Metropolitan News-Enterprise


Wednesday, November 30, 2016


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LAUSD’s ‘Chief Risk Officer’ Was Not a ‘Whistleblower’—C.A.

Justices Affirm Judge Fruin’s Dismissal of Action by Former Employee Who Complained That Miramonte Sexual Abuse Cases Were Being Handled Incompetently, and Lost Job


By a MetNews Staff Writer


The Los Angeles Unified School District’s decision not to renew the contract of a man hired as chief risk officer—with a prime responsibility being the minimizing of liability for the sexual abuse of pupils at Miramonte Elementary School—was not violative of a statute barring retaliation against whistleblowers, the Court of Appeal for this district held yesterday.

Div. Eight, in an unpublished opinion by Justice Elizabeth Grimes, said that Los Angeles Superior Court Judge Richard Fruin made the right call in sustaining a demurrer without leave to amend to the second amended complaint.

Appealing the ensuing judgment of dismissal, plaintiff Gregg Breed insisted that the non-renewal of his contract was a breach of Labor Code § 1102.5 which forbids reprisals against an employee who discloses to a governmental agency a violation of a state or federal law or regulation.

Grimes and her colleagues agreed with Fruin that Breed never expressly pointed to a belief that the state constitutional ban on gifts of public funds was being violated, and that his mere questioning of policies did not entitle him to the protection of the whistleblower statute.

Allegations of Complaint

Breed, who had worked in the risk management field for more than 30 years, was hired by LAUSD in April, 2012, at a salary of $14,438 a month, plus benefits. According to his Superior Court complaint, he “immediately began to notice corruption and cronyism” in the Office of General Counsel.

A list of approved outside counsel—termed the “defense panel”—had been developed. Those on the list had experience in sexual assault and molestation cases.

Breed alleged that Gregory McNair, the school district’s chief business and compliance counsel, acting at the direction of General Counsel David Holmquist, “selected outside counsel” to handle the cases (totaling nearly 200) filed on behalf of Miramonte students, hiring them “based on his personal relationships rather than using the Defense Panel criteria.”

This included, he said, engaging the services of Thomas Delaney of Sedgwick, LLP—a firm that “had once employed McNair”—and Sean Andrade of Baute, Crochetiere and Maloney LLP, who “was a law school classmate of McNair’s.”

Breed noted:

“Neither firm had experience in the area of sexual assault and molestation cases.”

While those on the panel, with the requisite experience, were paid  $175 an hour,” Delaney received $455 an hour and Andrade got $390 an hour, the plaintiff alleged. He termed it “gross mismanagement of public funds” for lawyers being paid at the $175 an hour “to teach a training session to Delaney, Andrade and others about sexual assault and molestation cases.”

Uttered Complaints

In early October of 2012, Breed declared, he complained to McNair and to Chief Operating Officer Enrique Boull’t about the hiring of counsel who weren’t on the list and consequently received a negative performance review from Bou’llt and was barred from attending the final mediation session.

At that February, 2013 session, he declared, LAUSD “settled a large group of Miramonte cases at a flat rate of $470,000 for each claimant, contrary to the individualized approach” he had formulated.

(LAUSD agreed on that occasion to 63 settlements totaling $30 million; in November of 2014, to reached a $139 million settlement with the remaining plaintiffs.)

Breed said he found that several errors had been made in the settlements, such as agreeing to pay $470,000 to a child who was not in the class taught by the abuser, Mark Berndt, and did not participate in after-school activities, and the allotting the same amount to a girl who was merely touch on the shoulder by Berndt on a single occasion.

(He alleged that Holmquist made a public statement that the settlements would be paid by insurance companies, which he remarked was “designed to diminish the shock, should it ever be discovered that students who never even encountered the abuser were handed $470,000 because of a settlement strategy developed by one of Holmquist’s subordinates.” Breed asserted that, in fact, the insurers might not pay, in light of LAUSD mishandling matters, including not including the insurers at the mediation.) 

“On or about April 9, 2013, Plaintiff was informed by Boull’t that his employment contract would not be renewed,” Breed averred.

His $10 million lawsuit followed.

Gift of Funds

Breed’s theory was that he had blown the whistle on the gift of public funds to undeserving persons, in violation of Art. XVI, §6 of the California Constitution.

He said the reason for his exclusion from the mediation was that McNair “knew that Plaintiff would object to this non-specific and fiscally irresponsible approach, and bring the matter to the attention of the LAUSD Board out of concern that McNair was engaging in improper governmental conduct, making a gift of public funds as to certain of the Miramonte claimants and subverting the Board’s direction.”

Grimes said in yesterday’s opinion:

“[A]s the trial court pointed out, plaintiff does not allege that, when he complained about mismanagement and lump sum payments on marginal claims, he told his superiors that he believed their actions violated the constitution (or any other state or federal law). Because he did not do so, he cannot now contend he engaged in activity protected by section 1102.5.”

The jurist quoted from Jordan v. Department of Motor Vehicles (2002) 100 Cal.App.4th 431 that “settlement of a good faith dispute between the state and a private party is an appropriate use of public funds and not a gift” while use of public funds to settle “a wholly invalid claim…serves no public purpose and violates the gift clause.”

She wrote:

“Here, plaintiff contends ‘there can be no question that [defendant’s] decision to settle meritless cases constituted a violation’ of the constitutional prohibition on gifts of public funds.  Putting aside plaintiff’s failure to so advise his superiors at the time, we point out that the complaint itself alleges that at the mediation, defendant ‘settled a large group of Miramonte cases at a flat rate of $470,000 for each claimant, contrary to the individualized approach’ plaintiff had developed. It is not the province of a court to require a government agency to follow an ‘individualized approach’ rather than a flat rate approach to dispose of multiple claims. Even if this results in one or more excessive payments among the more than 60 claims settled—all pursuant to minors’ compromises approved by the Superior Court—these circumstances cannot reasonably be thought to constitute ‘[t]he compromise of a wholly invalid claim’ within the meaning of the principle explained in Jordan.”

The case is Breed v. Los Angeles Unified School District, B263705.

Arnold P. Peter and Melinda D. Minoofar of Peter Law Group represented Breed and Linda B. Hurevitz, Christine T. Hoeffner and Rami A. Yomtov of Ballard Rosenberg Golper & Savitt were counsel for LAUSD.

Berndt in November 2013 pled no contest to sexual abuse of 23 students and was sentenced to 25 years in prison.


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