PATRICIA M. PALMER, Plaintiff and Appellant, v. THE REGENTS OF THE UNIVERSITY OF CALIFORNIA, Defendant and Respondent.
No. B154868
Second Dist., Div. Seven
Apr. 8, 2003.
107 Cal. App. 4th 899
Herbert Abrams and Lauren Mayo-Abrams for Plaintiff and Appellant.
Atkinson, Andelson, Loya, Ruud & Romo, James C. Romo and Sukhi K. Sandhu for Defendant and Respondent.
OPINION
PERLUSS, P. J.—Plaintiff Patricia M. Palmer sued the Regents of the University of California (the Regents) in a common law action for wrongful termination in violation of public policy without first pursuing University of California grievance procedures expressly created to protect employees like Palmer who claim to be victims of retaliation for reporting improper activities. The trial court granted the Regents’ motion for summary judgment based on Palmer‘s failure to exhaust the internal remedies available to her. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
1. Palmer‘s Termination and Her Complaint for Wrongful Discharge
Palmer was employed for 21 years as a clinical laboratory technologist at the UCLA Medical Center‘s Department of Pathology and Laboratory Medicine. In January 1997 the department announced a major restructuring.
A committee established to select employees to whom permanent positions would be offered after the restructuring interviewed Palmer but did not offer her a job because, according to the chair of the committee, “there were other, better qualified applicants for the positions available.” However, Palmer was hired as a temporary clinical laboratory technologist in a position that terminated in December 1997. Palmer was told her “knowledge and ability qualify you [for] this position.”
Palmer brought this action against the Regents, alleging wrongful discharge in violation of the public policy against retaliation for reporting unlawful activity. In paragraphs 19 and 20 of her complaint she asserts she “repeatedly reported laboratory abuses to defendants [including] failure... to comply with state regulations regarding reviewing lab results and failure to comply in signing off those results [and] that data from the lab was being falsified.” She alleges she “was wrongfully terminated and not rehired because of her whistleblowing activities as set forth in paragraphs 19 and 20 of this complaint.”
2. The Regents’ First Motion for Summary Judgment
The trial court granted the Regents’ initial motion for summary judgment, construing Palmer‘s complaint as limited to a cause of action for discharge in violation of
3. The Second Summary Judgment Motion: Failure to Exhaust Internal Grievance Procedures
On remand the Regents again moved for summary judgment, asserting that Palmer was required to exhaust available internal grievance procedures before bringing her wrongful discharge action. The Regents explained Palmer had available both the general employee grievance procedure described in the complaint resolution section of the pamphlet entitled Personnel Policies for Staff Members (PPSM) and the more specific internal grievance process involving retaliation for reporting improper activities, outlined in the document, UCLA Procedures for Reporting Whistle Blowing Complaints. Although Palmer did file a grievance under the PPSM alleging discrimination based on age, race and sex, as well as retaliation for her participation in union organizational activities, she abandoned that grievance before it was finally resolved. No internal complaint or grievance was ever filed claiming she was the victim of retaliation for reporting unlawful activity at UCLA.
Palmer responded to the motion by arguing exhaustion of administrative remedies is not a valid affirmative defense to a common law cause of action for wrongful discharge in violation of public policy. She did not contend the Regents’ internal grievance procedures are inadequate for adjudication of her claim of wrongful termination.
The trial court once again granted the Regents’ motion for summary judgment, agreeing with the Regents that Palmer was required to pursue internal grievance procedures before filing her lawsuit. Palmer filed a timely notice of appeal.
DISCUSSION
1. Palmer‘s Failure to Exhaust Internal Grievance Procedures Precludes Her Civil Action for Wrongful Termination
In Westlake Community Hosp. v. Superior Court (1976) 17 Cal.3d 465 [131 Cal.Rptr. 90, 551 P.2d 410] (Westlake), the Supreme Court held a physician‘s failure to pursue a hospital‘s internal grievance process barred his civil suit for damages based on the hospital‘s purportedly improper denial of staff privileges. “[A] doctor who has been denied hospital staff privileges must exhaust all available internal remedies before instituting any judicial action, including an action seeking only damages . . . .” (Id. at p. 485.) In Rojo v. Kliger (1990) 52 Cal.3d 65 [276 Cal.Rptr. 130, 801 P.2d 373] (Rojo), the Supreme Court distinguished Westlake (id. at p. 86) and held that, while
The difference between Westlake, where exhaustion was required, and Rojo and Stevenson, where it was not, is that Westlake involved the use of internal grievance procedures, made available to an employee or member by the organization itself. (See, e.g., Rojo, supra, 52 Cal.3d at p. 87 [courts “with little, or no, analysis” have extended Westlake, which “concerned the exhaustion of private internal remedies,” “to require exhaustion of ‘external’ administrative remedies in a variety of public contexts“].) When a statute such as FEHA provides an administrative process for resolution of grievances, exhaustion of those administrative remedies is a precondition to bringing a civil suit on a statutory cause of action, but not for seeking judicial relief on a common law tort claim for wrongful termination in violation of public policy. (Stevenson, supra, 16 Cal.4th at p. 905 [“An employee‘s post-termination failure to exhaust administrative remedies has no bearing on whether the termination violated the public policy expressed through the statutory prohibition against age discrimination, and thus the employee‘s post-termination administrative default does not preclude assertion of a nonstatutory tort claim for wrongful termination in violation of public policy.“].) When a private association or public entity establishes an internal grievance mechanism, as the Regents has done, failure to exhaust those internal remedies precludes any subsequent private civil action. (Rojo, at p. 86; Westlake, supra, 17 Cal.3d at p. 485.)
Although Westlake involved exhaustion of internal grievance procedures maintained by a voluntary private association (Westlake, supra, 17 Cal.3d at p. 474), in Rojo the Supreme Court confirmed that the Westlake exhaustion doctrine was not confined to private associations and voluntary organizations. In the course of explaining why Westlake did not mandate exhaustion of FEHA administrative procedures before proceeding with a judicial action for the common law tort of wrongful discharge in violation of public policy, the Rojo court defined the “context” in which exhaustion of internal remedies was a precondition to a civil suit: “We agree the exhaustion doctrine,
As made plain by Rojo‘s expansive definition of the “context” in which the doctrine properly applies, the rationale for Westlake‘s exhaustion requirement is not the existence of a contractual relationship between the plaintiff and the defendant entity. Indeed, the Supreme Court specifically rejected that notion when it recognized that the exhaustion doctrine was equally applicable to an applicant for membership who has been denied admission to the organization and an individual whose membership has been revoked. (Westlake, supra, 17 Cal.3d at p. 475 & fn. 4.) Exhaustion of internal grievance procedures is required not because of contractual obligation but because of “compelling” policy considerations: “[A]n exhaustion of remedies requirement serves the salutary function of eliminating or mitigating damages. If an organization is given the opportunity quickly to determine through the operation of its internal procedures that it has committed error, it may be able to minimize, and sometimes eliminate, any monetary injury to the plaintiff by immediately reversing its initial decision and affording the aggrieved party all membership rights; an individual should not be permitted to increase damages by foregoing available internal remedies. [Citation.] [¶] Moreover, by insisting upon exhaustion even in these circumstances [where the plaintiff is seeking only damages and not reinstatement], courts accord recognition to the ‘expertise’ of the organization‘s quasi-judicial tribunal, permitting it to adjudicate the merits of the plaintiff‘s claim in the first instance.” (Id. at p. 476; accord, Edgren v. Regents of University of California, supra, 158 Cal.App.3d at p. 521.)2
The ” ‘context’ to which Westlake properly applies” is precisely the situation now before this court. As was true in Westlake, plaintiff Patricia
2. The Primary Jurisdiction Doctrine Has No Application to the Requirement That Internal Grievance Procedures Be Utilized Before a Civil Action Is Initiated
As the Supreme Court noted in Rojo, supra, 52 Cal.3d at page 87, a number of courts have confused or conflated issues involving exhaustion of private internal grievance procedures with the distinct doctrine requiring exhaustion of external administrative remedies. The dissent compounds this problem by relying on principles associated with the doctrine of primary jurisdiction, a corollary to the doctrine of exhaustion of administrative remedies that is itself often confused with the exhaustion doctrine (Farmers Ins. Exchange v. Superior Court (1992) 2 Cal.4th 377, 390 [6 Cal.Rptr.2d 487, 826 P.2d 730]), to analyze the separate question whether internal grievance procedures must be utilized before filing a lawsuit.4
The primary jurisdiction doctrine obligates a litigant to apply to an outside regulatory agency (for example, the state Insurance Commissioner, the Federal Communications Commission or the Civil Aeronautics Board) for relief before pursuing a civil action. It, like the closely related doctrine of exhaustion of external administrative remedies, arises in the context of complex regulatory schemes utilizing expert administrative agencies. Both doctrines are, in the words of the Supreme Court, ” ‘essentially doctrines of comity between courts and agencies. They are two sides of the timing coin: Each determines whether an action may be brought in a court or whether an agency proceeding, or further agency proceeding, is necessary.’ [Citation.]” (Farmers Ins. Exchange v. Superior Court, supra, 2 Cal.4th at p. 390.) ” ’ “Exhaustion” applies where a claim is cognizable in the first instance by an administrative agency alone; judicial interference is withheld until the administrative process has run its course. “Primary jurisdiction,” on the other hand, applies where a claim is originally cognizable in the courts, and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body; in such a case the judicial process is suspended pending referral of such issues to the administrative body for its views.’ [Citations.]” (Ibid.)
The dissent is correct that cases alleging wrongful termination in violation of public policy typically do not involve issues of such a complex or technical nature that the doctrine of primary jurisdiction is properly invoked, and the Regents does not argue to the contrary. But very different policy considerations support the requirement that an employee pursue to completion internal grievance procedures before initiating a lawsuit concerning an adverse employment decision—principally, the desire to provide an opportunity for the employer (not an outside administrative agency) to quickly and efficiently redress a grievance and thereby minimize or even eliminate injury to the plaintiff. (Westlake, supra, 17 Cal.3d at p. 476 the principles articulated in Westlake are fully applicable here.
The policy underlying
The manual, UCLA Procedures for Reporting Whistle Blowing Complaints, contains the UCLA campus procedures for implementing the university‘s
Although
DISPOSITION
The judgment is affirmed. Respondent The Regents of the University of California is to recover its costs on appeal.
Woods, J., concurred.
JOHNSON, J.—I respectfully dissent.
The issue before us is whether the plaintiff in a common law action for wrongful discharge in violation of public policy should be judicially required to resort to her employer‘s internal grievance procedure when no statute, contractual provision, or pertinent public policy requires her to do so.1 I would decline to impose such a requirement under the facts and circumstances of this case and would therefore reverse the judgment for defendants.
Under section 70 of the Regents’ Personnel Policies for Staff Members (PPSM), an employee may complain of “a specific management act which is
In addition to the PPSM, the UCLA manual on Procedures for Reporting Whistle Blowing Complaints (UCLA Procedures) contains its own detailed remedial scheme for employees “alleging threatened or actual interference or retaliation resulting from the reporting of improper activities.” The latter scheme involves a confidential complaint process and the enlistment of a “whistleblowing adviser.”
The crux of the Regents’ argument is that the PPSM and the UCLA Procedures contain administrative and internal remedies which must be exhausted before an aggrieved employee may sue in court over an alleged wrongful termination. It is not clear from the Regents’ brief whether they believe Patricia A. Palmer was required to exhaust one or both of these internal grievance procedures before filing suit for wrongful discharge in violation of public policy.
For her part, Palmer does not contend the Regents’ internal grievance procedures are unavailable or inadequate for adjudicating a claim of wrongful discharge in violation of public policy. Rather, she contends these internal procedures are options afforded to university employees who may or may not elect to make use of them in pursuing a claim for wrongful termination.
California courts have long recognized “where a statutory remedy is provided for a preexisting common law right, the newer remedy is generally considered to be cumulative, and the older remedy may be pursued at the plaintiff‘s election.”2 For the reasons explained below I see no reason why the general rule applicable to statutory remedies should not also apply to the Regents’ and UCLA‘s administrative remedies.
While the public policy violated in a common law wrongful termination cause of action must be “tethered to” a constitutional or statutory provision, the cause of action itself is a judicially recognized common law cause of
I recognize that in certain situations courts have held an employee alleging wrongful termination must exhaust available administrative remedies or internal grievance procedures before seeking tort damages in court. This exhaustion requirement applies, for example, when the employee alleges a statutory cause of action and the statute contains an administrative remedy;6 when the employee is covered by a collective bargaining agreement which
None of these grounds for requiring exhaustion of internal remedies apply here. Palmer is not asserting a statutory cause of action or one founded on the PPSM or UCLA Procedures. I have searched the record for any evidence of a collective bargaining agreement or employment contract which would require Palmer to exhaust the Regents’ internal grievance procedures and have found none.10 Nor have I found any statute which would require exhaustion of the Regents’ internal procedures before bringing a common law wrongful termination claim based on violation of public policy.11 Indeed, I have found no language in the PPSM or UCLA Procedures themselves which obligates an employee to avail herself of those procedures before suing on a common law cause of action for wrongful discharge in violation of public policy. Furthermore, the principles underlying the doctrine of primary jurisdiction do not support submission of Palmer‘s wrongful termination claim to the Regents for preliminary adjudication.
The Regents offer three reasons why Palmer was required to exhaust their internal grievance procedures.
Westlake was not an employment case and was not decided on employment law principles. It was a case involving admission to a private hospital medical staff and was decided on principles of law pertaining to private voluntary associations.14
The exhaustion issue in Westlake arose in the context of the plaintiff doctor‘s suit against a codefendant, Los Robles Hospital, for damages resulting from denial of hospital staff privileges. The Westlake defendants moved for summary judgment on the ground the plaintiff had not exhausted Los Robles’ internal grievance procedure.15 When the trial court denied the motion, the Westlake defendants sought a writ of prohibition to restrain the trial court from proceeding with the plaintiff‘s action.16 The Supreme Court held “a doctor who has been denied hospital staff privileges must exhaust all available internal remedies before instituting any judicial action, including an action seeking only damages.”17 The court denied the writ, however, because the defendants’ affidavits did not establish Los Robles provided an available remedy which the plaintiff failed to exhaust.18
In reaching its holding in Westlake, the Supreme Court concluded the principles underlying the doctrine of primary jurisdiction require a doctor challenging her exclusion from staff privileges at a private hospital to resort to the hospital‘s internal grievance procedures even though the doctor had no contractual or statutory obligation to do so. The Regents contend the trial court here properly followed Westlake in holding Palmer was required to submit her wrongful termination claim to the Regents’ grievance procedure. They point to Edgren v. Regents of University of California, which reached a similar conclusion with respect to a university employee who did not exhaust
The doctrine of primary jurisdiction comes into play when claims are originally cognizable in judicial forums and in nonjudicial forums, usually administrative agencies, and raises issues ” ‘within the special competence of an administrative body.’ ”20 The principles underlying the doctrine, however, are not limited to claims cognizable by administrative agencies. They have been applied in the Westlake context to a physician‘s claim a hospital committee wrongfully revoked his surgical privileges.21
The doctrine of primary jurisdiction differs from the doctrine of exhaustion of administrative remedies in that ” ‘Exhaustion’ applies where an agency alone has exclusive jurisdiction over a case; primary jurisdiction where both a court and an agency have the legal capacity to deal with the matter.’ ”22 The policy reasons behind the two doctrines, however, are similar and overlapping. The exhaustion doctrine is principally grounded on administrative autonomy and judicial efficiency.23 The primary jurisdiction doctrine is grounded on the courts’ desire to take advantage of administrative expertise and to assure uniform application of regulatory laws.24 “No rigid formula exists for applying the primary jurisdiction doctrine.”25 In addition to the policy considerations noted above, courts consider the adequacy or inadequacy of the administrative remedy including the expense and delay to the litigants.26 If an issue is referred to an administrative agency under the primary jurisdiction doctrine the action is not dismissed but stayed pending resolution of the issues within the agency‘s expertise.27
Despite the “considerable flexibility” afforded the courts in applying the primary jurisdiction doctrine,28 our Supreme Court has identified two elements which must be present before a matter is referred to an administrative agency. First, the agency must have a ” ‘pervasive and self-contained system
In Westlake the facts showed the plaintiff‘s application for staff privileges at Los Robles Hospital was considered by the hospital‘s medical committee which conducted an independent investigation of her qualifications. The committee‘s decision to deny the application was reviewed by the medical executive committee and the hospital‘s board of directors.31 More importantly, the court, analogizing to cases involving denial of membership in private associations such as fraternal organizations and unions,32 found deferring to the hospital on the issue of the plaintiff‘s qualifications for staff membership was appropriate given the hospital‘s “expertise,” and “familiarity” with the issues.33
In contrast to Westlake, the Supreme Court in Rojo v. Kliger held resort to the FEHA was unnecessary before a plaintiff could proceed with a civil suit based on common law claims for damages resulting from sex discrimination in employment.34 The court found the FEHA “does not have a ‘pervasive and self-contained system of administrative procedure’ . . . for general regulation or monitoring of employer-employee relations so as to assess or prevent discrimination or related wrongs in the employment context[.]”35 And, unlike denial of membership in a private association, the court found “the factual issues in an employment discrimination case [are not] of a complex or technical nature beyond the usual competence of the judicial system.”36 Employment discrimination cases, the court held, “are not cases having such a paramount need for specialized agency fact-finding expertise as to require exhaustion of administrative remedies before permitting an aggrieved person to pursue his or her related nonstatutory claims and remedies in court.”37
In my view, Rojo, not Westlake, is the pertinent authority here. Even assuming for the sake of argument the Regents’ protection for whistleblowers constitutes a “pervasive and self-contained system of administrative procedure,” this case does not meet the second prong of the test for primary jurisdiction because the factual issues in a case involving wrongful termination in violation of public policy are not “of a complex or technical nature beyond the usual competence of the judicial system.”38 Indeed, such cases are quite common in California courts.
Edgren, on which the Regents also rely, is distinguishable as well. Edgren, the University of California‘s principal architect, was laid off for alleged “budgetary reasons.” He initiated a grievance proceeding but later abandoned it. In his complaint Edgren claimed the Regents engaged in fraud and failed to follow their own personnel policies in effectuating his layoff and in conducting his grievance hearing “all of which resulted in a breach of his employment contract.”39 The trial court sustained the Regents’ demurrer based on Edgren‘s failure to exhaust administrative remedies and the Court of Appeal affirmed citing Westlake for the proposition “failure to exhaust administrative remedies will bar actions for damages, including tort claims.”40
Edgren is not on point for several reasons. Edgren was essentially a breach of contract action in which the plaintiff claimed some ancillary tort damages. It was not a common law tort action for wrongful termination as is the case before us. Furthermore, it is apparent from the allegations in Edgren‘s complaint that, unlike Palmer, he had a contractual relationship with the Regents which included an obligation to pursue an internal grievance procedure.41 Edgren did not dispute this obligation but maintained he was excused from exhausting his administrative remedies for a variety of reasons the court found to be without merit.42
In summary, I would hold an employee alleging a common law cause of action for wrongful termination of employment is not required to first resort to her employer‘s internal grievance procedure unless she is contractually or statutorily obligated to do so or the trial court determines in the exercise of
Having determined neither a contractual obligation nor the principles of primary jurisdiction support referring plaintiff‘s claim to her employer‘s grievance procedure, I turn to the question whether plaintiff was statutorily obligated to exhaust the Regents’ grievance procedure before bringing this action.
In an argument not raised by the Regents, the majority maintains the California Whistleblower Protection Act (CWPA)43 requires Palmer to exhaust their internal grievance procedures before bringing an action for wrongful termination in violation of the public policy against retaliation for whistleblowing activity. On the contrary, the CWPA supports Palmer not the Regents.
If Palmer was pursuing a statutory cause of action under
This conclusion is bolstered by the fact the internal remedy the Regents claim must be exhausted was created to enforce the university‘s responsibilities under
Finally, the Regents contend even if Palmer is not contractually or statutorily bound to exhaust its internal grievance procedures, exhaustion is required by ” ‘compelling’ policy considerations.’ ”49
I agree the exhaustion doctrine may serve important functions in some circumstances. Among other things, it permits the organization to resolve factual issues and apply its expertise in its rules and regulations to the dispute. It usually affords a less formal and more economical forum to resolve disputes and mitigate damages. And, even if the dispute is not finally resolved at the grievance stage, the above mentioned factors may still promote judicial economy in handling the dispute once it reaches court.50
Of course, it is one thing to agree exhaustion of internal remedies is a socially beneficial policy and quite another thing to judicially impose such a policy on an employment relationship in which the parties theoretically could have agreed to it, but did not. Courts interpret contracts for the parties, they do not make them. To paraphrase an observation frequently made with respect to arbitration, the policy favoring exhaustion of administrative remedies cannot displace the necessity for a voluntary agreement to submit to administrative remedies.51
The absence of any agreement by Palmer to submit her wrongful termination claim to the Regents’ grievance procedure is particularly troubling because requiring Palmer to exhaust the Regents’ internal remedies may prevent Palmer from ever obtaining a jury trial on her tort cause of action for wrongful discharge in violation of public policy. If Palmer submits her
One final observation: Although the Regents obviously approve of imposing an exhaustion requirement in this case, neither the Regents nor the majority suggest a doctrinal basis for restraining judges in other cases from imposing other terms and conditions of employment the judges might agree are socially beneficial or striking down terms and conditions they agree are socially harmful. Unless the courts are to become super-Regents, I do not believe policy choices among lawful alternatives should become a judicial function.
For the reasons explained above, in my view, the trial court erred in granting the Regents’ motion for summary judgment based on failure to exhaust internal remedies.
Appellant‘s petition for review by the Supreme Court was denied July 9, 2003. George, C. J., and Brown, J., did not participate therein. Kennard, J., was of the opinion that the petition should be granted.