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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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.