Veverka v. Department of Veterans Affairs

Facts

The California Department of Veterans Affairs (CalVet) “is a state agency tasked with operating veterans homes within California.” (Veverka, supra, 102 Cal.App.5th at p. 168.) During the relevant period its Undersecretary was Russell Atterberry, who reported to Secretary Vito Imbasciani. In 2014, the Governor appointed Donald Veverka administrator of the veterans home in Yountville, where he “oversaw all aspects of the home’s operation, including staffing, budgeting, and maintaining the home’s compliance with applicable laws and regulations.” (Ibid.) He served until May 2017, when the Governor’s Office removed him. (Ibid.)

In the period before his removal, Veverka “made reports to an independent state agency and to his superiors at CalVet regarding safety and health issues at the Yountville home, such as lack of heating and air-conditioning and inoperable elevators, and about his belief that CalVet was violating federal law,” and “reiterated many of his concerns to Imbasciani in May 2017.” (Veverka, supra, 102 Cal.App.5th at p. 168.) “A few days later, Atterberry ‘made the calls’ to the Governor’s Office to recommend Veverka’s removal, and the Governor’s Office informed Veverka the next day that he was being removed.” (Ibid.)

Atterberry attributed his recommendation to Veverka’s “poor management” of the home: Veverka had entered expensive “emergency contracts” for numerous repairs “because of either failed—or expired contracts or not planning for—not planning ahead for those needs”; he was unprepared for, and “dismissive” at, meetings for a major project; and he failed to prioritize reproducing documentation about the home that the federal Department of Veterans Affairs had lost — documentation the home needed to receive federal funding. (Veverka, supra, 102 Cal.App.5th at p. 168.)

Procedural history

In October 2018, Veverka sued CalVet for violation of Labor Code section 6310, unlawful whistleblower retaliation under Labor Code section 1102.5, and violation of Health and Safety Code section 1278.5, “alleging that CalVet wrongfully terminated him for reporting his concerns about patient and employee safety and illegal conduct,” and seeking damages, injunctive relief, a declaration that CalVet violated section 1102.5, attorney’s fees, and costs. (Veverka, supra, 102 Cal.App.5th at p. 168.)

The case was tried to a jury, which found for CalVet on all claims. On the section 1102.5 claim, the special verdict traced the two-step framework of Labor Code section 1102.6: the jury found that some of Veverka’s reports were protected disclosures and that those disclosures “were ‘contributing factor[s]’ in CalVet’s recommendation to remove him as administrator of the Yountville home. Nonetheless, the jury found in favor of CalVet because it had proved by clear and convincing evidence that it would have made the same recommendation at that time ‘for legitimate, independent reasons.’” (Veverka, supra, 102 Cal.App.5th at pp. 168–169.) The trial court entered judgment for CalVet. (Id. at p. 169.)

Veverka then moved to vacate the judgment under Code of Civil Procedure section 663, arguing that the jury’s contributing-factor findings entitled him to declaratory relief, injunctive relief, and reasonable attorney’s fees and costs notwithstanding the same-decision finding — the remedial architecture Harris had established for FEHA mixed-motive cases. (Veverka, supra, 102 Cal.App.5th at p. 169.) The trial court denied the motion, “concluding Harris’s analysis was specific to the FEHA and did not extend to section 1102.5 claims, which are evaluated under the procedures set forth in section 1102.6.” (Ibid.) Veverka appealed; CalVet filed a protective cross-appeal advancing alternative grounds for affirmance. (Id. at p. 167.) On appeal, Veverka pressed only declaratory relief and fees and costs, apparently abandoning his claim for injunctive relief. (Id. at p. 169, fn. 2.) Because the motion turned on the interpretation of sections 1102.5 and 1102.6, review was de novo. (Id. at pp. 169–170.)

Issue

When a section 1102.5 plaintiff proves that protected disclosures were a “contributing factor” in an adverse employment action, but the employer carries its burden under section 1102.6 to prove by clear and convincing evidence that it would have taken the same action “for legitimate, independent reasons,” is the employer’s same-decision showing a complete defense to liability — or does it merely limit remedies, leaving the employee entitled to declaratory relief and reasonable attorney’s fees and costs on the model of Harris v. City of Santa Monica’s FEHA rule? (Veverka, supra, 102 Cal.App.5th at pp. 167, 169.)

Holding

Reasoning

The Harris baseline: a judicially crafted partial defense under the FEHA. The court began by taking Harris seriously on its own terms. The FEHA makes it “an unlawful employment practice” to take an adverse action against a person “because of” a protected characteristic (Gov. Code, § 12940), and courts evaluating discrimination claims frequently borrow the three-part test of McDonnell Douglas Corp. v. Green (1973) 411 U.S. 792: prima facie case, legitimate reason, pretext. (Veverka, supra, 102 Cal.App.5th at p. 170.) In Harris, the Supreme Court held that test “inapplicable to cases where a mix of discriminatory and legitimate reasons motivated the employer’s decision” and construed the phrase “because of” to fix the causation standard for mixed-motive cases. (Ibid.) Confronting three candidate meanings — but-for cause, substantial factor, or simply “a motivating factor” — Harris settled on “substantial motivating factor,” and then calibrated remedies to the FEHA’s twin purposes of restoring aggrieved persons and deterring unlawful practices. (Id. at pp. 170–172.) The result was a two-sided rule: a same-decision showing bars damages, backpay, and reinstatement (any more would confer “an unjustified windfall”), but it “is not a complete defense to liability when the plaintiff has proven that discrimination on the basis of a protected characteristic was a substantial factor motivating the adverse employment action” — declaratory relief, injunctive relief, and reasonable attorney’s fees may still follow, because “it would tend to defeat the preventive and deterrent purposes of the FEHA to hold that a same-decision showing entirely absolves an employer of liability when its employment decision was substantially motivated by discrimination.” (Id. at p. 171, quoting Harris v. City of Santa Monica, supra, 56 Cal.4th at pp. 225, 233.)

Why Harris does not travel: the Legislature “has spoken” in section 1102.6. Turning to the whistleblower scheme, the court situated section 1102.6 historically: Section 1102.5 “reflects the broad public policy interest in encouraging workplace whistle-blowers to report unlawful acts without fearing retaliation” (Veverka, supra, 102 Cal.App.5th at p. 172, quoting Green v. Ralee Engineering Co. (1998) 19 Cal.4th 66, 77), and the Legislature added section 1102.6 in 2003 in response to “the recent spate of false business reports and other illegal activity by Enron, WorldCom and others.” (Ibid.) As Lawson v. PPG Architectural Finishes, Inc. (2022) 12 Cal.5th 703 established, section 1102.6 “does not merely codify the same decision defense and specify the parties’ burdens of proof; it sets forth ‘the governing framework for the presentation and evaluation of whistleblower retaliation claims brought under section 1102.5’” — the “applicable substantive standards and burdens of proof for both parties” and a “complete set of instructions” for adjudicating these claims. (Id. at p. 173, quoting Lawson, at pp. 712, 718.) “This alone distinguishes Harris”: there, “[i]n the absence of a procedural statute like section 1102.6, the Harris court relied on the specific language and purposes of the FEHA to determine the level of causation required”; here, “by enacting section 1102.6, the Legislature ‘has spoken’ about the exact standards to be used.” (Id. at pp. 173–174.)

Plain language: “civil action,” without carve-outs. The statute’s text supplied the second, independent ground. Section 1102.6 “begins by stating that its two-step framework applies in a ‘civil action,’ without limitation” — and a “civil action” includes one for declaratory relief. (Veverka, supra, 102 Cal.App.5th at p. 174, citing Code Civ. Proc., § 30.) “There is no language in section 1102.6 exempting certain claims for relief.” (Ibid.) Once the employee makes the contributing-factor showing, “the statute simply shifts the burden to the employer” — and if the employer carries it, “a plaintiff is barred from all relief.” (Ibid.) For that proposition the court invoked Vatalaro v. County of Sacramento (2022) 79 Cal.App.5th 367, 387–388, which had affirmed summary judgment for an employer on a section 1102.6 same-decision showing. (Ibid.)

A “contributing factor” finding is not itself a statutory violation. Veverka’s premise was that the jury’s step-one findings established that CalVet had violated section 1102.5, leaving only remedies to be decided. The court dismantled that premise textually. Nothing in the whistleblower statutes indicates “the Legislature intended a ‘contributing factor’ on its own to be a sufficient basis for relief in a civil action”: the threshold is deliberately low — a contributing factor “includes ‘any factor, which alone or in connection with other factors, tends to affect in any way the outcome of the decision.’” (Veverka, supra, 102 Cal.App.5th at p. 174, quoting Lawson, supra, 12 Cal.5th at p. 714.) Equating “retaliation ‘for’” a disclosure (§ 1102.5(b)) with a mere contributing factor (§ 1102.6) “would render the ‘contributing factor’ language redundant,” violating the canon that courts “must interpret statutes to avoid redundancy and give significance to each word and phrase.” (Ibid., quoting People v. Jennings (2019) 42 Cal.App.5th 664, 672.) Moreover, “both steps in section 1102.6 refer to the employer’s ‘prohibited action’ as ‘alleged’” — the accusation remains an allegation until the second step resolves it. (Ibid.) Strikingly, the court found that “Harris undermines Veverka’s position”: Harris insisted on a substantial motivating factor precisely so that “liability will not be imposed based on evidence of mere thoughts or passing statements unrelated to the disputed employment decision.” (Id. at p. 175.) By parity of reasoning, “we find it highly unlikely the Legislature intended to impose liability on employers whenever a protected disclosure may have had minimal influence on their employment decisions, as this could easily lead to liability based on nothing more than passing remarks unrelated to the disputed employment decision.” (Ibid.) The second step exists, the court explained, to allow “an inference of a ‘direct causal link’” between disclosure and adverse action before liability attaches. (Ibid., quoting Crawford v. Dist. of Columbia (D.C. Cir. 2006) 891 A.2d 216, 221.) A footnote added that section 1102.6’s legislative history “seems to support” the complete-defense reading: the committee analyses of Senate Bill No. 777 (2003–2004 Reg. Sess.) describe a framework “more protective of whistleblowers while still allowing an employer to avoid liability on a same decision defense,” under which “the employer may nevertheless prevail.” (Id. at p. 175, fn. 3.)

The reply-brief arguments: section 98.7 and the Sarbanes-Oxley omission. Two final arguments failed. First, Veverka pointed to Labor Code section 98.7 — the Labor Commissioner complaint procedure — to suggest that “the only remedies not available to an employee due to the same decision defense would be emotional distress damages and punitive damages”; the court answered that “nothing in section 98.7 suggests it was intended to limit the effect of the employer’s same decision defense in a civil action brought pursuant to section 1102.5.” (Veverka, supra, 102 Cal.App.5th at pp. 175–176.) Second, Veverka observed that the Sarbanes-Oxley Act’s parallel framework expressly provides that “‘[r]elief may not be ordered’” when the employer makes a same-decision showing (49 U.S.C. § 42121(b)(2)(B)(iv)), and argued the Legislature’s failure to copy that language was “intentional.” (Id. at p. 176.) The court found the legislative history “not ‘unambiguous’” on the point — the bill’s sponsor had described the defense as “borrowed from federal law, including the Sarbanes-Oxley act” — and reiterated that “a single canon of construction cannot ‘defeat the underlying legislative intent otherwise determined.’” (Id. at p. 176 & fn. 4, quoting Ferra v. Loews Hollywood Hotel, LLC (2021) 11 Cal.5th 858, 879.) The complete-defense reading, by contrast, “is consistent with [the statute’s] plain language and gives effect to every phrase and word, including ‘alleged’ and ‘contributing factor,’” while preserving the expanded protections Lawson recognized — a “heightened burden” on the employer and a lesser one on the employee. (Ibid., citing Lawson, supra, 12 Cal.5th at pp. 712, 716.)

Application. “Because Veverka does not challenge the jury’s findings that CalVet would have made the same recommendation to remove him for legitimate, independent reasons, he is not entitled to declaratory relief on his section 1102.5 claim. He is also not entitled to attorney’s fees and costs” — the fee provision authorizes fees only for “a plaintiff who brings a successful action for a violation of these provisions.” (Veverka, supra, 102 Cal.App.5th at pp. 176–177, quoting § 1102.5, subd. (j), italics omitted.) The trial court therefore properly denied the section 663 motion, and CalVet’s protective cross-appeal — urging alternative grounds for affirmance — was dismissed as moot. (Id. at p. 177.)

Significance

Veverka completes a doctrinal arc that began with Lawson. Lawson held that section 1102.6, not McDonnell Douglas, governs section 1102.5 claims; Vatalaro showed the framework operating at summary judgment, where a clear-and-convincing same-decision showing on undisputed evidence entitles the employer to judgment; Veverka resolves what the same-decision finding means after a full trial: total victory for the employer. The decision draws a sharp — and now express — asymmetry between California’s two great anti-retaliation regimes. A FEHA plaintiff who proves discrimination was a substantial motivating factor retains declaratory and injunctive relief and a pathway to fees even against a successful same-decision defense under Harris; a section 1102.5 plaintiff who proves retaliation was a contributing factor recovers nothing at all once the employer carries its section 1102.6 burden. The trade-off is coherent on the court’s account — the whistleblower plaintiff enjoys a lower causation threshold and forces the employer to a higher standard of proof, but the second step is dispositive of liability itself, not merely of remedies. (Veverka, supra, 102 Cal.App.5th at pp. 173–176.)

The opinion also carries practical weight on fees. Section 1102.5, subdivision (j), keys fee entitlement to “a successful action,” and Veverka reads a same-decision loss as the opposite of success — foreclosing the argument, viable under the FEHA after Harris, that establishing unlawful motivation alone can support a fee award. (Veverka, supra, 102 Cal.App.5th at pp. 176–177.) Two cautions attend the decision’s reach. It construes the defense “in a civil case”; how the same-decision principle operates in Labor Commissioner proceedings under section 98.7 was not before the court. And the Supreme Court’s denial of review was not unanimous — Justice Evans would have granted the petition — a signal, together with the case’s publication upon request after an initially unpublished filing, that the remedial question retains certworthy interest. Until the Supreme Court or the Legislature says otherwise, however, Veverka is the controlling published authority on remedies after a same-decision finding in whistleblower cases.

Key quotes

“Thus, a straightforward reading of section 1102.6 is that if the jury finds the employer satisfies its second-step burden in a civil case, a plaintiff is barred from all relief.” (Veverka, supra, 102 Cal.App.5th at p. 174.)

“An interpretation of section 1102.6 that precludes liability where an employer has met its burden at the second step of the statute’s framework is consistent with its plain language and gives effect to every phrase and word, including ‘alleged’ and ‘contributing factor.’” (Veverka, supra, 102 Cal.App.5th at p. 176.)

“[W]e find it highly unlikely the Legislature intended to impose liability on employers whenever a protected disclosure may have had minimal influence on their employment decisions, as this could easily lead to liability based on nothing more than passing remarks unrelated to the disputed employment decision.” (Veverka, supra, 102 Cal.App.5th at p. 175.)

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Practice pointer

Open questions

Veverka settles the civil-action question but leaves edges undefined. First, the opinion construes section 1102.6’s application “in a civil case”; it holds only that section 98.7 does not “limit the effect of the employer’s same decision defense in a civil action,” expressly leaving unexamined how the defense operates in administrative proceedings before the Labor Commissioner. (Veverka, supra, 102 Cal.App.5th at pp. 175–176.) Second, because Veverka abandoned his injunctive-relief claim on appeal (id. at p. 169, fn. 2), the holding formally addresses declaratory relief and fees; the court’s “barred from all relief” reasoning plainly encompasses injunctions, but no published holding yet applies it to one. Third, the court repeatedly emphasized that Veverka “does not challenge the jury’s findings” (id. at p. 176) — the decision says nothing about the standards governing a sufficiency challenge to a same-decision verdict, an issue that will now bear most of the appellate weight in these cases. Fourth, CalVet’s protective cross-appeal — asserting alternative legal grounds for affirmance — was dismissed as moot, leaving those questions unresolved. (Id. at p. 177.) Finally, the dissent from denial of review (Evans, J.) and the contrast with the express bar-on-relief language Congress used in Sarbanes-Oxley (49 U.S.C. § 42121(b)(2)(B)(iv)) mark this as a candidate for either Supreme Court review in a future case or a legislative response specifying the remedial consequences of a same-decision showing. (Id. at p. 176.)