Nancy Michaels vs. (CALPERS)

2017-00223756-CU-OE

Nature of Proceeding: Hearing on Demurrer to First Amended Complaint for Damages

Filed By: Cotter, Barbara A.

*** If oral argument is requested, the parties must at the time oral argument is requested notify the clerk and opposing counsel of the causes of action that will be addressed at the hearing. The parties are also reminded that pursuant to local court rules, only limited oral argument is permitted on law and motion matters. ***

Defendants Melinda Lorenz-Anderson’s (“Lorenz-Anderson”) demurrer to Plaintiff Nancy Michaels’ first amended complaint (“FAC”) is ruled upon as follows.

Overview

This case follows Plaintiff Nancy Michaels’ promotion and subsequent demotion while employed by Co-Defendant CalPERS. Plaintiff alleges that Lorenz-Anderson, Plaintiff’s coworker at CalPERS, obtained Plaintiff’s confidential employment information and delivered it to both the Secretary of Government Operations Agency and members of the Legislature. Lorenz-Anderson submitted the confidential information in a complaint (“the Lorenz-Anderson Complaint”) to protest what she believed was Plaintiff’s unlawful promotion to the position of Data Processing Manager (“DPM II”). The Lorenz-Anderson Complaint contained other accusations against Plaintiff as well. The State Personnel Board (“SPB”) received the Lorenz-Anderson Complaint and undertook an investigation resulting in the voiding of Plaintiff’s appointment to DPM II.

Lorenz-Anderson held a Staff Services Manager I position in CalPERS IT HR and a Staff Information Systems Analyst position in CalPERS IT.

The FAC contains causes of action against Lorenz-Anderson for invasion of privacy, negligence, defamation per se, defamation per quod, intentional infliction of emotional distress and negligent infliction of emotional distress.

After Lorenz-Anderson filed the instant demurrer, she filed a special motion to strike (“Anti-SLAPP Motion”). Pursuant to the Court’s ruling on the Anti-SLAPP Motion, the defamation causes of action have been stricken. With respect to the fifth, sixth, ninth and tenth causes of action against Lorenz-Anderson for invasion of privacy, negligence, IIED and NIED, the Court struck portions of these causes of action predicated on distribution of confidential materials. The portions predicated on accessing confidential materials remain operative.

Both parties’ requests for judicial notice are granted. In taking judicial notice of these documents, the court accepts the fact of their existence, not the truth of their contents. (See Professional Engineers v. Dep’t of Transp. (1997) 15 Cal.4th 543, 590; Steed v.
Department of Consumer Affairs (2012) 204 Cal.App.4th 112, 120-121.)

Plaintiff has also filed a petition writ of mandate against the State Personnel Board (“SPB”) seeking among other relief, reinstatement to her DPM II position and back pay.

Invasion of Privacy

In this cause of action, Plaintiff alleges that in violation of Article I, § I of the California, Lorenz-Anderson invaded her right to privacy. She specifically alleges that Lorenz-Anderson accessed Plaintiff’s confidential personnel files without authorization and submitted the Lorenz-Anderson Complaint. (FAC, ¶ 34.)

Lorenz-Anderson demurs on the ground that there is no private right of action for damages predicated on violations of the California Constitution.

In opposition, Plaintiff advances that she had a legally protected privacy interest in her personal information as set forth in Gov’t Code §11015.5(b) and Civ. Code §§ 1798.81.5(b) and 1798.82(b).

Gov’t Code §11015.5(b) does not apply because it prohibits a state agency from distributing or selling electronically collected personal information about users to any third party without prior written permission from the user. Here, Lorenz-Anderson is not a state agency.

Civ. Code §1798.81.5(b) provides “[a] business that owns, licenses, or maintains personal information about a California resident shall implement and maintain reasonable security procedures and practices appropriate to the nature of the information, to protect the personal information from unauthorized access, destruction, use, modification, or disclosure.” Here, Lorenz-Anderson is not a business nor are there allegations that Lorenz-Anderson “owns, licenses, or maintains personal information.”

Civ. Code §1798.82(b) provides “[a] person or business that maintains computerized data that includes personal information that the person or business does not own shall notify the owner or licensee of the information of the breach of the security of the data immediately following discovery, if the personal information was, or is reasonably believed to have been, acquired by an unauthorized person.” Here, there are no allegations that Lorenz-Anderson maintains computerized data or factual allegations that she was unauthorized to acquire the information.

The demurrer is SUSTAINED with leave to amend.

Negligence and Negligent Infliction of Emotional Distress

Plaintiff alleges that Lorenz-Anderson had a duty to: (a) accurately document her personnel actions within the CalPERS’ records and databases and (b) protect her private personnel information from unauthorized access and distribution. Lorenz-Anderson breached that duty by (a) failing to use reasonable care to properly document, and then refusing to correct, that Plaintiff’s appointment to the DPM II classification was effective as of May 3, 2016, within the CalPERS’ records and databases pursuant to California Government Code § 18525, and (b) failing to use reasonable care and take reasonable measures to ensure the privacy of Plaintiff’s private personnel information contained within her OPF and the CalPERS’ records and databases.

Lorenz-Anderson demurs on the ground that the action is barred by the workers’ compensation exclusivity rule. Plaintiff seeks to invoke the “dual capacity” doctrine as

an exception to the rule.

The “dual capacity” exception to the exclusivity rule allows a civil action to proceed when an employer negligently aggravates an initial industrial injury where the employer assumes a different set of obligations toward the employee arising independently from the employment relationship. (Weinstein v. St. Mary’s Medical Center (1997) 58 Cal.App.4th 1223, 1230.) The doctrine is based “on the distinction between two entirely separate sets of duties: (1) the duties of an employer to an employee arising from the existence of an employment relationship under workers’ compensation law; and (2) the common law (or other statutory) duties of care arising from other, nonemployment relationships, such as those of a medical care provided to a patient, or of a business or property owner to an invitee.” (Id.)

According to Plaintiff, “[b]ecause Lorenz had additional duties to Michaels which arise independently of the employment relationship, Michaels’ cause of action for negligence is not barred by the workers’ compensation exclusivity rule. Lorenz had a duty, outside of its employment relationship with Michaels, to not abuse her position as a CalPERS employee to unlawfully access, use, disclosure, or dissemination to third parties without Michaels’ prior written consent.” (Opposition, 10:15-19.)

The Court disagrees with Plaintiff. Here, Lorenz-Anderson is not Plaintiff’s employer, thus, the dual capacity doctrine does not apply. The demurrer is SUSTAINED with leave to amend.

Having sustained the demurrer on this ground, the Court need not address Lorenz-Anderson’s remaining arguments.

Intentional Infliction of Emotional Distress

Plaintiff alleges that “Defendant Lorenz’s conduct was outrageous because Lorenz intentionally violated Michaels’s privacy by unlawfully accessing and distributing Michaels’s confidential private personal information and then using such information to wrongfully accuse Michaels of (a) being engaged in unlawful hiring practices and (b) to cause a formal SPB investigation to be initiated regarding Michaels’s appointment the DMP II classification.” (FAC, ¶ 169.)

As a reminder, pursuant to the Court’s ruling on the Anti-SLAPP Motion, the Court struck portions of the cause of action predicated on distribution of confidential materials. The portions predicated on accessing confidential materials remain operative.

The demurrer on the ground that Plaintiff fails to sufficiently plead outrageous conduct is SUSTAINED with leave to amend. Given that the only act upon which this cause of action is based is Lorenz-Anderson accessing Plaintiff’s information and not distributing the information which resulted in Plaintiff’s demotion, the Court concludes

that Plaintiff fails to sufficient allege outrageous conduct.

Plaintiff may file and serve a second amended complaint (“SAC”) by no later than September 17, 2018, Response to be filed and served within 30 days thereafter, 35 days if the SAC is served by mail. (Although not required by any statute or rule of court, Plaintiffs are requested to attach a copy of the instant minute order to the SAC to facilitate the filing of the pleading.)

The minute order is effective immediately. No formal order pursuant to CRC Rule 3.1312 or further notice is required.

Item 6 2017-00223756-CU-OE

Nancy Michaels vs. (CALPERS)

Nature of Proceeding: Hearing on Demurrer to First Amended Complaint for Damages

Filed By: Perkell, Jennifer G.

Defendants California Public Employees’ Retirement System (“CalPERS”) and Tina Campbell’s (“Campbell”) (collectively “Defendants”) demurrer to Plaintiff Nancy Michaels’ first amended complaint (“FAC”) is ruled upon as follows.

This is an employment action. Plaintiff alleges that she was unlawfully demoted from her DPM II position at CalPERS. As against Defendants, the FAC asserts causes of action for: (a) Violation of Statute [2 C.C.R. §226(a)], (b) Age Discrimination, (c) FEHA Retaliation, (d) Violation of Due Process [42 U.S.C. §1983], (e) Invasion of Privacy, (f) Negligence, (g) Intentional Infliction of Emotional Distress, and (h) Negligent Infliction of Emotional Distress.

Plaintiff has also filed a petition writ of mandate against the State Personnel Board (“SPB”) seeking among other relief, reinstatement to her DPM II position and back pay.

Violation of Statute [formerly 2 C.C.R. §226(a), now §243.2]

2 C.C.R. §243.2(a) provides:

(a) When the Board, Executive Officer, or Department determines that an appointment is unlawful, the Board, Executive Officer, or Department may take corrective action up to and including voiding the appointment under the following circumstances:

(1) The action to correct or void the appointment is taken within one year after the appointment; and

(A) The appointing power or employee or both the appointing power and employee acted in other than good faith; or

(B) The appointment was accepted and made in good faith by both the appointing power and employee; and the appointment would not have been made but for some mistake of law or fact that if known to the parties would have rendered the appointment unlawful when made.

Plaintiff alleges that she was appointed on May 3, 2016. Therefore, Plaintiff alleges that CalPERS violated 2 C.C.R. §243.2 by demoting her on May 4, 2017 – more than one year after her appointment.

Defendants demur on the ground that there is no private right of action for a violation of 2 C.C.R. §243.2. In opposition, Plaintiff advances that CalPERS may be liable for their breach of a mandatory duty (Gov’t Code §815.6) purportedly imposed by 2 C.C.R. §243.2.

In California, a private cause of action lies against a public entity only if the underlying enactment sets forth the elements of liability identified in Government Code section 815.6. (Haggis v. City of Los Angeles (2000) 22 Cal.4th 490,499-500.) Section 815.6 of the Government Code states, “where a public entity is under a mandatory duty imposed by an enactment that is designed to protect against the risk of a particular kind of injury, the public entity is liable for an injury of that kind proximately caused by its failure

to discharge the duty unless the public entity establishes that it exercised reasonable diligence to discharge that duty.”

Gov’t Code §815.6 has three requirements: (1) the enactment must impose a mandatory duty; (2) the enactment must be meant to protect against the kind of risk of injury suffered by the party asserting section 815.6 as a basis for liability; and (3) the breach of the mandatory duty must be a proximate cause of the injury suffered. ( Eberlee v. County of Los Angeles (2010) 187 Cal.App.4th 1206, 1214.)

Here, 2 C.C.R. §243.2 applies to the “Board, Executive Officer, or Department” taking corrective action and voiding the appointment. These terms have specific meanings. “Board” means the State Personnel Board of the State of California. (2 C.C.R. §4.)

“Department” means the California Department of Human Resources. (2 C.C.R. §4.5.) “Executive Officer” means the executive officer of the Board. (2 C.C.R. §6.) Therefore, this regulation does not direct CalPERS to do anything. Rather, it directs the “Board, Executive Officer, or Department” to take such acts. Absent an enactment expressly directing that CalPERS take action, the first cause of action fails to state a valid cause of action.

The demurrer is SUSTAINED with leave to amend.

Age Discrimination

Plaintiff was 59 when she was demoted. Plaintiff alleges that CalPERS demoted her due to her age. She alleges that she was repeatedly asked by her supervisors words to the effect of “aren’t [you] going to retire soon?” They alleged made this statement even though she had never indicated she was planning to retire soon. (FAC, ¶ 103.)

Defendants demur on the ground that this cause of action is barred because Plaintiff’s demotion was required by law. Specifically, Defendants explain that the State Personnel Board of the State of California (“SPB”) ultimately determined that Plaintiff did not meet the minimum qualifications of the DPM III position and the SPB voided Plaintiff’s appointment. (Defendants’ RJN, Exs. A-B.) Given SPB’s decision, CalPERS was merely following an SPB order, which it was required to do.

In opposition, Plaintiff insists that Defendants’ argument “ignores the fact that Michaels’ was unlawfully demoted from her DPM II position more than one (1) year after the date of her appointment in blatant violation of California Code of Regulations, Title 2, § 266

(a). CalPERS’ argument that it was required by law to void Michaels’ DPM II appointment when it was, in fact, under a mandatory duty not to do so does not insulate CalPERS’ from liability for discriminating against Michaels’ based on her age.” (Opposition, 9:26-9:4.)

The Court has concluded, however, that 2 C.C.R. §243.2 does not impose a mandatory duty on CalPERS to void Plaintiff’s appointment within one year of her appointment. The record is clear that SPB made the decision to void Plaintiff’s appointment because she did not meet the minimum qualifications.

The demurrer is SUSTAINED with leave to amend.

FEHA Retaliation

Plaintiff alleges CalPERS retaliated against her for filing (on behalf of her subordinate employees) workplace violence/hostile work environment complaint against Melinda Lorenz-Anderson (“Lorenz”). Plaintiff also provided testimony on numerous occasions to the Attorney General’s office in response to complaints made against Lorenz. Lorenz held a Staff Services Manager I position in CalPERS IT HR and a Staff

Information Systems Analyst position in CalPERS IT.

Defendants demur on the grounds that Plaintiff failed to exhaust her administrative remedies and fails to state a cause of action.

The purpose of the FEHA complaint is to provide the DFEH the opportunity to resolve disputes and eliminate unlawful employment practices through conciliation. Further, what is submitted to the DFEH “must not only be construed liberally in favor of plaintiff, it must be construed in light of what might be uncovered by a reasonable investigation.” (Nazir v. United Airlines, Inc. (2009) 178 Cal.App.4th 243, 268); see also Wills v. Sup.Ct. (2011) 195 Cal.App.4th 143, 157-159.) Thus, a plaintiff may pursue claims not included in her DFEH charge that were “like or reasonably related” to the claim
that was made. (Okoli v. Lockheed Technical Operations Co. (1995) 36 Cal.App.4th 1607, 1616.)

While the DFEH charge must be liberally construed, a DFEH charge, must “set forth the particulars [of the unlawful practice complained of].” (Gov. Code § 12960(b) [emphasis added].) The “ ‘crucial element’ . . . is the factual statement contained therein.” (Sandhu v. Lockheed Missiles & Space Co. (1994) 26 Cal.App.4th 846, 858 [quoting Sanchez v. Standard Brands, Inc. (5th Cir. 1970) 431 F.2d 455][emphasis in original].)

Plaintiff’s DFEH Charge states:

On or around May 4, 2017, complainant alleges that respondent took the following adverse actions against complainant: Discrimination, Harassment, Retaliation Asked Impermissible non-job-related questions, Demoted, Denied a work environment free of discrimination and/or retaliation, Denied equal pay, Denied or forced to transfer, Denied reinstatement, Complainant believes respondent committed these acts because of their: Age – 40 and over.

According to Defendants, the DFEH Charge is insufficient because it fails to assert that Plaintiff was retaliated against for having filed workplace-violence complaints, and participated in investigations of those complaints.

In opposition, Plaintiff insists that a reasonable investigation of her DFEH Charge would lead to the investigation of any retaliatory actions that Plaintiff was subjected to. Plaintiff also explains that she can amend the FAC to include allegations that CalPERS retaliated against her because of her refusal to retire.

The Court disagrees with Plaintiff. Here, the DFEH Charge focused only on discrimination/retaliation based on age. There is no reason to believe that an investigation based upon the DFEH Charge would uncover retaliation based on her

workplace violence complaints and participation in the investigations. (See e.g. Okoli v. Lockheed Technical Operations Co. (1995) 36 Cal.App.4th 1607, 1615 [“a complaint alleging race discrimination is neither ‘like or related to’ nor likely to be discovered in a ‘reasonable’ investigation of a charge of sex discrimination”].) Baker v. Children’s Hosp. Med. Ctr. (1989) 209 Cal.App.3d 1057 does not support Plaintiff’s position because the case concerned whether a DFEH investigation into charges of discrimination is likely to uncover discriminatory acts that occurred after the charges were filed.

The demurrer is SUSTAINED with leave to amend.

The demurrer on the ground of failure to state sufficient facts is also SUSTAINED with leave to amend. Defendants contend Plaintiff fails to plead a causal connection between her protected activity and the adverse employment actions because the SPB, not CalPERS, made the decision to void Plaintiff’s appointment because she did not meet the minimum qualifications. As noted above with respect to the age discrimination cause of action, the Court agrees with Defendants. Thus, the demurrer is sustained with leave to amend.

Violation of Due Process [42 U.S.C. §1983]

Defendants demur on the ground that CalPERS, as a “state agency”, and Campbell, in her “official capacity” cannot be sued under 42 U.S.C. §1983.

The demurrer is SUSTAINED with leave to amend. Neither a State nor its officials acting in their official capacities are “persons” subject to suit under 42 U.S.C. §1983. ( Will v. Mich. Dep’t of State Police (1989) 491 U.S. 58, 71.)

Invasion of Privacy

In this cause of action, Plaintiff alleges that in violation of Article I, § I of the California, Defendants invaded her right to privacy. She specifically alleges that Lorenz accessed Plaintiff’s confidential personnel files without authorization and submitted a complaint to the Secretary Government Operations Agency and to members of the California State Legislature “falsely alleging that [Plaintiff] did not meet the minimum qualifications for the DPM II classification, that [Plaintiff] admitted to being complicit in being ‘pre-selected’ and ‘a blatant illegal hire,’ that a manager in the Human Resources Recruitment Section stated that [Plaintiff] was ‘not qualified,’ for the DPM II position.” (FAC, ¶ 34.) Plaintiff alleges that Lorenz cited to the confidential information in her complaint. (Id.) She further alleges that Defendants actual knowledge that Lorenz unlawfully accessed and distributed her personnel information and failed to take any action to determine who she obtained the information or to prevent any breach from happening again or to rectify the damage caused to Plaintiff. (Id. at ¶¶ 139-140.)

Defendants demur on the ground that there is no private right of action for damages predicated on violations of the California Constitution.

In opposition, Plaintiff advances that she can maintain a private right of action based on Defendants’ violation of their mandatory duty purportedly imposed by Gov’t Code §11015.5(b) and Civ. Code §§ 1798.81.5(b) and 1798.82(b).

Civ. Code §1798.81.5(b) provides “[a] business that owns, licenses, or maintains personal information about a California resident shall implement and maintain reasonable security procedures and practices appropriate to the nature of the information, to protect the personal information from unauthorized access, destruction, use, modification, or disclosure.” Here, Campbell is not a business. Additionally, there are no allegations the CalPERS failed to implement and maintain reasonable security procedures and practices appropriate to protect Plaintiff’s information from being disclosed.

Civ. Code §1798.82(b) provides “[a] person or business that maintains computerized data that includes personal information that the person or business does not own shall notify the owner or licensee of the information of the breach of the security of the data immediately following discovery, if the personal information was, or is reasonably believed to have been, acquired by an unauthorized person.” Here, there are no allegations that Campbell maintains computerized data. Nor are there any allegations that CalPERS did not “own” the information.

The demurrer is SUSTAINED with leave to amend.

Negligence

Plaintiff alleges that Defendants had a duty to: (a) accurately document her personnel actions within the CalPERS’ records and databases and (b) protect her private personnel information from unauthorized access and distribution. Defendants breached that duty by (a) failing to use reasonable care to properly document, and then refusing to correct, that Plaintiff’s appointment to the DPM II classification was effective as of May 3, 2016, within the CalPERS’ records and databases pursuant to California Government Code § 18525, and (b) failing to use reasonable care and take reasonable

measures to ensure the privacy of Plaintiff’s private personnel information contained within her OPF and the CalPERS’ records and databases.

Defendants demur on the ground that the action is barred by the workers’

compensation exclusivity rule. Plaintiff seeks to invoke the “dual capacity” doctrine as an exception to the rule.

According to Plaintiff, “[b]ecause CalPERS, as a state agency, had additional duties to Michaels which arise independently of the employment relationship, Michaels’ cause of action for negligence is not barred by the workers’ compensation exclusivity rule.

CalPERS had a duty, outside of its employment relationship with Michaels, to protect Michaels’ personal information from unauthorized access, use, disclosure, or dissemination to third parties without Michaels’ prior written consent.” (Opposition, 14, 21-25.)

The Court disagrees with Plaintiff. Here, it appears to the Court that CalPERS’ “duty” to maintain Plaintiff’s personal information arose out of Plaintiff’s employment with CalPERS. Plaintiff has not alleged that CalPERS’ duty was independent of her employment relationship with CalPERs or that CalPERS maintained her personnel information in a non-employment context. The demurrer is SUSTAINED with leave to amend.

Having sustained the demurrer on this ground, the Court need not address Defendants’ remaining arguments.

Negligent and Intentional Infliction of Emotional Distress

The demurrer on the ground that these causes of action are barred by the workers’ compensation exclusivity rule is SUSTAINED with leave to amend. While FEHA employment actions may fall outside the normal course of the employer-employee relationship (See Fretland v. County of Humboldt (1999) 69 Cal.App.4th 1478, 1492), the Court has sustained the demurrer to the FEHA causes of action. Because the FEHA causes of action are deficient, Plaintiff has not sufficiently pled that the emotional distress causes of action fall outside of the typical employer, employee relationship. Additionally, as explained above, Plaintiff has not sufficiently pled the “dual capacity” doctrine.

Plaintiff may file and serve a second amended complaint (“SAC”) by no later than

September 17, 2018, Response to be filed and served within 30 days thereafter, 35 days if the SAC is served by mail. (Although not required by any statute or rule of court, Plaintiffs are requested to attach a copy of the instant minute order to the SAC to facilitate the filing of the pleading.)

The minute order is effective immediately. No formal order pursuant to CRC Rule 3.1312 or further notice is required.