The trial court rejected the District's argument, ruling the District had engaged in a continuous course of retaliation against Monk. We agree with the result reached by the trial court, but we reach it by a different path.

The District argues the trial court's ruling is incorrect. It asserts Monk's claim, to the extent it arises from the 2000 disciplinary proceedings, is barred by the one-year statute of limitations of former Code of Civil Procedure section 340, subdivision (3), and that no continuing course of conduct tolled the accrual of that statute. At the time of the 2000 disciplinary proceedings, Code of Civil Procedure section 340, subdivision (3), granted one year for filing an action "for injury to . . . one caused by the wrongful act or neglect of another . . . ." (Stats. 1982, ch. 517, § 97; see Barton v. New United Motor Manufacturing, Inc. (1996) 43 Cal.App.4th 1200, 1209 (Barton) [action for wrongful discharge in violation of public policy governed by Code Civ. Proc., former § 340, subd. (3)].)

The District applies the wrong statute of limitations. "The statute of limitations to be applied in a particular case is determined by the nature of the right sued upon or the principal purpose of the action, not by the form of the action or the relief requested. [Citations.]" (Barton, supra, 43 Cal.App.4th at p. 1207, italics added.) Here, the nature of the right sued upon, an act of retaliation in violation of Labor Code section 1102.5, is a "liability created by statute, other than a penalty or forfeiture." (Code Civ. Proc., § 338, subd. (a).) Such actions based on statutory liabilities are governed by a three-year statute of limitations. (Ibid.)

The three-year statute of limitations applies "where the liability is embodied in a statutory provision and was of a type that did not exist at common law." (3 Witkin, Cal. Procedure (5th ed. 2008) Actions, § 664, p. 878.) Although a violation of Labor Code section 1102.5 can be similar to the tort of wrongful discharge in violation of public policy, it is distinct in that it imposes a separate liability for retaliating against an employee who reports the employer's unlawful conduct to a government or law enforcement agency. We are not aware of a common law liability for retaliating against an employee under these specific grounds, and thus conclude the three-year statute of limitations applicable to statutory liabilities applies to violations of Labor Code section 1102.5.

The District claims Monk's retaliation action related to the 2000 disciplinary proceedings accrued by at least September 2001 upon the conclusion of the arbitration. If that is so, Monk's claim was barred effective September 2004. He filed his complaint in February 2004, well before the statute of limitations expired. Because the statute had not expired when Monk filed this action, we need not discuss the parties' arguments regarding whether the District engaged in a continuous course of conduct for purposes of tolling the statute of limitations.

2. Claim based on 2002 disciplinary proceedings

At the beginning of trial, the trial court denied a District in limine motion and ruled the settlement agreement did not preclude Monk's causes of action for retaliation and constructive discharge as related to the 2002 disciplinary proceedings. As a result, Monk was allowed to introduce evidence of postsettlement economic damages. Monk claimed his retirement was a constructive discharge, and if he had worked until his retirement age of 55, his pension over his lifetime would have been larger.

On its JNOV motion, the District again argued Monk's claims arising from the 2002 disciplinary proceedings were precluded by the settlement agreement. The trial court did not change its earlier ruling. Unlike reported cases where mandamus was denied for seeking to set aside a disciplinary action to which the petitioner had agreed, this case did not attempt to vacate or set aside any provision of the settlement agreement. Monk alleged the retaliation left him with no alternative but to enter into the settlement agreement, and he allegedly suffered economic damages because of that. The agreement did not bar an action to recover those damages, and a damage award would not affect the agreement.

The District argues the trial court erred, and that the settlement agreement bars Monk from recovering any damages based on the 2002 disciplinary proceedings. We disagree. The agreement was narrowly drawn to settle Monk's POBR lawsuit and the District's 2002 disciplinary proceedings. It did not include within its scope a claim by Monk that the agreement itself was the result of retaliation and a constructive discharge.

"'[A] valid compromise agreement has many attributes of a judgment, and in the absence of a showing of fraud or undue influence is decisive of the rights of the parties thereto and operates as a bar to the reopening of the original controversy.' [Citation.] [¶] Compromise agreements are, of course, 'governed by the legal principles applicable to contracts generally.' [Citation.] They 'regulate and settle only such matters and differences as appear clearly to be comprehended in them by the intention of the parties and the necessary consequences thereof, and do not extend to matters which the parties never intended to include therein, although existing at the time.' [Citations.]" (Folsom v. Butte County Assn. of Governments (1982) 32 Cal.3d 668, 677.)

The settlement agreement's language does not disclose an intent by the parties to prohibit Monk from raising claims of retaliation over the course of Monk's employment or even that the agreement is the result of a course of retaliation or a constructive discharge. The agreement is narrowly drawn to resolve only Monk's POBR lawsuit and the 2002 disciplinary proceedings against him. It makes no mention of affecting or waiving any other claims by either party against the other, known or unknown.

The District argues the settlement of the 2002 disciplinary proceedings cannot be attacked unless upon a showing of duress, one which it claims Monk did not make here. The District reads the relevant law too narrowly. "Settlements of disciplinary proceedings are binding in the absence of a showing of fraud, mistake, undue influence, or duress . . . ." (Alhambra Police Officers Assn. v. City of Alhambra Police Dept. (2003) 113 Cal.App.4th 1413, 1420.) Here, Monk alleged the settlement of his 2002 disciplinary proceedings was the result of undue influence. He claimed the continuing pattern of retaliation that in 2002 threatened his termination was so intolerable or aggravated that it effectively forced him to retire by means of the settlement agreement. Such a settlement agreement, the result of undue influence, would not be enforceable. The settlement of the disciplinary proceeding did not bar Monk's claim.

B. Sufficiency of Evidence to Sustain Retaliation Verdict

The District claims the jury's verdict of retaliation under Labor Code section 1102.5 is not supported by sufficient evidence. It claims Monk failed to establish the elements of a violation of that statute; namely, that he was retaliated against for his complaint to a law enforcement officer of possible illegal activity by District personnel, and that the District's actions against him were a pretext for retaliation. We disagree.

"Labor Code section 1102.5, subdivision (b), provides that an 'employer may not retaliate 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, or a violation or noncompliance with a state or federal rule or regulation.' A retaliation claim may be proved in two different ways.

"First, a plaintiff may prove retaliation by circumstantial evidence. In these cases, the plaintiff is required to first establish a prima facie case of retaliation. Once established, the defendant must counter with evidence of a legitimate, nonretaliatory explanation for its acts. If the defendant meets this requirement, the plaintiff must then show the explanation is merely a pretext for retaliation. (Patten v. Grant Joint Union High School Dist. (2005) 134 Cal.App.4th 1378, 1384 (Patten); see also Akers v. County of San Diego (2002) 95 Cal.App.4th 1441, 1453.)

"Second, retaliation may be proved by direct evidence. 'Where a plaintiff offers direct evidence of discrimination that is believed by the trier of fact, the defendant can avoid liability only by proving the plaintiff would have been subjected to the same employment decision without reference to the unlawful factor.' (Morgan v. Regents of University of California (2000) 88 Cal.App.4th 52, 67-68 (Morgan).) Where direct evidence of retaliation is shown, the burden shifting analysis imposed in circumstantial evidence cases does not apply. (Id. at p. 68.)

"To establish a prima facie case of retaliation 'a plaintiff must show (1) [he] engaged in a protected activity, (2) [his] employer subjected [him] to an adverse employment action, and (3) there is a causal link between the two.' (Patten, supra, 134 Cal.App.4th at p. 1384.) An employee engages in protected activity when [he] discloses to a governmental agency '"reasonably based suspicions" of illegal activity.' (Green v. Ralee Engineering Co. (1998) 19 Cal.4th 66, 86-87.)" (Mokler v. County of Orange (2007) 157 Cal.App.4th 121, 138.)

The District claims Monk failed to establish a prima facie case of retaliation because there is no evidence establishing any causal link between the disciplinary proceedings against him and his reporting Lewis's actions to Deputy District Attorney Margarita and testifying in his deposition in the Polly Johnson lawsuit against Lewis and the District.

Assuming Monk established a prima facie case, the District also claims Monk failed to establish the District's reasons for imposing discipline were a pretext for retaliatory action.

Substantial evidence supports Monk's establishing a prima facie case of retaliation. First, the evidence shows Monk engaged in protected activity. He reported Lewis's falsification of a police report to Deputy District Attorney Margarita, a government or law enforcement official. He did so reasonably believing Lewis's action constituted a violation of state or federal law.*fn5

Second, the District subjected Monk to an adverse employment action. Approximately two months after Monk reported Lewis's action to Margarita, Means suspended Monk from employment, and shortly thereafter issued the first of three notices of proposed discipline she issued against him in a period of two months. These resulted in Monk being demoted from a supervising arson inspector to a line firefighter.

Third, substantial evidence establishes a causal link between Monk's protected activity and the adverse employment action the District took against him. "'"The causal link may be established by an inference derived from circumstantial evidence, 'such as the employer's knowledge that the [employee] engaged in protected activities and the proximity in time between the protected action and allegedly retaliatory employment decision.'" [Citation.]' [Citation.] 'Essential to a causal link is evidence that the employer was aware that the plaintiff had engaged in the protected activity.' [Citations.]" (Morgan, supra, 88 Cal.App.4th at pp. 69-70.)

Here, District officials knew Monk had reported Lewis's actions to Margarita. Monk's boss, Fire Marshal Brown, was in the meeting where Monk first reported Lewis's falsification of the Polly Johnson police report to Margarita. Margarita knew nothing about this incident until Monk told him while at the meeting with Brown. It was Brown's practice to convey such employment information directly to the fire chief.

Margarita then repeated this information in his letter to Brown which Brown shared with Means and Costamagna. Moreover, the disciplinary actions against Monk began soon after Monk and Brown met with Margarita, and particularly soon after the disciplinary action against Lewis was concluded. These facts are substantial evidence of a causal link for purposes of Monk establishing a prima facie case of retaliation.

Because Monk established a prima facie case, the burden of proof shifted to the District to establish legitimate reasons for its actions against Monk. Once the District satisfied that requirement, the burden of proof shifted back to Monk to establish the District's reasons were a pretext for engaging in unlawful retaliation. The District claims no substantial evidence supports the jury's determination that its reasons justifying its actions against Monk were pretextual.

We disagree with the District. Substantial evidence exists on which the jury could determine the District's actions were pretextual. Although the District introduced significant evidence establishing legitimate grounds for disciplining Monk, there was also substantial evidence establishing a pretextual element in addition to the District's legitimate grounds, particularly in the actions by Means. Means first suspended Monk from work without giving him a notice of proposed discipline. She proposed disparate treatment of Monk when compared with her actions against Lewis. Despite Lewis's more serious actions, Means did not suspend Lewis from work like she did Monk, nor did she impose as severe discipline on Lewis. In addition, the arbitration award confirmed Monk's demotion to firefighter had been unwarranted. And even though the arbitrator ordered the District to reinstate Monk immediately to his duties as an arson inspector, the District instead placed Monk on weed abatement duty. Shortly thereafter, Means issued another notice of proposed discipline against Monk.

This evidence constitutes substantial evidence supporting the jury's determination that the District's reasons for taking action against Monk were pretextual. We thus affirm the jury's determination of liability under Labor Code section 1102.5.

C. Admission of Hearsay Evidence

The District claims the trial court erred by admitting hearsay evidence it claims was prejudicial to the outcome. It argues this was a close case, decided by the jury on a vote of six to two, the minimum needed for Monk to prevail on his retaliation cause of action. In such a close case, the District argues, we should conclude the error was prejudicial. We conclude the error was not prejudicial.

1. Additional background information

Fire Chief Don Mette, who replaced Rick Martinez as chief of the District, was asked by Monk's attorney whether he learned that Martinez's relationship with Teresa Means was "of an intimate nature." The District's attorney objected. Monk's attorney stated the information went "to bias." At that point, a sidebar discussion was held. Then the testimony went as follows:

"Q. BY MR. VELEZ [Monk's counsel]: Chief Mette, if I may, again, you know who Captain Sinclair is?

"A. Yes.

"Q. You know who Jeffery Rinek is?

"A. Yes.

"Q. Was there an investigation by Jeffery Rinek into Captain Sinclair that revealed facts to you indicating that Chief Martinez had an intimate relationship with Teresa Means?

"A. There was an interview done by Jeffery Rinek, who was a private investigator for the district, of Captain Sinclair, who made that statement.

"Q. And that was done within the course and scope of your duty, yes?

"A. Yes.

"Q. You ordered that interview?

"A. Yes.

"Q. And the facts that came out of that interview of Captain Sinclair were such that he had firsthand knowledge indicating that Rick Martinez was intimate with Deputy Chief Teresa Means, yes?

"MR. SCHMIDT [District's counsel]: Objection. We've got hearsay and speculation.

"THE COURT: All right. The objection is overruled and the evidence is admitted. And the court admits the evidence under Evidence Code section 352."

Chief Mette then testified he had learned that Martinez and Means had engaged in "inappropriate touching" at the workplace. Mette viewed that conduct as completely inappropriate by a fire chief and a deputy chief of human resources.*fn6

In his closing argument, counsel for Monk stated Means's lack of credibility would be one of his themes. Expounding on that theme, counsel reiterated that Means and Martinez initiated the 2002 discipline process against Monk, and they were obligated to give him a fair Skelly hearing at the same time they were having an intimate relationship. Counsel argued the relationship was why Martinez approved or directed actions against Monk.

2. Analysis

Hearsay evidence is inadmissible unless it comes within an established exception. (Evid. Code, § 1200, subd. (b).) Chief Mette's testimony given after the court overruled opposing counsel's objection and concerning the out of court statement Sinclair made to Rinek, admitted for the truth of the matter Sinclair asserted, was hearsay that did not qualify for admission under an established exception. The trial court erred in admitting the statement over counsel's objection.

We review violations of state evidentiary rules under the standard of People v. Watson (1956) 46 Cal.2d 818, to determine whether the error was prejudicial. Under that standard, we must determine whether it is reasonably probable a result more favorable to the District would have occurred absent the erroneous admission of the hearsay testimony. (Id. at p. 836.)

Applying that standard to this case, we conclude the error was not prejudicial. Some of the challenged evidence came in without being subject to an objection. Counsel for the District did not object when Chief Mette acknowledged that Captain Sinclair had stated Chief Martinez was having an intimate relationship with Means. Thus, there is no prejudice when that testimony is again admitted over an objection.

Moreover, even if the hearsay evidence had not been admitted, it is not likely the District would have achieved a more favorable result. Much of the retaliation occurred before Martinez became chief of the District and Means's boss. There was sufficient evidence from Means's behavior alone, separate from any evidence about Martinez or their relationship, on which the jury more likely than not would have found the District liable for retaliation. Admitting the hearsay evidence thus was not prejudicial error.


Monk's Appeal

Generally, a prevailing plaintiff in employment tort litigation is entitled to damages in the form of back pay less sums obtained through mitigation. (Chin et al., Cal. Practice Guide: Employment Litigation (The Rutter Group 2010) ¶ 17.291, p. 17-43 (rev. # 1 2011).) Although no published California court opinion appears to address the scope of recovery for an employee who resigns after being discriminated against, federal courts that have addressed the issue have held that an employee who resigns or retires after being discriminated against may not recover back pay for the period following his resignation or retirement unless he was constructively discharged. (See Sanchez v. City of Santa Ana (9th Cir. 1990) 915 F.2d 424, 431; Satterwhite v. Smith (9th Cir. 1984) 744 F.2d 1380, 1381, fn. 1.)

The trial court granted JNOV on account of this federal rule. It denied Monk an award of back pay in the form of increased pension benefits he would have received had he remained employed by the District because Monk was not constructively discharged.

Monk's appeal challenges the application of this damages rule. He first claims there was substantial evidence on which the jury could have determined he was actually terminated by the District and thus entitled to the award of damages. Second, and in the alternative, Monk asserts he was not required to prove constructive discharge in order to receive an award of damages for retaliation under Labor Code section 1102.5. He asserts a causal relationship between the District's retaliation and his loss of pension benefits consisting of something less than constructive discharge is sufficient to justify an award of lost pension benefits, and that substantial evidence supports the existence of this causal relationship here. We conclude substantial evidence supports neither assertion.

A. Standard of Review

Before discussing Monk's claims, we briefly explain the standard of review on an appeal from a JNOV. The trial court may grant a defendant's motion for JNOV "when, disregarding the conflicting evidence, and indulging in every legitimate inference in favor of the plaintiff, the result is a determination that there is no evidence of substantial nature to support the verdict. The trial court, on such motion, is not permitted to weigh the evidence, and on an appeal from the judgment entered on the granting of such a motion, the appellate court must read the record in the light most advantageous to the plaintiff, resolve all conflicts in his favor, and give him the benefit of all reasonable inferences in support of the judgment." (Quintal v. Laurel Grove Hospital (1964) 62 Cal.2d 154, 159.) "In other words, we apply the substantial evidence test to the jury verdict, ignoring the judgment." (Hasson v Ford Motor Co. (1977) 19 Cal.3d 530, 546, overruled on a different ground in Soule v. General Motors Corp. (1994) 8 Cal.4th 548, 574, 580.)

B. Sufficiency of Evidence Supporting a Determination that the District Actually Terminated Monk

Monk asserts he is entitled to an award of postretirement economic damages in the form of lost pension benefits because the jury could have determined on this record that he was actually terminated, as opposed to being constructively terminated. We disagree with this claim, as there was no evidence he was actually terminated.

Monk relies upon two District letters as evidence he was actually terminated. The first, the April 9, 2002, notice of proposed discipline, informed him the District intended to terminate him, and it would do so if he chose not to exercise his Skelly hearing rights. The second letter is the April 25, 2002, letter Means sent to Monk's attorney informing him if they could not schedule a Skelly hearing within a week, the District would assume Monk had waived his hearing rights.

Monk argues that because no Skelly hearing took place on the 2002 notice of proposed discipline, the jury could conclude the District terminated him just as the District said it would if no hearing was scheduled. Monk also claims the settlement agreement simply implemented this actual termination.

No evidence in the record supports this line of reasoning. Nowhere is there any testimony or document establishing the District actually terminated Monk after Means sent the April 25 letter. The evidence that exists on the subject is to the contrary. Monk's own attorney wrote after receiving the April 25 letter that he and Means had held further discussions, resulting in his offer on behalf of Monk to settle the dispute. That settlement proposal, which became the agreement between the parties, included Monk remaining an employee of the District until he turned age 50, and then Monk would retire. Prior to retiring and while still an employee, Monk would receive all benefits and credits applicable when an employee is on annual leave and sick leave status. The District agreed to these terms, and at no time terminated Monk's employment. There is no basis on which the jury could have concluded the District actually terminated Monk.

C. Damages for Causal Relationship Less than Constructive Discharge

Monk asserts that even if he was not actually or constructively discharged, he was still entitled to an award of postretirement economic damages in the form of lost pension benefits because the District's actions, although not so offensive and intolerable as to amount to an actual or constructive discharge, nonetheless left him with no alternative except to retire. Otherwise, he risked what he asserts was certain termination and loss of his lifetime medical coverage. He claims this type of causal relationship is sufficient to be awarded postretirement economic damages in the form of lost pension benefits.

In Richards v. CH2M Hill, Inc. (2001) 26 Cal.4th 798, 824, footnote 5, our Supreme Court specifically left undecided the issue of whether an employee may obtain monetary damages when the employee resigns and the resignation does not rise to the level of a constructive discharge. We, too, need not answer this question here in order to resolve this appeal.

We will assume, for purposes of argument only, that Monk would be entitled to damages if he could show the District's retaliation left him with no reasonable alternative except to resign. Unfortunately for Monk, no substantial evidence supports his claim that he had no viable alternative to resigning from the District.

Instead of resigning, Monk could have proceeded to have the Skelly hearing on the 2002 proposed discipline. There, he could have presented his rebuttal evidence to the charges as he did at trial, even if it consisted only of his testimony and the written statements of witnesses. Despite the evidence of retaliation in the past, particularly by Means, nothing in the record indicates the outcome of the Skelly hearing was a foregone conclusion based on a retaliatory motive. Indeed, Monk had already participated in a Skelly hearing where Chief Costamagna determined not to impose the discipline Means had recommended, but instead imposed a lesser discipline. And the hearing officer for the 2002 Skelly hearing was a person Monk had no reason to believe would be unfair to him.

If the Skelly hearing had resulted in termination, Monk was still not without options. He could appeal that decision to binding arbitration by a neutral arbitrator, where he would be allowed to introduce live testimony and rebut the charges against him fully. Again, the outcome of such an arbitration was in no way a foregone conclusion. Monk had already participated in arbitration where the arbitrator reduced the discipline the District had imposed on him and ordered a lesser discipline with back pay and benefits.

To recover economic damages in the form of lost pension benefits, Monk must show he would not have lost the additional pension benefits but for the District's retaliation, and that there was no intervening, superseding cause. (Civ. Code, § 3333.) Although the evidence supports the jury's determination that the District retaliated against Monk over the course of his employment, it does not support Monk's assertion that he would not have lost his pension benefits but for the District's retaliation. He lost those additional benefits because he retired. And he retired even though there was a reasonable alternative to retirement for him to vindicate his position, retain his employment with the District, and thereby preserve the health benefits he feared losing. Monk's argument thus does not overcome the trial court's decision to strike the award of postretirement economic damages.


The judgment is affirmed. The parties shall bear their own costs on appeal. (Cal. Rules of Court, rule 8.278(a).)

We concur: ROBIE , J. BUTZ , J.

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