Scheer v. Regents of the University of California

Facts

Arnold Scheer, M.D., M.P.H., served as chief administrative officer (CAO) of the UCLA Department of Pathology and Laboratory Medicine, where he had worked since 2004 and held the CAO role since 2009. (Scheer, supra, 76 Cal.App.5th at p. 909.) His operative complaint alleged that “he identified and became aware of numerous issues, violations, and concerns related to patient safety, mismanagement, economic waste, fraudulent and/or illegal conduct, unsafe and/or substandard conditions, and incompetence at the facilities of the UC REGENTS, including, but not limited to, recurrent lost patient specimen issues, mislabeling and mix-up of patient samples resulting in misdiagnosis, lost specimens used in NIH funded research, and failure and/or refusal to follow required procedures to investigate, analyze, and formulate action plans to correct patient safety issues.” (Ibid.) Scheer pleaded that, as a result of his attempts to report and correct that conduct, he was terminated from his position on June 2, 2016. (Ibid.)

The termination instrument was a June 2, 2016 notice of intent to terminate (NOIT), signed by Scheer’s supervisors Jonathan Braun, M.D., Ph.D., and Scott Binder, M.D., and drafted by employee relations manager Josh Samuels. (Scheer, supra, 76 Cal.App.5th at pp. 910, 917–918, 920.) As the Regents framed it, the NOIT stated Scheer “was being terminated because he (1) had an overly aggressive attitude concerning certain negotiations; (2) had a harsh and disruptive style at meetings; (3) had become increasingly ineffective as CAO; (4) lack[ed] … enthusiasm for [his] position; and (5) was not an effective leader.” (Id. at p. 910.) Its opening paragraph invoked “the needs of the department and your poor performance and conduct.” (Id. at p. 918.)

Scheer’s countervailing record — which would prove decisive on appeal — showed a very different employment history: from 2004 through the end of his tenure he “continued to receive accolades, positive feedback, promotions, and additional assignments and responsibilities from upper management, including from Defendants Dr. Braun and Dr. Binder,” with “a maximum merit increase in salary and near maximum incentive awards” each year. (Scheer, supra, 76 Cal.App.5th at p. 918.) His fiscal year 2014–2015 performance evaluation, delivered around the end of July 2015 — “just three months before his termination was initiated” — contained no criticisms, and the 2015–2016 goals he developed with Braun and Binder in September 2015 identified no deficiencies. (Id. at p. 919.)

Procedural history

Scheer sued the Regents and supervisors Braun and Binder on April 26, 2017. The operative first amended complaint pleaded three whistleblower causes of action: (1) violation of Health and Safety Code section 1278.5, against the Regents; (2) violation of Labor Code section 1102.5, against the Regents; and (3) violation of Government Code section 8547 et seq. — the California Whistleblower Protection Act (CWPA) — against the Regents, Braun, and Binder. (Scheer, supra, 76 Cal.App.5th at p. 909.)

The Regents and Braun jointly moved for summary judgment or summary adjudication, arguing that Scheer was terminated for the legitimate, nonretaliatory reasons set forth in the NOIT and that he could not demonstrate pretext “as required by McDonnell Douglas Corp. v. Green (1973) 411 U.S. 792”; Binder filed a separate motion on the same theory as to the CWPA claim against him. (Scheer, supra, 76 Cal.App.5th at pp. 909–910.) Scheer opposed on the ground that the NOIT’s reasons were “patently false,” pointing to his outstanding 2015 review from Braun and his September 2015 goals identifying no behavioral or performance issues. (Id. at p. 910.)

The trial court granted both motions under the three-step McDonnell Douglas framework. At step one it found — without contest from the defense — that Scheer established a prima facie case of retaliation. (Scheer, supra, 76 Cal.App.5th at p. 911.) At step two it found the defendants presented “sufficient evidence demonstrating that Plaintiff was terminated for his harsh and aggressive style of work and increasing ineffectiveness as CAO,” supported by complaints and a human resources investigation. (Ibid.) At step three — “the crux of this appeal” — it ruled Scheer failed to raise a triable issue of pretext: his performance reviews were mere “checklists relating to completion of individual tasks” that did not “speak to or controvert” the proffered reasons (citing Hicks v. KNTV Television, Inc. (2008) 160 Cal.App.4th 994, 1009–1010); his award nominations predated the complaints about him; his continued satisfactory 2015 review “in effect shows that his evaluation was not affected by his protected activity”; and temporal proximity alone could not carry pretext, particularly since “verbal complaints from the faculty regarding Plaintiff’s performance issues started in 2013, before Plaintiff engaged in his first protected activity.” (Id. at pp. 911–912.)

Scheer timely appealed from the December 27, 2019 judgment. (Scheer, supra, 76 Cal.App.5th at p. 912.) The Court of Appeal deferred consideration pending Lawson, which the Supreme Court decided on January 27, 2022, and then took supplemental briefing on Lawson’s impact — including, at the parties’ instance, its impact on the Government Code claim. (Id. at pp. 912–913 & fn. 1.) Review of the summary judgment was de novo, viewing the evidence in the light most favorable to Scheer. (Id. at p. 913.)

Issue

Three questions, one per statute. First, after Lawson, does Labor Code section 1102.6 — not McDonnell Douglas — supply the framework for summary adjudication of a section 1102.5 claim, and what follows from the fact that the moving papers employed the superseded framework? Second, does Lawson’s reasoning extend to Government Code section 8547.10, the CWPA provision governing University of California employees, whose subdivision (e) tracks section 1102.6 nearly verbatim? Third, under the McDonnell Douglas framework that continues to govern Health and Safety Code section 1278.5 claims, did Scheer raise a triable issue of material fact that the NOIT’s stated reasons were pretextual? (Scheer, supra, 76 Cal.App.5th at pp. 908–909, 913–917.)

Holding

Reasoning

The section 1102.5 claim: the motion fails at the threshold because it invoked the wrong law. Labor Code section 1102.5 is a whistleblower statute whose purpose “is to encourage workplace whistleblowers to report unlawful acts without fearing retaliation” (Scheer, supra, 76 Cal.App.5th at p. 913, citing Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 287), and section 1102.6, part of the same statutory scheme, prescribes its adjudicative mechanics: once the employee shows by a preponderance that retaliation was “a contributing factor” in the adverse action, “the employer bears the burden of demonstrating by clear and convincing evidence that it would have taken the same action for legitimate, independent reasons.” (Id. at pp. 913–914.) Lawson resolved that this statute — not the three-part test of McDonnell Douglas — “provides the governing framework for the presentation and evaluation of whistleblower retaliation claims brought under [Labor Code] section 1102.5,” holding “with clarity” that the “plaintiff need not satisfy McDonnell Douglas in order to discharge” the plaintiff’s burden. (Id. at p. 912, quoting Lawson, supra, 12 Cal.5th at p. 718.) The consequence for this record was structural: the Regents had moved for summary adjudication “pursuant to the McDonnell Douglas framework,” so “the moving papers failed to employ the applicable framework prescribed by Labor Code section 1102.6, the Regents failed to meet their initial burden in moving to summarily adjudicate the second cause of action[, and t]heir motion as to the second cause of action should therefore have been denied.” (Id. at p. 914.)

Neither forfeiture nor affirm-on-any-ground review saves the ruling. The court anticipated two rejoinders. That Scheer’s opposition likewise never invoked section 1102.6 “does not preclude our consideration of the issue”: before Lawson “the state of the law was unsettled,” and in any event a trial court’s “assessment of whether the moving party has carried its burden—and therefore caused a shift—occurs before the court’s evaluation of the opposing party’s papers.” (Scheer, supra, 76 Cal.App.5th at pp. 914–915, quoting Y.K.A. Industries, Inc. v. Redevelopment Agency of City of San Jose (2009) 174 Cal.App.4th 339, 367, italics omitted.) And the court declined the Regents’ invitation to affirm on the existing record notwithstanding the framework change: “Our role as an appellate court is to review the trial court’s order on the motion the Regents actually made in the trial court, not to rule in the first instance on whether the Regents are entitled to summary adjudication on the second cause of action in light of the Labor Code section 1102.6 framework.” (Id. at p. 915.) The reversal was therefore without prejudice: “Now that Lawson has clarified the law, the Regents are not precluded on remand from moving for summary adjudication of the second cause of action in accordance with the Labor Code section 1102.6 framework.” (Ibid.)

The CWPA claim: section 8547.10’s mirrored text imports the Lawson framework for UC employees. Government Code section 8547.10, “which pertains to University of California employees, authorizes a civil action for damages on a complaint for retaliation.” (Scheer, supra, 76 Cal.App.5th at p. 915, citing Taswell v. Regents of University of California (2018) 23 Cal.App.5th 343, 355–356.) Its subdivision (e) provides that “once it has been demonstrated by a preponderance of the evidence that an activity protected by this article was a contributing factor in the alleged retaliation against a former, current, or prospective employee, the burden of proof shall be on the supervisor, manager, or appointing power to demonstrate by clear and convincing evidence that the alleged action would have occurred for legitimate, independent reasons even if the employee had not engaged in protected disclosures or refused an illegal order.” (Ibid., quoting Gov. Code, § 8547.10, subd. (e), italics omitted.) That language, the court observed, “mirrors the language of Labor Code section 1102.6.” (Id. at pp. 915–916.) The syllogism followed: “Guided by Lawson and applying its reasoning, we conclude that Government Code section 8547.10, subdivision (e), rather than McDonnell Douglas, provides the relevant framework for analyzing claims under Government Code section 8547.10.” (Id. at p. 916.) Because the defendants — including Binder, whose separate motion attacked only this claim — had “incorrectly relied upon the McDonnell Douglas framework,” summary adjudication of the CWPA cause of action was error, again without prejudice to a renewed motion under the proper standard. (Ibid.)

The section 1278.5 claim: McDonnell Douglas still governs … Health and Safety Code section 1278.5 “prohibits retaliation against any employee of a health facility who complains to an employer or government agency about unsafe patient care” (Scheer, supra, 76 Cal.App.5th at p. 916, citing Fahlen v. Sutter Central Valley Hospitals (2014) 58 Cal.4th 655, 660–661), and supplies a “rebuttable presumption” of retaliation where responsible staff knew of the complaint and the discriminatory action — including discharge — occurs within 120 days. (Ibid., citing Health & Saf. Code, § 1278.5, subd. (d)(1), (2).) California courts have applied McDonnell Douglas to such claims (Armin v. Riverside Community Hospital (2016) 5 Cal.App.5th 810, 830; Taswell, supra, 23 Cal.App.5th at pp. 350, 365–366), and “[t]he Lawson decision has no direct bearing on the interpretation of Health and Safety Code section 1278.5, which is structured differently from the Labor Code provision that was construed in Lawson.” (Id. at pp. 916–917.) Notably, the court added that “neither Scheer nor the Regents contend that Lawson altered California law” on this point — so it reviewed the ruling “under the McDonnell Douglas framework on which the Regents based their motion.” (Id. at p. 917.)

… and under it, Scheer’s dissection of the NOIT raised a triable issue of pretext. The governing standard came from Serri v. Santa Clara University (2014) 226 Cal.App.4th 830, 861 — the employee must produce “substantial evidence that the employer’s stated reasons were untrue or pretextual, or that the employer acted with a discriminatory animus” — and from Mamou v. Trendwest Resorts, Inc. (2008) 165 Cal.App.4th 686, 715: evidence “that the employer’s claimed reason is false—such as that it conflicts with other evidence, or appears to have been contrived after the fact—will tend to suggest that the employer seeks to conceal the real reason for its actions,” and while a fact finder may not impose liability “solely because [the stated reasons] are found wanting,” it “can take account of manifest weaknesses in the cited reasons.” (Scheer, supra, 76 Cal.App.5th at pp. 917–918.) The court then walked the NOIT, clause by clause, against the record. The “needs of the department” recital: its own drafter, Samuels, testified he “would refer basically to the rest of the letter” and to “the termination language in the person[nel] policies,” permitting the inference the phrase “was merely boilerplate language drawn from a personnel manual.” (Id. at p. 918.) “[P]oor performance”: contradicted by twelve years of “accolades, positive feedback, promotions,” maximum merit raises, and a criticism-free July 2015 evaluation — facts the Regents did not dispute, dismissing them as “Immaterial,” a characterization the court found “not well taken” because “Scheer’s undisputed evidence showed that he unfailingly received excellent evaluations over a 12-year period, and no one ever advised him of any shortcomings or deficiencies that were asserted in the NOIT.” (Id. at pp. 918–919.) “[A] problematic presence within the Department”: NOIT signatory Binder himself testified, “I did not think he was a problematic presence within the Department,” and indicated he had been reluctant to sign the NOIT because he disagreed with its content. (Id. at pp. 919–920.) The NOIT’s claim that Scheer’s hospital responsibilities had previously been removed: controverted by Scheer’s declaration that he was never so advised and by his September 2015 objectives, approved by Braun, which “specifically identified his goals for clinical lab oversight.” (Id. at p. 920.) The “overly aggressive” negotiations criticism: undercut by Binder and Braun’s own May 13, 2015 e-mail celebrating an agreement that “more than doubled” the department’s medical-directorship valuation “to $5.2 M” and crediting “the assiduous work of Arnie Scheer” — an e-mail that “calls into question the veracity” of the NOIT. (Ibid.) The China-laboratory criticism: refuted by the fiscal year 2015 evaluation crediting “100% of goal … obtained by implementing other revenue enhancement opportunities such as … opening of joint venture with CTI in Shanghai, China.” (Id. at pp. 920–921.)

The trial court’s contrary rationales failed. Its dismissal of the evaluations as “mere ‘checklists’” was “incorrect because the evaluation forms included a field for comments to be entered,” and it was undisputed the evaluations “were unfailingly excellent.” (Scheer, supra, 76 Cal.App.5th at p. 921.) Hicks — where general compliments did not controvert evidence of a specific anchoring deficiency — was “not on point,” because Scheer’s evidence directly contradicted the NOIT’s stated reasons. (Ibid.) And the temporal-proximity rationale mistook the record: “Scheer’s evidence of pretext went far beyond a showing of temporal proximity,” combining falsity evidence with “his reports concerning patient safety, his stellar record up to his date of termination and the temporal proximity between his protected conduct and the employer’s adverse action.” (Id. at pp. 921–922.) “Based on all the above, the trier of fact could determine that the Regents’ stated reasons, as set forth in the NOIT, were untrue and were a pretext for retaliation.” (Id. at p. 921.)

Significance

Scheer is the decision that turned Lawson from a Labor Code holding into a general methodology. Its statute-by-statute map is now the starting point for any California whistleblower case involving multiple theories: (1) Labor Code section 1102.5 claims are governed by section 1102.6’s two-step framework; (2) CWPA claims by University of California employees under Government Code section 8547.10 — part of the scheme whose exhaustion architecture the Supreme Court examined in Miklosy v. Regents of University of California (2008) 44 Cal.4th 876 — follow the same framework because subdivision (e) “mirrors” section 1102.6; and (3) Health and Safety Code section 1278.5 claims, which carry their own 120-day rebuttable presumption and no exhaustion prerequisite (see Satyadi v. West Contra Costa Healthcare District (2014) 232 Cal.App.4th 650), remain under McDonnell Douglas. (Scheer, supra, 76 Cal.App.5th at pp. 914–917.) The mirrored-text reasoning invites extension: other CWPA provisions containing the same contributing-factor/clear-and-convincing structure — most obviously the provisions governing state and CSU employees — stand on the same footing, though Scheer decides only section 8547.10.

Equally important is the decision’s procedural teaching about who bears the cost of a framework change. The court held that a summary judgment motion built on McDonnell Douglas fails the moving party’s threshold burden on a claim governed by section 1102.6 — the defect is not cured by the opponent’s silence, because the moving burden is assessed “before the court’s evaluation of the opposing party’s papers.” (Scheer, supra, 76 Cal.App.5th at pp. 914–915.) Contrast Vatalaro v. County of Sacramento (2022) 79 Cal.App.5th 367, decided weeks later, where the Third District — after supplemental briefing — affirmed a summary judgment litigated below under the same wrong framework because the employer’s undisputed evidence satisfied section 1102.6’s higher standard anyway. The decisions are reconcilable but stand in visible tension: Scheer confines review to “the motion the Regents actually made,” while Vatalaro tested the record itself against the correct standard. Which path an appellate court takes may determine the outcome of every transition-era case — and, prospectively, the lesson for movants is absolute: brief the statutory framework or lose the motion. Finally, the pretext analysis under section 1278.5 is a model of its genre — a clause-by-clause impeachment of the termination letter using the employer’s own evaluations, commendations, drafter testimony, and a signatory’s disavowal — and it supplies the practical blueprint for defeating summary judgment whenever a paper reason conflicts with a paper record.

Key quotes

“While Lawson did not discuss Government Code section 8547.10, that statute contains nearly identical language to the language analyzed by our Supreme Court. We therefore conclude that Lawson’s legal framework applies to Scheer’s Government Code claim as well.” (Scheer, supra, 76 Cal.App.5th at p. 908.)

“Because the moving papers failed to employ the applicable framework prescribed by Labor Code section 1102.6, the Regents failed to meet their initial burden in moving to summarily adjudicate the second cause of action. Their motion as to the second cause of action should therefore have been denied.” (Scheer, supra, 76 Cal.App.5th at p. 914.)

“Based on all the above, the trier of fact could determine that the Regents’ stated reasons, as set forth in the NOIT, were untrue and were a pretext for retaliation.” (Scheer, supra, 76 Cal.App.5th at p. 921.)

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Practice pointer

Open questions

First, the mirrored-text holding is expressly limited to Government Code section 8547.10; whether the CWPA provisions governing other public workforces — which share the contributing-factor/clear-and-convincing structure — receive the same treatment awaits a published holding, though Scheer’s reasoning points one way. Second, the continued vitality of McDonnell Douglas for Health and Safety Code section 1278.5 rests in part on party positioning: the court noted both that section 1278.5 “is structured differently” from the Labor Code provision and that “neither Scheer nor the Regents contend[ed]” Lawson changed the rule (Scheer, supra, 76 Cal.App.5th at p. 917) — leaving room for a future litigant to argue the framework question afresh, particularly as to how the statute’s built-in 120-day presumption interacts with the borrowed federal test. Third, Scheer does not resolve when an appellate court should test the record against the correct framework itself rather than reverse for a new motion — the path Vatalaro took to affirm just weeks later — so the consequences of a framework error remain forum-dependent. Fourth, because the court reversed on the moving papers, it expressed no view on whether Scheer’s evidence would satisfy the contributing-factor step, or whether defendants could carry the clear-and-convincing same-decision burden, under sections 1102.6 and 8547.10(e) on remand. (Id. at pp. 915–916.)