Case Name: Terri Dikes v. Santa Clara Valley Water District

Case No: 19CV346252

I. Background
II.

Teri Dikes (“Plaintiff”) brings this action against Santa Clara Valley Water District (“Defendant”) for damages associated with negligent hiring, supervision or retention of employees responsible for the administration of retirement benefits.

According to the allegations of the complaint, Plaintiff was employed by Defendant from 2000 until she retired. (Complaint, ¶ 10.) One of Plaintiff’s benefits as an employee was membership in the California Public Employees’ Retirement System (“CalPERS”). (Complaint, ¶ 7.) In 2017, Plaintiff calculated her prospective retirement benefits using the CalPERS website and based on her projected retirement benefits, decided to retire, surrendered her California home and moved to Nevada. (Complaint, ¶ ¶12, 14.)

However, shortly after retirement she received notice that her calculation of benefits included income reported by Defendant not in compliance with California Employees’ Retirement Law. (Complaint, ¶ 17.) The noncompliance was due to a 10% salary increase she earned as part of a temporary promotion shortly before her retirement. (Complaint, ¶ 10.) The income was reported to CalPERS by Defendant, but was inconsistent with actuarial projections of her retirement benefits. (Ibid.) As a result, Plaintiff’s pension benefits were less than she expected, and had she known of the lesser amount, she would not have retired. (Complaint, ¶ 14.)

The notice gave her and Defendant an opportunity to appeal, and Defendant told her it would file the appeal on her behalf. (Complaint, ¶ 19.) Defendant filed for an extension of the time to appeal, which was denied. (Ibid.) Defendant then notified Plaintiff it would not be filing an appeal, however this was three days after the appeal was due, leaving Plaintiff unable to file her own appeal. (Complaint, ¶ 19.)

Plaintiff asserts a cause of action for negligent hiring, supervision and retention of employees.

Before the Court is Defendant’s demurrer and Plaintiff’s request for judicial notice in opposition to the demurrer.

III. Request for Judicial Notice
IV.
Plaintiff requests that the Court take judicial notice of certain legislative and agency enactments regarding public pension administration under CalPERS as well as a letter she received from CalPERS and an email she received from Defendant

Judicial notice may be taken of any matter authorized or required by law. (Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 113, citing Evidence Code §§ 451 & 452.) A matter is subject to judicial notice only if it is reasonably beyond dispute. (Ibid.) Furthermore, any matter judicially noticed must be relevant to a material issue. (People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422, fn. 2.)

Evidence Code section 451 requires a court to take judicial notice of statutory law, regulations and legislative enactments. Those requested by Plaintiff are relevant to her argument in support of a statutory basis for liability. Therefore, the Court will grant Plaintiffs request for judicial notice of Government Code sections 20221, 20222.5, 20223, 21063, 20636, as well as California Code of Regulations, title 2, sections 565.1 and 571.

Plaintiff also requests judicial notice of a letter CalPERS sent to her and email she received from Defendant. However, Plaintiff does not refer to the letter or email as substantive to any argument in her opposition, so they lack relevance. Therefore, the Court will not grant the request for judicial notice of the letter or the email.

Consequently, the Court GRANTS Plaintiff’s request for judicial notice of the various statutes and regulations cited. The Court DENIES Plaintiff’s request for judicial notice of the other documents.

V. Demurrer
VI.

Defendant demurs to the cause of action on the ground of failure to state sufficient facts. (See Code Civ. Proc., § 430.10, subd. (e) .) It first argues it is not liable based on statutory grants of government immunity. Alternatively, it argues that no applicable statutory cause of action for which direct liability can be established has been pleaded.

A demurrer tests the legal sufficiency of a pleading, but not the truth of a plaintiff’s allegations or the accuracy with which he describes the defendant’s conduct. (Align Technology, Inc. v. Tran (2009) 179 Cal.App.4th 949, 958; citing Committee on Children’s Television Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213.) The demurrer is treated as admitting all material facts, properly pleaded, but not contentions, deductions or conclusions of law. (Ibid.)

A. Government Immunity
B.

Defendant first claims immunity from the cause of action under Government Code sections 818.8 and 822.2. Section 818.8 provides that 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.” (Gov. Code, § 818.8.) Section 822.2 provides “a public employee acting in the scope of his employment is not liable for an injury caused by his [or her] misrepresentation whether or not such misrepresentation be negligent or intentional.” (Gov. Code, § 822.2.)

A demurrer based on immunity under these statutes will be sustained where the cause of action is based on misrepresentation. (See Finch Aerospace Corp. v. City of San Diego (2017) 8 Cal.App.5th 1248, 1252 [on review of demurrer, holding that immunities under sections 818.8 and 822.2 did not apply in a cause of action for slander of title].) Misrepresentation narrowly refers to the common law tort of deceit and involve interferences with financial or commercial interests, which are limited to: intentional misrepresentation, negligent misrepresentation, concealment or failure to perform a promise. (Ibid.)

Here, while an underlying issue may be the misrepresentation by an employee of Defendant, the cause of action is that of negligent hiring, supervision and retention. Therefore, the statutory immunities cited by Defendant do not apply, and demurrer cannot be sustained on this basis.

C. Public Entity Direct Liability
D.

Plaintiff alleges its cause of action for negligent hiring is based on sections of the Government Code regarding obligations under CalPERS laws and regulations that confer a duty regarding hiring, supervision and retention of employees.

Defendant first argues that the complaint does not allege that it owed a specific statutory duty to Plaintiff. Direct tort liability of public entities must be based on a specific statute declaring them to be liable, or at least creating some specific duty of care apart from general tort principles. (Eastburn v. Regional Fire Protection Authority (2003) 31 Cal.4th 1175, 1179, citing Gov. Code § 815, subd. (a).) Plaintiff offers no citation to a statute that confers direct liability for failure to comply with CalPERS laws and regulations.

Instead, Plaintiff alleges that taken as a whole, certain sections of the Government Code confer a specific duty of care on Defendant to have adequately hired, trained and supervised staff on issues related to CalPERS benefits. Where a mandatory duty is found, “the required action [is] clear and discrete and required no evaluation of whether in fact it occurred.” (de Villers v. County of San Diego (2007) 156 Cal.App.4th 238, 260.) The mandatory duty must be “designed” to protect against the particular kind of injury the plaintiff suffered, and the injury is “one of the consequences which the enacting body sought to prevent.” (Id. at 255.)

As Defendant argues, the sections cited do not support any mandatory duty to Plaintiff breached by Defendant’s hiring, supervision and retention of employees. One confers an obligation on a public employer to provide notice to the CalPERS board of an employee’s change in status, such as promotions or resignations. (Gov. Code § 20221). Another specifies what information must be provided by a public employer during an audit by the board. (Gov. Code § 20222.5.) The next requires that employees shall provide the board information affecting his or her status as a member. (Gov. Code § 20223.) One provides that a member may request a meeting in which the employer shall explain elements of past or current compensation reported to the board. (Gov. Code § 21063.) The last one defines terms related to “compensation.” (Gov. Code § 20636.) Plaintiff also cites the Code of Regulations, section 565.1, which specifies that an employer must submit payroll and contribution information using the CalPERS reporting system, on or before 30 calendar days following the last day of the pay period, and that CalPERS must notify the employer of errors, requiring that the employer correct errors. Finally, she cites Code of Regulations, section 571 which defines and explains “special compensation.”

Four of these citations refer to information shared between the employer and CalPERS, including during an audit; one confers an obligation upon the employee; and the others define terms relevant to CalPERS administration. Only section 21063 confers any duty upon an employer as to the member employee. However the duty is to have a meeting with the employee at his or her request to discuss benefits. The facts allege that such a meeting was held at Plaintiff’s request, so that obligation was not breached.

Extrapolating from the statutes taken as a whole to impose a duty regarding hiring, supervising and retaining of employees as Plaintiff implores, requires an inferential leap not supported as pleaded or by case law. (See Eastburn v. Regional Fire Protection Authority, supra, 31 Cal.4th 1175, 1183, [“[T]he intent of the Tort Claims Act is not to expand the rights of plaintiffs in suits against governmental entities, but to confine potential governmental liability to rigidly delineated circumstances.”].)

Therefore, there is no adequately pleaded statutory cause of action.

Consequently, the demurrer to the cause of action is SUSTAINED, with 10 days leave to amend.