In Thornton v. California Unemployment Insurance Appeals Board, 2012 DJDAR 4796 (2012), the California Court of Appeal for the Fourth Appellate District decided a legal question pertaining to the reimbursement of attorney fees incurred during a law enforcement investigation. The public employee incurred the fees relating to allegations of conflict of interest.

Cynthia Thornton was appointed to the California Unemployment Insurance Appeals Board (“the Board”). Subsequently, she was elevated to chairperson of the organization.

While she was chairperson of the Board, the director of the organization offered her an Administrative Law Judge (“ALJ”) position. She had previously taken an examination and passed it, which made her eligible to serve as an ALJ. The director and a lawyer for the Board told her that it was appropriate for her to take the ALJ job. She accepted the job on that basis.

Subsequently, a state auditor began to investigate the Board’s hiring practices. The auditor referred Thornton’s ALJ hiring to the Attorney General and the district attorney. Thornton hired an attorney to advise her about the investigation.

Thornton was subsequently informed that no charges would be filed against her. She then filed a claim for reimbursement of the attorney fees incurred by her in the investigation. The claim was rejected. She then sued the Board for reimbursement of the attorney fees. The trial court sustained the Board’s demurrer to the complaint without leave to amend. Thornton appealed the grant of the demurrer.

The court of appeal affirmed the decision of the trial court. The court of appeal noted that a public employer must “defend” its employees in any “civil action or proceeding” brought against the employee in her official or individual capacity. If the entity fails to do so and the employee hires her own counsel to defend the action or proceeding, the employee is entitled to recover attorney fees incurred in defending the action or proceeding.

On appeal, however, Thornton argued that the phrase “civil action or proceeding” includes an “investigation” that does not ultimately lead to a lawsuit. The court of appeal determined that a public employer is only required to defend employees in civil court proceedings, not prelitigation investigations. The fee claim was denied on that basis.