A decision this week by the California Court of Appeal reemphasizes why retaliation claims by whistleblowers (or by employees who complain of discrimination or statutory violations) can carry substantial risk for employers and must be handled very carefully.

In Ohton v. California State University of San Diego, Case No. D053738 (January 12, 2010), the California court addressed the legal standard for determining a whistleblower's "good faith" in alleging misconduct. Cal State San Diego had rejected a strength and condition coach's claim of retaliation, in part on the ground that his initial complaint of misconduct was not made in good faith, being based on hearsay and subsequently fully refuted. The court's decision makes it extremely difficult to defend against retaliation claims by whistleblowers on the ground that the initial complaint of misconduct was not made in good faith.

The court held that the university was in error to reject the coach's claim of retaliation because his initial complaint of alleged misconduct was based on hearsay. The court stated that "[w]e disagree that a whistleblower's reliance on hearsay precludes a finding the complaint was a good faith protected disclosure. Improper governmental activity is frequently difficult to uncover and whistleblowers will often need to rely on hearsay evidence, in part out of the informants' fears of reprisals." The court also rejected the argument that the erroneous nature of the complaint established a lack of good faith. "Whether the disclosure is made in good faith is properly determined based on whether the complainant believed it was true or had reason to believe it was true at the time it was made." The court further held that the university's finding of a lack of good faith was inconsistent with its own investigator's determination that the coach was not being dishonest.

In conclusion, a defense that a complaint was not made in good faith because it was erroneous or not based on personal knowledge will likely fail. The decision this week also establishes why determining who will investigate a claim of retaliation is a significant act because the courts will likely react unfavorably to any perceived inconsistency between the investigators’ conclusions and the employer's final determination on the merits of the claim.