Unfavorable Findings of State Personnel Board Did Not Preclude Employee From Filing Lawsuit and Alleging Whistleblower Retaliation

David Wabakken, a lieutenant with the California Department of Corrections and Rehabilitation (Department), disclosed alleged improper activities, including the negligent supervision of inmates, to his superiors between 2007 and 2011. During the period of time that Wabakken made the disclosures, he received three notices of adverse action. The first notice resulted in a salary reduction, the second resulted in a demotion, and the third resulted in termination. Wabakken's termination became effective May 6, 2011. Wabakken appealed all three disciplinary actions to the California State Personnel Board.

The California State Personnel Board reviews disciplinary actions taken against state employees. Wabakken appealed the three adverse actions to the State Personnel Board.

Wabakken raised multiple defenses to the charges that formed the basis for his discipline, including the defense that the adverse actions taken against him constituted retaliation. In September 2011, Wabakken also filed a whistleblower retaliation complaint with the State Personnel Board alleging that the Department retaliated against him after he made protected disclosures of their improper government activities. In October 2011, the State Personnel Board dismissed Wabakken's complaint after determining that he failed to demonstrate that Department's actions against him were in retaliation for his protected disclosures.

In June 2012, an administrative law judge (ALJ) heard Wabakken's disciplinary appeal. The ALJ found that the Department failed to prove most of the charges by a preponderance of the evidence, and determined that a one-year salary reduction, not termination, was appropriate for the sustained charges. In his decision, the ALJ explicitly addressed three of Wabakken's affirmative defenses, but not his retaliation defense. The State Personnel Board adopted the ALJ's decision.

Wabakken subsequently filed suit against the Department, the warden, and several other correctional officers (Defendants) alleging violations of the Whistleblower Retaliation Act (California Government Code section 8547) and violation of 42 U.S.C. section 1983 based upon claims that he was retaliated against for disclosing improper government activities. The district court granted Defendants' motion for summary judgment on the basis of collateral estoppel, finding that the issue of whether an adverse employment action was taken against Wabakken as a result of whistleblower retaliation had already been litigated and decided against Wabakken during the State Personnel Board proceedings. Wabakken appealed, and the Court of Appeals for the Ninth Circuit reversed.

The doctrine of collateral estoppel is based on the premise that "once an issue has been resolved in a prior proceeding, there is no further fact-finding function to be performed." Collateral estoppel bars an issue from being relitigated if (1) the issue already decided is identical to the one which is sought to be relitigated; (2) the previous proceeding resulted in a final judgment on the merits; and (3) the party against whom collateral estoppel is asserted was a party or in privity with a party at the prior proceeding. An issue is actually litigated when it was properly raised, submitted for determination, and determined.

A court should not apply collateral estoppel to a decision in a prior proceeding if doing so is contrary to the intent of the legislative body that established the proceeding. In 2009, the California Supreme Court held that the California Legislature did not intend for the State Personnel Board's findings in a whistleblower retaliation case to have a preclusive effect against the complaining employee. The Whistleblower Retaliation Act expressly authorizes an employee to bring a lawsuit for damages, though the employee first must file a complaint with the State Personnel Board. As long as the employee files a complaint with the Board, it may proceed with a damages action regardless of whether the Board's findings are favorable or unfavorable.

Here, Wabakken filed a complaint with the State Personnel Board, which the Board dismissed. Even though the Board's findings were not favorable to Wabakken, he was then eligible to seek relief in court, and collateral estoppel should not have been applied. The Ninth Circuit reversed and remanded.

Note:

It is important to remember that this case specifically deals with hearings conducted by the State Personnel Board, and does not stand for the sweeping proposition that an employee who loses a disciplinary appeal can file a federal lawsuit alleging the same claims and defenses as those raised in the appeal. As a general rule, an employee wishing to challenge a disciplinary appeal must do so by filing a petition for writ of administrative mandamus pursuant to California Code of Civil Procedure section 1094.5.

Wabakken v. California Department of Corrections and Rehabilitation (9th Cir. 2015) ___ F.3d ____ [2015 WL 5315411].