Lack of Court or Judicial Proceedings Was Dispositive.
Ms. Thornton, near the end of her term as a Board member of the California Unemployment Insurance Appeals Board, was appointed as an ALJ for the Board, a hire that was subsequently investigated by the State Auditor and Sacramento District Attorney’s Office for potential Government Code/state conflict of interest law violations. Ms. Thornton retained an attorney to assist with the investigations, incurring fees and costs when counsel dealt with the investigating authorities. Then, she made a claim under the Government Claims Act for reimbursement of fees/costs, but the claim was rejected. She brought a civil suit seeking reimbursement, basing her claims upon Government Code section 996.4 and Labor Code section 2802.
The lower court’s sustaining of a demurrer without leave was affirmed in Thornton v. Calif. Unemployment Ins. App. Board, Case No. D058635 (4th Dist., Div. 1 Apr. 17, 2012) (certified for publication).
Reimbursement was not appropriate under Government Code sections 995 and 996.4 because it could only be triggered if there was a commencement of a civil action or judicial proceeding in court, not by just law enforcement agency investigations.
So, too, no fees or costs were covered by Labor Code section 2802, because that provision only required the employer to cover third-party claims arising out of a lawsuit against the employee arising out of the course and scope of her employment, again not encompassing expenses incurred in responding to law enforcement investigations. Even if section 2802 could be stretched that far, it would be “trumped” anyway by the specific provisions of Government Code section 996.4 under the “specific over general” cannon of statutory interpretation.