Public Sector Case Notes

by

PUBLIC SECTOR CASE NOTES

By J. Scott Tiedemann and Kaylee E. Feick

Scott Tiedemann is the Managing Partner of Liebert Cassidy Whitmore, California’s largest public sector labor, employment and education law firm. He is the author of the CPER Pocket Guide to the Firefighters Procedural Bill of Rights, as well as a chapter on that topic in California Public Sector Employment Law. Kaylee Feick is an Associate in Liebert Cassidy Whitmore’s Los Angeles office, where she provides representation and counsel to clients in all matters pertaining to labor, employment, and education law. She provides support in litigation claims for discrimination, harassment, retaliation, wage and hour disputes, and other employment matters. Kaylee can be reached at (310) 981-2735 or kfeick@lcwlegal.com.

FINAL DECISION MAKER’S INVOLVEMENT EXCUSED EMPLOYEE FROM EXHAUSTING HIS ADMINISTRATIVE APPEAL

Briley v. City of W. Covina, 66 Cal. App. 5th 119 (2021)

Jason Briley worked for the City of West Covina (City) as a deputy fire marshal. In this role, Briley oversaw the operations of the Fire Prevention Bureau, which included checking building plans and existing buildings for Fire Code compliance and conducting fire investigations. Assistant Fire Chief Larry Whithorn supervised Briley for part of his employment.

In June 2014, Briley complained that several City officials, including Whithorn and the City Manager, had failed to address his reports of Fire Code violations, and issued a building permit before the building plans had passed fire inspection. The City hired a private firm to investigate Briley’s allegations. After making his initial complaint, Briley also complained that Whithorn and others had retaliated against him by canceling his scheduled overtime, moving him to a smaller office, and changing his take-home vehicle. The pending investigation included these new allegations. During this time, Briley also filed similar grievances and alleged that Whithorn retaliated against him with a poor performance review.

In January 2015, the investigating firm concluded that Briley’s allegations were largely unfounded. Then Assistant City Manager Chris Freeland adopted the firm’s findings. Whithorn’s relationship with Briley became "strained" as a result of the investigation.

While this investigation was still pending, Whithorn and the City Manager also informed the City of multiple complaints against Briley involving allegations of misconduct and unprofessional behavior. Specifically, Briley was alleged to have: 1) addressed a fire captain in an unprofessional manner, and used profanity in addressing a retail worker when responding to a fire alarm at a store; 2) improperly obtained a prospective City employee’s personnel form; and 3) used profanity in addressing individuals at a CrossFit gym. The City retained another firm to investigate the allegations against Briley. The investigation ultimately determined that Briley had exhibited a pattern of unbecoming conduct, unprofessional behavior, and incompetence, and that Briley had been untruthful. By this time, Whithorn had been promoted to Fire Chief.

As Fire Chief, Whithorn issued Briley a notice of intent to terminate. After a pre-termination meeting, another City official decided to uphold Briley’s termination and issued him a notice of termination. Through his counsel, Briley protested his termination and asserted it was "clearly further retaliation against him."

In December 2015, Briley initiated an administrative appeal of his discipline to the City’s Human Resources Commission (HR Commission). The City’s rules provide that the HR Commission must grant the employee an evidentiary hearing and deliver its recommendations to relevant City officials. For Briley’s appeal, Whithorn and Freeland would have been the ultimate decisionmakers following the HR Commission’s review. Around this same time, Freeland, who had adopted the investigation firm’s findings that Briley’s retaliation claims were largely unfounded, had been promoted to City Manager.

While the HR Commission scheduled Briley’s appeal, Briley’s counsel notified the Commission that Briley would not proceed because the appeal hearing would be futile for several reasons, including that Freeland and Whithorn were biased against him. Briley then initiated a civil lawsuit against the City alleging whistle-blower retaliation under Cal. Lab. Code § 1102.5. The City argued that Briley could not pursue his claims because he failed to exhaust his administrative remedies, but

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the trial court disagreed. Instead, the court concluded that Briley was excused from pursuing an appeal to the HR Commission. The matter proceeded to trial, and the jury awarded Briley $4 million, including $3.5 million in non-economic damages. The City appealed.

On appeal, the City claimed, among other arguments, that the trial court: erred in concluding that Briley was not required to exhaust his administrative remedies; and abused its discretion in failing to reduce the jury’s excessive award for non-economic damages.

The Court of Appeal found for Briley on the failure to exhaust remedies defense. The Court relied solely on Whithorn’s involvement in the underling dispute and his expected role in deciding Briley’s appeal. Although the Court found the standard for impartiality in an administrative hearing was lower than in judicial proceedings, the Court determined that Whithorn’s involvement in the administrative appeal violated due process. Therefore, Briley was excused from proceeding with his administrative appeal. The Court reasoned that due process entitles a person seeking an evidentiary administrative hearing appeal to "a reasonably impartial, noninvolved reviewer." Whithorn’s role presented an "unacceptable risk" of bias that excused Briley from exhausting this remedy for two reasons: 1) Whithorn’s personal involvement in the same controversies at issue in the administrative appeal; and 2) the significant animosity between them from Briley’s attacks on Whithorn’s integrity. The Court was careful to emphasize that it was not making any blanket finding about bias in administrative hearing decision makers. Instead, the Court held "only that as a matter of due process, an official whose prior dealings with the employee have created substantial animosity and whose own conduct and character are central to the proceeding may not serve as a decisionmaker."

The Court concluded that the $3.5 million non-economic damages award was so excessive that it may have resulted from the jury’s passion or prejudice. At trial, Briley claimed that his termination had caused him "distress" and that the ordeal was "tough" because his livelihood was taken away and he had dedicated eight years to the City. He also stated his termination was "upsetting" and that he had "issues with his sleep" because of financial uncertainty. There was no evidence, however, that any of the problems Briley described were particularly severe. Thus, the Court concluded that the jury’s total award of $3.5 million in non-economic damages was "shockingly disproportionate to the evidence of Briley’s harm and cannot stand." The Court remanded the case for a new trial on Briley’s noneconomic damages.

AGENCY WINS QUALIFIED IMMUNITY FROM SCIENTIST’S CLAIM THAT THE FIRST AMENDMENT PROTECTED HIS ON-DUTY TRIAL TESTIMONY

Ohlson v. Brady, 9 F.4th 1156 (9th Cir. 2021)

The State of Arizona employed Greg Ohlson as a forensic scientist. Ohlson worked in the Department of Public Safety, Scientific Analysis Bureau (Department). His role was to test blood samples for alcohol content, report the findings, and testify about those findings in court.

The Department had a number of quality control policies, including a practice of evaluating the test results for an entire batch of samples. This quality control policy allowed the Department to identify non-conformities and catch instrument failures or malfunctions that skew results. Department policy limited criminal defendants access to only their individual sample results. Absent a court order, they were not permitted access to the remaining samples in the batch.

Ohlson felt strongly that the Department should provide the results of all of the samples within a batch to criminal defendants. On multiple occasions, he suggested to his supervisors that the batch data be released on a public website. Each time, they informed Ohlson that, while the release of batch results may be a good idea, it was not feasible because the Department would need technological help. Ohlson’s supervisors also said they were not authorized to make a Department-wide decision.

Ohlson then began creating a private PDF file of all the data within the batches. Part of Ohlson’s job duties included meeting with defense attorneys for pre-trial interviews. During those interviews, he began instructing defense attorneys to request the data for the entire batch.

In May 2016, Ohlson testified in a criminal proceeding that the disclosure of the entire batch was necessary to ensure the accuracy of the results. He disclosed that he had a PDF of the batch results he could send to the parties if permitted to do so. Ohlson’s supervisors told him he had violated Department policy, counseled him to bring his future testimony in line with policy, and directed him to delete the PDF files.

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After Ohlson strongly expressed his objection, his supervisor gave him a performance notation that instructed him to, among other things, adhere to policies, stop scanning batch results, cease use of job-related legal proceedings to advance his personal views, and align his testimony with the Department’s position.

A few days later, Ohlson testified in another evidentiary hearing expressing that after 35 years of job experience, his personal belief was that batch results should be disclosed. He also expressed his disagreement with his supervisors, stating that it was not in his "best interest in terms of career advancement" to testify as he had.

Following his testimony, the Department placed Ohlson on administrative leave pending investigation by the Professional Standards Unit. After the investigation findings led to a 16-hour suspension, Ohlson gave notice of his retirement.

Ohlson then filed a complaint in federal district court alleging a First Amendment retaliation claim for "testifying truthfully and completely under oath," and advocating within the Department for "a change in the manner in which the Department responds to requests in criminal cases for entire batch runs." The district court found that while Ohlson had First Amendment rights to his trial testimony, those rights were not clearly established, and concluded that the Department had qualified immunity. After the district court entered judgment in the Department’s favor, Ohlson appealed.

On appeal, Ohlson argued that the First Amendment protected both his testimony in court and his advocacy in the workplace concerning the production of batch results.

The Ninth Circuit determined that the only dispute was whether Ohlson was speaking as a private citizen or a public employee. If Ohlson was speaking as a private citizen, his speech was protected by the First Amendment. If he was speaking as part of his duties as a public employee, it was not. The Ninth Circuit disagreed with the district court that Ohlson’s speech was protected, in large part because Ohlson spoke against his supervisor’s orders. If courts were to protect speech that violates a supervisor’s orders, it would be difficult for a public agency to enforce any rules.

The Ninth Circuit also disagreed with the district court’s conclusion that because citizens have a duty to testify, Ohlson was speaking as a private citizen. The Ninth Circuit noted that because he was testifying in court as part of his job duties, Ohlson was not called to testify as a private citizen.

The Ninth Circuit noted that the United States Supreme Court had not addressed whether a government employee, who testifies as part of her job duties, has First Amendment protection in that speech. The only United States Supreme Court case on the topic involved a government employee whose testimony was not made as part of his job duties.1

The Ninth Circuit affirmed the district court’s ultimate decision that regardless of whether Ohlson had a First Amendment right, the Department was entitled to judgment in its favor, because the Department had not violated any clearly established law. Because Ohlson’s First Amendment rights were not clearly established, the Department had qualified immunity.

FORMER FIRE CHIEF WAS WRONGLY ACCUSED OF PENSION SPIKING

Nowicki v. Contra Costa Cty. Employees’ Ret. Ass’n, 67 Cal. App. 5th 736 (2021)

Peter Nowicki worked for the Moraga-Orinda Fire District (District) from 1983 until 2009. In July 2006, Nowicki became the District’s Fire Chief. As Chief, Nowicki had an employment contract with a four-year term. Later, Nowicki and the District agreed to two contract amendments. The amendments granted Nowicki added benefits, including salary increases, annual vacation and holiday "sell-backs," and additional vacation and administrative leave credit. Nowicki was a member of the Contra Costa County Employees’ Retirement Association (CCCERA), which administers pensions for the County.

On January 30, 2009, two and a-half years into his four-year term as fire chief, Nowicki retired for personal reasons. Nowicki’s contract stated that he was eligible for retirement benefits under the then-applicable formula, which took into account a member’s "highest annual compensation earnable." When Nowicki retired, his retirement allowance was based on the total of his final year’s salary, plus the vacation leave and holiday cash-outs he took during his final year of employment.

In late 2013, CCCERA began a "lookback project" to review past incidents of unusual compensation increases at the end of employment, and to determine if pension spiking had occurred through "members’ receipt of pay items that were not earned as part of their regularly recurring employment compensation during their careers."

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In August 2015, Nowicki received a letter from CCCERA’s Board of Retirement (Board) that the Board had scheduled a hearing to determine whether adjustments to his retirement allowance were warranted. The letter noted that before the Board adjusted Nowicki’s retirement benefits, it would give him the opportunity to present his position and any relevant information.

Following a September 2015 open public meeting on the issue, CCCERA sent Nowicki a letter stating that the Board had determined he had improperly caused his final compensation to be increased at the time of retirement, and therefore, his retirement allowance would be reduced from $20,448.09 to $14,667.74 per month. CCCERA also informed Nowicki that his retirement allowance had been overpaid from January 2009 through September 2015 and that Nowicki would be responsible for repaying the overpayments plus interest, which totaled $585,802.90.

Nowicki subsequently filed a petition for writ of administrative mandate requesting an order rescinding the Board’s decision to reduce his pension benefit and reinstating the benefit as originally calculated. The trial court denied Nowicki’s writ after determining that Nowicki did not meet his burden of establishing that the Board’s decision to decrease his monthly allowance was an abuse of discretion. Nowicki appealed.

The Court of Appeal reversed the trial court’s ruling. The statute at issue in this case was Cal. Gov’t Code § 31539(a)(2). That law provides that the Board may, in its discretion, correct any error made in the calculation of a retired member’s monthly allowance if "the member caused his or her final compensation to be improperly increased or otherwise overstated at the time of retirement and the system applied that overstated amount as the basis for calculating the member’s monthly retirement allowance." On appeal, Nowicki argued that there was no evidence of impropriety on his part, given that he acted to increase his final year’s compensation under CCCERA’s own rules, and he simply sold benefit accruals back in his final year, as he had in prior years.

First, the Court considered the meaning of "improperly" as used in Cal. Gov’t Code § 31539. Relying on the historical circumstances behind the statute’s enactment to discern the Legislature’s intent, the Court concluded that the use of the word "improperly" unquestionably reflected an intent for subdivision (a)(2) to address actual wrongdoing.

Next, the Court analyzed whether the evidence of Nowicki’s pre-retirement conduct supports a finding that he caused his "final compensation to be improperly increased or otherwise overstated at the time of retirement." The Court noted that Nowicki’s original fire chief contract expressly allowed for annual salary adjustments. While his original contract did not include benefit sell-back provisions, it did permit contract amendments by mutual written agreement. In addition, Nowicki had previously utilized the sell-back provisions in his prior battalion chief contract every year between 2000 and 2006. Nowicki twice used the sell back provisions, but his amended contract permitted him to do so. This was also permitted under the law and CCCERA guidelines in place at the time.

The Court also found the Board’s lookback project used standards that took effect in 2013, which would be applied prospec-tively. The Board had no authority to apply the 2013 standards to Nowicki’s 2009 retirement.

The Court of Appeal concluded that the Board erroneously applied subdivision (a)(2) to Nowicki. The Court found that "it simply is not plausible that the Legislature intended to empower retirement boards to target long retired county employees who had negotiated with their employer for contract terms permitted under then-existing law and county retirement association guidance, solely because those acts enabled them to increase their final compensation at the time of retirement." Thus, the trial court erred in denying Nowicki’s petition for writ of mandate.

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Notes:

1. See Lane v. Franks, 573 U.S. 228, 238 n.4 (2014).

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