Opinion
B228091
12-01-2011
JEFFREY ALAN STORM, JR., Plaintiff and Appellant, v. THRIFTY PAYLESS, INC., Defendant and Respondent.
Shegerian & Associates, Inc., Carney R. Shegerian, Donald Conway, and Anthony Nguyen for Plaintiff and Appellant. Hodel Briggs Winter, Glenn L. Briggs, Theresa A. Kading, and Beth C. Kearney for Defendant and Respondent.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Los Angeles County Super. Ct. No. BC419584)
APPEAL from a judgment of the Superior Court of Los Angeles County. Holly E. Kendig, Judge. Reversed and remanded.
Shegerian & Associates, Inc., Carney R. Shegerian, Donald Conway, and Anthony Nguyen for Plaintiff and Appellant.
Hodel Briggs Winter, Glenn L. Briggs, Theresa A. Kading, and Beth C. Kearney for Defendant and Respondent.
Jeffrey Alan Storm, Jr. (appellant) appeals from a judgment entered after the trial court granted summary judgment in favor of Thrifty Payless, Inc. doing business as Rite Aid (respondent) on appellant's claims against respondent for wrongful termination, intentional infliction of emotional distress, breach of express and implied contracts not to terminate employment without good cause, and defamation and compelled self-defamation. We reverse and remand for further proceedings.
Respondent was erroneously sued in this matter as Rite Aid Corporation.
CONTENTIONS
Appellant contends that summary judgment was improperly granted because respondent did not negate liability as a matter of law under appellant's theories.
As to his first and second causes of action for wrongful termination in violation of public policy, appellant contends that the trial court erred in determining that he did not engage in protected activity, and in determining that his claim under Labor Code section 1102.5 must fail because he did not contact a governmental agency. As to his third cause of action for breach of implied contract not to terminate without good cause, appellant argues that the trial court erred in determining that he could not overcome respondent's evidence that he was an at-will employee. As to his fourth cause of action for defamation and coerced self-defamation, appellant argues that the trial court erred in determining that he did not meet the elements of these torts. Appellant further contends that his claims for intentional infliction of emotional distress and punitive damages are viable.
Finally, appellant raises numerous evidentiary rulings that he contends were erroneous.
FACTUAL BACKGROUND
1. Appellant's employment
Respondent hired appellant to work as a security officer in its Lancaster distribution center in August 2001. About a year and a half later, appellant was promoted to the position of undercover detective. In 2005, appellant was promoted to district loss prevention manager, and in 2007, he retained that position in the area of Southern California covering Santa Monica to downtown Los Angeles. Appellant remained in the position of loss prevention manager until his termination in June 2009.
Appellant's responsibilities as a loss prevention manager included performing internal investigations of other employees of respondent. The majority of these investigations involved theft or fraud. Appellant testified that he normally did not investigate time card fraud or time clock fraud, but that he had been involved in investigating such fraud "a couple of times." Appellant's regular job duties included checking to see if there were outdated products on the shelves in respondent's stores, pulling such items off the shelves, and ensuring that the products were properly processed out of the system.
Appellant's supervisor at the time of his termination was Dexter Mason (Mason).
2. The two relevant investigations
Outdated food items - April 2009
In late April 2009, appellant was training two new district managers on internal control issues at respondent's Westwood store. Appellant was showing the two new employees how to use a "SMT," or shrink management tool. As part of the process, they were required to determine if there was any outdated product on the shelves. Appellant found approximately 20-25 items with expired dates, including chips, "Lunchables," and milk. Appellant had, in the past, found one or two items with expired dates while performing SMTs in other stores, but never to the extent that he discovered at the Westwood store.
Following normal protocol, appellant pulled the items off the shelf and instructed the store manager, Christi Cuara (Cuara), to process them. This meant that the items would be taken out of the system for inventory purposes. Appellant reported his findings to Mason. He also reported the incident to his district manager, David Baca (Baca). Baca's response was, "What a fuckin' idiot." Baca told appellant he would take care of the situation.
Respondent argues that the "fact" that Baca responded by saying "What a fuckin' idiot" was not presented to the trial court. However, the statement was part of a transcript attached to a declaration filed in support of respondent's summary judgment motion, and is properly part of the record on appeal.
Appellant asserts that respondent was, at the time of his discovery, under indictment by the State of California for selling "outdates," or expired items.
Appellant has provided no evidence to support this statement other than the deposition testimony of Cuara, as follows: "Q: At that point in time did you know that Rite Aid was under indictment by the State of California for selling outdates? [¶] . . . [¶] A: No. [¶] Q: Did you learn that around that time period? [¶] A: Yes."
Cuara testified that appellant was very upset when he discovered the outdated items in her store. Appellant was "yelling," and informed Cuara that he had just terminated another employee for falsifying an outdate log. Cuara explained to appellant that she had a new employee working as "pack pricing coordinator" who might have been responsible for the error. Cuara testified that appellant stated, "Well, you better let her know I will fire her too."
Time card fraud - May 2009
In May 2009, appellant had spoken with a couple of employees from the respondent's Culver City store, and those employees had informed appellant that they felt they had occasionally been shorted on their pay. The specific allegation was that Cuara (who had been in the Culver City store before the Westwood store) was removing overtime from employee time cards. Appellant passed on the information to Roger Ceballos (Ceballos) and Frank Granillo (Granillo) in respondent's human resources department, and they asked appellant to investigate the allegations further. The payroll clerk provided appellant with payroll paperwork. Appellant also interviewed Cuara during this investigation. Cuara denied the allegations, but did not provide an explanation of the evidence that appellant presented to her. Appellant asked her to write a statement, which she did. The interview lasted about 25 minutes. During the interview, Cuara let appellant know that "she felt she was being harassed." As far as appellant knew, nothing ever came of the investigation.
Appellant was apparently specifically asked to undertake the investigation of time card fraud involving Cuara because the other individual who would normally undertake that task did not seem like a good choice under the circumstances. Appellant explained: "They asked me to interview [Cuara] because [Cuara] had previously filed a complaint against [Granillo], stating that he asked her out on a date. So they didn't want [Granillo] interviewing her, so they asked me to interview."
Appellant testified that the payroll records he reviewed showed that Cuara had "eliminated . . . 15 minutes here, 20 minutes there . . . from different associates." Appellant observed approximately 10 such improper adjustments in all. The trial court sustained respondent's objection to portions of appellant's declaration which referred to the payroll records, on the ground of hearsay. We find no abuse of discretion in this ruling. However, the specifics of appellant's investigation of the time card fraud are not crucial to his ability to establish that he engaged in a protected activity.
3. Respondent's investigation of appellant for sending inappropriate text messages
Shortly after appellant had interviewed Cuara about the timecard irregularities, Cuara reported to respondent that appellant had sent her inappropriate text messages in the past. The text messages included a cartoon image of a male masturbating and a man having intercourse with a woman on a donkey. Cuara was asked why she waited until appellant had this meeting with her on an unrelated topic before complaining about the text messages. Cuara responded that she was scared, because she found appellant intimidating. Cuara testified that her conversations with appellant about timecard fraud and outdated products motivated her to report appellant to human resources because she felt that she was being targeted.
Ceballos received the report from Cuara on June 9, 2009. Two days later, Cuara showed Ceballos the text messages on her cellular telephone. The messages appeared to have been sent to her from appellant's cell phone number. Ceballos personally reviewed the text messages and confirmed that they appeared in every respect to have been sent from appellant's cell phone, based on the fact that the sender's telephone number was appellant's cell phone number.
On June 19, 2009, Ceballos called appellant into his office. Ceballos asked appellant if appellant had ever sent inappropriate text messages to Cuara. Appellant denied ever having done so. Ceballos stated that the inappropriate text messages had been sent to Cuara in August 2008. Appellant asked to be transferred out of the district, so as not to have to work with Cuara any longer. Appellant informed Ceballos that his phone could not send the type of messages sent to Cuara. Appellant offered to show Ceballos his phone bills to prove that he did not send the message, but Ceballos said that would not be necessary.
Cuara testified that she could not recall the date that appellant sent her the inappropriate text messages. She later testified that she had received the messages in January of an unknown year.
Ceballos asked appellant to prepare a statement, which appellant completed on the same date in Ceballos's office. Appellant stated in writing that he did not send any inappropriate messages to Cuara or anyone else. Ceballos instructed appellant to write "or anyone else" at the end of this sentence. However, according to appellant, it was a true statement. Appellant expressed to Ceballos his belief that that Cuara was retaliating against him because he investigated her for the possible time card irregularities.
Appellant admitted that it appeared that the text message came from his phone. Appellant had no idea how anyone would send a text message from his phone without his knowledge. Despite Ceballos's statement that copies of appellant's cell phone bills were not necessary, appellant provided Ceballos with his August 2008 phone bill, which did not reveal any picture messages sent to Cuara. He also gave Ceballos data showing that the type of phone he had in August 2008 could not send picture or animated texts.
After Ceballos's meeting with appellant, Mason reported to Ceballos that appellant had also sent him sexually explicit text messages, including at least one of the same ones that Cuara had reported receiving.
4. Appellant's termination
On June 26, 2009, Ceballos met with appellant again, this time with Mason present. Appellant was informed that his employment was terminated for sending inappropriate text messages, and "for being less than truthful about it." Ceballos testified that, having reviewed the text messages, he believed that appellant sent them. He also considered appellant's "dishonest written and verbal statements" that appellant had not sent the text messages. Ceballos stated: "[Appellant's] dishonesty was a vital part of Rite Aid's decision to terminate [appellant's] employment. As a Loss Prevention Manager, [appellant's] honesty and integrity was of absolute importance given that one of [appellant's] primary job duties was to investigate other Rite Aid employees for misconduct."
5. Events after termination
Appellant testified that Cuara told Preslyn Badillo (Badillo) that appellant had been terminated for sexual harassment, and that Badillo later informed appellant of this statement. In addition, appellant was forced to tell his family, his fiancé, and prospective employers that he had been fired for "sending inappropriate text messages" and "being less than truthful about it." Appellant did not receive job offers from these prospective employers.
A portion of appellant's declaration containing this statement was excluded by the trial court on the ground of hearsay. Appellant claims that this ruling was erroneous. However, the trial court considered appellant's very similar deposition testimony that Badillo told him that Cuara told her that his employment was terminated for sexual harassment. Therefore the trial court's ruling sustaining respondent's objection to appellant's declaration is not significant to the determination of this matter on appeal.
PROCEDURAL HISTORY
Appellant's complaint, filed on August 11, 2009, alleged causes of action for: (1) wrongful termination of employment in violation of public policy for internal reporting of illegal failure to pay wages; (2) wrongful termination of employment in violation of public policy pursuant to Labor Code section 1102.5, subdivision (b); (3) intentional infliction of emotional distress; (4) breach of express and implied-in-fact contracts not to terminate employment without good cause; and (5) defamation and compelled self-defamation.
Respondent generally denied the allegations and raised 27 affirmative defenses.
On May 28, 2010, respondent filed a motion for summary judgment or, alternatively, summary adjudication (motion for summary judgment). As to the first two causes of action for wrongful termination, respondent argued: (1) that respondent had a legitimate reason for firing appellant; (2) there is no constitutional, statutory or regulatory basis for appellant's claim; and (3) that appellant did not engage in a protected activity. As to the cause of action for intentional infliction of emotional distress, respondent argued that personnel decisions cannot, as a matter of law, form the basis for such a claim. As to the cause of action for breach of express and implied-in-fact contracts, respondent argued that this cause of action must fail as a matter of law because appellant was an at-will employee and respondent had good cause to fire him. As to the cause of action for defamation and compelled self-defamation, respondent argued that appellant could not prevail as a matter of law because the claim was based on inadmissible hearsay and publications that were true. Finally, as to the claim for punitive damages, respondent argued that appellant could not prove that any director, officer, or manager of respondent committed, authorized or ratified any acts of fraud, oppression or malice.
Appellant opposed respondent's motion, arguing that his complaints about expired dates on food and the stealing of employee overtime are both protected acts; that his claims regarding an implied contract raise a jury question; that respondent's improper motive for firing him need only be a factor in the decision to fire him, not the only reason for such action; that the question of whether good cause exists for terminating employment is a jury question; that his claim of defamation was viable; and that respondent had failed to negate his claim for punitive damages.
Respondent filed a reply to appellant's opposition. Both parties filed evidentiary objections.
The motion was heard on August 12, 2010. The trial court ruled on many of the evidentiary objections, stated tentative decisions as to several of the causes of action, and continued the hearing to August 30, 2010, for supplemental briefing.
The continued hearing took place as scheduled and the court took the matter under submission. On September 10, 2010, the court issued an order granting respondent's motion in full. The court confirmed the tentative decisions that it announced at the August 12, 2010 hearing: first, it found that because appellant did not contact any governmental agency regarding his time card fraud complaints, appellant's Labor Code section 1102.5, subdivision (b) claim failed. Further, the court found that as a matter of law, personnel decisions cannot form the basis of a claim for intentional infliction of emotional distress. In addition, the court ruled that appellant had not effectively disputed respondent's contention that appellant was an at-will employee.
As to appellant's first and second causes of action, the trial court held that the undisputed facts established that appellant was not engaged in protected activity, since his investigations of time card fraud and outdated food were specific assignments given to him in connection with his job. As an alternative ground, the court held that respondent acted reasonably in terminating appellant for the stated reasons, and that there was insufficient evidence to create a triable issue of fact as to whether the termination was pretextual. The court granted summary adjudication on the cause of action for defamation because the alleged defamatory statement was true. On October 5, 2010, the trial court entered judgment for respondent.
On October 14, 2010, appellant filed a timely notice of appeal.
DISCUSSION
I. Standards of review
The standard of review for an order granting or denying a motion for summary judgment or adjudication is de novo. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 860 (Aguilar).) The trial court's stated reasons for granting summary relief are not binding on the reviewing court, which reviews the trial court's ruling, not its rationale. (Kids' Universe v. In2Labs (2002) 95 Cal.App.4th 870, 878.)
A party moving for summary judgment "bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law." (Aguilar, supra, 25 Cal.4th at p. 850, fn. omitted.) "There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof." (Ibid., fn. omitted.) "A defendant bears the burden of persuasion that 'one or more elements of the 'cause of action' in question 'cannot be established,' or that 'there is a complete defense' thereto. [Citation.]" (Ibid.)
Generally, "the party moving for summary judgment bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact; if he carries his burden of production, he causes a shift, and the opposing party is then subjected to a burden of production of his own to make a prima facie showing of the existence of a triable issue of material fact. . . . A prima facie showing is one that is sufficient to support the position of the party in question. [Citation.]" (Aguilar, supra, 25 Cal.4th at pp. 850-851.)
The court's evidentiary rulings made on summary judgment are reviewed for abuse of discretion. (Walker v. Countrywide Home Loans, Inc. (2002) 98 Cal.App.4th 1158, 1169.)
Under the standards set forth above, respondent was required to show that, as to each of appellant's causes of action, there was no triable issue of material fact and that respondent was entitled to judgment as a matter of law. The burden then shifted to appellant to show the existence of a triable issue of fact as to that cause of action. We examine each of appellant's causes of action separately below.
II. First cause of action
Appellant's first cause of action was for wrongful termination of employment in violation of public policy for internal reporting of illegal failure to pay wages. Such conduct is actionable, even when employment is at-will. As set forth in Casella v. SouthWest Dealer Services, Inc. (2007) 157 Cal.App.4th 1127, 1138-1139:
"'[W]hile an at-will employee may be terminated for no reason, or for an arbitrary or irrational reason, there can be no right to terminate for an unlawful reason or a purpose that contravenes fundamental public policy. Any other conclusion would sanction lawlessness, which courts by their very nature are bound to oppose.' [Citations.]"
A. Applicable standards for evaluating this claim
"When a plaintiff alleges retaliatory employment termination . . . [such] as a claim for wrongful employment termination in violation of public policy, and the defendant seeks summary judgment, California follows the burden-shifting analysis of McDonnell Douglas Corp. v. Green (1973) 411 U.S. 792 to determine whether there are triable issues of fact for resolution by a jury. . . . In the first stage, the 'plaintiff must show (1) he or she engaged in a "protected activity," (2) the employer subjected the employee to an adverse employment action, and (3) a causal link existed between the protected activity and the employer's action.' [Citation.]" (Loggins v. Kaiser Permanente Internat. (2007) 151 Cal.App.4th 1102, 1108-1109 (Loggins).)
If the employee successfully establishes these elements, "the burden shifts to the employer to provide evidence that there was a legitimate, nonretaliatory reason for the adverse employment action. [Citation.]" (Loggins, supra, 151 Cal.App.4th at p. 1109.) If such a legitimate reason is shown, the burden shifts back to the employee to provide "'substantial responsive evidence' that the employer's proffered reasons were untrue or pretextual. [Citation.]" (Ibid.)
B. Federal requirement that employee step outside his or her role as an employee
Before applying the elements of the tort to the facts of this case we turn our attention to the first element of the tort: protected activity. Our Supreme Court has determined that, in a claim of wrongful termination in violation of public policy, the employee's protected activity must fall into one of four categories: the employee must have (1) refused to violate a statute; (2) performed a statutory obligation; (3) exercised a constitutional or statutory right or privilege; or (4) reported a statutory violation for the public's benefit. (Green v. Ralee Engineering Co. (1998) 19 Cal.4th 66, 76 (Green).) In order to avoid judicial policymaking, the public policy giving rise to the termination action must have "'a basis in either constitutional or statutory provisions.'" (Id. at p. 80.)
However, respondent raises an additional requirement pertinent to the facts of this case. Citing federal cases regarding retaliation and discrimination, respondent contends that, in order to engage in a protected activity, the employee must step outside his or her role as a representative of the company. In other words, the protected action may not be a part of the employee's regular duties. (See, e.g., McKenzie v. Renberg's Inc. (10th Cir. 1996) 94 F.3d 1478, 1486 (McKenzie)[plaintiff's act of reporting concerns about possible wage and hour violations not actionable because employee was "merely performing her everyday duties as personnel director for the company"].) It is respondent's position that, because appellant was acting within the scope of his job duties when he reported the outdated food items and time card fraud, appellant cannot, as a matter of law, establish that he engaged in a protected activity.
1. Federal law
We begin with a discussion of the federal law raised by respondent. The federal decisions discussed below are not controlling on matters of state law. (Estate of D'India (1976) 63 Cal.App.3d 942, 948.)
The rule requiring that an employee step outside of his or her regular job duties in order to bring a claim for wrongful termination is well established in claims brought under the federal Fair Labor Standards Act (FLSA). In McKenzie, the plaintiff brought claims against her employer for violation of the FLSA as well as Oklahoma public policy. The plaintiff's state law claim was dismissed by the trial judge, and although the jury entered a verdict in favor of plaintiff on her FLSA claim, the trial court granted the defendant's motion for judgment as a matter of law. The Tenth Circuit affirmed, holding that McKenzie did not engage in protected activity when, in her capacity as personnel director, she advised her employer that its wage and hour policies were in violation of the FLSA. (McKenzie, supra, 94 F.3d at p. 1481.)
In Claudio-Gotay v. Becton Dickinson Caribe, Ltd. (1st Cir. 2004) 375 F.3d 99, the plaintiff was hired to ensure that guards were performing their duties at a certain plant. Part of his job was to approve the invoices of the guards. Upon examining such invoices, the plaintiff discovered that the guards were not being properly compensated for overtime hours. Plaintiff spoke with his superiors about this potential labor violation, and provided a written statement as well. Plaintiff was told to approve the invoices for the time being. When he refused to do so, he was fired. (Id. at p. 101.) Summary judgment was granted in favor of the employer. One of the central issues on appeal was whether the plaintiff's reporting of the potential violations constituted a protected activity under the FLSA. The First Circuit concluded that it did not, stating that the report was made "in furtherance of his job responsibilities." (Id. at p. 102.) As the plaintiff's letter to his employer indicated, the plaintiff was "concerned with protecting" his employer, not asserting a right adverse to the employer. (Ibid.)
Hagan v. Echostar Satellite, L.L.C. (5th Cir. 2008) 529 F.3d 617 (Hagan), provides another example. There, a field manager alleged that he was fired for unlawful retaliation after he objected to a schedule change which would reduce his technicians' overtime pay. After the jury deadlocked, the matter was resolved by the trial court's granting of the defendant's motion for a directed verdict. The question on appeal was whether the plaintiff could prove that he engaged in protected activity under the FLSA. The Fifth Circuit concluded that he did not, explaining that it was the manager's job to act as an intermediary between the manager's subordinates and the manager's own superiors. Under the circumstances, "[v]oicing each side's concerns is not only not adverse to the company's interests, it is exactly what the company expects of a manager." (Id. at p. 628.) The Fifth Circuit set forth the following rationale for the rule that an employee must step outside his normal job duties in order to engage in a protected activity:
"If we did not require an employee to 'step outside the role' or otherwise make clear to the employer that the employee was taking a position adverse to the employer, nearly every activity in the normal course of a manger's job would potentially be protected activity under [the FLSA].
An otherwise typical at-will employment relationship could quickly degrade into a litigation minefield, with whole groups of employees -- management employees, human resources employees, and legal employees, to name a few -- being difficult to discharge without fear of a lawsuit. For those reasons, we agree that an employee must do something outside of his or her job role in order to signal to the employer that he or she is engaging [in] protected activity. . . ." (Hagan, supra, 529 F.3d at p. 628.)
There is one unreported district court opinion applying this rule under California law. In Lund v. Leprino Foods Co. (E.D. Cal., June 20, 2007, No. CIV S-06-0431 WBS KJM) 2007 U.S.Dist. Lexis 46705 (Lund), the plaintiff alleged wrongful termination in violation of California Labor Code sections 1102.5 and 6310, as well as common law wrongful termination contrary to public policy. The plaintiff was a safety supervisor at one of the defendant's food processing facilities. His job responsibilities included "ensuring compliance with state and federal safety requirements, identifying unsafe working conditions, making recommendations to fix them, and at times interacting with, and reporting incidents to, various outside governmental agencies." (Id. at p. *3.) As part of those responsibilities, the plaintiff also assisted in the preparation of reports related to accidents at his assigned facility. On November 17, 2004, seven pounds of ammonia was accidentally released. Plaintiff and the plant engineer reported the incident to the corporate office. As part of the investigation into the release, plaintiff discovered that there had been a caustic leak several weeks prior. Plaintiff emailed the plant engineer about the incident, received an explanation, and no further action was taken. (Id. at pp. *5-6.)
Plaintiff's employment was terminated on December 3, 2004, after he received a poor performance review. He brought suit, and the defendant brought a summary judgment motion, arguing, in part, that plaintiff could not show that his actions were protected. (Lund, supra, U.S.Dist. Lexis 46705 at p. *7.) In addressing plaintiff's common law wrongful termination claim, the District Court noted that "Courts addressing this issue have made clear that the hallmark of protected action under a retaliation statute is that plaintiff assert a right adverse to the company. [Citation.]" (Id. at p. *24.) Noting that the plaintiff's report on the November 17, 2004 incident was part of his regular duties, the court concluded that the plaintiff had not alleged a protected activity under either Labor Code section 1102.5 or section 6310. Summary judgment was granted in favor of the defendant on all claims.
2. California state law
Appellant argues that there is no requirement in California that the protected activity not be part of the employee's regular job duties. Appellant cites the California jury instruction, CACI No. 2430, which sets forth the requirements of the tort as follows:
"To establish this claim, [plaintiff] must prove all of the following:
"1. That [plaintiff] was employed by [defendant];
"2. That [defendant] [discharged/demoted] [plaintiff];
"3. That [insert alleged violation of public policy, e.g. '[plaintiff]'s refusal to engage in price fixing']was a motivating reason for [plaintiff's] discharge/demotion]; and
"4. That the [discharge/demotion] caused [plaintiff] harm."
Appellant also cites Holmes v. General Dynamics Corp. (1993) 17 Cal.App.4th 1418, 1426, footnote 8 (Holmes), which sets forth the elements of a cause of action for termination of employment in violation of public policy under California law as: (1) an employer-employee relationship; (2) the termination of plaintiff's employment was a violation of public policy; (3) the termination of employment was a legal cause of plaintiff's damage; and (4) the nature and extent of plaintiff's damage.
Neither party has cited a California case in which the federal rule requiring the plaintiff to have stepped out of his role as employee has been applied. In fact, California cases, discussed below, suggest that no such requirement exists under the California common law.
In Holmes, plaintiff Holmes was a manager at a company which built and repaired electronic warfare, surveillance, and navigation systems. In his position, he supervised nine staff analysts in analyzing financial data on government defense contracts. (Holmes, supra, 17 Cal.App.4th at p. 1424.) Beginning in spring 1983 through his termination in October 1984, Holmes reported to his supervisor that the company was violating various provisions of its defense contracts, resulting in excessive billing to the government. Holmes's superior refused to take any action to rectify the situation. Three days after his final internal disclosure of the illegality, Holmes was fired without explanation. (Id. at p. 1425.) Holmes prevailed on his claim of wrongful discharge in violation of public policy at trial, and the jury's verdict was upheld on appeal.
The parties did not raise the issue on appeal as to whether Holmes was precluded from recovering because he discovered the violations as part of his job duties. However, we note that the plaintiff's job involved the analysis of financial data in government defense contracts -- and it was in carrying out that precise obligation that he "unwittingly" came upon his employer's "scheme to manipulate the numbers." (Holmes, supra, 17 Cal.App.4th at p. 1430.) Thus, Holmes's protected act -- discovering his employer's financial manipulation -- was undertaken as part of his regular obligation to audit and monitor financial data.
Another California case on this topic is Collier v. Superior Court (1991) 228 Cal.App.3d 1117 (Collier). In Collier, the plaintiff was West Coast regional manager for his employer, a record company. The plaintiff's office was located at a distribution center which shipped recordings, at no cost to the recipients, for promotional purposes. In early 1984, plaintiff became suspicious of criminal activity when he noticed certain unusual large shipments of these promotional materials. He reported his concerns to higher management on three occasions between April 10 and May 30, 1984. On June 8, 1984, he was fired, purportedly for failing to perform his job adequately. Plaintiff brought an action for, among other things, wrongful termination in violation of public policy. (Id. at pp. 1120-1121.) His employer's demurrer to the complaint was sustained, but when he filed a writ seeking to vacate that ruling, his claim was reinstated. The Court of Appeal held that plaintiff's report "served not only the interests of his employer, but also the public interest in deterring crime and . . . the interests of innocent persons who stood to suffer specific harm from the suspected illegal conduct." (Id. at p. 1123.) The court noted that even though Labor Code section 1102.5 addresses whistle-blower reports to public agencies, "it does evince a strong public interest in encouraging employee reports of illegal activity in the workplace." (Ibid.)
Because Collier had been decided at the pleading stage, the Court of Appeal took no position as to whether the plaintiff would be able to prove his allegations; it considered only whether he had alleged facts showing an entitlement to some relief. (Collier, supra, 228 Cal.App.3d at p. 1120.)
Again, neither party raised the question of whether the fact that Collier may have been acting within the scope of his job duties precluded his claim that he had undertaken a protected activity. However, like the plaintiff in Holmes, the Collier plaintiff was arguably acting within the scope of his duties as manager when he discovered and reported the possible illegal conduct.
Holmes and Collier suggest that the adoption of a blanket requirement that a plaintiff's protected activity must fall outside the scope of his job description would conflict with the common law as it has developed in California. The tort of wrongful termination in violation of public policy does not require that the employee step outside his or her role as an employee in undertaking to report wrongful activities, and we decline to adopt such a rule in the absence of any controlling state law authority.
C. Application of elements of state law tort to the facts of this case
Having concluded that the requirement that an employee step outside of his or her role as an employee in order to perform a protected act is not an element of common law wrongful termination in violation of public policy, we turn back to the facts of the case. 1. Prima facie case
a. Protected activity
To reiterate the Supreme Court's directive, in order to have engaged in protected activity appellant must have (1) refused to violate a statute; (2) performed a statutory obligation; (3) exercised a constitutional or statutory right or privilege; or (4) reported a statutory violation for the public's benefit. (Green, supra, 19 Cal.4th at p. 76.) Appellant contends that his protected activity falls under the fourth category.
Internal reports of wrongful activity may be considered to be protected activity. (Green, supra, 19 Cal.4th at p. 85.) The duty to pay overtime wages is a well-established fundamental public policy. (See Barbosa v. IMPCO Technologies, Inc. (2009) 179 Cal.App.4th 1116, 1122; Gould v. Maryland Sound Industries, Inc. (1995) 31 Cal.App.4th 1137, 1147 (Gould) ["the prompt payment of wages due an employee is a fundamental public policy of this state"].) Selling food that is spoiled or unfit for human consumption violates the law (see Pen. Code, § 383), therefore the obligation to refrain from selling outdated food may also be considered an important public policy of the state. The wrongful acts alleged go beyond mere violations of internal practices, and embrace policies of sufficient public importance. (See Green, supra, at pp. 84-85 [the laws which the employer is alleged to have violated must "inure to the public's benefit"].) Under the guidelines set forth by the Supreme Court, appellant has set forth a prima facie case that he engaged in a protected activity.
Respondent argues that appellant has not sufficiently stated a constitutional, regulatory, or statutory basis for his claim that he was wrongfully terminated because he found and reported outdated merchandise. Respondent claims "there is nothing unlawful about selling merchandise beyond its 'best by' date." Respondent objects that appellant's reliance on Penal Code section 383 is misplaced, because that section applies to food that is adulterated, tainted, decayed, spoiled or otherwise unfit or unwholesome to be eaten or drunk. We reject this argument. As set forth in Green, an employee "need not prove an actual violation of law." Instead, it is sufficient that the employee raise alleged conduct which violates "the public policies embodied in the [law]." (Green, supra, 19 Cal.4th at p. 87.) Presumably, laws requiring a "best by" date exist in order to avoid public consumption of spoiled foods. (See, e.g., Food & Agr. Code, § 36004.)
Respondent argues that in the case of the allegations of time card fraud, it was actually the individuals who reported the fraud to appellant, not appellant himself, who engaged in protected activity by reporting potential fraud. However, appellant was the one who reported the allegations to upper management, investigated the allegations, and concluded that there was, in fact, fraud occurring. At that point, appellant reported the results of his investigation to respondent. Thus, according to his allegations, appellant was the one who confirmed actual wrongful activity. Nothing in California case law suggests that an individual placed in appellant's role as investigator cannot engage in protected activity for the purpose of a wrongful termination claim.
In Gould, supra, 31 Cal.App.4th at page 1148, the court reversed a ruling on demurrer where one of the plaintiff's protected acts was "reporting to management the violation of overtime wage laws applicable to other MSI employees." Significantly, the plaintiff in Gould did not contend that he was illegally denied overtime wages (ibid.), yet the court concluded that the trial court erred in sustaining the defendant's demurrer to his cause of action for wrongful termination of employment. Thus, the individual retaliated against need not be the employee directly affected by the employer's wrongful wage violations.
We therefore find that, under the circumstances of this case, appellant has made a prima facie showing that he engaged in protected activity.
b. Adverse employment action
On June 26, 2009, appellant's employment was terminated. Appellant has established this element of his prima facie case.
c. Causal link
A plaintiff cannot merely show that he or she engaged in whistle-blowing activities that were followed at some point by his termination. To establish a claim for wrongful termination in violation of public policy, the employee must also "demonstrate the required nexus between his reporting of alleged statutory violations and his allegedly adverse treatment." (Turner v. Anheuser-Busch, Inc. (1994) 7 Cal.4th 1238, 1258 (Turner), overruled on other grounds in Romano v. Rockwell Internat., Inc. (1996) 14 Cal.4th 479, 498.) Evidence of a causal connection is usually shown with circumstantial evidence and includes a consideration of the proximity in time between the protected action and the retaliatory employment action. (Fisher v. San Pedro Peninsula Hospital (1989) 214 Cal.App.3d 590, 615.) Nonetheless, the employee must present more than speculation. "[A] material triable controversy is not established unless the inference is reasonable. And an inference is reasonable if, and only if, it implies the unlawful motive is more likely than defendant's proffered explanation. [Citation.]" (Cucuzza v. City of Santa Clara (2002) 104 Cal.App.4th 1031, 1038, citing Aguilar, supra, 25 Cal.4th at p. 858.)
In some cases, the evidence establishes that the employer has a mixed motive for the adverse employment decision. "In a mixed motive case, both legitimate and illegitimate factors contribute to the employment decision." (Heard v. Lockheed Missiles & Space Co. (1996) 44 Cal.App.4th 1735, 1748 (Heard).)In such a case, once the employee establishes an illegitimate factor played a motivating or substantial role in the employment decision, the burden shifts to the employer to show that he or she would have made the same decision even if the illegitimate factor had not been taken into account. (Grant-Burton v. Covenant Care, Inc. (2002) 99 Cal.App.4th 1361, 1379.)
Thus, to establish a nexus, appellant had to present evidence he was discharged because of or in retaliation for his protected actions of reported outdated food items and reporting possible illegal time card fraud. (See Turner, supra, 7 Cal.4th at pp. 1258-1259 [requisite degree of nexus is not established where employee cannot show he was fired because of his earlier reports of illegal activities].)
Appellant's protected activity took place in April 2009 and May 2009 respectively; his dismissal was in June 2009. Considering that he had been employed with respondent for nearly eight years, we find that appellant has established sufficient proximity in time between the protected action and his termination. This proximity may be contrasted with the appellant's relatively remote alleged action of sending harassing text messages, which we assume took place in January of 2008, 17 months before Cuara reported them.
Cuara's most recent testimony was that she received the text messages from appellant in January of an unknown year. While the date stamp on the messages do not reveal the year the messages were sent, we must view the facts in a light most favorable to the appellant. (Colarossi v. Coty US Inc. (2002) 97 Cal.App.4th 1142, 1152 (Colarossi).) Therefore, we accept appellant's assertion that the phone he used between June 2008 and March 2010 was unable to send picture messages. This leaves as the only possible date of transmission January 2008, 17 months before Cuara complained to management about the messages. Respondent's policies require that an employee (1) raise her complaint about unwelcome messages "within 20 days from the date of the occurrence" and (2) "immediately tell the person displaying the offensive behavior to stop."
In addition, Cuara has testified that her sole motivation for reporting the alleged harassing text messages was the fact that appellant was investigating alleged inappropriate activity at her store. While Cuara was not in a position to take any direct adverse action against appellant, appellant has presented evidence that he informed his superiors that he believed Cuara's action was retaliatory. Appellant's direct supervisor, Mason, shared appellant's suspicion that the motivating factor behind Cuara's report was the fact that her store was being investigated for improprieties. Mason shared his thoughts with Ceballos, and he expected that Ceballos would investigate the matter. Ceballos admitted that he never followed up on the allegations that Cuara's motive for reporting the text messages was retaliatory. Despite his suspicions, Mason never followed up either.
Mason testified: "I think that the timing of [Cuara's] complaint centered around the time when he was doing that investigation. It seemed like it was as a result of him going and doing the investigation . . . ."
This evidence is sufficient to establish a triable issue of material fact as to whether there exists a causal connection between appellant's protected activity and the adverse employment action. We therefore conclude that appellant succeeded in establishing a prima facie case of wrongful termination in violation of public policy.
2. Legitimate, nonretaliatory reason
Because appellant has successfully set forth a prima facie case of wrongful termination in violation of public policy, the burden shifts to respondent to present a legitimate, nonretaliatory reason for the adverse employment action. (Loggins, supra, 151 Cal.App.4th at p. 1109.)
Respondent has met this burden. The reason for appellant's termination, according to respondent, was respondent's reasonable, good faith belief that appellant sent sexually explicit text messages to Cuara, and that appellant was dishonest about it. While respondent acknowledges appellant's position that the text messages had to have been sent 17 months prior to appellant's termination, respondent argues that the relevant measuring date is when respondent learned of the text messages, which was in the same month that respondent terminated appellant's employment.
On the basis of the evidence presented, we find that respondent has met its burden of producing a legitimate, nonretaliatory reason for appellant's termination.
3. Pretext
Because respondent has set forth a legitimate reason for appellant's termination, the burden shifts back to appellant "to provide 'substantial responsive evidence' that the employer's proffered reasons were untrue or pretextual. [Citation.]" (Loggins, supra, 151 Cal.App.4th at p. 1109.) In taking this step, we need not reject respondent's proffered legitimate reason as insufficient. As explained above, a "mixed motive case," arising where "both legitimate and illegitimate factors contribute to the employment decision," is actionable. (Heard, supra, 44 Cal.App.4th at p. 1748.)
"It is not enough for the employee simply to raise triable issues of fact concerning whether the employer's reasons for taking the adverse action were sound." (Hersant v. Department of Social Services (1997) 57 Cal.App.4th 997, 1005.) This is because it is not the employer's wisdom that is in controversy, but the employer's possible improper motivation. Thus, in order to successfully raise the question of pretext, appellant must set forth specific facts demonstrating "'such weaknesses, implausibilities, inconsistencies, incoherences, or contradictions in the employer's proffered legitimate reasons for its action that a reasonable factfinder could rationally find them "unworthy of credence" [citation] . . . . [Citations.]' [Citations.]" (Ibid.)
Appellant sets forth several such inconsistencies and implausibilities which, he contends, are sufficient to create a question as to whether the motivation behind his termination was permissible. Significantly, as discussed above, Cuara admitted that the investigations at her store motivated her to report the harassing text messages, 17 months after she received them. While Cuara was not in a position to take any adverse action against appellant, her improper motivation triggered the adverse action. Respondent admits that it relied upon information from Cuara in reaching its employment decision. Both appellant and his supervisor suggested to management that Cuara's motives were retaliatory, yet management never carried out an investigation of possible retaliation. The extent to which respondent knew of, or knowingly carried out, Cuara's retaliatory motives, is a factual question raised by this evidence. (See, e.g., Reeves v. Safeway Stores, Inc. (2004) 121 Cal.App.4th 95, 113 [summary judgment inappropriate where "retaliatory animus on the part of one or more contributors to the decision was a substantial contributing factor in bringing about [the plaintiff's] dismissal"].)
Appellant also points to the timing of his termination, which occurred shortly after the two internal reports. Such timing may raise an inference of retaliation. (Loggins, supra, 151 Cal.App.4th at p. 1110.) In addition, appellant argues that respondent failed to carry out its own internal policies when it neglected to address his allegation of retaliation. Specifically, appellant argues, respondent ignored its own policy asking that employees report any harassing conduct within 20 days, ignored its own policy that "[a]ll complaints of retaliation shall be investigated and remedial action taken where necessary," and ignored its own policy of progressive discipline. Such departures from normal procedure can also raise an inference of improper motive. (Colarossi, supra, 97 Cal.App.4th at p. 1153 [intent to retaliate may be shown by "such factors as the plaintiff's job performance, the timing of events, and how the plaintiff was treated in comparison to other workers"].)
Respondent's policies require that an employee (1) raise her complaint about unwelcome messages "within 20 days from the date of the occurrence" and (2) "immediately tell the person displaying the offensive behavior to stop."
It appears that appellant did not provide any written policy of progressive discipline as evidence in this matter. However, in his deposition, Mason confirmed that respondent uses various "forms of progressive discipline for violations for misconduct," and that he had seen respondent take less drastic action such as suspensions, written warnings, and verbal warnings. Respondent's internal policy provides that action such as harassment is the type of infraction which "may result in corrective action; up to and including immediate discharge." Thus, the manual itself suggests that lesser corrective action is available for this type of transgression.
Appellant also points to what he characterizes as respondent's "dishonesty" in material sworn testimony, as well as respondent's failure to investigate exculpatory evidence. Appellant points to certain conflicting evidence within the declarations, as well as respondent's decision to ignore exculpatory items such as appellant's phone bills. Appellant argues that a jury may infer that respondent's refusal to look at appellant's phone bills shows that respondent was not in fact concerned about appellant's purported harassing texts, but instead wanted to avoid further investigation into Cuara's store. (See, e.g., Nazir v. United Airlines, Inc. (2009) 178 Cal.App.4th 243, 280 [employer's failure to follow up on potentially exculpatory information evidences pretext].)
We find that the evidence set forth above is sufficient to create a triable issue of fact as to pretext. A reasonable juror might conclude that respondent's stated reason for terminating appellant was pretextual, and was used as an excuse to terminate appellant's employment and cover up the problems at Cuara's store. As explained in Nazir v. United Airlines, supra, 178 Cal.App.4th at page 286, this cause of action presents "issues of intent, and motive," which are "rarely appropriate for disposition on summary judgment." We conclude that summary judgment of appellant's first cause of action must be reversed.
III. Second cause of action
Appellant's second cause of action alleges wrongful termination in violation of public policy pursuant to Labor Code section 1102.5, subdivision (b). Section 1102.5 is a whistle-blower statute that protects employees from employer retaliation if they complain to a "government or law enforcement agency" about what the employee believes to be a violation of state or federal laws or regulations.
The trial court determined that this cause of action failed because appellant never complained to a government entity or law enforcement agency. Appellant argues that his claim is not based on an actual violation of the statute, but upon the public policy underlying this statute, as expressed in Collier, supra, 228 Cal.App.3d at page 1121.
To the extent that appellant's second cause of action was based on a violation of Labor Code section 1102.5, it fails for the reasons articulated by the trial court. To the extent that it relies on public policy, it is essentially the same cause of action discussed above in Section II, and should be treated as such.
IV. Third cause of action
Appellant's third cause of action is for intentional infliction of emotional distress. The elements of a cause of action for intentional infliction of emotional distress are: (1) extreme and outrageous conduct with the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the plaintiff's suffering severe or extreme emotional distress; and (3) actual and proximate causation of the emotional distress by the defendant's outrageous conduct. (Potter v. Firestone Tire & Rubber Co. (1993) 6 Cal.4th 965, 1001.)
The courts of appeal have differed on the question of whether a routine employment decision, such as the hiring or firing of an employee, can be considered "outrageous conduct" for the purposes of this tort. In Cabesuela v. Browning-Ferris Industries of California, Inc. (1998) 68 Cal.App.4th 101, 112, the court determined that an individual who has stated a claim for wrongful termination in violation of public policy "has also stated a cause of action for intentional infliction of emotional distress." The Cabesuela court explained:
"[W]hen an employer's decision to discharge an employee results from an animus that violates . . . fundamental policy, such misconduct cannot be considered a normal part of the employment relationship. Thus, where, as here, a plaintiff's emotional distress claim is premised upon his employer's violation of a fundamental public policy of this state, such conduct lies outside of the exclusive remedy provisions of the Labor Code. [Citations.]" (Id. at pp. 112-113.)
However, the Second Appellate District has taken the position that the tort of intentional infliction of emotional distress is improper as a matter of law in wrongful termination cases. This is because the conduct at issue must itself be outrageous -- not the motivation behind the conduct. As explained in Janken v. GM Hughes Electronics (1996) 46 Cal.App.4th 55, 80:
"Managing personnel is not outrageous conduct beyond the bounds of human decency, but rather conduct essential to the welfare and prosperity of society. A simple pleading of personnel management activity is insufficient to support a claim of intentional infliction of emotional distress, even if improper motivation is alleged. If personnel management decisions are improperly motivated, the remedy is a suit against the employer for discrimination."
We follow the reasoning of the Second Appellate District's precedent on this issue, and conclude that, under the facts of this case, respondent's act of firing appellant cannot be considered "outrageous conduct" as a matter of law. Therefore, his claim for intentional infliction of emotional distress fails.
V. Fourth cause of action
Appellant's fourth cause of action alleged breach of express and implied-in-fact contracts not to terminate employment without good cause.
Appellant does not dispute that he signed a written agreement acknowledging that he was an at-will employee. Appellant has produced no evidence that the agreement was modified or superseded in writing. As set forth in Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 340, footnote 10, "an at-will provision in an express written agreement, signed by the employee, cannot be overcome by proof of an implied contrary understanding. [Citations.]" (Original italics.)
The agreement stated: "I understand and agree that my employment relationship with Rite Aid is 'at will,' which means that my employment is for no definite period and may be terminated by me or Rite Aid at any time and for any reason, with or without cause or advance notice . . . . [¶] I understand and agree that the terms of this acknowledgement may not be modified or superseded except by a written agreement signed by me and an officer of the corporation."
Appellant relies heavily on Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, for his argument that he can establish an implied agreement that he would not be terminated without cause. Foley is distinguishable because no express written contract establishing at-will employment existed between the employee and the employer. The Foley court acknowledged that case law "preclude[s] enforcement of an implied-in-fact modification of an on-going employment agreement when some express written provision insists on the employee's at-will status." (Id. at p. 680, fn. 23.) The Foley court specified "[t]his . . . is not such a case." (Ibid.) Because there was no express written agreement regarding permissible bases for discharge, the Foley plaintiff could permissibly argue for the existence of an implied promise not to terminate employment without cause. Because an express agreement establishing at-will employment exists in this matter, Foley is inapplicable.
Because appellant was employed under an express written agreement establishing that his employment was at-will, he cannot, as a matter of law, prevail on his cause of action for breach of express or implied-in-fact contract not to terminate employment without good cause.
VI. Fifth cause of action
Appellant's final cause of action alleged defamation and compelled self-defamation. Without analysis or discussion, appellant's sole argument on appeal is that "Cuara's comment to Badillo that [appellant] was fired for 'sexual harassment' is clearly defamatory." Appellant did not meet his burden on appeal.
Badillo denied ever hearing Cuara make the statement.
In addressing an appeal, we begin with the presumption that a judgment or order of the trial court is presumed correct and reversible error must be affirmatively shown. (Denham v. Superior Court (1970) 2 Cal.3d 557, 564.) The appellant must "present argument and authority on each point made." (County of Sacramento v. Lackner (1979) 97 Cal.App.3d 576, 591; Cal. Rules of Court, rule 8.204(a)(1)(B).)
Here, while appellant summarizes the law regarding defamation, he does not explain or provide any analysis as to why Cuara's comment to Badillo is defamatory. After all, on the one hand, it is true that respondent terminated appellant's employment for sexual harassment. But, appellant does not explain why or how that statement could be defamatory.
For the same reason, we conclude that appellant's self-defamation claim cannot proceed. After setting forth the elements of this cause of action, appellant's entire argument lies in one sentence: "The record satisfies each element." Absent a thorough legal analysis and discussion appellant's claim fails.
VII. The disputed evidentiary objections
Apart from those specifically mentioned above, the disputed evidentiary rulings concern evidence which is not essential to the resolution of this matter on summary judgment. Therefore, we decline to discuss those rulings.
We also decline to address appellant's claim for punitive damages at this stage of the proceedings. It has been held that mere "termination for an improper reason" is insufficient to support a finding of despicable conduct sufficient to support an award of punitive damages. (See Scott v. Phoenix Schools, Inc. (2009) 175 Cal.App.4th 702, 716). However, punitive damages may properly be awarded in employment cases where a jury determines that the employer's actions were sufficiently contemptible. (See, e.g., Cloud v. Casey (1999) 76 Cal.App.4th 895, 912.) The factual questions that remain -- whether appellant's termination was improper and, if so, whether respondent's actions rose to the level of oppression, fraud, or malice -- are properly determined by a jury. Therefore we find it premature to discuss that issue here.
DISPOSITION
The judgment is reversed and remanded for further proceedings on appellant's first cause of action, including appellant's claim for punitive damages. The trial court is directed to enter an order granting summary adjudication as to the second, third, fourth, and fifth causes of action. Each side to bear their own costs of appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.
CHAVEZ We concur: BOREN ASHMANN-GERST