Opinion
A146058
11-27-2017
BRIAN MCVEIGH, Plaintiff and Appellant, v. RECOLOGY SAN FRANCISCO et al., Defendants and Respondents.
ORDER MODIFYING OPINION AND DENYING REHEARING NO CHANGE IN JUDMENT BY THE COURT: It is ordered that the opinion filed herein on November 27, 2017, be modified as follows:
At page 17, the final sentence, which reads "The judgment is reversed," is modified to read "The judgment is reversed as to the verdict on the cause of action under the CFCA."
The petition for rehearing filed December 12, 2017, is denied. There is no change in the judgment. DATE:
/s/_________
Pollak Acting P.J.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (City & County of San Francisco Super. Ct. No. CGC09491654)
Plaintiff Brian McVeigh appeals from a judgment after a jury found his former employer, Recology San Francisco et al. (Recology), did not fire him in violation of California's False Claims Act (CFCA; Gov. Code, § 12650 et seq. and Gov. Code former section 12653, subd. (b)). The court instructed the jury that, to find for McVeigh, it had to find he informed Recology or a law enforcement entity that he suspected Recology was submitting false claims to a government agency. McVeigh contends this instruction erroneously and prejudicially foreclosed the jury from finding Recology violated the CFCA by firing him in retaliation for his investigation of suspected fraud. We agree, and reverse the judgment.
BACKGROUND
This is the second time we have addressed litigation arising from McVeigh's allegations that he was fired for investigating possible fraud in connection with Recology's California Redemption Value (CRV) program. In McVeigh v. Recology San Francisco (2013) 213 Cal.App.4th 443 (McVeigh I) we held McVeigh established the existence of triable issues of fact and reversed summary judgment on three of five causes of action, including his claim of wrongful termination in violation of the CFCA. The case was subsequently tried to a jury on two whistleblower claims, one under the CFCA and another under Labor Code section 1102.5. Recology won on both counts.
Labor Code section 1102.5, subdivision (b) prohibits an employer from discriminating against an employee for reporting unlawful conduct to the government.
This appeal concerns the definition of "protected activity" by an employee that may support a wrongful termination claim under the CFCA. It is a strictly legal issue. Much of what occurred at the four-week trial is irrelevant to that issue and this court and the parties are familiar with the relevant background, so we will forego an exhaustive recitation of the evidence. Instead, while cognizant of the differences between this and the prior appeal, we incorporate by reference the "Background" section in McVeigh I, supra, to provide general context of McVeigh's claims for our analysis. What is required for resolution of the legal issue posed this time around may be relatively briefly stated.
We emphasize that the following recitation does not purport to portray the evidence as a whole, and we take no position as to the credibility or value of any evidence other than as relevant to the validity or prejudicial potential of the challenged instruction.
During McVeigh's employment with Recology he investigated and reported to Recology management and police his belief that employees were defrauding Recology's CRV program through "tag inflation" and thefts from trucks transporting recyclable materials between Recology facilities. "Tag inflation" fraud occurred when employees inflated the weight of the recyclable materials customers brought to Recology's buy-back centers for redemption, resulting in overpayments to the customers and possibly kickbacks to Recology employees. McVeigh also suspected, investigated and reported that Recology truck drivers who transported CRV cans and bottles from its Tunnel Road site to its Pier 96 facility might be stealing large quantities of CRV materials in transit and recording inflated weights for CRV material shipped between the two facilities. (McVeigh I, supra, 213 Cal.App.4th at pp. 448-449 and pp. 452-453.)
McVeigh acknowledges that he at no time disclosed to his employer or law enforcement that he suspected Recology was submitting false claims to a government agency. His theory, rather, was that he did not know the precise mechanism Recology used to bill the state for CRV redemption payments, but he believed the suspected fraud and theft in Recology's CRV operations implicated state CRV program funds. We observed when we reversed the summary judgment that if state reimbursements to Recology were based on inflated tag weights, it would not be unreasonable "to suspect that the state, as well as Recology, would be harmed by the weight tag fraud." (McVeigh I, supra, 213 Cal.App.4th at p. 464.)
There was evidence at trial of problems with McVeigh's job performance, including poor performance reviews and grievances from other employees. In spring 2008 Recology human resources representative David Jackson investigated and found no support for McVeigh's claims of fraud, collusion and misappropriation of funds. Jackson concluded McVeigh was "divisive . . . that he had no chance of repairing his relationship with the other supervisors. And in order for the operation to be cohesive and work again, that he should be separated from the company." Jackson "didn't feel that Mr. McVeigh was being honest about many of [his] allegations," that "a lot of these things were just enhanced." McVeigh was terminated on May 28, 2008.
McVeigh sued Recology for firing him in retaliation for reporting possible fraud in connection with the CRV payments made by and to Recology for recycled materials. Following remand after the appeal from the summary judgment, the case went to trial on McVeigh's whistleblower claims under the CFCA and Labor Code. McVeigh filed this timely appeal from the judgment in favor of Recology, arguing the court erroneously instructed the jury on the elements of a cause of action under the CFCA.
DISCUSSION
I. The Court Misinstructed the Jury on Protected Activity
McVeigh contends the jury instruction that defined "protected activity" for purposes of the False Claims Act erroneously required the jury to find that he disclosed his suspicion to Recology or law enforcement that Recology was submitting false claims to a government agency. He contends the CFCA provides legal protection for an employee's investigation into potential fraud that could result in a false claim on the government, regardless of whether the employee disclosed a particular suspicion that the employer was making false claims against the public fisc. Recology argues the disputed instruction was correct, that McVeigh's argument is barred by the invited error doctrine, and that any error was harmless. We agree with McVeigh that the instruction precluded the jury from properly assessing whether he engaged in protected activity on the basis of his investigations. Recology's claims of invited and harmless error are meritless.
A. Whistleblower Protection Under the CFCA
Our discussion of the CFCA's whistleblower protections in McVeigh I, supra, 213 Cal.App.4th at pp. 454-455, provides the general legal context for our analysis of the issue here. We explained: "The CFCA 'permits the recovery of civil penalties and treble damages from any person who knowingly presents a false claim for payment to the state or a political subdivision.' [Citation.] . . . . 'A CFCA action may be initiated by any person, as a qui tam plaintiff, in the name of the state or political subdivision whose funds are involved,' and such plaintiffs receive a significant portion of CFCA litigation proceeds. [Citation.] The CFCA 'ferrets out fraud on the government by offering an incentive to persons with evidence of such fraud to come forward and disclose that evidence to the government.' [Citations.] The typical whistleblower 'is unsophisticated in the legal intricacies of fraud law, and . . . happens across evidence of fraud during the course of employment.' " [Citation.]
"The CFCA is modeled on the federal False Claims Act [FFCA] [citations], and has comparable protection for whistleblowers. The federal provision prohibits an employee from being 'discharged . . . 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 . . . in furtherance of an action under [the FFCA]. . . .' [Citation.] Until recently, the CFCA expressly added protection for whistleblowers who report to government and law enforcement agencies. It provided: 'no employer shall discharge . . . or in any other manner discriminate against, an employee in the terms and conditions of employment because of lawful acts done by the employee . . . in disclosing information to a government or law enforcement agency or in furthering a false claims action, including investigation for . . . an action filed or to be filed under [the CFCA].' " (Id. at pp. 454-455, footnote omitted, italics omitted.)
" 'As a statute obviously designed to prevent fraud on the public treasury, [Government Code] section 12653 plainly should be given the broadest possible construction consistent with that purpose.' [Citations.] An 'employee does not have to file a false claims action or show a false claim was actually made' to establish that he or she engaged in protected activity. [Citation.] '[H]owever, the employee must have reasonably based suspicions of a false claim and it must be reasonably possible for the employee's conduct to lead to a false claims action.' " (McVeigh I, supra, 213 Cal.App.4th at p. 456.) Because the CFCA is patterned on the FFCA, we may rely on cases interpreting the federal statute for guidance in interpreting the CFCA. (Ibid; Kaye v. Board of Trustees of San Diego County Public Law Library (2009) 179 Cal.App.4th 48, 59-60.)
B. The Instructions
The court gave the following instructions, modeled on CACI No. 2440, on the elements of a cause of action for wrongful termination under the False Claims Act.
"Mr. McVeigh alleges that the termination of his employment by Recology San Francisco violated the False Claims Act. To establish this claim, Mr. McVeigh must prove all of the following by a preponderance of the evidence: "1. That he engaged in protected activity covered by the False Claims Act while he was employed at Recology San Francisco; "2. That Recology San Francisco knew he engaged in protected activity covered by the False Claims Act while he was employed at Recology San Francisco; and "3. That his protected activity covered by the False Claims Act was a substantial motivating reason for Recology San Francisco's termination of his employment."
The court proposed language for instructions to the parties. Over McVeigh's objection the court instructed the jury that the "protected activity" element required that McVeigh inform Recology that he suspected Recology of making false claims to a government agency or law enforcement. The court then instructed the jury on the meaning of the "protected activity" element. For clarity, we have italicized the controverted portions of the instruction.
"To constitute a protected activity under the False Claims Act, an employee must disclose to his employer or to a law enforcement agency a suspicion that the employer was possibly submitting false claims to a government agency, the employee in good faith believed that there was a possibility that the employer was submitting false claims to the government agency, and that a hypothetical reasonable employee in the same or similar circumstances would believe that there was a possibility that the employer was submitting false claims to a government agency. Thus, there are three different aspects of the first element that Mr. McVeigh must show to prove that he engaged in protected activity covered by the False Claims Act:
"First, that he disclosed to Recology or to the police his suspicion that Recology was submitting false claims to a government agency.
"Second, that he subjectively and in good faith believed that there was a possibility that Recology was submitting false claims to a government agency.
"Third, that his suspicion was objectively reasonable in that a reasonable person, who knew the same information that Mr. McVeigh knew, would believe that Recology was possibly submitting false claims to a government agency."
The jury was also instructed that "For Mr. McVeigh to have a good faith belief in his suspicion that Recology was submitting false claims to a government agency, Mr. McVeigh did not have to actually know that any false claims had been submitted by Recology to a government agency. It is sufficient if Mr. McVeigh was genuinely concerned about fraud on the government."
C. Analysis
Our analysis of the court's protected activity instruction begins with the language of former Government Code section 12653, subdivision (b) in effect when McVeigh was terminated: "No employer shall discharge, demote, suspend, threaten, harass, deny promotion to, or in any other manner discriminate against, an employee in the terms and conditions of employment because of lawful acts done by the employee on behalf of the employer or others in disclosing information to a government or law enforcement agency or in furthering a false claims action, including investigation for, initiation of, testimony for, or assistance in, an action filed or to be filed under [the CFCA]." (See generally Park City Services, Inc. v. Ford Motor Co., Inc. (2006) 144 Cal.App.4th 295, 305-306; Khajavi v. Feather River Anesthesia Medical Group (2000) 84 Cal.App.4th 32, 46 (Khajavi).)
Further statutory citations are to the Government Code.
The statute was amended in 2012. (Stats. 2012, ch. 647, §§ 4, 5.) It currently provides: "Any employee, contractor, or agent shall be entitled to all relief necessary to make that employee, contractor, or agent whole, if that employee, contractor or agent is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of his or her employment because of lawful acts done by the employee, contractor, agent, or associated others in furtherance of an action under this section or other efforts to stop one or more violations of this article." (§ 12653, subd. (a).)
"It is well settled that ' "[t]he statutory language . . . is the best indicator of legislative intent.' " [Citations.] Indeed, the most powerful safeguard for the courts' adherence to their constitutional role of construing, rather than writing, statutes is to rely on the statute's plain language. (See Seaboard Acceptance Corp. v. Shay (1931) 214 Cal. 361, 365 ['This court has no power to rewrite the statute so as to make it conform to a presumed intention which is not expressed. This court is limited to interpreting the statute, and such interpretation must be based on the language used'].) (Khajavi, supra, 84 Cal.App.4th at pp. 45-46.) "In relying on the statute's text as the best indicator of legislative intent, '[w]henever possible a construction must be adopted which will give effect to all provisions of the statute.' [Citation.] '[W]e cannot read the words of a statute in isolation, ignoring their context. We must read a statute as a whole and attempt to harmonize its elements by considering each clause or section in the context of the overall statutory framework. [Citation.] We are obligated to select the construction that comports most closely with the apparent intent of the Legislature, to promote rather than defeat the statute's general purpose and to avoid an interpretation that would lead to absurd and unintended consequences. [Citation.] We must not construe a statute in a manner that renders its provisions essentially nugatory or ineffective, particularly when that interpretation would frustrate the underlying legislative purpose.' " (Id. at p. 46.)
Former section 12653, subdivision (b)'s language is disjunctive: it prohibits employers from discriminating against their employees "because of lawful acts done by the employee . . . in disclosing information to a government or law enforcement agency or in furthering a false claims action, including investigation for, initiation of, testimony for, or assistance in, an action filed or to be filed under [the CFCA]." (Italics added.) The usage of "or" unaccompanied by any indication that what follows is qualified, "indicates an intention to use [or] disjunctively so as to designate alternative or separate categories." (White v. County of Sacramento (1982) 31 Cal.3d 676, 680.) By its terms, then, the CFCA protects against discrimination employees who take steps, including investigation, in furtherance of a potential false claim action, regardless of whether they report a suspicion the employer was submitting false claims to the government. By requiring such a specific disclosure by the employee, the trial court's instruction nullified the Act's recognition that there can be other lawful acts done "in furthering a false claims action" (former § 12653, subd. (b)) that are "protected activity." That was error, particularly because "[a]s a statute obviously designed to prevent fraud on the public treasury, section 12653 plainly should be given the broadest possible construction consistent with that purpose." (Southern Cal. Rapid Transit Dist. v. Superior Court (1994) 30 Cal.App.4th 713, 725; see also § 12655, subd. (c) [the CFCA "shall be liberally construed and applied to promote the public interest"].)
Cases addressing the nature of protected activity under the FFCA support our conclusion. The plaintiff in United States ex rel. Yesudian v. Howard University (D.C. Cir. 1998) 153 F.3d 731 (Yesudian) repeatedly complained to senior university officials that the director of the purchasing department was guilty of financial improprieties such as accepting bribes from vendors and permitting payments to vendors who provided no services to the university. After Yesudian was fired he sued the university and three of his supervisors alleging submission of false claims in violation of the FFCA and retaliation for reporting the alleged false claims.
Reversing an order granting judgment as a matter of law on Yesudian's retaliation claim, the D.C. Circuit rejected the argument that the federal Act's protection for an "investigation for . . . an action filed or to be filed" . . . (31 U.S.C.A., former § 3730(h)) required that the plaintiff contemplated filing a whistleblower suit when he or she reported the alleged fraud. In this context, the court observed that "the 'to be filed' language in § 3730(h) does not define protected conduct; it is simply part of the language that describes examples of what is 'include[d]' within that category. See 31 U.S.C. § 3730(h) ('acts done . . . in furtherance of an action under this section, including investigation for . . . an action filed or to be filed') (emphasis added). There is no indication that Congress intended the examples to encompass the entire category. (See [United States, ex rel., Mary C. Mckenzie v. Bellsouth Telecommunications, Inc. (6th Circuit 1997)] 123 F.3d [935,] 944 [" 'The statute provides examples of the types of activity that are protected, including investigation, initiation of a suit and testimony, but these examples are not exclusive and the legislative history indicates that "[p]rotected activity should . . . be interpreted broadly"] [Citation.] The protected conduct itself is simply 'acts done . . . in furtherance of an action under this section,' and even an investigation conducted without contemplation of—or knowledge of the legal possibility of—a False Claims Act suit can end up being 'in furtherance' of such an action.' " (Yesudian, supra, 153 F.3d 731, 741.) "[A]s Judge Easterbrook put it, '§ 3730(h) protects "investigation" as well as reports of fraud, and an "investigation" precedes communication.' " (Id. at p. 742.)
To be clear, the investigation must concern "matters which are calculated, or reasonably could lead, to a viable FCA action." (Yesudian, supra, 153 F.3d at p. 740; see also McVeigh I, supra, 213 Cal.4th at pp. 463-464 [" 'the employee must have reasonably based suspicions of a false claim and it must be reasonably possible for the employee's conduct to lead to a false claims action' "].)
Jewell v. Lincare, Inc. (2011 U.S. Dist. Maine) 810 F.Supp.2d 340 is also illustrative. The defendant sought to dismiss a claim of retaliatory termination under the FFCA, arguing the plaintiff's investigation into allegedly forged and backdated claims for Medicare reimbursement was not "protected activity" under the federal Act because "Plaintiff never reported to his supervisor about fraudulent billing practices. In other words, Plaintiff never reported internally that the government was billed for items that were not delivered or for which Defendant overcharged." (Id. at p. 343.) The court disagreed. "The definition of 'protected conduct' . . . is broad and objective [citations], and can be read to incorporate Jewell's allegations. To state a claim that he engaged in 'protected conduct,' Plaintiff's Complaint must allege that he engaged in 'investigations, inquiries, testimonials or other activities that concern the employer's knowing submission of false or fraudulent claims for payment to the government.' [Citation.]" (Id. at p. 344.) Jewell met that standard because he allegedly observed and reported a supervisor backdating and forging client signatures on documents later submitted for Medicare reimbursement. The court expressly observed that Jewell "need not have specifically reported a 'fraud on the government' to his supervisor." (Ibid, italics added.) It was sufficient, rather, that his report to his supervisor concerned the falsification of documents that were submitted to the government for reimbursement. (Id. at p. 344 & fn. 1.)
Recology does not appear to seriously contend in its briefs that McVeigh needed to specifically report to Recology suspicions of false claims on the government in order to engage in "protected activity." Certainly it provides neither case authority nor statutory analysis to support such a contention. Instead, it argues the court also correctly instructed the jury that, for McVeigh to have the necessary good faith belief in his suspicions, he "did not have to actually know that any false claims had been submitted by Recology to a government agency. It is sufficient if Mr. McVeigh was genuinely concerned about fraud on the government."
True, but so what? No one disputes that McVeigh was required to prove he had a genuine, good faith concern about possible fraudulent claims on the government. This was what the court explained to the jury as the second of "three different aspects" of the "protected activity" element. The problem is that the jury was also instructed and required to find, as the first "aspect" of protected activity, that McVeigh disclosed suspicions that Recology was submitting false claims to a government agency. The instruction on the additional requirement of good faith does nothing to mitigate the effect of imposing the legally unfounded disclosure requirement. Nor, notwithstanding Recology's oddly extensive discursion into the parties' closing arguments, is there any reason to think the attorneys' arguments about McVeigh's good faith (or lack of it) could have cured the error.
Recology also contends the instruction was proper because, as we understand its argument, the jury was correctly instructed that McVeigh had to suspect fraud was being committed against the government, and here McVeigh conceded at trial that he never suspected the alleged fraud implicated state CRV program funds rather than, or as well as, Recology's bottom line. This argument may be legally sound, but it is betrayed by the record. McVeigh made no such concession. To the contrary, he testified and vociferously argued that, while he did not know the mechanics by which Recology obtained payments or reimbursements from the state CRV program, he believed the fraud implicated state funds. The undisputedly correct instruction requiring an objectively reasonable belief that Recology was submitting false claims to a government agency in no way cured the erroneous instruction that McVeigh had to disclose that belief to Recology.
" '[T]he relevant inquiry . . . is whether "(1) the employee in good faith believes . . . that the employer is committing fraud against the government." ' " (McVeigh I, supra, 213 Cal.App.4th at p. 464.)
"What was his concern? He was running the California CRV redemption program. And he testified he didn't know how the funding worked, how it went. He said that he thought either they were turning over California money, because that's what you give to the - the grocery store takes from you and it goes into a fund and comes back, or Recology was seeking reimbursement for that money from the state. And he knew people were stealing and engaging in fraud with the tickets, and he's pushing this, and sure, he doesn't do what I, the attorney, might do, and that is say 'Okay, this is fraud, it could impact the company and the state program.' [¶] He's saying 'I'm running the California CRV program and people are stealing like crazy from it; and I don't run the trucks, but they are stealing the CRV stuff, and we are paying out California redemption money.' To say that he in this situation had no concern that the government might be getting cheated by this thing is incredible. [¶] . . . [¶] . . . You'd have to be a total moron running the California redemption Buyback program certified by the state, audited by the state, inspections all the time, you clearly are getting paid back by the state or the state's giving you the money up front to think there might not be some potential for the state being screwed, and that's all this requires. Is there some possibility that he thinks that that might be going on? [¶] He testified that was the case and that the company was being screwed. Both realities."
Recology further suggests the instruction on "protected activity" was correct because it merely "repeated the same requirement that already appeared in the portion of the instruction requiring notice to the employer" that was loosely based on CACI No. 2440. Again, we disagree. The portion of the instruction addressing notice as the second element of the CFCA claim properly required the jury to find that Recology knew McVeigh engaged in protected activity. Nothing in that instruction mitigates the fact that the jury was also required to find that for McVeigh to have engaged in protected activity he must have reported a suspicion that false claims were being made against state funds. Moreover, the verdict form instructed the jury not to address the "notice" element unless it first found McVeigh engaged in protected activity. Since it found he did not, there is little reason to believe the jury would have considered the "notice" instruction for any purpose.
CACI No. 2440 does not contain an element specifically requiring a plaintiff to prove the defendant had notice of the protected activity. The concept of notice is absorbed in the requirement in CACI No. 2440 that a plaintiff must prove his or her acts in furtherance of a false claims action were a substantial factor motivating the discharge from employment.
Recology argues the challenged instruction was correct because "it correctly stated the law applicable to 'fraud alert' employees like McVeigh," whose normal job duties include investigating fraud. (See McVeigh I, supra, 213 Cal.App.4th at pp. 465-467.) Here, too, we disagree. "A fraud-alert employee imparts knowledge of his or her protected activity 'by any action which a factfinder reasonably could conclude would put the employer on notice that litigation is a reasonable possibility. [Citation] 'It would not be enough to "simply report [the] concern of a mischarging to the government to [one's] supervisor," [citation,] nor would it be enough to investigate "nothing more than [the] employer's non-compliance with federal or state regulations." [Citation.]' [Citation.] But the requisite notice could be provided by reports of malfeasance the employee describes as 'illegal or fraudulent' [citation], or by threats to report the misconduct to government officials." (Id. at p. 466.) Assuming arguendo, as Recology contends, that a fraud-alert employee's actions must alert his or her employer to the specific possibility of a government false claims suit, neither precedent nor common sense support Recology's position that the employee must do so by expressly "disclos[ing] to [the employer] or to the police that he suspected [the employer] was submitting false claims to a government agency."
II. The Error Was Not Invited
Recology argues that, if the instruction was erroneous, McVeigh invited or consented to the error by submitting proposed jury instructions containing "substantially the same statements." "The doctrine of invited error provides that a party may not assert as a ground for reversal an error that he or she induced the trial court to commit. [Citation.] 'At bottom, the doctrine rests on the purpose of the principle, which prevents a party from misleading the trial court and then profiting therefrom in the appellate court.' " (Maureen K. v. Tuschka (2013) 215 Cal.App.4th 519, 530.)
Recology identifies the following three passages from McVeigh's proposed instructions, reprinted below with Recology's italics:
"[A]n employee does not have to file a false claims lawsuit or show that a fraudulent or false claim was actually submitted to a government agency to establish that he engaged in protected activity covered by the False Claims Act. However, the employee must have a reasonably based suspicion that false records were being created that could possibly be used by the employer in the submission of claims to a government agency that could result in the government either paying more than the government owes or depriving the government of money that is owed to it." [¶] . . . [¶]
"For Mr. McVeigh to have a good faith belief in his suspicion that employees of Recology were creating false records that could be used by Recology to submit false claims to a government agency, Mr. McVeigh did not have to actually know that any false claims had been submitted to a government agency. It is sufficient if Mr. McVeigh was genuinely concerned about fraud on the government." [¶] and [¶] . . . [¶]
"To constitute a protected activity under the False Claims Act by disclosing information to law enforcement or his employer, the employee's suspicion or information that employees of the company were involved in conduct it must have been possible to result in false claims being submitted to the government agency. The disclosure by the employee to law enforcement or his employer must be made in good faith in the information disclosed, and a hypothetical reasonable employee in the same or similar circumstances would believe that there was a possibility that the conduct could possibly result in false claims by Recology being submitted to a government agency."
Recology's point escapes. These proposed instructions merely say that McVeigh had to believe reasonably and in good faith that Recology employees were creating false records that could be used to submit false government claims. None of that is controversial. Nothing in it comes close to suggesting that for McVeigh to engage in protected activity he had to inform Recology or police of his suspicion that Recology was submitting false claims to a government agency. Moreover, McVeigh repeatedly objected to the trial court's instruction and requested instructions that identified investigations into fraud and theft that could reasonably lead to potential false claims litigation as protected activity. There was no invited error.
III. The Error Was Prejudicial
"An appellant who shows an instructional error occurred also must establish the error was prejudicial. [Citation.] [¶] Prejudice or a miscarriage of justice exists when there is 'a reasonable probability that in the absence of the error, a result more favorable to the appealing party would have been reached.' [Citation.] In cases of instructional error, a reasonable probability that 'the jury would have returned a more favorable verdict' is sufficient to establish prejudice." (Wallace v. County of Stanislaus (2016) 245 Cal.App.4th 109, 132.) "A 'reasonable probability' in this context 'does not mean more likely than not, but merely a reasonable chance, more than an abstract possibility.'" (Kinsman v. Unocal Corp. (2005) 37 Cal.4th 659, 682.) "In assessing prejudice from an erroneous instruction, we consider, insofar as relevant, "(1) the degree of conflict in the evidence on critical issues [citations]; (2) whether respondent's argument to the jury may have contributed to the instruction's misleading effect [citation]; (3) whether the jury requested a rereading of the erroneous instruction [citation] or of related evidence [citation]; (4) the closeness of the jury's verdict [citation]; and (5) the effect of other instructions in remedying the error [citations].' " (Soule v. General Motors Corp. (1994) 8 Cal.4th 548, 570-571 (Soule).)
Before addressing the Soule factors, it seems that the error in this case was particularly critical because McVeigh never claimed he made the specific disclosure required by the instruction. Rather, his theory of the case was that he suspected theft and embezzlement in Recology's state CRV program and believed reasonably and in good faith that the state program was thereby being defrauded. But the jury was instructed that McVeigh had to prove he informed Recology or police that he suspected Recology was submitting false claims to a government agency. This requirement eliminated any possibility the jury could find protected activity on the basis of McVeigh's investigation of possible fraud. It was therefore all but a foregone conclusion that the jurors would find against McVeigh on the first, "protected activity" element of his False Claims Act claim.
Accordingly, as the verdict form directed, they never proceeded to consider whether Recology was aware of McVeigh's protected activities and whether those activities played a substantial part in his termination.
In addressing the first Soule factor, Recology argues McVeigh was not prejudiced because "not a single contemporaneous document supports his claim" that he was concerned about public funds. That may be true as far as it goes, but it overlooks McVeigh's testimony that he suspected the state CRV program was being cheated. McVeigh's testimony that he was unaware of how the state calculated reimbursement payments but believed thefts from the state CRV program impacted state funds suggests "more than an abstract possibility" the jury might have believed that he was concerned about more than "his poor performance review and (possibly) Recology losing money," as Recology asserts. (See Kinsman v. Unocal Corp., supra, 37 Cal.4th at p. 682.)
"Q: And in your testimony with your attorney, you said the reason you did that is because you were concerned about fraud on public funds. Do you remember that? [¶] A: Yes, I did. [¶] Q: And was that your concern, that's what you were focused on was why you sent in that report? [¶] A. I was told by Bo Duong that his Bayshore Buyback CRV responsibility was to be responsible for public funds that was deposits from the bottles and cans from the California redemption program. [¶] Q: And as a result of that you were focused at that time, February 4th, 2008, on protecting public money; is that right? [¶] A: I was focused on protecting public money and making sure that we got to a complete investigation of the fraud that was taking place at the Tunnel Road Buyback facility. [¶] Q: And that's what you wanted to make sure that you were communicating to Recology, that they understood that you were focused on public money; is that true? [¶] A: That they were focused on public money and on the embezzlement that I felt was involving more than just the people there at the Buyback, that it could involve the management team, as well, and the theft of the state funds was something that needed to be looked into at a higher level."
The closing arguments heighten our concern that the error was prejudicial. Recology's counsel took full advantage of the error in the protected activity instruction. Counsel argued: "[T]hese are the elements of protected activity. You have to show, and McVeigh has to prove that he disclosed to Recology, not just that there were weight differences or even that an employee stole or that Jeffrey Anthony was part of an inside job, armed robbery. That's not what he has to show. [¶] What he has to show is that he disclosed to Recology suspicion that somebody was submitting a false claim to the government." Later counsel argued, "Okay. So let's talk about the elements, if we may. The first one is he has to show that he made a disclosure to Recology. Now, keep in mind the disclosure that he had to make was that there were false claims to the government." And again, "So we are finished if you orient here on your chart to the right, the blue area, all of those four hurdles are the elements of did he have a protected status, did he make the right disclosures, did he believe it, was it reasonable, and was it possible." These points drove home that a specific disclosure of a false claim to the government was required, and that McVeigh did not make it. We fail to see how, as Recology summarily claims, that argument "significantly reduced any prejudicial effect the erroneous instruction might have had."
Recology's remaining (and equally summary) Soule arguments are no more persuasive. It argues the 11-to-one defense verdict shows lack of prejudice, but the split is just as likely because the erroneous instruction foreclosed the jury's consideration of McVeigh's theory of the case. Nor, as we have discussed, could the instruction requiring the jury to find McVeigh believed in good faith that Recology was possibly submitting false claims to the government have cured the erroneous instruction that required it to find he made a specific disclosure that he conceded he did not make. It is also clear that the defense verdict on the Labor Code claim does not dispel the likelihood of prejudice. The jury was correctly instructed that, to find a Labor Code section 1102.5 violation, it had to find McVeigh was fired for reporting suspected illegal activities to the police. Properly instructed, the jurors could have rejected that specific claim but nonetheless found that Recology fired McVeigh for engaging in the broader array of activities protected under the CFCA. The error requires reversal.
DISPOSITION
The judgment is reversed.
/s/_________
Siggins, J. We concur: /s/_________
McGuiness, P. J. /s/_________
Jenkins, J.