2018-00232466-CU-OE

Heather C. Hoganson vs. Ca Dept. of Alcoholic Beverage

Nature of Proceeding: Hearing on Demurrer

Filed By: Call, Greg A.

Judge Krueger discloses that he has known the plaintiff, Heather C. Hoganson, for many years through participation in Sacramento County Bar Assocation activities. Judge Krueger is also friends with Ms. Hoganson on Facebook. However, he does not feel that these associations with Ms. Hoganson would affect his ability to be impartial in this case.

** If any party requests oral argument, then at the time the request is made, the

requesting party shall inform the court and opposing counsel of the specific cause(s) of action or issue(s) on which oral argument is sought. **

The demurrer of Defendant Department of Alcohol Beverage Control (ABC) and Sunshine Garside (Garside) (collectively “Defendants”) is SUSTAINED in part and OVERRULED in part.

Plaintiff Heather C. Hoganson’s (Hoganson) requests for a monetary sanction or an OSC re: sanctions on grounds the demurrer was presented for an improper purpose is
DENIED.

Defendants’ request for judicial notice of official records is GRANTED. In taking judicial notice of these records, the court accepts the fact of their existence and their contents. The court may not construe their contents where the contents’ meaning is reasonably disputable. (See Apple Inc. v. Superior Court (2017) 18 Cal.App.5th 222, 241.)

This case arises from an employment relationship. Hoganson alleges she served as an ABC trial attorney between 2008 and 2017. Garside became ABC’s acting deputy director in May 2016.

According to Hoganson, when Garside and others began running ABC in 2016, they became concerned about a practice known as “drink solicitation.” Hoganson describes the practice as follows: “At some bars, employees sit with patrons and entice them to order alcoholic beverages for the employee, who obtains a commission on the

sale.” (Compl., ¶ 18.) Hoganson alleges that concerns about drink solicitation led to ABC’s legislative director’s separation from the agency. Hoganson further alleges that “she was dragged into an investigation involving [Legislative Director] Ruelas and the drink solicitation matter.” Apparently Hoganson was suspected of having submitted an anonymous comment about drink solicitation.

Eventually, ABC management charged Hoganson with insubordination and placed her on administrative time off (ATO). While on ATO, Hoganson applied for a position with the Secretary of State and received a job offer. The offer, however, was withdrawn after Garside advised that Hoganson was the target of an internal investigation. ABC then terminated Hoganson in May 2017. Hoganson remains unemployed and has suffered emotional distress.

The complaint contains causes of action for intentional interference with prospective economic advantage, negligent interference with prospective economic advantage, “Preventing Subsequent Employment by Misrepresentation” [Labor Code §§ 1050 et seq.], violation of the Information Practices Act [CC §§ 1798 et seq.], defamation per se and intentional infliction of emotional distress (IIED). Defendants demur on grounds the allegations fail to state a valid cause of action. Hoganson opposes.

Discussion

Defendants raise the defense of release as a bar to the entire complaint. In this regard, they cite several documents submitted with a request for judicial notice. First, they cite Hoganson’s June 2017 appeal before the State Personnel Board (SPB Appeal). (See Call Decl., Exh. A.) The SPB Appeal was assigned case no. 17-0946. Hoganson’s complaint in the SPB Appeal indicated she was appealing the “Adverse

Action / Disciplinary Action” dated “June 5, 2017.” (Id.) The complaint in the SPB Appeal also indicated Hoganson was appealing her “dismissal.” (Id.) The SPB Appeal contains a request that Hoganson “be reinstated with any applicable back pay plus interest.” (Id.)

Hoganson’s Prehearing and Settlement Conference Statement in the SPB Appeal enumerated several affirmative defenses and potential witnesses. (Call Decl., Exh. B.) Hoganson highlighted “unlawful retaliation” as one of her defenses. (Id., Exh. B., p. 2.) She identified witnesses who could testify that ABC informed the Secretary of State she was a target of an investigation. (Id., Exh. B, p. 5.) She identified another witness to testify about “attempted interference with her job prospects.” (Id., Exh. B, p. 7.)

Next, Defendants cite Hoganson’s August 2017 State Personnel Board complaint (SPB Complaint) for whistleblower retaliation. The face page of this document indicates it is “related” to SPB case no. 17-0946 but was not assigned a case number yet. (Call Decl., Exh. C, p.1.) The document is styled “Whistleblower Retaliation Complaint [/] Discrimination Complaint.” (Id., Exh. C, p. 1.) In the body of the SPB Complaint, Hoganson alleged that “[t]he investigation of [her] was mere pretext; when [she] tried to leave ABC, management sabotaged her exit.” She also alleged:

Complainant participated in approximately 15 job interviews for various state attorney positions between August 2016 and May 2017, leading to three serious job prospects. Two state agencies determined that they were unable to hire Complainant due to her status on ATO. A third agency, with full knowledge of Complainant’s ATO status, offered her a job, which she accepted. Complainant advised ABC (Rambo and Scoleri) of the offer on Tuesday, May 9, 2017, and the requested start date of Monday, May 15, 2017. However, on Friday, May 12, 2017, Garside spoke with the agency which led them to rescind the offer of employment. Rambo also told other employees that Complainant was a bad person.

(Call Decl., Exh. C, p. 7.)

Complainant asserts that ABC, through its employees Garside and Rambo, violated the Information Practices Act, CCP 1798.53, caused tortious inference with job prospects and privacy, and defamed Complainant, which resulted in Complainant being unable to mitigate damages caused by ABC, and with additional damages being caused therefrom. Because the investigation conducted by ABC against Complainant was retaliatory and discriminatory, communications regarding such were not a protected activity by ABC. ABC employees Garside and Rambo acted with malice and a lack of good faith in disclosing confidential information.

(Id., Exh. C. pp. 9-10.)

[Hoganson] could have been working at a new job in May 2017, but ABC stole that opportunity. Two other employers indicated they were unable to hire her while on A[TO], losing her a total of three opportunities from March through May, 2017.

(Id., Exh. C, p. 12.) The SPB Complaint contains a prayer for administrative reinstatement, back pay, the equivalent of 10 months prospective pay and other forms of relief.

Next, Defendants cite the SPB’s Decision Approving Stipulation for Settlement (SPB Decision). (See RJN, Exh. D.) The SPB Decision is under case no. 17-0946 and memorializes Hoganson’s settlement of the SPB Appeal. The SPB Decision indicates the parties’ desire to “settle the appeal” and dispose of “the matter pending before the Board[.]” (Id., Exh. D, p. 1.) The SPB Decision also indicates the Board “adopts the stipulation for settlement as is decision in the case.” (Id., Exh. D , p.1.) The terms of the settlement appear in the ALJ’s Proposed Decision (Proposed Decision).

The Proposed Decision, which is also under case no. 17-0946, indicates that “the parties settled the matter by stipulating” to provisions in several numbered paragraphs, including:

1. Respondent [ABC] agrees to modify the Notice of Adverse Action (NOAA), effective as of the close of business on June 5, 2017, from a dismissal to a suspension… .

2. Appellant [Hoganson] shall not be entitled to backpay or other compensation…[and] agrees to voluntarily resign from ABC… .

[¶]

4. Appellant hereby withdraws her Appeal filed in SPB Case No. 17-0946 and waives any further right of appeal or any claim or action in any forum whatsoever (except a claim for workers’ compensation benefits) which she may have how or hereafter acquire arising out of and by reason of the dispute settled herein. Appellant also agrees to withdraw her Whistleblower Retaliation Complaint, filed with the SPB on or about August 11, 2017. (Emphasis added.)

5. Appellant agrees this is a full and final settlement and release of all known and unknown disputes, claims, injuries or damages arising from, or in any way related to the events or circumstances surrounding the matters settled herein. […] Appellant specifically and expressly waives and relinquishes any and all rights and benefits which she now has, or in the future may have, under California Civil Code section 1542… .

6. Appellant being aware of Civil Code section 1542 hereby expressly waives…any rights…with respect to claims for damages against the State of California, ABC, its agents, officers, members and employees arising from, or in any way related to the investigation of, taking of, and settling of this adverse action.

7. Appellant will not institute or cause to be instituted any legal action or administrative proceedings against the State of California, ABC, its agents, officers, members or employees, arising out of or in any way related to circumstances and/or events concerning Appellant’s adverse action and the matter settled herein. (Emphasis

added.)

The Proposed Decision contains an integration clause.

Defendants argue the Proposed Decision and SPB Decision encompass a release of claims barring Hoganson’s complaint in this case. If it were clear that the release encompassed Hoganson’s SPB Complaint, as opposed merely to the SPB Appeal, then the court might agree. The SPB Complaint involved the same disparagement alleged in the current action, and a release of actions “arising out of or in any way related to circumstances and/or events concerning” the SPB Complaint would probably bar this civil action. It is not clear, however, that the release encompasses the SPB Complaint. As noted above, the court may not construe a judicially noticeable document the meaning of which is reasonably disputable.

As Defendants note, a separate argument can be made that the release of claims in the SPB Appeal extends to the claims of disparagement alleged in this case. In the SPB Appeal, Hoganson tendered witnesses knowledgeable about ABC’s alleged interference with her job offer from the Secretary of State. Ergo the argument that such interference is “related to the events or circumstances surrounding the matters settled herein.” The court, however, is not satisfied Hoganson will be unable to produce extrinsic evidence supporting a different construction. For that reason, and given the limits on judicial notice, the court will not sustain the demurrer based on a defense of release.

Next, Defendants argue that the SPB Decision bars the complaint under the doctrine of res judicata. As Defendants observe, res judicata only bars relitigation of the same primary right. The primary rights at work in the SPB Appeal were rights not to be wrongly disciplined or terminated. The instant case involves Hoganson’s rights not to be disparaged and not to have her prospective employment disrupted. Absent a case holding that all these rights are one and the same, the court will not sustain the demurrer based on res judicata.

With respect to res judicata, the court notes Defendants’ position that the SPB alone is authorized to enforce and interpret its orders. (See Moving Memo. at 8:8-10.) Yet, Defendants are the ones asking this court to construe the SPB Decision in order to determine its res judicata effect. The court expresses no opinion about the scope of the SPB’s authority to interpret or enforce its orders.

Defendants argue next that Hoganson’s causes of action are all defective because ABC’s statements to the Secretary of State are inactionable statements within the common interest privilege. (See CC § 47(c).) This argument fails because the allegations can be construed to establish malice, which overcomes the common interest privilege. (See Compl., ¶¶ 11, 48, 49, 86.) To the extent Defendants argue Hoganson’s allegations about malice are too conclusory to survive demurrer, the court disagrees.

Defendants argue next that they are immune from liability under Government Code §§ 818.8 and 822.2. Those sections read, respectively:

A public entity is not liable for an injury caused by misrepresentation by an employee of the public entity, whether or not such misrepresentation be negligent or intentional. (Emphasis added.)

A public employee acting in the scope of his employment is not liable for an injury caused by his misrepresentation, whether or not such misrepresentation be negligent or intentional, unless he is guilty of actual fraud, corruption or actual malice. (Emphasis added.)

Based on these immunities, Defendants argue that any claims predicated on Garside’s or any other ABC employee’s misrepresentations are barred. Defendants appear to argue that the entire complaint is predicated on misrepresentations Garside made to the Secretary of State. On that basis, they argue the subject immunities bar the complaint altogether.

With one exception discussed below, the court rejects Defendants’ argument. With respect to most of her causes of action, Hoganson does not predicate liability solely on a theory of misrepresentation. She impugns Garside and, vicariously, ABC for providing confidential information to the Secretary of State without authority. (See Compl., ¶¶ 47-49, 56, 67, 84.) The causes of action incorporating this theory of liability are not within the immunities in Government Code §§ 818.8 or 822.2. In addition, the immunities do not apply to defamation or other claims of reputational harm. (See City of Costa Mesa v. D’Alessio Investments, LLC (2013) 214 Cal.App.4th 358, 383 [“Tort causes of action based on reputational harm (slander, trade libel, and intentional interference based on false statements to third parties) are not included within the ‘deceit’ rubric identified by our Supreme Court when it interpreted Government Code sections 818.8 and 822.2”].) Furthermore, to the extent Garside relies on § 822.2, the demurrer fails because the allegations can be construed to establish malice. (See Compl., ¶¶ 11, 48, 49, 86.)

The court agrees with ABC, however, that the immunity in Government Code § 818.8 bars Hoganson’s third cause of action against it for violation of Labor Code §§ 1050 et seq. Section 1050 prohibits employers from making misrepresentations about discharged employees in order to prevent the latter from obtaining employment. Section 1054 creates a private right of action for treble damages. Because these sections are meant to protect discharged employees from losing employment, they are aimed at the financial losses–as opposed to mere reputational harms–that Government Code § 818.8 covers. (See Burden v. County of Santa Clara (2000) 81 Cal.App.4th 244, 251.) Consequently, ABC’s demurrer to the third cause of action is sustained. Moreover, because Hoganson has not demonstrated a reasonable likelihood she can cure the allegations through amendment, leave to amend the third cause of action against ABC is denied.

Next, Defendants argue the Government Claims Act bars Hoganson’s common law causes of action, i.e., the first, second, fifth and sixth causes of action. Defendants argue that Government Code §§ 810 et seq. bar all common law claims against both public employers and their employees. Defendants have it partly right. As to public employers, the Government Clams Act bars common law claims on a theory of direct liability. (See Lloyd v. County of Los Angeles (2009) 172 Cal.App.4th 320, 329.) But there is no bar on claims that public employers are vicariously liable. (Id., p. 330.) Nor is there a bar against common law claims against public employees. (Id.) Given this, and given that Hoganson’s complaint incorporates a theory of vicarious liability for Garside’s conduct, (see Compl., ¶ 10), Defendants’ reliance on the Government Claims Act is misplaced.

Returning to the third cause of action for violation of Labor Code §§ 1050 et seq., Garside argues the allegations do not establish the essential elements. Specifically, Garside argues Hoganson failed to allege either a misrepresentation or a misrepresentation occurring after separation, as required under § 1050. The court agrees that the allegations do not establish a post-separation misrepresentation, and for that reason Garside’s demurrer is sustained. The court does not address the further issue whether Hoganson has alleged a misrepresentation at all.

Leave to amend the third cause of action against Garside is granted.

Next, Defendants argue Hoganson has not alleged all the elements of her fourth cause of action for Invasion of Privacy under the Information Practices Act (IPA) codified in

CC §§ 1798 et seq. Hoganson appears to base the fourth cause of action on Garside’s disclosure of her “personal information.” That term is specially defined in CC § 1798.3(a):

The term “personal information” means any information that is maintained by an agency that identifies or describes an individual, including, but not limited to, his or her name, social security number, physical description, home address, home telephone number, education, financial matters, and medical or employment history. It includes statements made by, or attributed to, the individual.

Defendants argue that a statement Hoganson was the target of an ABC investigation did not disclose “personal information” because it did not identify or describe her within the meaning of § 1798.3(a). In Hurley v. Department of Parks & Recreation (2018) 20 Cal.App.5th 634, 647, however, the court determined that information about an employee’s failure of probation, which was maintained in a personnel file, was “clearly” personal information under the IPA. Given Hurley, the court is not persuaded information about Hoganson’s role in an ABC investigation cannot qualify as personal information.

Defendants also argue the allegations do not establish exactly how they violated the IPA. As to Garside, the court disagrees. Hoganson alleges that Garside, acting outside her official capacity, improperly and unnecessarily disclosed that Hoganson was a target of an ABC investigation. This is enough to satisfy CC § 1798.53, which establishes individual liability under the IPA. Insofar as Garside argues the allegations cannot be construed to describe an intentional disclosure, the court disagrees. Garside’s demurrer the fourth cause of action is overruled.

ABC’s demurrer to the fourth cause of action is overruled as well. Hoganson predicates ABC’s liability on CC § 1798.45(c). That subdivision creates liability for an agency’s violation of another provision in the same chapter, as long as the violation had an “adverse effect” on the plaintiff. The other provision on which Hoganson relies is § 1798.24. That section prohibits agencies from disclosing “personal information” unless the disclosure is one of the types described in numerous exceptions. Hoganson alleges that ABC is liable because its employee, Garside, disclosed personal information without authority. ABC does not argue that is cannot be vicariously liable.

The allegations also establish the requisite adverse effect, namely that Hoganson lost the Secretary of State’s job offer. ABC argues Hoganson should be required to allege

additional facts establishing its violation. Given the way § 1798.24 was written, however, all that Hoganson could allege would be that none of the exceptions to the general rule of nondisclosure apply. ABC does not cite any case holding that the nonapplicability of the exceptions is an essential element of Hoganson’s cause of action and must be alleged. The demurrer is thus overruled.

Finally, Defendants demur to Hoganson’s IIED cause of action on grounds it is within the worker’s compensation exclusivity. IIED causes of action are within the exclusivity as long as the alleged misconduct falls within the compensation bargain attending employment. (See Light v. Department of Parks & Recreation (2017) 14 Cal.App.5th 75, 96-97.) The misconduct is within the compensation bargain unless it violates fundamental public policy or exceeds the risks inherent in the employment relationship. (Id., p. 97.)

In enacting the IPA, the Legislature sought to protect individuals’ fundamental, constitutional rights of privacy. (See CC § 1798.1 [Legislative Declaration and Findings].) At least one court has held that a supervisor’s disclosure of an employee’s private information can fall outside the compensation bargain. (See Operating Engineers Local 3 v. Johnson (2003) 110 Cal.App.4th 180, 190-192.) Because Defendants failed to cite or distinguish this authority, the demurrer is overruled.

The court disregards Defendants’ suggestion, raised for the first time in the reply, that the alleged misconduct is not extreme or outrageous for purposes of IIED.

Disposition

ABC’s demurrer to the third cause of action for violation of Labor Code §§ 1050 et seq.

is sustained without leave to amend.

Garside’s demurrer to the third cause of action is sustained with leave to amend.

The balance of the demurrers are overruled.

No later than 9/04/18, Hoganson may file and serve a first amended complaint (FAC) in an attempt to cure the third cause of action against Garside; response due within 30 days thereafter, 35 days if the FAC is served by mail.

Although not required by any statute or rule of court, Hoganson is requested to attach a copy of the instant minute order to the FAC to facilitate the filing of the pleading.

If Garside demurs to the FAC or moves to strike, a copy of the FAC shall be included with the moving papers.

The minute order is effective immediately. No formal order pursuant to CRC 3.1312 or further notice is required.