Opinion

Dept. of Human Resources v. Internat. Union of Operating Engineers

Court: California Court of Appeal
Filed: Dec 17, 2020
Status: Published
Cited by: 0 cases
Authority: More cited than 14.6%

The opinion

Filed 12/17/20

CERTIFIED FOR PARTIAL PUBLICATION*

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIFTH APPELLATE DISTRICT

DEPARTMENT OF HUMAN RESOURCES et

al., F078825

Plaintiffs and Appellants, (Super. Ct. No. BCV-17-102795)

OPINION

INTERNATIONAL UNION OF OPERATING

ENGINEERS,

Defendant and Respondent.

APPEAL from a judgment of the Superior Court of Kern County. Linda S.

Etienne, Temporary Judge.

Frolan R. Aguiling, Linda A. Mayhew, Sandra L. Lusich and Chris E. Thomas for

Plaintiffs and Appellants.

The Myers Law Group, Adam N. Stern and D. Smith for Defendant and

Respondent.

-ooOoo-

* Pursuant to California Rules of Court, rules 8.1105(b) and 8.1110, this opinion is

certified for publication with the exception of part V. of the Discussion.

The State of California, through the California Department of Human Resources

(the State), entered into a “Memorandum of Understanding” (MOU) with the

International Union of Operating Engineers (the Union) regarding terms and conditions

of employment for certain state employees classified as bargaining unit 12. The MOU,

under article 16.7(G), provided that “materials of a negative nature” placed in an

employee’s personnel file shall, at the request of the employee, “be purged … after one

year.” An exception to this provision stated that it did not apply to “formal adverse

actions” as defined in the Government Code1 or to “material of a negative nature for

which actions have occurred during the intervening one year period.” In the present

dispute, an employee (B.H.) in bargaining unit 12 requested that negative material

retained in his personnel file for more than one year be purged. A number of months

later, the state agency where B.H. is employed, the California Department of Water

Resources (DWR), took formal disciplinary action against B.H. referred to as a Notice of

Adverse Action (NOAA). The discipline imposed in the NOAA consisted of a one-year

salary reduction. The NOAA was based on, and attached copies of, counseling and

corrective memoranda of a negative nature from several years past relating to B.H.’s job

performance history at DWR. A settlement was later reached which reduced the

discipline imposed under the NOAA.2

However, the settlement with B.H. did not end the controversy. The Union filed a

grievance claiming that DWR violated article 16.7(G) of the MOU by using purged

documents to support the adverse disciplinary action taken against B.H. The grievance

was ultimately submitted to an arbitrator for resolution, and the arbitrator agreed with the

Union’s position holding, based on the language of article 16.7(G), that documents

1 Government Code section 19570 defines an “adverse action” as a “dismissal,

demotion, suspension, or other disciplinary action.”

2 The outcome of that employee disciplinary matter is not at issue herein, and B.H.

is not a party to the present appeal.

coming under the operation of the file-purge provision should not have been used to

support the adverse action specified in the NOAA. As a remedy, the arbitrator directed

the State to cease and desist from further violation of article 16.7(G) of the MOU. In

response to the arbitrator’s award, the State and DWR (together the State) filed a petition

in the trial court under Code of Civil Procedure section 1285 to vacate or correct the

award on several grounds (the petition), including that the arbitrator’s interpretation of

article 16.7(G) of the MOU constitutes a violation of public policy relating to civil

service employment. The trial court found the State’s arguments unpersuasive; the

petition was denied, and the decision of the arbitrator was confirmed.

The State now appeals from the trial court’s order denying its petition to vacate or

correct the award. We agree with the State’s contention that the arbitrator’s interpretation

of the MOU is contrary to public policy—specifically, the public policy embodied in the

constitutional merit principle applicable to all civil service employment. Accordingly,

we reverse the trial court’s order on the petition and the ensuing judgment, and we

remand the matter to the trial court with instructions to enter a new order vacating the

award.3

FACTS AND PROCEDURAL HISTORY

Article 16.7 of the MOU

The MOU contains provisions relating to personnel and evaluation materials

contained in employees’ personnel files. Although the specific provision interpreted by

the arbitrator in this case is article 16.7(G), which we have underscored below, the

entirety of article 16.7 is helpful for purposes of context. Article 16.7 of the MOU states

as follows:

3 An arbitrator’s decision is often referred to as an “award,” even where no

monetary award is made. As used herein, the arbitration decision and award are

synonymous terms. For convenience, we sometimes refer simply to the “award.”

“16.7 Personnel and Evaluation Materials

“There will only be one official personnel file and normally one supervisory

working file regarding each employee and these files will be maintained as

follows:

“A. An employee’s official departmental personnel file shall be

maintained at a location identified by each department head

or designee.

“B. Information in an employee’s official departmental personnel

file shall be confidential and available for inspection only to

the employee’s department head or designee in connection

with the proper administration of the department’s affairs and

the supervision of the employee; except, however, that

information in an employee’s official departmental personnel

file may be released pursuant to court order or subpoena. An

affected employee will be notified of the existence of such a

court order or subpoena.

“C. Evaluation material or material relating to an employee’s

conduct, attitude, or service shall not be included in his/her

official personnel file without being signed and dated by the

author of such material. Before the material is placed in the

employee’s file, the department head or designee, where

possible, shall provide the affected employee an opportunity

to review the material, and sign and date it. A copy of

evaluation material relating to an employee’s conduct shall be

given to the employee.

“D. An employee and/or his/her authorized representative may

review his/her official personnel file and/or supervisory

working file during regular office hours. Where the official

personnel file is in a location remote from the employee’s

work location, reasonable arrangements will be made to

accommodate the employee.

“E. The employee with or without the assistance of their

authorized representative, shall have a right to insert in

his/her file reasonable supplementary material and a written

response to any items in the file. Such response shall remain

attached to the material it supplements for as long as the

material remains in the file.

“F. Any performance evaluation conducted of an employee who

is a participant in IUOE/State collective bargaining

negotiations shall recognize the employee’s frequent absence

from his/her State job and the impact of such absences on the

employee’s performance. This is not intended to abrogate the

right of the State to take disciplinary action against any

employee who happens to be involved in such collective

bargaining.

“G. Materials relating to an employee’s performance included in

the employee’s official departmental personnel file shall be

retained for a period of time specified by each department,

except that at the request of the employee, materials of a

negative nature shall be purged from any and all files after

one year.

This provision, however, does not apply to formal adverse

actions as defined in applicable Government Code sections or

to material of a negative nature for which actions have

occurred during the intervening one year period. Except that,

by mutual agreement between a department head or designee

and an employee, adverse action material may be removed.”

B.H. Exercises File-Purge Rights

B.H. reviewed his personnel file at DWR and requested that materials of a

negative nature be purged from his files. According to the arbitrator’s findings, B.H. did

this in 2014 and again in August 2015.

DWR’s Notice of Adverse Action

In a written NOAA dated March 17, 2016, DWR informed B.H. that adverse

action in the form of employee discipline would be imposed—specifically, a salary

reduction of 10 percent for a period of one year. The NOAA stated that the causes of the

disciplinary action included, among other things, inefficiency, inexcusable neglect of

duty, insubordination, dishonesty, discourteous treatment of the public or other

employees, and willful disobedience. A lengthy statement of facts supporting the

disciplinary action included acts or omissions of B.H. occurring between 2013 and the

end of 2015. For purposes of supporting the adverse action and demonstrating that B.H.

received progressive discipline, numerous counseling and corrective memoranda and

other documents containing negative material were referenced and copies were attached

to the NOAA. The issuance dates of the negative memoranda and documents ranged

from 2007 to 2015.

B.H. Appeals Adverse Action, Then Settles

On March 28, 2016, B.H. appealed the disciplinary action to the State Personnel

Board (SPB or the Board), which is the constitutional agency charged with enforcing the

civil service statutes and reviewing disciplinary actions on appeal. (See Cal. Const.,

art. VII, § 3, subd. (a).) Thereafter, DWR and B.H. reached an agreement to settle the

disciplinary action. In June 2016, the Board approved the parties’ settlement agreement.

In the settlement agreement, B.H. agreed to accept the disciplinary action, but with a

lesser penalty of a 10 percent salary reduction for six months, and he also waived his

right to challenge his disciplinary action in any other proceeding.

The Union Files a Grievance as Bargaining Representative

On April 1, 2016, the Union filed a grievance alleging that DWR violated article

16.7(G) of the MOU by relying on prior corrective and counseling memoranda to support

the NOAA issued to B.H. since the memoranda on file more than one year should have

been purged. The parties were unable to resolve the dispute, and the Union demanded

arbitration as provided under the MOU.

Arbitration Hearing

On May 23, 2017, the arbitration commenced between the Union and the State, the

two contracting parties to the MOU, being conducted at the DWR facility in Mettler,

California, before Arbitrator R. Douglas Collins. At the outset of the hearing, the parties

stipulated the arbitrator would decide the following limited issues: “Did the employer

violate Section 16.7 of the 2015–2020 bargaining unit MOU by using purged documents

to support adverse action specified in a notice of adverse action against [B.H.]? If so,

what is the appropriate remedy?” The arbitrator recognized the employer to be the State.

At the hearing, the State made several arguments that article 16.7(G) of the MOU

was not violated, including: (i) the situation came within the exception clause of article

16.7(G); (ii) the only files covered by article 16.7 are personnel and supervisory files, not

files necessary for other purposes such as making a record of progressive discipline or

other legal issues (e.g., discrimination claims); (iii) the interpretation urged by the Union

would prevent the State from being able to follow the progressive discipline model

required by the civil service system and would violate public policy.

The Union made several arguments in favor of its position that the State (through

DWR) violated the file-purge provision, including the following: (i) the language of

article 16.7(G) is clear that it applies to “any and all files” and not merely to certain kinds

of files; (ii) any other interpretation would make the promise illusory because the State

could simply retrieve the purged negative memoranda from another file to use them

against the employee; (iii) “purged” means it is to be completely removed and gone, not

simply placed in another file to be used against the employee at a later time.

At the arbitration hearing, B.H. and certain DWR employees testified. Other

evidence presented to the arbitrator included the MOU, excerpts from past MOU’s, the

NOAA with the exhibits attached thereto, the settlement agreement between B.H. and

DWR, and the Union’s grievance. After the arbitration hearing was completed, the

parties filed posthearing briefing in support of their respective positions. The parties’

posthearing briefs emphasized the same points each had argued at the hearing.

Arbitration Decision

The arbitrator’s decision was issued on August 18, 2017. The arbitrator found in

favor of the Union, concluding that the State violated article 16.7(G) of the MOU by

using purged documents to support adverse action specified in the NOAA against B.H.

The arbitrator so concluded based on what it held was the clear language of the MOU

requiring that documents containing negative material must be “purged” after one year at

the employee’s request from “any and all files” maintained by the State, not merely the

so-called working personnel file in the department to which the employee is assigned.

Given the clarity of the contractual provision, the arbitrator found the State’s reliance on

principles of civil service or progressive discipline to be irrelevant: “It is not uncommon

that parties to collective bargaining agreements agree therein that discipline may not be

considered if it is beyond a specified age, typically one to three years ….” As a remedy,

the State was ordered to “cease and desist” from violating article 16.7(G) of the MOU

“by failing or refusing to purge materials of a negative nature that are more than a year

old from any and all files maintained by the Employer upon request of the employee;

provided, however, that this requirement does not apply to formal adverse actions as

defined in applicable provisions of the California Government Code, specifically

Government Code [section] 19570 et seq.”

The State’s Petition to Vacate or Correct Arbitration Award

On December 5, 2017, the State filed its petition to vacate or correct the arbitration

award (the petition). In the petition, the State argued the award should be vacated by the

trial court because the interpretation given by the arbitrator to article 16.7(G) of the MOU

allegedly violates public policy by undermining state departments’ ability, as civil service

employers, to comply with the constitutional merit principle, including by impeding their

ability to take appropriate disciplinary action based on progressive discipline.

Additionally, the State argued the arbitrator’s interpretation of article 16.7 will interfere

with the Board’s constitutional duty to review disciplinary action. Finally, the State

argued in the petition that the arbitrator’s remedy exceeded the scope of his authority by

issuing a statewide cease and desist order.

Supporting Declarations

In further support for the petition, the State presented two declarations to the trial

court that were not introduced in the arbitration proceedings. One was the declaration of

Alvin Gittisriboongul, as chief counsel for the Board. In his declaration, Gittisriboongul

notes the importance of progressive discipline under civil service principles as applied by

the Board in reviewing disciplinary actions. Gittisriboongul then states: “However, if a

state department has purged its progressive discipline documentation from existence, a

state department will not be able to include such matters with its notice of adverse action,

as required by SPB regulations and precedent. This will make it less likely that the SPB

will be able to appropriately consider the progressive disciplinary measures the State

employer may have taken.” Additionally, Gittisriboongul’s declaration observed the

Board “has previously ruled that it may consider prior personnel actions even after they

have been removed from the employee’s official personnel file. (See, e.g., In the Matter

of the Appeal of J.H. (2003) SPB No. 03-05 and Jack Tolchin (1996) SPB Dec. No. 96-

04.)”

The second declaration presented in support of the petition was the declaration of

Jennifer Dong Kawate, the chief of the human resources office of DWR. According to

Kawate’s declaration, DWR employs approximately 3,400 individuals, including

approximately 633 individuals who belong to bargaining unit 12. She explains DWR is

required to follow the Board’s policy of applying progressive discipline in any

disciplinary actions it takes against its employees, and DWR employees have the right to

appeal disciplinary actions they receive to the Board. Kawate expresses the following

concerns in her declaration about the effect of the arbitration decision rendered in this

case: “If this Arbitration Award is allowed to stand, it will detrimentally impact the

ability of DWR to initiate and be successful with meritorious disciplinary actions. For

instance, if DWR cannot present appropriate evidence of progressive discipline to the

SPB, this will severely weaken DWR’s ability to demonstrate that a disciplined employee

has received prior notice of wrongdoing and an opportunity to improve their performance

or change their conduct. This could potentially result in the SPB overturning a

disciplinary action in its entirety, or rendering a lesser penalty than the employee would

otherwise receive had DWR been able to inform the SPB of the progressive disciplinary

measures it had, in fact, taken. [¶] … Similarly, DWR is required by SPB regulations to

provide a disciplined employee with a copy of all materials upon which an action is

based. If DWR is required to purge its progressive discipline documentation from

existence, it will not be able to satisfy these regulations. This would further jeopardize

the ability of DWR to have its disciplinary action upheld by the SPB.”

Kawate’s declaration stated that the arbitration decision, if allowed to stand, would

result in further negative impacts: “The problems with the Arbitration Award potentially

extend beyond the disciplinary context. DWR maintains an array of records that could

contain progressive discipline materials. Such records may include internal investigation

files, legal files, equal employment opportunity (EEO) files, and workers’ compensation

files. If DWR is required to delete its counseling and corrective memoranda from every

single file within its possession, it will impede DWR’s ability to perform many basic

management functions that depend on the existence of such records. For example, if

DWR needed to conduct an EEO investigation as to whether an employee received a

counseling memo as an act of retaliation or discrimination, the Arbitration Award may

require DWR to destroy this key evidence. In certain workers’ compensation claims,

whether an employee received a counseling or corrective memo may be relevant to

benefit entitlement.”

The Union filed opposition to the petition. The Union objected to the introduction

of the two declarations that were not presented in the arbitration proceedings, and it urged

the trial court to confirm the award since it was based on the clear terms of the bargain

reached by the parties. The Union also made various arguments that the trial court should

not consider the public policy arguments due to alleged failure by the State to exhaust

other remedies and/or failure to bargain.

In its reply in support of the petition, the State reasserted its grounds for granting

the petition (i.e., violation of public policy) and argued that the Union’s attempts to avoid

the public policy issue were misplaced. The state also asserted, with citation to

precedent, that the evidentiary objection to the declarations was without merit. (See, e.g,

10.

Ahdout v. Hekmatjah (2013) 213 Cal.App.4th 21, 39–40 [on petition to vacate arbitration

award, the trial court should take into account “ ‘all of the admissible evidence submitted

to it regardless of whether that evidence was before the arbitrator’ ”].)

The Trial Court’s Order Denying the Petition

The hearing on the petition was commenced on August 30, 2018, continued to

September 28, 2018, and after the parties’ arguments were concluded, the trial court took

the matter under submission. The trial court held that the arbitrator correctly interpreted

the plain language of the MOU, and such interpretation did not violate public policy. The

trial court further held the arbitration award did not go beyond the arbitrator’s authority

because the State was one of the parties to the MOU, not simply DWR. On February 26,

2019, the trial court entered its written order and judgment on the petition. The judgment

was amended on May 8, 2019, to include an award of costs of suit.

On February 14, 2019, the State filed a premature notice of appeal from the denial

of its petition to vacate or correct arbitration award. We elected to treat the premature

notice of appeal as from the subsequently entered judgment.

DISCUSSION

I. STANDARD OF REVIEW

“The scope of judicial review of arbitration awards is extremely narrow. Courts

may not review the merits of the controversy, the sufficiency of the evidence supporting

that award, or the validity of the arbitrator’s reasoning.” (Department of Personnel

Administration v. California Correctional Peace Officers Assn. (2007) 152 Cal.App.4th

1193, 1200.) With limited exceptions, “an arbitrator’s decision is not generally

reviewable for errors of fact or law, whether or not such error appears on the face of the

award and causes substantial injustice to the parties.” (Moncharsh v. Heily & Blase

(1992) 3 Cal.4th 1, 6.)

By statute, however, a trial court “shall vacate” an arbitration award if the

“arbitrators exceeded their powers and the award cannot be corrected without affecting

11.

the merits of the decision upon the controversy submitted.” (Code Civ. Proc., § 1286.2,

subd. (a)(4), italics added.) An arbitrator exceeds his or her powers by issuing an award

that violates a well-defined public policy. (California Dept. of Human Resources v.

Service Employees Internat. Union, Local 1000 (2012) 209 Cal.App.4th 1420, 1430;

Jordan v. Department of Motor Vehicles (2002) 100 Cal.App.4th 431, 443.) “[C]ourts

may, indeed must, vacate an arbitrator’s award when it violates a party’s statutory rights

or otherwise violates a well-defined public policy.” (Department of Personnel

Administration v. California Correctional Peace Officers Assn., supra, 152 Cal.App.4th

at p. 1200.) In determining whether an arbitration award contravenes public policy, we

review the trial court’s decision de novo. (Ling v. P.F. Chang’s China Bistro, Inc. (2016)

245 Cal.App.4th 1242, 1252.)

II. THE SUBJECT PUBLIC POLICY REGARDING CIVIL SERVICE

EMPLOYMENT – THE MERIT PRINCIPLE

An arbitration award in a dispute between the State and an employee organization

will be vacated if the arbitrator’s interpretation of the subject MOU violates public

policy. (See, e.g., California Statewide Law Enforcement Assn. v. Department of

Personnel Administration (2011) 192 Cal.App.4th 1, 15–16 [where the arbitrator’s award

mandated that certain provisions of the agreement be enforced retroactively without

necessary legislative approval, it violated public policy].) Here, the State’s primary

argument on appeal is that the trial court erred in failing to vacate the arbitration award

because the arbitrator’s construction of article 16.7 of the MOU violates public policy

regarding fundamental civil service law—specifically, the merit principle. We agree, as

more fully explained in the discussion below. We begin our consideration of this issue

by summarizing the nature of the public policy being asserted by the State.

As noted, the public policy under consideration is known as the merit principle of

civil service employment. It is founded on and enshrined in the California Constitution,

which mandates as follows: “In the civil service permanent appointment and promotion

12.

shall be made under a general system based on merit ascertained by competitive

examination.” (Cal. Const., art. VII, § 1, subd. (b).) This constitutional provision was

adopted by California voters in 1934 to eliminate the spoils system and political

patronage in civil service appointments and promotions. (California Attorneys, etc. v.

Schwarzenegger (2009) 174 Cal.App.4th 424, 433; California State Personnel Bd. v.

California State Employees Assn., Local 1000, SEIU, AFL-CIO (2005) 36 Cal.4th 758,

764–765 (California State Personnel Bd. v. CSEA) [noting further the nonpartisan SPB

was also established by constitutional provision adopted in 1934].) Under this merit

principle, public employees are to be recruited, selected, and advanced under conditions

of political neutrality, equal opportunity, and competition on the basis of merit and

competence. (State Personnel Bd. v. Department of Personnel Admin. (2005) 37 Cal.4th

512, 526.) The Board is the constitutional agency charged with administering the merit

principle through its oversight of civil service laws and review of disciplinary actions.

(California Correctional Peace Officers Assn. v. Department of Corrections &

Rehabilitation (2017) 15 Cal.App.5th 97, 105; Pacific Legal Foundation v. Brown (1981)

29 Cal.3d 168, 184.) Because the merit principle is considered inviolate (see California

State Personnel Bd. v. CSEA, supra, 36 Cal.4th 758, 765), it is well established that

“neither a statue nor an MOU may contravene it.” (California Correctional Peace

Officers Assn. v. Department of Corrections & Rehabilitation, supra, 15 Cal.App.5th at

p. 106.)

The Supreme Court has consistently held that MOU’s, even when approved by the

Legislature, may not contravene the merit principle. For example, in California State

Personnel Bd. v. CSEA, supra, 36 Cal.4th 758, the Legislature approved three MOU’s

that provided for “post and bid” pilot programs for certain bargaining units. These

programs required that the appointment and promotion of employees eligible for post and

bid positions would be based on seniority. (Id. at p. 763.) The Board filed a petition for

a writ of mandate seeking to enjoin the implementation of the program on the ground that

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it violated the constitutional merit principle. The trial court agreed, but the Court of

Appeal reversed and review was granted by the Supreme Court. The Supreme Court held

the post and bid programs violated the fundamental mandate of the merit principle. (Id.

at pp. 763–764, 775–776.) The court explained as follows: “[W]hile consideration of

seniority may be appropriate as part of a general merit-based system of appointments and

promotions, depriving appointing powers of the ability to interview eligible candidates

and base their hiring decisions on a broader range of criteria bearing on fitness and

efficiency ‘inevitably pose[s] a present total and fatal conflict’ [citation] with the

constitutional command that ‘appointments and promotions in state service be made

solely on the basis of merit’ [citation].” (Id. at p. 772.) “By dictating an absolute

seniority preference in hiring, and foreclosing appointing powers from interviewing

eligible candidates and considering a broader and more meaningful range of merit-based

criteria as appropriate to determine the candidate most qualified for a posted position, the

programs undermine the constitutional mandate that appointments and promotions be

based on merit.” (Id. at p. 773.)

In reaching this conclusion, the Supreme Court rejected the argument that the

Legislature’s approval of the three MOU’s was a permissible limitation on the discretion

of hiring agencies: “In adopting the constitutional merit principle, California voters made

clear their intent that permanent civil service appointments and promotions be made

solely on the basis of merit. No matter what discretion the Legislature has purported to

give or withdraw from appointing powers, it does not have a free hand to approve MOU’s

or enact statutes that flout this mandate.” (California State Personnel Bd. v. CSEA,

supra, 36 Cal.4th at p. 774.) For these reasons, the judgment of the Court of Appeal

upholding the MOU’s was reversed. (Id. at pp. 775–776.)

In State Personnel Bd. v. Department of Personnel Admin., supra, 37 Cal.4th 512,

the Board challenged four MOU’s that allowed employees the option of bypassing the

Board for review of any disciplinary action by requesting an alternative review forum

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created by the MOU. (Id. at p. 516.) The Supreme Court held the bypass provision

violated the constitutional mandate that the Board shall review disciplinary actions taken

against civil service employees. (Ibid.) In so ruling, the Supreme Court emphasized that

the Board’s adjudicatory authority to review disciplinary actions “is a ‘necessary

counterpart’ ” to its power to administer the merit principle. (Id. at p. 526.) The

Supreme Court explained: “[W]hen a state civil service employee is removed from

employment, the interest of the [SPB] in ensuring that the disciplinary action does not

violate the merit principle is just as great as when an employee is selected for state civil

service employment. And discipline other than removal from civil service also

implicates the merit principle because disciplinary actions in general can have a profound

effect on an employee’s chance of future advancement within the merit-based civil

service. [¶] It would be inimical to California’s constitutionally mandated merit-based

system of civil service, which is administered by the [SPB], to wholly divest that board of

authority to review employee disciplinary actions in favor of an MOU-created review

board. This is so because a state civil service based on the merit principle can be

achieved only by developing and consistently applying uniform standards for employee

hiring, promotion, and discipline.… Because employee discipline is an integral part of

the civil service system, the [SPB’s] exclusive authority to review disciplinary decisions

is a critical component of the civil service system.” (Id. at pp. 526–527.)

As the above authority makes clear, the merit principle is implicated not only in

decisions to hire or promote state employees, but also in decisions to impose discipline.

(State Personnel Bd. v. Department of Personnel Admin., supra, 37 Cal.4th at p. 526.)

Further, “a state civil service based on the merit principle can be achieved” by the Board

“only by developing and consistently applying uniform standards for employee hiring,

promotion, and discipline.” (Id. at pp. 526–527.) One of the uniform standards applied

by the Board by means of precedential decision in the review of disciplinary actions is

that of progressive discipline. (See Gov. Code, § 19582.5 [board may issue precedential,

15.

published decisions in its review of disciplinary actions].) In the case of In the Matter of

the Appeal by R.N. (1992) SPB Decision No. 92-07, at pp. 6–7, the Board declared as

follows: “Historically, the SPB has followed the principles of progressive discipline in

exercising its constitutional authority to review disciplinary actions under the State Civil

Service Act. The principles of progressive discipline require that an employer, seeking to

discipline an employee for poor work performance, follow a sequence of warnings or

lesser disciplinary actions before imposing the ultimate penalty of dismissal. The

obvious purpose of progressive discipline is to provide the employee with an opportunity

to learn from prior mistakes and to take steps to improve his or her performance on the

job. Thus, corrective and/or disciplinary action should be taken by a department on a

timely basis: performance problems should not be allowed to accumulate before

progressive discipline is initiated.”4 (In the Matter of the Appeal by R.N., supra, SPB

Dec. No. 92-07, at pp. 6–7, fn. omitted.) (See also In the Matter of the Appeal by

Bazemore (1996) SPB Dec. No. 96-02 (Bazemore) [numerous past counseling memos

properly used to support adverse action and to establish the employee did not take

counseling to heart]; In the Matter of the Appeal by J.H., supra, SPB Dec. No. 03-05, at

p. 12 [narrow construction of statute rejected which would have limited the types of

disciplinary matters that may be considered, since such a narrow construction would

hamper the board’s ability to apply the principles of progressive discipline].)

III. THE ARBITRATOR’S DECISION VIOLATED THE MERIT PRINCIPLE

In this case, the arbitration award construed article 16.7(G) of the MOU to mean

that once an employee in bargaining unit 12 has exercised his or her file-purge rights

4 As set forth in a footnote to this summary of progressive discipline, the Board also

pointed out that “[w]hile the principles of progressive discipline are well-suited to

treating problems of poor work performance, … serious willful misconduct on the part of

an employee may well warrant dismissal in the first instance.” (In the Matter of the

Appeal by R.N., supra, SPB Dec. No. 92-07, at p. 6, fn. 3.)

16.

under that provision, any and all documents containing negative material on file for more

than one year must be purged and cannot be used or recited as support for any adverse

action or NOAA against said employee. The arbitrator explained his decision: “The

controlling language [of the] first paragraph of § 16.7(G) … plainly states that ‘materials

of a negative nature shall be purged from any and all files after one year’ [emphasis

added]. That sentence contains two absolutes, ‘shall’ and ‘all,’ that are simply not

susceptible of any alternate meaning. By the use of the word ‘shall,’ the parties have

agreed that management has no discretion but to remove ‘materials relating to an

employee’s performance’ that are ‘of a negative nature’ upon request by the employee

after one year. By their use of the term ‘any and all files,’ the parties made it crystal clear

that such documents must be purged from every file maintained by the Employer, not

merely the so-called ‘working personnel file’ in the Department or office to which the

employee is assigned.”

In applying this construction, the arbitrator found that the State had violated article

16.7 by supporting its March 17, 2016 NOAA against B.H. with prior counseling and

corrective memoranda on file more than one year prior to the date of the NOAA,

including corrective memoranda dated March 11, 2015, November 3, 2014, and August

1, 2013, and counseling memoranda dated June 21, 2013, and June 15, 2010. The

arbitrator acknowledged the exception clause in the second paragraph of article 16.7(G),

but apparently concluded it was inapplicable because “there [was] no evidence that …

adverse action” was taken against B.H. regarding any of the more than one year old

negative materials.5

5 As noted previously, the exception clause states: “This provision … does not

apply to formal adverse actions as defined in applicable Government Code sections or to

material of a negative nature for which actions have occurred during the intervening one

year period. Except that, by mutual agreement between a department head or designee

and an employee, adverse action material may be removed.”

17.

According to the State’s appeal, the arbitrator’s construction of the MOU, even if

arguably correct as a matter of contractual interpretation, conflicts with the fundamental

principle of civil service law known as the merit principle, because it impedes the ability

of state departments to make reasonable and sound employment decisions based on merit.

As argued by the State: “The Award requires a department to destroy all copies of its

counseling and corrective memoranda upon request of the employee, if a formal adverse

action does not follow within one year. The Award thereby prevents state departments

from considering these materials (because they have been destroyed) when making

important employment decisions on appointment, promotional, and disciplinary matters.

This interpretation violates the merit principle because it requires the state departments to

expunge key documents, such as corrective memoranda, which are crucial to the fair and

accurate evaluation of an employee’s performance.”

We agree that if article 16.7 were enforced as construed by the arbitrator, the

resulting inability of state departments6 (with employees in bargaining unit 12) to retain,

consider or rely on the subject employees’ counseling and corrective memoranda

containing negative material on file more than one year, once a file-purge request is

made, would impermissibly undermine the merit principle. As the present case clearly

demonstrates, such records serve to memorialize matters relevant to an employee’s

ongoing work performance and provide warnings of areas needing improvement.

Obviously, such counseling and corrective memoranda, while not amounting to formal

adverse actions, may have a material bearing on subsequent disciplinary decisions. It

follows that the wholesale purging of such relevant records and information from all files

after the elapse of only one year at the employee’s request, which would thereby prevent

any subsequent use or consideration thereof by the state employer to support a

disciplinary action, will substantially undermine that state employer’s ability to (i) make

6 Also referred to as state employers.

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a fair and fact-based evaluation of the employee’s performance, and (ii) decide on

disciplinary action based on merit. The same effect would logically undermine the

Board’s ability to fairly review such matters based on merit. For these reasons, we

conclude that the arbitrator’s interpretation and enforcement of article 16.7 of the MOU

conflicts with the constitutional merit principle and therefore violates fundamental public

policy applicable to civil service employment. (See California State Personnel Bd. v.

CSEA, supra, 36 Cal.4th 758, 773 [MOU provisions may not contain programs that

“undermine” the merit principle].)

Closely related to the negative impact of the arbitrator’s award on the ability of

state departments, as employers, to comply with the merit principle, the construction

given to article 16.7(G) of the MOU would also interfere with the ability of said state

departments to effectively carry out progressive discipline. As noted above, the Board, in

administering the merit principle by the development and application of uniform

standards for employee hiring, promotion, and discipline, has required that state

departments utilize progressive discipline. In the case of In the Matter of the Appeal by

R.N., supra, SPB Decision No. 92-07, the Board declared adherence to the principles of

progressive discipline, and it further stated that progressive discipline requires that an

employer, seeking to discipline an employee for poor work performance, follow a

sequence of warnings or lesser disciplinary measures before imposing a more severe

disciplinary action. (Id. at p. 6.)

Regarding the detrimental effect of the arbitration award on progressive discipline,

the State asserts as follows: “The Arbitrator’s interpretation of [a]rticle 16.7 improperly

prevents a department from following this progressive discipline model required by the

SPB. A department cannot make a proper record of the warnings it has issued in the form

of counseling and corrective memoranda if it is required to purge these documents from

existence. A department will similarly be unable to present its progressive discipline

evidence to the SPB if a department is required to destroy such evidence prior to hearing.

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This Award violates public policy by requiring state departments to eradicate its records

of progressive discipline, and by preventing departments from sharing such evidence with

the SPB. The Award will inevitably harm the civil service system by hampering the

ability of state departments to bring appropriate disciplinary actions.”

The present case demonstrates the validity of the State’s concerns regarding the

impact of the arbitrator’s decision on progressive discipline. The DWR had extensively

documented by means of counseling and corrective memoranda a long series of

problematic behavior exhibited by B.H.; however, under the arbitrator’s decision, such

evidence had to be removed from all files—since it was more than one year old—and

could not be used or relied on to support the disciplinary action itself or to verify that

progressive discipline was followed. Furthermore, in the event B.H. exhibited similar

work deficiencies in the future warranting disciplinary action, DWR would have no

adequate record from which to show it followed progressive discipline as required. If the

matter were eventually reviewed by the Board, it is reasonable to assume the Board

would likewise be hampered by the absence of such relevant evidence in attempting to

confirm whether progressive discipline had been followed.

We conclude the arbitrator’s decision interpreting and enforcing article 16.7(G)

interferes with state employers’ ability to administer and prove progressive discipline.

We have already concluded that the arbitrator’s decision violates the public policy

enshrined in the constitutional merit principle. Does the fact that the arbitrator’s decision

also impedes progressive discipline lend further support to our conclusion? No adequate

argument is made that progressive discipline is itself a fundamental public policy, nor do

we equate progressive discipline with the merit principle. Nevertheless, the two concepts

do overlap at a more practical level—that is, the same loss of relevant evidence in the

event that personnel files are purged after one year would affect both the ability to carry

out discipline based on merit and the ability to comply with progressive discipline. As

accurately pointed out by the State, the progressive discipline steps taken by a state

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employer often constitutes relevant information that the Board relies upon in determining

whether, and to what extent, to uphold a particular disciplinary action. (In the Matter of

the Appeal by R.N., supra, SPB Dec. No. 92-07, at pp. 6–9.) Thus, progressive discipline

may in many cases have a direct bearing on the appropriate level of discipline imposed or

upheld. (Ibid.) Because of this correlation, we hold that the award’s negative effect on

the ability of state employers to engage in or prove progressive discipline—although not

shown to establish a public policy violation by itself—provides further corroboration to

our ultimate conclusion that the public policy of the merit principle has been violated in

this case.

For all of the foregoing reasons, we conclude the arbitration award in this case

violated the fundamental merit principle in the construction given to article 16.7(G) of the

MOU, and consequently, the trial court should have vacated the arbitration award on the

ground that it violated public policy.

A. Statute of Limitations

The State raises an additional argument in support of its claim that the arbitration

decision violated public policy. This additional argument is premised on the fact that the

Legislature has provided a three-year statute of limitations to serve a notice of

disciplinary action on an employee after the occurrence of the cause for discipline. (Gov.

Code, § 19635.)7 The State argues the arbitrator’s interpretation of the MOU provision

would effectively eviscerate the three-year statute of limitation under circumstances such

as occurred in the present case, because, in practical effect, it would force state employers

to decide on whether or not to pursue a disciplinary action within only one year, not three

7 Along with this legislative provision of a three-year period to pursue adverse

disciplinary action, the State points out that in the Board’s decision entitled Bazemore,

supra, SPB Decision No. 96-02, at pages 10–12, the Board held that a department may

discipline an employee for actions previously documented in a counseling memo,

provided the department notifies the employee in the counseling memo that it might do

so.

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years.8 According to the State, “A department would be forced to bring an adverse action

within one year, not three years, because the Award requires a department to destroy its

evidence of the misconduct (e.g., the counseling memo) after just one year, and also

because the Award forbids a department from even citing the counseling memo in a

disciplinary action after one year (provided that the employee has asked the department

to purge the document).”

Because we have already concluded that the MOU file-purge provision, as

interpreted and enforced by the arbitration award, violated public policy, we find it is

unnecessary to reach the statute of limitations argument raised by the State—and we

decline to do so. However, in connection with the statute of limitations argument, we

note that in several of the MOU’s adopted in prior years by the same parties with respect

to bargaining unit 12, an employee could only request to have negative materials purged

“after three years,” and the exception clause stated the provision would not apply “to

material of a negative nature for which actions have occurred during the intervening three

year period.” (Italics added.) It is possible that the file-purge provisions in these former

MOU’s were designed to seek consistency with the statute of limitations, but in any event

these former MOU’s clearly provided a much longer period of time within which the

state employer could make disciplinary decisions that relied on materials of a negative

nature in the employee’s personnel file. We offer no opinion whether a three-year

provision, such as was present in the earlier MOU’s, would survive the same public

policy challenge against which the MOU provision in this case—with its one-year

provision—did not.

8 As previously noted, the exception clause of article 16.7 would permit the state

employer to use “material of a negative nature for which actions have occurred during the

intervening one year period.”

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IV. THE TRIAL COURT ERRED IN EXCLUDING DECLARATIONS

In support of its petition in the trial court, the State provided two declarations

shedding additional light on the impact of the arbitrator’s award. The trial court

sustained objection to the declarations on the sole ground that “the issues before the court

are not factual but legal, which makes the consideration of any facts set forth in the

declaration unnecessary ….” While conceding the declarations were not essential to

resolve the violation of public policy issue before the trial court, the State nonetheless

argues that because the declarations provided relevant information, the trial court should

not have excluded the declarations. As explained below, we agree with the State’s

argument.

Although we described the two declarations in our summary of the background

facts, we briefly reiterate the nature of these declarations. One was the declaration of

Alvin Gittisriboongul who, as chief counsel for the Board, observed the importance of

progressive discipline under civil service principles as applied by the Board in reviewing

disciplinary actions. Gittisriboongul’s declaration then added: “However, if a state

department has purged its progressive discipline documentation from existence, a state

department will not be able to include such matters with its notice of adverse action, as

required by SPB regulations and precedent. This will make it less likely that the SPB

will be able to appropriately consider the progressive disciplinary measures the State

employer may have taken.” The second declaration was that of Jennifer Dong Kawate,

the chief of the human resources office of DWR. Kawate’s declaration acknowledged

that DWR is required to follow the Board policy of applying progressive discipline in any

disciplinary actions it takes against its employees, and DWR employees have the right to

appeal disciplinary actions they receive to the Board. Kawate expressed the following

concerns in her declaration about the effect of the arbitration decision rendered in this

case: “If this Arbitration Award is allowed to stand, it will detrimentally impact the

ability of DWR to initiate and be successful with meritorious disciplinary actions. For

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