Murray v. Alaska Airlines Inc.

• Decision Date: 23 August 2010
• Docket Number: No. S162570.,S162570.
• Citation: 237 P.3d 565,50 Cal.4th 860
• Court: California Supreme Court
• Parties: Kevin MURRAY, Plaintiff and Petitioner, v. ALASKA AIRLINES, INC., Defendant and Respondent.

50 Cal.4th 860

237 P.3d 565

Kevin MURRAY, Plaintiff and Petitioner, v. ALASKA AIRLINES, INC., Defendant and Respondent.

No. S162570.

Supreme Court of California

Aug. 23, 2010.

[114 Cal.Rptr.3d 242]

Law Offices of James P. Stoneman II and James P. Stoneman II, Claremont, for Plaintiff and Petitioner.

Howard Rice Nemerovski Canady Falk & Rabkin, David J. Reis, San Francisco, and Jason M. Habermeyer, for Defendant and Appellant.

BAXTER, J.

The doctrine of collateral estoppel, or issue preclusion, ¹ is firmly embedded in both federal and California common law. It is grounded on the premise that “once an issue has been resolved in a prior proceeding, there is no further fact-finding function to be performed.” ( Parklane Hosiery Co. v. Shore (1979) 439 U.S. 322, 336, fn. 23, 99 S.Ct. 645, 58 L.Ed.2d 552.) “Collateral estoppel ... has the dual purpose of protecting litigants from the burden of relitigating an identical issue with the same party or his privy and of promoting judicial economy, by preventing needless litigation.” ( Id. at p. 326, 99 S.Ct. 645, fn. omitted.)

We granted the request of the United States Court of Appeals, Ninth Circuit, to answer the following question of California

[114 Cal.Rptr.3d 243]

law pertaining to collateral estoppel: Should issue-preclusive effect be given to a federal agency's investigative findings, when the subsequent administrative process provides the complainant the option of a formal adjudicatory hearing to determine the contested issues de novo, as well as subsequent judicial review of that determination, but the complainant elects not to invoke his right to that additional process, and the agency's findings and decision thereby become a final, nonappealable order by operation of law? ² (SeeMurray v. Alaska Airlines, Inc. (9th Cir.2008) 522 F.3d 920 ( Murray v. Alaska ).)

The Ninth Circuit has furnished the following statement of facts and procedural history (substantially reproduced here with minor nonsubstantive and stylistic modifications) to more fully explain the context in which the question arises. ( Murray v. Alaska, supra, 522 F.3d at pp. 921-922.)

Factual and Procedural Background

Kevin Murray (Murray), a quality assurance auditor at Alaska Airlines, Inc. (Alaska), brought safety concerns to the attention of the Federal AviationAdministration (FAA), which then conducted an investigation that revealed “significant discrepancies relating to air carrier safety.” Subsequently, the maintenance facility at which Murray worked was closed and his position was outsourced. Murray was not rehired by Alaska.

In December 2004, Murray filed an administrative complaint with the United States Secretary of Labor (Secretary) under the whistleblower protection provision of the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR 21), seeking reinstatement, back pay, and compensatory damages. (See 49 U.S.C. § 42121(b)(1), (b)(3)(B).) ³ Invocation of AIR 21's administrative complaint procedure is voluntary and optional. ( § 42121(b)(1).) Murray-through his lawyer, Rand Stephens-alleged he had been denied the opportunity to apply or interview for open positions at other Alaska facilities, “despite [his] stated and documented request to remain” with the company, “in retaliation for [his] notifying [FAA inspectors] of Federal Aviation Regulations ... violations and for serious airworthiness issues posing a threat to air safety.” He also alleged that his superiors at Alaska “admonished and chastised [him] ... for disclosing information to the FAA.”

Pursuant to section 42121(b)(2)(A), the Secretary conducted an investigation, during which Alaska submitted a written response to Murray's complaint, produced relevant documentation, and offered testimonial evidence. Murray was never contacted by the Secretary's investigator. He was not given a copy of the documents provided by Alaska or its witnesses' statements. Nor did Murray have an opportunity to submit additional information to the Secretary, or respond to Alaska's arguments, before the Secretary rendered her findings.

In June 2005, the Secretary notified Murray by letter of her investigative findings. The Secretary found that Murray had participated in protected whistleblowing activity and that his termination and Alaska's subsequent failure to rehire himconstituted adverse employment action. Notwithstanding that determination, the Secretary further determined there was “no credible basis to believe [Alaska] violated the employee protection provisions of AIR 21,” because the “record fail[ed] to establish any connection between [Murray's] termination and his involvement in protected activity.” The Secretary found that Murray had applied electronically for positions at other Alaska facilities and then “inexplicably removed his resume ... the same night he applied.” “The evidence showed that it was impossible for [Alaska] to remove [Murray's] resume from the employment website of its own accord.” The Secretary therefore concluded that Murray “failed to establish a nexus between his protected activity and the perceived discriminatory action taken against him.” The Secretary dismissed Murray's administrative complaint because he failed to demonstrate there was “reasonable cause to believe” (§ 42121(b)(2)(A)) that his whistleblowing was a “contributing factor in [Alaska's] unfavorable personnel action.” (§ 42121(b)(2)(B)(iii); see 29 C.F.R. § 1979.105(a) (2010).)

The Secretary's letter closed by notifying Murray that he had “important rights of objection which must be exercised in a timely fashion.” “AIR 21 permits an aggrieved party,WITHIN 30 DAYS ... to file objections with the Department of Labor and to request a hearing on the record before an Administrative Law Judge.” (Original capitalization.) The letter also warned that if “no objections are filed WITHIN 30 DAYS, this decision shall become final and not subject to judicial review.” (Original capitalization.) Murray never filed objections or requested an on-the-record hearing. Nor did he take any steps to formally withdraw his administrative complaint. (Cf. 29 C.F.R. § 1979.111(a) [allowing complainant to withdraw his complaint by filing a written withdrawal with the Asst. U.S. Sect. of Labor, who “then determine[s] whether the withdrawal will be approved”].) On July 8, 2005, by operation of law, the Secretary's preliminary investigative findings were “deemed a final order ... not subject to judicial review.” (§ 42121(b)(2)(A).)

On August 2, 2005, Murray, still represented by counsel, filed a complaint against Alaska in California state court, claiming that he had been wrongfully terminated and retaliated against for whistleblowing, in violation of the public policy of California. (See Lab.Code, § 1102.5, subd. (b).) Invoking diversity jurisdiction, Alaska removed the action to federal district court. The district court, relying on the Secretary's findings in her final order, granted summary judgment to Alaska based on collateral estoppel. Murray timely appealed.

Discussion

The Ninth Circuit has asked this court to determine whether certain factual findings made in the Secretary's final nonappealable order in the AIR 21 administrative action that preceded this state court lawsuit (removed to federal court on grounds of diversity jurisdiction) may now be afforded issue-preclusive effect under California law. Given the particular factual and procedural circumstances of this case, and the particular provisions of the AIR 21 statutory scheme here at issue, we conclude that they should.

Collateral estoppel is a distinct aspect of res judicata. “ ‘The doctrine of res judicata gives conclusive effect to a former judgment in subsequent litigation between the same parties involving the same cause of action. Aprior judgment for the plaintiff results in a merger and supersedes the new action by a right of action on the judgment. A prior judgment for the defendanton the same cause of action is a complete bar to the new action. (4 Witkin, Cal. Procedure (2d ed. 1971) Judgment, §§ 147-148, pp. 3292-3293.) Collateral estoppel ... involves a second action between the same parties on a different cause of action. The first action is not a complete merger or bar, but operates as an estoppel or conclusive adjudication as to such issues in the second action which were actually litigated and determined in the first action. ( Id., § 197, at p. 3335.)’ ( Preciado v. County of Ventura (1982) 143 Cal.App.3d 783, 786-787, fn. 2 .)” ( Rymer v. Hagler (1989) 211 Cal.App.3d 1171, 1178, 260 Cal.Rptr. 76 ( Rymer ).)

This case involves the doctrine of collateral estoppel as applied to the final decision of a federal administrative agency, as well as a corollary of that doctrine sometimes described as “judicial exhaustion.” It is settled that the doctrine of collateral estoppel or issue preclusion is applicable to final decisions of administrative agencies acting in a judicial or quasi-judicial capacity. (See Astoria Federal S. & L. Assn. v. Solimino (1991) 501 U.S. 104, 107, 111 S.Ct. 2166, 115 L.Ed.2d 96 [extending the doctrine to the final adjudications of both state and federal agencies]; United States v. Utah Constr. Co. (1966) 384 U.S. 394, 421-422, 86 S.Ct. 1545, 16 L.Ed.2d 642 ( Utah Constr. Co.) ; People v. Sims (1982) 32 Cal.3d 468, 479, 186 Cal.Rptr. 77, 651 P.2d 321 ( Sims ); French v. Rishell (1953) 40 Cal.2d 477, 480-481, 254 P.2d 26; Knickerbocker v. City of Stockton (1988) 199 Cal.App.3d 235, 242, 244 Cal.Rptr. 764.) As we explained in McDonald v. Antelope Valley Community College Dist. (2008) 45 Cal.4th 88, 84 Cal.Rptr.3d 734, 194 P.3d 1026, judicial exhaustion “may arise when a party initiates and takes to decision an administrative process-whether or not the party was required, as a matter of administrative exhaustion, to even begin the administrative process in the first place. Once a decision has been issued, provided that decision is of a...