Source: https://caselaw.findlaw.com/ca-court-of-appeal/1445709.html
Timestamp: 2019-04-23 23:12:22+00:00

Document:
Court of Appeal, Fourth District, Division 3, California.
Gene MORAN, Plaintiff and Appellant, v. MURTAUGH, MILLER, MEYER & NELSON, LLP, et al., Defendants and Respondents.
Arik Shafir and Evan Blair for Plaintiff and Appellant. Butz, Dunn, DeSantis & Bingham, Kevin V. DeSantis, Steven C. Uribe and Kathleen A. Silhasek, San Diego, for Defendants and Respondents.
Gene Moran contends the trial court erred by requiring him, as a vexatious litigant, to post security before proceeding with claims against his former employer, Murtaugh, Miller, Meyer & Nelson, and several attorneys at the firm, Michael Nelson, Jim Murphy, David Davidson, and an administrator, Marjorie Doyle (collectively Murtaugh). Disagreeing with Devereaux v. Latham & Watkins (1995) 32 Cal.App.4th 1571, 38 Cal.Rptr.2d 849 (Devereaux ), we hold that to require security under Code of Civil Procedure section 391.1,1 the trial court need not conclude as a matter of law that the plaintiff has no reasonable probability of prevailing on any of his or her claims. Nor is the court required to credit the allegations of the plaintiff's complaint as true, but instead may exercise its discretion in weighing the evidence presented at the security motion, without infringing the plaintiff's right to a jury trial.
As a matter of first impression, we also conclude that where an employer conducts an investigation on suspicion of employee wrongdoing or misconduct, pursuant to Civil Code section 1786.53 the employer must furnish to the employee copies of any public records uncovered by a background check within a reasonable time after the investigation concludes, rather than within a fixed period. Finally, in light of these holdings, we determine the trial court did not abuse its discretion in concluding it was not reasonably probable Moran would prevail on any of his claims against Murtaugh. We therefore affirm the trial court's dismissal of Moran's suit for failure to post security.
Murtaugh hired Moran for an at-will position as a paralegal on April 2, 2003. Because Moran would be privy to client confidences, he was required to sign a confidentiality statement. On April 3, 2003, after a discussion with Moran, firm associate David Davidson conducted a computerized legal database search that turned up three unpublished appellate opinions in which Moran was a party. The three cases, all civil suits, revealed that Moran had suffered several felony convictions, including grand theft, second degree burglary, and theft with a prior conviction. In one of the cases, Moran sued the City of Brea, its police department, a mall owner, a store owner, and several officials and individuals for allegedly violating his civil rights when he was arrested for commercial burglary at Brea Mall.
On April 8, 2003, Davidson anonymously placed printouts of the cases on the chairs of two Murtaugh partners, who forwarded them to the firm's managing partners, Michael Nelson and James Murphy. The next day, April 9, 2003, Nelson and Murphy met with Moran to discuss whether he had ever been convicted of a felony and, when he answered affirmatively, they requested and received his immediate resignation.
On Saturday, April 19, 2003, Moran sent a letter to Murtaugh by e-mail, fax, and certified mail, citing the Investigative Consumer Reporting Agencies Act (Civ., Code, § 1786 et seq.) and requesting “a copy of the sourced public record information that the adverse decision was based upon, and the date it was accessed.” Moran stated in his letter, “I need to know what public record information relied upon was perceived as adverse to my continuing employment with the firm.” According to Moran, on “the very next day,” Murtaugh mailed him copies of the cases discovered by Davidson. The cover letter sent with the cases was dated Monday, April 21, 2003.
The trial court held an evidentiary hearing on Murtaugh's motion for security, concluded Moran was a vexatious litigant with no reasonable probability of prevailing on his claims, and required him to post security. When he failed to do so, the court dismissed his suit (§ 391.4), and he now appeals.
Devereaux's notion the court must accept plaintiff's facts as true is inconsistent with the evidentiary hearing the Legislature envisioned by enacting section 391.2. (See Muller v. Tanner, supra, 2 Cal.App.3d at p. 465, 82 Cal.Rptr. 738.) Under section 391.2, “the court shall consider such evidence, written or oral, by witnesses or affidavit, as may be material to the ground of the motion.” If the standard articulated in Devereaux were correct, there would be no need for such an evidentiary hearing, just as there is none on a demurrer, where the plaintiff's alleged facts are accepted as true.
We agree with the court's conclusion in Hung, but a crucial distinction separates Civil Code section 1714.10 and section 391.1. Unlike Civil Code section 1714.10, section 391.1 only empowers the trial court to require security, not halt a lawsuit. The plaintiff's failure to persuade the court that his civil conspiracy complaint has legal merit operates as a complete defense to the action. (Civ.Code, § 1714.10, subd. (b).) In contrast, the trial court's assessment under section 391.1 that there is no reasonable probability the plaintiff will succeed is subject to a contrary conclusion by a jury on the merits. (§ 391.2.) Thus, the plaintiff's right to a jury trial remains intact, and the rationale for the demurrer-type standard adopted by Devereaux disappears.
In sum, in light of the particular language utilized in sections 391.1, 391.2, and 391.3, and the fact that the trial court's security determination does not infringe the plaintiff's right to a jury trial, we must part company with Devereaux. As discussed, we hold the trial court need not credit the allegations of the plaintiff's complaint as true, but rather may exercise its discretion in evaluating the evidence presented on a motion to require security under section 391.1. Accordingly, the standard of review is abuse of discretion.
The purpose of Civil Code section 1786.53 is “to provide California consumers with additional protections against identity theft.” (Historical and Statutory Notes, 9A West's Ann. Civ.Code (2004 Supp.) foll. § 1785.10, p. 136 [letter from Assemblymember Roderick D. Wright describing intent of Stats.2001, c. 354 (A.B.655), which added § 1786.53].) The section aids the discovery of identity theft by requiring employers to provide employees and prospective employees (Civ.Code, § 1786.53, subd. (a)(1)) who are the subject of a background check with copies of “public records” in the report, that is, “records documenting an arrest, indictment, conviction, civil judicial action, tax lien, or outstanding judgment.” 5 (Civ.Code, § 1786.53, subd. (a)(3).) Thus apprised of the report's contents, the person may prevent or correct an adverse employment action, such as denial of employment (see Civ.Code, § 1786.53, subd. (a)(1)), premised on information attributable to identity theft or that is otherwise erroneous.
But subdivisions (b)(3) and (b)(4) of the same section suspend the seven day requirement when the employer is investigating “suspicion of wrongdoing or misconduct” by the employee.8 Here, Davidson ferreted out background information suggesting Moran had previously engaged in theft and other serious wrongdoing and, given the nature of the firm's practice handling client confidences and assets, Murtaugh was entitled to investigate. Notably, the statutory language does not specify that the wrongdoing or misconduct must be contemporaneous rather than occurring before the employee was hired. We see no reason to impose such a requirement since antecedent conduct may affect an employee's suitability for his or her position. Nor does the statute require an elaborate investigation to defer disclosure. According to the circumstances, the employer may choose to interview fellow employees, conduct surveillance, contact prior employers, or make other inquiries.
Nothing in the statute, however, precludes a simpler investigative tactic: the employer may choose to withhold the background check results temporarily to confront the employee with the information therein and measure character, veracity, and other factors according to his or her response. Here, Davidson passed on the information about Moran to the Murtaugh partners, no doubt to prompt action of some kind, and partners Nelson and Murphy prudently exercised due diligence by investigating the matter in the most direct and expedient manner possible-confronting Moran.
Illustrating the Legislature's preference for disclosure, subdivisions (b)(2) and (b)(3) together dictate that the background check information reviewed by the employer must be disclosed even if the investigation ends in a result favorable to the employee, unless the employee has “waive[d] his or her right to receive a copy of any public record obtained pursuant to this section.” (Civ.Code, § 1786.53, subd. (b)(2) and (3).) There is no requirement that the employee must request the information, for he or she may not even be aware a background check has been conducted. And subdivision (b)(4) provides that if the employee has executed a waiver, he or she is nonetheless entitled to a copy of the public record if the investigation results in adverse action. (Civ.Code, § 1786.53, subd.(b)(4).) In the absence of a statutorily prescribed period, we hold that an employer must furnish copies of any public record uncovered in a background check within a reasonable time after an investigation concludes, according to the circumstances of each case.
1. All further undesignated statutory references are to this code unless otherwise specified.
5. Murtaugh does not dispute the appellate decisions Davidson uncovered fell within the wide ambit of Civil Code section 1786.53 because they conveyed “information on a consumer's character, general reputation [or] personnel characteristics ․, which are matters of public record” (Civ.Code, § 1786.53, subd. (a)), as reflected in the cases's discussions of his “arrest[s], ․ conviction[s],” and subsequent “civil judicial action[s.]” (Civ.Code, § 1786.53, subd. (a)(3)).
9. In a petition for rehearing, Moran argues the $10,000 penalty must be imposed because Murtaugh failed to comply with Civil Code section 1786.53, subdivision (b)(2), which states: “Any person shall provide on any job application form, or any other written form, a box that, if checked by the consumer, permits the consumer to waive his or her right to receive a copy of any public record obtained pursuant to this section.” (Italics added.) But the trial court could conclude there was no reasonable probablility Moran would prevail on this claim, even assuming Murtaugh failed to provide a waiver form. Simply put, Moran's suit alleging a failure to disclose public records uncovered by a background check amply demonstrated he was not interested in gaining an opportunity to waive receipt of a copy of any such public records - hence, the subdivision does not apply to him.
FOOTNOTE. See footnote *, ante.
WE CONCUR: SILLS, P.J., and IKOLA, J.

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