Jeffra v. Cal. State Lottery

• Decision Date: 29 August 2019
• Docket Number: B292775
• Court: California Court of Appeals Court of Appeals
• Parties: James Thomas JEFFRA, Plaintiff and Respondent, v. CALIFORNIA STATE LOTTERY, Defendant and Appellant.

39 Cal.App.5th 471

251 Cal.Rptr.3d 873

James Thomas JEFFRA, Plaintiff and Respondent,

v.CALIFORNIA STATE LOTTERY, Defendant and Appellant.

B292775

Court of Appeal, Second District, Division 8, California.

Filed August 29, 2019

Xavier Becerra, Attorney General, Chris A. Knudsen, Senior Assistant Attorney General, Kenneth C. Jones, Supervising Deputy Attorney General, and Nancy James, Deputy Attorney General, for Defendant and Appellant.

Santiago & Jones, David G. Jones and Alex V. Vo, Woodland Hills, for Plaintiff and Respondent.

GRIMES, J.

SUMMARY

Plaintiff James Thomas Jeffra was an investigator employed by defendant California State Lottery. He sued defendant, alleging retaliation in violation of the California Whistleblower Protection Act. ( Gov. Code, § 8547.8, subd. (c).) He alleged defendant engaged in a pretextual investigation, ultimately forcing him to retire, after he filed a whistleblower complaint with the California State Auditor.

Defendant filed an anti-SLAPP (strategic lawsuit against public participation) motion to strike the complaint ( Code Civ. Proc., § 425.16 ), contending the complaint arose from protected activity, namely, defendant's investigation of possible misconduct by plaintiff. The trial court denied the motion, finding the complaint arose "from non-protected retaliation, not protected investigations."

After plaintiff's ensuing appeal was briefed, the California Supreme Court decided Wilson v. Cable News Network, Inc. (2019) 7 Cal.5th 871, 249 Cal.Rptr.3d 569, 444 P.3d 706 ( Wilson ). In Wilson , the court disapproved the precedent on which the trial court here relied, and held that retaliation claims "arise from the adverse actions allegedly taken" – here, the investigation – "notwithstanding the plaintiff's allegation that the actions were taken for an improper purpose." ( Id. at p. 892, 249 Cal.Rptr.3d 569, 444 P.3d 706.) We conclude, consistent with Wilson , that plaintiff's complaint arose from protected activity.

The trial court did not consider whether plaintiff had established a probability of prevailing on the merits of his claim. Giving "careful attention to the limited nature of a plaintiff's second-step showing" ( Wilson, supra , 7 Cal.5th at p. 892, 249 Cal.Rptr.3d 569, 444 P.3d 706 ), we conclude plaintiff has made the necessary showing. Consequently, we affirm the trial court's order denying the anti-SLAPP motion.

FACTS

1. Plaintiff's Complaint and Declaration

Plaintiff was hired by defendant as a Lottery Investigator in October 2011. His duties included investigating complaints and allegations of administrative misconduct of Lottery ticket retailers, claimants, distributors, suppliers, and contractors to the Lottery. Until November 2016, when he was placed on "administrative time off," his performance was exemplary.

Plaintiff alleges that from 2013 through 2016, he reported to his superiors that prizes were paid to claimants of winning Lottery tickets who did not provide substantial proof that they were the genuine owners of the winning tickets. He also reported fraud among retailers of Lottery tickets and their employees, such as narrowly scratching tickets to see if they were winners and, if not, selling them to unsuspecting members of the public; and widespread theft of tickets. He also reported defendant had inadequate systems to prevent fraud. Some superiors, in effect, told him to stay quiet because sales were good.

Plaintiff made a telephonic whistleblower report in April 2016. He and investigator Gary Galbreath made a joint written report in late September 2016. They appended to their report copies of documents they had created or obtained in the course of their duties. They only provided the documents to the Auditor's office, and to no one else.

On November 14, 2016, Kelly Dixon, the special assistant to the deputy director of the Security/Law Enforcement Division (for which plaintiff worked) told plaintiff he was being put on administrative leave. Plaintiff was required to turn in his equipment and peace officer credentials and was escorted off the premises. He was interrogated by Mr. Dixon on November 17, including about his whistleblower complaint – which he had not told anyone about. He was later told he would lose pension and health benefits if he was terminated while on administrative leave. He knew of two former coworkers who had been terminated after submitting whistleblower complaints within the previous year. So he retired.

The complaint alleged defendant's actions were "solely based on retaliation because of Plaintiff's protected conduct," and the reasons given for the investigation and for placing him on administrative time off were "wholly pretextual."

2. Defendant's Anti-SLAPP Motion

Defendant filed an anti-SLAPP motion, including a declaration from James Libby, an assistant chief with the California Highway Patrol, who was assigned to perform the duties of deputy director of the Lottery's Security/Law Enforcement Division. (The parties refer to this division as SLED.) Mr. Libby was the chief law enforcement officer for the Lottery, and oversaw a staff that included plaintiff. Among many other duties, he was charged with "investigating employee misconduct when I became aware of possible misconduct."

Mr. Libby explained that, when questions arise about a claim for Lottery winnings, an investigator is assigned to investigate the claim. The investigator's report includes confidential information, such as a claimant's name, address, phone number, date of birth, social security number, and so on. The investigation files are kept confidential, accessible only to investigative and legal staff on a need to know basis.

In late October 2016, Mr. Libby saw an advertisement promoting an investigative report scheduled to air on a CBS television affiliate on October 27 and October 28. The advertisement indicated the reporter (David Goldstein) was looking into payments made to a specific Lottery winner whose claim was not accessible to investigators for various reasons.

The promotion for the CBS show indicated that Lottery insiders were giving confidential information to Mr. Goldstein. Mr. Libby testified he had a duty to investigate the potentially criminal disclosure of confidential information.

Before the Goldstein investigative report was broadcast, Mr. Libby began an investigation to determine who was releasing confidential information from the Lottery. The investigation revealed that plaintiff and two other Lottery employees had viewed two files they were not authorized to access and printed copies of confidential reports.

On October 31, 2016, Mr. Libby initiated a formal administrative investigation into potential misconduct by plaintiff to determine whether he had committed misconduct by accessing investigative files without authority and/or disseminating confidential information.

On November 10, 2016, Mr. Libby issued a memorandum to plaintiff notifying him that "he would be the subject of a formal administrative interrogation on November 17, 2016."

On November 14, 2016, defendant notified plaintiff it was placing him on "Administrative Time Off" pending its investigation, which was standard procedure "when there are concerns that misconduct could continue, or that the investigation could be compromised, if the employee remains in the workplace."

On November 16, 2016, Manuel Ortiz, plaintiff's supervisor, received a package from plaintiff "containing separation documents and advising that he intended to retire," with November 26, 2016 as his last day on the payroll.

Also on November 16, 2016, another investigator, Mr. Galbreath, was interviewed "in connection with the investigation into [plaintiff's] possible misconduct." Plaintiff was interviewed the following day, November 17. Following one or both of these interviews, Mr. Libby "was notified by the interviewer that [plaintiff] and the other employee revealed in their administrative interviews that they had submitted a joint whistleblower complaint to the California State Auditor. This was the first I learned that either [plaintiff] or the other employee had filed any sort of whistleblower complaint."

3. Plaintiff's Opposition

Plaintiff submitted several declarations in opposition to defendant's anti-SLAPP motion, including his own.

In addition to facts already recounted, plaintiff described his work investigating "numerous instances of theft and embezzlement of Lottery ‘scratchers’ tickets, often in amounts exceeding $100,000." He learned these crimes "were made possible by flaws in the Lottery's Retailer Compliance Program." He stated that "throughout the years 2013 through 2016, I notified my direct supervisors about my findings and apprised them of the widespread fraud I have observed upon bona fide Lottery ticket purchasers, the Lottery, and the state of California, as well as the inadequacies I had observed in the Lottery's Retailer Compliance Program that enabled such fraud and theft to go on without detection." He described his findings in detail, and identified some of his superiors to whom he reported the concerns he described.

On April 16, 2016, plaintiff submitted a telephonic whistleblower complaint to the Auditor. He "reported the ... flaws in the Lottery's Retailer Compliance Program as well as the Lottery's failure to implement notification systems to flag and apprise investigators in advance of suspicious transactions and activities. In reporting the Lottery's failure to employ sufficient oversight and safeguards to prevent theft and embezzlement of scratchers tickets," plaintiff identified two specific cases "whereby scratchers tickets retailers or their employees were able to abscond with approximately $123,000 and $270,000 worth of tickets ... months before the Lottery even became suspicious and began to investigate." He reported that defendant uses notification systems for its other games, but not for scratchers tickets, and he "apprised the Bureau of the statements I had received from other...