Treasurer claims duties, salary reduced after reporting financial improprieties
In a recent case, an elected city official alleged that the city and certain individuals defamed and retaliated against her after she reported concerns about how they were allegedly mishandling the city’s finances.
The plaintiff – who served as the elected treasurer for the City of Inglewood since 1987 – reported to certain members of the Inglewood City Council that she discovered facts indicating that they committed financial improprieties, including by paying almost $100,000 to a city contractor, and failed to accurately report to the public the city’s true financial health.
The plaintiff sued the city and the individual defendants. The complaint alleged defamation; violation of section 1102.5(b) and (c) of California’s Labor Code, which prohibited retaliation against an employee based on their reporting or refusing to participate in what they reasonably believed was the employer’s illegal activity; and intentional infliction of emotional distress (IIED), based on the alleged retaliation and defamation.
Read more: California court calls for further proceedings in suit claiming whistleblower retaliation
Specifically, the plaintiff claimed that the city and the individual defendants:
- reduced her duties and authority as treasurer
- reduced her salary by 83 percent
- took away her seat at council meetings
- temporarily locked her and her staff out of their offices
The mayor allegedly said that the plaintiff did not know the procedure for handling bad debts. This supposedly amounted to a defamatory pretextual reason for taking away her duties and for reducing her salary.
The city and the individual defendants filed a motion to strike the complaint as a strategic lawsuit against public participation (SLAPP). They cited section 425.16 of California’s Code of Civil Procedure, also called the anti-SLAPP law.
The plaintiff submitted evidence seeking to establish her status as an employee for the purposes of section 1102.5. She offered tax forms, which she received from the city and which identified her as an employee, and her biweekly pay stub, which provided for health and other employee benefits and which reflected a deduction from her regular earnings for workers’ compensation.
The court denied the anti-SLAPP motion in relation to the claims of section 1102.5 retaliation and retaliation-based IIED against all the defendants but otherwise granted the motion. The defendants appealed.
Treasurer’s claims stricken
In the case of Brown v. City of Inglewood, the California Court of Appeal for the Second District partly reversed the order of the trial court. The trial court should have stricken the plaintiff’s claims of section 1102.5 retaliation and retaliation-based IIED against the individual defendants under the anti-SLAPP law, the appellate court ruled.
First, the appellate court determined that the retaliation-based claims against the individual defendants arose from conduct that the anti-SLAPP law protected. The individual defendants’ votes adopting two ordinances and a policy that collectively led to the reduction in the plaintiff’s salary, authority, and duties were protected activity, the appellate court explained.
Second, the appellate court held that the section 1102.5 retaliation claim was not legally sufficient because the plaintiff was not an employee for the purposes of that provision. Subdivisions (b) and (c) of that section protected employees from certain kinds of retaliation by an employer or by someone acting on the employer’s behalf.
The legislature did not reference elected officials as falling within the scope of the term “employee” under section 1102.5, the appellate court noted. The legislature provided elected officials such as the plaintiff the benefits of the Workers’ Compensation Act but denied them the protections of section 1102.5, the appellate court added.
Lastly, the plaintiff’s IIED claim against the individual defendants failed because the exclusive remedy provisions of workers’ compensation subsumed it, the appellate court said.
