"Devaney said the SEDC does not
believe Smith is entitled to her
severance package and will
defend the suit aggressively."

Ex-SEDC President Files
Suit Against Former
Employer
Carolyn Smith Was Fired In 2008
For Giving Large Bonuses To
Herself, Others

July 30, 2010
A San Diego development official
fired over large bonuses she gave
herself and others is firing back by
filing a lawsuit, 10News reported.

According to the lawsuit filed
against the Southeastern
Economic Development Corp.,
longtime president Carolyn Smith
is seeking hundreds of thousands
of dollars in severance pay she
said she is entitled to.

Smith, who was fired from the
SEDC in July 2008, served as its
president for 14 years. She is also
the daughter of longtime civic
leader Rev. George Walker Smith.

In 2008, Mayor Jerry Sanders
demanded Smith be fired after an
audit revealed she had given
nearly $900,000 in bonuses to
herself and other SEDC staff over
a five-year period. Auditors
complained the compensation
efforts amounted to fraud, but
Smith claimed the bonuses were
justified.

A year later, she tried to collect her
$100,000 severance package, but
a judge blocked the payment,
citing the need to protect taxpayer
interest.

Smith is seeking a severance
benefit of just over $200,000,
according to the lawsuit.

SEDC attorney Leslie Devaney
told 10News Smith's lawsuit
"came as no surprise" and "had
been threatened for some time."

Devaney said the SEDC does not
believe Smith is entitled to her
severance package and will
defend the suit aggressively.

Smith's attorney did not have any
comment.

Previous Stories:

* February 26, 2009: SEDC To
Rescind Ex-President's Severance
Pay
* October 6, 2008: Judge Stops
$100K Severance Check For
Ex-SEDC President
* September 24, 2008: SEDC
Considers Speedy Removal Of
President
* September 15, 2008: City
Councilman Speaks On SEDC
Audit
* September 10, 2008: Audit:
SEDC Bonuses Amount To Fraud
* August 8, 2008: Lawsuit Filed
Against Ex-SEDC President
* August 7, 2008: Report:
Ex-SEDC President Gave Herself
Bonuses
* July 24, 2008: SEDC President
Carolyn Smith Fired
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LAWSUIT #3 2010:
Carolyn Walker v.
SEDC
When she's not suing
public entities,
Devaney is defending
them from similar
"frivolous" lawsuits

Ironically, Leslie Devaney serves as a
board member of CALA, Californians
Against Lawsuit Abuse
Rumor: BBK attorney
Woody Merrill was
fired and they brought
in Biggs.  The fired
administrators
brought in SASH
because an employee
who is a board
member at Carlsbad
USD is friends with
Davaney and Artiano.
Her name is Kelly, so
Kelly referred the fired
employees to SASH.
Tri-City releases
details of Gonzalez
settlement
By North County Times
May 4, 2009

OCEANSIDE ----
Former Tri-City
Medical Center Chief
Executive Officer
Arthur Gonzalez will
receive about
$900,000 plus benefits
under a settlement
agreement released
by the hospital's
attorney late Monday
afternoon.

The money includes
$125,000 up front, as
well as payments of
$41,250 per month ----
Gonzalez's regular
base salary --- for the
next 18 months.
It's Leslie
Devaney (left)
versus Kathleen
Sterling (right).
Devaney has targeted board member Kathleen Sterling in lawsuit against
Tri-City Hospital.
S.D. mayor is right on how poorly run state is
By Logan Jenkins
San Diego Union Tribune
July 26, 2009

... A spiky bouquet – the Sterling Silver Tongue award – to the attorneys for seven fired Tri-City
executives who are suing four board members, Tri-City Medical Center and its current CEO for
illegal termination and defamation.

Without judging the merits of the case, one thing you have to admire about the lawsuit's
complaint, fashioned by the law firm of Stutz, Artiano, Shinoff & Holtz, is the way it focuses like a
laser on what it calls, over and over and over, the “Sterling Faction.”

The overriding theory of the lawsuit is that the chain of events that led to the firing of the seven
high-level executives, as well as the departure of former CEO Arthur Gonzalez via settlement,
was orchestrated exclusively by Kathleen Sterling, a maverick board member with a score of
scores to settle against the Tri-City executives and several hostile board members.

Here's an illustrative paragraph from the complaint that lays out the dynamic that the plaintiffs
hope will earn them millions of dollars in damages:

“The Healthcare Executives are informed and believe that as soon as elected (in November),
the Sterling Faction set out to exact revenge against the Healthcare Executives and then-CEO
Gonzalez who had worked for so many years to protect the District and the public from
Defendant Sterling's abuses and that the Sterling Faction set out to exact retribution for the
Healthcare Executives' perceived anti-union political beliefs. Even before the elections were
certified, the union-backed Sterling Faction began meeting as a group to plot the ouster . . . ”

In the plaintiffs' narrative, the other board members of the Sterling Faction – RoseMarie Reno,
Charlene Anderson and George Coulter – were mere pro-union stooges under Sterling's
decisive thumb.

By focusing the lawsuit on Sterling, the Exiled Seven's attorneys accomplish a couple of things.
They create a colorful villain with a well-documented history of odd behavior. Moreover, they
posit a highly personal motive for the firings – Sterling's burning desire for vengeance – that
dovetails with the allegedly self-interested agenda of the nurses union.

If a jury ever hears this mother of all termination cases – each plaintiff is asking for a minimum
of a million dollars, and that doesn't include punitive damages – Sterling will be the alleged
conspiracy's ringleader, the star of the show.

And the other defendants? They're just stooges, along for the ride.
LAWSUIT #1. 2010: Tri-City
Hospital sued by attorneys
Leslie Devaney and
Ray
Artiano on behalf of fired
administrators
A Tale of Three Lawsuits:
Which Leslie Devaney case is the most frivolous?
LAWSUIT #2 2007: Devaney,
a partner in Stutz, Artiano,
Shinoff & Holtz, is
suing San
Diego Education Report for
defamation.
Devaney and Ariano answer to motion to dismiss

Allen Coleman et., al v. Sterling et. all case No. CV—01594-W- Porter
Case 3:09-cv-01594-W-POR Document 19 Filed 09/21/2009 Page 16 of 18

...Since the moment the Healthcare Executives filed this lawsuit, delay has been the
Defendants’ watchword. The complaint contains ten claims, nine of which are state
law claims and the single federal claim for violation of U.S. constitutional rights
would have been properly heard in State Court. Rather than answer the complaint
in State Court, the Defendants removed this action to this Federal Court, where it
need not be. Rather than answer, the Defendants filed four motions to strike or
dismiss claims. Among those delay tactics is this motion to strike language used in
the Complaint and five of the 155 paragraphs of the Complaint. The motion should
be denied.

Motions to Strike for Redundant, Immaterial, Impertinent or Scandalous Matter are
Highly Disfavored as Time-Wasters

The function of a motion to strike is to avoid unnecessary expenditures that arise
throughout litigation by dispensing of any spurious issues prior to trial. Chong v.
State

Farm Mut. Auto. Ins. Co., 428 F.Supp.2d 1136, 1139 (S.D.Cal.2006); Sidney-
Vinstein v. A.H. Robins Co., 697 F.2d 880, 885 (9th Cir.1983). Rule 12(f) motions
“are generally regarded with disfavor because of the limited importance of pleading
in federal practice, and because they are often used as a delaying tactic.” Neilson
v. Union Bank of Cal., N.A., 290 F.Supp.2d 1101, 1152 (C.D.Cal.2003).

Courts generally grant a motion to strike only where “it is clear that the matter
to be stricken could have no possible bearing on the subject matter of the
litigation.” LeDuc v.Kentucky Cent. Life Ins. Co., 814 F.Supp. 820, 830 (N.D.Cal.
1992).

The Healthcare Executives request the Court take judicial notice of Defendant’s
own pleadings on record with the San Diego Superior Court pursuant to Federal
Rule of Evidence, 201(b). See, U.S. ex rel Robinson Rancheria Citizens Council v.
Borneo, Inc., 971 F.2d 244, 248 (9th Cir.1992)

(“Federal courts may take notice of proceedings in other courts, both within and

without the federal judicial system, if those proceedings have a direct relation to the
matters at issue.”; Rothman v. Gregor, 220 F.3d 81, 92 (2nd Cir. 2000) (judicial
notice of complaint in another court pursuant to Rule 201(b).)

Obviously, there will be many opportunities for Defendant Sterling to object to
attacks on her credibility when the time comes for submission of evidence in this
case, but the allegation is relevant.

The allegation is relevant. Moreover, the fact that her fellow Board

Members hired security guards out of fear for their safety also relates to
demonstrating Kathleen Sterling is an unreliable witness who lacks credibility. See
Federal Rule of Evidence 608(a).

Again, this fact will be relevant to Kathleen Sterling’s credibility as a witness for all
purposes. See Federal Rule of Evidence 608(a).

Her challenges to the sufficiency of the sixth claim for defamation and the eighth
and ninth claims for violations of California's Labor Code, is without merit.

Legal Standard on a Motion to Dismiss: Any Cognizable Theory Properly Pled
Should be Upheld

A Rule 12(b)(6) motion to dismiss tests the complaint's sufficiency. See, North Star
Int'l.v. Arizona Corp. Comm'n., 720 F.2d 578, 581 (9th Cir.1983). A complaint may
be dismissed as a matter of law for two reasons: (1) lack of a cognizable legal
theory, or (2) insufficient facts under a cognizable theory. Robertson v. Dean Witter
Reynolds, Inc., 749 F.2d 530, 534 (9th Cir.1984); Neitzke v. Williams, 490 U.S. 319,
326-27, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989) (“Rule 12(b)(6) authorizes a court
to dismiss a claim on the basis of a dispositive issue of law.”).

In reviewing a Rule 12(b)(6) motion, the court assumes all factual allegations are
true, and construes them in the light most favorable to the nonmoving party.
Gompper v. VISX, Inc., 298 F.3d 893, 895 (9th Cir.2002). And the complaint, and all
reasonable inferences therefrom, are construed in plaintiff's favor. Walleri v. Fed.
Home Loan Bank of Seattle, 83 F.3d 1575, 1580 (9th Cir.1996).

And, although a complaint attacked by a Rule 12(b)(6) motion to dismiss does not
nee detailed factual allegations, a plaintiff's obligation is to provide more than
labels and conclusions -- a formulaic recitation of the elements of a cause of action
are insufficient. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). A
complaint will be sustained where the allegations “raise a right to relief above the
speculative level.” Id. This motion to dismiss motion should be denied.

“In April 2007, the news media reported that Defendant Sterling had accused
District administrators of mis-handling Medi-Cal and Medicare funds.” This is
published allegation charging all of the financial professionals among the
Healthcare Executives with professional incompetence and malfeasance.
Defendant Sterling called each of the Healthcare Executives incompetent.

“At the very time that the Sterling Faction placed the District's entire executive team
on leave, the media reported results of an independent audit conducted by the
Office of Statewide Hospital Planning and Development showing that ‘Tri-City had
completed one of its most successful financial years

in recent history.’ The reality is that the Healthcare Executives were doing an
excellent job running the District. . .” Defendant Reno, too, is alleged to have
defamed the professional reputations

Reno also stated that she hired Michael Williams ‘to conduct a forensic
investigation into District finances and operations.’ Reno later stated that, ‘The
action the Board has taken . . . is about protecting District and the assets of the
hospital . . .’.”

Defendant Reno accused the Healthcare Executives of being professionally
incompetent - or worse. As in Gould, these allegations infer that each of the
Healthcare Executives was incompetent, lacked professionalism and that they
may have engaged in criminal conduct.

The complaint alleges that Coulter stated, “Some things don't seem ethical and not
even legal.”

[Paragraph 55 & 105.] This allegation directly impugns the competence of each of
the Healthcare Executives who each had just been placed on leave and identified in
the media. Even worse, Defendant Coulter affirmatively suggests the Healthcare
Executives have committed crimes. The Healthcare Executives have stated a claim
for defamation against Defendant Coulter defamed each Healthcare Executive.

Defendant Healthcare District CEO Larry Anderson also defamed
The Healthcare Executives have been told that the investigation report in question
contains false allegations of professional misconduct against each one of the
Healthcare Executives.

However, the report, prepared by or at the direction of Defendant Larry Anderson,
falsely disparages the professional reputations of each Healthcare Executive and
the report was published.

In Rogers v. Home Shopping Network, Inc., 57 F.Supp.2d 973, 982 (C.D.Cal.1999)
the Court analyzed California’s anti-SLAPP statue as applied in federal courts and
held, “[I]f a defendant desires to make a special motion to strike based on the
plaintiff’s lack of evidence, the defendant may not do so until discovery has been
developed sufficiently to permit summary judgment under Rule 56.”

The Ninth Circuit, however, has altered the second part of the analysis because
requiring a party to present admissible evidence before discovery is complete is
akin to a motion for summary judgment and the Federal Rules of Civil Procedure
and federal case law forbid such a requirement. In Metabolife Intern., Inc. v.
Wornick, 264 F.3d 832, 846 (2001), the Ninth Circuit expressly adopted the holding
of Rogers v. Home Shopping Network, Inc., 57 F.Supp.2d 973, 980

(C.D.Cal.1999) in which the Central District Court of California rejected application
of the procedural aspects of California’s anti-SLAPP statute.


The Rogers Court explained, “[The provisions of section 425.16] create a default
rule that allows the defendant served with a complaint to immediately put the
plaintiff to his or her proof before the plaintiff can conduct discovery. . . . If this
expedited procedure were used in federal court to test the plaintiff’s evidence
before the plaintiff has completed discovery, it would collide with Federal Rule of
Civil Procedure 56.” Supra, 57 F.Supp.2d at 980.

The Federal Rules discourage motions for summary judgment based on evidence
outside the record until the nonmoving party has had the opportunity to conduct
discovery. Rule 56(f) provides that if the party opposing a motion for summary
judgment cannot yet submit evidence supporting its opposition, “the court may
refuse the application for judgment or may order a continuance to permit affidavits
to be obtained or depositions to be taken or discovery to be had or may make such
other order as is just.” Fed.R.Civ.P. 56(f). The Supreme Court has restated this rule
as requiring, rather than merely permitting, refusal “where the nonmoving party has
not had the opportunity to discover information that is essential to his opposition.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 n. 5, 106 S.Ct. 2505, 91
L.Ed.2d 202 (1986).Id. at 981.

The requirements of the Federal Rules of Civil Procedure mandate that, “[I]f a
defendant desires to make a special motion to strike based on the plaintiff’s lack of
evidence, the defendant may not do so until discovery has been developed
sufficiently to permit summary judgment under Rule 56.” Id. at 982. (holding
specifically adopted by Metabolife Intern., Inc. v. Wornick, 264 F.3d 832, 846 (9th
Cir. 2001).)

Taken together, The District Defendants’ Special Motion to Strike based on
California’s anti-SLAPP statute is untimely. Even if the subject of this action were
properly addressed by the anti-SLAPP statute - which it is not - the motion cannot
be filed at this time because no party has had any right to take discovery. Because
the motion must be denied, the Healthcare Executives request an award of their
attorneys fees as authorized by California Code of Civil Procedure section 425.16.

Defamation is an invasion of the interest in reputation. The tort involves the
intentional publication of a statement of fact that is false, unprivileged, and has a
natural tendency to injure or which causes special damage. (Civ. Code §§ 45, 46;
5 Witkin, Summary of Cal. Law (9th ed. 1988) Torts § 471, pp. 557-558.)
Publication means communication to some third person who understands the
defamatory meaning of the statement and its application to the person to whom
reference is made. Publication need not be to the “public” at large; communication
to a single individual is sufficient. (Cunningham v. Simpson (1969) 1 Cal.3d 301,
306; , 81 Cal.Rptr. 855, 461 P.2d 39 5 Witkin, Summary of Cal. Law, supra, Torts,
§§ 471, 476, pp. 557-558, 560- 561.) Reprinting or recirculating a libelous writing
has the same effect as an original publication. (Gilman v. McClatchy (1896) 111

Plaintiff’s Opposition to dismiss defendants’ Rule 12
9b0 (6) motion to dismiss and for a more definite
statement

LEGAL DISCUSSION

A. Legal Standard on a Motion to Dismiss: Any Pled Cognizable Theory Should be
Upheld

A Rule 12(b)(6) motion to dismiss tests the complaint’s sufficiency. See, North Star
Int’l. v. Arizona Corp. Comm’n., 720 F.2d 578, 581 (9th Cir.1983). A complaint may
be dismissed as a matter of law for two reasons: (1) lack of a cognizable legal
theory, or (2) insufficient facts under a cognizable theory. Robertson v. Dean Witter
Reynolds, Inc., 749 F.2d 530, 534 (9th Cir.1984); Neitzke v. Williams, 490 U.S. 319,
326-27, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989) (“Rule 12(b)(6) authorizes a court
to dismiss a claim on the basis of a dispositive issue of law.”).

In reviewing a Rule 12(b)(6) motion, the court assumes all factual allegations are
true, and construes them in the light most favorable to the nonmoving party.
Gompper v. VISX, Inc., 298 F.3d 893, 895 (9th Cir.2002). And the complaint, and all
reasonable inferences therefrom, are construed in plaintiff’s favor. Walleri v. Fed.
Home Loan Bank of Seattle, 83 F.3d 1575, 1580 (9th Cir.1996).

And, although a complaint attacked by a Rule 12(b)(6) motion to dismiss does not
need detailed factual allegations, a plaintiff’s obligation is to provide more than
labels and conclusions -- a formulaic recitation of the elements of a cause of action
are insufficient. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). A
complaint will be sustained where the allegations “raise a right to relief above the
speculative level.” Id. This motion to dismiss motion should be denied.


A court’s function on a Rule 12(b)(6) motion “is not to weigh potential

evidence that the parties might present at trial, but to assess whether the plaintiff’s
complaint alone is legally sufficient to state a claim for which relief may be granted.”
Sutton v. Utah State Sch. for the Deaf & Blind, 173 F.3d 1226, 1236 (10th Cir.
1999).

California Labor Code section 1102.5, subdivision (a) provides: “No employer shall

make, adopt, or enforce any rule, regulation, or policy preventing an employee
from disclosing information to a government or law enforcement agency, where the
employee has reasonable cause to believe that the information discloses a
violation of state or federal statute, or violation or noncompliance with a state or
federal regulation.” Subdivision (b) provides: “No employer shall retaliate against
an employee for disclosing information to a government or law

enforcement agency, where the employee has reasonable cause to believe that the
information discloses a violation of state or federal statute, or violation or
noncompliance with a state or federal regulation.” This statute is sometimes known
as a whistle blower protection law.



...prove whistle blowing retaliation, a plaintiff must show (1) she engaged
in a protected activity,
(2) her employer subjected her to an adverse
employment action, and (3) there is a link between the two. Patten v. Grant Joint
Union High School Dist., 134 Cal.App.4th 1378, 1384 (2005). Additionally, in the
case of an employee of a public agency, the employee is covered by the whistle
blower protections if the employee reports the alleged wrongdoing to a superior.

Cal. Labor Code, § 1102.5(e) (“A report made by an employee of a government
agency to his or her employer is a disclosure of information to a government or law
enforcement agency . . .”)

Here, the evidence demonstrates all of the facts necessary to prove the Healthcare

Executives were fired for taking action to vindicate the public’s right to know what its
elected officials are doing. The Healthcare Executives filed a writ petition with the
San Diego County Superior Courts, a branch of the State Government, alleging the
District Defendants violated the California Brown Act. [Mahlowitz Decl., Exh. A
(Brown Act Petition).] The Brown Act protects the public by requiring that all
activities of public entities be conducted in public.

Violation of the Act is a criminal offense. Cal. Gov. Code § 54959. These facts are
alleged in the Complaint in this federal court.


In deciding a motion to dismiss, “A court also may consider documents that are
referred to in the complaint, that are ‘central’ to the plaintiff’s claims, and whose
authenticity is undisputed.” In re New Century, 588 F.Supp.2d 1206, 1219 (C.D.Cal.
2008) (citing Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir.

1994), overruled on other grounds, 307 F.3d 1119, 1127 (9th Cir.2002).)

The Ninth Claim for Violation of Labor Code § 1102.5 Alleges Multiple Protected

Whistle Blowing Activities Stemming From Defendant's Many Violations of the
California Brown Act

Again, Although Defendant Sterling has no standing to challenge the Ninth Claim,
for which only the Healthcare District Defendant can be liable, she has asserted the
claim is not properly alleged. The motion to dismiss the Ninth Claim should be
denied because she has no standing to challenge the claim. Moreover, her
arguments are wrong.

California Labor Code section 1102.5, subdivision (a) provides: “No employer shall

make, adopt, or enforce any rule, regulation, or policy preventing an employee
from disclosing information to a government or law enforcement agency, where the
employee has reasonable cause to believe that the information discloses a
violation of state or federal statute, or violation or noncompliance with a state or
federal regulation.” Subdivision (b) provides: “No employer shall retaliate against
an employee for disclosing information to a government or law enforcement
agency, where the employee has reasonable cause to believe that the information

discloses a violation of state or federal statute, or violation or noncompliance with a
state or federal regulation.” This statute is sometimes known as a whistle blower
protection law.

To prove whistle blowing retaliation, a plaintiff must show (1) she engaged in a
protected activity, (2) her employer subjected her to an adverse employment
action, and (3) there is a link between the two. Patten v. Grant Joint Union High
School Dist., 134 Cal.App.4th 1378, 1384 (2005). Additionally, in the case of an
employee of a public agency, the employee is covered by the whistle blower
protections if the employee reports the alleged wrongdoing to a superior.

Cal. Labor Code, § 1102.5(e) (“A report made by an employee of a government
agency to his or her employer is a disclosure of information to a government or law
enforcement agency . . .”)

No requirement exists that the report be made to a different governmental agency.

Here, the evidence demonstrates all of the facts necessary to prove the Healthcare

Executives were fired for taking action to vindicate the public's right to know what its
elected officials are doing. The Healthcare Executives filed a writ petition with the
San Diego County Superior Courts, a branch of the State Government, alleging the
District Defendants violated the California Brown Act. [Mahlowitz Decl., Exh. A
(Brown Act Petition).] The Brown Act protects the public by requiring that all
activities of public entities be conducted in public.

Violation of the Act is a criminal offense. Cal. Gov. Code § 54959.

These facts are alleged in the Complaint in this federal court. In deciding a motion
to dismiss, “A court also may consider documents that are referred to in the
complaint, that are ‘central’ to the plaintiff's claims, and whose authenticity is
undisputed.” In re New Century, 588 F.Supp.2d 1206, 1219 (C.D.Cal. 2008) (citing
Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir.1994), overruled on other grounds,
307 F.3d 1119, 1127 (9th Cir.2002).) Here, the Brown Act Petition is alleged is
central to the pending Complaint. The Court is entitled to take judicial notice of the
records of other courts as explained above in Part III(B). After the Brown Act
Petition was filed, the District Defendants fired the Healthcare Executives.
[Complaint, ¶ 9 (Healthcare Executives terminated Aril 23, 2009).] The Complaint
alleges a violation of section 1102.5 on this ground.

Additionally, as explained in the Brown Act Writ Petition identified in the Complaint
at paragraph 21, prior to being fired, the Healthcare Executives served the District
Defendants with a letter identifying the Brown Act violation and requesting the
District cure it's violations of the

law. [Mahlowitz Decl, Exh.A (Brown Act Petition, at Exh. 3).] As explained above, it is
proper for this Court to consider authentic evidence referenced in the Complaint in
opposition to this Motion to Dismiss. By reporting the allegations of Brown Act
violations to their superiors – the District Board -- the Healthcare Executives
establish a second basis to assert they were wrongfully terminated four months
after filing the Petition and letter asking for corrections in retaliation for their whistle
blowing activities. The allegations of retaliation for whistle blowing activity are well
alleged and nearly established as a matter of fact.


The Sixth Claim for Defamation is Properly Alleged as to Defendant Sterling and
the remaining Defendants

The California Court of Appeal has explained the elements of a claim for
defamation as follows:

Defamation is an invasion of the interest in reputation. The tort involves the
intentional publication of a statement of fact that is false, unprivileged, and has a
natural tendency to injure or which causes special damage. (Civ.Code, §§ 45, 46;
5 Witkin, Summary of Cal. Law (9th ed. 1988) Torts § 471, pp. 557-558.)
Publication means communication to some third person who understands the
defamatory meaning of the statement and its application to the person to whom
reference is made. Publication need not be to the “public” at large; communication
to a single individual is sufficient. (Cunningham v. Simpson (1969) 1 Cal.3d 301,
306; , 81 Cal.Rptr. 855, 461 P.2d 39 5 Witkin, Summary of Cal. Law, supra, Torts,
§§ 471, 476, pp. 557-558, 560- 561.) Reprinting or recirculating a libelous writing
has the same effect as an original publication. (Gilman v. McClatchy (1896) 111
Cal. 606, 612, 44 P. 241; Rest.2d Torts, §§ 576, 578; 5 Witkin, Summary of Cal.
Law, supra, Torts, § 478, pp. 562-563.)

Smith v. Maldonado, 72 Cal.App.4th 637, 647 (1999). The essential elements, thus,
are (1) intentional publication, (2) statement of fact, (3) that is false and
unprivileged and (4) has a tendency to injure or which causes special damage.

California Civil Code section 46 defines defamation and slander as an unprivileged,
false publication regarding an individual that, “Tends directly to injure him in
respect to his office, profession, trade or business, either by imputing to him
general disqualification in those respects which the office or other occupation
peculiarly requires, or by imputing something with reference to his office,
profession, trade, or business that has a natural tendency to lessen its profits.”
(See also Cal. Civ. Code § 44 (slander is defamation).)

Particularly instructive regarding the defamation claim in this action is the California

Court of Appeal decision in Gould v. Maryland Sound Industries, Inc., 31 Cal.App.
4th 1137 (1995). Like this case, Gould concerned claims for wrongful termination
and separate claims for the tort of defamation. In Gould, the employer made an
accusation that the employee had made a $100,000 mistake in a contractual
bidding situation. Id. at 1154. The Court found this allegation withstood a motion to
dismiss, holding, “This statement would tend to injure [the employee] by imputing to
him incompetence in his trade.” Id. Thus, defamation occurred even though the
employer did not directly state, “you are incompetent.” Defamation occurs by

imputation of the statements made in context. Here, all of the publications made by
the Defendants, as alleged by the Healthcare Executives either directly or by
imputation, assault the professional reputations of each Healthcare Executive.

Defendant Sterling, herself, identifies the defamation claims alleged against her as
part of her concurrently-filed Motion to Strike. [Sterling Motion to Strike, p. 2:6-12.]
Sterling's  Motion to Strike objects to paragraph 35 of the Complaint which alleges:
“In April 2007, the news media reported that Defendant Sterling had accused
District administrators of mis-handling Medi-Cal and Medicare funds.” This is
published allegation charging all of the financial professionals among the
Healthcare Executives with professional incompetence and malfeasance.
Defendant Sterling called each of the Healthcare Executives incompetent.

The Complaint, also at paragraph 35, states that Defendant Sterling's accusations
are false, alleging: “News reports cited State Department of Health and Human
Services sources as absolutely rejecting Defendant Sterling's allegations.”
Additionally, at paragraph 46 (oddly objected to as irrelevant by Defendant
Sterling's Motion to Strike), the Healthcare Executives

again demonstrate the falsity of Defendant Sterling's accusations by alleging, “At
the very time that the Sterling Faction placed the District's entire executive team on
leave, the media reported results of an independent audit conducted by the Office
of Statewide Hospital Planning and Development showing that ‘Tri-City had
completed one of its most successful financial years in recent history.’ The reality is
that the Healthcare Executives were doing an excellent job running the District. . .”

Defendant Reno, too, is alleged to have defamed the professional reputations of
the

Plaintiffs. Paragraphs 55 and 105 of the Complaint allege that shortly after
December 18, 2008, Defendant Reno made remarks in the media concerning the
Board's employment actions as follows: “Defendant Reno justified the action that
was taken as being necessary ‘to secure the District's assets and records . . .’
Reno also stated that she hired Michael Williams ‘to conduct a forensic
investigation into District finances and operations.’ Reno later stated that, ‘The
action the Board has taken . . . is about protecting District and the assets of the
hospital . . .’.”

Additionally, at paragraph 56 of the complaint, Reno is alleged to have stated to
the media that termination letters to each of the Healthcare Executives were sent
“for cause.” By stating termination was”for cause,” the Healthcare District and
Defendant Reno accused the Healthcare Executives of being professionally
incompetent - or worse. As in Gould, these allegations infer that each of the
Healthcare Executives was incompetent, lacked professionalism and that they may
have engaged in criminal conduct. As in Gould, a claim for defamation against
Defendant

Reno is stated. Defendant Coulter also defamed the Healthcare Executives.
Paragraphs 55 and 105 of the Complaint address comments Defendant Coulter
made to the media shortly after the Healthcare Executives were placed on
administrative leave. The complaint alleges that Coulter stated, “Some things don't
seem ethical and not even legal.” [Paragraph 55 & 105.] This allegation directly
impugns the competence of each of the Healthcare Executives who each had just
been placed on leave and identified in the media. Even worse, Defendant Coulter
affirmatively suggests the Healthcare Executives have committed crimes. The
Healthcare

Executives have stated a claim for defamation against Defendant Coulter defamed
each Healthcare Executive.

Defendant Healthcare District CEO Larry Anderson also defamed the Healthcare

Executives. Paragraph 108 of the Complaint states, “The Healthcare Executives are
informed that the ‘confidential investigation’ and/or the alleged findings which have
still not been shared with the Healthcare Executives, have been shared with other
employees of Tri-City Healthcare District by Defendant Larry Anderson, and that
said investigation or statements concerning the investigation contain the false
statements impugning the character and professional reputations of the Healthcare
Executives.” The Healthcare Executives have been told that the investigation report
in question contains false allegations of professional misconduct against each one
of the

Healthcare Executives. Although none of the Plaintiffs has personally seen the
report, they have discussed the report with persons to whom Defendant District
CEO Larry Anderson showed the report. Thus, the allegation must be made at this
time on information and belief. However, the report, prepared by or at the direction
of Defendant Larry Anderson, falsely disparages the professional reputations of
each Healthcare Executive and the report was published. Defendant Larry
Anderson is also alleged, at paragraph 107, to have told hospital employees during
the investigation that no Healthcare Executive would be returning to the District.
Thus, each Healthcare Executive was accused of having engaged in some form of
professional misconduct - more defamation. The Healthcare Executives have
alleged sufficient facts to withstand a motion to dismiss and have earned the right
to undertake discovery to marshal admissible evidence to support this allegation at
trial.

Liability of Defendant Charlene Anderson, the District and each Defendant Board

Member. The Complaint also asserts, at paragraph 115, that the defamation
identified above was known to and ratified by each individual member of the Board
and ratified by the Defendant Healthcare District Board on behalf of the District.
See, Shively v. Bozanich, 31 Cal.4th 1230, 1245 (2003) (“[E]ach person who takes
a responsible part in a publication of defamatory matter may be held liable for the
publication.”) This intentional plan to disparage the reputation of each Healthcare
Executive via the above statements presents another basis upon which liability for
defamation as to each of the Defendant District Board Members, including
Defendant Charlene Anderson, as well as the District itself. The Complaint alleges
that each of the above allegations was reasonably understood to assert that each
Healthcare Executive committed a crime or was professionally incompetent [ ¶ 112];
that all of the allegations are untrue [ ¶ 110]; that they were stated or understood
as fact, not opinion [¶ 111]; and that they were made with malice or recklessly and
were not privileged [¶ 115]. Finally, damages are alleged. [ ¶ 116.] The Healthcare
Executives have stated a claim for defamation against each and every defendant in
this action.

Case 3:09-cv-01594-W-POR Document 19 Filed 09/21/2009 Page 16 of 18
OCEANSIDE: Tri-City seven suit moves to federal court
Case could be split, attorneys say
North County Times
PAUL SISSON

A lawsuit by seven fired Tri-City Medical Center administrators has moved from state to federal court.

Tom Tosdal, the attorney for hospital Director Kathleen Sterling, said he asked for the case to be removed
because it makes a claim that board members, and Tri-City's top administrator, violated the federal Civil Rights
Act when the seven were fired April 23.

"This is right in the federal court's wheelhouse," Tosdal said.

The suit, filed July 15, asks for more than $1 million in damages per client for a range of affronts from wrongful
termination to defamation of character.

Leslie Devaney, one of the attorneys representing the fired administrators, said Friday that, while the lawsuit
against the board does make a federal claim, most of the allegations rely on state law.

"We're going to be asking that the court remand our claims that are state claims back to state court," Devaney
said.

If that happened, then there would technically be two cases, one in state court and a second in federal court,
involving many of the same issues and players.

Tosdal said he would resist any Devaney's request to send part of the lawsuit back to the state courts.

"I'm not interested in cellular division of this case," he said.

The legal battle arises out of a long-fought battle at Tri-City that started with four of seven directors putting former
hospital chief executive officer Arthur Gonzalez and seven administrators who worked for him on paid
administrative leave Dec. 18.

Gonzalez later reached a settlement with the hospital and found a new job at a large public hospital in
Minneapolis, Minn. Contracts for each of the fired administrators state that they are "at will" employees of the
hospital, meaning that they can be let go without cause. However, their lawsuit against the hospital alleges that
they were fired for illegal reasons, including retaliation for perceived anti-union beliefs.

In subsequent federal filings, Tosdal says he will ask a federal judge, at an upcoming hearing Oct. 5, to dismiss
several of the defamation claims against Sterling because the administrators' attorneys have failed to state
specific instances when she publicly said or wrote negative things about the seven administrators.

"They've made cases for defamation against Sterling, but they haven't said that she said or did anything
defamatory," he said.

Devaney said she is confident that the claims were properly worded.
OCEANSIDE: Tri-City investigation winding down
North County Times
PAUL SISSON
February 12, 2009

Tri-City Medical Center's ongoing financial investigation is in its final weeks and a report on the
probe is nearly ready, the hospital's interim chief executive said Wednesday.

The chief executive, Larry Anderson, made the assessment after a committee meeting Wednesday.
He said a report will likely be provided to hospital directors in private before a decision is made on
what information will be released to the public.

The probe started Dec. 18 when four of Tri-City's seven board members put eight top
administrators, including chief executive Arthur Gonzalez, on paid administrative leave. At the same
meeting, the board members hired an accountant to examine the hospital's books.

A contract with the accountant, Michael Williams, specifies that he was to look into the "accuracy
and fairness" of Tri-City's financial performance as it pertained to the hospital's bonus programs,
which paid hospital staff more than $1 million in 2008 as a reward for meeting patient health care
goals and for turning a profit.

Williams' contract also says he will examine a recent bond refinancing deal that has soured with
the collapse of the national auction-rate securities market, and that he will determine how proceeds
from those bonds affected the hospital's financial performance. Additionally, the investigator is to
review "alleged retaliatory actions" made by hospital management against various employees.

Citing confidentiality concerns, board members have declined to say more about the allegations.

On Wednesday, a hospital committee was scheduled to examine, and perhaps approve, a formal
plan for the replacement of Tri-City's chief executive officer. According to the board's secretary,
succession planning came up in March 2008, long before the current board decided to put its top
administrators on leave. The item was postponed Wednesday at the suggestion of board
Chairwoman RoseMarie Reno in light of the ongoing investigation.

"I think we should table it for one month," Reno said. "We don't know what changes are coming up."

Anderson, the chief executive hired in mid-January, told committee members that he has begun to
look at the hospital's administrative processes with an eye toward freeing up extra cash. He said he
has found some areas, such as paying a recruiter to identify candidates for midlevel management
positions that the hospital does not intend to fill, that can be cut to save money.

"We're paying for things we're not using," Anderson said.

After Wednesday's meeting, Reno indicated, in a conversation with hospital attorney Julie Biggs,
that board member Kathleen Sterling had requested a special meeting to appoint a new hospital
CEO. Reno read a draft of a letter she indicated she would send to Sterling declining her request.

Sterling could not be reached for comment Wednesday night. Reno and Biggs declined to
elaborate.

It was unclear Wednesday whether Sterling had formally asked the board to fire Gonzalez or
whether she seeks to make Anderson's position permanent.

Contact staff writer Paul Sisson at (760) 901-4087 or psisson@nctimes.com.

CORRECTION: Sterling did not request meeting

A story that ran in some editions of the Feb. 12 North County Times contained incorrect information,
according to hospital attorney Julie Biggs. Biggs said Tri-City board member Kathleen Sterling did
not request a special meeting and that a letter written by board Chairwoman Rosemarie Reno was
to inform Sterling, the vice chairwoman, that no meeting was to be called while Reno was out of
town.
No Severance for
Ousted
Redevelopment Chief
April 7, 2011
Will Carless
Voice of San Diego

The city of
San Diego
redevelopment agency
responsible for
revitalizing a large part of
southeastern San Diego
has settled a long-running
legal feud with its former
president, Carolyn Y.
Smith.

Smith will receive a total of
$23,000 from the agency as
reimbursement for legal fees
she incurred while working at
SEDC. But she will not
receive a controversial
$100,350 severance
payment she was initially
offered and will also not
receive additional money she
argued she was owed from
her retirement account,
according to the settlement.

The agency's board voted
unanimously for the
settlement in a meeting
today. SEDC also plans to
deny Smith reimbursement of
her legal fees in this dispute,
which has been continuing
for at least two years, said
Leslie Devaney, SEDC's
corporate counsel. Devaney
said Smith is not entitled to
reimbursement of those legal
fees, which she estimated
amount to hundreds of
thousands of dollars. A judge
will have to decide on that
matter.

Smith walks away from the
dispute with something else,
however: SEDC has
promised to drop a counter-
suit it filed against her last
year that claimed Smith
manipulated public funds
available to the agency in a
number of ways to enrich
herself.

Devaney said today's
settlement is a significant
success for SEDC. The
public agency's insurance
company will pay for the cost
of defending Smith's lawsuit
and will also reimburse Smith
the $23,000, she said.

"It's a very good result. SEDC
won't have to pay anything
and hasn't paid anything,"
Devaney said.

D. Cruz Gonzalez, SEDC
board chairman, said he was
relieved that the legal fight
was over.

"We're going to put this
behind us. We have many
more important things to deal
with," Gonzalez said.

Smith’s attorney released a
statement saying his client is
pleased that the parties to
the lawsuit can put the matter
behind them.

“She wishes nothing but the
best for the community of
Southeastern San Diego as
we all move forward,” it states.

Smith was ousted from her
position as president of
SEDC in 2008 after our
investigation revealed that
she and former SEDC
Finance Director Dante
Dayacap had orchestrated a
clandestine bonus system
that paid out more than $1
million to SEDC staffers over
the course of five years.
Smith and Dayacap were the
largest beneficiaries from the
secret bonuses.

A city commissioned audit of
the agency the same year
found that the hidden system
of bonuses and extra
compensation rose "to the
level of fraud."

The day she was fired, Smith
was offered a $100,350
severance package by
SEDC's board.

A lawsuit filed by a local
community activist led to that
severance payment being
withheld, however. As that
lawsuit was working its way
through the courts, several
members of the SEDC board
were removed and replaced
and the newly constituted
SEDC board then rescinded
the severance payment
completely.

Smith then sued SEDC,
arguing that she was still
owed the severance and that
the agency should also pay
for legal fees she had
incurred while defending the
lawsuit from the community
activist and a separate
lawsuit brought by then-City
Attorney Mike Aguirre.

Smith later also added
another claim: That she was
owed far more than SEDC
had paid her from her
retirement account at the
agency.

SEDC claimed that during
her tenure at the agency,
Smith had unilaterally
decided to start paying 15
percent of her income into
her retirement account
instead of 12 percent, the
amount approved by SEDC's
board. The agency said
Smith wasn't entitled to the
extra 3 percent she had paid
into her account and refused
to pay out tens of thousands
of dollars Smith had
accumulated.

Today's settlement clears all
of those matters up: Smith
gets the legal fees for
defending the two cases
brought when she was an
employee, but the agency
won't pay her the severance
or the disputed retirement
account money. And it will
drop its counter-lawsuit
against Smith.

This post has been updated
to include a subsequent
statement from Smith's
attorney.
June 2012:  George Coulter
(
main witness against Tri-City
board member Kathleen Sterling)
has
background of moral turpitude
San Diego Education Report
SDER
San Diego
Education Report
SDER
SDER
SDER
Logan Jenkins writes about the
Leslie Devaney v. Kathleen
Sterling confrontation
Court of Appeal
Case Number         Trial Court
Case Number         Case Caption
D061265         
37-2011-00052050-CU-PO-NC         Tri-City
Healthcare District v. Sterling
D060490         
37-2011-00052069-CU-PT-NC         Tri-City
Healthcare District v. Sterling
D060431         
37-2011-00052050-CU-PO-NC         Tri-City
Healthcare District et al. v. Sterling
D059816         
37-2011-00052112-CU-PT-NC         Tri-City
Healthcare District v. Sterling
D059815         
37-2011-00052114-CU-PT-NC         Tri-City
Healthcare District v. Sterling
D059814         
37-2011-00052104-CU-PT-CTL         Tri-City
Healthcare District v. Sterling
D059813         
37-2011-00052103-CU-PT-NC         Tri-City
Healthcare District v. Sterling
D059812         
37-2011-00052102-CU-PT-NC         Tri-City
Healthcare District v. Sterling
D059810         
37-2011-00052101-CU-PT-NC         Tri-City
Healthcare District v. Sterling

 
Tri-City 7 and Art
Gonzalez and Kathleen
Sterling

Leslie Devaney

Tri-City Theatrics

Tri-City cases

Larry Anderson CEO
Tri-City Thank Heaven blog
DA drops case against Tri-City board member
www.utsandiego.com/.../2012/Aug/.../da-drops-case-against-tri-city-boar...‎
Aug 30, 2012 - By Aaron Burgin ... Tri-City Healthcare District board member
Kathleen Sterling is forced to attend meetings by video from a ...