APPEAL from a judgment of the Superior Court of San Diego County, Judith F. Hayes, Judge. (Super. Ct. No. 37-2010-00089897-CU-OE-CTL)
The opinion of the court was delivered by: Irion, J.
CERTIFIED FOR PUBLICATION
The question on this appeal from a judgment of dismissal after a demurrer was sustained without leave to amend is whether, under Government Code section 996.4 or Labor Code section 2802, an employee of a public agency who is hired into a different position within the agency has a right to reimbursement from the agency for attorney fees and other expenses the employee incurred in an investigation by law enforcement of potential conflicts of interest in the hiring, when no formal civil action or proceeding was commenced against the employee. We hold the answer is no and affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
Because this case comes to us after entry of a judgment of dismissal based on the sustaining of a demurrer without leave to amend, we accept as true the well-pleaded material allegations of the complaint. (Shoemaker v. Myers (1990) 52 Cal.3d 1, 7.) Those allegations are as follows:
In January 2000, Governor Gray Davis appointed Cynthia K. Thornton to the California Unemployment Insurance Appeals Board (the Board), and elevated her to chairperson in May of that year. Thornton held that position until her term expired in October 2005.
After Thornton had chaired the Board for two years, several long-term employees of the Board encouraged her to take an examination that, if passed, would allow her to serve as an administrative law judge (ALJ) for the Board and other state agencies. She passed the examination and was added to the list of candidates eligible for ALJ positions.
Near the end of Thornton's term as chairperson of the Board, the Board's executive director offered her a job as an ALJ for the Board. The executive director and the Board's chief counsel assured Thornton it was permissible for a Board member to be offered and to accept a position as an ALJ for the Board. Thornton accepted the offer, and she began her duties as an ALJ in the Board's San Diego office in November 2005.
After Thornton was hired, the Board's executive director "expressed concern that he would be criticized by the incoming [Governor] for hiring a [Board] member . . . who had [been] appointed by the prior Governor from the other political party." The executive director therefore "took the unusual step of asking the [Board] to vote on the job offer to [Thornton] for 'political cover' -- even though she had already been offered the job." The Board, "without input or participation from [Thornton]," voted to extend her an offer for a position as an ALJ.
Three years after Thornton began her duties as an ALJ, the State Auditor issued a report concerning, among other matters, the Board's hiring practices. The report mentioned the hiring of a former Board member as an ALJ for the Board. Although the report did not name Thornton, the hiring referred to was hers. The State Auditor was required to, and did, refer the matter to the Sacramento County District Attorney and the Attorney General for investigations into whether Thornton's hiring violated Government Code section 1090*fn1 or any other state conflict of interest laws.*fn2
After Thornton learned of these referrals, she retained an attorney to assist her with the investigations. The attorney had numerous conversations with and wrote several letters to the investigating authorities.
In January 2009, Thornton's attorney requested that the Board provide her with a defense pursuant to Government Code section 995. The Board denied the request.
By April 2009, the district attorney and the Attorney General informed Thornton's attorney that they had concluded their investigations and would not be filing either a civil claim or a criminal charge against Thornton. The following month, Thornton filed a claim under the Government Claims Act (Gov. Code, § 810 et seq.) for reimbursement of the attorney fees and other expenses she incurred in connection with the investigations, but the claim was rejected.
Thornton sued the Board for reimbursement of the attorney fees and other expenses she incurred in responding to the district attorney's and the Attorney General's investigations of the circumstances of her hiring as an ALJ for the Board. In her complaint, Thornton asserted she was entitled to reimbursement ...