California Fair Employment and Housing Council Regulations Effective April 1, 2016 Require Employers to Change EEO Policies Now

The California Fair Employment and Housing Council is issuing revised regulations regarding discrimination, harassment and the like under the Fair Employment and Housing Act.  Shaw Valenza will be publishing a more detailed article in the next couple of weeks, which I'll post here.

The full text of the revised regulations, with redline and strikeout to show the changes is here. 

Some of the changes will not affect how employers do business, but will affect liability in litigation if courts adopt the Council's view.  But there are several new provisions that employers will have to deal with by amending policies and procedures.

The most urgent issue for employers to deal with - right now - is the Council's new, specific requirements for anti-harassment, discrimination and retaliation policies:   Employers already have a duty to distribute a DFEH brochure or alternative document that complies with Govt Code section 12950. But now, the Council requires much more. This is from section 11023(b) of the new regulations:

In addition to distributing the Department’s DFEH-185 brochure on sexual harassment, or an alternative writing that complies with Government Code section 12950, an employer shall develop a harassment, discrimination, and retaliation prevention policy that: 

(1) Is in writing; 

(2) Lists all current protected categories covered under the Act; 

(3) Indicates that the law prohibits coworkers and third parties, as well as supervisors and
managers, with whom the employee comes into contact from engaging in conduct prohibited by the Act; 

(4) Creates a complaint process to ensure that complaints receive:

(A) An employer’s designation of confidentiality, to the extent possible;(B) A timely response; (C) Impartial and timely investigations by qualified personnel; (D) Documentation and tracking for reasonable progress; (E) Appropriate options for remedial actions and resolutions; and (F) Timely closures.

(5) Provides a complaint mechanism that does not require an employee to complain directly to his or her immediate supervisor, including, but not limited to, the following:

(A) Direct communication, either orally or in writing, with a designated company representative, such as a human resources manager, EEO officer, or other supervisor; and/or

(B) A complaint hotline; and/or

(C) Access to an ombudsperson; and/or

(D) Identification of the Department and the U.S. Equal Employment Opportunity Commission (EEOC) as additional avenues for employees to lodge complaints.

(6) Instructs supervisors to report any complaints of misconduct to a designated company representative, such as a human resources manager, so the company can try to resolve the claim internally. Employers with 50 or more employees are required to include this as a topic in mandated sexual harassment prevention training, pursuant to section 11024 of these regulations.  

(7) Indicates that when an employer receives allegations of misconduct, it will conduct a fair, timely, and thorough investigation that provides all parties appropriate due process and reaches reasonable conclusions based on the evidence collected.

(8) States that confidentiality will be kept by the employer to the extent possible, but not indicate that the investigation will be completely confidential 

(9) Indicates that if at the end of the investigation misconduct is found, appropriate remedial measures shall be taken. 

(10) Makes clear that employees shall not be exposed to retaliation as a result of lodging a complaint or participating in any workplace investigation.

These are all good ideas for employers to follow. But these now must be included in a written policy disseminated to all employees.  

The new regulations also explain how the policy must be disseminated:

Dissemination of the policy shall include one or more of the following methods:

(1) Printing and providing a copy to all employees with an acknowledgment form for the employee to sign and return;

(2) Sending the policy via e-mail with an acknowledgment return form;

(3) Posting current versions of the policies on a company intranet with a tracking system
ensuring all employees have read and acknowledged receipt of the policies;

 (4) Discussing policies upon hire and/or during a new hire orientation session; and/or (5) Any other way that ensures employees receive and understand the policies.

(d) Any employer whose workforce at any facility or establishment contains 10 percent or more of persons who speak a language other than English as their spoken language shall translate the policy into every language that is spoken by at least 10 percent of the workforce.

So, multi-state employers, no more "or any other characteristic protected by state law" in your policies. Please review EEO policies and revise them ASAP.  

It is also critical to ensure there are systems in place for addressing complaints should they arise that are consistent with the policy - such as translation if needed, dissemination of the policy and record keeping, investigations, complaint procedures, etc.

EEOC Will Provide Position Statements to Employees While Charge Is Pending...But

the door does not swing both ways.

When an employee files an administrative charge or complaint with the Equal Employment Opportunity Commission, the agency usually requires the employer to provide a position statement. A position statement is a response to the complaint charge, which is often a letter explaining the legitimate reason for action taken, along with a response to requests for information.  The EEOC uses the charge and position statement to investigate whether there is "reasonable cause" to find a violation of the federal anti-discrimination laws.

The position statements are usually subject to disclosure under the federal Freedom of Information Act during later litigation.  However, under a revised policy, employees who file the charge (and their lawyers) can simply ask for the position statements while the charge is pending. That gives the employees and their counsel what is known as "free discovery" It also gives them a chance to respond to the position statement.

The "but" in the title of this post is that the EEOC will not provide the employer with the Employee's response to the position statement upon request.  So, employers and their lawyers do not get a "free look" at the employee's proof of discrimination or harassment.

Writing a good position statement is key for several reasons.  Of course it will influence the EEOC's decision on the merits of the charge. But it also will influence the employee's lawyer's decision regarding whether to take a case. And it will affect the employer's litigation position later if there is a lawsuit.  Accuracy is important, because when an employer's reasons change over time, that can be used as proof of a discriminatory motive.

The EEOC's policy is explained on the agency's website here. The EEOC also provides tips to employers and employees linked on its site.

U.S. Supreme Court: Courts Have the Power to Review EEOC's Conciliation Efforts

The Supreme Court unanimously held that the Equal Employment Opportunity Commission's duty to "conciliate" after finding reasonable cause is reviewable in court.

The EEOC typically investigates "charges," administrative complaints filed by individuals alleging discrimination or harassment or retaliation.  If EEOC decides there is no "reasonable cause" to find a violation of Title VII, the ADA, etc., it issues a "no cause" finding and a "right to sue" letter.

But when the agency decides there IS reasonable cause to believe a violation has occurred, then it proceeds with an effort to remedy the situation. That can be via "conciliation" - e.g., a settlement proposal, mediation, etc. If that fails the EEOC can sue or issue a eight-to-sue letter.

The conciliation process is required by law.  But what happens if the employer believes the EEOC has not attempted to do so?  That's what the supreme Court considered in  Mach Mining, LLC v. EEOC.  Justice Kagan, writing for the unanimous court, explained:

This case began when a woman filed a charge with the EEOC claiming that petitioner Mach Mining, LLC, had refused to hire her as a coal miner because of her sex. The Commission investigated the allegation and found reasonable cause to believe that Mach Mining had discriminated against the complainant, along with a class of women who had similarly applied for mining jobs. See App. 15. In a letter announcing that determination, the EEOC invited both the company and the complainant to participate in “informal methods” of dispute resolution, promising that a Commission representative would soon “contact [them] to begin the conciliation process.” Id., at 16. The record does not disclose what happened next. But about a year later, the Commission sent Mach Mining a second letter, stating that “such conciliation efforts as are required by law have occurred and have been unsuccessful” and that any further efforts would be “futile.” Id., at 18–19.

The EEOC then sued Mach Mining in federal district court alleging sex discrimination in hiring. The Commission’s complaint maintained that “[a]ll conditions precedent to the institution of this lawsuit”—including an attempt to end the challenged practice through conciliation—“ha[d] been fulfilled.” Id., at 22. In its answer, Mach Mining contested that statement, asserting that the EEOC had failed to “conciliat[e] in good faith” prior to filing suit. Id., at 30.

So, the EEOC moved for summary judgment against Mach Mining on the conciliation issue, arguing that the quality of its efforts are not reviewable by a court.  The district court disagreed; the Seventh Circuit ruled in favor of the EEOC.

The Supreme Court held as follows:

1.  Courts indeed have the power to review the EEOC's efforts to conciliate. Therefore, the court rejected the EEOC's argument that it had unreviewable discretion to determine what is adequate.

2.  EEOC's letter showing that it found reasonable cause and planned to conciliate, and a later letter stating conciliation has failed is insufficient evidence of conciliation.  EEOC must provide notice to the employer of what the violation is claimed to be, and must provide a court with an affidavit that it attempted conciliation. If the employer offers credible evidence contradicting EEOC's claim, the court may do fact-finding into that limited issue.

3.  If the district court finds in favor of the employer - that the EEOC did not conciliate adequately - then it is to stay the action and order the EEOC to conciliate.

So, thanks for reading this far.  As you probably figured out, this case will have little impact on employers and employment litigation.  First, the EEOC finds reasonable cause in few cases.  Second, the failure to conciliate at best is remedied with an order to conciliate, not dismissal of the lawsuit. And third, EEOC rarely sues employers, filing lawsuits in just a small percentage of cases in which it finds cause.  Fourth, this case has no bearing on state agencies and their charges, such as the Department of Fair Employment and Housing in California.

So, that's Mach Mining, LLC v. EEOC. The opinion is here. 

California Supreme Court Washes Unclean Hands. And After Acquired Evidence, Too

The defense of "after acquired evidence" is a variation on the equitable defense of "unclean hands." A party's "unclean hands" are supposed to "close the courthouse door" to those guilty of wrongdoing directly related to the heart of his or her claims.  "Unclean hands" is supposed to apply only when the wrongdoing goes to the heart of the claims the employee is asserting.

After-acquired evidence is a broader concept, in that the focus is on whether the employer would have denied employment to the employee, had the employer known about the misconduct during the hiring process or before termination.  As the Supreme Court explained:

The doctrine of after-acquired evidence refers to an employer‟s discovery, after an allegedly wrongful termination of employment or refusal to hire, of information that would have justified a lawful termination or refusal to hire.

Unlike unclean hands, the after-acquired information may not have to cut to the heart of the employee's case. But the employer must prove that the employee would not have been hired or would have lost his or her job.

In the employment law context, for example, a California court once held that someone who lied on his employment application, that he was not convicted of a crime, was not permitted to sue for martial status discrimination under the Fair Employment and Housing Act. The court reasoned the employee was not entitled to the job in the first place because of his misconduct, because he never would have been hired. (Camp v. Jeffer Mangels et al.) Another court held that an employee who was unauthorized to work in the U.S. could not proceed on termination-based claims because she was not entitled to the job in the first place.  (Murillo v. Rite-Stuff Foods).

Under federal employment laws, such as Title VII, however, these defenses can limit damages available, but are not complete bars to liability. McKennon v. Nashville Banner Publishing Co. (1995) 513 U.S. 352.  That is, if the employer proves it would have fired an employee had it known about information acquired after the termination, the employer can argue that damages should be reduced, but cannot assert a complete defense.

The California Supreme Court just decided in Salas v. Sierra Chemical that the federal rule is the better one.

Vicente Salas intentionally and repeatedly used someone else's social security number to obtain employment with Sierra Chemical Company. He signed an I-9 form under penalty of perjury, attesting to the documents he submitted in support of his eligibility to work in the U.S.  Because his job with Sierra was seasonal, Salas repeatedly misrepresented his social security number, every time he re-applied for seasonal work.

Mirabile dictu, the social security bureaucracy figured out that Salas's social security number was bogus. Of course, that was the social security office of many years ago; the one that issued "no-match" letters and required an explanation from the employees whose numbers did not match their names.  Sierra Chemical apparently didn't do anything about the employees with no-match letters.  They allowed Salas and the other employees to continue working.

Meanwhile, in 2006, Salas injured himself  He returned to work the next day, with restrictions, which Sierra honored.  He returned to full duty a couple of months later, in June. But in August, he hurt himself again, and required modified duty until December, when he was laid off for the season (as he had been in the past).

Salas went to work for another company after the layoff.  But then his Sierra managers called him and asked if he wanted to return to work. They then told him he would have to have a release from his doctor - to full duty - before he could return. (Spot the issue, accommodation mavens).

Salas told his boss he would try to get the release by June 2007. The boss said he would hold open Salas's job.  But Salas did not contact the boss again.  Instead, he sued.  He claimed denial of reasonable accommodation under the Fair Employment and Housing Act, and retaliation for filing a workers' compensation claim, in violation of public policy.

As the trial date approached, both parties filed motions in limine regarding evidence.  Salas acknowledge it is a crime (illegal) under federal and state law:

for a person to use false identification documents to conceal the person‟s true citizenship or resident alien status. Plaintiff stated that he would testify at trial and assert his privilege against self-incrimination under the Fifth Amendment to the United States Constitution if asked about his immigration status. He asked that he be allowed to assert the privilege outside the jury's presence and that the court and counsel not comment at trial on his assertion of the privilege. 

So, Salas' disclosure for the first time prompted the defense to investigate the bona fides of Salas' immigration status.  The defendant found out that Salas' social security number actually belonged to a person on the East Coast.

Sierra moved for summary judgment on the ground that Salas falsified his employment authorization paperwork. The company submitted a sworn statement from the real owner of the social security number and of the company's president, who said they would have fired Salas had they known of his deception.

Yet the trial court denied Sierra's motion for summary judgment.  The Court of Appeal, on the other hand, held Salas's claims were barred. Per the Supreme Court:

The Court of Appeal reasoned that the doctrine of after-acquired evidence barred plaintiff‟s causes of action because he had misrepresented to defendant employer his eligibility under federal law to work in the United States. It also held that plaintiff‟s claims were subject to the doctrine of unclean hands because he had falsely used another person's Social Security number in seeking employment with defendant, he was disqualified under federal law from working in the United States, and his conduct exposed defendant to penalties under federal law.

The lower court's decision was entirely consistent with California law up to this point.

But the California Supreme Court disagreed with the Court of Appeal and held that "after-acquired evidence" or "unclean hands" defenses are not complete bars to liability under FEHA.  Rather, the Court decided, these defenses in some cases may be used only to limit damages. As a result, summary judgment based on the defenses no longer is an option.

California law protects  immigrant workers who are unauthorized to work by guaranteeing them access to the same employment laws that protect those legally entitled to work.  So, Salas argued, if late-discovered unauthorized status resulted in application of unclean hands, these worker would be barred from bringing wrongful termination claims.

The Court agreed with Salas. First, the Court decided that federal immigration laws do not preempt California's laws preserving illegal aliens' employment-based claims. If federal law preempted California law, the California statutes would not impede the application of unclean hands. The Court engaged in a lengthy analysis of federal preemption jurisprudence, concluding that California was free to pass laws guaranteeing illegal aliens the right to benefit from employment law on the same terms as authorized workers.

The Court could have limited its discussion to whether unclean hands / after acquired evidence may be applied to hose who lie about their immigration status / identification documents.  But no.

The Court then examined, and gutted, the application of after-acquired evidence / unclean hands in FEHA cases generally.  The Court decided that the defenses are not complete bars in Fair Employment and Housing Act cases because employers should not be insulated from liability for making unlawful employment decisions, even those taken against employees who should never have been employed in the first place.  The Court reasoned that the employer made the challenged decisions without knowing of the employee's misconduct that would have led to termination or refusal to hire.

The Court then decided that, like under the federal rule, employees found to have engaged in misconduct that would have disqualified them from employment should be limited in their potential remedies:

Generally, the employee's remedies should not afford compensation for loss of employment during the period after the employer‟s discovery of the evidence relating to the employee‟s wrongdoing. When the employer shows that information acquired after the employee‟s claim has been made would have led to a lawful discharge or other employment action, remedies such as reinstatement, promotion, and pay for periods after the employer learned of such information would be “inequitable and pointless,” as they grant remedial relief for a period during which the plaintiff employee was no longer in the defendant‟s employment and had no right to such employment. (McKennon, supra, 513 U.S. at p. 362.)

The remedial relief generally should compensate the employee for loss of employment from the date of wrongful discharge or refusal to hire to the date on which the employer acquired information of the employee‟s wrongdoing or ineligibility for employment. Fashioning remedies based on the relative equities of the parties prevents the employer from violating California‟s FEHA with impunity while also preventing an employee or job applicant from obtaining lost wages compensation for a period during which the employee or applicant would not in any event have been employed by the employer. In an appropriate case, it would also prevent an employee from recovering any lost wages when the employee's wrongdoing is particularly egregious.

The lower courts apparently are left to decide what an "appropriate case" or "egregious" means in this context.

The significance of the Court's no-preemption holding now becomes clear.  If preemption applies, it is likely that federal law would preclude any post-termination or back pay to an employee who falsifies employment documents to obtain employment.  Given the California Supreme Court decided state law is not preempted, its holding under state law is viable.  But if the U.S. Supreme Court hears this case and decides federal immigration law applies, it could be that unauthorized workers are entitled to no post-termination pay, but could still recover for pre-termination damages due to unlawful harassment, for example.

The Court then separated the "unclean hands" defense from the "after-acquired evidence" analysis.  But then the Court simply said that the defense of unclean hands, normally a complete bar, would not apply in FEHA cases either, but again authorized trial courts to fashion appropriate equitable remedies.  It's hard to tell, but it seems like the courts will apply the same analysis whether the defense is expressed as "unclean hands" or "after-acquired evidence."  Again, "unclean hands" likely will apply only when the misconduct relates to serious application fraud, but it appears not to matter anymore.

Retired Justice Joyce Kennard wrote the opinion for 5 justices; her final gift to the plaintiffs' bar.  Retiring Justice Baxter wrote a concurrence/dissent, joined by Justice Ming Chin, the editor of the "leading employment law treatise" in the words of a recent court opinion.  Justice Baxter opined that federal immigration law indeed precludes any remedy to employees who falsify eligibility to work in the U.S. And Justice Baxter pointed out that the "unclean hands" defense, when applicable, generally is a complete bar to a plaintiff's access to court.

The opinion in Salas v. Sierra Chemical Co. is here.

California Court of Appeal: Applying New Post-Harris v. L.A. Standard in FEHA Discrimination Cases

Alamo worked for a small company called PMIC as a collections clerk. She took pregnancy leave.  PMIC hired a pregnant temp to replace her during the leave.  The temp, named Moran, intended to stop working once Alamo returned.

Stop me if you've heard this before. While Alamo was on leave, her manager discovered performance problems with Alamo's work, including problems that cost the Company money.  And - again stop me - the manager had noticed performance problems before the leave, but had not disciplined Alamo previously.

So, Alamo is getting ready to come back to work. She comes into the office one day to have lunch with a co-worker.  She runs into Moran and gets into a heated argument about Moran's alleged treatment of Alamo's co-worker (with whom she had just had lunch).  Moran tells Alamo she's about to be fired.  Sure enough, when Alamo returned, she was fired for poor performance and insubordination.

Alamo sued for pregnancy discrimination. After trial, a jury awarded her $10,000.00 in compensatory damages, and 0 for punitive damages.  The court awarded about $50K in attorney's fees.

PMIC appealed.  It argued that the court should have instructed the jury that the plaintiff has to prove discrimination was a "substantial motivating reason" for the termination, rather than just "a motivating reason."  PMIC also argued that it was entitled to put on evidence of a "mixed motive" defense,
following Harris v. City of Santa Monica (2013) 56 Cal.4th 203 (discussed here).

The Court of Appeal ageed that PMIC was entitled to an instruction that says discrimination must be a "substantial" motivating reason. The form civil jury instructions ("CACI") have been amended to incorporate Harris.  Practitioners should ensure they have the most current version of the instructions.

But PMIC was not so lucky on the mixed motive defense. PMIC offered a defective mixed motive instruction that was not a proper statement of the law. And the Court also found that "mixed motive" is an affirmative defense that must be pleaded in the defendant's answer.  Therefore, employers seeking to limit damages with the mixed motive defense must plead it or amend their answers.

Frankly, I don't know why the employer lost, or why it wanted a "mixed motive" defense.  There was scant evidence of discrimination described in the court of appeal's opinion.   Alamo argued that this was not a mixed motive case at all, and I think I agree with her.  We shall see if the employer can assert the mixed motive defense without admitting there is evidence of a discriminatory and non-discriminatory motive for taking action.

This case is Alamo v. Practice Management Information Corp. and the opinion is here.

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Me Too? Too Far

"Me too" evidence is when the plaintiff attempts to prove discrimination against him or her by offering evidence that others suffered similar discrimination.  The courts admit this evidence as proof of intent or motive, where it otherwise would be excluded as "character" evidence.

The Court of Appeal rejected the attempted use of "me too" evidence in a case where an employee claimed his boss discriminated against him because of his Asian national origin.  But this employee did not seek to admit "me too" evidence to show that the boss discriminated against other Asians.  Rather, the employee tried to admit evidence showing the boss discriminated against anyone who was not "Arab."

The trial court excluded the evidence as more prejudicial than probative under Evidence Code Section 352. The Court of Appeal affirmed:

Here, Hatai alleged he is a person of “Asian or Japanese race or national origin or ancestry,” and that he suffered discrimination, harassment and retaliation on the basis of his national origin and/or race. Thus, the “me-too” doctrine entitled Hatai to present evidence that other employees at Caltrans of east Asian or Japanese descent had been subjected to similar discrimination. However, given the nature of Hatai‟s lawsuit, the “me-too” doctrine did not entitle Hatai to present evidence of discrimination against employees outside of Hatai’s protected class to show discrimination or harassment against Hatai.

 The case is Hatai v. Department of Transportation and the opinion is here.

California Supremes Rule on "Mixed Motive"

Here is a long awaited and unanimous (6-0 with Baxter recused) ruling from the California Supreme Court:

We hold that under the FEHA, when a jury finds that unlawful discrimination was a substantial factor motivating a termination of employment, and when the employer proves it would have made the same decision absent such discrimination, a court may not award damages, backpay, or an order of reinstatement. But the employer does not escape liability. In light of the FEHA’s express purpose of not only redressing but also preventing and deterring unlawful discrimination in the workplace, the plaintiff in this circumstance could still be awarded, where appropriate, declaratory relief or injunctive relief to stop discriminatory practices. In addition, the plaintiff may be eligible for reasonable attorney’s fees and costs.

Long awaited?  Yes, we published about the court of appeal's pro-employer decision in November 2009, here.  And this case is very important to clarify the burdens of proof in discrimination cases.  So, "long anticipated" too.

The Supreme Court did not go as far as the lower court.  In Harris, the plaintiff was a bus driver for LA County.  She had a series of accidents and unexcused absences, resulting in her termination. She claimed it was due to her pregnancy, in violation of the Fair Employment and Housing Act.  She pointed to some negative comments by a supervisor as evidence.

After trial, a jury awarded Harris a bunch of money.  LA County tried to get the court to instruct the jury that Harris could not prevail if the County proved it would have fired Harris regardless of her pregnancy.  Harris prevailed upon the trial court to instruct only that discriminatory bias must be but one motivating reason for the discharge.  So, she won.

The court of appeal reversed, holding that the County should have been provided the jury instruction.  

The California Supreme Court reasoned that the FEHA prohibits acts that occur "because of" illegal discrimination. That phrase is construed a variety of ways.  The Court sought to effectuate the legislature's intent to prohibit discriminatory practices.  After reviewing cases and engaging in statutory interpretation, the Court came up with the principle above.  An employer who proves it fired the plaintiff even though there was evidence of a discriminatory motive is entitled to prevail on the claim for damages.  But the plaintiff will still win declaratory relief  (like an injunction), attorneys' fees, and costs. 

Here is some additional helpful language for employers:

We are mindful, however, that section 12940(a) does not purport to outlaw discriminatory thoughts, beliefs, or stray remarks that are unconnected to employment decisionmaking. Racist, sexist, or other biased comments in the workplace may give rise to a claim for unlawful harassment under a separate provision of the FEHA. (§ 12940, subd. (j); see Lyle v. Warner Bros. Television Productions (2006) 38 Cal.4th 264, 277–278.) But such comments alone do not support a claim under section 12940(a), nor do bigoted thoughts or beliefs by themselves. Were it otherwise, the causation requirement in section 12940(a) would be eviscerated. Section 12940(a) does not prohibit discrimination “in the air.” It prohibits discrimination that causes an employer “to refuse to hire or employ the person or to refuse to select the person for a training program leading to employment, or to bar or to discharge the person from employment or from a training program leading to employment, or to discriminate against the person in compensation or in terms, conditions, or privileges of employment.” (§ 12940(a).)

No emotional distress damages because:

When an employee is fired, and when discrimination has been shown to be a substantial factor but not a “but for” cause, we believe it is a fair supposition that the primary reason for the discharged employee’s emotional distress is the discharge itself. Such distress is not compensable under the FEHA — indeed, compensation for such distress would be a windfall to the employee — if the employer proves it would have fired the employee anyway for lawful reasons.  But such comments alone do not support a claim under section 12940(a), nor do bigoted thoughts or beliefs by themselves. Were it otherwise, the causation requirement in section 12940(a) would be eviscerated. Section 12940(a) does not prohibit discrimination “in the air.” It prohibits discrimination that causes an employer “to refuse to hire or employ the person or to refuse to select the person for a training program leading to employment, or to bar or to discharge the person from employment or from a training program leading to employment, or to discriminate against the person in compensation or in terms, conditions, or privileges of employment.” (§ 12940(a).)

Although attorneys' fees may be available when the plaintiff wins a mixed-motive case, the plaintiffs' bar should not assume it will be the entire cost of litigating a case to conclusion:

An award of attorney’s fees is discretionary under section 12965, subdivision (b). An award may take into account the scale of the plaintiff’s success, and it must not encourage “unnecessary litigation of claims that serve no public purpose either because they have no broad public impact or because they are factually or legally weak.” (Weeks v. Baker & McKenzie (1998) 63 Cal.App.4th 1128, 1173.) Like Congress in enacting Title VII, our Legislature did not “ ‘ enact[] legislation whose benefit inures primarily to lawyers in the form of a substantial fee recovery, even if relief to the plaintiff is otherwise trivial and the lawsuit promotes few public goals.’ ” (Stevens v. Gravette Medical Center Hospital (W.D.Ark. 1998) 998 F.Supp. 1011, 1018.) The touchstone is “reasonable[ness].” (§ 12965, subd. (b).) In sum, we hold that a plaintiff subject to an adverse employment decision in which discrimination was a substantial motivating factor may be eligible for reasonable attorney’s fees and costs expended for the purpose of redressing, preventing, or deterring that discrimination.

Strong mixed motive cases will be thwarted by well timed and realistic offers of compromise under Civil Procedure Code Section 998.

So, a mixed bag on mixed motive.  But a welcome ruling in all for employers, in my opinion.  There is a lot to like in this opinion, even though mixed motive is not a complete defense.   The case is Harris v. City of Santa Monica and the opinion is here. 

Court of Appeal: Discharge of Executive Uncooperative in Investigation

is perfectly legal.

Applied Signal fired John McGrory.  One of his reports, Dana Thomas, complained to human resources that McGrory harassed / discriminated against her because of her sex / sexual orientation.  Applied hired an outside investigator.   McGrory did not like the investigator, but she exonerated him of mistreating Thomas.  She did find, though, that McGrory was untruthful and uncooperative during the investigation.  She also found that McGrory violated the company's anti-harassment policy because he made off-color jokes related to sex and national origin.

Applied fired McGrory, not for discrimination or harassment against Thomas, but for his lack of cooperation and deception during the investigation.  He sued Applied Signal, claiming not only wrongful termination, bur also sex discrimination and defamation.  He believed he was disfavored because of his male sex, that even at-will employees are entitled to notice of an investigation, and more.

McGrory argued Allied could not fire him for participating in the investigation, “'The public policy of California is to shield anyone participating in an investigation of discrimination from the possibility of retaliation,' presumably even if the participant is uncooperative and untruthful."

Wrong.  I have come across people who refused to participate in investigations without their lawyer, or simply were uncooperative.  I have heard some people question whether it is OK to fire someone for refusing to cooperate in an investigation.  (They don't read the blog, but maybe they should. Just sayin').

Anyway, the court of appeal has laid that issue to rest:

refusing to participate in or cooperate with an investigation into a discrimination claim is not participation or assistance and is not a protected activity. (Alack v. Beau Rivage Resorts, Inc. (S.D. Miss. 2003) 286 F.Supp.2d 771, 775; Bray v. Tenax Corp. (E.D. N.C. 1995) 905 F.Supp. 324, 328.)

Here's another news flash to those employees who lie during an investigation. They have no protection, either:

The participation immunity does not prohibit an employer from imposing discipline for an employee‟s misbehavior during an internal investigation, such as attempting to deceive the investigator. (Cf. Vasconcelos v. Meese, supra, 907 F.2d 111, 113.) “Lying in an internal investigation is disruptive of workplace discipline.” (Hatmaker, supra, 619 F.3d 741, 746.) “[W]hether to fire an employee for lying to the employer in the course of the business‟s conduct of an important internal investigation is basically a business decision; this decision, as with most business decisions, is not for the courts to second-guess as a kind of super-personnel department.” (Total System Services, supra, 221 F.3d 1171, 1176.)

McGrory also argued that the employer could not lawfully rely on fear of litigation with the accuser as a basis for firing him.  Really?  The Court of Appeal held that fear of liability also is a legitimate, non-discriminatory reason for firing an accused harasser:

Employee also argues that his “relatively innocent behavior” could not justify “a sexual harassment claim.” Employee provides no authority requiring an Employer to retain an at-will employee until his conduct creates civil liability. 

The court also held that the VP of HR's explanation to another employee that McGrory was fired for being uncooperative was privileged and made without malice. No slander for you.

This is a significant case about the meaning of employment at will and the employer's freedom to discipline and discharge those who violate policies.

The opinion is McGrory v. Applied Signal Tech. and the opinion is here.

Court of Appeal Endorses "Business Judgment" Jury Instruction in Discrimination Cases

The court of appeal in Veronese v. Lucasfilm issued a highly significant ruling that will bring some balance to jury instructions in discrimination cases.  The pattern jury instructions (called CACI) do not address adequately that the jury is responsible for finding illegal discrimination only.  It is not entitled to second-guess whether the employer's judgment was sound, whether the employer correctly determined the plaintiff was a bad employee, etc.   Put another way, the employer's business judgment is entitled to deference unless there is evidence of illegal motivation.

So, Lucasfilm was going to hire Julie Veronese to help manage George Lucas's estate. Veronese is the wife of an employment law attorney, plaintiff's side. Ultimately, the employment relationship did not work out, which Veronese attributed to her pregnancy.  Lucasfilm asserted legitimate reasons for ending Veronese's temporary assignment, and for not hiring her into a regular job.    A jury found against Lucasfilm on some claims, awarding her six figures. The attorney's fees award, though, was over one million dollars (!).  [I'm in the wrong business. -ed.].  Oh wait. Right business; wrong side!

Anyway, the employer appealed, primarily arguing that the trial court refused to give what was called a "business judgment" jury instruction.   The court of appeal agreed that the instruction should have been given.  Here is the discussion.

Judge Taylor instructed the jury that it should find for Veronese if her pregnancy was “a motivating reason” for Lucasfilm’s decision, specifically instructing as follows: “Julie Gilman Veronese must prove . . . [t]hat [her] race, gender or pregnancy, or her complaint about pregnancy discrimination was a motivating reason for the discharge . . . .” And “A motivating reason is a reason that contributed to the decision to take action, even though other reasons also may have contributed to the decision.” The instruction was based on CACI 2500. * * * *
It Was Error to Refuse a “Business Judgment” Instruction
Lucasfilm proposed special instruction no. 9, as follows: “You may not find that Lucasfilm discriminated or retaliated against Julie Gilman Veronese based upon a belief that Lucasfilm made a wrong or unfair decision. Likewise, you cannot find liability for discrimination or retaliation if you find that Lucasfilm made an error in business judgment. Instead, Lucasfilm can only be liable to Julie Gilman Veronese if the decisions made were motivated by discrimination or retaliation related to her being pregnant.”

* * *

Refusing this instruction was error.  * * * *
 As our colleagues in Division One have put it, a plaintiff in a discrimination case must show discrimination, not just that the employer’s decision was wrong, mistaken, or unwise. (Reeves v. MV Transportation, Inc. (2010) 186 Cal.App.4th 666, 673-674.) Or, as another Court of Appeal has said, “ ‘The employer may fire an employee for a good reason, a bad reason, a reason based on erroneous facts, or for no reason at all, as long as its action is not for a discriminatory reason. . . . “While an employer’s judgment or course of action may seem poor or erroneous to outsiders, the relevant question is . . . whether the given reason was a pretext for illegal discrimination. The employer’s stated legitimate reason . . . does not have to be a reason that the judge or jurors would act on or approve.” ’ ” (Arteaga v. Brink’s, Inc. (2008) 163 Cal.App.4th 327, 344; accord, Hersant v. Department of Social Services (1997) 57 Cal.App.4th 997, 1005.) In Guz v. Bechtel National Inc. (2000) 24 Cal.4th 317, 358, the Supreme Court affirmed a summary judgment for the employer in an age discrimination case. Doing so, the court noted as follows: “On the other hand, if nondiscriminatory, Bechtel’s true reasons need not necessarily have been wise or correct. [Citations.] While the objective soundness of an employer’s proffered reasons supports their credibility . . . , the ultimate issue is simply whether the employer acted with a motive to discriminate illegally. Thus, ‘legitimate’ reasons [citation] in this context are reasons that are facially unrelated to prohibited bias, and which, if true, would thus preclude a finding of discrimination. (See, e.g., Kariotis v. Navistar Intern. Transp. Corp. (7th Cir. 1997) 131 F.3d 672, 676 [suggesting that proffered reasons, if ‘nondiscriminatory on their face’ and ‘honestly believed’ by employer, will suffice even if ‘foolish or trivial or baseless’]; McCoy v. WGN Continental Broadcasting Co. (7th Cir. 1992) 957 F.2d 368, 373 [ultimate issue is whether employer ‘honestly believed in the reasons it offers’]; see also Fuentes v. Perskie (3d Cir. 1994) 32 F.3d 759, 765 [issue is discriminatory animus, not whether employer’s decision was ‘wrong or mistaken,’ or whether employer is ‘wise, shrewd, prudent, or competent’].)”

 There are other significant jury instructions discussed, including relating to damages.  But the above discussion is key. That is because the jury only has to find discrimination /retaliation are "a" motivating reason for taking action. And a jury only has to find discrimination / retaliation by a "preponderance" of the evidence (50.00001%).   So, the employer should be able to argue to the jury that a decision the jury disagrees with is not ipso facto discriminatory.  Before this decision, it was hard to persuade trial judges to give these instructions.

The case is Veronese v. Lucasfilm LTD and the opinion is here.

Court of Appeal: Let Jury Decide Co-Worker Harassment Case

The Court of Appeal issued a "writ" of mandate, overturning a summary judgment order on a harassment claim.  Mustafa Rehmani worked for Ericsson in Silicon Valley.  He is Pakistani. Many of his co-workers are Indian. Rehmani claimed the Indian co-workers gave him a rough ride.  The court describes a series of incidents, over a few months, in which there were political jokes, terrorism jokes, and the like.  However, these jokes were pretty isolated, occurring about a month apart. 

The court decided that the allegations were enough to send the case to a jury and that the trial court should not have granted summary judgment.  The court also held that the company's management had sufficient notice of the conduct, and there was insufficient evidence of an adequate response to the conduct to justify summary resolution.

If you believe the plaintiff's version of events (which the court had to do), he told his manager repeatedly about his co-workers' anti-Pakistani / anti-Muslim jokes.  But she brushed them off.  So, a very thin case of national origin harassment will go to a jury, or a mediator.  A little management training (or better training) could have helped here.

The case is Rehmani v. Superior Court and the opinion is here.

No Individual Liability for Supervisors Under Military Service Anti-Discrimination Law

Mario Pantuso is a member of the U.S. Navy. He served six months in Iraq and then sought return to his job at Safway Services. Denied reinstatement, he sued Safway and two former supervisors under the Military and Veterans Code for discrimination.  If you are unfamiliar with that law, here it is, as quoted by the court:

Section 394, subdivision (a) reads: “No person shall discriminate against any officer, warrant officer or enlisted member of the military or naval forces of the state or of the United States because of that membership. No member of the military forces shall be prejudiced or injured by any person, employer, or officer or agent of any corporation, company, or firm with respect to that member‟s employment, position or status or be denied or disqualified for employment by virtue of membership or service in the military forces of this state or of the United States.” (Italics added.)


Section 394, subdivision (d) reads in part: “No employer or officer or agent of any corporation, company, or firm, or other person, shall discharge any person from employment because of the performance of any ordered military duty or training or by reason of being an officer, warrant officer, or enlisted member of the military or naval forces of this state . . . .” (Italics added.)

 So, the individual managers sought to have the claims against them dismissed. The trial court refused, and they took a writ to the court of appeal. The court of appeal agreed that there is no individual liability for supervisors under the Military and Veterans Code. The court reasoned that the law is written similarly to the Fair Employment and Housing Act and has a similar purpose. Because individuals cannot be held liable for discrimination and retaliation under FEHA, the same result should obtain.  The court pointed out that some federal decisions impose liability for individuals under the federal USERRA.  But the plaintiff was proceeding under state law, and the language of USERRA is different.

Because the narrow issue was whether individuals could be held liable, there was no discussion of the merits of the lawsuit itself.

The case is Haligowski v. Superior Court and the opinion is here.

DGV
 

Supreme Court Unanimously Limits Employers' Right to Attorneys' Fees in Discrimination Cases

In federal cases alleging discrimination, harassment, retaliation and violations of civil rights, when may a defendant employer recover attorneys' fees?  It is long settled that defendants may recover only when the plaintiff's claims are "frivolous, unreasonable or without foundation."  What about when just some of the claims are frivolous?  The Supreme Court answered that question, unanimously, with Justice Kagan writing the opinion:

Section 1988 allows a defendant to recover reasonable attorney’s fees incurred because of, but only because of, a frivolous claim. Or what is the same thing stated as a but-for test: Section 1988 permits the defendant to receive only the portion of his fees that he would not have paid but for the frivolous claim.

The Court then went on to hold that if the defendant spends fees on issues that deal with both frivolous and nonfrivolous claims simultaneously, the defendant may not recover fees:

But if the defendant would have incurred those fees anyway, to defend against non-frivolous claims, then a court has no basis for transferring the expense to the plaintiff. Suppose, for example, that a defendant’s attorney conducts a deposition on matters relevant to both a frivolous and a non-frivolous claim—and more, that the lawyer would have taken and committed the same time to this deposition even if the case had involved only the non-frivolous allegation. In that circumstance, the work does not implicate Congress’s reason for allowing defendants to collect fees. The defendant would have incurred the expense in any event; he has suffered no incremental harm from the frivolous claim. In short, the defendant has never shouldered the burden that Congress, in enacting §1988, wanted to relieve. The basic American Rule thus continues to operate.

Thus, the Supreme Court unanimously made sure that defendants will have a tough time recovering fees in cases including both frivolous and non-frivolous claims, just like the Ninth Circuit decided in Harris v. Maricopa County, which I discussed  here. Yes, I thought the Court of Appeals was out to lunch. I was wr-wr-wr... incorrect.  No wonder I don't have a vote on either court.  My opinion, though, remains the same. The Supreme Court joins the Ninth Circuit in making it very difficult for defendants to recover attorneys' fees in frivolous discrimination cases, unless the case is entirely frivolous. There is little incentive for the plaintiff to dismiss the frivolous component.

The Supreme Court decision is Fox v. Vice and the opinion is here.