The sexual harassment lawsuit involving a premier state board fills 11 volumes, its overstuffed red folders wedged into a cardboard box and stored at an off-site warehouse in Sacramento County.
The case against the Medical Board of California and five senior managers dragged on for five years before settling in 2010 for $750,000.
The story, however, did not end there.
Despite the lawsuit’s startling allegations – which described a workplace filled with after-hours trysts, favoritism, offensive comments and racial discrimination – the central defendant in the case continued to prosper in state government.
Jerry Smith, formerly the medical board’s supervising investigator, was granted a medical retirement in 2003, then returned in 2007 as a retired annuitant, collecting more pay. He left the Contractors State License Board in August 2017, according to the Controller's Office.
A sworn peace officer, Smith also petitioned the Workers’ Compensation Appeals Board in 2002, arguing he deserved additional benefits because he had been subjected to a hostile work environment due to all the internal investigations into his conduct.
In California, the state is allowed to rehire an individual who has retired from state civil service to work up to 960 hours in a fiscal year, or 24 weeks, without losing his or her CalPERS retirement benefit. The arrangement is considered a perk by many, who want to supplement their incomes without being penalized on their retirement packages.
The hiring decisions on retired annuitants are left to each department.
One other supervisor named in the lawsuit, David Thornton, also capped off his career as a retired annuitant – to the chagrin, even today, of the plaintiffs in the lawsuit.
“There’s never been any real accountability for them,” said Elizabeth Schlie, who filed the lawsuit in 2005, along with a second plaintiff, Tony Tobin. The two later were married.
Even today, Schlie and Tobin’s case provides a unique view of how vigorously the state sometimes fights these claims, and the outcomes for those individuals involved – willingly or not.
The couple’s $750,000 settlement was not the first time the state had paid out over Smith’s alleged behavior. The peace officer also had been at the center of a 2000 lawsuit against him and the Department of Consumer Affairs, the medical board’s umbrella agency.
Christopher Wilkinson, a senior investigator, had accused Smith of retaliating against him after he reported him for alleged sexual harassment and discrimination. According to the lawsuit, Wilkinson had reported Smith for taunting a new female investigator about her bra, bragging about his penis size and declaring that he would hire a secretary based on her breast size.
The state settled Wilkinson’s case in 2003 for $350,000.
A spokeswoman for the Department of Consumer Affairs noted in an email response that “in both settlements, all parties agreed that the settlement was not an admission of any liability or wrongdoing.” Such language is common in sexual harassment and retaliation suits.
Smith did not return phone calls from The Bee.
According to Schlie and Tobin’s lawsuit, the saga began in 2000 when Smith was brought into the medical board as a supervising investigator, on “loan” from the Department of Consumer Affairs. Smith already was in trouble at that agency for running an unlawful license plate check for personal reasons, according to court documents. His unit was being disbanded, and the department shipped him over to the medical board.
Schlie had joined the medical board as an investigator in 1994 and Tobin, a former firefighter/paramedic, had arrived in 2000 as an investigator assistant. A known couple in a consensual relationship, Schlie and Tobin were married in 2008.
Smith and Thornton had their own history. The two had worked together in the 1980s, and now Thornton was Smith’s supervisor. Smith was godfather to Thornton’s child.
“The cronyism is just unbelievable,” said Schlie. “... It’s the fox guarding the henhouse. There’s just no oversight.”
Shortly after Smith’s arrival at the medical board, he began making “derogatory sexual remarks and racist slurs,” referring to an African-American supervisor as “Aunt Jemina” and using an offensive term for Asians, the lawsuit states. Another investigator complained that Smith viewed pornography on his office computer, the lawsuit says.
One female co-worker allegedly told Schlie that she and Thornton were having an extramarital affair, and that the two would have after-hours sex on Schlie’s desk or in her office, the lawsuit states. Smith regularly quizzed Schlie about Thornton’s sexual relationship, which offended Schlie, the lawsuit says.
“Even though Smith and Thornton were long-time personal friends, Smith seemed obsessed for details about Thornton’s affair…,” according to the lawsuit.
Schlie filed her first written complaint against Smith in April 2001, directing it to Thornton, then the board’s chief of enforcement.
Thornton says he was asked by the medical board’s executive director at that time, Ron Joseph, to handle the investigation into Schlie’s complaint because of its “sensitive nature.” Joseph also was later named in the lawsuit.
“We just didn’t believe we should farm this out to somebody else,” said Thornton, who vigorously denies the allegations of his after-hours sexual encounters.
Acknowledging that he and Smith had been friends in the 1980s while working for a special investigative unit, Thornton said the friendship had soured by the time he received Schlie’s complaint.
Thornton issued his findings in July 2001 in a seven-page confidential report. Thornton found “no evidence” of a hostile work environment, or that Smith had made sexually inappropriate comments, according to the report, included in the court file. He did sustain the allegation of racial slurs.
Based on the report, Joseph directed Smith to take sensitivity training in two courses titled “Valuing Cultural Diversity” and “Interpersonal Communication.”
Schlie and Tobin’s 2005 lawsuit singled out Smith as the chief harasser, but also accused Thornton of doing little to change the office culture.
The lawsuit was vigorously challenged by the state’s attorneys.
In numerous filings, the state contended that the couple’s lawsuit was overblown, and that Schlie had been subjected to “a small number of rude remarks.” Looking back, Thornton – who was upset that the state settled – said he believes the couple filed suit because he had denied Tobin a promotion.
While the lawsuit lumbered along in Sacramento Superior Court, Thornton went on to become the medical board’s executive director from 2004 to 2006.
In June 2010 – nine years after Schlie filed her first internal complaint – the medical board agreed to settle the case for $750,000. The state made clear that the agreement was not an admission of any wrongdoing, or that any of its employees had treated the couple improperly or unfairly.
Schlie retired from the medical board in December 2009. Tobin, who did not want to discuss the case, left the medical board in 2008 and now works in the private sector.
Public records show that Smith had a base pay of about $6,200 a month when he took a medical retirement from the board in June 2003. He returned in 2007 as a retired annuitant at the Contractors License Board, also under the Department of Consumer Affairs, where he worked until August 2017 as an associate governmental program analyst, according to the state Controller’s Office.
He receives $5,480 a month gross for his pension, according to CalPERS.
Thornton retired from the medical board in December 2002 but stayed on in interim positions, and also had a lengthy stint as a retired annuitant. Until last month, was a retired annuitant at the Professional Fiduciaries Bureau.
“Now here we are again,” said Thornton, who worked for the state for nearly 50 years. “I’m having to defend my character that – up until this incident – had never been in question before.”
Today, Schlie said it is still hard to talk about the case that consumed the couple’s lives for a decade. She said they poured tens of thousands into the case before the state settled.
“The state threw all kinds of money at this,” she said. “It was like, who can last the longest? Who has the most stamina? Who has the most money?
“I was just exhausted,” she said. “I’m a fighter, but I’d had it. I just wanted it over with.”