"Devaney said the SEDC
does not believe Smith is
entitled to her severance
package and will defend the
suit aggressively."
Ex-SEDC President
Files Suit Against
Former Employer
Carolyn Smith Was Fired In
2008 For Giving Large
Bonuses To Herself, Others
July 30, 2010
A San Diego development
official fired over large
bonuses she gave herself
and others is firing back by
filing a lawsuit, 10News
reported.
According to the lawsuit filed
against the Southeastern
Economic Development
Corp., longtime president
Carolyn Smith is seeking
hundreds of thousands of
dollars in severance pay she
said she is entitled to.
Smith, who was fired from the
SEDC in July 2008, served as
its president for 14 years.
She is also the daughter of
longtime civic leader Rev.
George Walker Smith.
In 2008, Mayor Jerry Sanders
demanded Smith be fired
after an audit revealed she
had given nearly $900,000 in
bonuses to herself and other
SEDC staff over a five-year
period. Auditors complained
the compensation efforts
amounted to fraud, but Smith
claimed the bonuses were
justified.
A year later, she tried to
collect her $100,000
severance package, but a
judge blocked the payment,
citing the need to protect
taxpayer interest.
Smith is seeking a severance
benefit of just over $200,000,
according to the lawsuit.
SEDC attorney Leslie
Devaney told 10News
Smith's lawsuit "came as no
surprise" and "had been
threatened for some time."
Devaney said the SEDC does
not believe Smith is entitled
to her severance package
and will defend the suit
aggressively.
Smith's attorney did not have
any comment.
Previous Stories:
* February 26, 2009: SEDC
To Rescind Ex-President's
Severance Pay
* October 6, 2008: Judge
Stops $100K Severance
Check For Ex-SEDC
President
* September 24, 2008: SEDC
Considers Speedy Removal
Of President
* September 15, 2008: City
Councilman Speaks On
SEDC Audit
* September 10, 2008: Audit:
SEDC Bonuses Amount To
Fraud
* August 8, 2008: Lawsuit
Filed Against Ex-SEDC
President
* August 7, 2008: Report:
Ex-SEDC President Gave
Herself Bonuses
* July 24, 2008: SEDC
President Carolyn Smith Fired
does not believe Smith is
entitled to her severance
package and will defend the
suit aggressively."
Ex-SEDC President
Files Suit Against
Former Employer
Carolyn Smith Was Fired In
2008 For Giving Large
Bonuses To Herself, Others
July 30, 2010
A San Diego development
official fired over large
bonuses she gave herself
and others is firing back by
filing a lawsuit, 10News
reported.
According to the lawsuit filed
against the Southeastern
Economic Development
Corp., longtime president
Carolyn Smith is seeking
hundreds of thousands of
dollars in severance pay she
said she is entitled to.
Smith, who was fired from the
SEDC in July 2008, served as
its president for 14 years.
She is also the daughter of
longtime civic leader Rev.
George Walker Smith.
In 2008, Mayor Jerry Sanders
demanded Smith be fired
after an audit revealed she
had given nearly $900,000 in
bonuses to herself and other
SEDC staff over a five-year
period. Auditors complained
the compensation efforts
amounted to fraud, but Smith
claimed the bonuses were
justified.
A year later, she tried to
collect her $100,000
severance package, but a
judge blocked the payment,
citing the need to protect
taxpayer interest.
Smith is seeking a severance
benefit of just over $200,000,
according to the lawsuit.
SEDC attorney Leslie
Devaney told 10News
Smith's lawsuit "came as no
surprise" and "had been
threatened for some time."
Devaney said the SEDC does
not believe Smith is entitled
to her severance package
and will defend the suit
aggressively.
Smith's attorney did not have
any comment.
Previous Stories:
* February 26, 2009: SEDC
To Rescind Ex-President's
Severance Pay
* October 6, 2008: Judge
Stops $100K Severance
Check For Ex-SEDC
President
* September 24, 2008: SEDC
Considers Speedy Removal
Of President
* September 15, 2008: City
Councilman Speaks On
SEDC Audit
* September 10, 2008: Audit:
SEDC Bonuses Amount To
Fraud
* August 8, 2008: Lawsuit
Filed Against Ex-SEDC
President
* August 7, 2008: Report:
Ex-SEDC President Gave
Herself Bonuses
* July 24, 2008: SEDC
President Carolyn Smith Fired
Why This Website
Stutz Artiano Shinoff
& Holtz v. Maura
Larkins defamation
SDCOE
CVESD
Castle Park
Elementary School
Law Enforcement
CTA
CVE
Stutz Artiano Shinoff
& Holtz
Silence is Golden
Schools and Violence
Office Admin Hearings
Larkins OAH Hearing
Stutz Artiano Shinoff
& Holtz v. Maura
Larkins defamation
SDCOE
CVESD
Castle Park
Elementary School
Law Enforcement
CTA
CVE
Stutz Artiano Shinoff
& Holtz
Silence is Golden
Schools and Violence
Office Admin Hearings
Larkins OAH Hearing
3. 2010: Carolyn
Walker v. SEDC
When she's not suing
public entities,
Devaney is defending
them from similar
"frivolous" lawsuits
Ironically, Leslie Devaney
serves as a board member of
CALA, Californians Against
Lawsuit Abuse
Walker v. SEDC
When she's not suing
public entities,
Devaney is defending
them from similar
"frivolous" lawsuits
Ironically, Leslie Devaney
serves as a board member of
CALA, Californians Against
Lawsuit Abuse
BBK attorney Woody
was fired and they
brought in Biggs. The
fired administrators
brought in SASH
because an employee
who is a board
member at Carlsbad
USD is friends with
Davaney and Artiano.
Her name is Kelly, so
Kelly refereed the fired
employees to SASH.
was fired and they
brought in Biggs. The
fired administrators
brought in SASH
because an employee
who is a board
member at Carlsbad
USD is friends with
Davaney and Artiano.
Her name is Kelly, so
Kelly refereed the fired
employees to SASH.
Tri-City releases
details of Gonzalez
settlement
By North County Times
May 4, 2009
OCEANSIDE ----
Former Tri-City
Medical Center Chief
Executive Officer
Arthur Gonzalez will
receive about
$900,000 plus benefits
under a settlement
agreement released
by the hospital's
attorney late Monday
afternoon.
The money includes
$125,000 up front, as
well as payments of
$41,250 per month ----
Gonzalez's regular
base salary --- for the
next 18 months.
details of Gonzalez
settlement
By North County Times
May 4, 2009
OCEANSIDE ----
Former Tri-City
Medical Center Chief
Executive Officer
Arthur Gonzalez will
receive about
$900,000 plus benefits
under a settlement
agreement released
by the hospital's
attorney late Monday
afternoon.
The money includes
$125,000 up front, as
well as payments of
$41,250 per month ----
Gonzalez's regular
base salary --- for the
next 18 months.
It's Leslie
Devaney (left)
versus Kathleen
Sterling (right).
Devaney (left)
versus Kathleen
Sterling (right).
Devaney has targeted board member Kathleen Sterling in lawsuit against
Tri-City Hospital.
S.D. mayor is right on how poorly run state is
By Logan Jenkins
San Diego Union Tribune
July 26, 2009
... A spiky bouquet – the Sterling Silver Tongue award – to the attorneys for seven fired Tri-City
executives who are suing four board members, Tri-City Medical Center and its current CEO for
illegal termination and defamation.
Without judging the merits of the case, one thing you have to admire about the lawsuit's
complaint, fashioned by the law firm of Stutz, Artiano, Shinoff & Holtz, is the way it focuses like
a laser on what it calls, over and over and over, the “Sterling Faction.”
The overriding theory of the lawsuit is that the chain of events that led to the firing of the seven
high-level executives, as well as the departure of former CEO Arthur Gonzalez via settlement,
was orchestrated exclusively by Kathleen Sterling, a maverick board member with a score of
scores to settle against the Tri-City executives and several hostile board members.
Here's an illustrative paragraph from the complaint that lays out the dynamic that the plaintiffs
hope will earn them millions of dollars in damages:
“The Healthcare Executives are informed and believe that as soon as elected (in November),
the Sterling Faction set out to exact revenge against the Healthcare Executives and then-CEO
Gonzalez who had worked for so many years to protect the District and the public from
Defendant Sterling's abuses and that the Sterling Faction set out to exact retribution for the
Healthcare Executives' perceived anti-union political beliefs. Even before the elections were
certified, the union-backed Sterling Faction began meeting as a group to plot the ouster . . . ”
In the plaintiffs' narrative, the other board members of the Sterling Faction – RoseMarie Reno,
Charlene Anderson and George Coulter – were mere pro-union stooges under Sterling's
decisive thumb.
By focusing the lawsuit on Sterling, the Exiled Seven's attorneys accomplish a couple of
things. They create a colorful villain with a well-documented history of odd behavior. Moreover,
they posit a highly personal motive for the firings – Sterling's burning desire for vengeance –
that dovetails with the allegedly self-interested agenda of the nurses union.
If a jury ever hears this mother of all termination cases – each plaintiff is asking for a minimum
of a million dollars, and that doesn't include punitive damages – Sterling will be the alleged
conspiracy's ringleader, the star of the show.
And the other defendants? They're just stooges, along for the ride.
Tri-City Hospital.
S.D. mayor is right on how poorly run state is
By Logan Jenkins
San Diego Union Tribune
July 26, 2009
... A spiky bouquet – the Sterling Silver Tongue award – to the attorneys for seven fired Tri-City
executives who are suing four board members, Tri-City Medical Center and its current CEO for
illegal termination and defamation.
Without judging the merits of the case, one thing you have to admire about the lawsuit's
complaint, fashioned by the law firm of Stutz, Artiano, Shinoff & Holtz, is the way it focuses like
a laser on what it calls, over and over and over, the “Sterling Faction.”
The overriding theory of the lawsuit is that the chain of events that led to the firing of the seven
high-level executives, as well as the departure of former CEO Arthur Gonzalez via settlement,
was orchestrated exclusively by Kathleen Sterling, a maverick board member with a score of
scores to settle against the Tri-City executives and several hostile board members.
Here's an illustrative paragraph from the complaint that lays out the dynamic that the plaintiffs
hope will earn them millions of dollars in damages:
“The Healthcare Executives are informed and believe that as soon as elected (in November),
the Sterling Faction set out to exact revenge against the Healthcare Executives and then-CEO
Gonzalez who had worked for so many years to protect the District and the public from
Defendant Sterling's abuses and that the Sterling Faction set out to exact retribution for the
Healthcare Executives' perceived anti-union political beliefs. Even before the elections were
certified, the union-backed Sterling Faction began meeting as a group to plot the ouster . . . ”
In the plaintiffs' narrative, the other board members of the Sterling Faction – RoseMarie Reno,
Charlene Anderson and George Coulter – were mere pro-union stooges under Sterling's
decisive thumb.
By focusing the lawsuit on Sterling, the Exiled Seven's attorneys accomplish a couple of
things. They create a colorful villain with a well-documented history of odd behavior. Moreover,
they posit a highly personal motive for the firings – Sterling's burning desire for vengeance –
that dovetails with the allegedly self-interested agenda of the nurses union.
If a jury ever hears this mother of all termination cases – each plaintiff is asking for a minimum
of a million dollars, and that doesn't include punitive damages – Sterling will be the alleged
conspiracy's ringleader, the star of the show.
And the other defendants? They're just stooges, along for the ride.
1. 2010: Tri-City Hospital sued by attorneys Leslie Devaney
and Ray Artiano on behalf of fired administrators
and Ray Artiano on behalf of fired administrators
A Tale of Three Lawsuits:
Which Leslie Devaney case is the most
frivolous?
Which Leslie Devaney case is the most
frivolous?
2. 2007: Devaney, a
partner in Stutz,
Artiano, Shinoff & Holtz,
is suing San Diego
Education Report for
defamation.
partner in Stutz,
Artiano, Shinoff & Holtz,
is suing San Diego
Education Report for
defamation.
Devaney and Ariano answer to motion to dismiss
Allen Coleman et., al v. Sterling et. all case No. CV—01594-W- Porter
Case 3:09-cv-01594-W-POR Document 19 Filed 09/21/2009 Page 16 of 18
...Since the moment the Healthcare Executives filed this lawsuit, delay has been the
Defendants’ watchword. The complaint contains ten claims, nine of which are state
law claims and the single federal claim for violation of U.S. constitutional rights
would have been properly heard in State Court. Rather than answer the complaint
in State Court, the Defendants removed this action to this Federal Court, where it
need not be. Rather than answer, the Defendants filed four motions to strike or
dismiss claims. Among those delay tactics is this motion to strike language used in
the Complaint and five of the 155 paragraphs of the Complaint. The motion should
be denied.
Motions to Strike for Redundant, Immaterial, Impertinent or Scandalous Matter are
Highly Disfavored as Time-Wasters
The function of a motion to strike is to avoid unnecessary expenditures that arise
throughout litigation by dispensing of any spurious issues prior to trial. Chong v.
State
Farm Mut. Auto. Ins. Co., 428 F.Supp.2d 1136, 1139 (S.D.Cal.2006); Sidney-
Vinstein v. A.H. Robins Co., 697 F.2d 880, 885 (9th Cir.1983). Rule 12(f) motions
“are generally regarded with disfavor because of the limited importance of pleading
in federal practice, and because they are often used as a delaying tactic.” Neilson
v. Union Bank of Cal., N.A., 290 F.Supp.2d 1101, 1152 (C.D.Cal.2003).
Courts generally grant a motion to strike only where “it is clear that the matter
to be stricken could have no possible bearing on the subject matter of the
litigation.” LeDuc v.Kentucky Cent. Life Ins. Co., 814 F.Supp. 820, 830 (N.D.Cal.
1992).
The Healthcare Executives request the Court take judicial notice of Defendant’s
own pleadings on record with the San Diego Superior Court pursuant to Federal
Rule of Evidence, 201(b). See, U.S. ex rel Robinson Rancheria Citizens Council v.
Borneo, Inc., 971 F.2d 244, 248 (9th Cir.1992)
(“Federal courts may take notice of proceedings in other courts, both within and
without the federal judicial system, if those proceedings have a direct relation to the
matters at issue.”; Rothman v. Gregor, 220 F.3d 81, 92 (2nd Cir. 2000) (judicial
notice of complaint in another court pursuant to Rule 201(b).)
Obviously, there will be many opportunities for Defendant Sterling to object to
attacks on her credibility when the time comes for submission of evidence in this
case, but the allegation is relevant.
The allegation is relevant. Moreover, the fact that her fellow Board
Members hired security guards out of fear for their safety also relates to
demonstrating Kathleen Sterling is an unreliable witness who lacks credibility. See
Federal Rule of Evidence 608(a).
Again, this fact will be relevant to Kathleen Sterling’s credibility as a witness for all
purposes. See Federal Rule of Evidence 608(a).
Her challenges to the sufficiency of the sixth claim for defamation and the eighth
and ninth claims for violations of California's Labor Code, is without merit.
Legal Standard on a Motion to Dismiss: Any Cognizable Theory Properly Pled
Should be Upheld
A Rule 12(b)(6) motion to dismiss tests the complaint's sufficiency. See, North Star
Int'l.v. Arizona Corp. Comm'n., 720 F.2d 578, 581 (9th Cir.1983). A complaint may
be dismissed as a matter of law for two reasons: (1) lack of a cognizable legal
theory, or (2) insufficient facts under a cognizable theory. Robertson v. Dean Witter
Reynolds, Inc., 749 F.2d 530, 534 (9th Cir.1984); Neitzke v. Williams, 490 U.S. 319,
326-27, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989) (“Rule 12(b)(6) authorizes a court
to dismiss a claim on the basis of a dispositive issue of law.”).
In reviewing a Rule 12(b)(6) motion, the court assumes all factual allegations are
true, and construes them in the light most favorable to the nonmoving party.
Gompper v. VISX, Inc., 298 F.3d 893, 895 (9th Cir.2002). And the complaint, and all
reasonable inferences therefrom, are construed in plaintiff's favor. Walleri v. Fed.
Home Loan Bank of Seattle, 83 F.3d 1575, 1580 (9th Cir.1996).
And, although a complaint attacked by a Rule 12(b)(6) motion to dismiss does not
nee detailed factual allegations, a plaintiff's obligation is to provide more than
labels and conclusions -- a formulaic recitation of the elements of a cause of action
are insufficient. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). A
complaint will be sustained where the allegations “raise a right to relief above the
speculative level.” Id. This motion to dismiss motion should be denied.
“In April 2007, the news media reported that Defendant Sterling had accused
District administrators of mis-handling Medi-Cal and Medicare funds.” This is
published allegation charging all of the financial professionals among the
Healthcare Executives with professional incompetence and malfeasance.
Defendant Sterling called each of the Healthcare Executives incompetent.
“At the very time that the Sterling Faction placed the District's entire executive team
on leave, the media reported results of an independent audit conducted by the
Office of Statewide Hospital Planning and Development showing that ‘Tri-City had
completed one of its most successful financial years
in recent history.’ The reality is that the Healthcare Executives were doing an
excellent job running the District. . .” Defendant Reno, too, is alleged to have
defamed the professional reputations
Reno also stated that she hired Michael Williams ‘to conduct a forensic
investigation into District finances and operations.’ Reno later stated that, ‘The
action the Board has taken . . . is about protecting District and the assets of the
hospital . . .’.”
Defendant Reno accused the Healthcare Executives of being professionally
incompetent - or worse. As in Gould, these allegations infer that each of the
Healthcare Executives was incompetent, lacked professionalism and that they
may have engaged in criminal conduct.
The complaint alleges that Coulter stated, “Some things don't seem ethical and not
even legal.”
[Paragraph 55 & 105.] This allegation directly impugns the competence of each of
the Healthcare Executives who each had just been placed on leave and identified in
the media. Even worse, Defendant Coulter affirmatively suggests the Healthcare
Executives have committed crimes. The Healthcare Executives have stated a claim
for defamation against Defendant Coulter defamed each Healthcare Executive.
Defendant Healthcare District CEO Larry Anderson also defamed
The Healthcare Executives have been told that the investigation report in question
contains false allegations of professional misconduct against each one of the
Healthcare Executives.
However, the report, prepared by or at the direction of Defendant Larry Anderson,
falsely disparages the professional reputations of each Healthcare Executive and
the report was published.
In Rogers v. Home Shopping Network, Inc., 57 F.Supp.2d 973, 982 (C.D.Cal.1999)
the Court analyzed California’s anti-SLAPP statue as applied in federal courts and
held, “[I]f a defendant desires to make a special motion to strike based on the
plaintiff’s lack of evidence, the defendant may not do so until discovery has been
developed sufficiently to permit summary judgment under Rule 56.”
The Ninth Circuit, however, has altered the second part of the analysis because
requiring a party to present admissible evidence before discovery is complete is
akin to a motion for summary judgment and the Federal Rules of Civil Procedure
and federal case law forbid such a requirement. In Metabolife Intern., Inc. v.
Wornick, 264 F.3d 832, 846 (2001), the Ninth Circuit expressly adopted the holding
of Rogers v. Home Shopping Network, Inc., 57 F.Supp.2d 973, 980
(C.D.Cal.1999) in which the Central District Court of California rejected application
of the procedural aspects of California’s anti-SLAPP statute.
The Rogers Court explained, “[The provisions of section 425.16] create a default
rule that allows the defendant served with a complaint to immediately put the
plaintiff to his or her proof before the plaintiff can conduct discovery. . . . If this
expedited procedure were used in federal court to test the plaintiff’s evidence
before the plaintiff has completed discovery, it would collide with Federal Rule of
Civil Procedure 56.” Supra, 57 F.Supp.2d at 980.
The Federal Rules discourage motions for summary judgment based on evidence
outside the record until the nonmoving party has had the opportunity to conduct
discovery. Rule 56(f) provides that if the party opposing a motion for summary
judgment cannot yet submit evidence supporting its opposition, “the court may
refuse the application for judgment or may order a continuance to permit affidavits
to be obtained or depositions to be taken or discovery to be had or may make such
other order as is just.” Fed.R.Civ.P. 56(f). The Supreme Court has restated this rule
as requiring, rather than merely permitting, refusal “where the nonmoving party has
not had the opportunity to discover information that is essential to his opposition.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 n. 5, 106 S.Ct. 2505, 91
L.Ed.2d 202 (1986).Id. at 981.
The requirements of the Federal Rules of Civil Procedure mandate that, “[I]f a
defendant desires to make a special motion to strike based on the plaintiff’s lack of
evidence, the defendant may not do so until discovery has been developed
sufficiently to permit summary judgment under Rule 56.” Id. at 982. (holding
specifically adopted by Metabolife Intern., Inc. v. Wornick, 264 F.3d 832, 846 (9th
Cir. 2001).)
Taken together, The District Defendants’ Special Motion to Strike based on
California’s anti-SLAPP statute is untimely. Even if the subject of this action were
properly addressed by the anti-SLAPP statute - which it is not - the motion cannot
be filed at this time because no party has had any right to take discovery. Because
the motion must be denied, the Healthcare Executives request an award of their
attorneys fees as authorized by California Code of Civil Procedure section 425.16.
Defamation is an invasion of the interest in reputation. The tort involves the
intentional publication of a statement of fact that is false, unprivileged, and has a
natural tendency to injure or which causes special damage. (Civ. Code §§ 45, 46;
5 Witkin, Summary of Cal. Law (9th ed. 1988) Torts § 471, pp. 557-558.)
Publication means communication to some third person who understands the
defamatory meaning of the statement and its application to the person to whom
reference is made. Publication need not be to the “public” at large; communication
to a single individual is sufficient. (Cunningham v. Simpson (1969) 1 Cal.3d 301,
306; , 81 Cal.Rptr. 855, 461 P.2d 39 5 Witkin, Summary of Cal. Law, supra, Torts,
§§ 471, 476, pp. 557-558, 560- 561.) Reprinting or recirculating a libelous writing
has the same effect as an original publication. (Gilman v. McClatchy (1896) 111
Plaintiff’s Opposition to dismiss defendants’ Rule 12
9b0 (6) motion to dismiss and for a more definite
statement
LEGAL DISCUSSION
A. Legal Standard on a Motion to Dismiss: Any Pled Cognizable Theory Should be
Upheld
A Rule 12(b)(6) motion to dismiss tests the complaint’s sufficiency. See, North Star
Int’l. v. Arizona Corp. Comm’n., 720 F.2d 578, 581 (9th Cir.1983). A complaint may
be dismissed as a matter of law for two reasons: (1) lack of a cognizable legal
theory, or (2) insufficient facts under a cognizable theory. Robertson v. Dean Witter
Reynolds, Inc., 749 F.2d 530, 534 (9th Cir.1984); Neitzke v. Williams, 490 U.S. 319,
326-27, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989) (“Rule 12(b)(6) authorizes a court
to dismiss a claim on the basis of a dispositive issue of law.”).
In reviewing a Rule 12(b)(6) motion, the court assumes all factual allegations are
true, and construes them in the light most favorable to the nonmoving party.
Gompper v. VISX, Inc., 298 F.3d 893, 895 (9th Cir.2002). And the complaint, and all
reasonable inferences therefrom, are construed in plaintiff’s favor. Walleri v. Fed.
Home Loan Bank of Seattle, 83 F.3d 1575, 1580 (9th Cir.1996).
And, although a complaint attacked by a Rule 12(b)(6) motion to dismiss does not
need detailed factual allegations, a plaintiff’s obligation is to provide more than
labels and conclusions -- a formulaic recitation of the elements of a cause of action
are insufficient. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). A
complaint will be sustained where the allegations “raise a right to relief above the
speculative level.” Id. This motion to dismiss motion should be denied.
A court’s function on a Rule 12(b)(6) motion “is not to weigh potential
evidence that the parties might present at trial, but to assess whether the plaintiff’s
complaint alone is legally sufficient to state a claim for which relief may be granted.”
Sutton v. Utah State Sch. for the Deaf & Blind, 173 F.3d 1226, 1236 (10th Cir.
1999).
California Labor Code section 1102.5, subdivision (a) provides: “No employer shall
make, adopt, or enforce any rule, regulation, or policy preventing an employee
from disclosing information to a government or law enforcement agency, where the
employee has reasonable cause to believe that the information discloses a
violation of state or federal statute, or violation or noncompliance with a state or
federal regulation.” Subdivision (b) provides: “No employer shall retaliate against
an employee for disclosing information to a government or law
enforcement agency, where the employee has reasonable cause to believe that the
information discloses a violation of state or federal statute, or violation or
noncompliance with a state or federal regulation.” This statute is sometimes known
as a whistle blower protection law.
...prove whistle blowing retaliation, a plaintiff must show (1) she engaged
in a protected activity, (2) her employer subjected her to an adverse
employment action, and (3) there is a link between the two. Patten v. Grant Joint
Union High School Dist., 134 Cal.App.4th 1378, 1384 (2005). Additionally, in the
case of an employee of a public agency, the employee is covered by the whistle
blower protections if the employee reports the alleged wrongdoing to a superior.
Cal. Labor Code, § 1102.5(e) (“A report made by an employee of a government
agency to his or her employer is a disclosure of information to a government or law
enforcement agency . . .”)
Here, the evidence demonstrates all of the facts necessary to prove the Healthcare
Executives were fired for taking action to vindicate the public’s right to know what its
elected officials are doing. The Healthcare Executives filed a writ petition with the
San Diego County Superior Courts, a branch of the State Government, alleging the
District Defendants violated the California Brown Act. [Mahlowitz Decl., Exh. A
(Brown Act Petition).] The Brown Act protects the public by requiring that all
activities of public entities be conducted in public.
Violation of the Act is a criminal offense. Cal. Gov. Code § 54959. These facts are
alleged in the Complaint in this federal court.
In deciding a motion to dismiss, “A court also may consider documents that are
referred to in the complaint, that are ‘central’ to the plaintiff’s claims, and whose
authenticity is undisputed.” In re New Century, 588 F.Supp.2d 1206, 1219 (C.D.Cal.
2008) (citing Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir.
1994), overruled on other grounds, 307 F.3d 1119, 1127 (9th Cir.2002).)
The Ninth Claim for Violation of Labor Code § 1102.5 Alleges Multiple Protected
Whistle Blowing Activities Stemming From Defendant's Many Violations of the
California Brown Act
Again, Although Defendant Sterling has no standing to challenge the Ninth Claim,
for which only the Healthcare District Defendant can be liable, she has asserted the
claim is not properly alleged. The motion to dismiss the Ninth Claim should be
denied because she has no standing to challenge the claim. Moreover, her
arguments are wrong.
California Labor Code section 1102.5, subdivision (a) provides: “No employer shall
make, adopt, or enforce any rule, regulation, or policy preventing an employee
from disclosing information to a government or law enforcement agency, where the
employee has reasonable cause to believe that the information discloses a
violation of state or federal statute, or violation or noncompliance with a state or
federal regulation.” Subdivision (b) provides: “No employer shall retaliate against
an employee for disclosing information to a government or law enforcement
agency, where the employee has reasonable cause to believe that the information
discloses a violation of state or federal statute, or violation or noncompliance with a
state or federal regulation.” This statute is sometimes known as a whistle blower
protection law.
To prove whistle blowing retaliation, a plaintiff must show (1) she engaged in a
protected activity, (2) her employer subjected her to an adverse employment
action, and (3) there is a link between the two. Patten v. Grant Joint Union High
School Dist., 134 Cal.App.4th 1378, 1384 (2005). Additionally, in the case of an
employee of a public agency, the employee is covered by the whistle blower
protections if the employee reports the alleged wrongdoing to a superior.
Cal. Labor Code, § 1102.5(e) (“A report made by an employee of a government
agency to his or her employer is a disclosure of information to a government or law
enforcement agency . . .”)
No requirement exists that the report be made to a different governmental agency.
Here, the evidence demonstrates all of the facts necessary to prove the Healthcare
Executives were fired for taking action to vindicate the public's right to know what its
elected officials are doing. The Healthcare Executives filed a writ petition with the
San Diego County Superior Courts, a branch of the State Government, alleging the
District Defendants violated the California Brown Act. [Mahlowitz Decl., Exh. A
(Brown Act Petition).] The Brown Act protects the public by requiring that all
activities of public entities be conducted in public.
Violation of the Act is a criminal offense. Cal. Gov. Code § 54959.
These facts are alleged in the Complaint in this federal court. In deciding a motion
to dismiss, “A court also may consider documents that are referred to in the
complaint, that are ‘central’ to the plaintiff's claims, and whose authenticity is
undisputed.” In re New Century, 588 F.Supp.2d 1206, 1219 (C.D.Cal. 2008) (citing
Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir.1994), overruled on other grounds,
307 F.3d 1119, 1127 (9th Cir.2002).) Here, the Brown Act Petition is alleged is
central to the pending Complaint. The Court is entitled to take judicial notice of the
records of other courts as explained above in Part III(B). After the Brown Act
Petition was filed, the District Defendants fired the Healthcare Executives.
[Complaint, ¶ 9 (Healthcare Executives terminated Aril 23, 2009).] The Complaint
alleges a violation of section 1102.5 on this ground.
Additionally, as explained in the Brown Act Writ Petition identified in the Complaint
at paragraph 21, prior to being fired, the Healthcare Executives served the District
Defendants with a letter identifying the Brown Act violation and requesting the
District cure it's violations of the
law. [Mahlowitz Decl, Exh.A (Brown Act Petition, at Exh. 3).] As explained above, it is
proper for this Court to consider authentic evidence referenced in the Complaint in
opposition to this Motion to Dismiss. By reporting the allegations of Brown Act
violations to their superiors – the District Board -- the Healthcare Executives
establish a second basis to assert they were wrongfully terminated four months
after filing the Petition and letter asking for corrections in retaliation for their whistle
blowing activities. The allegations of retaliation for whistle blowing activity are well
alleged and nearly established as a matter of fact.
The Sixth Claim for Defamation is Properly Alleged as to Defendant Sterling and
the remaining Defendants
The California Court of Appeal has explained the elements of a claim for
defamation as follows:
Defamation is an invasion of the interest in reputation. The tort involves the
intentional publication of a statement of fact that is false, unprivileged, and has a
natural tendency to injure or which causes special damage. (Civ.Code, §§ 45, 46;
5 Witkin, Summary of Cal. Law (9th ed. 1988) Torts § 471, pp. 557-558.)
Publication means communication to some third person who understands the
defamatory meaning of the statement and its application to the person to whom
reference is made. Publication need not be to the “public” at large; communication
to a single individual is sufficient. (Cunningham v. Simpson (1969) 1 Cal.3d 301,
306; , 81 Cal.Rptr. 855, 461 P.2d 39 5 Witkin, Summary of Cal. Law, supra, Torts,
§§ 471, 476, pp. 557-558, 560- 561.) Reprinting or recirculating a libelous writing
has the same effect as an original publication. (Gilman v. McClatchy (1896) 111
Cal. 606, 612, 44 P. 241; Rest.2d Torts, §§ 576, 578; 5 Witkin, Summary of Cal.
Law, supra, Torts, § 478, pp. 562-563.)
Smith v. Maldonado, 72 Cal.App.4th 637, 647 (1999). The essential elements, thus,
are (1) intentional publication, (2) statement of fact, (3) that is false and
unprivileged and (4) has a tendency to injure or which causes special damage.
California Civil Code section 46 defines defamation and slander as an unprivileged,
false publication regarding an individual that, “Tends directly to injure him in
respect to his office, profession, trade or business, either by imputing to him
general disqualification in those respects which the office or other occupation
peculiarly requires, or by imputing something with reference to his office,
profession, trade, or business that has a natural tendency to lessen its profits.”
(See also Cal. Civ. Code § 44 (slander is defamation).)
Particularly instructive regarding the defamation claim in this action is the California
Court of Appeal decision in Gould v. Maryland Sound Industries, Inc., 31 Cal.App.
4th 1137 (1995). Like this case, Gould concerned claims for wrongful termination
and separate claims for the tort of defamation. In Gould, the employer made an
accusation that the employee had made a $100,000 mistake in a contractual
bidding situation. Id. at 1154. The Court found this allegation withstood a motion to
dismiss, holding, “This statement would tend to injure [the employee] by imputing to
him incompetence in his trade.” Id. Thus, defamation occurred even though the
employer did not directly state, “you are incompetent.” Defamation occurs by
imputation of the statements made in context. Here, all of the publications made by
the Defendants, as alleged by the Healthcare Executives either directly or by
imputation, assault the professional reputations of each Healthcare Executive.
Defendant Sterling, herself, identifies the defamation claims alleged against her as
part of her concurrently-filed Motion to Strike. [Sterling Motion to Strike, p. 2:6-12.]
Sterling's Motion to Strike objects to paragraph 35 of the Complaint which alleges:
“In April 2007, the news media reported that Defendant Sterling had accused
District administrators of mis-handling Medi-Cal and Medicare funds.” This is
published allegation charging all of the financial professionals among the
Healthcare Executives with professional incompetence and malfeasance.
Defendant Sterling called each of the Healthcare Executives incompetent.
The Complaint, also at paragraph 35, states that Defendant Sterling's accusations
are false, alleging: “News reports cited State Department of Health and Human
Services sources as absolutely rejecting Defendant Sterling's allegations.”
Additionally, at paragraph 46 (oddly objected to as irrelevant by Defendant
Sterling's Motion to Strike), the Healthcare Executives
again demonstrate the falsity of Defendant Sterling's accusations by alleging, “At
the very time that the Sterling Faction placed the District's entire executive team on
leave, the media reported results of an independent audit conducted by the Office
of Statewide Hospital Planning and Development showing that ‘Tri-City had
completed one of its most successful financial years in recent history.’ The reality is
that the Healthcare Executives were doing an excellent job running the District. . .”
Defendant Reno, too, is alleged to have defamed the professional reputations of
the
Plaintiffs. Paragraphs 55 and 105 of the Complaint allege that shortly after
December 18, 2008, Defendant Reno made remarks in the media concerning the
Board's employment actions as follows: “Defendant Reno justified the action that
was taken as being necessary ‘to secure the District's assets and records . . .’
Reno also stated that she hired Michael Williams ‘to conduct a forensic
investigation into District finances and operations.’ Reno later stated that, ‘The
action the Board has taken . . . is about protecting District and the assets of the
hospital . . .’.”
Additionally, at paragraph 56 of the complaint, Reno is alleged to have stated to
the media that termination letters to each of the Healthcare Executives were sent
“for cause.” By stating termination was”for cause,” the Healthcare District and
Defendant Reno accused the Healthcare Executives of being professionally
incompetent - or worse. As in Gould, these allegations infer that each of the
Healthcare Executives was incompetent, lacked professionalism and that they may
have engaged in criminal conduct. As in Gould, a claim for defamation against
Defendant
Reno is stated. Defendant Coulter also defamed the Healthcare Executives.
Paragraphs 55 and 105 of the Complaint address comments Defendant Coulter
made to the media shortly after the Healthcare Executives were placed on
administrative leave. The complaint alleges that Coulter stated, “Some things don't
seem ethical and not even legal.” [Paragraph 55 & 105.] This allegation directly
impugns the competence of each of the Healthcare Executives who each had just
been placed on leave and identified in the media. Even worse, Defendant Coulter
affirmatively suggests the Healthcare Executives have committed crimes. The
Healthcare
Executives have stated a claim for defamation against Defendant Coulter defamed
each Healthcare Executive.
Defendant Healthcare District CEO Larry Anderson also defamed the Healthcare
Executives. Paragraph 108 of the Complaint states, “The Healthcare Executives are
informed that the ‘confidential investigation’ and/or the alleged findings which have
still not been shared with the Healthcare Executives, have been shared with other
employees of Tri-City Healthcare District by Defendant Larry Anderson, and that
said investigation or statements concerning the investigation contain the false
statements impugning the character and professional reputations of the Healthcare
Executives.” The Healthcare Executives have been told that the investigation report
in question contains false allegations of professional misconduct against each one
of the
Healthcare Executives. Although none of the Plaintiffs has personally seen the
report, they have discussed the report with persons to whom Defendant District
CEO Larry Anderson showed the report. Thus, the allegation must be made at this
time on information and belief. However, the report, prepared by or at the direction
of Defendant Larry Anderson, falsely disparages the professional reputations of
each Healthcare Executive and the report was published. Defendant Larry
Anderson is also alleged, at paragraph 107, to have told hospital employees during
the investigation that no Healthcare Executive would be returning to the District.
Thus, each Healthcare Executive was accused of having engaged in some form of
professional misconduct - more defamation. The Healthcare Executives have
alleged sufficient facts to withstand a motion to dismiss and have earned the right
to undertake discovery to marshal admissible evidence to support this allegation at
trial.
Liability of Defendant Charlene Anderson, the District and each Defendant Board
Member. The Complaint also asserts, at paragraph 115, that the defamation
identified above was known to and ratified by each individual member of the Board
and ratified by the Defendant Healthcare District Board on behalf of the District.
See, Shively v. Bozanich, 31 Cal.4th 1230, 1245 (2003) (“[E]ach person who takes
a responsible part in a publication of defamatory matter may be held liable for the
publication.”) This intentional plan to disparage the reputation of each Healthcare
Executive via the above statements presents another basis upon which liability for
defamation as to each of the Defendant District Board Members, including
Defendant Charlene Anderson, as well as the District itself. The Complaint alleges
that each of the above allegations was reasonably understood to assert that each
Healthcare Executive committed a crime or was professionally incompetent [ ¶ 112];
that all of the allegations are untrue [ ¶ 110]; that they were stated or understood
as fact, not opinion [¶ 111]; and that they were made with malice or recklessly and
were not privileged [¶ 115]. Finally, damages are alleged. [ ¶ 116.] The Healthcare
Executives have stated a claim for defamation against each and every defendant in
this action.
Case 3:09-cv-01594-W-POR Document 19 Filed 09/21/2009 Page 16 of 18
Allen Coleman et., al v. Sterling et. all case No. CV—01594-W- Porter
Case 3:09-cv-01594-W-POR Document 19 Filed 09/21/2009 Page 16 of 18
...Since the moment the Healthcare Executives filed this lawsuit, delay has been the
Defendants’ watchword. The complaint contains ten claims, nine of which are state
law claims and the single federal claim for violation of U.S. constitutional rights
would have been properly heard in State Court. Rather than answer the complaint
in State Court, the Defendants removed this action to this Federal Court, where it
need not be. Rather than answer, the Defendants filed four motions to strike or
dismiss claims. Among those delay tactics is this motion to strike language used in
the Complaint and five of the 155 paragraphs of the Complaint. The motion should
be denied.
Motions to Strike for Redundant, Immaterial, Impertinent or Scandalous Matter are
Highly Disfavored as Time-Wasters
The function of a motion to strike is to avoid unnecessary expenditures that arise
throughout litigation by dispensing of any spurious issues prior to trial. Chong v.
State
Farm Mut. Auto. Ins. Co., 428 F.Supp.2d 1136, 1139 (S.D.Cal.2006); Sidney-
Vinstein v. A.H. Robins Co., 697 F.2d 880, 885 (9th Cir.1983). Rule 12(f) motions
“are generally regarded with disfavor because of the limited importance of pleading
in federal practice, and because they are often used as a delaying tactic.” Neilson
v. Union Bank of Cal., N.A., 290 F.Supp.2d 1101, 1152 (C.D.Cal.2003).
Courts generally grant a motion to strike only where “it is clear that the matter
to be stricken could have no possible bearing on the subject matter of the
litigation.” LeDuc v.Kentucky Cent. Life Ins. Co., 814 F.Supp. 820, 830 (N.D.Cal.
1992).
The Healthcare Executives request the Court take judicial notice of Defendant’s
own pleadings on record with the San Diego Superior Court pursuant to Federal
Rule of Evidence, 201(b). See, U.S. ex rel Robinson Rancheria Citizens Council v.
Borneo, Inc., 971 F.2d 244, 248 (9th Cir.1992)
(“Federal courts may take notice of proceedings in other courts, both within and
without the federal judicial system, if those proceedings have a direct relation to the
matters at issue.”; Rothman v. Gregor, 220 F.3d 81, 92 (2nd Cir. 2000) (judicial
notice of complaint in another court pursuant to Rule 201(b).)
Obviously, there will be many opportunities for Defendant Sterling to object to
attacks on her credibility when the time comes for submission of evidence in this
case, but the allegation is relevant.
The allegation is relevant. Moreover, the fact that her fellow Board
Members hired security guards out of fear for their safety also relates to
demonstrating Kathleen Sterling is an unreliable witness who lacks credibility. See
Federal Rule of Evidence 608(a).
Again, this fact will be relevant to Kathleen Sterling’s credibility as a witness for all
purposes. See Federal Rule of Evidence 608(a).
Her challenges to the sufficiency of the sixth claim for defamation and the eighth
and ninth claims for violations of California's Labor Code, is without merit.
Legal Standard on a Motion to Dismiss: Any Cognizable Theory Properly Pled
Should be Upheld
A Rule 12(b)(6) motion to dismiss tests the complaint's sufficiency. See, North Star
Int'l.v. Arizona Corp. Comm'n., 720 F.2d 578, 581 (9th Cir.1983). A complaint may
be dismissed as a matter of law for two reasons: (1) lack of a cognizable legal
theory, or (2) insufficient facts under a cognizable theory. Robertson v. Dean Witter
Reynolds, Inc., 749 F.2d 530, 534 (9th Cir.1984); Neitzke v. Williams, 490 U.S. 319,
326-27, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989) (“Rule 12(b)(6) authorizes a court
to dismiss a claim on the basis of a dispositive issue of law.”).
In reviewing a Rule 12(b)(6) motion, the court assumes all factual allegations are
true, and construes them in the light most favorable to the nonmoving party.
Gompper v. VISX, Inc., 298 F.3d 893, 895 (9th Cir.2002). And the complaint, and all
reasonable inferences therefrom, are construed in plaintiff's favor. Walleri v. Fed.
Home Loan Bank of Seattle, 83 F.3d 1575, 1580 (9th Cir.1996).
And, although a complaint attacked by a Rule 12(b)(6) motion to dismiss does not
nee detailed factual allegations, a plaintiff's obligation is to provide more than
labels and conclusions -- a formulaic recitation of the elements of a cause of action
are insufficient. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). A
complaint will be sustained where the allegations “raise a right to relief above the
speculative level.” Id. This motion to dismiss motion should be denied.
“In April 2007, the news media reported that Defendant Sterling had accused
District administrators of mis-handling Medi-Cal and Medicare funds.” This is
published allegation charging all of the financial professionals among the
Healthcare Executives with professional incompetence and malfeasance.
Defendant Sterling called each of the Healthcare Executives incompetent.
“At the very time that the Sterling Faction placed the District's entire executive team
on leave, the media reported results of an independent audit conducted by the
Office of Statewide Hospital Planning and Development showing that ‘Tri-City had
completed one of its most successful financial years
in recent history.’ The reality is that the Healthcare Executives were doing an
excellent job running the District. . .” Defendant Reno, too, is alleged to have
defamed the professional reputations
Reno also stated that she hired Michael Williams ‘to conduct a forensic
investigation into District finances and operations.’ Reno later stated that, ‘The
action the Board has taken . . . is about protecting District and the assets of the
hospital . . .’.”
Defendant Reno accused the Healthcare Executives of being professionally
incompetent - or worse. As in Gould, these allegations infer that each of the
Healthcare Executives was incompetent, lacked professionalism and that they
may have engaged in criminal conduct.
The complaint alleges that Coulter stated, “Some things don't seem ethical and not
even legal.”
[Paragraph 55 & 105.] This allegation directly impugns the competence of each of
the Healthcare Executives who each had just been placed on leave and identified in
the media. Even worse, Defendant Coulter affirmatively suggests the Healthcare
Executives have committed crimes. The Healthcare Executives have stated a claim
for defamation against Defendant Coulter defamed each Healthcare Executive.
Defendant Healthcare District CEO Larry Anderson also defamed
The Healthcare Executives have been told that the investigation report in question
contains false allegations of professional misconduct against each one of the
Healthcare Executives.
However, the report, prepared by or at the direction of Defendant Larry Anderson,
falsely disparages the professional reputations of each Healthcare Executive and
the report was published.
In Rogers v. Home Shopping Network, Inc., 57 F.Supp.2d 973, 982 (C.D.Cal.1999)
the Court analyzed California’s anti-SLAPP statue as applied in federal courts and
held, “[I]f a defendant desires to make a special motion to strike based on the
plaintiff’s lack of evidence, the defendant may not do so until discovery has been
developed sufficiently to permit summary judgment under Rule 56.”
The Ninth Circuit, however, has altered the second part of the analysis because
requiring a party to present admissible evidence before discovery is complete is
akin to a motion for summary judgment and the Federal Rules of Civil Procedure
and federal case law forbid such a requirement. In Metabolife Intern., Inc. v.
Wornick, 264 F.3d 832, 846 (2001), the Ninth Circuit expressly adopted the holding
of Rogers v. Home Shopping Network, Inc., 57 F.Supp.2d 973, 980
(C.D.Cal.1999) in which the Central District Court of California rejected application
of the procedural aspects of California’s anti-SLAPP statute.
The Rogers Court explained, “[The provisions of section 425.16] create a default
rule that allows the defendant served with a complaint to immediately put the
plaintiff to his or her proof before the plaintiff can conduct discovery. . . . If this
expedited procedure were used in federal court to test the plaintiff’s evidence
before the plaintiff has completed discovery, it would collide with Federal Rule of
Civil Procedure 56.” Supra, 57 F.Supp.2d at 980.
The Federal Rules discourage motions for summary judgment based on evidence
outside the record until the nonmoving party has had the opportunity to conduct
discovery. Rule 56(f) provides that if the party opposing a motion for summary
judgment cannot yet submit evidence supporting its opposition, “the court may
refuse the application for judgment or may order a continuance to permit affidavits
to be obtained or depositions to be taken or discovery to be had or may make such
other order as is just.” Fed.R.Civ.P. 56(f). The Supreme Court has restated this rule
as requiring, rather than merely permitting, refusal “where the nonmoving party has
not had the opportunity to discover information that is essential to his opposition.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 n. 5, 106 S.Ct. 2505, 91
L.Ed.2d 202 (1986).Id. at 981.
The requirements of the Federal Rules of Civil Procedure mandate that, “[I]f a
defendant desires to make a special motion to strike based on the plaintiff’s lack of
evidence, the defendant may not do so until discovery has been developed
sufficiently to permit summary judgment under Rule 56.” Id. at 982. (holding
specifically adopted by Metabolife Intern., Inc. v. Wornick, 264 F.3d 832, 846 (9th
Cir. 2001).)
Taken together, The District Defendants’ Special Motion to Strike based on
California’s anti-SLAPP statute is untimely. Even if the subject of this action were
properly addressed by the anti-SLAPP statute - which it is not - the motion cannot
be filed at this time because no party has had any right to take discovery. Because
the motion must be denied, the Healthcare Executives request an award of their
attorneys fees as authorized by California Code of Civil Procedure section 425.16.
Defamation is an invasion of the interest in reputation. The tort involves the
intentional publication of a statement of fact that is false, unprivileged, and has a
natural tendency to injure or which causes special damage. (Civ. Code §§ 45, 46;
5 Witkin, Summary of Cal. Law (9th ed. 1988) Torts § 471, pp. 557-558.)
Publication means communication to some third person who understands the
defamatory meaning of the statement and its application to the person to whom
reference is made. Publication need not be to the “public” at large; communication
to a single individual is sufficient. (Cunningham v. Simpson (1969) 1 Cal.3d 301,
306; , 81 Cal.Rptr. 855, 461 P.2d 39 5 Witkin, Summary of Cal. Law, supra, Torts,
§§ 471, 476, pp. 557-558, 560- 561.) Reprinting or recirculating a libelous writing
has the same effect as an original publication. (Gilman v. McClatchy (1896) 111
Plaintiff’s Opposition to dismiss defendants’ Rule 12
9b0 (6) motion to dismiss and for a more definite
statement
LEGAL DISCUSSION
A. Legal Standard on a Motion to Dismiss: Any Pled Cognizable Theory Should be
Upheld
A Rule 12(b)(6) motion to dismiss tests the complaint’s sufficiency. See, North Star
Int’l. v. Arizona Corp. Comm’n., 720 F.2d 578, 581 (9th Cir.1983). A complaint may
be dismissed as a matter of law for two reasons: (1) lack of a cognizable legal
theory, or (2) insufficient facts under a cognizable theory. Robertson v. Dean Witter
Reynolds, Inc., 749 F.2d 530, 534 (9th Cir.1984); Neitzke v. Williams, 490 U.S. 319,
326-27, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989) (“Rule 12(b)(6) authorizes a court
to dismiss a claim on the basis of a dispositive issue of law.”).
In reviewing a Rule 12(b)(6) motion, the court assumes all factual allegations are
true, and construes them in the light most favorable to the nonmoving party.
Gompper v. VISX, Inc., 298 F.3d 893, 895 (9th Cir.2002). And the complaint, and all
reasonable inferences therefrom, are construed in plaintiff’s favor. Walleri v. Fed.
Home Loan Bank of Seattle, 83 F.3d 1575, 1580 (9th Cir.1996).
And, although a complaint attacked by a Rule 12(b)(6) motion to dismiss does not
need detailed factual allegations, a plaintiff’s obligation is to provide more than
labels and conclusions -- a formulaic recitation of the elements of a cause of action
are insufficient. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). A
complaint will be sustained where the allegations “raise a right to relief above the
speculative level.” Id. This motion to dismiss motion should be denied.
A court’s function on a Rule 12(b)(6) motion “is not to weigh potential
evidence that the parties might present at trial, but to assess whether the plaintiff’s
complaint alone is legally sufficient to state a claim for which relief may be granted.”
Sutton v. Utah State Sch. for the Deaf & Blind, 173 F.3d 1226, 1236 (10th Cir.
1999).
California Labor Code section 1102.5, subdivision (a) provides: “No employer shall
make, adopt, or enforce any rule, regulation, or policy preventing an employee
from disclosing information to a government or law enforcement agency, where the
employee has reasonable cause to believe that the information discloses a
violation of state or federal statute, or violation or noncompliance with a state or
federal regulation.” Subdivision (b) provides: “No employer shall retaliate against
an employee for disclosing information to a government or law
enforcement agency, where the employee has reasonable cause to believe that the
information discloses a violation of state or federal statute, or violation or
noncompliance with a state or federal regulation.” This statute is sometimes known
as a whistle blower protection law.
...prove whistle blowing retaliation, a plaintiff must show (1) she engaged
in a protected activity, (2) her employer subjected her to an adverse
employment action, and (3) there is a link between the two. Patten v. Grant Joint
Union High School Dist., 134 Cal.App.4th 1378, 1384 (2005). Additionally, in the
case of an employee of a public agency, the employee is covered by the whistle
blower protections if the employee reports the alleged wrongdoing to a superior.
Cal. Labor Code, § 1102.5(e) (“A report made by an employee of a government
agency to his or her employer is a disclosure of information to a government or law
enforcement agency . . .”)
Here, the evidence demonstrates all of the facts necessary to prove the Healthcare
Executives were fired for taking action to vindicate the public’s right to know what its
elected officials are doing. The Healthcare Executives filed a writ petition with the
San Diego County Superior Courts, a branch of the State Government, alleging the
District Defendants violated the California Brown Act. [Mahlowitz Decl., Exh. A
(Brown Act Petition).] The Brown Act protects the public by requiring that all
activities of public entities be conducted in public.
Violation of the Act is a criminal offense. Cal. Gov. Code § 54959. These facts are
alleged in the Complaint in this federal court.
In deciding a motion to dismiss, “A court also may consider documents that are
referred to in the complaint, that are ‘central’ to the plaintiff’s claims, and whose
authenticity is undisputed.” In re New Century, 588 F.Supp.2d 1206, 1219 (C.D.Cal.
2008) (citing Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir.
1994), overruled on other grounds, 307 F.3d 1119, 1127 (9th Cir.2002).)
The Ninth Claim for Violation of Labor Code § 1102.5 Alleges Multiple Protected
Whistle Blowing Activities Stemming From Defendant's Many Violations of the
California Brown Act
Again, Although Defendant Sterling has no standing to challenge the Ninth Claim,
for which only the Healthcare District Defendant can be liable, she has asserted the
claim is not properly alleged. The motion to dismiss the Ninth Claim should be
denied because she has no standing to challenge the claim. Moreover, her
arguments are wrong.
California Labor Code section 1102.5, subdivision (a) provides: “No employer shall
make, adopt, or enforce any rule, regulation, or policy preventing an employee
from disclosing information to a government or law enforcement agency, where the
employee has reasonable cause to believe that the information discloses a
violation of state or federal statute, or violation or noncompliance with a state or
federal regulation.” Subdivision (b) provides: “No employer shall retaliate against
an employee for disclosing information to a government or law enforcement
agency, where the employee has reasonable cause to believe that the information
discloses a violation of state or federal statute, or violation or noncompliance with a
state or federal regulation.” This statute is sometimes known as a whistle blower
protection law.
To prove whistle blowing retaliation, a plaintiff must show (1) she engaged in a
protected activity, (2) her employer subjected her to an adverse employment
action, and (3) there is a link between the two. Patten v. Grant Joint Union High
School Dist., 134 Cal.App.4th 1378, 1384 (2005). Additionally, in the case of an
employee of a public agency, the employee is covered by the whistle blower
protections if the employee reports the alleged wrongdoing to a superior.
Cal. Labor Code, § 1102.5(e) (“A report made by an employee of a government
agency to his or her employer is a disclosure of information to a government or law
enforcement agency . . .”)
No requirement exists that the report be made to a different governmental agency.
Here, the evidence demonstrates all of the facts necessary to prove the Healthcare
Executives were fired for taking action to vindicate the public's right to know what its
elected officials are doing. The Healthcare Executives filed a writ petition with the
San Diego County Superior Courts, a branch of the State Government, alleging the
District Defendants violated the California Brown Act. [Mahlowitz Decl., Exh. A
(Brown Act Petition).] The Brown Act protects the public by requiring that all
activities of public entities be conducted in public.
Violation of the Act is a criminal offense. Cal. Gov. Code § 54959.
These facts are alleged in the Complaint in this federal court. In deciding a motion
to dismiss, “A court also may consider documents that are referred to in the
complaint, that are ‘central’ to the plaintiff's claims, and whose authenticity is
undisputed.” In re New Century, 588 F.Supp.2d 1206, 1219 (C.D.Cal. 2008) (citing
Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir.1994), overruled on other grounds,
307 F.3d 1119, 1127 (9th Cir.2002).) Here, the Brown Act Petition is alleged is
central to the pending Complaint. The Court is entitled to take judicial notice of the
records of other courts as explained above in Part III(B). After the Brown Act
Petition was filed, the District Defendants fired the Healthcare Executives.
[Complaint, ¶ 9 (Healthcare Executives terminated Aril 23, 2009).] The Complaint
alleges a violation of section 1102.5 on this ground.
Additionally, as explained in the Brown Act Writ Petition identified in the Complaint
at paragraph 21, prior to being fired, the Healthcare Executives served the District
Defendants with a letter identifying the Brown Act violation and requesting the
District cure it's violations of the
law. [Mahlowitz Decl, Exh.A (Brown Act Petition, at Exh. 3).] As explained above, it is
proper for this Court to consider authentic evidence referenced in the Complaint in
opposition to this Motion to Dismiss. By reporting the allegations of Brown Act
violations to their superiors – the District Board -- the Healthcare Executives
establish a second basis to assert they were wrongfully terminated four months
after filing the Petition and letter asking for corrections in retaliation for their whistle
blowing activities. The allegations of retaliation for whistle blowing activity are well
alleged and nearly established as a matter of fact.
The Sixth Claim for Defamation is Properly Alleged as to Defendant Sterling and
the remaining Defendants
The California Court of Appeal has explained the elements of a claim for
defamation as follows:
Defamation is an invasion of the interest in reputation. The tort involves the
intentional publication of a statement of fact that is false, unprivileged, and has a
natural tendency to injure or which causes special damage. (Civ.Code, §§ 45, 46;
5 Witkin, Summary of Cal. Law (9th ed. 1988) Torts § 471, pp. 557-558.)
Publication means communication to some third person who understands the
defamatory meaning of the statement and its application to the person to whom
reference is made. Publication need not be to the “public” at large; communication
to a single individual is sufficient. (Cunningham v. Simpson (1969) 1 Cal.3d 301,
306; , 81 Cal.Rptr. 855, 461 P.2d 39 5 Witkin, Summary of Cal. Law, supra, Torts,
§§ 471, 476, pp. 557-558, 560- 561.) Reprinting or recirculating a libelous writing
has the same effect as an original publication. (Gilman v. McClatchy (1896) 111
Cal. 606, 612, 44 P. 241; Rest.2d Torts, §§ 576, 578; 5 Witkin, Summary of Cal.
Law, supra, Torts, § 478, pp. 562-563.)
Smith v. Maldonado, 72 Cal.App.4th 637, 647 (1999). The essential elements, thus,
are (1) intentional publication, (2) statement of fact, (3) that is false and
unprivileged and (4) has a tendency to injure or which causes special damage.
California Civil Code section 46 defines defamation and slander as an unprivileged,
false publication regarding an individual that, “Tends directly to injure him in
respect to his office, profession, trade or business, either by imputing to him
general disqualification in those respects which the office or other occupation
peculiarly requires, or by imputing something with reference to his office,
profession, trade, or business that has a natural tendency to lessen its profits.”
(See also Cal. Civ. Code § 44 (slander is defamation).)
Particularly instructive regarding the defamation claim in this action is the California
Court of Appeal decision in Gould v. Maryland Sound Industries, Inc., 31 Cal.App.
4th 1137 (1995). Like this case, Gould concerned claims for wrongful termination
and separate claims for the tort of defamation. In Gould, the employer made an
accusation that the employee had made a $100,000 mistake in a contractual
bidding situation. Id. at 1154. The Court found this allegation withstood a motion to
dismiss, holding, “This statement would tend to injure [the employee] by imputing to
him incompetence in his trade.” Id. Thus, defamation occurred even though the
employer did not directly state, “you are incompetent.” Defamation occurs by
imputation of the statements made in context. Here, all of the publications made by
the Defendants, as alleged by the Healthcare Executives either directly or by
imputation, assault the professional reputations of each Healthcare Executive.
Defendant Sterling, herself, identifies the defamation claims alleged against her as
part of her concurrently-filed Motion to Strike. [Sterling Motion to Strike, p. 2:6-12.]
Sterling's Motion to Strike objects to paragraph 35 of the Complaint which alleges:
“In April 2007, the news media reported that Defendant Sterling had accused
District administrators of mis-handling Medi-Cal and Medicare funds.” This is
published allegation charging all of the financial professionals among the
Healthcare Executives with professional incompetence and malfeasance.
Defendant Sterling called each of the Healthcare Executives incompetent.
The Complaint, also at paragraph 35, states that Defendant Sterling's accusations
are false, alleging: “News reports cited State Department of Health and Human
Services sources as absolutely rejecting Defendant Sterling's allegations.”
Additionally, at paragraph 46 (oddly objected to as irrelevant by Defendant
Sterling's Motion to Strike), the Healthcare Executives
again demonstrate the falsity of Defendant Sterling's accusations by alleging, “At
the very time that the Sterling Faction placed the District's entire executive team on
leave, the media reported results of an independent audit conducted by the Office
of Statewide Hospital Planning and Development showing that ‘Tri-City had
completed one of its most successful financial years in recent history.’ The reality is
that the Healthcare Executives were doing an excellent job running the District. . .”
Defendant Reno, too, is alleged to have defamed the professional reputations of
the
Plaintiffs. Paragraphs 55 and 105 of the Complaint allege that shortly after
December 18, 2008, Defendant Reno made remarks in the media concerning the
Board's employment actions as follows: “Defendant Reno justified the action that
was taken as being necessary ‘to secure the District's assets and records . . .’
Reno also stated that she hired Michael Williams ‘to conduct a forensic
investigation into District finances and operations.’ Reno later stated that, ‘The
action the Board has taken . . . is about protecting District and the assets of the
hospital . . .’.”
Additionally, at paragraph 56 of the complaint, Reno is alleged to have stated to
the media that termination letters to each of the Healthcare Executives were sent
“for cause.” By stating termination was”for cause,” the Healthcare District and
Defendant Reno accused the Healthcare Executives of being professionally
incompetent - or worse. As in Gould, these allegations infer that each of the
Healthcare Executives was incompetent, lacked professionalism and that they may
have engaged in criminal conduct. As in Gould, a claim for defamation against
Defendant
Reno is stated. Defendant Coulter also defamed the Healthcare Executives.
Paragraphs 55 and 105 of the Complaint address comments Defendant Coulter
made to the media shortly after the Healthcare Executives were placed on
administrative leave. The complaint alleges that Coulter stated, “Some things don't
seem ethical and not even legal.” [Paragraph 55 & 105.] This allegation directly
impugns the competence of each of the Healthcare Executives who each had just
been placed on leave and identified in the media. Even worse, Defendant Coulter
affirmatively suggests the Healthcare Executives have committed crimes. The
Healthcare
Executives have stated a claim for defamation against Defendant Coulter defamed
each Healthcare Executive.
Defendant Healthcare District CEO Larry Anderson also defamed the Healthcare
Executives. Paragraph 108 of the Complaint states, “The Healthcare Executives are
informed that the ‘confidential investigation’ and/or the alleged findings which have
still not been shared with the Healthcare Executives, have been shared with other
employees of Tri-City Healthcare District by Defendant Larry Anderson, and that
said investigation or statements concerning the investigation contain the false
statements impugning the character and professional reputations of the Healthcare
Executives.” The Healthcare Executives have been told that the investigation report
in question contains false allegations of professional misconduct against each one
of the
Healthcare Executives. Although none of the Plaintiffs has personally seen the
report, they have discussed the report with persons to whom Defendant District
CEO Larry Anderson showed the report. Thus, the allegation must be made at this
time on information and belief. However, the report, prepared by or at the direction
of Defendant Larry Anderson, falsely disparages the professional reputations of
each Healthcare Executive and the report was published. Defendant Larry
Anderson is also alleged, at paragraph 107, to have told hospital employees during
the investigation that no Healthcare Executive would be returning to the District.
Thus, each Healthcare Executive was accused of having engaged in some form of
professional misconduct - more defamation. The Healthcare Executives have
alleged sufficient facts to withstand a motion to dismiss and have earned the right
to undertake discovery to marshal admissible evidence to support this allegation at
trial.
Liability of Defendant Charlene Anderson, the District and each Defendant Board
Member. The Complaint also asserts, at paragraph 115, that the defamation
identified above was known to and ratified by each individual member of the Board
and ratified by the Defendant Healthcare District Board on behalf of the District.
See, Shively v. Bozanich, 31 Cal.4th 1230, 1245 (2003) (“[E]ach person who takes
a responsible part in a publication of defamatory matter may be held liable for the
publication.”) This intentional plan to disparage the reputation of each Healthcare
Executive via the above statements presents another basis upon which liability for
defamation as to each of the Defendant District Board Members, including
Defendant Charlene Anderson, as well as the District itself. The Complaint alleges
that each of the above allegations was reasonably understood to assert that each
Healthcare Executive committed a crime or was professionally incompetent [ ¶ 112];
that all of the allegations are untrue [ ¶ 110]; that they were stated or understood
as fact, not opinion [¶ 111]; and that they were made with malice or recklessly and
were not privileged [¶ 115]. Finally, damages are alleged. [ ¶ 116.] The Healthcare
Executives have stated a claim for defamation against each and every defendant in
this action.
Case 3:09-cv-01594-W-POR Document 19 Filed 09/21/2009 Page 16 of 18
OCEANSIDE: Tri-City seven suit moves to federal court
Case could be split, attorneys say
North County Times
PAUL SISSON
A lawsuit by seven fired Tri-City Medical Center administrators has moved from state to federal court.
Tom Tosdal, the attorney for hospital Director Kathleen Sterling, said he asked for the case to be removed
because it makes a claim that board members, and Tri-City's top administrator, violated the federal Civil Rights
Act when the seven were fired April 23.
"This is right in the federal court's wheelhouse," Tosdal said.
The suit, filed July 15, asks for more than $1 million in damages per client for a range of affronts from wrongful
termination to defamation of character.
Leslie Devaney, one of the attorneys representing the fired administrators, said Friday that, while the lawsuit
against the board does make a federal claim, most of the allegations rely on state law.
"We're going to be asking that the court remand our claims that are state claims back to state court," Devaney
said.
If that happened, then there would technically be two cases, one in state court and a second in federal court,
involving many of the same issues and players.
Tosdal said he would resist any Devaney's request to send part of the lawsuit back to the state courts.
"I'm not interested in cellular division of this case," he said.
The legal battle arises out of a long-fought battle at Tri-City that started with four of seven directors putting former
hospital chief executive officer Arthur Gonzalez and seven administrators who worked for him on paid
administrative leave Dec. 18.
Gonzalez later reached a settlement with the hospital and found a new job at a large public hospital in
Minneapolis, Minn. Contracts for each of the fired administrators state that they are "at will" employees of the
hospital, meaning that they can be let go without cause. However, their lawsuit against the hospital alleges that
they were fired for illegal reasons, including retaliation for perceived anti-union beliefs.
In subsequent federal filings, Tosdal says he will ask a federal judge, at an upcoming hearing Oct. 5, to dismiss
several of the defamation claims against Sterling because the administrators' attorneys have failed to state
specific instances when she publicly said or wrote negative things about the seven administrators.
"They've made cases for defamation against Sterling, but they haven't said that she said or did anything
defamatory," he said.
Devaney said she is confident that the claims were properly worded.
Case could be split, attorneys say
North County Times
PAUL SISSON
A lawsuit by seven fired Tri-City Medical Center administrators has moved from state to federal court.
Tom Tosdal, the attorney for hospital Director Kathleen Sterling, said he asked for the case to be removed
because it makes a claim that board members, and Tri-City's top administrator, violated the federal Civil Rights
Act when the seven were fired April 23.
"This is right in the federal court's wheelhouse," Tosdal said.
The suit, filed July 15, asks for more than $1 million in damages per client for a range of affronts from wrongful
termination to defamation of character.
Leslie Devaney, one of the attorneys representing the fired administrators, said Friday that, while the lawsuit
against the board does make a federal claim, most of the allegations rely on state law.
"We're going to be asking that the court remand our claims that are state claims back to state court," Devaney
said.
If that happened, then there would technically be two cases, one in state court and a second in federal court,
involving many of the same issues and players.
Tosdal said he would resist any Devaney's request to send part of the lawsuit back to the state courts.
"I'm not interested in cellular division of this case," he said.
The legal battle arises out of a long-fought battle at Tri-City that started with four of seven directors putting former
hospital chief executive officer Arthur Gonzalez and seven administrators who worked for him on paid
administrative leave Dec. 18.
Gonzalez later reached a settlement with the hospital and found a new job at a large public hospital in
Minneapolis, Minn. Contracts for each of the fired administrators state that they are "at will" employees of the
hospital, meaning that they can be let go without cause. However, their lawsuit against the hospital alleges that
they were fired for illegal reasons, including retaliation for perceived anti-union beliefs.
In subsequent federal filings, Tosdal says he will ask a federal judge, at an upcoming hearing Oct. 5, to dismiss
several of the defamation claims against Sterling because the administrators' attorneys have failed to state
specific instances when she publicly said or wrote negative things about the seven administrators.
"They've made cases for defamation against Sterling, but they haven't said that she said or did anything
defamatory," he said.
Devaney said she is confident that the claims were properly worded.
OCEANSIDE: Tri-City investigation winding down
North County Times
PAUL SISSON
February 12, 2009
Tri-City Medical Center's ongoing financial investigation is in its final weeks and a report on the
probe is nearly ready, the hospital's interim chief executive said Wednesday.
The chief executive, Larry Anderson, made the assessment after a committee meeting
Wednesday. He said a report will likely be provided to hospital directors in private before a
decision is made on what information will be released to the public.
The probe started Dec. 18 when four of Tri-City's seven board members put eight top
administrators, including chief executive Arthur Gonzalez, on paid administrative leave. At the
same meeting, the board members hired an accountant to examine the hospital's books.
A contract with the accountant, Michael Williams, specifies that he was to look into the "accuracy
and fairness" of Tri-City's financial performance as it pertained to the hospital's bonus
programs, which paid hospital staff more than $1 million in 2008 as a reward for meeting
patient health care goals and for turning a profit.
Williams' contract also says he will examine a recent bond refinancing deal that has soured
with the collapse of the national auction-rate securities market, and that he will determine how
proceeds from those bonds affected the hospital's financial performance. Additionally, the
investigator is to review "alleged retaliatory actions" made by hospital management against
various employees.
Citing confidentiality concerns, board members have declined to say more about the allegations.
On Wednesday, a hospital committee was scheduled to examine, and perhaps approve, a
formal plan for the replacement of Tri-City's chief executive officer. According to the board's
secretary, succession planning came up in March 2008, long before the current board decided
to put its top administrators on leave. The item was postponed Wednesday at the suggestion of
board Chairwoman RoseMarie Reno in light of the ongoing investigation.
"I think we should table it for one month," Reno said. "We don't know what changes are coming
up."
Anderson, the chief executive hired in mid-January, told committee members that he has begun
to look at the hospital's administrative processes with an eye toward freeing up extra cash. He
said he has found some areas, such as paying a recruiter to identify candidates for midlevel
management positions that the hospital does not intend to fill, that can be cut to save money.
"We're paying for things we're not using," Anderson said.
After Wednesday's meeting, Reno indicated, in a conversation with hospital attorney Julie Biggs,
that board member Kathleen Sterling had requested a special meeting to appoint a new
hospital CEO. Reno read a draft of a letter she indicated she would send to Sterling declining
her request.
Sterling could not be reached for comment Wednesday night. Reno and Biggs declined to
elaborate.
It was unclear Wednesday whether Sterling had formally asked the board to fire Gonzalez or
whether she seeks to make Anderson's position permanent.
Contact staff writer Paul Sisson at (760) 901-4087 or psisson@nctimes.com.
CORRECTION: Sterling did not request meeting
A story that ran in some editions of the Feb. 12 North County Times contained incorrect
information, according to hospital attorney Julie Biggs. Biggs said Tri-City board member
Kathleen Sterling did not request a special meeting and that a letter written by board
Chairwoman Rosemarie Reno was to inform Sterling, the vice chairwoman, that no meeting
was to be called while Reno was out of town.
North County Times
PAUL SISSON
February 12, 2009
Tri-City Medical Center's ongoing financial investigation is in its final weeks and a report on the
probe is nearly ready, the hospital's interim chief executive said Wednesday.
The chief executive, Larry Anderson, made the assessment after a committee meeting
Wednesday. He said a report will likely be provided to hospital directors in private before a
decision is made on what information will be released to the public.
The probe started Dec. 18 when four of Tri-City's seven board members put eight top
administrators, including chief executive Arthur Gonzalez, on paid administrative leave. At the
same meeting, the board members hired an accountant to examine the hospital's books.
A contract with the accountant, Michael Williams, specifies that he was to look into the "accuracy
and fairness" of Tri-City's financial performance as it pertained to the hospital's bonus
programs, which paid hospital staff more than $1 million in 2008 as a reward for meeting
patient health care goals and for turning a profit.
Williams' contract also says he will examine a recent bond refinancing deal that has soured
with the collapse of the national auction-rate securities market, and that he will determine how
proceeds from those bonds affected the hospital's financial performance. Additionally, the
investigator is to review "alleged retaliatory actions" made by hospital management against
various employees.
Citing confidentiality concerns, board members have declined to say more about the allegations.
On Wednesday, a hospital committee was scheduled to examine, and perhaps approve, a
formal plan for the replacement of Tri-City's chief executive officer. According to the board's
secretary, succession planning came up in March 2008, long before the current board decided
to put its top administrators on leave. The item was postponed Wednesday at the suggestion of
board Chairwoman RoseMarie Reno in light of the ongoing investigation.
"I think we should table it for one month," Reno said. "We don't know what changes are coming
up."
Anderson, the chief executive hired in mid-January, told committee members that he has begun
to look at the hospital's administrative processes with an eye toward freeing up extra cash. He
said he has found some areas, such as paying a recruiter to identify candidates for midlevel
management positions that the hospital does not intend to fill, that can be cut to save money.
"We're paying for things we're not using," Anderson said.
After Wednesday's meeting, Reno indicated, in a conversation with hospital attorney Julie Biggs,
that board member Kathleen Sterling had requested a special meeting to appoint a new
hospital CEO. Reno read a draft of a letter she indicated she would send to Sterling declining
her request.
Sterling could not be reached for comment Wednesday night. Reno and Biggs declined to
elaborate.
It was unclear Wednesday whether Sterling had formally asked the board to fire Gonzalez or
whether she seeks to make Anderson's position permanent.
Contact staff writer Paul Sisson at (760) 901-4087 or psisson@nctimes.com.
CORRECTION: Sterling did not request meeting
A story that ran in some editions of the Feb. 12 North County Times contained incorrect
information, according to hospital attorney Julie Biggs. Biggs said Tri-City board member
Kathleen Sterling did not request a special meeting and that a letter written by board
Chairwoman Rosemarie Reno was to inform Sterling, the vice chairwoman, that no meeting
was to be called while Reno was out of town.
No Severance for
Ousted
Redevelopment
Chief
April 7, 2011
Will Carless
Voice of San Diego
The city of San Diego
redevelopment
agency responsible
for revitalizing a large
part of southeastern
San Diego has settled
a long-running legal
feud with its former
president, Carolyn Y.
Smith.
Smith will receive a total
of $23,000 from the
agency as
reimbursement for legal
fees she incurred while
working at SEDC. But
she will not receive a
controversial $100,350
severance payment she
was initially offered and
will also not receive
additional money she
argued she was owed
from her retirement
account, according to
the settlement.
The agency's board
voted unanimously for
the settlement in a
meeting today. SEDC
also plans to deny Smith
reimbursement of her
legal fees in this dispute,
which has been
continuing for at least
two years, said Leslie
Devaney, SEDC's
corporate counsel.
Devaney said Smith is
not entitled to
reimbursement of those
legal fees, which she
estimated amount to
hundreds of thousands
of dollars. A judge will
have to decide on that
matter.
Smith walks away from
the dispute with
something else,
however: SEDC has
promised to drop a
counter-suit it filed
against her last year
that claimed Smith
manipulated public
funds available to the
agency in a number of
ways to enrich herself.
Devaney said today's
settlement is a
significant success for
SEDC. The public
agency's insurance
company will pay for the
cost of defending
Smith's lawsuit and will
also reimburse Smith the
$23,000, she said.
"It's a very good result.
SEDC won't have to pay
anything and hasn't paid
anything," Devaney said.
D. Cruz Gonzalez, SEDC
board chairman, said he
was relieved that the
legal fight was over.
"We're going to put this
behind us. We have
many more important
things to deal with,"
Gonzalez said.
Smith’s attorney
released a statement
saying his client is
pleased that the parties
to the lawsuit can put
the matter behind them.
“She wishes nothing but
the best for the
community of
Southeastern San Diego
as we all move forward,”
it states.
Smith was ousted from
her position as president
of SEDC in 2008 after
our investigation
revealed that she and
former SEDC Finance
Director Dante Dayacap
had orchestrated a
clandestine bonus
system that paid out
more than $1 million to
SEDC staffers over the
course of five years.
Smith and Dayacap
were the largest
beneficiaries from the
secret bonuses.
A city commissioned
audit of the agency the
same year found that
the hidden system of
bonuses and extra
compensation rose "to
the level of fraud."
The day she was fired,
Smith was offered a
$100,350 severance
package by SEDC's
board.
A lawsuit filed by a local
community activist led to
that severance payment
being withheld, however.
As that lawsuit was
working its way through
the courts, several
members of the SEDC
board were removed
and replaced and the
newly constituted SEDC
board then rescinded
the severance payment
completely.
Smith then sued SEDC,
arguing that she was still
owed the severance and
that the agency should
also pay for legal fees
she had incurred while
defending the lawsuit
from the community
activist and a separate
lawsuit brought by then-
City Attorney Mike
Aguirre.
Smith later also added
another claim: That she
was owed far more than
SEDC had paid her from
her retirement account
at the agency.
SEDC claimed that
during her tenure at the
agency, Smith had
unilaterally decided to
start paying 15 percent
of her income into her
retirement account
instead of 12 percent,
the amount approved by
SEDC's board. The
agency said Smith
wasn't entitled to the
extra 3 percent she had
paid into her account
and refused to pay out
tens of thousands of
dollars Smith had
accumulated.
Today's settlement
clears all of those
matters up: Smith gets
the legal fees for
defending the two cases
brought when she was
an employee, but the
agency won't pay her
the severance or the
disputed retirement
account money. And it
will drop its counter-
lawsuit against Smith.
This post has been
updated to include a
subsequent statement
from Smith's attorney.
Ousted
Redevelopment
Chief
April 7, 2011
Will Carless
Voice of San Diego
The city of San Diego
redevelopment
agency responsible
for revitalizing a large
part of southeastern
San Diego has settled
a long-running legal
feud with its former
president, Carolyn Y.
Smith.
Smith will receive a total
of $23,000 from the
agency as
reimbursement for legal
fees she incurred while
working at SEDC. But
she will not receive a
controversial $100,350
severance payment she
was initially offered and
will also not receive
additional money she
argued she was owed
from her retirement
account, according to
the settlement.
The agency's board
voted unanimously for
the settlement in a
meeting today. SEDC
also plans to deny Smith
reimbursement of her
legal fees in this dispute,
which has been
continuing for at least
two years, said Leslie
Devaney, SEDC's
corporate counsel.
Devaney said Smith is
not entitled to
reimbursement of those
legal fees, which she
estimated amount to
hundreds of thousands
of dollars. A judge will
have to decide on that
matter.
Smith walks away from
the dispute with
something else,
however: SEDC has
promised to drop a
counter-suit it filed
against her last year
that claimed Smith
manipulated public
funds available to the
agency in a number of
ways to enrich herself.
Devaney said today's
settlement is a
significant success for
SEDC. The public
agency's insurance
company will pay for the
cost of defending
Smith's lawsuit and will
also reimburse Smith the
$23,000, she said.
"It's a very good result.
SEDC won't have to pay
anything and hasn't paid
anything," Devaney said.
D. Cruz Gonzalez, SEDC
board chairman, said he
was relieved that the
legal fight was over.
"We're going to put this
behind us. We have
many more important
things to deal with,"
Gonzalez said.
Smith’s attorney
released a statement
saying his client is
pleased that the parties
to the lawsuit can put
the matter behind them.
“She wishes nothing but
the best for the
community of
Southeastern San Diego
as we all move forward,”
it states.
Smith was ousted from
her position as president
of SEDC in 2008 after
our investigation
revealed that she and
former SEDC Finance
Director Dante Dayacap
had orchestrated a
clandestine bonus
system that paid out
more than $1 million to
SEDC staffers over the
course of five years.
Smith and Dayacap
were the largest
beneficiaries from the
secret bonuses.
A city commissioned
audit of the agency the
same year found that
the hidden system of
bonuses and extra
compensation rose "to
the level of fraud."
The day she was fired,
Smith was offered a
$100,350 severance
package by SEDC's
board.
A lawsuit filed by a local
community activist led to
that severance payment
being withheld, however.
As that lawsuit was
working its way through
the courts, several
members of the SEDC
board were removed
and replaced and the
newly constituted SEDC
board then rescinded
the severance payment
completely.
Smith then sued SEDC,
arguing that she was still
owed the severance and
that the agency should
also pay for legal fees
she had incurred while
defending the lawsuit
from the community
activist and a separate
lawsuit brought by then-
City Attorney Mike
Aguirre.
Smith later also added
another claim: That she
was owed far more than
SEDC had paid her from
her retirement account
at the agency.
SEDC claimed that
during her tenure at the
agency, Smith had
unilaterally decided to
start paying 15 percent
of her income into her
retirement account
instead of 12 percent,
the amount approved by
SEDC's board. The
agency said Smith
wasn't entitled to the
extra 3 percent she had
paid into her account
and refused to pay out
tens of thousands of
dollars Smith had
accumulated.
Today's settlement
clears all of those
matters up: Smith gets
the legal fees for
defending the two cases
brought when she was
an employee, but the
agency won't pay her
the severance or the
disputed retirement
account money. And it
will drop its counter-
lawsuit against Smith.
This post has been
updated to include a
subsequent statement
from Smith's attorney.
San Diego
Education Report
Education Report