Filed 1/23/19
                           CERTIFIED FOR PUBLICATION

                IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                              FIRST APPELLATE DISTRICT

                                     DIVISION FOUR


SAYS SIRI,
        Plaintiff and Appellant,
                                                       A141335
v.
SUTTER HOME WINERY, INC.,                              (Napa County
                                                       Super. Ct. No. 26-59035)
        Defendant and Appellant.


        Plaintiff Says Siri appeals the dismissal of her wrongful discharge complaint
following the entry of summary judgment in favor of defendant Sutter Home Winery,
Inc., doing business as Trinchero Family Estates (defendant or TFE). Defendant has
cross-appealed, challenging the trial court’s denial of its motion for sanctions.
        Plaintiff’s complaint alleges that she was terminated in retaliation for having
brought to the attention of defendant’s management and the Board of Equalization
defendant’s failure to have paid use taxes owed by the company in violation of Labor
Code section 1102.5 and public policy. The litigation has an unnecessarily complex and
extended history, due in large part to a misconception of the relevant issues by both
parties. Proceeding as if the case turns on whether plaintiff correctly accused defendant of
failing to pay use taxes it owed, plaintiff pursued and defendant strenuously resisted
efforts to obtain copies of defendant’s tax returns, leading ultimately to a decision by this
court that defendant had not “waived the privilege against forced disclosure of tax
returns” and that no exception to the tax return privilege applied to entitle plaintiff to
compel the production of the returns. (No. A139114, Sept. 5, 2013 [nonpub. opn.].) Much
disputation has also centered on whether plaintiff wrongly obtained, disclosed or
destroyed material evidence. However, in moving for summary judgment defendant

                                               1
failed to address, much less negate, plaintiff’s allegation that she was terminated in
retaliation for raising the tax-avoidance issue, nor did it seek to establish an affirmative
defense to the claim. The summary judgment motion was based and granted on the
premise that plaintiff had acknowledged that she could not prove her case without the tax
returns. Because plaintiff has not so acknowledged and defendant has not shown this to
be true, the motion was improperly granted. There was no abuse in the trial court’s denial
of sanctions.
                                          Background
       Plaintiff’s complaint alleges she was employed as a “General Ledger Staff
Accountant” for defendant and that her primary duties included “filing sales and use tax
returns for applicable states, including the State of California. . . . [¶] . . . [¶] Having
reasonable cause to believe that TFE was in noncompliance with state law pertaining to
use tax payments, plaintiff repeatedly voiced to her direct supervisor . . . and to TFE top
management . . . her highly specific concerns about TFE responsibility to report and pay
use taxes on merchandise paid with TFE purchasing credit cards (‘P-Cards’). . . . Plaintiff
SIRI on December 9, 2010 communicated in writing to TFE general counsel . . . her
concerns that TFE is out of compliance with the California sales and use tax law,
including having not paid use tax on purchases with P-Cards, and asked that TFE be in
full compliance with such law. [¶] Plaintiff SIRI in August and September, 2011 alerted
TFE management that she had consulted the California State Board of Equalization
(‘BOE’), and that the BOE had confirmed that plaintiff was correct relative to her belief
that TFE owed use taxes on purchases paid with P-Cards and that there should be sales
tax due to the BOE on assets obtained from the acquisition of Joel Gott Wines.”1
       The complaint continues, alleging that although management authorized accrual
and payment of the use tax in question for the third quarter 2011 sales and use tax return,
management “declined to permit plaintiff Siri to make payment of unpaid use tax owed

1
      The complaint also alleges that “[a]s a material condition of employment, TFE
expected plaintiff to participate in, and condone, violation of applicable state law
governing payment of use taxes by TFE.”


                                                2
for prior periods, notwithstanding . . . knowledge that the subject taxes have never been
paid. [¶] Still, notwithstanding the obvious contradiction, TFE management declared
plaintiff Siri to be wrong in her contention that TFE was non-compliant relative to use
taxes owed on the subject purchases paid with P-Cards. [¶] As a direct result of plaintiff’s
communications to the BOE and to TFE management about TFE’s failure to report and
pay certain use taxes, TFE management retaliated against plaintiff Siri, by singling her
out for special scrutiny, withdrawing duties from her, giving to someone else an office
that had been promised to her, treating her as a pariah, and, ultimately, terminating her
employment.”
       Plaintiff’s first cause of action alleges that “[t]he aforesaid course of conduct of
defendant[] toward Siri constituted retaliatory adverse action in violation of California
Labor Code § 1102.5, subdivisions (a) through (c).”2 The second cause of action alleges
that this course of conduct “constituted a violation of public policies” set forth in section



2
         Labor Code section 1102.5 now reads in part: “(a) An employer, or any person acting on
behalf of the employer, shall not make, adopt, or enforce any rule, regulation, or policy
preventing an employee from disclosing information to a government or law enforcement
agency, to a person with authority over the employee, or to another employee who has authority
to investigate, discover, or correct the violation or noncompliance, or from providing information
to, or testifying before, any public body conducting an investigation, hearing, or inquiry, if the
employee has reasonable cause to believe that the information discloses a violation of state or
federal statute, or a violation of or noncompliance with a local, state, or federal rule or
regulation, regardless of whether disclosing the information is part of the employee’s job duties.
[¶] (b) An employer, or any person acting on behalf of the employer, shall not retaliate against an
employee for disclosing information, or because the employer believes that the employee
disclosed or may disclose information, to a government or law enforcement agency, to a person
with authority over the employee or another employee who has the authority to investigate,
discover, or correct the violation or noncompliance, or for providing information to, or testifying
before, any public body conducting an investigation, hearing, or inquiry, if the employee has
reasonable cause to believe that the information discloses a violation of state or federal statute, or
a violation of or noncompliance with a local, state, or federal rule or regulation, regardless of
whether disclosing the information is part of the employee’s job duties. [¶] (c) An employer, or
any person acting on behalf of the employer, shall not retaliate against an employee for refusing
to participate in an activity that would result in a violation of state or federal statute, or a
violation of or noncompliance with a local, state, or federal rule or regulation.
         All statutory references are to the Labor Code unless otherwise noted.


                                                  3
1102.5, subdivisions (a)-(c) and Revenue and Taxation Code section 6202, subdivision
(a).3
        Defendant’s separate statement in support of its second motion for summary
judgment cites evidence purporting to establish that both causes of action “fail[] because
plaintiff represents that she must rely on [defendant’s] sales and use tax returns to
establish the elements of her claim and thereby would invade Sutter Home’s tax return
privilege,” and “because plaintiffs reliance on information furnished to her in connection
with her preparation of [defendant’s] California sales and use tax returns to establish her
claim is in violation of California Revenue and Taxation Code section 7056.6.” The
separate statement then recites many largely undisputed facts concerning plaintiff’s
employment, her complaints to management and reports to the Board of Equalization,
and the lengthy procedural history leading to the determination that she was not entitled
to the production of defendant’s tax returns because of the taxpayer privilege. To
establish that plaintiff represented that to prevail she must rely on the tax returns, the
separate statement cites the following undisputed fact: “At the hearing on plaintiff’s
motion to compel, plaintiff’s counsel represented to this court that [defendant’s] use tax
returns are the basis of the ‘whole case’: [¶] [Defendant’s counsel]: But there’s nothing
before the court that indicates that her employment was terminated as a result of the
California use tax returns, nothing. [¶] The court: That’s what I understand is the basis of
this claim. I mean, unless I am missing something here. Isn’t that what the basis is?
[¶] [Plaintiff’s counsel]: Yes, your Honor, that’s the whole case.” The separate statement
also recites the undisputed fact that “At the hearing on [defendant’s] motion for
reconsideration, plaintiff’s counsel stated to this court that [defendant’s] use tax returns
are the ‘very crux of the case.’ ”
        In response to defendant’s assertedly undisputed fact that “To make her complaint,
plaintiff relied on information she received in connection with preparing [defendant’s]

3
      Revenue and Taxation Code section 6202, subdivision (a) reads in part: “Every
person storing, using, or otherwise consuming in this state tangible personal property
purchased from a retailer is liable for the tax.”


                                               4
tax returns and she could not have made her complaint without relying on that
information,” plaintiff admitted that she relied on unprivileged information she received
in connection with preparing the tax returns, but responded further that her “wrongful
termination case is not dependent upon introduction into evidence of privileged tax
returns or privileged information that is an integral part of a tax return; rather it is
dependent upon non-privileged communications with TFE management and the BOE.”
       The separate statement provided no purportedly undisputed facts as to the reasons
for which plaintiff was discharged. The separate statement recited, “On May 11, 2012,
plaintiff’s employment with [defendant] ended” and that “plaintiff’s complaint alleges
that her employment was terminated because she voiced concerns that [defendant] did not
report and pay California use tax on purchases made with [defendant’s] P-Cards.”
However, no facts were offered to dispute the reason for which plaintiff claims to have
been terminated.
       The trial court granted summary judgment for the reasons urged by defendant. The
court stated: “Plaintiff could not have made those allegations or obtained the [Board of
Equalization’s] ‘confirmation’ that she was correct that defendant owed taxes had she not
seen and examined the returns which she admittedly prepared and shared all or part of
that information with the Board. [¶] . . . [P]laintiff could not have reached her conclusions
and communicated them to the BOE without knowledge and disclosure of defendant’s tax
return information. In fact, plaintiff has admitted that the returns themselves are the
‘whole case’ and the ‘very crux of the case.’ . . . In deposition, plaintiff admitted she
‘could not have made this complaint had [she] not relied on information she received in
connection with preparing tax returns for [defendant].’ . . . When a party cannot litigate a
claim without disclosing privileged information, the claim must be dismissed. (General
Dynamics v. Superior Court (1994) 7 Cal.4th 1164, 1190.)”
                                          Discussion
       A defendant moving for summary judgment bears the initial burden of presenting
evidence establishing the lack of merit in the plaintiff’s claims, either by showing that
one or more elements of the plaintiff’s causes of action “cannot be established” or that


                                               5
there is a “complete defense” to each cause of action. (Code Civ. Proc., § 437c,
subds. (o), (p)(2)); Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.) Here,
defendant made no attempt to demonstrate that the reason she was discharged was not the
reason she alleges, nor has it argued that discharge for that reason would not violate
section 1102.5, subdivision (b) or fundamental public policy. Indeed, there is little room
to dispute that firing a “whistleblower” for complaining of the employer’s willful failure
to pay taxes that are due would support a right to relief under both of plaintiff’s causes of
action. (E.g., Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167, 172; Green v. Ralee
Engineering Co. (1998) 19 Cal.4th 66, 75-80; Casella v. SouthWest Dealer Services, Inc.
(2007) 157 Cal.App.4th 1127, 1138-1140.)
       Rather, summary judgment was sought and granted on the ground that plaintiff
cannot establish her case, essentially because the so-called taxpayer privilege prevents
her from doing so. Although the extensive record in this case contains evidence of many
things, it does not contain evidence establishing that plaintiff cannot prove she was
discharged because she expressed her informed concerns that defendant was not filing
accurate sales and use tax returns and paying use taxes that were due.
       Defendant’s argument and the trial court ruling in essence rest on two footings.
First is the contention that plaintiff has acknowledged that she cannot prove her case
without the tax returns the production of which she has been denied the right to compel.
But plaintiff has never made such an acknowledgement. Defendant refers repeatedly to
counsel’s statements quoted above that the tax returns are “the whole case” and the “crux
of the case.” But while it is certainly true that plaintiff claims she was terminated because
of her expressed concerns and complaints about the sales and use tax returns—that is
indeed the “whole case”—she has never said that without the tax returns she cannot prove
that was the reason for her termination. As her response quoted above indicates, she has
argued exactly the opposite. Through her own testimony and the testimony of other
witnesses, perhaps adverse witnesses, she may well be able to prove that she was
impermissibly discharged for the reason she asserts. While plaintiff made intense and
ultimately unsuccessful efforts to secure the tax returns, and the returns might well


                                              6
strengthen her case, that is not to say that she cannot prove her case without the returns,
and she has never asserted otherwise.
       The same is largely true of statements by plaintiff or her attorney that she could
not have “made her complaint” without relying on facts she learned from her work in
preparing the tax returns. That is the essence of her causes of action – that in connection
with her work in preparing and submitting sales and use tax returns she learned that not
all use tax that was due was being reported, and she was terminated when and because
she brought the matter to light. The implied taxpayer privilege precludes the forced
disclosure of tax returns and of the information contained in those returns. (See, e.g.,
Schnabel v. Superior Court (1993) 5 Cal.4th 704, 719-721; Sav-On Drugs, Inc. v.
Superior Court (1975) 15 Cal.3d 1, 6-7; Brown v. Superior Court (1977) 71 Cal.App.3d
141.) But neither case law nor reason suggests that this implied privilege precludes an
employee from speaking up when it discovers that the employer is filing incorrect or even
fraudulent returns, or precludes a wrongful termination claim if the employee is
discharged for doing so. Prosecution of plaintiff’s claim does not require the forced
production of defendant’s returns or of the content of its returns. Plaintiff’s right to
recover turns only on whether she was discharged for communicating her reasonable
belief that defendant was not properly reporting its use tax obligation. (Haney v. Aramark
Uniform Services, Inc. (2004) 121 Cal.App.4th 623, 641.) The elements of her causes of
action were alleged and can be proved without violating the implied taxpayer privilege.
       Second, is the premise that California Revenue and Taxation Code section 7056.6
precludes plaintiff’s reliance on information furnished to her in connection with her
preparation of defendant’s sales and use tax returns. Section 7056.6, subdivision (a)
provides: “Except as otherwise provided by law, any person who is engaged in the
business of preparing, or providing services in connection with the preparation of, returns
. . . , or any person who for compensation prepares any such return for any other person,
and who knowingly or recklessly . . . [¶] (1) Discloses any information furnished to him
or her for, or in connection with, the preparation of the return[, or] (2) Uses that
information for any purpose other than to prepare, or assist in preparing, the return” is


                                               7
guilty of a misdemeanor.4 The trial court rejected plaintiff’s argument that this section
applies only to commercial tax preparers. We need not decide whether the statute applies
to others, such as an employee of the company filing the return. Regardless of those to
whom the statute applies, the section cannot be read to prohibit an employee from
asserting to its employer that the employer is not paying a tax that is due, much less from
bringing a wrongful discharge claim if the assertion led to the employee’s discharge.
Moreover, even if plaintiff violated the section by contacting the Board of Equalization
(which we do not imply), we are aware of no authority indicating that the violation would
bar her causes of action.
       As indicated above, the trial court concluded its order granting summary judgment
with the statement, “When a party cannot litigate a claim without disclosing privileged
information, the claim must be dismissed,” citing General Dynamics Corp. v. Superior
Court, supra, 7 Cal.4th 1164. However, General Dynamics, which questioned the right of
a former in-house attorney to pursue a retaliatory discharge claim, turned on the
heightened fiduciary obligations of an attorney. “The lawyer’s high duty of fidelity to the
interests of the client work against a tort remedy that is coextensive with that available to
the nonattorney employee.” (Id. at p. 1189.) Moreover, rather than preclude the attorney
from maintaining a retaliatory discharge claim because it threatens to disclose
confidential information, the Supreme Court stated that “the trial courts can and should
apply an array of ad hoc measures from their equitable arsenal designed to permit the
attorney plaintiff to attempt to make the necessary proof while protecting from disclosure
client confidences subject to the privilege.” (Id. at p. 1191; see also Chubb & Son v.
Superior Court (2014) 228 Cal.App.4th 1094, 1105-1106.) That directive is fully
applicable here. Plaintiff is entitled to attempt to prove her claim without disclosing any



4
       Revenue and Taxation Code section 7056.6, subdivision (b) provides that the
section does not apply if the disclosure is made with consent or pursuant to a subpoena,
court order, or other compulsory process. There is no contention here that either of these
exceptions applies.


                                              8
information that is subject to the privilege. Defendant’s showing in support of its
summary judgment motion fails to show that she cannot do so.
       Finally, the court did not abuse its discretion in refusing to impose sanctions for
the plaintiff’s alleged and disputed spoliation of evidence. The court denied defendant’s
motion without prejudice and indicated (before granting summary judgment) that relevant
evidence and argument concerning the significance of any evidence that had been
destroyed could be presented to the trier of fact at trial. There was no abuse of discretion.
                                        Disposition
       The judgment is reversed and the matter is remanded to the trial court for further
proceedings consistent with this opinion. Plaintiff shall recover her costs on appeal.



                                                  Pollak, P.J.

We concur:

Streeter, J.
Tucher, J.




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Trial court:                           Napa County Superior Court

Trial judge:                           Honorable Rodney G. Stone

Counsel for plaintiff and appellant:   Olivier Schreiber & Chao LLP
                                       Duckworth Peters Lebowitz Olivier LLP
                                       Monique Olivier

                                       Campins • Benham-Baker, LLP
                                       Julia Campins

Counsel for defendant and appellant:   Littler Mendelson, P.C.
                                       Constance E. Norton
                                       Lisa Lin Garcia

                                       Dickenson, Petman & Fogarty
                                       Gregory J. Walsh




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A141335




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