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By PORAC | July 1, 2002 | Posted in PORAC LDF News

Lieutenant Obtains Injunction Preventing Department from Firing Him Based Upon Tax Return Deductions

In a case testing the limits of the financial disclosure and injunctive relief provisions of the Public Safety Officers’ Procedural Bill of Rights Act (POBR), a Siskiyou County sheriff’s lieutenant has won a court order prohibiting the county from using information in his state and federal income tax returns as a basis for discipline.

Lieutenant Patrick Kallstrom, a 22-year veteran of the Siskiyou County Sheriff’s Department, was dismissed July 11, 2001, in part on allegations he had falsely claimed business expense deductions on his state and federal tax returns for 1997-1999. Motivated by political considerations, the sheriff and the county spent thousands of dollars on an attorney and investigator from a Long Beach management-side firm to develop cause for terminating Kallstrom.

The investigator obtained copies of Kallstrom’s income tax returns from a third party who was suing Kallstrom’s wife over an unpaid loan, and the sheriff used the returns to fire Kallstrom for the allegedly false deductions.

POBR and Tax Statutes Limit Financial Disclosures: Government Code section 3308 provides broad protection for the financial privacy of peace officers by limiting the purposes for which an employer may obtain an officer’s financial data.

The statute prohibits disclosure “unless such information is obtained or required under state law or proper legal procedure[.]” In Kallstrom’s case, his attorney in the loan dispute had provided the returns to the plaintiffs under the Evidence Code privilege for settlement discussions. (Evid. Code §§ 1152, 1153.5.) There was no “state law or proper legal procedure” justifying the release of the returns to Siskiyou County’s investigator.

California’s Revenue and Taxation Code, and similar federal statutes, also provide strict confidentiality for taxpayer returns (Rev. & Tax. Code §§ 19542, 19552.). The courts have expressly condemned the acquisition of tax returns from third parties as an intolerable circumvention of this privilege (Webb v. Standard Oil Co. (1957) 49 Cal.2d 509; Sav-On Drugs, Inc. v. Superior Court (1975) 15 Cal.3d 1.).

Petition for Injunctive Relief Linked POBR and Revenue Code Provisions: When the sheriff rejected these arguments at Kallstrom’s Skelly hearing, the lieutenant turned to the PORAC Legal Defense Fund and panel attorneys David E. Mastagni and Christopher W. Miller of Mastagni, Holstedt & Amick to seek relief in Superior Court. Using Government Code section 3309.5, Kallstrom filed a petition for mandatory injunctive relief in Siskiyou County Superior Court.

The petition argued the prohibitions against financial disclosure set out in section 3308 and the Revenue and Taxation Code, together with the evidentiary privileges for settlement discussions, required the court to prevent Siskiyou County from firing Kallstrom based on the income tax returns.

Despite vehement argument from the county that section 3309.5 could not be used to seek injunctive relief based on non-POBR statutes, the visiting judge hearing Kallstrom’s petition accepted counsel’s argument provisions of the Revenue and Taxation Code and the Evidence Code were proper grounds for deciding whether there was a violation of section 3308. This preliminary decision by the judge extended jurisdiction for those claims and defeated the county’s argument that Kallstrom first had to pursue an administrative remedy for violation of those non-POBR provisions.

While the judge found a nexus existed between Kallstrom’s financial activities and his position with the sheriff’s department, he rejected the county’s claim that procuring the returns from a third party somehow nullified the protections of the POBR and tax laws. He ruled the tax returns could not be used as part of any disciplinary action because the returns are deemed confidential by the Revenue and Taxation Code.

Kallstrom’s victory in court now will be used to fight the disciplinary action. The ruling should discourage Siskiyou County and other law enforcement agencies from unwarranted and illegal invasions of employee confidentiality by hired guns looking for any excuse to end a peace officer’s career.

About The Author

David E. Mastagni represents PORAC LDF clients throughout northern California as an attorney with Mastagni, Holstedt & Amick in Sacramento.