California's First District Court of Appeal recently rendered Canovas et. al. v. State Personnel Board. In it, three employees of the California workers' compensation system sought judicial relief after they were fired by the Department of Industrial Relations (DIR). The case involves some allegations that are downright disturbing, some that might be mere errors of judgment, and it is worthy of discussion both substantively and because of procedural observations of the Court.
Three "long-term employees" were investigated. All three worked in a unit that was responsible for the settlement of certain workers' compensation claims. The DIR had a policy that prohibited those employees from receiving gifts "from
vendors with whom the DIR employee regularly does business." The prohibition is qualified, prohibited only "if the gift is intended to
reward the DIR employee for doing business with the gift giver." (In other states prohibitions on gifts may be more absolute). The employees received training on the rule and were required to complete an annual form regarding "gifts
of $50 or more."
Apparently, there was a period during which enforcement of the rules was somewhat lax, until 2012. A pattern or practice had therefore evolved of vendors "sometimes taking DIR employees to lunch," giving them "gift cards," and "edible treats" delivered to the "DIR
offices." In 2012, a supervisor (one of the three employees) was reminded of the gift policy and instructed to review the policy with those she supervised. She elected not to do so.
Thereafter, the lunches, "promotional gifts," and "food to DIR offices" continued. The supervisor was later "again reminded . . . of the gift policy," and a "confirming memorandum" was sent. The supervisor then held a meeting and instructed her team "not to accept gifts from vendors." Despite this, the behavior continued. In 2013, the three employees each elected "not (to) disclose vendor gifts in their signed (disclosure) Forms." Later, there were allegations beyond the acceptance of gifts. An "anonymous letter" accused the supervisor of "required
vendors to bring food and gifts." Thus, gifts were allegedly accepted but also solicited.
During the ensuing investigation, the three "denied knowledge of the lunches and gift cards." The DIR later "heightened its investigation by conducting investigatory
interviews and advising those interviewed that failure to provide accurate, honest, and
thorough answers could result in discipline, up to and including dismissal." The three were thereafter interviewed, and "each denied, in their separate interviews, knowledge of the
vendor lunches and gift cards."
In August 2014, each was terminated, for the receipt of gifts, falsifying their reporting forms, "falsifying time sheets, and
being dishonest in their investigatory interviews." Other employees admitted their dishonesty and were suspended instead. The three claimed that they were terminated because of a discrimination allegation that the supervisor had previously made against her superior.
One interesting side issue is discussed in the opinion regarding investigation notes prepared by a DIR attorney involved in the investigation. The three employees sought those notes through discovery, but the state declined to provide them. They also tried to force the attorney to appear as a witness. The Administrative Law Judge (ALJ) denied their motion to force the state to produce them and did not make the attorney testify.
A second interesting side issue raised by the plaintiffs was their perception that the ALJ was intemperate or biased.
Ultimately, the ALJ concluded that the three employees "were dishonest and that retaliation was
not the primary basis for the termination, and he upheld the termination as proper." A constitutional trial court declined to change the ALJ's conclusions, and the matter was ultimately reviewed by the California First District Appellate Court. The Court concluded that the ALJ's findings, that the firings were not retaliatory or related to the discrimination complaint, were supported by competent evidence. It conceded that the timing of the investigation was "suspicious," but upheld the ALJ conclusions. There were thus serious implications of receiving gifts, soliciting gifts, and attempting to hide gifts.
On the first side issue, the Court concluded that the DIR attorney was acting as counsel through the investigation. It noted particularly that she was "listed
as counsel on many" pleadings, and that the other attorneys involved corresponded with her as counsel. It held "whatever
information she had, therefore, she gained as counsel of record for a party." Furthermore, it noted that the interviews the attorney attended were also attended by another DIR employee, whose notes were provided to the three plaintiffs. Thus, there was support for the ALJ's decision not to compel her to testify or to produce her notes from the investigation.
The Court concluded that there was no justification for calling the attorney as a witness or compelling the production of her notes, saying that plaintiffs:
"fail to show how an examination of (attorney) Holton would have furthered the search for the truth, rather than the sport of targeting opposing counsel with hostile questioning in retaliation for doing her job."
It appears that the Court viewed the attempt to involved the attorney as a witness as a ploy, a litigation strategy, a "sport." Litigation is not a pleasant environment. It depends on professionals and professionalism. Everyone involved should perhaps remind themselves of that periodically.
As to the second side issue, the ALJ's handling of the plaintiff's claims and litigation, the Court concluded that their allegations were an "argument of last resort." The Court found that no evidence supported bias, but reminded that "Judges, of course, have the sometimes difficult job of maintaining
discipline and running an orderly proceeding." In that process, the Court said, "litigants may sometimes
confuse the exercise of a firm hand with a display of bias or intemperateness." It reinforced a critical point that it is "not 'unfair' of " an ALJ to "credit the testimony of" particular witnesses over the testimony of others. Determination of which witnesses to accept or credit is ultimately what judges have to do in deciding disputes.
This is an interesting decision. It reinforces and describes the roles of attorneys and appropriate application of the work-product privilege that may protect them from disclosing their thoughts or testifying. It reminds us that litigation can become involved, heated, and perhaps personal between parties. It is the role of the judge to maintain order and assure a fair hearing throughout, balancing the rights of all involved. Those procedural reminders are worthy of reading.
But substantively, the decision also reinforces a point that is worthy of remembering. State employees are bound by the rules of state government. Those rules often preclude the acceptance of gifts, not to mention the solicitation of gifts. Florida rules certainly do. It is not appropriate to offer gifts to Florida state employees, and it is not appropriate for such employees to seek them. Time and again I am told that attorneys and others merely wish to acknowledge and recognize our public service when offering some token of appreciation.
But, to avoid the kind of issues illustrated in Canovas, why not just offer a sincere and heartfelt "thank you?" Whether verbally delivered, or on a card, or in an email, that thank you will let someone know you appreciate what they do. It is by far a more appropriate acknowledgment than offering some gift which might be misinterpreted and which could lead to untoward circumstances for the employee.
