2018-00233619-CU-OE

Cynthia L. Curry vs. California Department of Conservation

Nature of Proceeding: Motion for Reconsideration of the 8/20/2018 Ruling on Demurrer (Set

Filed By:

The Motion for Reconsideration of the August 20, 2018 ruling on the Demurrer to the Complaint is granted. After reconsidering the court’s earlier order sustaining the demurrer with leave to amend, the court now overrules the demurrer.

In Plaintiff’s Complaint, she alleged she has been a member of the State Bar of California for almost 35 years. (Compl., 2.) Plaintiff began working at DOC on or about June 27, 2012 as an Attorney III. (Id., 4.) Her duties included working on personnel matters and reviewing DOC contracts with third parties. (Id., 5.) In or around August 2015, DOC entered into a consulting contract with Alexan International, Inc., an information technology contractor specializing in database architecture. (Id., 8.) Alexan recommended a software system created and owned by the Ground Water Protection Council (GWPC), a nonprofit composed of state agencies regulating ground water within their respective states. (Id., 9.) At that time, GWPC used the company KPMG Crimsonwing to install its software. (Id.) At Alexan’s recommendation, DOC and GWPC entered into a no-bid contract to phase in software, and then entered into a second no-bid contract to create a gap-fill that would later allow for the software to be fully implemented through a second phase. (Id. 10.) By February 2016, both contracts were completed and the parties turned their attention to phase two. (Id.) During subsequent negotiations for implementation of phase two, GWPC delegated its bargaining to Crimsonwing, who would ultimately be on “the ground” carrying out the job. (Id., 11.)

Curry alleges she “perceived concerns” during these negotiations and, as part of her duties as counsel for DOC, articulated them to Clayton Haas, DOC’s Deputy Director of Administration, in July 2016. (Id., 11,12.) Plaintiff is unaware that any action was taken in response to her concerns. (Id., 13.) Plaintiff also “expressed concerns” as counsel for DOC about a hiring decision as well, but is also unaware if any action was taken in response to her concerns. (Id., 15,16.) Lastly, in the spring and summer of 2016, DOC sought to plug a well in a residential area of downtown Los Angeles. (Id., 17.) DOC negotiated contracts related to the plugging of the well as well as additional services related to the work. (Id.) Plaintiff perceived problems with DOC’s contract with the City of Los Angeles and, as DOC counsel, shared these “concerns” with DOC management. (Id., II18.) Plaintiff is unaware if any action was taken in response to her concerns. (Id 19.)

Plaintiff’s Complaint alleged that she was retaliated against for expressing her “concerns” by having her responsibilities taken away. She alleges that as a result of her legal advice to defendant, she suffered negative consequences almost immediately. (Comp. ¶22.) Reeves and Haas immediately pulled Curry off the software and Los Angeles well contracts. (Comp. 22.) And by August 2016, even though Curry had just received a performance evaluation in June 2016 describing her work as “outstanding” Curry was removed from all of her previously assigned contract

work. (Comp. ¶¶21, 22) The DOC also removed nearly all Curry’s personnel matters from her. (Comp. ¶24. ) As alleged, Reeves publicly humiliated

Curry by forbidding her to interact directly with employees on the few personnel issues that remained, instead requiring her to communicate through an intermediary, who was lower in seniority and had virtually no relevant experience. (Comp.¶¶ 25, 26.) Curry was also the subject of a human resources (HR) investigation that accused her of bullying. (Comp. ¶¶ 29-31.) A few days before her retirement, the DOC served Curry with an “adverse action” as the result of the [alleged] sham workplace bullying investigation Reeves commenced against her over a year earlier. (Comp. ¶ 44.) DOC imposed a five-day suspension that commenced on October 16, 2017, or nearly a week after Curry effectively retired. (Comp. ¶45.)

On August 20, 2018, the court sustained the demurrer with leave to amend finding that plaintiff failed to state causes of action for whistle blowing under Government Code section 8547.8(e) and violation of Labor Code 1102.5 because she had not sufficiently alleged protected conduct. Plaintiff, in order to protect the confidentiality of the attorney client communications, had merely alleged her unspecified “concerns” rather than disclosing any specific communication that would implicate a public policy as a basis for her whistleblower claim.

The Court previously noted in ruling on the demurrer to the Complaint that the Supreme Court has recognized a claim for retaliatory termination in violation of public policy by “in-house” counsel. In General Dynamics Corp. v. Superior Court, the Supreme Court held “there is no reason inherent in the nature of an attorney’s role as in-house counsel to a corporation that in itself precludes the maintenance of a retaliatory discharge claim, provided it can be established without breaching the attorney-client privilege or unduly endangering the values lying at the heart of the professional relationship.” Thus, a former in-house counsel may sue her employer for wrongful termination so long as she does not publicly disclose information the employer is entitled to keep secret. General Dynamics Corp. v. Superior Court (1994) 7 Cal.4th 1164, 1169, 1190. (emphasis added)

Moreover, in dicta, the Supreme Court stated: “the trial courts can and should apply an array of ad hoc measures from their equitable arsenal designed to permit the attorney plaintiff to attempt to make the necessary proof while protecting from disclosure client confidences subject to the privilege. The use of sealing and protective orders, limited admissibility of evidence, orders restricting the use of testimony in successive proceedings, and, where appropriate, in camera proceedings, are but some of a number of measures that might usefully be explored by the trial courts as circumstances warrant. We are confident that by taking an aggressive managerial role, Judges can minimize the dangers to the legitimate privilege interests the trial of such cases may present.” (Id. at 1191, emphasis added)

In ruling on the demurrer the Court stated that plaintiff must provide more specificity regarding “protected conduct” without violating the attorney client privilege. Plaintiff was required to allege more than her “concerns” to defendant. She was told to allege sufficient facts to meet the statutory requirements of the causes of action. The Court further ruled that “Plaintiff, if she chooses, may file the complaint conditionally under seal to protect confidences.” (See minute order August 20, 2018) (emphasis added)

In order to protect the attorney client privilege, however, the Courts now finds that the

prior ruling on the demurrer cannot be read to allow plaintiff to allege the content of the actual attorney client privileged communications in the sealed portions of the Amended Complaint. The attorney client privilege is absolute, and the holder (DOC) is entitled to prevent any disclosure whatsoever, including to the court and court staff, and not just protection from public view by a sealing order.

The Court cannot speculate as to what type of sealing the Supreme Court was contemplating in its dicta statement from General Dynamics, quoted above. However, it cannot have meant that a plaintiff could obtain an order sealing the actual privileged communications, when such a motion a fortiori requires the Court to review what is being sealed. See Costco Wholesale Corp. v. Superior Court (2009) 47 Cal.4th 725, 736-737 (court cannot review an allegedly privileged attorney-client communication to determine whether it is privileged). When a document is sealed from public view, the unredacted language is available for viewing by court employees, including the Court, who must review the unredacted information to make its determination required by CRC 2.550(d) and (e).

On December 18, 2018, the court denied plaintiff’s motion to seal the amended complaint. Plaintiff admitted in her motion that the portion of the pleading proposed to be sealed contained the confidential attorney client communications. The declaration in support of the motion states that the motion contains the proposed redactions “of Curry’s specific advice to the DOC she contends was the basis for its
retaliation.” (Sanders decl. Ex. A.) The Court, in denying the motion to seal, found that it was not permitted to view attorney client privileged information in documents to be sealed.

In connection with plaintiff’s first motion to seal that was denied without prejudice, the court ruled:

“Indeed, she makes clear that the FAC contains attorney-client protected information. This Court is not permitted to review the document as a result. In fact, it is error for a trial court to order in camera disclosure of allegedly privileged information to evaluate a claim of privilege. (Costco Wholesale Corp. v. Superior Court (2009) 47 Cal.4th 725, 736-737.) Indeed, Evid. Code § 915 prohibits a court from reviewing an allegedly privileged attorney-client communication to determine whether it is privileged because the nature of the attorney-client privilege requires absolute protection for all confidential communications between an attorney and a client regardless of their content. Absent waiver, Courts do not have the power to create exceptions to section 915’s mandate. (Costco, supra, at p. 739.) The court therefore may not review the content of the communication to determine whether it is privileged. It would thus be error for this Court to review the FAC lodged conditionally under seal especially in light of Defendant’s strenuous opposition arguing that the Court cannot review the document. In reply Plaintiff argues that the information sought to be sealed may have been waived by Defendant such that Costco does not apply and the Court should seal the FAC pending a determination of such waiver. The attorney-client privilege, however, may be waived only by the holder of the privilege. (§ 912, subd. (a).) As may be relevant, the holder is the client, a guardian or conservator of the client, or the personal representative of the client if the client is deceased. (§ 953.) Plainly, defendant does not concede waiver….Costco made clear that a Court cannot require

disclosure of the actual communication claimed to be privileged in order to rule on whether the privilege has applied or has been waived. (Id. at 737-739.) Just as the Court cannot order in camera inspection of documents to determine if they are subject

to a privilege, this Court cannot simply review the conditionally lodged FAC containing information the parties agree is privileged (unless waived) to see if sealing is appropriate.” (Minute Order October 31, 2018)

The Court is mindful of the decision in General Dynamics in which the Supreme Court stated that it is inappropriate at the pleading stage to assume the plaintiff cannot prove her case by means other than disclosing the privileged communications. For example, discovery may determine that a waiver of the privilege has occurred.

The Court has now determined that the original language of the Complaint, which the Court previously found was too conclusory because it alleged only “plaintiffs concerns” rather the actual advice given to DOC, is sufficient at the pleading stage to allow this case to go forward. Defendant cannot be heard to complain that the conclusory language of the Complaint including the term “concerns” fails to put them on notice of the allegations against them. DOC has received the copy of the unredacted first amended complaint so is fully aware of the allegations against it.

Therefore, the Court on its own motion reconsiders the ruling of August 20, 2018 and now overrules the demurrer. Following the instruction of General Dynamics, the Court is choosing from its “array of ad hoc measures” to determine at the pleading stage that plaintiff is not required to allege the content of the attorney client privileged communications to state a cause of action particularly as here when the defendant is in possession of the un-redacted proposed first amended complaint.

Under General Dynamics plaintiff should be allowed to go forward with her pleading in the hopes she can establish her claim through discovery or other means that will not breach the attorney client privilege. Only in the event that the elements of a wrongful discharge in violation of fundamental public policy claim cannot, for reasons peculiar to the particular case, be fully established without breaching the attorney-client privilege, will the suit must be dismissed in the interest of preserving the privilege. The Supreme Court has stated that dismissal would “seldom if ever be appropriate at the demurrer stage of litigation.” Id. at p. 1190. By instructing courts to apply an array of ad hoc measures from their equitable arsenal to permit a plaintiff to attempt to make the necessary proof while protecting from disclosure client confidences subject to the privilege (General Dynamics, supra, p. 1191), it would appear prudent to permit the matter to go forward as currently pleaded.

Plaintiff has now removed her Labor Code Claim. Therefore an amended complaint is still required although the demurrer to the original complaint is now being overruled. Plaintiff is ordered to file the proposed First Amended Complaint on or before February 11, 2019 removing the Labor Code claim.

In the parties further briefing, defendant raises a new argument based on a recent opinion issued by the 3rd District Court of Appeal, Manavian v. Department of Justice (2018) 28 Cal. App. 5th 1127, contending that this case bars plaintiff’s action. Plaintiff, in opposition, disagrees. This new legal argument goes beyond the scope of the court’s reconsideration but may be made in a future motion for judgment on the pleadings or summary judgment addressing whether certain communication are protected whistleblower communications. As noted, the case does not appear to inform the issue presently before the court.

The minute order is effective immediately. No formal order pursuant to CRC Rule