Collateral Estoppel and the Exhaustion Doctrine

Must a whistleblower whose claim is denied at the administrative level exhaust his judicial remedies by petitioning for mandamus in the Superior Court before he may file a civil suit under the Whistleblower Act? That was the apparent question in CALPERS v. Superior Court, case no. C054168 (3d Dist. Feb. 15, 2008), where CALPERS contended that its demurrer to the civil suit should have been upheld because the plaintiff, whose whistleblower administrative claim had been denied by the State Personnel Board, did not challenge the SPB executive officer’s findings by petitioning for mandamus.

The answer is, “it depends.” That’s because the issue isn’t so much whether the statute requires exhaustion — it doesn’t — but because the findings have collateral estoppel effect. If the findings are not enough to bar a civil claim, then the plaintiff can proceed despite not petitioning for mandamus. But if the administrative findings preclude the civil claim, the whistleblower needs to challenge adverse findings successfully to preclude their collateral estoppel effect:

If, as plaintiff would like, the statute and the amended regulation were divorced from a complicated body of case law on the binding effect of administrative findings in subsequent litigation, we could accept the plain reading of the statute, bolstered by the regulation, and conclude a whistleblower need not be encumbered by the administrative findings of the SPB in his civil action under the Whistleblower Act. We are not, however, at liberty to pretend the thorny problems posed by collateral estoppel do not exist. As a result, even if we were to accord great weight to the SPB’s construction of [Government Code] section 8547.8’s administrative exhaustion requirement, we conclude that the plain language of the statute simply does not resolve the more difficult dilemma posed by collateral estoppel.

The court affords collateral estoppel effect to the executive officer’s findings — and thus finds the civil claim barred —  even though the findings were based solely on documentary evidence and argument and the whistleblower’s request for a full evidentiary hearing was denied:

Thus, it appears the investigation became a contested proceeding based on opposing evidentiary submissions. The executive officer served as a neutral adjudicator and was required to and did consider the parties’ documentary evidence as well as arguments. “[S]o long as the agency is required by law to accept and consider evidence from interested parties before making its decision,” the proceedings, even if entirely documentary, satisfy the hearing requirement of Code of Civil Procedure section 1094.5. [Citations.]

Since, as we have concluded, the SPB’s decision was made as the result of a proceeding in which evidence was required to be given and considered by the executive officer, its validity can be challenged by a petition for a writ of mandate. Here, plaintiff chose not to challenge the adverse findings by way of a petition for a writ. As a result, those findings cannot be relitigated in a whistleblower civil action and respondent court erred by overruling PERS’s demurrer.

This decision initially struck me as fundamentally unfair. No one could complain of collateral estoppel effect for findings made after a full evidentiary hearing. But in this case, the whistleblower’s request for an evidentiary hearing had been denied and the findings were based exclusively on documentary submissions. Even the court, in light of inherent flaws it notes in the administrative procedure, seems to regret that it must issue this decision :

Without exempting whistleblowers from pursuing the administrative proceedings it requires them to commence, we must apply traditional principles of collateral estoppel, and despite the distinct infirmities present in the administrative proceedings, we conclude that any adverse findings rendered by the SPB have a preclusive effect in subsequent civil litigation unless challenged by a writ of administrative mandamus.

One Comment

  1. From what I gather collateral estoppel attaches when a Plainitff fails to appeal an administrative determination by a California agency AND the Plaintiff cannot pursue review under CCP section 1094.5 for failure to exhaust administrative remedies. What happens in the inverse when a Plainitff wins/receives a favorable administrative decision after investigation, the agency does not appeal or seek review of any kind, and the period for reconsideration lapses? An example is a Dept. of Social Services determination of disability after full examinations by state doctors, no reconsideration is sought by DSS, and the requisite 2 period for review lapses.

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