Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. BC 364522, Peter D. Lichtman, Judge.
Law Offices of Neal J. Fialkow and Gregg A. Farley for Plaintiffs and Appellants.
Richard M. Brown, Joseph A. Brajevich, Eskel H. Solomon, Pamela L. McFarlane; Liner Yankelevitz Sunshine & Regenstreif, Liner Grode Stein Yankelevitz Sunshine Regenstreif & Taylor, Randall J. Sunshine, Angela C. Agrusa, and Allen P. Lohse for Defendants and Appellants.
FLIER, Acting P. J.
Plaintiffs Lucille Estes, Michael and Evelyn Pecina and Robert Bergerson named as defendants in their third amended complaint the City of Los Angeles and the Los Angeles Department of Water and Power (collectively DWP) and Latonya Carson, Sharon Arch and Gloria Bond. The trial court sustained defendants’ demurrer without leave to amend, judgment was entered and this appeal followed under No. B215596.
Prior to filing the third amended complaint and while the operative pleading was still the second amended complaint, defendants filed a motion to disqualify plaintiffs’ counsel. Ultimately, the trial court denied this motion. Defendants appealed from this order under No. B210760.
“An order denying a motion to disqualify the opposing party’s attorney is appealable in this jurisdiction either as a denial of injunctive relief or as a collateral matter unrelated to the merits of the underlying litigation.” (Gregori v. Bank of America (1989) 207 Cal.App.3d 291, 300.)
On June 4, 2009, we granted plaintiffs’ motion to consolidate these two appeals for all purposes under No. B210760.
We affirm the order sustaining the demurrer to the third amended complaint without leave to amend. Because our disposition of the order sustaining the demurrer potentially renders the appeal from the disqualification order moot, we stay the latter appeal. In the event our opinion becomes final, we will dismiss the appeal from the order denying the motion to disqualify counsel.
PROCEDURAL HISTORY
Plaintiff Estes first filed this putative class action against DWP for allegedly recording telephone calls between DWP and its customers without proper notice. Estes filed a first amended complaint on the heels of the original complaint, adding a plaintiff class of DWP employees who allegedly had their telephone conversations recorded by DWP; this complaint added John Gail and Bergerson as plaintiffs. Gail and Estes represented DWP customers while Bergerson, a DWP employee, was to represent the DWP employee class. Both the original and first amended complaints were predicated on Penal Code section 632 (section 632).
In relevant part, subdivision (a) of section 632 provides: “Every person who, intentionally and without the consent of all parties to a confidential communication, by means of any electronic amplifying or recording device, eavesdrops upon or records the confidential communication, whether the communication is carried on among the parties in the presence of one another or by means of a telegraph, telephone, or other device, except a radio, shall be punished by a fine not exceeding two thousand five hundred dollars ($2,500), or imprisonment in the county jail not exceeding one year, or in the state prison, or by both that fine and imprisonment.”
DWP demurred to the first amended complaint in part on the ground that the definition of “person” in subdivision (b) of section 632 did not include public agencies. The trial court disagreed, concluding that DWP fell into the “other legal entity” rubric of subdivision (b). DWP filed a petition for a writ of mandate in this court.
Subdivision (b) of section 632 states: “The term ‘person’ includes an individual, business association, partnership, corporation, limited liability company, or other legal entity, and an individual acting or purporting to act for or on behalf of any government or subdivision thereof, whether federal, state, or local, but excludes an individual known by all parties to a confidential communication to be overhearing or recording the communication.”
After reviewing Estes’s response to the petition, we entered an alternative writ of mandate and order in which we held that public agencies are not “persons” under section 632 and we afforded the trial court an opportunity to vacate its ruling on the demurrer or show cause why it would not do so. The trial court opted to set aside its ruling and entered an order sustaining the demurrer to the first amended complaint; ultimately, the trial court gave Estes leave to amend the complaint.
The second amended complaint re-pleaded the first three causes of action of the first amended complaint. These causes of action were against DWP and were, in order, a cause of action brought by the customer class, by the employee class and for injunctive relief. The complaint alleged that these causes of action were re-pleaded in order to preserve the opportunity for appellate review. The second amended complaint also added as defendants Carson, Arch and Bond, who are DWP employees. This complaint added causes of action by the customer and employee classes against the individual defendants and added a cause of action against DWP under Government Code section 815.2.
“(a) A public entity is liable for injury proximately caused by an act or omission of an employee of the public entity within the scope of his employment if the act or omission would, apart from this section, have given rise to a cause of action against that employee or his personal representative. [¶] (b) Except as otherwise provided by statute, a public entity is not liable for an injury resulting from an act or omission of an employee of the public entity where the employee is immune from liability.” (Gov. Code, § 815.2.)
DWP now filed its motion to disqualify plaintiffs’ counsel on the ground that there was a conflict because plaintiffs’ counsel represented the employee class while at the same time also suing DWP employees.
Initially, the trial court granted the motion on March 19, 2008. Sharp v. Next Entertainment, Inc. (2008) 163 Cal.App.4th 410 was filed on May 28, 2008. The trial court sua sponte notified the parties that it would reconsider its ruling in light of Sharp, heard argument and considered supplemental briefing, and eventually entered a new order denying the motion to disqualify. The basis for the court’s decision appears to have been that the DWP employee defendants were senior managers, while the DWP employee plaintiffs were going to be rank and file and that there was therefore no conflict.
Plaintiffs filed their third amended complaint that tracked the second amended complaint with some minor differences. As noted, the trial court sustained defendants’ demurrer to the third amended complaint without leave to amend.
THE THIRD AMENDED COMPLAINT
We turn to the third amended complaint (hereafter referred to as the complaint) and to plaintiffs’ theories about the complaint.
Plaintiffs make clear that they are not relying solely on section 632 but on the entire statutory scheme found in Penal Code sections 630 through 637.9 that “generally make it a crime to record or eavesdrop upon telephone calls without consent and that imposes civil liability of $5,000 per violation and the possibility of injunctive relief.” Therefore, plaintiffs’ action is predicated on Penal Code section 637.2, which creates a private right of action and under which a plaintiff can recover the greater of $5,000 or three times the amount of actual damages sustained by the plaintiff.
Plaintiffs explain that they sued the three named DWP employees as managers who controlled DWP’s telephonic system for their “primary or direct liability for the statutory damages under Penal Code section 637.2(a).” (Boldface and italics in original.) Plaintiffs rely on the definition of “person” set forth in subdivision (b) of section 632, which includes individuals “acting or purporting to act for or on behalf of any government or subdivision thereof.” (See fn. 3, ante.) Specifically, the individual defendants are alleged in the complaint to have “intentionally or willfully recorded, caused to be recorded, permitted to be recorded or assisted or participated in recording, without consent, telephone conversations between and among DWP employees, DWP customers, and other third parties.”
The complaint alleges that DWP has a “uniform policy of recording all calls that were either incoming or outgoing and that were made on certain telephone lines and numbers.” The complaint also alleges that the individual defendants’ acts and omissions “were in furtherance of the DWP’s business operations or were part of such Defendants’ regular employment duties with the DWP.”
Plaintiffs state that they have also sued DWP for its vicarious liability under the respondeat superior doctrine reflected by Government Code section 815.2.
THE TRIAL COURT’S RULING
The trial court sustained the demurrer to the first three causes of action for the reason set forth in our alternative writ and order.
The court found that the gravamen of plaintiffs’ action was DWP’s policy to record telephone conversations with DWP customers and employees. Therefore, the fourth and fifth causes of action, which named the individual defendants, were in fact against DWP and not the named individuals. The court found that when, as here, the action alleges injury caused by an official policy, the action is against the public agency and not any individual actors. The court further concluded that because the action was aimed at DWP policy, there were no acts or omissions of any individuals upon which this cause of action could be predicated.
DISCUSSION
1. Neither the City of Los Angeles Nor the Los Angeles Department of Water and Power Is a “Person” for the Purposes of Section 632
We stated in our alternative writ of mandate and order filed on November 2, 2008, that DWP is not a person for the purposes of section 632.
We also pointed out that the failure of the Legislature to enact a law giving a private right of action against public entities for eavesdropping on and the recording of conversations only underlines that no such right of action exists. Finally, we noted that including in the definition of persons an “individual acting or purporting to act for or on behalf of any government or subdivision thereof” (§ 632, subd. (b)) could be explained by a desire to emphasize that although governmental agencies are not included in the definition of persons, individuals acting on behalf of those agencies are included.
This means that the first three causes of action of the complaint do not state facts sufficient to constitute a cause of action.
2. Plaintiffs’ Action Is Against the Public Entity (DWP) and Not Against the Public Entity’s Employees
We conclude that plaintiffs’ action is against DWP, notwithstanding that they have also named three DWP supervisors as defendants. There are two reasons for this. (1) The action seeks to recover money from DWP. (2) The action is predicated on DWP’s alleged policy and practice of recording telephone conversations.
As the United States Supreme Court has observed, “the nature of a suit as one against the state is to be determined by the essential nature and effect of the proceeding.” (Ford Motor Co. v. Department of Treasury (1945) 323 U.S. 459, 464, italics added (Ford Motor Co.), overruled on other grounds in Lapides v. Board of Regents (2002) 535 U.S. 613, 614.) The first reason we have identified speaks to the effect of the proceeding, while the second describes the essential nature of the proceedings. We address these topics in the following subparts.
(a) The Action Seeks Recovery of Money from DWP (Effect)
Under the jurisprudence developed by the United States Supreme Court, when the action seeks recovery of money from the state and the named individual defendant is sued as a representative of the state, the action is held to be one against the state. “And when the action is in essence one for the recovery of money from the state, the state is the real, substantial party in interest and is entitled to invoke its sovereign immunity from suit even though individual officials are nominal defendants.” (Ford Motor Co., supra, 323 U.S. at p. 464.) In Ford Motor Co., the named defendants were Indiana’s Department of the Treasury and the governor, treasurer and auditor of the state and the recovery would have been paid by the state. The court concluded that the action was one against the state and was therefore barred by the 11th Amendment. In part, Ford Motor Co. relied on Smith v. Reeves (1900) 178 U.S. 436 and Great Northern Life Ins. Co. v. Read (1944) 322 U.S. 47, which we discuss below.
In Smith v. Reeves, supra, 178 U.S. at page 437, the sole named defendant was the Treasurer of the State of California and the action was for a refund of taxes paid. Justice Harlan put it this way: “Is this suit to be regarded as one against the State of California? The adjudged cases permit only one answer to this question. Although the state, as such, is not made a party defendant, the suit is against one of its officers as Treasurer; the relief sought is a judgment against that officer in his official capacity; and that judgment would compel him to pay out of the public funds in the treasury of the State a certain sum of money. Such a judgment would have the same effect as if it were rendered directly against the State for the amount specified in the complaint.” (Id. at pp. 438-439.) To the same effect is Great Northern Life Ins. Co. v. Read, where the action was for the recovery of taxes paid and the named defendant was the Insurance Commissioner of Oklahoma. (Great Northern Life Ins. Co. v. Read, supra, 322 U.S. at pp. 48, 51.) In both of these cases the court concluded that the action was against the state.
Two elements emerge from these cases. If the state will pay the money sought and the individual defendant is sued in his or her representative, and not individual, capacity, the action is one against the state.
California cases are in harmony with the foregoing.
The starting point is the “doctrine of sovereign immunity... that the state may not be sued without its consent.” (People v. Superior Court (1947) 29 Cal.2d 754, 757.) From here the next stop is Government Code section 815, which provides that, except as otherwise provided by statute, a public entity is not liable for an injury whether such injury arises out of an act of omission of the public entity or a public employee or any other person. This provision is the “policy cornerstone” of governmental immunity. (Nestle v. City of Santa Monica (1972) 6 Cal.3d 920, 932.) In other words, the principle at stake is the same as in Ford Motor Co., Smith v. Reeves, and Great Northern Life Ins. Co. v. Read: the state is immune from suit.
This leaves California courts with the same problem addressed in the Ford Motor Co. line of cases. California courts have arrived at the same solution to this problem as the United States Supreme Court.
“An action against a state officer for a wrongful act in the officer’s official capacity is permissible where the state’s interests are not involved. (Boland v. Cecil (1944) 65 C.A.2d Supp. 832, 841... [recovery of property unlawfully seized].)” (4 Witkin, Cal. Procedure (5th ed. 2008) Pleading, § 106(3), p. 169.) In Boland v. Cecil, agents of the state department of agriculture had wrongfully seized a butchered cow. The action was for the return of the (frozen) carcass and the named defendants were the state director of agriculture and his individual agents. The court carefully pointed out that an action for damages could not be maintained but that an action for a return of the carcass was a different matter. (Boland v. Cecil, supra, at p. 841.) This did not involve a substantial interest of the state. (Ibid.) In other words, the judgment would not be against the state, as it would have been if damages had been sought, but rather against the individual defendants in possession of the carcass.
Interestingly, Smith v. Reeves is in accord. Just after the passage we have already cited, the opinion goes on to state: “This case is unlike those in which we have held that a suit would lie by one person against another person to recover possession of specific property, although the latter claimed that he was in possession as an officer of the State and not otherwise.” (Smith v. Reeves, supra, 178 U.S. at p. 439.)
Witkin digests two other cases when California courts held that the action could be brought against the public employee only because the judgment would have to be against the public employee and not the state. “An action brought to compel an officer to perform a duty expressly required of him or her by law is not an action against the state. Los Angeles v. State Dept. of Public Health (1958) 158 C.A.2d 425, 441... [action for declaratory relief and injunction, to compel disbursement of funds in manner provided by statute and contrary to invalid administrative regulation].) [¶] An action may be brought against a state officer or agency having statutory capacity to sue and be sued for a declaration of rights under a regulatory statute. (California Physicians’ Service v. Garrison (1946) 28 C.2d 790, 800....)” (4 Witkin, Cal. Procedure, supra, Pleading, § 106(3), p. 169.)
Measured by the foregoing principles, plaintiffs’ action is one against DWP. The complaint goes so far as to allege that the individual defendants must be defended and indemnified by DWP pursuant to Government Code section 825, subdivision (a), making it clear that it is DWP who will pay the judgment. The complaint also alleges that what the individual defendants did, they did as part of their “regular employment duties with the DWP” and as part of their day-to-day duties at DWP. The sum of it is that the individual defendants are sued in their representative and not individual capacity.
The critical fact is that DWP is expected to respond to 100 percent of the monetary award. Given that the Government Claims Act “was conceived to strictly limit governmental liability” (Williams v. Horvath (1976) 16 Cal.3d 834, 842), one would think that there must be a convincing basis for the imposition of such massive liability on a public entity. As we demonstrate in the next subpart, plaintiffs have not shown that there is such a basis in this case.
The complaint alleges that at least 10, 000 conversations were recorded illegally.
Before turning to the next subpart, we note that plaintiffs dismiss Ford Motor Co. with the statement that “there was no analysis in this case regarding immunity under California law.” This misses the point that Ford Motor Co. addressed exactly the same problem that is encountered in this case, which is the naming of putative defendants when the actual defendant is a state or a subdivision thereof endowed with sovereign immunity. (Ford Motor Co., supra, 323 U.S. 459, 464.)
(b) The Action Is Predicated on DWP’S Alleged Policy and Practice of Recording Telephone Conversations (Nature of the Action)
As noted, the complaint alleges that DWP has a “uniform policy of recording all calls that were either incoming or outgoing and that were made on certain telephone lines and numbers.” The complaint also alleges that the individual defendants’ acts and omissions “were in furtherance of the DWP’s business operations or were part of such Defendants’ regular employment duties with the DWP.” While the complaint also alleges that the individual plaintiffs made or received calls to and from DWP that were recorded, it is obvious that the judgment would also have to provide that the policy or practice of recording calls has to cease. That is, the judgment would necessarily be also against DWP. Thus, not only would DWP have to pay the fines sought by plaintiffs’ action, DWP would also be bound by the judgment and would have to alter its policy and practice regarding recording telephone calls.
Plaintiffs contend that the trial court erred in concluding that it was DWP’s policy to record telephone conversations without notice. Plaintiffs are mistaken; as the text shows, that is precisely what the complaint alleges.
Given these realities, it cannot be said that this action is solely for injuries inflicted by the three individual defendants. The action is, in reality, one against DWP.
This conclusion is fortified by the fact that plaintiffs’ action as it has been pleaded is predicated on a criminal statute. That is, the rights plaintiffs seek to vindicate are not rights arising from the law of torts. Normally, when Government Code section 815.2 is invoked, the public employee has committed an intentional or unintentional tort. This is reflected in the definition of “injury” for the purposes of the Governmental Claims Act. But in this case the three individual defendants are to be held liable under a criminal statute for implementing and enforcing a policy promulgated by DWP. This is a far cry from committing a tort.
“‘Injury’ means death, injury to a person, damage to or loss of property, or any other injury that a person may suffer to his person, reputation, character, feelings or estate, of such nature that it would be actionable if inflicted by a private person.” (Gov. Code, § 810.8.)
Government Code section 815.2 cannot be used to circumvent the general rule of immunity laid down in Government Code section 815.
DISPOSITION OF THE APPEAL FROM THE ORDER DENYING THE MOTION TO DISQUALIFY COUNSEL IS STAYED
In the event that our decision to affirm the court’s order sustaining the demurrer without leave to amend turns out to be the final word, the competence of plaintiffs’ counsel to represent plaintiffs will be moot. There would therefore be no need to review the trial court’s ruling on the motion to disqualify counsel.
Accordingly, we vacated our order consolidating these two appeals and we reinstated the appeals under their original numbers. This appeal is B215596 and the other appeal is B210760, as before.
The disposition of B210760 is stayed. If our decision in B215596 becomes final, we will dismiss B210760 as moot. In the event our decision in B215596 is not final, we will address and dispose of B210760 expeditiously without further briefing and oral argument.
DISPOSITION
The order sustaining the demurrer without leave to amend is affirmed. Defendants are to recover their costs on appeal.
We concur: GRIMES, J., O’CONNELL, J.
Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.