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Monday, May 13, 2024 | Back issues
Courthouse News Service Courthouse News Service

In a win for whistleblowers, California high court upholds lower bar for proving workplace retaliation

A top contender for the U.S. Supreme Court wrote the majority opinion that makes it a bit easier for whistleblowers to bring successful retaliation cases.

(CN) — A unanimous California Supreme Court ruled Thursday that courts should follow California law in deciding claims of illegal workplace retaliation instead of a “well-worn” framework established by the U.S. Supreme Court that puts the final burden on the worker to show that their employer intentionally discriminated against them.

The ruling says an employee will only need to prove that their whistleblowing was a “contributing factor” in their firing, demotion or discipline.

“That means it was one reason among others, rather than the sole reason or the 'real' reason,” said Berkeley Law professor Catherine Fisk. “This rule makes it easier for whistleblowers to win when they sue for wrongful termination or other retaliation after they blow the whistle.”

The opinion was penned by Justice Leondra Kruger, currently on President Joe Biden’s shortlist to replace retiring Justice Stephen Breyer, in response to a question posed by the Ninth Circuit Court of Appeals as to what evidentiary standard should apply when evaluating whistleblower retaliation claims.

The appellate panel was wrestling with a workplace retaliation case brought by Wallen Lawson, who worked as a territory manager selling PPG paint and stain products to Lowe’s home improvement stores in Southern California.

In April 2017, his regional sales manager instructed him to change the tint of some of its slower-selling paints so that Lowe’s would have to sell the ruined product at a deep discount and PPG could avoid having to buy it back.

Lawson refused and reported the manager through the company’s anonymous ethics reporting portal. Lawson subsequently began to receive lower performance scores from the manager and he was eventually terminated in September 2017.

The district court tossed the case on summary judgment, finding PPG could justify Lawson’s firing because he had failed to meet performance expectations.

But on appeal, Lawson argued that the court should have used the evidentiary standard established by the California Legislature when it beefed up whistleblower protections in response to a spate of corporate misconduct by companies like Enron and WorldCom.

In 2003, lawmakers added section 1102.6 to California’s labor code to require employers to show by “clear and convincing evidence" that they fired or demoted an employee “for legitimate, independent reasons” rather than in retaliation for some protected activity.

“The provision of the Labor Code at issue was enacted in the wake of the huge financial scandals of the early 2000s that could have been prevented if company leadership and lawyers had listened to the employees who were reporting financial misconduct instead of retaliating against them,” Fisk said in an email to Courthouse News.

Fisk said the issue boils down to how much evidence there must be to show that an employee was fired for whistleblowing. “In many employment cases, the company’s lawyers will argue the employee was fired because the employee was not doing a good job or committed some misconduct. The employee’s lawyers will argue that the whistleblowing was the reason. Given the alternative theories, it matters a great deal who has the burden of proving the reason for the firing/demotion and how much evidence there must be,” she said.

“Section 1102.6 was to encourage whistleblower actions to come forward. The Legislature thought about it and said 'we want a higher burden placed on the employer to establish legitimate reasons, if they exist,’” employment attorney Chaka Okadigbo, who argued the case before the high court, said in a phone interview.

Though section 1102.6 has long been established law, some courts have continued to use a more tortuous scheme outlined by the U.S. Supreme Court’s 1973 decision in McDonnell Douglas Corp. v. Green.

The three-part McDonnell Douglas test shifts the burden on the worker show that retaliation contributed to their firing, to the employer to state a legitimate reason for taking the adverse action, then back to the worker to demonstrate that the stated reason is a pretext for retaliation or discrimination.

“Unfortunately some courts continued to inject the McDonnell Douglas standard into the analysis when it had no business being there,” Okadigbo said. “McDonnell Douglas only complicates the matter; causing this contraction by making the employee have to disprove these allegedly independent reasons.”

But California’s highest court decided that employees shouldn’t have to satisfy the McDonnell Douglas test to claim unlawful retaliation under California law.

Kruger wrote that it would make “little sense” for a worker to have to satisfy McDonnell Douglas just for the sake of proving that unlawful retaliation was a contributing factor in their firing or demotion since section 1102.6 already puts the initial burden on plaintiffs to show by a preponderance of evidence that there was some motivating retaliatory reason behind their firing or discipline.

“The central problem lies at the third step of McDonnell Douglas, which requires the plaintiff to prove that an employer’s proffered legitimate reason for taking an adverse action was a pretext for impermissible retaliation,” Kruger wrote. “Under section 1102.6, a plaintiff does not need to show that the employer’s non-retaliatory reason was pretextual. Even if the employer had a genuine, non-retaliatory reason for its adverse action, the plaintiff still carries the burden assigned by statute if it is shown that the employer also had at least one retaliatory reason that was a contributing factor in the action. There is, then, no reason why whistleblower plaintiffs should be required to satisfy the three-part McDonnell Douglas inquiry — and prove that the employer’s proffered legitimate reasons were pretextual — in order to prove that retaliation was a contributing factor under section 1102.6.”

Stanford law professor William Gould IV called the court’s decision “both a sensible and welcome development.”

“It improves substantially on federal case authority which was relied upon by some courts, and it will properly and effectively promote employee rights,” he said in a phone interview.

PPG said it fears the California “contributing factor" standard would allow too many meritless retaliation claims to go to trial, an assumption Kruger said is incorrect.

“In any event, PPG’s concern about more cases going to trial is not a sufficient reason to march every case through the McDonnell Douglas three-step solely for purposes of summary judgment,” she wrote. “To the extent PPG is concerned that the existing framework sets the plaintiff’s bar too low by requiring only a showing that retaliation was a contributing factor in an adverse decision, PPG’s remedy lies with the Legislature that selected this standard, not with this court.”

“These kinds of considerations are for the Legislature, not for the courts,” Gould said, adding the court’s opinion upholds the Legislature’s intent in favoring strong whistleblower protection laws. “That’s why this decision is so fundamentally sound,” he said.

Follow @MariaDinzeo
Categories / Appeals, Civil Rights, Employment

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