No Adverse Inferences

Carroll v. Comm’n on Teacher Credentialing, No. C083250 (D3 Oct. 23, 2020)

An employee of a state agency claims she was fired in retaliation for reporting misconduct to statue auditors. As required by statutes governing public employees, she first presented her claims to the State Personnel Board, which rejected her complaint. She then filed a civil action, which included both state claims and a claim under 42 U.S.C. § 1983. Agency removed the case to federal court, which dismissed the § 1983 claim for failure to state a claim and then remanded to state court. A state court jury subsequently found in her favor and awarded significant damages.

The Agency raises two preclusion issues, but neither carries the day. First, the Agency says the federal court’s dismissal of the § 1983 claim is claim preclusive (res judiciata) to the state law claims because they invoke the same primary right. But primary rights are a state court thing and the preclusive effect of a federal court ruling is decided by federal, not state, law. Federal courts say that the grant of a 12(b)(6) motion is not sufficiently on the merits to give rise to res judicata. So no preclusion.

The Agency also says that the Personnel Board’s denial created issue preclusion (collateral estoppel) issues. The statutory scheme that governs state employees does requires a Personnel Board complaint as a predicate to suit. But an employee has no right to appeal an adverse decision from the Board, and state law does not treat any subsequent civil suit as a review of the Board’s decision. Given that scheme, the California Supreme Court has held that Personnel Board decisions are insufficiently final to satisfy the finality element of issue preclusion. See State Bd. of Chiropractic Examiners v. Superior Court, 45 Cal. 4th 963, 975–76 (2009).

But Plaintiff isn’t out of the woods. During the trial, Plaintiff’s lawyer asked several of the Agency’s witnesses about their intentions for seeking legal advice related to Plaintiff from the Department of Personnel Administration—basically the state’s employment/HR counsel. When the witnesses would not answer the question on privilege grounds, the attorney sarcastically questioned them about what advice they were not seeking. The trial court let the questioning occur. It then refused to instruct under Evidence Code § 913, which says that a jury should be instructed not to draw any inference from the valid exercise of a privilege. In both questioning and argument, Plaintiff’s counsel implied an inference that the failure to disclose the purpose of the advice suggested something sinister was afoot.

That was error. Indeed, prejudicial error. You can’t make a witness decide between revealing privileged communications and letting an opponent draw negative inferences from a refusal to waive the privilege. Although the court gave a general closing instruction (CACI 215) about not drawing inferences regarding the invocation of the attorney-client privilege, the sheer amount of questioning on the issue, combined with the trial court’s refusal to specifically instruct under § 913 rebutted the general presumption that juries will follow their instructions. And because this testimony went to the heart of the case—the Agency’s motivation for firing Plaintiff—the error was clearly prejudicial, thus meriting reversal.

Reversed.