California State Lawyer Isn’t Barred From Bringing Whistle-Blower Claim

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By Joan C. Rogers  

Laws and rules on confidentiality and the attorney-client privilege do not prevent California government lawyers from bringing claims under the state's law designed to shield state employees who report improper government activity, the U.S. District Court for the Eastern District of California held Aug. 19 (Carroll v. California, E.D. Cal., No. 2:13-cv-00249-KJM-KJN, 8/19/13).

In holding that the California Whistleblower Protection Act is not off limits to state government lawyers, Judge Kimberly Mueller disagreed with an attorney general's opinion that laws and rules on confidentiality and privilege trump a public agency lawyer's right to sue for retaliatory action. That interpretation is contrary to California Supreme Court precedent generally allowing lawyers to bring retaliatory discharge suits when they are terminated for refusing to violate their professional obligations, Mueller said.

Fired Lawyer Sued Agency

Kathleen Carroll worked for a time as staff counsel for the California Commission on Teacher Credentialing (CTC).

After Carroll was let go, she sued the CTC, alleging that her employment was terminated because she complained--both internally to CTC supervisors and externally to the Bureau of State Auditing and to a state senator--about improper and illegal activities by the CTC and its employees. According to Carroll's complaint, the state auditor's external investigation confirmed her reports of serious mismanagement and processing backlogs within the agency.

Carroll alleged, as one of three causes of action, that in discharging her the CTC violated the California Whistleblower Protection Act, Cal. Gov't Code §8547.


“[T]he proper inquiry is not whether only the CWPA permits the attorney to depart from the usual requirement of confidentiality, but whether any statute or ethical rule permits this departure.”
Judge Kimberly Mueller

The agency responded that attorneys cannot be whistle-blowers in California because of the state's strict rules and statutes on lawyer-client confidentiality and attorney-client privilege. It relied, in particular on 84 Cal. Op. Att'y Gen. 71 (2001), which concluded that whistle-blower statutory protections that cover employees of state and local public entities do not supersede the statutes and rules governing confidentiality and lawyer-client privilege.

Taking Carroll's complaint at face value, the court denied the defendants' motion to dismiss her CWPA claim.

Public Lawyers Too

The court pointed out that Gen. Dynamics Corp. v. Superior Court, 876 P.2d 487 (Cal. 1994), recognized the right of former corporate counsel to sue for wrongful discharge when

• she was terminated for refusing to violate a mandatory ethical duty embodied in professional conduct rules; or

• the employer's conduct would give rise to a retaliatory discharge action by a nonlawyer employee and a statute or ethics rule expressly removes the requirement of confidentiality.

 

General Dynamics set out several limitations to account for the confidentiality concerns of companies with in-house counsel, Mueller noted.

Carroll's complaint adequately alleges that some of her protected conduct was required or supported by California's ethics rules, and her CWPA claim is not categorically barred by confidentiality concerns at this stage of the litigation, the court ruled. It can't be determined at the pleading stage, Mueller said, that proof of Carroll's claim will require her to breach the attorney-client privilege.

Mueller cited as persuasive Van Asdale v. Int'l Game Tech., 577 F.3d 989, 25 Law. Man. Prof. Conduct 432 (9th Cir. 2009), which held that concerns about confidentiality and the attorney-client privilege do not block in-house lawyers from pursuing retaliatory discharge claims against their former employer under the federal Sarbanes-Oxley Act.

Two Flaws in AG Opinion

Mueller identified two reasons why she declined to follow the state attorney general's opinion on application of the CWPA to public agency lawyers.

First, “the CWPA's text does not say what the AG Opinion says it does,” Mueller wrote. She said that to support the contention that the CWPA was not intended to supersede the privilege, the attorney general's opinion cited Section 8547.8(f) as stating that the CWPA “provides that its prohibition shall not be deemed to diminish any right, privilege, or remedy under state or federal law of an individual in the exercise of official authority.” But the cited section does not actually say that, according to Mueller.

Second, “the interpretation that follows from this textual misrepresentation contravenes California Supreme Court precedent,” Mueller said. She pointed out that General Dynamics allows attorneys to sue when they allege they were terminated for refusing to violate a mandatory ethical duty. When a lawyer makes that allegation, she said, it is irrelevant whether the CWPA was intended to supersede the attorney-client privilege.

Again citing General Dynamics, Mueller said that in the event a government lawyer is fired for engaging in conduct that is ethically permissible, “the proper inquiry is not whether only the CWPA permits the attorney to depart from the usual requirement of confidentiality, but whether any statute or ethical rule permits this departure.”

No Explicit Prohibition

The agency also contended that the CWPA explicitly disallows disclosures in the circumstances presented in this case, but the court rejected that argument as incorrect.

Mueller acknowledged that three sections of the act contain provisions prohibiting the disclosure of information protected by law. But those provisions, she said, apply only to the three sections in which they appear, not to the CWPA as a whole. None of those three sections, she found, is relevant to Carroll's CWPA claim under Section 8547.8, which prohibits any “person,” defined to include state agencies, from engaging in acts of reprisal.

Moreover, the California government code includes provisions that supersede the attorney-client privilege when the state auditor is authorize to conduct an audit under the CWPA, Mueller said.

Dean E. Royer of Siegel & Yee, Oakland, Calif., appeared for Carroll. Susan E. Slager and Vanessa W. Whang, California Department of Justice, Sacramento, Calif., appeared for the CTC.


Full text at http://www.bloomberglaw.com/public/document/Carroll_v_California_No_213cv00249KJMKJN_2013_BL_219110_ED_Cal_Au.

The California attorney general's opinion is at http://oag.ca.gov/system/files/opinions/pdfs/00-1203.pdf.

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