Court of Appeal: Statutory PDL Maximum Isn't

In California, employees disabled by pregnancy are entitled to up to four months of job-protected leave during any period in which they are disabled.  The leave has not length of service requirement.  There is no employer job-site requirement either.  And those employees eligible for California Family Rights Act leave may have up to 12 weeks of that for baby bonding.   The California Family Rights Act does not include pregnancy disability as a "serious health condition."   So, time under that law does not run during pregnancy disability.  Get it?  If not, don't feel like you're the Lone Ranger. It's one of California's most confusing sets of laws.

So, what happens when an employee is disabled by pregnancy and uses up all four months of PDL before delivering the baby, or before  she is able to return to work?  We know the 12 weeeks of FMLA leave (if employee is eligible) are exhausted, because FMLA does run during pregnancy disability.  The CFRA time did not start to run yet unless the employer and employee agree, because pregnancy disability is not a covered condition under CFRA.  Can it be that a worker in California could run out of medical leave and be denied reinstatement?

Nah. The PDL statute's four months of leave, and the potential for seven months of combined PDL/CFRA, are not the last word on leaves for those with long periods of pregnancy disability.  How can this be?

Swissport gave its employee, Ana Sanchez, nineteen weeks of leave. That's all the four months of PDL and then tacked on her unused vacation time.  But Fuentes had not yet given birth.  She was due in October. But, her leave exhausted in July, Swissport terminated her employment. Sanchez sued, claiming, among other things, that Swissport owed her more leave as a form of "reasonable accommodation" under California's anti-disability discrimination provisions contained in the Fair Employment and Housing Act.  The trial court dismissed her case because Swissport had provided her with all statutory leave to which she was entitled.

Leave in excess of statute, however, can be a form of "reasonable accommodation" under disability discrimination law.  Under California law it has to be reasonably definite in duration and effective, meaning that it is likely that at the end of a reasonably definite leave, the employee will be able to perform her essential job functions, with or without accommodation.

So, stautes collide; judges have to sort out the wreckage.  Here, the Court of Appeal decided that the limiting language in the PDL statute does not "supplant" the general obligation to grant reasonable accommodation to an employee with a disability.  That also means that the employee is not entitled to indefinite leave, or additional leave that would cause undue hardship.  In this case, however, the employer discharged the employee for exceeding four months of leave, without any "interactive process" or attempt to accommodate.

The bottom line, then, is that most employees disabled by pregnancy will be entitled to leave until they recover from childbirth, unless the period of leave sought is indefinite, or undue hardship would result.

This case is Sanchez v. Swissport 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 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.

California Pregnancy and Disability Regulations - Final Comments?

The Fair Employment and Housing Commission has issued nearly almost final regulations regarding disability discrimination and regarding pregnancy disability leave.  You may read them here. You may comment on the proposed regulations through August 30.
We will have articles on each of these regulatory changes.
DGV

Court of Appeal: No Attorney-Client Privilege for Employee's Emails to Lawyer

Gina Holmes worked for Petrovich Development Co. LLC as assistant to the CEO, Paul Petrovich.  She was pregnant early in her employment and got into a discussion with her boss about the length of her leave and their respective feelings about her pregnancy. Although it appeared that they had cleared the air, Holmes simultaneously attempted to hire a lawyer, via email at work. Apparently, Holmes became upset that Petrovich forwarded her emails to others in the organization and quit, claiming constructive discharge, discrimination, harassment, etc.

The trial court summarily dismissed the harassment, discrimination and retaliation claims. The court of appeal affirmed - holding that the harassment evidence was limited to email correspondence that was neither severe nor pervasive.

The court of appeal also affirmed dismissal of the claim that Holmes was forced to resign. The court noted that when a plaintiff cannot establish a hostile work environment, a constructive discharge claim is a higher standard and must also fail.  Holmes' retaliation claim failed too, because of the lack of an adverse action.

That left claims for intentional infliction of emotional distress and invasion of privacy, which were tried to a jury. The jury found for the defendants. On appeal, Holmes claimed the trial court should not have allowed Petrovich to use the emails she sent to a lawyer seeking a referral, in which she explained her situation.  The trial court held that Holmes waived the privilege because she used company email, and there were clear policies explaining the company's right to monitor email.

The court of appeal agreed that Holmes waived the privilege Here is the money quote:

Although a communication between persons in an attorney-client relationship "does not lose its privileged character for the sole reason that it is communicated by electronic means or because persons involved in the delivery, facilitation, or storage of electronic communication may have access to the content of the communication" (§ 917, subd. (b)), this does not mean that an electronic communication is privileged (1) when the electronic means used belongs to the defendant; (2) the defendant has advised the plaintiff that communications using electronic means are not private, may be monitored, and may be used only for business purposes; and (3) the plaintiff is aware of and agrees to these conditions. A communication under these circumstances is not a “„confidential communication between client and lawyer‟” within the meaning of section 952 because it is not transmitted “by a means which, so far as the client is aware, discloses the information to no third persons other than those who are present to further the interest of the client in the consultation . . . .” (Ibid.)


When Holmes e-mailed her attorney, she did not use her home computer to which some unknown persons involved in the delivery, facilitation, or storage may have access. Had she done so, that would have been a privileged communication unless Holmes allowed others to have access to her e-mails and disclosed their content. Instead, she used defendants‟ computer, after being expressly advised this was a means that was not private and was accessible by Petrovich, the very person about whom Holmes contacted her lawyer and whom Holmes sued. This is akin to consulting her attorney in one of defendants‟ conference rooms, in a loud voice, with the door open, yet unreasonably expecting that the conversation overheard by Petrovich would be privileged.

Lawyers for employees obviously should take note and advise employees not to use monitored email systems. Employers should ensure their email policies are comprehensive and clear regarding employees' expectations of privacy.

The case is Holmes v. Petrovich Development Company LLC and the opinion is here.

California Fair Employment and Housing Commission to Issue Pregnancy Discrimination Regulations

So, the California FEHC, which enforces the Fair Employment and Housing Act (FEHA) is fixing to revise its pregnancy disability leave regulations. The webpage devoted to these efforts, including a link to the first draft of the regulations is here. If history is a guide, there will be a number of hearings and revisions before final regulations are promulgated. We will have a detailed article on these proposed regulations in the coming weeks. However, one highlight I noticed right away is that the new regulations will explain in more detail how pregnancy disability dovetails with other disabilities regarding "reasonable accommodation obligations" (over and above the separate pregnancy disability leave requirement).

California Court of Appeal: "Me Too" Declarations Admissible

"Me too" evidence is when a plaintiff attempts to prove discrimination by showing that other employees have suffered discrimination. It can come in the form of live testimony at trial, or declarations in opposition to a motion for summary judgment.

Back in 2008, the Supreme Court of the U.S. held that "me too" evidence was neither categorically admissible nor inadmissible. We posted about that here.

California's Evidence Code is similar to the Federal Rules of Evidence in a number of respects. The Court of Appeal recently decided that co-employees' declarations claiming similar discrimination was admissible to defeat a motion for summary judgment.

Basically, the plaintiff, Dewandra Johnson, claimed discrimination against her because of her pregnancy. The employer, United Cerebral Palsy / Spastic Children's Foundation etc., claimed it fired her because she falsified time records. The Court of Appeal, reversing summary judgment in favor of the employer, found several issues from which the jury could determine that the real reason was discrimination. These evidentiary submissions included declarations from co-workers that claimed the same managers who fired the plaintiff had trumped up reasons for discharging them on the basis of pregnancy. Here's what the court said:

5. Declarations from Other Employees Also Constitute Substantial Evidence That
Requires Reversal of the Summary Judgment
The challenged "me to[o]" declarations that plaintiff included in her opposition to defendant‟s motion for summary judgment constitute substantial evidence requiring reversal of the judgment. Former employees of defendant stated in their declarations that (1) they too were fired by defendant after they became pregnant, (2) they know of someone who was fired by defendant because she was pregnant, (3) they resigned
because Jimenez made their work stressful after they notified her they were trying to become pregnant, or (4) they know of occasions when employees who were
dishonest or cited for dishonesty, were not fired by defendant. These employees
worked at the same facility where plaintiff worked, they were supervised by the
same people that supervised plaintiff (Jimenez and Sandgren), and their supervisors were, in turn, supervised by Jones. This is substantial evidence sufficient to raise a triable issue of material fact as to why defendant fired plaintiff.

The Court of Appeal then surveyed the case law supporting admission of this evidence to show pretext, concluding:

The evidence sets out factual scenarios related by former employees of the defendant that are sufficiently similar to the one presented by the plaintiff
concerning her own discharge by defendant, and the probative value of the
evidence clearly outweighs any prejudice that would be suffered by defendant by
its admission. Dissimilarities between the facts related in the other employees‟ declarations and the facts asserted by plaintiff with regard to her own case go to the weight of the evidence, not its admissibility.

So, the case turns on the similarity between the plaintiff's claims and her co-workers'. Had the co-workers' evidence been less similar, the court might have decided their admissibility a different way.

The case is JOHNSON v. UNITED CEREBRAL PALSY/SPASTIC CHILDREN‟S FOUNDATION OF LOS ANGELES AND VENTURA COUNTIES, and the opinion is here.

U.S. Supreme Court: Preganancy Discrimination Act Not Retroactive

AT&T's old pension plan used to provide that employees on pregnancy disability leave did not receive the same service credit as employees on leave for other disabilities. Just before Congress enacted the Preganancy Discrimination Act, in 1978, AT&T modified its service credit calculations prospectively, but still calculated pre-PDA service under its pre-PDA rules. Before the PDA, AT&T's calculations were legal under Supreme Court precedent interpreting Title VII.

Four AT&T employees sued AT&T, claiming that perpetuating the calculation of service credit violated the PDA because their pension benefits were reduced as a result of the pre-PDA calculation. The EEOC joined in, as did the Communication Workers' Union. The district court and Ninth Circuit agreed with the Plaintiffs.

However, the Supreme Court, on a 7-2 vote, reversed. The Court's decision, penned by soon-retiring Justice Souter, turned on a number of reasons, the most significant of which are:
- the prior calculation was a "seniority system" exempt from Title VII (pre-PDA);
- the calculation was considered lawful under Supreme Court precent, General Elec. Co. v. Gilbert, 429 U. S. 125 (1976); therefore, AT&T could not have intentionally discriminated by adopting the old system;
- the PDA was not retroactive;
- the Lilly Ledbetter Fair Pay Act did not save her claim because the underlying pre-PDA decision was not itself discriminatory.

Justice Stevens joined the majority, but also wrote a concurrence noting he was bound by the pre-PDA Supreme Court opinion, General Elec. Co. v. Gilbert, 429 U. S. 125 (1976), although he dissented in that case.

Justices Ginsburg and Breyer dissented. The dissent traced a history of discrimination against pregnancy in the workplace. Acknowleding that the PDA was not retroactive, the dissent in essence argued that because Gilbert was SO wrongly decided, it should not affect the decision in the present case. Here's the essence of the dissent:

The PDA does not require redress for past discrimination. It does not
oblige employers to make women whole for the compensation denied them when,
prior to the Act,they were placed on pregnancy leave, often while still ready, willing, and able to work, and with no secure right to return to their jobs after childbirth.[fn] But the PDA does protect women, from and after April 1979, when the Act became fully effective, against repetition or continuation of pregnancy-based disadvantageous treatment. Congress interred Gilbert more than 30 years ago, but the Court today allows that wrong decision still to hold sway. The plaintiffs (now respondents) in this action will receive, for the rest of their lives, lower pension benefits than colleagues who worked for AT&T no longer than they did. They will experience this discrimination not simply because of the adverse action to which they were subjected pre-PDA. Rather, they are harmed today because AT&T has refused fully to heed the PDA’s core command: Hereafter, for "all employment-related purposes," disadvantageous treatment "on the basis of pregnancy, childbirth, or related medical conditions" must cease. 42 U. S. C. §2000e(k) (emphasis added). I would hold that AT&T committed a current violation of Title VII when, post-PDA, it did not totally discontinue reliance
upon a pension calculation premised on the notion that pregnancy-based
classifications display no gender bias.

The case is AT&T Corp. v. Hulteen, and the opinion is here.