Writ Review of an Order Sustaining a Demurrer Without Leave to Amend

In Collier v. Superior Court (1991) 228 Cal.App.3d 1117, a case involving writ review of an order sustaining a demurrer without leave to amend, the operative complaint alleged that George Collier, a regional manager of a record company, reported to higher management his suspicions of criminal conduct involving internal orders to ship large quantities of free promotional records that "were not marked with any notation limiting them to nonsale or promotional purposes only." (Collier, supra, 228 Cal.App.3d at p. 1120.) The complaint alleged that Collier was subsequently "fired, purportedly for failing to perform his job adequately" but that reason was a pretext and his discharge was retaliatory. (Id. at pp. 1120-1121.) Relying upon former section 1102.5, subdivision (b), the appellate court in Collier found a "fundamental public interest in a workplace free from illegal practices." (Collier, supra, 228 Cal.App.3d at p. 1124.) The court stated: "Labor Code section 1102.5, subdivision (b), which prohibits employer retaliation against an employee who reports a reasonably suspected violation of the law to a government or law enforcement agency, reflects the broad public policy interest in encouraging workplace 'whistleblowers,' who may without fear of retaliation report concerns regarding an employer's illegal conduct. This public policy is the modern day equivalent of the long-established duty of the citizenry to bring to public attention the doings of a lawbreaker. Even though the statute addresses employee reports to public agencies rather than to the employer and thus does not provide direct protection to petitioner in this case, it does evince a strong public interest in encouraging employee reports of illegal activity in the workplace. " (Id. at p. 1123.) The Collier court distinguished Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654: "The case before us involves public policy implications not presented in Foley. The plaintiff in Foley merely reported that another employee was being investigated for possible past criminal conduct at a previous job. His action served only the interest of his employer. The petitioner in this case reported his suspicion that other employees were currently engaged in illegal conduct at the job, specifically conduct which may have violated laws against bribery and kickbacks (Pen. Code, 641.3); embezzlement (Pen. Code, 504); tax evasion (Rev. & Tax. Code, 7152; 26 U.S.C. 7201, 7202) ... ." (Collier, supra, 228 Cal.App.3d at p. 1122.) It stated that "an agreement prohibiting an employee from informing anyone in the employer's organization about reasonably based suspicions of ongoing criminal conduct by coworkers would be a disservice not only to the employer's interests, but also to the interests of the public and would therefore present serious public policy concerns not present in Foley." (Id. at p. 1125.) The Collier court concluded that, in addition to serving his employer's interest, the employee's report served "the public interest in deterring crime and ... the interests of innocent persons who stood to suffer specific harm from the suspected illegal conduct." (Collier, supra, 228 Cal.App.3d at p. 1123.) The "circle of harm" from the alleged wrongdoing encompassed recording artists, who allegedly "were deprived of royalty payments for the improperly distributed products," state and federal tax authorities, who allegedly "were deprived of appropriate tax revenues," and retailers, who "allegedly suffered a competitive disadvantage in pricing these ... products." (Ibid.) Collier indicated that American Computer's analysis had been undermined by Rojo v. Kliger (1990) 52 Cal.3d 65 276 Cal. Rptr. 130, 801 P.2d 373 (Rojo). (Collier, supra, 228 Cal.App.3d at pp. 1126-1127.) In Rojo, the California Supreme Court recognized a "fundamental public interest in a workplace free from the pernicious influence of sexism" (Rojo, supra, 52 Cal.3d at p. 90). Collier determined: "The fundamental public interest in a workplace free from crime is no less compelling. The public policy of this state against crime in the workplace is reflected in the Penal Code sections declaring unlawful the acts of embezzlement (Pen. Code, 504) and commercial bribery (Pen. Code, 641.3), and in the federal antitrust laws. (See Tameny v. Atlantic Richfield Co., supra, 27 Cal.3d at p. 173.) Retaliation by an employer when an employee seeks to further this well-established public policy by responsibly reporting suspicions of illegal conduct to the employer seriously impairs the public interest ... ." (Collier, supra, at p. 1127.)