Metropolitan News-Enterprise


Friday, November 18, 2011


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C.A. Upholds Wrongful Termination Verdict for Former Los Angeles Housing Authority Attorney


By SHERRI M. OKAMOTO, Staff Writer


The Court of Appeal for this district yesterday upheld a jury verdict in favor of a former attorney for the Housing Authority of the City of Los Angeles on her wrongful termination claim.

Div. Eight explained Ada Cordero-Sacks, now in private practice in Encino, could sue the authority under the False Claims Act for retaliating against her for performing her job duties when her investigation cast suspicion upon the agency’s president and CEO.

Cordero-Sacks was hired in in October 2006 to work in the authority’s Office of Internal Control, which investigates internal misconduct and fraud. The following year, the director of the authority’s technical services department, Victor Taracena, fell under suspicion that he was awarding contracts to unqualified corporations that he had secretly set up with family members. 

In May 2007, Rudolf Montiel, who was the authority’s president and chief executive officer, authorized the Office of Internal Control to investigate Taracena. The office shortly thereafter discovered Taracena had steered over $800,000 in contracts to corporations his family controlled.

During the course of this investigation, information surfaced that may have suggested Montiel was involved in Taracena’s fraud, as Montiel’s brother was related by marriage to a man named Gustavo Valdiva, which was the name of one of Taracena’s accomplices.

As part of the office’s investigation, Cordero-Sacks in August 2007 conducted an on-line search of Montiel’s relative using the Choicepoint commercial database. The office subsequently discovered that the relative and Taracena’s accomplice were different men.

In October 2007, the authority fired Cordero-Sacks, and she later sued the agency, asserting she had been fired because she had participated in investigating Taracena’s misuse of the authority’s funds. She claimed a cause of action for wrongful termination in violation of public policy and for violation of the statutory prohibition against retaliatory discharge in California’s False Claims Act.

Los Angeles Superior Court Judge John P. Shook granted summary adjudication in favor of the authority on Cordero-Sacks’s cause of action for wrongful termination in violation of public policy because that cause of action cannot lie against a public entity. 

He rejected, however, the authority’s assertion that Cordero-Sacks’ duty to maintain the confidentiality of her attorney-client communications with authority personnel made it impossible for her to prove the authority unlawfully discharged her, and allowed her claim for retaliatory discharge under the False Claims Act to be decided by a jury.

The jury returned a special verdict in her favor, finding she acted lawfully when she conducted the Choicepoint searches in furtherance of a False Claims Act action, and the authority would not have fired her but for those searches. She was awarded $98,889 in past economic damages, $330,000 in future economic losses, and $10,000 in past noneconomic loss.

Writing for the appellate court, Justice Laurence D. Rubin acknowledged that the False Claims Act prohibits a “person” from defrauding the government of money, property, or services by submitting to the government a “false or fraudulent claim” for payment, and that a governmental agency is not a “person” under the act.

But, he said, the judgment in this case rested on the authority’s liability as an employer under the False Claims Act’s prohibition against retaliatory discharge, which states that an “employer” cannot retaliate against an employee who assists in the investigation or pursuit of a false claim.

Rubin rejected the agency’s argument that the term “employer” in the retaliatory discharge provision is a subset of a “person” who can be liable for making a false claim, so that only employers who are “persons” can be liable for retaliatory discharge. 

“The Legislature presumably intended to target different malefactors when it used the word ‘person’…compared to its use of the word ‘employer,’ ” the  justice reasoned.

He also said the act’s retaliation provision applies not only to qui tam actions but to false claims in general, so Cordero-Sacks did not have to have been pursuing a qui tam action when she conducted the Choicepoint searches. 

“[I]t was sufficient that she was investigating Victor Taracena for what might have been the Authority’s false claim action,” Rubin concluded.

Justices Madeleine Flier and Elizabeth A. Grimes joined Rubin in his decision.

Charles E. Slyngstad and Sanaea H. Daruwalla of Burke, Williams & Sorensen, along with David L. Brandon of Morris Polich & Purdy were counsel for the housing authority. Cordero-Sacks was represented by Manhattan Beach attorney Craig T. Byrnes and Lee R. Feldman and Gina Browne of The Feldman Law Firm.

The case is Cordero-Sacks v. Housing Authority of the City of Los Angeles, 11 S.O.S. 6196.


Copyright 2011, Metropolitan News Company