Companies Cannot Hide Behind Taxpayer Privilege When Faced with Retaliation Claims

On January 23, 2019, in Siri v. Sutter Home Winery (click here for pdf), a case CBB was honored to co-counsel with Monique Olivier (click here for bio), the 1st appellate district held that a company could still be subject to a whistleblower retaliation suit by a former accountant who reported concerns with tax compliance.

The plaintiff was an accountant at a winery and she reported her concerns that the business was out of compliance with tax laws. Defendant sought and won summary judgment on the premise that "taxpayer privilege" meant that the plaintiff could not prove her case without using protected tax returns. The Court of Appeal rejected this argument rather quickly. Her claims do not require the returns themselves, but instead her report and belief, neither of which Defendant disputed at this stage. Defendant also argued Plaintiff could not sustain a whistleblower retaliation claim because she violated a provision of the Revenue and Taxation Code that makes revealing information learned while preparing taxes a misdemeanor. Again, the Court determined that this section could not prevent her employment claims, and declined even to weigh in on whether she had violated it.