Egge v. County of Santa Clara, Case No. 18CV329071

Defendant County of Santa Clara (“Defendant” or the “County”) demurs to the First Amended Complaint (“FAC”) filed by plaintiff Melissa Egge, M.D. (“Plaintiff”).

I. Factual and Procedural Background

According to the allegations of the FAC, Plaintiff is a Suspected Child Abuse and Neglect (“SCAN”) physician who was hired by the County on July 1, 2011 as a Child Abuse Pediatrician at the Santa Clara Valley Medical Center (“SCVMC”). (FAC, ¶ 8.) As a component of her contractual employment agreement with the County, Plaintiff was required to abide by the Medical Staff Bylaws and the internal policies and procedures of SCVMC. (Id., ¶ 9, Exhibit A.) The bylaws created binding rights and duties and are legally enforceable. (Id., ¶ 10.)

Plaintiff reported to Dr. Stirling, Director of the Center for Child Protection at SCVMC, and was subordinate to his role as a SCAN physician. (FAC, ¶ 11.) Both Plaintiff and Dr. Stirling reported to Dr. Harris, the Chair of the Department of Pediatrics, and were required to abide by his decisions as they related to his patients and his SCVMC policy determinations. (Id.) Plaintiff and Dr. Stirling, the only two SCAN physicians at the facility, alternated on call for child abuse issues as they came up. (Id.)

On July 3, 2015, a two-year old child was transferred from O’Connor Hospital to SCVMC suffering from what were believed to be two fractures. (FAC, ¶ 12.) Plaintiff was consulted on the phone by Dr. Zhang, a common practice at SCVMC used by mandated reporters who suspected abuse in lieu of making a report to child protective services (“CPS”). (Id.) After Dr. Zhang described the nature of the child’s injuries and his mother’s explanation for them, Plaintiff stated that if the doctors at the preceding hospital suspected non-accidental trauma they should make a report, and opined that the scenario Dr. Zhang described was not a pattern of injury typical for non-accidental trauma. (Id., ¶ 13.) By that time, no orthopedic surgeons had seen the child, and no x-rays were available for review. (Id.) Plaintiff was not asked to perform an inpatient consultation and had no further clinical involvement with the child. (Id.)

Over the next few days, physicians at SCVMC discovered the child had suffered additional fractures and he underwent surgery. (FAC, ¶ 15.) Although there were several red flags, no reports were made and the child was eventually discharged to go home with his mother.

In November 2015, the Orthopedic Review Committee reviewed the child’s case and became concerned that a report was warranted. (FAC, ¶ 16.) Dr. Harris was asked to weigh in and Plaintiff was asked to do a supplemental review of an ongoing Quality Improvement review of the child’s case. (Id.) Plaintiff reviewed the child’s records, which included details not available during the prior telephone consultation, and concluded that a CPS report should have been filed. (FAC, ¶ 17.) Plaintiff discussed the case with Dr. Stirling, the official SCAN physician listed on it, and he agreed to file the CPS report. (Id.)

Before leaving on vacation, Plaintiff checked with Dr. Stirling to ensure that he had made the report. (FAC, ¶ 18.) Dr. Stirling told her that he had forgotten but would do so that evening. (Id.) However, Dr. Stirling never made the report, and in January 2016, the child died as a result of alleged physical and sexual abuse. (Id.)

During a Death Review Committee meeting in February 2016, Plaintiff learned that the child had died and subsequently checked his records where she found that on December 24, 2015, Dr. Stirling had placed a note in the chart stating that he had again reviewed the file, decided there was a low index of suspicion of child abuse, and therefore a CPS report was not warranted. (Id., ¶ 19.) Thus, Dr. Stirling never made the CPS report as he had promised Plaintiff he would. (Id.) Plaintiff believed that in the event Dr. Stirling decided not to submit a report to CPS on behalf of both of them, he would have told her of his decision so as to provide her with an opportunity to make a report herself. (Id., ¶ 20.) Because he did not, Plaintiff did not believe she was required to submit a report. (Id.)

Concerned of what had transpired, Plaintiff contacted Dr. Harris to inform him of the child’s death and Dr. Stirling’s failure to report the case to CPS; he had not been aware of either fact prior to that point. (FAC, ¶ 21.) Plaintiff also expressed multiple concerns that SCVMC policies and procedures were inadequate to comply with California’s mandated reporting laws. (Id., ¶¶ 21-23.) As a result of Plaintiff’s pressure to do so, SCVMC initiated an external peer review of the child’s case. (Id.) Plaintiff told Dr. Harris that many other employees, all mandatory reporters, had failed to comply with the law and that the practices encouraged by SCVMC leadership resulted in suspicions of child abuse not getting reported. (Id., ¶¶ 22-23.) She further advised him of many other systematic failings which she believed may have contributed to the child’s death. (Id., ¶ 23.)

On March 11, 2016, Plaintiff was put on administrative leave. (FAC, ¶ 24.) On April 21, 2016, the Medical Executive Committee recommended a 6-month summary suspension of Plaintiff’s clinical privileges and medical staff memberships. (Id.) The following day, Dr. Smith, as County Executive of the County, terminated Plaintiff’s employment. (Id.) Plaintiff was not afforded a hearing prior to the termination and her suspension and termination were completely unwarranted and arose in the context of activities that under SCVMC’s bylaws entitled her to immunity. (Id., ¶ 25.)

In addition to the foregoing, Dr. Nguyen, on behalf of SCVMC, reported Plaintiff’s suspension to the Medical Board of California, despite not being obligated to do so. (FAC, ¶ 27.) Dr. Nguyen was also aware that statements made to the Medical Board and contained in the report were false and misleading and did not provide Plaintiff with an opportunity to explain or comment. (Id.) The report will be a negative mark on Plaintiff’s career and she alleges that her suspension, termination and SCVMC’s report to the Medical Board were committed with malice and in bad faith, with Plaintiff made a scapegoat and punished for voicing her concerns. (FAC, ¶ 28.) As a result of Defendants’ conduct, Plaintiff has been unable to obtain employment in the Bay Area and has to commute weekly to Southern California in order to work as a physician. (Id., ¶¶ 30-31.) Plaintiff successfully appealed her summary suspension, but has yet to regain her reputation. (Id., ¶ 34.)

Plaintiff filed her initial complaint in this action on May 30, 2018, asserting claims for (1) breach of written contract and (2) violation of Labor Code section 1102.5 (“Section 1102.5”). Defendant (and former defendants Jeffrey Smith, M.D. and Phuong Nguyen, M.D.) demurred to both of the foregoing claims on a variety of grounds. On September 19, 2018, the Court entered an order sustaining the demurrer to the first cause of action with leave to amend on the ground of failure to state facts sufficient to constitute a cause of action and sustaining the demurrer to the second cause of action without leave to amend as to Drs. Smith and Nguyen on the same ground. On September 28, 2018, Plaintiff filed the FAC, asserting the same two causes of action. On October 30, 2018, Defendant filed the instant demurrer to the first cause of action on the ground of failure to state facts sufficient to constitute a cause of action. (Code Civ. Proc., § 430.10, subd. (e).) Plaintiff opposes the motion.

II. Demurrer

In support of its demurrer to the breach of contract claim in the FAC, Defendant makes a single argument: that Plaintiff’s breach of contract claim is barred by collateral estoppel, the issue preclusion component of the doctrine of res judicata. More specifically, Defendants maintains that the issue of Plaintiff’s employment status (she maintains it was more than at-will and subject to a written agreement) was already addressed and adjudicated in Defendant’s favor in a federal action brought by Plaintiff entitled Egge v. County of Santa Clara (N.D. Cal. May 7, 2018) 2018 WL 2096275 (the “Federal Action”).

In its most succinct and narrow form, res judicata is described as a doctrine which “precludes parties or their privies from relitigating a cause of action [finally resolved in a prior proceeding].” (Vandenberg v. Superior Court (1999) 21 Cal.4th 81, 828 [internal citations and quotations omitted].) “Thus, res judicata does not merely bar relitigation of identical claims or causes of action. Instead, in its collateral estoppel aspect, the doctrine may also preclude a party to prior litigation from redisputing issues therein decided against him, even when those issues bear on different claims raised in a later case. Moreover, because the estoppel need not be mutual, it is not necessary that the earlier and later proceedings involve the identical parties or their privies. Only the party against whom the doctrine is invoked must be bound by the prior proceeding.” (Id. at p. 828 [internal citations and quotations omitted] [emphasis in original].)

Traditionally, the doctrine of collateral estoppel applies only if the following threshold requirements are met: (1) the issue sought to be precluded from relitigation must be identical to that decided in a former proceeding; (2) the issue must have been actually litigated in the former proceeding; (3) it must have been necessarily decided in the former proceeding; (4) the decision in the former proceeding must be final and on the merits; and (5) the party against whom the preclusion is sought must be the same as, or in privity with, the party to the former proceeding. (Lucido v. Superior Court (1990) 51 Cal.3d 335, 341.) The party asserting collateral estoppel bears the burden of establishing these requirements. (See, e.g., Vella v. Hudgins (1977) 20 Cal.3d 251, 257.)

Defendant contends, as it did in its previous demurrer, that the court in the Federal Action already considered and rejected Plaintiff’s argument that she had more than an at-will employment status based on the SCVMC Medical Staff Bylaws and the County Ordinance Code. But as the Court explained previously in expressly rejecting Defendant’s collateral estoppel argument, it does not agree with Defendant’s characterization of the Federal Action and the decision by that court. Contrary to Defendant’s assertions, the federal court did not determine whether or not Plaintiff was an at-will employee. Instead, what the court actually determined was whether or not she had a viable property interest in her employment with SCVMC such that she could maintain a claim for federal constitutional violations under 42 U.S.C. § 1983. The court concluded that given the plain language of the County Ordinance and the bylaws, Plaintiff’s allegations were “insufficient to plausibly allege a property interest in employment under the standards set forth in Iqbal and Twombly.” (Egge v. County of Santa Clara, supra, 2018 WL 2096275 at *4.) Accordingly, Plaintiff’s claims under 42 U.S.C. § 1983 were dismissed by the court, which then declined to exercise supplemental jurisdiction over Plaintiff’s state law claims (breach of written contract, breach of oral contract, promissory estoppel and violation of California Labor Code section 1102.5) given the absence of a viable federal claim.

Whether or not Plaintiff has a property interest under the Due Process Clause of the Fourteenth Amendment is not an issue that need be reached in order to adjudicate her state law breach of contract claim in the instant action. For this claim, Plaintiff need only establish (1) the existence of an enforceable contract between herself and Defendants, (2) her performance or excuse for nonperformance thereunder, (3) Defendants’ breach of the agreement, and (4) damages to Plaintiff resulting from the breach. (CDF Firefighters v. Maldonado (2008) 158 Cal.App.4th 1226, 1239.) Thus, the “issues” underlying the breach of contract claim are not identical to the issues adjudicated by the federal court in connection with Plaintiff’s federal civil rights claim.

Specifically, the federal court did not actually and finally litigate the issue of whether the SCVMC Medical Staff Bylaws constituted an enforceable agreement between Plaintiff and Defendant. Granted, in its initial order granting Defendants motion to dismiss the claims asserted in Plaintiff’s original complaint the federal court found that the pleading failed to sufficiently allege the existence of a contract based on the SCVMC’s Medical Staff Bylaws. But the federal court then granted Plaintiff leave to amend. Never at any point did the federal court find as a matter of law that the bylaws absolutely did not constitute an enforceable agreement. The court merely found that the allegations of the original complaint were insufficient to establish that the subject bylaws constituted a contract between Plaintiff and Defendants and then did not reach the sufficiency of the amended allegations of Plaintiff’s First Amended Complaint in that regard because it declined to exercise supplemental jurisdiction over her state law claims. Thus, all of the elements necessary to find that collateral estoppel applies are not present.

Given the foregoing, Defendant’s assertion that Plaintiff’s first cause of action in the FAC is barred by collateral estoppel is without merit. Consequently, Defendant’s demurrer is OVERRULED.