Barber v. Cal. State Pers. Bd.

• Decision Date: 17 May 2019
• Docket Number: E068719
• Citation: 247 Cal.Rptr.3d 474,35 Cal.App.5th 500
• Court: California Court of Appeals Court of Appeals
• Parties: Patrick BARBER, Plaintiff and Appellant, v. The CALIFORNIA STATE PERSONNEL BOARD, Defendant and Respondent; Department of Corrections and Rehabilitation, Real Party in Interest and Respondent.

35 Cal.App.5th 500

247 Cal.Rptr.3d 474

Patrick BARBER, Plaintiff and Appellant,

v. The CALIFORNIA STATE PERSONNEL BOARD, Defendant and Respondent;Department of Corrections and Rehabilitation, Real Party in Interest and Respondent.

E068719

Court of Appeal, Fourth District, Division 2, California.

Filed May 17, 2019

OPINION

CODRINGTON J.

I.INTRODUCTION

This is plaintiff and appellant Patrick Barber’s second appeal in this case and raises an issue of first impression.¹ Upon remand from Barber’s first appeal ( Barber I ) , defendant and respondent, the California State Personnel Board (SPB), awarded Barber a lump sum back pay award, which resulted in Barber incurring increased income tax liability. SPB denied Barber’s motion for recovery for increased tax liability. The trial court upheld SPB’s decision and denied Barber’s petition for writ of mandamus. Barber appeals the denial of his writ petition and motion for increased tax liability recovery.

Barber contends he is entitled to recover damages for incurring increased tax liability because his increased tax liability was caused by real party in interest and respondent, California Department of Corrections and Rehabilitation (CDCR), improperly terminating his employment. Barber argues that awarding him such relief is consistent with the remedial statutory purpose of Government Code section 19584,² of making an improperly terminated employee whole by restoring the employee to the financial position he or she would otherwise have occupied had employment not been wrongfully interrupted. We disagree. Barber is not entitled to increased tax liability recovery under section 19584 or to such recovery as equitable relief, because such relief is not statutorily authorized. We therefore affirm the judgment denying such an award.

II.FACTS AND PROCEDURAL HISTORY

We incorporate the undisputed facts summarized in Barber I , regarding Barber’s employment history leading to his employer, CDCR, serving Barber with a notice of adverse action and terminating him in April 2009. The notice of adverse action notified Barber that he was dismissed from his position as a parole agent for alleged violations of section 19572 (inexcusable neglect of duty, dishonesty, discourteous treatment of the public or other employees, and behavior either during or outside of duty hours of such a nature to cause discredit to the appointing authority or the person’s employment). SPB and the trial court concluded that CDCR’s termination of Barber was proper. Barber appealed ( Barber I ).

On October 24, 2014, in Barber I , this court reversed the trial court’s decision upholding Barber’s termination, and ordered the trial court to issue a peremptory writ of mandate directing SPB to set aside its decision sustaining CDCR’s dismissal of Barber and award him "any other relief to which he is entitled." This court concluded that the notice of adverse action did not provide Barber with sufficient notice of the workplace rules he allegedly violated or the specific manner in which the violation occurred. We therefore held in Barber I that, "[w]ithout that notice, he was deprived of his due process right to prepare an effective defense against the charge and to argue the appropriate punishment."

SPB issued a resolution setting aside its previous April 2011 decision, and ordered CDCR to reinstate Barber and pay Barber all back pay and benefits that would have accrued had he not been terminated in April 2009. SPB further directed that if the parties were not in agreement on the amount of Barber’s salary and benefits recovery, the matter was to be referred to the chief administrative law judge (ALJ) for a hearing. In April 2015, Barber was reinstated, and began working again and receiving salary and benefits.

Although as of October 2015, CDCR paid Barber approximately $ 500,000 in back pay (over $ 450,000 in back pay and over $ 230,000 in benefits), in January 2016, Barber submitted a request for additional recovery under section 19584 and a hearing. Barber asserted that, "due to the large lump sum back pay payment [Barber] received in 2015, he is now faced with a significantly greater tax burden than if he had been receiving his salary on a yearly basis and paying his taxes accordingly." Barber maintained that, as a consequence, CDCR had a duty to return Barber to the condition he would have been in had he not been dismissed and, as such, CDCR should reimburse Barber for his increased tax liability from being paid a lump sum back pay award.

At a prehearing/settlement conference, Barber and CDCR disagreed on whether Barber was entitled to additional reimbursement of wages to cover Barber’s increased tax liability. The ALJ instructed the parties to brief the issue of whether Barber’s increased tax liability was compensable under section 19584.

A. Motion to Allow Increased Tax Liability Recovery

In May 2016, Barber filed a motion to allow recovery for increased tax liability under section 19584 as an element of back pay. The Los Angeles Police Protective League joined Barber’s motion as amicus curiae and filed a supporting amicus brief and reply. Barber asserted in his motion that the purpose of section 19584 is to make a wrongfully terminated employee whole. Barber argued that, in making him whole, CDCR was required to pay him for incurring approximately $ 145,000 in increased tax liability, caused by receiving the lump sum back pay award.

Barber noted that, "[p]rior to 1986, it was not uncommon for courts to disallow the award of increased tax liability in lump sum awards due to the availability of the averaging provisions of the Tax Code which eliminate nearly all of the excess liability that would otherwise result from a lump sum award. [Citation.] The 1986 Tax Reform Act, P.L. 99-514 (1986), however, repealed the income averaging provision of the old Revenue Code leaving all those receiving a lump sum award to suffer the consequences of additional tax liability." As a consequence, the Equal Employment Opportunity Commission (EEOC) and National Labor Relations Board (NLRB) have awarded compensation for increased tax liability resulting from lump sum back pay awards arising from discrimination claims. Barber argued that CDCR was required to pay him compensation for his increased tax liability because he would not be made whole without such recovery.

CDCR argued in its opposition that section 19584 does not authorize compensation for increased tax liability; SPB did not have jurisdiction to award compensation for increased tax liability; Barber failed to cite any supporting binding case law; and federal NLRB and EEOC case law does not support Barber’s position because Barber’s case does not involve discrimination and there is a split of nonbinding federal authority on whether damages for increased tax liability are recoverable.

B. June 2, 2016, Hearing on Motion for Increased Tax Liability Recovery

On June 2, 2016, an ALJ heard, telephonically, Barber’s motion for increased tax liability recovery. No witness testimony or evidence was presented. Counsel for Barber and CDCR presented oral argument. Barber, through his attorney, argued that section 19584 provided for back pay "salary," in furtherance of making an employee whole after being wrongfully terminated. Barber’s attorney acknowledged there was little, if any, state case law on the issue and section 19584 did not include any specific language authorizing broad equitable relief, as is included in Title VII of the Civil Rights Act. Barber’s attorney argued that, nevertheless, the intent of section 19584 is to allow for such relief. Barber’s attorney noted that Barber’s claim was unusual because he received back pay for six years of salary. Usually, back pay is for a relatively short period of time, resulting in minimal increased tax liability. In addition, counsel argued that, before tax laws changed in 1986, receiving a lump sum back pay award was not a problem.

CDCR’s attorney argued section 19584 did not allow for increased tax liability recovery because such relief is not salary or benefits. Counsel further argued the federal case law Barber relied on is inapplicable because it is founded on federal law which, unlike section 19584, contains language expressly allowing for broad equitable relief. CDCR’s attorney stated that the legislature could amend the statute to allow for such relief or it could be provided for in the memorandum of understanding, which currently does not provide for increased tax liability recovery. The ALJ took the matter under submission and issued a written decision on June 16, 2016.

C. SPB’s June 16, 2016, Ruling on Barber’s Motion

The ALJ stated in its June 16, 2016, written decision that section 19584 does not mention recovery for increased tax liability. Furthermore, the terms "salary," "benefits," and " ‘special salary compensations’ " do not encompass payment for increased tax liability. The ALJ also considered and rejected the proposition that SPB had broad equitable authority to make Barber whole, when section 19584 does not provide tax liability relief. The ALJ concluded SPB was not vested with statutory or equitable power to make Barber whole, beyond those remedies provided within the bounds of the legislative framework and parameters established by the state Legislature in the State Civil Service Act (§ 18500 et seq.). The ALJ recognized that section 19582, subdivision (a) of the State Civil Service Act provides authority for SPB to make Barber whole, but concluded such authority is limited by the statutory authority granted to SPB in section 19584. The ALJ noted that SPB did not have broad equitable authority to award tax relief, unlike federal courts’ broad equitable powers to allow offsets for federal tax consequences arising from awards under Title VII, including the ADEA³ and ADA.⁴ The ALJ concluded there was no case law supporting Barber’s contention that SPB had authority to award him recovery for increased tax liability. The ALJ therefore...