Opinion
No. C-93-1912 MHP.
September 19, 1995
MEMORANDUM AND ORDER
On July 12, 1993, plaintiff Jack Clemes brought suit against defendants Del Norte County Unified School District, Gene Edinger, Paul H. McCarthy, Debi Balzarini, Darlene Fosdick and Karen Marcum, alleging injuries arising from plaintiff's attempts to rectify certain improprieties that he witnessed on the part of the school district and its employees. Clemes sued under a host of statutes. In an earlier opinion, this court dismissed several of his claims; the remaining claims are under 42 U.S.C. § 1981, 1982, and 1983; 42 U.S.C. § 2000(d) et seq. ("Title VI"); 20 U.S.C. § 1681 ("Title IX"); and 31 U.S.C. § 3730 (h) ("False Claims Act").
Defendants have now moved for summary judgment or, in the alternative, for summary adjudication of issues on the grounds that Clemes' claim for reinstatement is barred by the preclusive effect of the findings of the Commission on Professional Competence, and Clemes' claims under sections 1981, 1982 and 1983, the False Claims Act, Title VI and Title IX all fail for a variety of reasons.
Having read and considered the arguments and submissions of the parties, and for the reasons set forth below, the court issues the following memorandum and order.
The following facts are taken from an earlier decision in this case. Jack C. Clemes v. Del Norte Co. Unified Sch. Dist., 843 F. Supp. 583 (1994). They are an approximation of the storyline. That almost every characterization is contested by the parties in some way (and that they are incapable of agreement on even undisputed issues) is evidenced by the regrettable fact that in their Joint Statement of Undisputed Facts the parties agreed on only one item: that plaintiff had testified before the Grand Jury on May 22, 1991.
Clemes was a teacher in the Del Norte County Unified School District ("District") for approximately 25 years. In 1989 he was assigned as teacher, and at various times designated Coordinator, for the Independent Studies Program. The Independent Studies Program was established by the District to provide educational services to students outside of the formal educational structure of the schools maintained by the District. A substantial number of the students enrolled in the program were Native Americans. The students were also predominantly female. The program was funded with both federal and state education monies.
Clemes alleges that around September 1990 he learned from the parents of some of the Independent Studies students that the other teacher for the Program, defendant Debbie Balzarini, was not teaching the students assigned to her. Upon investigation Clemes alleges that he discovered that defendant Balzarini was making false entries in student records and forging the signatures of students and parents on Independent Studies Program documents, including records of teaching sessions for students and contracts for the Independent Studies Program teaching services. Clemes reported this activity to defendant Paul McCarthy, principal in charge of the Independent Studies Program, and to defendant Gene Edinger, superintendent of the Del Norte School District.
Plaintiff also alleges that defendant Balzarini was conducting a private business, known as the "Diet Center," with the tacit approval of the District and defendants McCarthy and Edinger.
Clemes alleges in essence that McCarthy and Edinger told him to mind his own business and stop reporting on illegal activities of his colleagues. After that, according to Clemes, both McCarthy and Edinger aided and assisted Balzarini's fraud with the intent of allowing the District to collect state and federal financial assistance for educational services under false pretenses.
Clemes subsequently took his complaints about defendant Balzarini, as well as defendants McCarthy and Edinger, to the office of the District Attorney for Del Norte County and to the Department of Justice. This led to Clemes' testimony before a Del Norte County grand jury about the forgeries and fraud, apparently to consider issuing indictments against some of the defendants now before this court. From the facts presented to this court it appears that no indictments issued. Clemes maintains that the District Attorney withheld the majority of Clemes' documentation from the tribunal, such that the grand jury failed to appreciate the true scope of the fraud involved.
Clemes also advised the Governing Board of the District of the alleged misconduct. Clemes maintains that the Governing Board has refused to review or consider the evidence of the fraud.
Finally, in January 1993 Clemes filed a complaint with the Office of Civil Rights, United States Department of Education, alleging discrimination by the District against Native Americans, minorities and females in educational programs.
From August 31, 1992 through November 4, 1992, the District, through the Commission on Professional Competence, held adversary administrative hearings before a three-person panel to consider whether to terminate Clemes' employment. Clemes maintains that the hearings failed to provide him with due process. On April 23, 1993 Clemes was terminated from employment with the District.
Clemes alleges that some or all of the defendants improperly attempted to influence the investigations conducted by the above administrative and judicial bodies. Briefly, Clemes alleges that the District concealed evidence from the State Controller's office during an audit of the District and the Independent Studies Program; that defendant McCarthy improperly met in private with members of the grand jury; that defendant Edinger instructed or advised the members of the District's Governing Board not to review Clemes' evidence and to destroy the documents he provided; that agents of the District had ex parte communications with the chair of the Commission panel; and that the assistant to the chair of the Commission panel had improper conversations with the Office of Civil Rights and the investigator in charge of the investigation concerning Clemes' allegations. Clemes also alleges that certain defendants improperly attempted to influence him to remain silent about the fraud, threatening among other things termination from his job.
As a result of Clemes' actions, some or all of the defendants allegedly subjected Clemes to discrimination and retaliation. These acts included: three charges of unprofessional conduct, pursuant to section 44938 of the California Education Code; placement on administrative leave, beginning January 1992; termination from employment; insertion of additional language on Clemes' application for house refinancing to the effect that his termination was "likely," thus resulting in denial of the loan; alteration of employment verification documents such that Clemes is unable to obtain a teaching credential in another state; and physical and verbal assaults. In addition, Clemes maintains that defendants caused the wrongful denial of ninety-six days of disability; caused injury to his property; interfered with the delivery of his mail; monitored his activities, mail and communications; encouraged others to make baseless complaints against him; and warned students that contact with Clemes would jeopardize receipt of their degrees.
As a consequence of the various acts allegedly taken against him, Clemes seeks damages to remedy the loss of wages and benefits, both past and future, and to remedy the damage to his reputation and standing in the community. He also seeks recompense for the humiliation, anxiety, mental suffering and distress that he has suffered; for his inability to refinance his home; and to cover the cost of litigation. In addition to damages, Clemes seeks the following equitable relief: 1) restoration of his employment as a teacher and restoration of any certificates or licenses lost as result of the defendants' action; 2) preliminary and permanent injunctions enjoining defendants from taking retaliatory or discriminatory actions against him; 3) other and further equitable relief to restore his reputation and to undo the harm and damage to his career, reputation and standing.
LEGAL STANDARD
Under Federal Rule of Civil Procedure 56, summary judgment shall be granted:
against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. . . . since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial.Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987). The moving party bears the initial burden of identifying those portions of the record which demonstrate the absence of a genuine issue of material fact. The burden then shifts to the nonmoving party to "go beyond the pleadings, and by [its] own affidavits, or by the `depositions, answers to interrogatories, or admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" Celotex, 477 U.S. at 324 (citations omitted); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986) (a dispute about a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.").
The moving party does not surmount its initial burden through conclusory allegations as to the state of the material on file, however, it is not required to "support its motion with affidavits or other similar material negating the opponent's claim." Celotex, 477 U.S. at 323 (emphasis in original). The moving party discharges its burden by showing that the nonmoving party has not disclosed the existence of any "significant probative evidence tending to support the complaint." First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253, 290 (1968).
The court's function on a motion for summary judgment is not to make credibility determinations. Anderson, 477 U.S. at 249. The inferences to be drawn from the facts must be viewed in a light most favorable to the party opposing the motion. T.W. Elec. Serv., 809 F.2d at 631.
DISCUSSION
I. Res Judicata and Collateral Estoppel
Defendants argue that the decision of the Commission on Professional Competence to terminate plaintiff's employment and strip him of his teaching credential should be given preclusive effect in this court because plaintiff failed to seek an administrative mandamus challenging the Commission's decision in state court. Clemes insists that a mandamus petition is currently pending in California Superior Court, which prevents either issue or claim preclusion from being applied in this action.
Under California Code of Civil Procedure § 1094.5, judicial review in state court is available by administrative mandamus.
The Supreme Court has held that state court judgments are to be given the same preclusive effect in federal section 1983 actions as they would be given in the state in which they were rendered.Marrese v. American Academy of Orthopaedic Surgeons, 470 U.S. 373, 380 (1985); Migra v. Warren City School District Board of Educ., 465 U.S. 75, 84 (1984). Moreover, the Supreme Court has afforded the same effect to decisions by administrative agencies when they act in their judicial capacity. University of Tennessee v. Elliott, 478 U.S. 788, 799 (1986).
The Ninth Circuit has interpreted Elliott as giving preclusive effect even to unreviewed administrative findings, whether made by state or municipal agencies. Miller v. County of Santa Cruz, 39 F.3d 1030, 1032-33 (9th Cir. 1994); Eilrich v. Remas, 839 F.2d 630, 632-33 (9th Cir.), cert. denied, 488 U.S. 819 (1988).
In Eilrich the Ninth Circuit laid out the two part test applied in California to determine whether administrative proceedings would be given preclusive effect under California law. The first part adopts the fairness standard developed by the Supreme Court and affords preclusive effect "when an administrative agency is acting in a judicial capacity and resolves disputed issues of fact properly before it which the parties have had an adequate opportunity to litigate." Eilrich, 839 F.2d at 633 (quoting United States v. Utah Construction Mining Co., 384 U.S. 394, 422 (1966)). The second part applies the traditional criteria for collateral estoppel under California Law: (1) the issue or issues sought to be relitigated are identical to the ones decided in the prior administrative proceeding; (2) the previous proceeding reached a final judgment on the merits; and (3) the party estopped was a party or in privity with a party to the prior proceedings. Eilrich, 839 F.2d at 633 (citing People v. Sims, 32 Cal.3d 468, 484 (1982)).
In order to determine which issues are subject to preclusion, California employs the primary rights theory under which a prior proceeding binds subsequent adjudication of all issues encompassed by the primary right at stake in the first proceeding. Swartzendruber v. City of San Diego, 3 Cal.App.4th 896. 904 (1992). In Swartzendruber, the plaintiff was discharged from her civilian job in the police department for refusing a direct order to wear a uniform to work. Swartzendruber did not seek an administrative mandamus of the Civil Service Commission's decision and instead brought Title VII and section 1983 claims in state court. The court concluded that plaintiff was collaterally estopped from pursuing her section 1983 claim because, as the Ninth Circuit put it, that claim "merely restated her cause of action for wrongful termination in constitutional terms. The same primary right, the right to continued employment, was at stake in both actions." Miller, 39 F.3d at 1034.
For a number of reasons the Title VII sex discrimination claim was not precluded by the Commission's termination decision, most notably because that claim encompassed conduct that was not necessarily part of the termination. Here, Mr. Clemes bases all his constitutional claims on the motivation behind his discharge.
Defendants seek to preclude litigation of all Clemes' claims in federal court on the grounds that they are collaterally estopped by the unreviewed decision of the Commission under Eilrich andMiller, and that they all issue from the same primary right to continued employment. Plaintiff insists that his mandamus petition is currently pending in state court, effectively barring application of collateral estoppel for lack of finality. See Long Beach Unified School Dist. v. State of California, 225 Cal.App.3d 155, 168-69 (1990). Defendants counter that their motion to strike the petition was granted and plaintiff never amended.
In actuality, neither party accurately portrays the status of the state court petition. Defendants' own exhibits show that their motion to strike the petition was only partially granted. Defendants Exh. D1. In fact, the order to strike left the bulk of Clemes' 29-page petition intact and the vast majority of his claims for relief untouched despite his failure to amend. Defendants Exh. E. However, plaintiff for his part, has essentially abandoned his petition in superior court in favor of federal adjudication.
Clemes further argues that even if review were not pending, the proceeding before the Commission was so patently unfair as to preclude application of collateral estoppel. Clemes devotes six pages to enumerating what he sees as the failings of the proceedings before the Commission, including its application of the wrong legal standard, its adjudication of issues outside its jurisdiction, and its rejection of some of plaintiff's evidence.
Yet these are precisely the issues that are to be addressed on direct review in state court where plaintiff's petition currently languishes. This court is in no position to review every action of the Commission that was adverse to plaintiff, nor should it. Moreover, the Commission's proceedings appear to meet the basic fairness standard under Eilrich and Miller and applied in California courts — plaintiff was represented by counsel, afforded an opportunity to call witnesses and cross-examine witnesses against him, and was heard by a three-person panel which included an ALJ. Thus, but for the pendency of the mandamus petition, collateral estoppel would apply to some or all of the issues before this court.
As plaintiff notes, it is premature to apply collateral estoppel to the instant case because the Commission's decision is not final. In Long Beach Unified School Dist. the state court of appeals held that finality for the purposes of administrative collateral estoppel was a two-step inquiry. First, the decision must be final with respect to the administrative agency; that is, the agency must exhaust its jurisdiction and be incapable of rehearing the claim. Second, the agency decision must have conclusive effect.
In other words, the decision must be free from direct attack. A direct attack on an administrative decision may be made by appeal to the superior court for review by petition for administrative mandamus. A decision will not be given collateral estoppel effect if such appeal has been taken or if the time for such appeal has not lapsed.Id. at 169.
Plaintiff cannot have it both ways. He cannot tout his mandamus petition for the purposes of forestalling collateral estoppel against his federal claims and then neglect it in favor of moving forward in federal court.
Given that a mandamus petition appears to be pending in state court, this court may not give preclusive effect to the issues litigated before the Commission. Yet neither will this court allow plaintiff to stall his direct appeal in the hopes of adjudicating his claims in federal court. Since the direct appeal may be determinative of the instant action, the court stays this action in anticipation of the proceedings in state court. However, if the mandamus petition is not vigorously pursued, this court will treat the Commission's decision as final and preclusive. Accordingly, except for the issues addressed below, this action is stayed pending the outcome of the state court proceedings.
II. Section 1982 Claim
Defendants argue that plaintiff's claims under section 1982 for violation of his property rights in employment and in refinancing his home fail for five reasons: because (1) section 1982 does not apply to employment discrimination claims; (2) section 1982 does not protect the right to refinance; (3) plaintiff is barred by the statute of limitations; (4) plaintiff has not established a prima facie case of discrimination; and (5) defendants have legitimate, nondiscriminatory reasons which plaintiff has not shown to be pretextual.
Courts that have considered the issue have found that employment is not contemplated among the real and personal property protected under section 1982. See e.g., Evans v. Meadow Steel Products, Inc., 572 F. Supp. 250 (N.D. Ga. 1983);Johnson v. Duval County Teachers Credit Union, 507 F. Supp. 307 (M.D. Fla. 1980).
The court need not reach any of the other arguments made by defendants as to this claim since plaintiff's inability to refinance — which otherwise may be protected — stems directly from his employment claim against the District. Plaintiff seeks to vindicate the loss of both his job and the refinancing of his home under section 1982. As to the job, plaintiff is simply wrong as a matter of law to contend that employment is a personal property right protected under the statute. With respect to the refinancing, while a home is personal property for the purposes of section 1982, any damages sustained by plaintiff by his inability to refinance were the direct result of the employment action taken against him by the District. The only act of defendants plaintiff cites to support his section 1982 claim is their response to the financing institution that the District could not verify Clemes' continued employment. The statement itself is not discriminatory. The question of discrimination goes only to plaintiff's actual employment, which is not protected under this statute.
In Sullivan v. Little Hunting Park, Inc., 396 U.S. 229, 237 (1969) the Court warned that a "narrow construction of the language of § 1982 would be quite inconsistent with the broad and sweeping nature of the protection meant to be afforded by [the statute] from which § 1982 was derived."
This court concludes as a matter of law that employment is not a property right protected under section 1982. Plaintiff has provided no evidence that his inability to refinance his house was the product of anything other than the employment action taken against him. As no rational trier of fact could concluded that the District violated Clemes' right to buy, sell, and hold property, defendants are entitled to summary judgment on plaintiff's section 1982 claim.
V. False Claims Act
Defendants maintain that Clemes' False Claims Act must fail because (1) he was not the original source of the information to the District; (2) the District would have dismissed Clemes in any case; and (3) there was no fraud actually perpetrated upon the government.
The memoranda of both parties evince some confusion about the requirements for bringing a cause of action under the False Claims Act. 31 U.S.C. § 3730(h) provides that
Any employee who is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment by his or her employer because of lawful acts done by the employee on behalf of the employee or others in furtherance of an action under this section, including investigation for, initiation of, testimony for, or assistance in an action filed or to be filed under this section, shall be entitled to all relief necessary to make the employee whole.
A claim under this section requires plaintiff to show three things: that she engaged in protected activity under this statute, that defendants knew of that activity, and that defendants then took retaliatory action against plaintiff.Robertson v. Bell Helicopter Textron, Inc., 32 F.3d 948, 951 (5th Cir. 1994). The question in this case is whether Clemes' claims of fraud within the District were protected according to the terms of the statute. Section 3730(h) requires that the acts a plaintiff seeks to protect be done in furtherance of an action "filed or to be filed" under that section. The qui tam actions provided for under the statute can be brought by either a private plaintiff or the federal government. 31 U.S.C. § 3730(a)(b).
The Seventh Circuit has expressly addressed whether the statute covers actions that do not necessarily culminate in litigation.Neal v. Honeywell Inc., 33 F.3d 860 (7th Cir. 1994). In Neal the Court determined that for the purposes of section 3730(h) an "action" meant a formal proceeding, either judicial or administrative. Id. at 863. The Court further found that because the statute protected investigations which preceded litigation and applied to actions "filed or to be filed", that litigation need not have been instigated to gain protection under the statute. Id. at 864. Rather, in order to protect those employees who sincerely allege fraud in cases that ultimately prove to be doubtful as well as those who uncover such egregious conduct that the employer immediately settles, the Court concluded that the statute should be read to cover those "situations in which litigation could be filed legitimately — this is, consistently with Fed.R.Civ.P. 11." Id. In other words, while neither plaintiff nor the government must have actually filed a qui tam action, at the very least a plaintiff must show that litigation was "a distinct possibility." Id.
In the instant case, Clemes has offered evidence that he made allegations to the District, the Sheriff's Office, and the District Attorney of fraud and forgery by defendant Debi Balzarini. Clemes Decl. ¶¶ 14-15, 20-24. There is also evidence that plaintiff conveyed his belief that the fraud involved both state and federal funds. Defendants Exh. I. In his complaint plaintiff alleges that he "took acts of investigation or disclosure in contemplation for or preparatory to a potential action under the False Claims Act." Complaint ¶ 42. However, plaintiff has offered no evidence that such an action was contemplated, or more to the purpose, that such an action could be filed legitimately as Neal requires.
Accordingly, this court gives plaintiff leave to file further submissions in support of his claim under 31 U.S.C. § 3730 (h) within 30 days of this order.
Defendants' arguments against plaintiff's section 3730(h) claim are singularly unpersuasive. In contending that Clemes' claim fails because he was not an original source of the fraud allegations, defendants rely heavily on U.S. ex rel. Green v. Northrop Corp., 59 F.3d 953 (9th Cir. 1995), in which the Ninth Circuit clarified that a qui tam plaintiff under the Act must have played a part in the original disclosure of allegations.Id. at 964 (citation omitted). In Northrop the Ninth Circuit sought to respect the line Congress had attempted to walk between encouraging whistleblowing and discouraging opportunism. Id.
Defendants assert that Clemes was not the original source of the fraud allegations because the families of students had brought reports of fraud to the District up to three years before Clemes did, and the District had conducted its own internal investigation three weeks before Clemes alleges to have blown the whistle.
Defendants' bark is insistent, but it is up the wrong tree. As plaintiff notes in response, this is not a qui tam suit at all, but a claim under section 3730(h), which protects those whose employment is affected by action taken in furtherance of the Act. As the Ninth Circuit pointed out in Northrop, which exclusively addressed qui tam actions, the deterrence concerns are different under these circumstances. Clemes need not have been the original source of the fraud allegations. He certainly assisted in exposing possible fraud and forgery in the District, even going so far as to testify before a Grand Jury. The question is not whether there were other sources, but whether plaintiff engaged in activity within the meaning of subparagraph (h).
Even if it were required that Plaintiff be an original source, the Defendants manage to undermine their argument by stating, within a page of averring that the District knew of fraud allegations and dealt with them long before Mr. Clemes blew the whistle, that the state "audit was performed in response to Clemes' allegations of fraud. . . ." Defendants Memorandum of Points and Authorities in Support of Motion for Summary Judgment, p. 20.
Second, defendants claim they would have discharged plaintiff in any event for dishonesty and unfitness even in the absence of his allegations. The fact that the District began its disciplinary proceedings against Clemes on the day he testified before the Grand Jury makes this contention appear disingenuous to say the least. Moreover, the one case defendants cite to support a defense based on dual-motivation discharge was not brought under this statute at all, but concerned the whistleblower protection statute of the Energy Reorganization Act. See Mackowiak v. University Nuclear Systems, Inc., 735 F.2d 1159 (9th Cir. 1984). Finally, this is fact question that cannot be resolved on this record.
Lastly, defendants posit that because the state audit made no findings of fraud Clemes cannot prevail under the Act. The only authority defendants cite for this anomalous proposition isNorthrop, which merely states that the False Claims Act exists to compensate the U.S. and not the qui tam relator. Not only is this not a qui tam suit, but it would certainly defeat the laudable goals of an act that was passed to encourage and protect whistleblowers if that protection were utterly dependent on positive findings of fraud. Given that Neal acknowledged that aqui tam suit need not even be filed for a plaintiff to prevail under section 3730(h), it would strain logic to then require affirmative evidence of fraud.
Defendants' arguments are not only ineffectual, they simply miss the mark. Not one case cited by them addresses an action brought under section 3730(h), nor do defendants attempt to even analogize these cases to such an action. As such, these arguments fail as a matter of law.
CONCLUSION
For the foregoing reasons, defendants motion for summary judgment on plaintiff's claim under section 1982 is GRANTED.
Defendants' motion for summary judgment on plaintiff's claim under the False Claims Act is DENIED.
With respect to the claims under section 1981, section 1983, Title VI, and Title IX, this action is STAYED.
IT IS SO ORDERED.